[Cite as In re Certificate of Need Application for Project "Livingston Villa," Cuyahoga Cty., 2017-Ohio-196.]

IN THE COURT OF APPEALS OF OHIO 

TENTH APPELLATE DISTRICT 

In re: : 

 No. 15AP-1146 

Certificate of Need Application for Project : (O.D.H. No. 9063-01-13A) 

"Livingston Villa," Cuyahoga County, 

 : (REGULAR CALENDAR) 

 (Appellee). 

 : 

 

D E C I S I O N 

Rendered on January 19, 2017 

 

On brief: Dinsmore & Shohl, LLP, Thomas W. Hess and 

Brendan T. O'Reilly, for appellants. Argued: Brendan T. 

O'Reilly. 

On brief: Bricker & Eckler LLP, and James F. Flynn, for 

appellee Livingston Real Estate Co., LLC. 

Argued: James F. Flynn. 

On brief: Michael DeWine, Attorney General, and James T. 

Wakley, for appellee Ohio Department of Health. 

Argued: James T. Wakley. 

 

APPEAL from the Ohio Department of Health 

KLATT, J. 

{¶ 1} Appellants, Rea-Ann Westlake Properties, LLC, Rea-Ann Westlake, Inc., 

Rea-Ann Suburban Properties, LLC, Rea-Ann Suburban, Inc., the Lutheran Home, and 

Concord Reserve Realty, LLC, appeal from an order of appellee, the Ohio Department of 

Health ("ODH"), granting the certificate of need ("CON") application of appellee, 

Livingston Real Estate Company, LLC, d/b/a Livingston Villa ("Livingston Villa"). 

Because the order is supported by reliable, probative, and substantial evidence and is in 

accordance with law, we affirm. 
No. 15AP-1146 2 

I. Facts and Procedural History 

{¶ 2} On May 9, 2014, Livingston Villa filed an application with ODH for a CON. 

The application proposed the construction of a new 100-bed facility, to be located in 

Westlake, Ohio in Cuyahoga County. Livingston Villa projected that the total cost of the 

project would be $14,003,000. 

{¶ 3} Livingston Villa stated in the CON application that it would acquire the 100 

long-term care beds for its facility from other facilities located in Cuyahoga County via 

purchase agreements. Specifically, Livingston Villa stated it would receive 21 beds from 

Lakewood Hospital; 5 beds from the Montefiore Home; 13 beds from Pleasantview Care 

Center; 47 beds from Hillside Plaza; and 14 beds from Franklin Plaza. Legacy Health 

Services, Inc. ("Legacy") manages Hillside Plaza and Franklin Plaza, and will also manage 

Livingston Villa. 

{¶ 4} The Livingston Villa facility will be located "less than one (1) mile of St. 

John Medical Center," and the facility will "provide high quality rehabilitative and skilled 

services to residents that need such services." (Livingston Villa CON at 31.) Livingston 

Villa noted in the CON application that the "population of elderly residents in the service 

area is expected to grow and the Applicant's facility will help provide a nursing home to 

care for this growing population." Id. "All of the resident rooms" in Livingston Villa will 

be "large private rooms with private bathrooms and showers in each room." Id. 

{¶ 5} On December 10, 2014, the director granted Livingston Villa's CON 

application. On January 9, 2015, appellants requested an administrative hearing on the 

matter. 

{¶ 6} The matter was referred to a hearing examiner, who conducted a three-day 

hearing on May 5, 6, and 7, 2015. At the hearing, Benjamin Chukwumah, the ODH staff 

member who initially reviewed the CON application, testified that the "trend now is 

providing private rooms, with larger beds, larger room sizes, and for primarily comfort of 

the resident." (Tr. Vol. I at 79.) Eliav Sharvit, the general counsel for Legacy, noted that 

most nursing home residents prefer private rooms. Russell Corwin, a certified public 

accountant ("CPA") who specializes in accounting for nursing homes, testified that, when 

a patient is discharged from a hospital, "the physicians group would prefer to have them 

in that private room." (Tr. Vol. I at 147.) 
No. 15AP-1146 3 

{¶ 7} John Griffiths, president of Rea-Ann Holdings, the management company 

for the Rea-Ann facilities, testified that his company wanted the director of ODH to 

withdraw his approval of the Livingston Villa CON. Griffiths asserted that Cuyahoga 

County was "the most over bedded county in the state, and [he did not] see a need for an 

addition[al] hundred bed home in our area." (Tr. Vol. I at 169.) Charles Rinne, the CEO of 

the Lutheran Home, testified that, based on "questionable shuffling of beds, both intracounty and inter-county, and the economic principles of supply and demand * * * and an 

overall census of approximately 80 percent in the primary and secondary markets, the 

C.O.N. should never have been granted." (Tr. Vol. II at 98.) 

{¶ 8} On September 21, 2015, the hearing examiner issued a report and 

recommendation, containing findings of fact and conclusions of law. The hearing 

examiner recommended that the director withdraw his approval of the Livingston Villa 

CON. The hearing examiner observed that Hillside Plaza was a 47-bed facility, and that 

the transfer of Hillside Plaza's 47 beds to Livingston Villa would effectively close Hillside 

Plaza. The hearing examiner thus concluded that "[t]he approval and implementation of 

the certificate of need application for the Livingston Villa project would close Hillside 

Plaza as a long-term care facility, would eliminate any capacity by Hillside Plaza to carry 

out the reviewable activity described in its certificate of need application that was 

approved on March 19, 2013, and would result in a violation of Ohio Revised Code section 

3702.53(C)." (Sept. 21, 2015 Report and Recommendation at 96.) 

