Appeals court upholds moratorium on new nursing homes

A moratorium on new nursing home licenses passed by the legislature in 2015 that applied to proposals seeking approval prior to the bill’s passage was affirmed Tuesday by the Indiana Court of Appeals.

The moratorium was made to take effect retroactively to March 1, 2015, meaning any proposals pending Indiana State Department of Health licensing review after that date would not be permitted. The moratorium has been extended until June 30, 2019.

Carmel-based Mainstreet Property Group, LLC, and its affiliated entities had nine nursing home projects across the state in various planning stages when the moratorium took effect. None of the plans had been submitted to the Department of Health by March 1, 2015. Mainstreet had executed land purchase agreements for sites in Zionsville, Jeffersonville, Fort Wayne and New Haven, but closing on those properties had not taken place.

Mainstreet in 2016 filed a complaint for declaratory and injunctive relief against the Department of Health and other entities, which was dismissed by the trial court. The appellate court upheld that ruling Tuesday.

“We hold that the Moratorium did not impair any contractual obligations or vested rights” of Mainstreet. “Because (Mainstreet) failed to show that the Moratorium impaired any of their contractual obligations, we affirm the trial court’s dismissal of the contract clause claims and need not delve further into (Mainstreet’s) argument,” Judge Terry Crone wrote for the panel.

Further, Mainstreet failed to demonstrate that it had vested rights in any of the projects. The court also rejected Mainstreet’s claims that it had spent millions of dollars developing the proposed properties. The company’s “evidence regarding the expenditure of money, time, and effort could be characterized as normal business efforts expended to investigate future business opportunities,” as the trial court held, Crone wrote, noting the company was reimbursed all earnest money on properties where purchase agreements had been secured.

The case is Mainstreet Property Group, LLC; Mainstreet Realty, LLC; and 7105 E SR 334, LLC v. Pam Pontones, in her official capacity as Interim Commissioner of the Indiana State Department of Health; et al., 29A02-1704-MI-871.

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