639 F.2d 908 (2nd Cir. 1981), 358, United States v. Cabrini Medical Center

Docket Nº:358, Docket 80-6166.
Citation:639 F.2d 908
Party Name:UNITED STATES of America, Petitioner-Appellee, v. CABRINI MEDICAL CENTER, Respondent-Appellant.
Case Date:January 27, 1981
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

Page 908

639 F.2d 908 (2nd Cir. 1981)

UNITED STATES of America, Petitioner-Appellee,


CABRINI MEDICAL CENTER, Respondent-Appellant.

No. 358, Docket 80-6166.

United States Court of Appeals, Second Circuit

January 27, 1981

Argued Dec. 10, 1980.

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Martin D. Heyert, New York City (Kelley Drye & Warren, Patrick W. McGovern, New York City, of counsel), for respondent-appellant.

Jane E. Bloom, Asst. U. S. Atty., S.D. New York, New York City (John S. Martin, Jr., U. S. Atty., S.D. New York, Dennison Young, Jr., Peter C. Salerno, Asst. U. S. Attys., New York City, of counsel), for petitioner-appellee.


LUMBARD, Circuit Judge:

Cabrini Medical Center ("Hospital") appeals from an order of June 25, 1980, by Judge Owen of the Southern District of New York, 497 F.Supp. 95, which directed the Hospital to grant the Government access to its records and other data concerning Esperanza Polanco. Polanco, a former unskilled laundry employee of the Hospital, alleges he was discharged because of a mental disability. The Government contends that the Department of Health and Human Services's Office for Civil Rights ("OCR") is authorized to investigate Polanco's complaint under § 504 and § 505(a)(2) of the Rehabilitation Act of 1973, 29 U.S.C. § 794, 794a(a)(2), as amended. We conclude that the Hospital's receipt of Medicare and Medicaid funds does not constitute receipt of financial assistance under the Rehabilitation Act, because its primary objective was not to provide employment. Accordingly, we reverse the order, dismiss the Government's petition and direct that the Hospital's cross-petition be granted.

The Hospital, located on East 19th Street in New York City, comprises a 478 bed, non-profit, acute-care hospital and a 100 bed nursing home. It had employed Polanco in its laundry from 1970 to 1977, during which Polanco took Valium to quiet his nerves. On October 1, 1977 Polanco lost his temper with a faucet that did not work to his satisfaction while washing his hands, and he clubbed the faucet with a cane until he broke it. The Hospital discharged him October 7 when its investigation showed that Polanco had broken the $80 faucet deliberately. At a hearing on October 18, 1977, Polanco's union, District 1199, admitted that Polanco had broken the faucet and decided not to pursue the matter further by arbitration.

When Polanco filed a claim for unemployment insurance benefits in January 1978, he was disqualified on the ground that he had been discharged for misconduct. Polanco had claimed that the Hospital discharged him because of his alleged disability. Both the New York State Unemployment Insurance Appeal Board and the New York State Division of Human Rights ruled against him. Despite these rulings, OCR chose to conduct its own inquiry and, upon the Hospital's refusal to allow OCR to investigate, the Government brought this action on February 25, 1980. The hospital answered and cross-petitioned, alleging that § 504 did not authorize OCR to investigate.

The district court granted the Government's petition and dismissed the

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cross-petitions. From its review of the pertinent statutes, it concluded that Congress intended to protect the rights of handicapped persons broadly and that § 504 was designed to eliminate discrimination under any program or activity receiving federal assistance "without regard to the purpose for which the funds were received." Pending determination of the Hospital's appeal, the district court stayed its order enjoining the Hospital to permit OCR access to investigate.

We conclude that the statutory scheme was not meant to authorize the Government to investigate the Hospital, because the primary objective of the Government's Medicare and Medicaid payments was not that of providing employment.

Initially, the Government's challenge to the Hospital's standing can be summarily dismissed....

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