{¶ 9} On October 5, 2015, Livingston Villa filed objections to the hearing 

examiner's report and recommendation. Appellants filed objections to the report and 

recommendation on October 6, 2015. 

{¶ 10} The director issued an order on November 24, 2015, rejecting and 

modifying the hearing examiner's recommendation. The director concluded that the 

Livingston Villa CON would not cause Hillside Plaza to act other than in substantial 

accordance with its CON. The director further observed that the Hillside Plaza CON was 

"separate from that of applicant, Livingston Villa." (Adjudication Order at 2.) Because the 

Livingston Villa CON "presented a reviewable activity as defined in R.C. 3702.511" and 

met the requirements for granting a CON, the director granted Livingston Villa's 

application for a CON. Id. 
No. 15AP-1146 4 

II. Assignments of Error 

{¶ 11} Appellants appeal, assigning the following errors for our review: 

Assignment of Error I: 

The Director's Order Approves Actions Specifically Prohibited 

by R.C. 3702.53(B), and is Therefore Not in Accordance with 

Law. 

Assignment of Error II: 

The Director's Order Relies Upon Incorrect Interpretations of 

R.C. 3702.52 and 3702.53, and is Therefore Not in 

Accordance with Law. 

Assignment of Error III: 

The Director Incorrectly Considered the Review Criteria 

Specified in the Ohio Administrative Code, and Therefore the 

Order is not Supported by Substantial, Probative, and Reliable 

Evidence, nor is it in Accordance with Law. 

Assignment of Error IV: 

This Court Erred in Denying the Motion for Judgment in 

Favor of the Appellants Based on the Ohio Department of 

Health's Failure to Timely Certify the Record of Proceedings. 

III. First Assignment of Error – Franklin Plaza 

{¶ 12} Appellants' first assignment of error asserts that, in granting the Livingston 

Villa CON, the director approved actions prohibited by R.C. 3702.53(B). Specifically, 

appellants contend that the Livingston Villa CON attempts to circumvent the CON rules 

regarding inter-county bed transfers. 

{¶ 13} Pursuant to R.C. 3702.52(C)(1), if a project proposed in a CON application 

"meets all of the applicable certificate of need criteria for approval under sections 3702.51 

to 3702.62 of the Revised Code * * *, the director shall grant a certificate of need for all or 

part of the project that is the subject of the application." A person affected by the 

director's ruling on a CON application "may appeal the director's ruling in the 

adjudication hearing to the tenth district court of appeals." R.C. 3702.60(A). This court's 

standard of review in considering an appeal from the director provides that "[t]he court 

shall affirm the director’s order if it finds, upon consideration of the entire record and any 
No. 15AP-1146 5 

additional evidence admitted * * *, that the order is supported by reliable, probative, and 

substantial evidence and is in accordance with law." R.C. 3702.60(F)(3). In the absence 

of such a finding, we must reverse, vacate, or modify the order. Id.

{¶ 14} Although " 'this court may engage in a very limited weighing of the evidence 

upon an appeal of this nature, we may not substitute our judgment for that of the 

Department as to the credibility of witnesses and the weight to be given the testimony.' " 

Manor Care, 10th Dist. No. 05AP-398, 2005-Ohio-5703, ¶ 9, quoting In re Knolls of 

Oxford, 10th Dist. No. 02AP-514, 2003-Ohio-89, ¶ 13. Rather, a reviewing court must 

give due deference to the administrative resolution of evidentiary conflicts. Id., citing In 

re Christian Care Home of Cincinnati, Inc., 74 Ohio App.3d 453 (10th Dist.1991), citing 

Univ. of Cincinnati v. Conrad, 63 Ohio St.2d 108 (1980). Analysis of whether the 

director's decision is supported by the evidence is essentially a question of the absence or 

presence of the requisite quantum of evidence. Id.

{¶ 15} R.C. 3702.592 governs applications for the "replacement or relocation of 

existing beds from an existing long-term care facility within the same county." Because all 

of the source facilities from which Livingston Villa will receive long-term care beds are 

located in Cuyahoga County, Livingston Villa properly filed its CON application pursuant 

to R.C. 3702.592. R.C. 3702.594 governs applications for an "increase in beds in an 

existing nursing home" when the proposed increase "is attributable solely to a relocation 

of licensed nursing home beds from an existing nursing home to another existing nursing 

home located in a county that is contiguous to the county from which the beds are to be 

relocated," and is for "[n]ot more than a total of thirty nursing home beds." Because 

Livingston Villa is not yet an existing nursing home, it could not have filed for an intercounty bed transfer under R.C. 3702.594. 

{¶ 16} Appellants assert that the 14 long-term care beds Livingston Villa will 

receive from Franklin Plaza "are not, in fact, from Cuyahoga County." (Appellant's brief at 

14.) Appellants assert that these 14 beds are Summit County beds that Livingston Villa 

passed through Franklin Plaza in order to circumvent the requirements of R.C. 3702.594. 

