Out-of-state health care giant gains advantage over smaller, local providers in Independence, Kansas, with help from Kansas officials

A version of this story was originally published in the July 21, 2016 print edition of The Montgomery County Chronicle under the headline “One year later: External pressures, local decisions have joined together to influence Independence’s medical scene” that includes additional information, including a forward and chronology by Chronicle editor Andy Taylor.

When Mercy Hospital in Independence, Kansas, closed its doors in late 2015,[1] it was national news [2] partly because the city, with a population of around 9,500, became the largest in the state without emergency services.[3]

independence ks logo

Mercy made its intentions apparent more than a year earlier, and members of the community voiced concern.  Local government officials began looking for a way to bring emergency services to town, including assisting Mercy in negotiations with other healthcare providers to purchase Mercy’s assets.[4]  When those negotiations failed, Labette County Medical Center (Labette Health), a Kansas healthcare organization already operating a clinic in Independence, proposed expanding those services to include an emergency room.[5]

But instead of acting on that proposal or any other that would result in emergency services for Independence, local government officials abruptly changed course and said residents who need such care should go to a Bartlesville, Oklahoma, [6] hospital—the Jane Phillips Medical Center owned by St. John Health System—a 35-40-minute drive away.[7]

Shortly after first stating publicly that Jane Phillips was a viable destination for emergency services, the City acquired the Mercy Hospital facilities as a result of city commission action [8] still making news months later.[9]  Then, the City leased the facilities to St. John for use as an outpatient clinic rather than as an emergency room.[10]  The lease agreement also precluded the City from financially supporting any other healthcare provider’s attempt to bring emergency services to town as long as St. John operates there.[11]

In spite of those obstacles, Labette Health began new construction on an emergency room in Independence in March of 2016 to meet continued demand for hospital and emergency services.[12]  However, that facility will not open until the summer of 2017, at the earliest.[13]  Until then, Independence will be without local emergency services.

Meanwhile, St. John, which is part of Ascension Health,[14] a Missouri-based corporation describing itself as the “nation’s largest nonprofit health system and the world’s largest Catholic health system,”[15] is now a key player in the Independence health care market.  An agreement signed by the Kansas Department of Health and Environment will allow the St. John clinic, as soon as July 1, 2016, to receive substantially increased Medicare payments for imaging outpatient services at the clinic.[16] Ordinarily, a clinic would be eligible for such increased revenues only if it were connected with a hospital with emergency services in Kansas.[17]  However, the agreement signed by KDHE will allow St. John to gain the increased Medicare payments without incurring the expense of providing costly emergency services in the state.[18] Labette Health filed a lawsuit to void the agreement, arguing in part that the agreement gives St. John a competitive advantage over Kansas healthcare providers who are required by law to provide needed emergency care before they can qualify to receive increased Medicare payments for other services,[19] but a Shawnee County district court recently rejected Labette’s position.[20]

Even so, the developments in Independence illuminate how the availability of health care can be influenced by local politics, competition among hospitals in static or declining markets, and prospects for enhanced hospital revenues for those willing to take advantage of the highly complex state and federal laws, regulations and public policy governing health care.

Mercy Hospital prepares for exit from Independence

Mercy Hospital had operated in Independence since 1910,[21] but its parent company [22] initiated a review of the facility, called “discernment,” in the spring of 2014 [23] with an eye toward “divesting itself” [24] of its assets in Independence.  To do so, Mercy negotiated with fellow Catholic organizations, including St. John.[25]

However, Mercy failed to come to terms with St. John, so it began negotiations in the spring of 2015 with southeast Kansas healthcare provider Coffeyville Regional Medical Center (CRMC) to acquire Mercy’s Independence assets, including the emergency room.[26]

In the summer of 2015, negotiations between the two healthcare providers stalled, and Mercy sought the City’s assistance.[27] Intent on retaining local emergency services, Independence city commissioners voted unanimously “to issue $3 million in bonds…for the purpose of retaining health care services in Independence” and appointed a committee to “look after the best interests of Independence” in the negotiations.[28]  The bonds would issue only on the condition that Independence retain a “degree of health care services” in town, “including emergency or immediate care.”[29]

Likewise, the Letter of Intent (LOI) between the parties indicated that the city was willing to spend the $3 million to insure, among other healthcare-related objectives, the “provision of emergency/immediate care services at the Mercy facility.”[30]

It was clear that city officials, including City Manager Micky Webb, “believed an emergency department was something of utmost importance for Independence,” [31] and that the Mercy facilities would be used for that purpose.

