U.S. v. Harris Methodist Fort Worth

• Decision Date: 01 September 1992
• Docket Number: No. 91-1552,91-1552
• Citation: 970 F.2d 94
• Parties: 59 Empl. Prac. Dec. P 41,728, 61 USLW 2168, 38 Soc.Sec.Rep.Ser. 207, Medicare & Medicaid Guide P 40,914 UNITED STATES of America, Plaintiff-Appellant Cross-Appellee, v. HARRIS METHODIST FORT WORTH, Defendant-Appellee Cross-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 94

970 F.2d 94

59 Empl. Prac. Dec. P 41,728, 61 USLW 2168,

38 Soc.Sec.Rep.Ser. 207,

Medicare & Medicaid Guide P 40,914

UNITED STATES of America, Plaintiff-Appellant Cross-Appellee, v. HARRIS METHODIST FORT WORTH, Defendant-Appellee Cross-Appellant.

No. 91-1552.

United States Court of Appeals Fifth Circuit.

Sept. 1, 1992.

Louise A. Lerner, Atty., John R. Dunne, Asst. Atty. Gen., Dennis J. Dimsey, Atty., U.S. Dept. of Justice, Civil Rights Div., Marvin Collins, U.S. Atty., Housing and Civil Enforcement Sect., Civil Rights Div., Justice Dept., Washington, D.C., for appellant.

Rory Divin, Carolyn McFatridge, Edward L. Kemble, Cantey & Hanger, Fort Worth, Tex., for appellee.

Appeals from the United States District Court for the Northern District of Texas.

Before WISDOM, JONES, and SMITH, Circuit Judges.

EDITH H. JONES, Circuit Judge:

The Department of Health and Human Services (HHS) appeals from a ruling that a proposed Title VI compliance review of physician staff privileges at Harris Methodist Hospital-Fort Worth was a warrantless search that did not comport with Fourth Amendment standards of reasonableness. Harris Methodist cross-appeals the trial court's ruling that Title VI of the Civil

                Rights Act of 1964, 42 U.S.C. § 2000d et seq. applies to physician staff privileges.   We affirm, albeit on different reasoning from that of the district court
                

BACKGROUND

Harris Methodist in Fort Worth, Texas, is one of 500 to 600 hospitals in Region VI of HHS. In August 1986, HHS notified Harris Methodist that it was targeted for an investigation of the hospital's physician staff privileges and peer review processes. HHS asserted that the investigation was authorized by Title VI. HHS appended an expansive request for information to the original notification of the investigation, including all documents and the names and ethnic identities of all persons associated with the granting of physician staff privileges at Harris Methodist. The pertinent parts of the investigation request are appended to this opinion.

Opposed to the extensive scope of the requested materials, Harris Methodist officials sought meetings with HHS representatives. When these were unsuccessful, Harris Methodist refused to permit HHS investigators access to the information. Finally, in May 1989, HHS filed suit seeking declaratory relief against Harris Methodist. A bench trial was held on March 18, 1991, at which time the trial court ruled in favor of Harris Methodist, concluding that the proposed compliance review was an impermissible warrantless search.

The trial court held that Title VI applies to physician staff privileges, prohibiting discrimination in granting or denying staff privileges at a hospital receiving federal funds. However, the court also barred execution of the proposed HHS compliance investigation as an unconstitutional warrantless search. The court found the proposed search to be unreasonable because Harris Methodist was selected for a compliance investigation on the basis of the unreviewed discretion of the HHS regional director. The court also found that the director's decision was entirely arbitrary and was not based on meaningful criteria. The court further ruled that Harris Methodist had not consented to the administrative search.

On appeal, HHS argues that Harris Methodist consented to an administrative search by executing compliance assurance documents tied to federal construction loans under the Hill-Burton Act and receipt of continuing Medicare/Medicaid funding. HHS asserts that Fourth Amendment reasonableness requirements are therefore inapplicable. As cross-appellant, Harris Methodist challenges the applicability of Title VI to physician staff privileges. As a further ground for affirming the trial court's ruling, Harris Methodist urges that peer review materials are protected from disclosure by an evidentiary privilege.

APPLICABILITY OF TITLE VI

Enacted as part of the Civil Rights Act of 1964, § 601 of Title VI, 42 U.S.C. § 2000d states a broad prohibition of the use of federal funds to aid discrimination:

No person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance.

The next two provisions of Title VI, §§ 2000d-1 and -2, authorize federal agencies to ensure compliance with the non-discrimination policy and, in the worst cases, to withdraw federal funds from a violator. The penultimate provision, § 604, 42 U.S.C. § 2000d-3, qualifies the policy:

Nothing contained in this subchapter shall be construed to authorize action under this subchapter by any department or agency with respect to any employment practice of any employer, employment agency, or labor organization except when a primary objective of the federal financial assistance is to provide employment.