Appellants assert that, in doing so, Livingston Villa has violated R.C. 3702.53(B), which 

prohibits any person from separating "portions of any proposal for any reviewable activity 

to evade the requirements of sections 3702.51 to 3702.62 of the Revised Code." The CON 
No. 15AP-1146 6 

application asked Livingston Villa to identify, for each source facility, the current bed 

status of the facility and what the bed status of the facility would be after implementation 

of the Livingston Villa project. Regarding Franklin Plaza, Livingston Villa stated that 

Franklin Plaza has 201 long-term care beds, and that it would have 201 long-term care 

beds after the project was implemented. Livingston Villa explained this result by noting as 

follows: 

Please note that Franklin Plaza Extended Care Center has 

filed a CON with the Ohio Department of Health seeking 

approval to relocate 14 beds from a Summit County nursing 

home to Franklin Plaza to replace the 14 beds that are being 

relocated to the Applicant in this CON, so that after both 

CONs are approved and implemented, Franklin Plaza 

Extended Care Center will remain licensed and certified at 201 

beds. 

(Livingston Villa CON at 24.) 

{¶ 17} Appellants assert that this statement demonstrates that Livingston Villa has 

violated R.C. 3702.53(B), as Livingston Villa could not have moved the Summit County 

beds directly into a new facility. Appellants contend that Livingston Villa "attempted to 

accomplish this result * * * by splitting the activity into separate applications for 

certificates of need that may each be separately permissible." (Emphasis sic.) 

(Appellant's brief at 17.) 

{¶ 18} The director granted the Franklin Plaza CON application on December 2, 

2014, thereby approving the transfer of the 14 long-term care beds from a Summit County 

facility into Franklin Plaza. Appellants did not appeal that order, and the instant appeal 

concerns only the Livingston Villa CON. As such, the propriety of the director's approval 

of the 14-bed transfer is not before us for review. As of December 2, 2014, the 14 longterm care beds at issue became Cuyahoga County beds existing at Franklin Plaza, and 

remained as such when the director granted Livingston Villa's CON application on 

December 10, 2014. See Ohio Adm.Code 3701-12-01(J) and (O)(5) (defining an existing 

bed as "[a] bed held as an approved bed under a certificate of need approved by the 

director"). 

{¶ 19} Appellants assert that "[a]ny disparity in the timing between the two" CONs 

"would result in either more Beds than physically possible at Franklin Plaza, or fewer 
No. 15AP-1146 7 

certified Beds than actually operational." (Appellant's brief at 20-21.) However, Mr. 

Sharvit explained that the Livingston Villa CON was "not contingent upon" the Franklin 

Plaza CON. (Tr. Vol. III at 109.) He observed that, if the director did not grant the 

Franklin Plaza CON, the total number of long-term care beds at Franklin Plaza "goes 

down to 187." Id. While appellants argue that it was not possible for Franklin Plaza to 

accept 14 beds, the Franklin Plaza CON is not before us for review. Accordingly, whether 

it was or was not possible for Franklin Plaza to accept the 14 long-term care beds is not 

presently at issue. 

{¶ 20} Mr. Chukwumah explained that, "using the occupancy rates for" Franklin 

Plaza, "the number of beds that were going to be relocated or purchased by the applicant, 

those beds are no longer occupied, they are just sitting there." (Tr. Vol. at I 56.) Mr. 

Chukwumah noted in his report to the director that the "occupancy rate for Franklin Plaza 

in 2014 [was] 92.38 percent of 201 long-term care beds (201-185=16 beds). Sixteen beds 

are not currently occupied." (Livingston Villa CON at 336.) Thus, even in the absence of 

the director's approval of the Franklin Plaza CON, Franklin Plaza had more than 14 

unoccupied beds available to sell to Livingston Villa. 

{¶ 21} As noted by the hearing examiner, "beds intended to serve residents at longterm care facilities are fungible, that is, any actual bed may be substituted for any other 

actual bed and the result is considered the same." (Report and Recommendation at 82.) 

Accordingly, it is impossible to say whether the 14 long-term care beds being relocated 

from Franklin Plaza to Livingston Villa were any of the 201 beds existing at Franklin Plaza 

before December 2, 2014, or whether they were the newly acquired beds existing at 

Franklin Plaza after December 2, 2014. 

{¶ 22} Livingston Villa was also transparent with the director about these 

transfers. Mr. Sharvit explained that Livingston Villa included the note regarding the 

pending Franklin Plaza CON in the Livingston Villa CON application "in the interest of 

full disclosure and forthrightness to say what's actually happening." (Tr. Vol. III at 109.) 

Franklin Plaza complied with the CON laws regarding the inter-county movement of longterm care beds, and Livingston Villa complied with the CON laws regarding the intracounty movement of beds. Livingston Villa's compliance with the applicable CON laws, 

and disclosure of the pending Franklin Plaza transfer to the director, demonstrate that 
No. 15AP-1146 8 

Livingston Villa did not separate portions of a proposal in an attempt to evade the CON 

statutes. 

{¶ 23} Appellants have failed to demonstrate that Livingston Villa violated R.C. 

3702.53(B). Based on the foregoing, appellants' first assignment of error is overruled. 