Unfortunately for the citizens of Independence who shared that belief, even though Mercy and CRMC reached a tentative agreement on July 15, 2015 that would have left emergency services intact at the Mercy Hospital facilities, the parties ended negotiations on September 1, 2015.[32]

When it was announced that the hospitals could not reach an agreement, a “major blow was dealt to the Independence community—and to the future of medical coverage in Montgomery County.”[33]  City Manager Webb concurred, stating “it’s a very difficult situation for Independence.”[34]

Two days later, Mercy announced it would be closing its Independence inpatient treatment unit and emergency room on October 10, and its remaining facilities would be open no later than the end of 2015.[35]

Citizens were “shocked[36] by Mercy’s closure.  A former Mercy administrator said “[n]o one thought we would ever come to this. “[37]  In a piece titled “Closing a hospital, and fearing for the future,” the New York Times reported “the economic cost of losing the hospital could be stark, local officials said. Though there are two other hospitals within a half-hour’s drive, Micky Webb, the city manager, said companies considering coming to Independence often asked whether there was a hospital in town, and that residents felt more secure with one within a few minutes’ reach.”[38]

Independence healthcare in flux; Mercy turns to St. John and the City

After failing to make a deal with CRMC, Mercy Hospital officials announced in early September that they would “negotiate solely with St. John Health System for an assumption of Mercy’s clinics and related services,” but not its hospital or emergency room.[39]   The proposal included a taxpayer subsidy from the City in the amount of $2,250,000 to “guarantee its profits.”[40]

In response, the city commission appointed a Healthcare Committee in early October, 2015, that included City Manager Micky Webb, City Commissioner Fred Meier, City Attorney Jeff Chubb, and Jim Kelly, Mercy Hospital board chairman (and state representative for the legislative district that includes Independence).[41]  The city commission authorized the committee to negotiate only with St. John to develop a “healthcare plan proposal” that “provides the healthcare we think we need now and in the future in the City of Independence.”[42]

On October 9, 2015, the day before Mercy closed its emergency room, the City issued a press release stating it planned to negotiate with Mercy and St. John for the continuation of some services. [43]  At the same time, St. John issued a statement on its website that “Mercy leaders have confirmed a preliminary agreement with St. John Health System and the City of Independence to assume operation of local outpatient services.”[44]  The proposal by the City and St. John did not include a provision for any emergency services, although “a long-term vision, but not a contractual obligation, called for creation of an emergency department.”[45]

In response to the lack of local emergency services, the City’s ambulance services “beefed up its protocols and acquired another ambulance…due to the anticipated length of time that ambulances will be on the road to transport patients to other area hospitals.”[46]

Despite Mercy’s announcement that it would negotiate only with St. John, Labette Health, based in nearby Parsons, planned to pitch the possibility of bringing an emergency room to Independence that the City would own, with the help of the $3 million in bonds previously earmarked for CRMC.[47]  Labette Health officials met with members of the City’s Healthcare Committee on September 4, 2015, at which time the committee told Labette the City’s needs for healthcare included an emergency room, observation beds, and an operating room.[48]

During the month of October 2015, city officials met behind closed doors with administrators from both St. John and Labette Health to continue discussions of both organizations’ positions.[49] On October 21, 2015, Labette Health made its proposal to the city commission for “an emergency department for Independence”[50] based on feasibility studies [51] it had performed.  However, the city commission never considered it.[52]

Instead, after a meeting “with St. John/Jane Phillips officials” on October 27, 2015, City Manager Webb told a reporter that although he originally believed Independence needed an emergency room, he now believed “it would ‘be a mistake’ for Independence to have a free-standing emergency department.”[53]  That same day, members of the Healthcare Committee, including then-Mercy Hospital Board Chair Kelly and City Manager Webb, told the Independence Chamber of Commerce board of directors that the “’best plan’ for Independence would favor a relationship with St. John Health System/Jane Phillips Medical Center” because “[t]he bulk of traffic for medical care already goes south to Bartlesville and Tulsa, where Jane Phillips Medical Center and St. John Health System have a firm hold.”[54]

