NHC sues SC health department over CON confusion

Murfreesboro company fighting for licenses obtained while law was suspended

National Healthcare Corp. has filed a lawsuit against the South Carolina Department of Health and Environmental Control over the state's attempt to cease the company's operations in four counties.

The Murfreesboro-based home health and skilled nursing company expanded its license last year when South Carolina's Gov. Nikki Haley vetoed funding for the state's Certificate of Need program. The South Carolina program, like Tennessee's, regulates the number of medical facilities allowed in the state. After the funding veto by Haley, who said the program stifled competition, DHEC suspended the program for one year.

During that time, NHC took the opportunity to expand without the CON application process and received approval to operate home health agencies in Abbeville, McCormick, Newberry and Saluda counties, which all lie west of Columbia, S.C.

"We expanded our territory significantly because the certificate of need was not required, and we received licenses for all of those," said Gerald Coggin, NHC senior vice president.

In April, the South Carolina Supreme Court upheld the CON program and ruled that the law could not be eliminated by withholding funding. Late last month, The Post and Courier reported that DHEC requested NHC apply retroactively for CON approval of licenses it had already received.

"What happens to licenses that were legally granted to us? We could not get a certificate of need because the certificate of need board was shut down," Coggin said. "If we wanted to open a new agency, we would have to — and be willing to — go through the process like we've always done. But the question is, can they retroactively retract licenses."

NHC filed a suit in Richland County Circuit Court and Coggin said the company has received an injunction against the state.

"It's a temporary restraining order preventing the state from limiting the license and allowing us to operate in all the counties we operated in last year," he said. "Pending the outcome of the lawsuit, any license granted while there was no CON is valid."

Shares of NHC (Ticker: NHC) are up about 3 percent in the last month and are changing hands around $58. Year to date, they're up 7 percent.