 IV. Second Assignment of Error – Hillside Plaza 

{¶ 24} Appellants' second assignment of error asserts that the director erred in his 

interpretation of R.C. 3702.52(E) and 3702.53(C). Appellants' contentions in this 

assignment of error relate to the 47 long-term care beds which the Livingston Villa CON 

will transfer from Hillside Plaza to Livingston Villa. 

{¶ 25} Question 10.38 of the CON application asked Livingston Villa, if it was 

proposing the replacement of a facility, to "attach as Exhibit M a detailed study of the 

respective costs that demonstrates that replacement of the source facility is more costeffective or otherwise more feasible than its renovation." (Livingston Villa CON at 69.) 

Livingston Villa responded to the question by noting that it would receive 47 beds from 

Hillside Plaza, which was "expected to be closed in the next several months. This project 

will, in part, replace Hillside Plaza and attached hereto as Exhibit M is a detailed study 

of costs as requested." (Emphasis sic.) Id. 

{¶ 26} In Exhibit M, Livingston Villa explained that Hillside Plaza was constructed 

in the early 1960s, and that "[w]ithout having experienced any substantial structural or 

mechanical renovations, the facility's systems, windows, roof, kitchen equipment, HVAC 

and other features of the building are approaching the end of their useful life." Id. at 223. 

Livingston Villa noted that Hillside Plaza's "current lack of size prevents it from doing 

laundry services at the facility," and that due to the material used to construct the 

building, any "structural modification would be cost prohibitive." Id. Livingston Villa 

further observed that, at a bed capacity of 47, Hillside Plaza's "operational economies of 

scale are less efficient than nursing homes with larger capacity." Id. Compare Ohio 

Adm.Code 3701-12-23(J). Livingston Villa also noted that "Hillside Plaza's design and 

layout reflects a market period that placed less value on the residential dignity of each 

resident and their family and pursued the delivery of long term care services with a much 

more institutional flavor." Id. 
No. 15AP-1146 9 

{¶ 27} Hillside Plaza's utilization rates were 85.31 percent in 2012, 79.32 percent in 

2013, and 74.52 percent in 2014. (Livingston Villa CON at 146.) Livingston Villa noted 

that it did not anticipate that any Hillside Plaza residents would "be residing in the beds to 

be relocated," because Hillside Plaza would be closed "in the next several months as its 

occupancy has been declining and the cost to maintain the premises is prohibitive." Id. at 

68. Livingston Villa stated that it would coordinate the transfer of any Hillside Plaza 

resident "with the applicable Ombudsman, resident and family." Id. at 69. 

{¶ 28} The Hillside Plaza CON application, filed on November 2, 2012, asked the 

director to approve the transfer of 23 long-term care beds from a facility in Lake County 

into Hillside Plaza. The director granted Hillside Plaza's CON on March 19, 2013. The 

Livingston Villa CON application was filed on May 9, 2014. 

{¶ 29} Mr. Sharvit explained that, between the filing of the two CON applications, 

Hillside Plaza's financial situation and outlook changed. He noted that, before filing the 

Hillside Plaza CON application, Legacy paid off Hillside Plaza's "mortgage so as to not 

breach financial covenants as a result of decreasing census in the building," and that 

Hillside Plaza "turned solvent." (Tr. Vol. III at 115.) Legacy then had to "re-inject equity 

capital to sustain [Hillside Plaza], and in so doing you have a leap, a substantial leap to 

positive cash flow." Id. at 114-15. Thereafter, however, the "cost of operating the facility" 

became too great. Id. at 114. Thus, while Legacy had "replenished the beds to continue 

operating [Hillside Plaza] after paying off the mortgage," Legacy subsequently determined 

that "in the long run it [did not] make sense to continue operating this, and the most 

useful way to allocate the resources available from the facility, mainly beds, because the 

physical plant is obsolete, [was] to build a new facility inside of the county and to relocate 

those beds." Id. at 116-17. 

{¶ 30} R.C. 3702.53(C) provides that "[n]o person granted a certificate of need 

shall carry out the reviewable activity authorized by the certificate of need other than in 

substantial accordance with the approved application for the certificate of need." 

Compare In re MSI Regency Village, Ltd., 10th Dist. No. 08AP-64, 2008-Ohio-3830, 

¶ 24 (finding that MSI violated R.C. 3702.53(C), because "the relocation of residents was a 

reviewable activity," and "MSI failed to conduct this activity in substantial accordance 
No. 15AP-1146 10 

with the plan of care they had set forth in the CON application"). R.C. 3702.52(E) 

provides as follows: 

During the period beginning with the granting of a certificate 

of need and ending five years after implementation of the 

reviewable activity for which the certificate was granted, the 

director shall monitor the activities of the person granted the 

certificate to determine whether the reviewable activity is 

conducted in substantial accordance with the certificate. A 

reviewable activity shall not be determined to be not in 

substantial accordance with the certificate of need solely 

because of a decrease in bed capacity. 

{¶ 31} The hearing examiner stated that he could not "accept that a long-term care 

facility offering no long-term care beds can provide the reviewable activity described in 

the certificate of need application approved for Hillside Plaza on March 19, 2013." 

(Report and Recommendation at 87.) The hearing examiner noted R.C. 3702.52(E), but 

stated that his decision was not based "on the bed decrease but on whether Hillside Plaza" 

would be able to carry out the reviewable activity covered by its CON. Id. The hearing 

examiner concluded that the Livingston Villa CON resulted in a violation of R.C. 