Despite the Health Care Committee’s sudden efforts to convince the public that local emergency services were no longer necessary, the city commissioners rejected the St. John proposal by a 2-1 vote.[55]  Then-Mayor Leonhard Caflisch explained his vote against by telling a reporter that the city “was looking for a medical provider that could bring an emergency department” and that because St. John is owned by a Missouri corporation, Ascension Health, the proposal did not provide for sufficient “local decision making.”[56] The other two commissioners, even Meier, who cast the one vote in favor, expressed concern because it included over $2 million in taxpayer subsidies to benefit a “billion dollar corporation.”[57]

After the city rejected the St. John plan, the commission declared the city’s intent to “open negotiations with interested medical providers—including Wilson County Medical Center in Neodesha, Neosho Regional Medical Center in Chanute, Coffeyville Regional Medical Center, Labette Health in Parsons and even St. John Health System—to open an urgent care or emergency department in Independence.”[58]  At the time, “commissioners admitted that prospects would be slim that St. John…would be willing to entertain another proposal for Independence healthcare coverage.”[59]

However, by November 20, 2015, Kelly, a member of the city’s Healthcare Committee and now the former chairman of the board of Mercy, remained in favor of a relationship with Jane Phillips, citing “the tendency of patients to go out of town for health care. People in Independence are used to traveling to Bartlesville to shop, Kelly said, and the path from Independence to Bartlesville is well worn. When it comes to health care, he added, ‘the grass is always greener someplace else.’”[60]

Casting its lot: City of Independence officials negotiate for the Mercy property, but not for emergency services  

Sentiment for emergency services at the Mercy Hospital property was so strong on October 29, 2015, that the Independence City Commission rejected a plan for St. John to assume the property because the plan did not include an emergency room.  Nevertheless, on December 4, 2015, city officials made a deal for the property that would allow St. John to operate from the Mercy facilities anyway, even though emergency services would not be available there.

That day, the officials negotiated a Letter of Intent (LOI) with Mercy Hospital for the City itself to acquire the Mercy Hospital real estate and facilities.[61]  The City would then lease portions of the facilities to St. John.[62]  The LOI provided that Mercy’s transfer of its real estate to the City would occur with a “Restrictive Covenant” that will “remain in place for as long as St. John Health System…operates a multi-specialty clinic and provides laboratory and diagnostic imaging services in the Independence, Kansas community.”[63] The restrictive covenants on the real estate the City received from Mercy allowed for administration of certain healthcare services, but prevented the establishment of an “abortion clinic,” or even a “counseling service” that “recommends…the consideration of abortion” as an option for its patients.[64]

Even though the City had negotiated the LOI, there was still the matter of getting authority from the city commission in order to make the contract effective and acquire the property.  In addition to the pushback the City was likely to receive given the proposal did not include the provision of emergency services, it had another problem: the wife of Commissioner Gary Hogsett, the commissioner most likely to join Commissioner Fred Meier and vote for the transfer, was employed as a doctor at Mercy.[65]  As such, Hogsett acknowledged that, by law, he had a “substantial interest” in that hospital.[66]  If he had a conflict of interest, Hogsett could not legally vote, and without his tiebreaking vote, the transfer was unlikely to go through, as then-Mayor Caflisch was likely to vote against it.

City Attorney Jeff Chubb sought to solve the problem by writing a letter to the Attorney General’s Office (AGO) to get an advisory opinion on the conflict the day before the vote was to take place.[67]  Attorney General Derek Schmidt’s hometown is Independence, and he worked for Chubb’s law firm before becoming Attorney General.[68]

Chubb’s letter advised the AGO that he believed Commissioner Hogsett’s vote would be permissible because “one element of a contract is not present: consideration.”[69]  In a response dated December 17, 2015,[70] the day of the vote, the AGO essentially concurred, noting that as long as the property was “transferred without exchange of any compensation,” an exception would apply, [71] and Hogsett’s action at the meeting scheduled to take place that night would be permitted by law.

