Mainstreet Property Group is suing the Indiana State Department of Health in a legal challenge to the state’s new moratorium on nursing homes and transitional care properties.
The Carmel company, which calls itself the nation’s largest developer of transitional care properties, filed suit Friday in Hamilton County Circuit Court, saying the moratorium violates the Indiana and U.S. constitutions.
Last year, the General Assembly passed a three-year ban on building new skilled nursing facilities and transitional care properties.
Gov. Mike Pence let the legislation pass into law without his signature last May.
“As a strong advocate of free-market economics, I hesitate to support any restriction on commerce, but in an industry that derives 85 percent of its revenue from state and federal sources, we must always consider the impact of our policies on the cost to taxpayers," Pence said in a written statement at the time.
The law prohibits the health department from approving the licensing of any new comprehensive care beds for participation in the state Medicaid program, or the transfer of beds between facilities.
Mainstreet specializes in building transitional care properties, which provide short-term stays for patients after they are discharged from a hospital. The average length of stay is less than 20 days.
Mainstreet has developed 24 transitional care properties in Indiana and a total of 29 across the country, with an additional 30 projects in development.
The company said that as a result of the new law, it was precluded from completing any of its pending projects, which cost it more than $9 million.
“Other industries are not able to use moratoriums to protect themselves from competition, but this is exactly what [the new law] does for existing nursing homes,” said Jim Bopp, Mainstreet’s lawyer. “It protects existing providers while stifling innovation and competition.”
The law’s supporters have said the moratorium was needed because Indiana has thousands of unused nursing home beds. Other nursing-home owners have been pushing back hard against Mainstreet’s aggressive building plans.
Named as defendants are Dr. Jerome Adams, commissioner of the State Department of Health, and two other department officials. The state agency did not have an immediate comment on the suit.