3702.53(C), because it would "make it impossible for Hillside Plaza to fulfill its obligations 

under its certificate of need." Id. at 92. 

{¶ 32} The director determined that the hearing examiner had "based his finding 

on the conclusion that decreasing bed capacity at Hillside Plaza would cause it to be out of 

substantial accordance with the CON it was granted." (Adjudication Order at 2.) Relying 

on R.C. 3702.52(E), the director concluded that the decrease in bed capacity was not an 

indication that Hillside Plaza had carried out a reviewable activity other than in 

substantial accordance with its CON. The director further observed that the Hillside Plaza 

CON was separate from the Livingston Villa CON, and that "[b]oth applications were 

reviewed when received for the project described. The Hillside Plaza CON was not the 

subject of the hearing and the Livingston Villa CON was at issue. The Hearing Examiner 

did not find any deficiency with Livingston Villa's application." Id. 

{¶ 33} The director also stated that, "because Livingston Villa has not yet been 

granted a CON, R.C. 3702.53(C) does not apply to it." Id. Appellants assert that this 

statement "makes no sense," because "Livingston Villa was granted a certificate of need 

on December 10, 2014." (Appellants' brief at 23-24.) We agree that Livingston Villa was 
No. 15AP-1146 11 

granted a CON on December 10, 2014, but find no reversible error in the director's 

misstatement. 

{¶ 34} Due to the proceedings below and in this appeal, Livingston Villa has not 

begun to carry out any of the reviewable activities in its CON. Accordingly, R.C. 

3702.53(C) cannot yet apply to Livingston Villa, as Livingston Villa has not had the 

opportunity to carry out a reviewable activity. Thus, Livingston Villa cannot yet have 

carried out a reviewable activity "other than in substantial accordance with the approved 

application for the certificate of need." R.C. 3702.53(C). Compare R.C. 3702.532 (noting 

that, when the director determines that a person has violated R.C. 3702.53(C), "the 

director shall send a notice to the person * * * specifying the activity constituting the 

violation"); R.C. 3702.55 (providing for additional penalties if a person who has violated 

R.C. 3702.53(C) "fails to cease conducting an activity"). 

{¶ 35} Appellants assert that, while Livingston Villa "may not be the legal entity 

violating the law," because "Legacy controls both Hillside Plaza and Livingston Villa," it is 

"appropriate to hold Legacy accountable for the actions and violations of both entities." 

(Appellant's brief at 24.) However, Legacy is not party to this action, and the Hillside 

Plaza CON is not before this court for review. Again, the present appeal concerns only the 

Livingston Villa CON. 

{¶ 36} The director also concluded that, pursuant to R.C. 3702.52(E), a decrease in 

bed capacity, including a total decrease in bed capacity, does not render an entity out of 

substantial accordance with its CON. Notably, while the "construction of a new long-term 

care facility," the "[r]enovation of or addition to a long-term care facility," and "[a]n 

increase in long-term care bed capacity" are all reviewable activities under R.C. 3702.511, 

the closure of a long-term care facility is not listed as a reviewable activity. 

{¶ 37} Appellants assert that R.C. 3702.52(E) is inapplicable in this action because 

"the offending conduct in question is not 'solely' a decrease in bed capacity." (Appellant's 

brief at 25.) Appellants assert that R.C. 3702.52(E) does not pertain to "more drastic 

decrease[s] in bed capacity," and they state that a drastic decrease in bed capacity means 

"a decrease in capacity and an additional negative factor that may independently justify 

a determination that the reviewable activity has not been carried out in substantial 

accordance with the certificate of need." (Emphasis sic.) (Appellant's brief at 26-27.) 
No. 15AP-1146 12 

Appellants assert that "the additional negative factor" here is the "complete closure" of 

Hillside Plaza. (Appellant's brief at 27.) 

{¶ 38} Appellants "additional negative factor" argument essentially attempts to 

add language to R.C. 3702.52(E). When interpreting a statute, "[c]ourts may not delete 

words used or insert words not used." Columbia Gas Transm. Corp. v. Levin, 117 Ohio 

St.3d 122, 2008-Ohio-511, ¶ 19. If a statute's meaning is clear, unequivocal, and definite, 

then statutory interpretation ends, and the court applies the statute according to its terms. 

Id.; Hubbell v. Xenia, 115 Ohio St.3d 77, 2007-Ohio-4839, ¶ 11. 

{¶ 39} Furthermore, when interpreting an agency's statute or rule, a reviewing 

court " 'must give due deference to an administrative interpretation formulated by an 

agency which has accumulated substantial expertise, and to which the legislature has 

delegated the responsibility of implementing the legislative command.' " In re 138 Mazal 

Health Care, 117 Ohio App.3d 679, 685 (10th Dist.1997), quoting State ex rel. McLean v. 

Indus. Comm., 25 Ohio St.3d 90, 92 (1986). A reviewing court need not find the agency's 

construction of a rule is the only reasonable one or even that it is the result the court 

would have reached. Id. See also Manor Care at ¶ 46 (noting that "[b]ecause the 

director's conclusion is not at odds with the statute itself, Manor Care properly could 

exclude said costs from its total project costs"). 