However, the deeds that ultimately recorded the transaction between Mercy and the City dated December 21, 2015, included the restrictive covenants referenced in the December 4 LOI.[72]  Although the City did not pay Mercy “compensation” in the traditional sense to acquire the property, the Kansas Court of Appeals has indicated that restrictive covenants are “part of the valuable contract consideration given and relied upon in the conveyance of land.”[73]

There appears little doubt that Mercy, as a Catholic organization with strong pro-life views, benefited from “valuable consideration” by including the restrictions in the transfer.  Likewise, the City gave Mercy “valuable consideration,” because in accepting the restrictive covenants, the City’s choices for how to use the property are limited.

Restrictions not revealed; commissioners vote on “blank deed”

Unfortunately, the existence of the restrictions was not revealed to the commissioners or the public at the December 17, 2015, city commission meeting when the commission considered, and ultimately accepted, the Mercy real estate on a 2-1 vote. [74]  Although the actual deeds recorded shortly thereafter included the restrictions, [75] the vote was taken after the commission only considered what City Attorney Chubb later characterized as a “blank deed.”[76]  City Manager Webb later admitted he knew the restrictions would “follow” the property when the commission considered the issue, but didn’t “open” his “mouth” at the meeting.[77] City Attorney Chubb also later admitted he was aware “since last June or July” that any transfer of the hospital would include such restrictions in accordance with the policy of the Roman Catholic Diocese of Wichita, but he didn’t say anything, either.[78]  Moreover, both of them had been in a position to know that the December 4 LOI included explicit reference to the restrictions.  Still, both failed to reveal that information to the commissioners or the public before or during the meeting.

In an attempt to explain how the restrictions appeared in the deeds after the vote was taken after the fact, City Attorney Chubb suggested that Mercy must have “added” [79] the covenants to the deeds after the vote was taken, without the knowledge of the City.[80]

Commissioner Hogsett’s vote was in favor of the transfer of Mercy’s real estate to the city.[81]  Before casting his vote, Hogsett indicated that after legal consultation, which included a discussion with the city attorney about the Attorney General’s December 17, 2015, letter, the city attorney advised Hogsett that his admitted conflict of interest did not prevent him from voting. [82]  However, because Chubb expressly characterized the transaction as one that did not include “consideration” in his December 16, 2015, letter to the Attorney General, that office did not have the opportunity to address whether accepting the property with restrictive covenants created an impermissible conflict of interest for Hogsett.  Further, the AGO also advised City Attorney Chubb that its opinion was not binding, and that the City should get an opinion from the Governmental Ethics Commission,[83] but as of late June 2016, the City had yet to do so. Moreover, Hogsett has since recused himself on any matters involving Mercy “due to a conflict of interest with Hogsett’s wife, Anne, a doctor, who was formerly employed by Mercy Hospital, [and] according to Kansas state statues (sic) make the commissioner ineligible to cast a vote in this matter.”[84]

But with the votes cast, the City proceeded to acquire the property and rent it to St. John for $500,000 over 5 years to operate an imaging clinic.  For all intents and purposes, the commission’s vote rejecting St. John’s assumption of the Mercy property on October 29, 2015, had been nullified.  Now, St. John not only occupied the property, but it also gained a market advantage because the agreement between itself and the City prohibited the City from providing financial assistance to any other hospital organization seeking to set up a competing operation.[85]

The $500,000 lease arrangement with St. John was executed effective January 15, 2016, and the agreement was discussed at the city commission meeting the previous night.[86]   At that meeting, the public became aware of an additional agreement between the City and Mercy, where Mercy would provide $1.4 million in demolition, remodeling, and construction services at the former Mercy facilities now owned by the City.[87]  Moreover, Mercy intended to donate $500,000 to the City “for use in specific capital projects approved by Mercy relating to the City’s ongoing use of the property,” with a “preference…for capital projects relating to emergency and patient transport services or other health care uses.”[88]

