Mainstreet Files Suit to Open Path for New Development

The nation’s largest developer of transitional care properties has hired a high-profile constitutional lawyer to sue the state of Indiana over its skilled nursing and transitional care moratorium. 

Mainstreet Property Group, LLC has filed a lawsuit challenging the state of Indiana’s moratorium on new transitional care facilities, arguing that the moratorium violates both the Indiana and U.S. Constitutions. The suit comes as Mainstreet is launching a new operating company, and in Indiana and elsewhere, such moratoria could constrain that company’s growth

For counsel, the Carmel, Indiana-based development and investment company hired James Bopp, Jr. of The Bopp Law Firm in Terre Haute, Indiana. Bopp has been widely credited as the intellectual architect of the arguments that convinced the U.S. Supreme Court, in Citizens United v. FEC, to equate the free speech of corporations with that of human beings, according to The New York Times.

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Mainstreet is challenging Indiana’s three-year ban on constructing new transitional care properties and skilled nursing facilities, according to the company’s complaint, filed April 29 in Hamilton County Circuit Court. Indiana Gov. Mike Pence allowed the moratorium legislation—Senate Enrolled Act 460—to become law without his signature in May 2015. 

The resulting moratorium bans the construction of new transitional care properties in Indiana for three years by preventing certification, licensure or transfer of comprehensive care beds and comprehensive health care facilities, Mainstreet’s complaint says.

Consequently, the moratorium has prevented Mainstreet from being able to finish any of its pending projects in Indiana, which has cost the company more than $9 million, the complaint says.

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“Mainstreet had nine projects in process, and those nine projects were cancelled as a result of the moratorium,” Bopp told Senior Housing News. “Even more egregiously, they were cancelled retroactively.”

On March 9, 2015, the Indiana legislature added a new qualifier to the moratorium that made it retroactive, the complaint says. As a result, facilities that wanted to be considered “under development” must have submitted complete construction and design plans to the Indiana State Department of Health and the division of building and fire safety by March 1, 2015—eight days before the amendment was added.

“This is, in effect, declaring something someone did in the past now illegal,” Bopp said. 

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This addition to the “under development” qualifiers offered no opportunity for developers, including Mainstreet, to submit construction plans for projects that were in the development process, the complaint says.

If the moratorium had permitted all projects already underway to be completed, Mainstreet would have been able to complete all nine of its pending projects, the company claims. On the other hand, if the moratorium had required the “under development” submissions to be submitted by the moratorium’s effective date, Mainstreet would have been able to complete at least six of its pending projects, according to the complaint.

The moratorium is supported by current owners of nursing homes that are “antiquated and have been losing patients,” Bopp told SHN. These owners fear competition from new transitional care facilities that are “much more appealing” to patients, he added.

The defendants have 30 days to respond to the complaint, Bopp said.

The defendants listed in the complaint include Jerome Adams, the commissioner of the ISDH; Terry Whiston, the assistant commissioner of the ISDH Health Care Quality and Regulatory Commission; and Kim Rhodes, the director of the ISDH Division of Long Term Care.

The father of Mainstreet CEO Zeke Turner, Eric Turner, resigned from his seat in the Indiana House of Representatives in November 2014 following allegations that he lobbied privately to kill the moratorium legislation out of his own personal interest. An Indiana House Ethics Committee determined that Turner failed to live up to the “highest spirit of transparency,” but cleared him of any wrongdoing, The Indianapolis Star reported. Turner maintains he did nothing wrong.

Written by Mary Kate Nelson

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