{¶ 40} Here, the director's construction of R.C. 3702.52(E) was reasonable and not 

at odds with the language of the statute. As such, we defer to the director's interpretation 

of the statute and find that any decrease in bed capacity, including a total decrease in bed 

capacity, "shall not be determined to be not in substantial accordance with the certificate 

of need." R.C. 3702.52(E). Accordingly, Hillside Plaza's decrease in bed capacity due to 

the Livingston Villa CON does not indicate that a reviewable activity was being conducted 

other than in substantial accordance with the CON. 

{¶ 41} Appellants lastly assert that, as Exhibit M is essentially a "one-paragraph 

long narrative," Livingston Villa failed to attach a detailed study regarding the costeffectiveness of renovating Hillside Plaza. (Appellant's brief at 30.) See Ohio Adm.Code 

3701-12-23.2(D) (stating that, to replace a facility and relocate beds, the applicant must 

provide a "detailed study" demonstrating "that replacement of the facility is more costeffective or otherwise more feasible for the applicant than renovation"). However, this 
No. 15AP-1146 13 

court has held that where there is sufficient testimony explaining why renovation of the 

facility to be replaced is not feasible, the fact that a CON applicant "did not provide a 

'detailed study' of potential costs is not determinative." Manor Care at ¶ 25. In Manor 

Care, a Manor Care representative explained that the facility to be replaced "required new 

plumbing, a new heating plant, and other new infrastructure," such that Manor Care had 

"determined renovations were not feasible." Id.

{¶ 42} Mr. Sharvit explained at the hearing that "replacement of the [Hillside 

Plaza] facility was not an option given the size of the land and given the quality of the 

building." (Tr. Vol. III at 128.) He also noted that the statements in Exhibit M were a 

summary of the internal analysis Legacy conducted every day regarding the operation and 

viability of Hillside Plaza. Livingston Villa's statements in Exhibit M, combined with Mr. 

Sharvit's testimony at the hearing, provided reliable, probative, and substantial evidence 

to support the director's finding that Livingston Villa sufficiently demonstrated that 

replacing Hillside Plaza was more cost-effective than renovating the facility. 

{¶ 43} Based on the foregoing, appellants' second assignment of error is overruled. 

V. Third Assignment of Error – Reliable, Probative, and Substantial 

Evidence 

{¶ 44} In their third assignment of error, appellants assert that the director's order 

is not supported by reliable, probative, and substantial evidence and is not in accordance 

with Ohio Adm.Code 3701-12-20(E) or (J). Ohio Adm.Code 3701-12-20 provides criteria 

which the director must apply "when reviewing an application for a certificate of need." 

Ohio Adm.Code 3701-12-20(A). Ohio Adm.Code 3701-12-20(E) obligates the director to 

consider "the impact of the project on all other providers of similar services in the service 

area specified by the applicant including the impact on their utilization, market share and 

financial status." Ohio Adm.Code 3701-12-20(J) obligates the director to "consider the 

impact of the project on existing staffing levels, if applicable, and the availability of 

personnel resources to meet the applicant's projected requirements." 

{¶ 45} "Reliable" evidence is evidence that is dependable and may be confidently 

trusted. Our Place, Inc. v. Ohio Liquor Control Comm., 63 Ohio St.3d 570, 571 (1992). In 

order to be reliable, there must be a reasonable probability that the evidence is true. Id. 

"Probative" evidence is evidence that tends to prove the issue in question; it must be 
No. 15AP-1146 14 

relevant in determining the issue. Id. "Substantial" evidence is evidence with some 

weight; it must have importance and value. Id.

{¶ 46} The hearing examiner acknowledged that increased "competition is 

unavoidable and inherent in the construction and operation of a new facility." (Report and 

Recommendation at 80.) The hearing examiner concluded that the competition expected 

from the Livingston Villa project "as to utilization, market share, and financial status of 

the existing service providers operating in the service area proposed to be served by 

Livingston Villa is not found * * * to support a recommendation of the withdrawal of the 

Livingston Villa certificate of need application's approval." Id. at 90. 

{¶ 47} This court has acknowledged that "[a]ny new facility will initially impact 

existing providers to some extent[, and] [i]f some impact was sufficient to deny a CON, 

then few, if any, * * * would ever be approved." Manor Care at ¶ 51. See also In re Green 

Village Skilled Nursing Ctr., 10th Dist. No. 12AP-91, 2012-Ohio-3769, ¶ 38; In re 

Altercare of Stow Rehab. Ctr., 10th Dist. No. 12AP-29, 2012-Ohio-4243, ¶ 22 (noting that 

this "court has recognized that some negative impact does not necessarily require denial 

of a CON application"). 

{¶ 48} Appellants contend that "the proposed project would have more than a 

typical competitor's negative impact on the utilization, market share, and financial status 

of surrounding nursing homes." (Appellant's brief at 36.) Appellants, however, fail to 

support their contention that Livingston Villa will have a "much greater impact than 

typical competition." Id. at 38. 

{¶ 49} Appellants assert that Livingston Villa will dilute the Medicare payer pool, 

thereby harming other providers in the service area. Testimony at the hearing established 

that, between Medicare, Medicaid, and private insurance, Medicare pays providers the 

most for services rendered. (See Tr. Vol. I at 151.) Livingston Villa projected that its 

percentages of Medicare occupants would be 32.99 percent in the first year, 22.38 percent 

in the second year, and 21.98 percent in its third year of operation. (Livingston Villa CON 

at 141.) Corwin concluded that, based on Livingston Villa's usage projections, the 

"Medicare population for these three nursing homes should decline." (Tr. Vol. I at 115.) 