Ascension Health: higher Medicare reimbursements thanks to the KDHE

Meanwhile, St. John and its parent company, Ascension, proceeded with plans to operate an outpatient imaging clinic at the former Mercy Hospital facilities.[89]  The key to the plans was an agreement on April 19, 2016,[90] between KDHE and the Oklahoma State Department of Health.  According to that document, the KDHE permits Ascension-owned Jane Phillips Medical Center in Bartlesville, Oklahoma, “to operate a provider-based outpatient clinic in Independence, Kansas, as a department” of that hospital.  According to Labette Health, who brought suit against the KDHE in Shawnee County District Court, the agreement allows Ascension “to receive substantially higher reimbursement” from Medicare for the imaging services it plans to offer in Independence beginning July 1, 2016. [91]

If a clinic is a “provider-based entity,” it receives a special designation under Medicare/Medicaid law allowing it to obtain reimbursement from the federal government for both the services rendered and the facilities at which they are rendered.[92]  In contrast, freestanding facilities” are only allowed to bill for the services, not the facilities.[93]  The difference can amount to a profit increase of over 60% per patient.[94] Ordinarily, the purpose of an arrangement to “reimburse at a higher rate [is] to offset emergency room loses.”[95]

Under Kansas law, in order for an outpatient clinic to be reimbursed by the federal government at the higher rate as a “provider-based entity,” a Kansas health care provider is required to get a Kansas hospital license, and a condition of such a license is the provision of emergency services in the state.[96] However, St. John does not offer any emergency services in the state, and apparently does not have a Kansas license.  Because St. John has no Kansas license, it only would appear eligible, under ordinary circumstances, to be reimbursed for services rendered at the former Mercy Hospital in Independence at the lower, “freestanding facility” rate.[97]

Despite not investing in costly emergency services in Kansas, St. John remained undeterred in its efforts to obtain provider-based status for its Independence imaging clinic, and proceeded on December 29, 2015, with its plans to open by July 1, 2016. [98]  Construction continued through the first half of 2016, and it became the beneficiary of the KDHE agreement allowing its Independence clinic to be reimbursed for services rendered as a “provider-based entity” on April 19, 2016.

Judge denies Labette Health’s attempt to challenge the KDHE agreement

On June 27, 2016, a Shawnee County district judge denied Labette Health’s motion for a temporary restraining order[99] that would have prevented St. John’s Independence clinic from becoming a “provider-based entity.”

Labette Health, due in large part to its recent significant commitment to providing needed emergency services in Independence,[100] sought to dissolve the KDHE agreement in court.  From its point of view, if St. John “is permitted to operate as it proposes, it will have all the benefits of being a Kansas hospital (including substantially higher reimbursement for the services it plans to provide) without a Kansas license and all of its accompanying obligations,”[101] and “the Independence imaging center threatens the viability” of Labette Health’s planned “emergency care” operations in Independence[102] because Labette needs “those revenues in order to provide the full range of services that are required by the Kansas license.”[103]

KDHE argued that the contract benefiting St. John is valid in part because St. John relied on the prospect of “provider-based” billing in Independence before making further investment in the former Mercy Hospital property, and cited a post on St. John’s website reporting the December 29, 2015, ground-breaking in support. [104]

KDHE further argued that it has broad statutory authority to contract with any party it chooses,[105] and characterizes Labette Health’s lawsuit as an attempt to “stop a business competitor.”[106]  The agency further claims that Labette Health cannot operate in Independence because Independence is outside the Labette County borders.[107]

Although none of those KDHE arguments were specifically referenced in the judge’s June 27, 2016, opinion, the Court still ruled against Labette Health in part because it concluded that the “loss of viability in the Labette satellite facility stems from competition with the Independence imaging center—not from certification by the KDHE.”[108]

Has the public been served?

