A legal storm is brewing over a proposed nursing home in Orem that some say could leave Medicaid patients with nowhere to turn for treatment.

Nine of the 12 skilled nursing facilities in the county have beds for both Medicare and Medicaid patients, according to the state Health Department's Bureau of Health Facility Licensing, Certification and Resident Assessment. Those facilities rely on money from Medicare patients -- who typically need only short-term help as they transition from a hospital back to home -- to subsidize the treatment of less-profitable and generally longer-staying Medicaid patients.

The administrators of three of those facilities have banded together and petitioned the Health Department to deny Pointe Meadows's license application. They argue that facilities that treat both types of patients could be forced to shut down if revenue from Medicare patients is lost to Medicare-only facilities, leaving poorer Medicaid patients out in the cold.

"It has some very simple outcomes that people will feel very directly," said Justin Allen, administrator of the Orchard Park Care Center and spokesman for the group. "We would be forced to potentially close our doors. It puts Utah County's long-term-care Medicaid patients at risk for few to no services."

The group argues that Pointe Meadows's developer, Gary Burraston, didn't apply for the license before Gov. Jon Huntsman Jr. signed a statewide moratorium on skilled nursing facilities into law Feb. 28, 2007. Health Department records show that Burraston filed a notice of intent the day of the deadline -- but that, argued attorney Stephen F. Mecham, is not an application.

"The way an application was defined at the time, the Pointe Meadows notice of intent fails," said Mecham, who filed the petition on behalf of the group. "The Legislature was quite serious about this moratorium."

But Burraston said he's worked closely with the state throughout the licensure process, and it has not expressed any concerns about problems with the way things have been handled.

"We've maintained a great working relationship with the state," he said. "The people who are trying to oppose this have made a lot of claims. We have responded back to the state with the facts."

Part of the dispute lies in the Health Department's retroactive acceptance of notices of intent.

Three months after the moratorium took effect, the department amended state code to say that notices of intent submitted before the deadline would be accepted just as applications had been.

Mecham said the department can't do that.

"We believe that the Legislature intended that the statute be followed with some precision," he said. "Not only does a notice of intent not constitute an application, we don't think they followed several steps of the Department of Health's own rules."

Pointe Meadows's attorney, J. Andrew Sjoblom, disagreed, saying the department had the authority to make that call.

"We believe the Department of Health has correctly interpreted the statute to mean that a facility can obtain a license if it filed a notice of intent before the Feb. 28, 2007, deadline," he said.

Other violations alleged in the petition include not filing a "feasibility study" -- a document gauging the facility's potential impact on its surroundings -- before beginning construction, as required, and initially filing the notice for a location in Lehi, which was later changed to Orem.

Burraston insisted his team has followed the advice of the Health Department from start to finish, and has won approval at each necessary step. An e-mail dated Nov. 5, 2007, from Bureau of Health Facility Licensing, Certification and Resident Assessment director Allan D. Elkins to Burraston confirms that he was given the OK to change Pointe Meadows's location.

"We feel like we've been altruistic about our approach," Burraston said. "If you were to go poll all of the residents of Utah County, I think you'd be overwhelmed with people saying, 'Boy, I'm so excited about having an option for mom and dad.' "

Burraston said he doesn't believe his 36-bed facility will cause anyone else's doors to close. Burraston said his vision is to simply offer private rooms in a newer facility to short-term patients -- something he was moved to do after receiving care at the Huntsman Cancer Institute during a stay five years ago.

"That's what seniors are looking for," he said. "I cannot understand how anybody can rationalize how 36 beds are not welcome or needed in Utah County."

That seems to contradict the Legislature's reason for the moratorium -- that there was a saturation of facilities in Utah, leading to an excess of empty beds -- but Burraston said census growth estimates give him reason to believe demand will blossom as baby boomers get older. Besides, he said, you can't deny a license because it will cause competition.

"Fair-market competition is what still makes it work," he said. "As far as we're concerned, it's been pretty much business as usual."

Burraston said he hopes to open Pointe Meadows for business in November or December -- but those plans may be put on hold if the Health Department decides to intervene.

"My assumption is that the department would set up a procedural schedule for this to culminate in a hearing," Mecham said.