{¶ 50} Appellants assert that Livingston Villa's Medicare utilization rates are 

"much higher than typical nursing homes in the area." (Appellant's brief at 38.) The 
No. 15AP-1146 15 

average Medicare utilization rates for all providers in the service area were 12.74 percent 

in 2012, 11.71 percent in 2013, and 11.55 percent in 2014. (Objector's Ex. at 12.) However, 

these figures are averages. Exhibit 12 demonstrates that the Avon Oaks nursing home and 

the Main Street Care Center, both located in the proposed service area, had Medicare 

utilization rates of 18.36 percent and 19.23 percent, respectively, in 2014. (Objector's Ex. 

at 12.) Rinne testified that the Lutheran Home had a Medicare utilization rate of 17 

percent in 2014. (Tr. Vol. II at 74.) One of Livingston Villa's source facilities, Lakewood 

Hospital, has a Medicare only area in its facility, and it had a Medicare utilization rate of 

84.5 percent in 2014. 

{¶ 51} Livingston Villa explained in the CON application that it would have "[o]ne 

50 bed area [that] will be utilized primarily for skilled care." (Livingston Villa CON at 31.) 

Skilled care refers to patients "that are not going to be in the institutional portion of the 

nursing home, and that skilled care will be for Medicare, and for insurance pays, for short 

stays." (Tr. Vol. I at 106.) Mr. Sharvit explained that Livingston Villa intended to provide 

"high volume skilled services." (Tr. Vol. III at 23.) Thus, as Livingston Villa intends to 

serve more skilled care patients, it will likely have higher Medicare utilization rates than a 

facility that does not serve such patients. 

{¶ 52} Accordingly, while Livingston Villa's projected Medicare utilization 

percentages may be above average for the service area, they are not outside of the 

reasonable range of utilization rates for providers in the service area. See Manor Care at 

¶ 37 (noting that "[r]easonable projections are based on operational histories of similar 

facilities within the service areas and 'may vary widely among parties yet remain within 

the reasonable range' "). Mr. Rinne testified that, while Livingston Villa's utilization 

percentages might have been "extremely optimistic," he did not find them unreasonable. 

(Tr. Vol. II at 76.) Accordingly, the evidence demonstrates Livingston Villa's projected 

Medicare utilization rates were within a reasonable range. 

{¶ 53} Mr. Griffiths opined that Livingston Villa would "take market share from all 

of [Rea-Ann's] facilities," and that Livingston Villa's proximity to St. John Medical Center 

would "have an impact on [their] admissions." (Tr. Vol. I at 189, 170.) However, Mr. 

Griffiths acknowledged that "a number of facilities [have] come on-line since we started in 

business in 1974. I think I counted five in the primary and secondary service areas that 
No. 15AP-1146 16 

have come on-line, and 20 assisted living." (Tr. Vol. II at 12.) He admitted that "[s]o far," 

the Rea-Ann facilities had successfully overcome competitive pressures from new facilities 

entering the service area. Id. at 13. Compare In re Ave. at Aurora, 10th Dist. No. 12AP151, 2013-Ohio-1145, ¶ 22. 

{¶ 54} Mr. Rinne noted that, although "every time [they] lose an admission it 

harms [them]," he also admitted that Livingston Villa wasn't going to "bankrupt" the 

Lutheran Home. (Tr. Vol. II at 88.) Mr. Rinne stated, "whether you come or don't come 

* * *, is that going to make the difference, I don’t think so." Id. at 97. 

{¶ 55} Accordingly, appellants failed to demonstrate that Livingston Villa will 

cause anything more than a typical impact on the utilization, market share, and financial 

status of the existing providers in the service area. There was reliable, probative, and 

substantial evidence in the record demonstrating that Livingston Villa will have some 

impact, but not such a severe impact on other area providers as to warrant denial of the 

Livingston Villa CON. See In re Green Village Skilled Nursing Ctr. at ¶ 37 (noting that 

"[p]resented with conflicting testimony as to the impact on other providers in the service 

area, including appellant, the hearing examiner gave weight to the testimony that 

appellant will be able to successfully withstand the opening of a new facility"). 

{¶ 56} Appellants next assert that the director erred by failing to deny the 

Livingston Villa CON due to the effect the project will have on staffing at appellants' 

facilities. Livingston Villa noted in the CON application that, "[g]iven the current job 

market and unemployment rate, the Applicant does not believe that its recruitment of 

staff will affect other area health care providers, assuming that those providers provide 

quality care, [and] offer competitive pay and benefits to employees." (Livingston Villa 

CON at 58.) 

{¶ 57} "[N]ursing homes everywhere are faced with the challenge of finding and 

retaining quality staff. If tight staffing were sufficient to deny a CON application, they 

apparently all would be denied." Manor Care at ¶ 54. The hearing examiner noted that 

"[s]ecuring adequate staff to operate long-term care facilities in the service area * * * has 

been a long-standing and continuing challenge," and concluded that he did "not find the 

competition expected from an approved and implemented Livingston Villa project for 
No. 15AP-1146 17 

adequate staffing to be sufficiently onerous to recommend" denial of the CON. (Report 

and Recommendation at 90.) 