Ascension, the giant Missouri-based health organization that owns St. John, has won a preferred position in the Independence health care market with the help of the KDHE and Independence officials.  Unlike Kansas healthcare providers, who are required to provide emergency services in order to keep their hospital licenses, the KDHE agreement allows Ascension/St. John to forgo investing in such services while still receiving the higher “provider-based” reimbursement rate for imaging services rendered in the state.  Not only would this arrangement appear to give Ascension/St. John a distinct competitive advantage over smaller Kansas providers, but it also is inconsistent with public policy that “provider-based” billing is designed to “offset the cost of emergency room expenses.”[109]

Further, Independence city officials gave Ascension/St. John the opportunity to set up shop at the former Mercy Hospital, even though Ascension/St. John refused to provide local emergency services and precluded the City from financially supporting such services in Independence.[110]

Meanwhile, Bartlesville’s Jane Phillips Center—owned by St. John, which in turn is owned by Ascension—stands to gain from suggestions that Independence residents travel there for emergency treatment.

Whether these health care outcomes and the procedures and policies that led to them serve the public interest is a matter for the citizens of Independence and Kansans generally to decide.

Max Kautsch is the Kansas legal hotline attorney for the Kansas Press Association and the Kansas Association of Broadcasters.  Send him an email here.

[1] Joplin Regional Business Journal, “Mercy Announces Closure of Hospital in Independence, Kansas,” September 4, 2015.

[2] The New York Times, “Closing a hospital, and fearing for the future,” October 8, 2015.

[3] Montgomery County Chronicle, “Hospital merger discussions cease,” September 2, 2015.

[4] Id.; Montgomery County Chronicle, “CRMC agrees to buy Mercy Hospital of Independence,” July 16, 2015.

[5] Montgomery County Chronicle, “Emergency department proposed,” December 9, 2015.

[6] Montgomery County Chronicle, “City reps, medical providers continue closed-door talks,” October 29, 2015; Winfield Courier, “Independence Hospital Closing for Many Reasons,” November 20, 2015.

[7] Transcript, Labette County Medical Center v. Kansas Department of Health and Environment, Shawnee County District Court Case No. 16 CV 353, June 16, 2016, p. 32.

[8] Minutes of the Independence City Commission’s December 17, 2015; see generally K.S.A. 75-4301a et seq.

[9] See generally K.S.A. 75-4301a et seq.  See also Independence Daily Reporter, “Mayor speaks on Mercy vote,” May 22, 2016.

[10] The Independence Reporter, “Commissioners discuss demolition of Mercy buildings,” January 15, 2016.

[11] Montgomery County Chronicle, Labette Health unveils expansion plan,” March 3, 2016.

[12] Id.

[13] Transcript, Labette Health v. KDHE, June 16, 2016, p. 33.

[14] http://ascension.org/news/news-articles/2016/03/17/13/45/st-john-health-system-begins-operations-in-kansas

[15] http://ascension.org/about/facts-and-stats

[16] Memorandum in Support of Motion for Temporary Restraining Order, Labette Health v. KDHE, filed May 11, 2016; see generally Healthcare Strategy Group, “Provider-based billing: advantages and obstacles,” August, 2015; 42 CFR 413.65.

[17] Id; 902 KAR 20:016, Hospitals; operations and services.

[18] Exhibit A, Memorandum in Support of Motion for Temporary Restraining Order, Labette Health v. KDHE, filed May 11, 2016, filed May 11, 2016.

[19] KDHE Response in Opposition, Labette Health v. KDHE, filed June 14, 2016.

[20] Memorandum Decision and Order, Labette Health v. KDHE, filed June 27, 2016.

[21] The New York Times, “Closing a hospital, and fearing for the future,” October 8, 2015.

[22] https://en.wikipedia.org/wiki/Mercy_(healthcare_organization)

[23] Winfield Courier, “Independence Hospital Closing for Many Reasons,” November 20, 2015; see also Transcript, Labette Health v. KDHE, June 16, 2016, pp. 27-28.

[24] Montgomery County Chronicle, “Hospital merger discussions cease” September 2, 2015; Montgomery County Chronicle, “CRMC agrees to buy Mercy Hospital of Independence,” July 16, 2015.

[25] Id.

[26] Montgomery County Chronicle, “CRMC agrees to buy Mercy Hospital of Independence,” July 16, 2015.

[27] Id.

[28] Montgomery County Chronicle, “Committee to represent City of Independence in hospital merger talks,” July 6, 2015.