Section 604 appears to dovetail with the contemporaneously enacted Title VII of the Civil Rights Act. Consolidated Rail Corp. v. Darrone, 465 U.S. 624, 632-33, 104 S.Ct. 1248, 1254, 79 L.Ed.2d 568 (1984). In so doing, it distinguished between remedies Remarkably, in twenty-eight years since the passage of Title VI, only three cases have addressed whether a hospital's discriminatory handling of physician staff privileges may "exclude [a physician] from participation in" or "subject [him] to discrimination under" federal funding programs. ¹ Those cases generally held that physician staff privileges are not covered by § 601. ²

                available for discriminatory misuse of federal funds and for discriminatory employment practices.   The former problem was to be monitored by the funding agency, while employment discrimination conferred remedies on the victim employees through the EEOC-based enforcement process.   See Consolidated Rail Corp., 465 U.S. at 633 n. 13, 104 S.Ct. at 1253-54 n. 13;  Chowdhury v. Reading Hosp. & Med.  Center, 677 F.2d 317, 325-26 (3d Cir.1982) (Aldisert, J., dissenting), cert. denied, 463 U.S. 1229, 103 S.Ct. 3569, 77 L.Ed.2d 1411 (1983)
                

We conclude, based on the plainer reading of Title VI and our circuit's precedents, that physician staff privileges are protected from discriminatory actions by a hospital receiving federal funds. The contrary conclusions of the other cases shed light, however, on the ambit of this protection.

On its face, § 601 arguably covers private physicians on the staff privileges as persons who "participate in" or may be "subject to discrimination under" a federally-funded program or activity. That the terms "participate" and "subject to" have this broad meaning was reinforced by the Supreme Court in North Haven Bd. of Educ. v. Bell, 456 U.S. 512, 102 S.Ct. 1912, 72 L.Ed.2d 299 (1982), where the Court held that employees who directly participate in federal education programs are covered by Title IX (which has no counterpart to § 604), not just the students who are the recipients of the aid. The Court stated:

Employees who directly participate in federal programs or who directly benefit from federal grants, loans, or contracts clearly fall within the first two protective categories [of § 9012.... In addition, a female employee who works in a federally funded education program is 'subjected to discrimination under' that program if she is paid a lower salary for like work, given less opportunity for promotion, or forced to work under more adverse conditions than are her male colleagues.

456 U.S. at 520-21, 102 S.Ct. at 1917. The Court also observed that Congress could have narrowed the coverage of the anti-discrimination provision by limiting it to "students" or "beneficiaries" rather than "persons," 456 U.S. at 521, 102 S.Ct. at 1918. If employees are "persons" under Title IX, where no § 604 exclusion exists, so, it would seem, are non-employee physicians, without whom the hospital would be only a hotel. They "participate in" the federally funded programs, making the facilities usable as places of treatment, this is not to say that every vendor of supplies or services to a hospital that receives federal funds is a "participant" in the hospital operations protected by § 601. ³ But by direct Two of this circuit's cases support application of § 601 in this context. In Diggs v. Harris Methodist Hospital, 847 F.2d 270 (5th Cir.), cert. denied, 488 U.S. 956, 109 S.Ct. 394, 102 L.Ed.2d 383 (1988), a physician removed from appellee's staff contended unsuccessfully that she was an "employee" of the hospital covered by Title VII. As a consequence of Diggs, staff physicians who are not "employees" of a hospital are not excluded by § 604 from § 601's blanket nondiscrimination protection. Earlier, this court authorized HHS to audit a hospital's compliance with the handicapped anti-discrimination law, § 504 of the Rehabilitation Act, based upon the complaint of a patient not covered by a federally funded program. United States v. Baylor Univ. Med. Center, 736 F.2d 1039 (5th Cir.1984), cert. denied, 469 U.S. 1189, 105 S.Ct. 958, 83 L.Ed.2d 964 (1985). Relying upon Title VI as the model for § 504, this court stated that Title VI prevents

analogy with North Haven, those who directly care for the patients "participate in" the federally funded programs.

service providers receiving federal funds from discriminating in programs in which individual beneficiaries of aid participate. Title VI binds the services provider, or "recipient," thus it affords a remedy against discrimination by recipients to all participants in a federally funded program, not merely to the individual beneficiaries of federal aid.

736 F.2d at 1043-44 (emphasis added). This reasoning, if not Baylor 's direct holding, is applicable in the case before us.

Also consistent with our reading of § 601 are HHS regulations, which, since shortly after the passage of Title VI, have mandated non-discrimination as to physicians' staff privileges by federally-funded...