{¶ 58} Appellants assert that the Livingston Villa CON "proposes a more 

significant negative impact than typical competitors. Specifically, the unique difficulties 

of the proposed service area must be considered." (Appellant's brief at 41.) Appellants 

state that the unique difficulties in the proposed service area are that housing costs in the 

service area are high so that "individuals willing to work for nursing home staff wages 

typically do not live locally," and that "public transportation into the proposed service 

area is minimal, further limiting the potential pool of employees." Id. at 42. 

{¶ 59} Griffiths testified that Livingston Villa would have a "negative impact" on 

staffing at Rea-Ann's facilities, because there is a "limited number of people, many of 

whom * * * can't afford the housing in that area." (Tr. Vol. I. at 188.) However, the 

evidence also demonstrated that at least one of Rea-Ann's facilities is located on a bus line 

and does "have limited bus service." (Tr. Vol. II at 49.) Griffiths admitted that staffing 

was "a consistent pressure," and observed that, more so than fighting staff from leaving to 

go "make ten cents more an hour, * * * what [he's] finding now is we’re fighting people 

wanting to go on government assistance." (Tr. Vol. II at 53.) 

{¶ 60} Griffiths also noted that "every time that a new facility comes on-line it's a 

new shiny penny and everyone runs over there, and then they stay there for a while and 

they usually come back" in "about a year or so." Id. at 54. Rinne also stated that what he 

had "found in the past at a pretty high level is maybe 30 or 40 percent of our people who 

leave come back to us within a couple of months, because its not greener on the other 

side." (Tr. Vol. II at 93.) Rinne noted that the "bottom line on staffing, it's a constant 

battle whether you all come or don’t come, okay." Id. Rinne admitted that Livingston 

Villa was "not going to effect [his] staffing levels" at the Lutheran Home. Id. at 95. 

{¶ 61} Furthermore, Griffiths testified that Rea-Ann was one of the only facilities 

in Westlake to offer an ODH certified training program to "train people * * * and help 

them take the State Tested Nursing Assistant exam." (Tr. Vol. I at 182.) He admitted that 

the training program gave Rea-Ann a "competitive advantage" over other facilities. (Tr. 

Vol. II at 50.) Mr. Rinne explained that the Lutheran Home had partnered with Lorain 
No. 15AP-1146 18 

Community College to help train their nursing students, noting that partnering with a 

college "really does help." Id. at 92. See Manor Care at ¶ 53-54. 

{¶ 62} Accordingly, the evidence demonstrated that staffing is a constant issue at 

appellants' facilities, that appellants have some competitive advantages over Livingston 

Villa with respect to staffing, and that staff who might leave appellants' facilities initially 

will likely return after a couple of months to a year. The hearing examiner heard the 

conflicting evidence regarding the impact Livingston Villa will have on area staffing levels, 

and concluded that the impact would not be sufficiently onerous as to warrant denial of 

the CON application. This court defers to the agency's resolution of evidentiary conflicts. 

In re Green Village Skilled Nursing Ctr. at ¶ 24 (noting that "a reviewing court must 

afford due deference to the administrative resolution of evidentiary conflicts"). 

Accordingly, we find that reliable, probative, and substantial evidence supports the 

director's conclusion that Livingston Villa would not cause such an onerous impact on 

staffing at appellants' facilities as to warrant denial of the application. 

{¶ 63} Upon review, we find that the director properly considered the impact 

Livingston Villa would have on the surrounding facilities and on area staffing, and that 

the record contains reliable, probative, and substantial evidence to support the director's 

determinations as to those issues. Based on the foregoing, appellants' third assignment of 

error is overruled. 

VI. Fourth Assignment of Error – Record 

{¶ 64} Appellants' fourth assignment of error asserts that this court erred in 

denying appellants' motion for an order granting judgment in their favor. Appellants filed 

a motion on January 26, 2016, asserting that they were entitled to judgment in their favor 

because ODH failed to timely certify the record of proceedings to this court. In our 

February 3, 2016 journal entry denying the motion, we observed that appellants had filed 

their notice of appeal on December 22, 2015, and that ODH certified the record to the 

clerk of court on January 13, 2016. The clerk, however, did not docket the record until 

January 28, 2016. We noted that the "dispositive date is the date of certification by the 

agency, not the date of docketing by the clerk. The agency has complied with the 30-day 

requirement for certifying the administrative record under R.C. 119.12(I)." (Jan. 28, 2016 

Journal Entry.) 
No. 15AP-1146 19 

{¶ 65} In their brief, appellants argue only that, "[f]or the reasons previously 

articulated in the Motion for Judgment filed by Appellants on January 26, 2016, the 

Appellants assert that ODH failed to timely certify the record to this court, and that 

judgment in favor of Appellants is therefore required." (Appellant's brief at 46.) 

Accordingly, for the reasons stated in our February 3, 2016 journal entry, we find that 

ODH timely certified the administrative record to this court. Appellants' fourth 

assignment of error is overruled. 

VII. Conclusion 

{¶ 66} Having overruled appellants' first, second, third, and fourth assignments of 

error, we affirm the order of the Ohio Department of Health. 

Order affirmed.

BROWN, J., concurs. 

BRUNNER, J., concurs in part and dissents in part. 

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