[29] Montgomery County Chronicle, “CRMC agrees to buy Mercy Hospital of Independence,” July 16, 2015.

[30] Id.

[31] Montgomery County Chronicle, “City reps, medical providers continue closed-door talks,” October 29, 2015.

[32] Montgomery County Chronicle, “Hospital merger discussions cease,” September 2, 2015.

[33] Id.

[34] Id.

[35] KTUL Tulsa, “Mercy Announces Closure of Kansas Facility,” September 3, 2015.

[36] The New York Times, “Closing a hospital, and fearing for the future,” October 8, 2015.

[37] https://www.advisory.com/daily-briefing/2015/10/12/its-hospital-gone-one-town-asks-whats-next

[38] The New York Times, “Closing a hospital, and fearing for the future,” October 8, 2015.

[39] Montgomery County Chronicle, “Independence City Commission Rejects St. John proposal, open future talks to area medical providers,” October 30, 2015.

[40] Id.

[41] Id.

[42] Minutes of the Independence City Commission’s special meeting, October 5, 2015.

[43] Montgomery County Chronicle, “City reps, medical providers continue closed-door talks,” October 29, 2015.

[44] http://www.stjohnhealthsystem.com/site:24/article/view/735

[45] Montgomery County Chronicle, “Independence City Commission Rejects St. John proposal, open future talks to area medical providers,” October 30, 2015.

[46] Montgomery County Chronicle, “Independence’s medical reality: no hospital, ER,” October 8, 2015.

[47] Montgomery County Chronicle, “Emergency department proposed,” December 9, 2015.

[48] Transcript, Labette County Health v. KDHE, June 16, 2016, pp. 29-30.

[49] Minutes of the Independence City Commission’s special meetings, October 21, October 27, 2015.

[50] Montgomery County Chronicle, “City reps, medical providers continue closed-door talks,” October 29, 2015.

[51] Transcript, Labette County Health v. KDHE, June 16, 2016, p. 30.

[52] Transcript, Labette County Health v. KDHE, June 16, 2016, p. 31.

[53] Montgomery County Chronicle, October 29, 2015, “City reps, medical providers continue closed-door talks.”

[54] Id.

[55] Montgomery County Chronicle, “Independence City Commission Rejects St. John proposal, open future talks to area medical providers,” October 30, 2015.

[56] Id.

[57] Id.

[58] Id.

[59] Id.

[60] Winfield Courier, “Independence Hospital Closing for Many Reasons,” November 20, 2015.

[61] “Letter of Intent and Terms Sheet” from Mercy to the City of Independence (December 4, 2015).

[62] Id.

[63] “Letter of Intent and Terms Sheet” from Mercy to the City of Independence (December 4, 2015), Exhibit A(1)(b).

[64] See, e.g., Quit Claim Deed, December 21, 2015, from Mercy Kansas Communities, Inc., to the City of Independence, Lots 4, 5 and 6, CONCANNONS ADDITION; see also The Independence Reporter, “Commissioners discuss demolition of Mercy buildings,” January 15, 2016.

[65] Independence Daily Reporter, “Mayor speaks on Mercy vote,” May 22, 2016.

[66] Minutes of the Independence City Commission’s December 17, 2015; see generally K.S.A. 75-4301a et seq.

[67]  Letter from Jeffrey A. Chubb, Independence City Attorney, to Athena E. Andaya, Deputy Attorney General (December 16, 2015).

[68] https://ballotpedia.org/Derek_Schmidt

[69]  Letter from Jeffrey A. Chubb, Independence City Attorney, to Athena E. Andaya, Deputy Attorney General (December 16, 2015).

[70]  Letter from Athena E. Andaya, Deputy Attorney General, to Jeffrey A. Chubb, Independence City Attorney (December 17, 2015).

[71] K.S.A. 75-4304a(d)(2)

[72] See, e.g., Quit Claim Deed, December 21, 2015, from Mercy Kansas Communities, Inc., to the City of Independence, Lots 4, 5 and 6, Block 6, CONCANNONS ADDITION.

[73] Persimmon Hill First Homes Ass’n v. Lonsdale, 31 Kan.App.2d 889, 895 (2003).

[74] Minutes of the Independence City Commission’s December 17, 2015; see generally K.S.A. 75-4301a et seq.

[75] See, e.g., Quit Claim Deed, December 21, 2015, from Mercy Kansas Communities, Inc., to the City of Independence, Lots 4, 5 and 6, Block 6, CONCANNONS ADDITION.

[76] Independence City Commission meeting, January 28, 2016, at the 51:06 mark of video available on City website.

[77] Independence City Commission meeting, January 21, 2016, at the 57:52 mark of video available on City website.

[78] Independence City Commission meeting, January 28, 2016, at the 52:13 mark of video available on City website.

[79] Minutes of the Independence City Commission’s January 28, 2016 meeting, p. 7.

[80] Independence City Commission meeting, January 28, 2016, at the 51:20 mark of video available on City website.

[81] Minutes of the Independence City Commission’s December 17, 2015 meeting, page 5.

[82] Id.

[83]  Letter from Athena E. Andaya, Deputy Attorney General, to Jeffrey A. Chubb, Independence City Attorney (December 17, 2015).

[84] The Independence Reporter, “Commissioners discuss demolition of Mercy buildings,” January 15, 2016.

[85] Montgomery County Chronicle, March 3, 2016, “Labette Health unveils expansion plan.”

[86] The Independence Reporter, “Commissioners discuss demolition of Mercy buildings,” January 15, 2016.

[87] Id.; Agreement, January 14, 2016, between Mercy Health and City of Independence.

[88] Id.; Agreement, January 14, 2016, between Mercy Health and City of Independence.

[89] http://www.stjohnhealthsystem.com/site:7/article/view/754.

[90] Memorandum in Support of Motion for Temporary Restraining Order, Labette Health v. KDHE, filed May 11, 2016, Exhibit A.

[91] Id.

[92] Healthcare Strategy Group, “Provider-based billing: advantages and obstacles,” August, 2015; see also https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/mm7631.pdf; Dunlay and Dowdell, Provider-Based Status, Under Arrangements, Enrollment and Related Medicare Requirements, p. 3; see also see also 42 CFR 413.65(a)(2).

[93] Id.

[94] Healthcare Strategy Group, “Provider-based billing: advantages and obstacles,” August, 2015.

[95] Memorandum in Support of Motion for Temporary Restraining Order, Labette Health v. KDHE, filed May 11, 2016; see also Healthcare Strategy Group, “Provider-based billing: advantages and obstacles,” August, 2015.

[96] Memorandum in Support of Motion for Temporary Restraining Order, Labette Health v. KDHE, filed May 11, 2016; 902 Kansas Administrative Regulations 20:016, Hospitals; operations and services.

[97] Transcript, Labette Health v. KDHE, June 16, 2016, e.g. pp. 4, 7.

[98] KDHE Response in Opposition, Labette Health v. KDHE, filed June 14, 2016; http://www.stjohnhealthsystem.com/site:7/article/view/754.

[99] Memorandum Decision and Order, Labette Health v. KDHE, filed June 27, 2016.

[100] Montgomery County Chronicle,Labette Health unveils expansion plan,” March 3, 2016; Transcript, Labette Health v. KDHE, June 16, 2016, pp. 32-33.

[101] Memorandum in Support of Motion for Temporary Restraining Order, Labette Health v. KDHE, filed May 11, 2016, p. 11.

[102] Reply Memorandum in Support, Labette Health v. KDHE, filed June 17, 2016, p. 3-4.

[103] Transcript, Labette Health v KDHE, June 16, 2016, p. 6.

[104] KDHE Response in Opposition, Labette Health v. KDHE, filed June 14, 2016, p. 3, ¶s 7 and 8.

[105] KDHE Response in Opposition, Labette Health v. KDHE, filed June 14, 2016.

[106] Id.

[107] Id.

[108] Memorandum Decision and Order, Labette Health v. KDHE, filed June 27, 2016, ¶ A.2.

[109] Memorandum in Support of Motion for Temporary Restraining Order, Labette Health v. KDHE, filed May 11, 2016, p. 11.

[110] Montgomery County Chronicle, Labette Health unveils expansion plan,” March 3, 2016.