American Hosp. Ass'n v. Harris

• Decision Date: 02 July 1980
• Docket Number: No. 79-2162,79-2162
• Citation: American Hosp. Ass'n v. Harris, 625 F.2d 1328 (7th Cir. 1980)
• Parties: AMERICAN HOSPITAL ASSOCIATION, Plaintiff-Appellant, v. Patricia R. HARRIS, Secretary of the United States Department of Health, Education, and Welfare et al., Defendants-Appellees, Illinois Migrant Council et al., Intervening Defendants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1328

625 F.2d 1328

AMERICAN HOSPITAL ASSOCIATION, Plaintiff-Appellant, v.Patricia R. HARRIS, Secretary of the United States Department of Health, Education, and Welfare et al., Defendants-AppelleesIllinois Migrant Council et al., Intervening Defendants.

No. 79-2162.

United States Court of Appeals Seventh Circuit.

Argued Jan. 10, 1980.

Decided July 2, 1980.

Lawrence A. Manson, Jay H. Hedgepeth, American Hospital Ass'n, Chicago, Ill., for plaintiff-appellant.

Shalom Brilliant, Dept. of Justice, Washington, D. C., for defendants-appellees.

Nelson A. Soltman, Legal Asst. Foundation of Chicago, Chicago, Ill., for intervening defendants.

Before PELL, Circuit Judge, PECK, Senior Circuit Judge, ^* and WOOD, Circuit Judge.

HARLINGTON WOOD, Jr., Circuit Judge.

The sole issue on appeal is whether the district court, 477 F.Supp. 665, properly refused to grant a preliminary injunction against the operation of regulations promulgated by the Department of Health, Education and Welfare.

Congress, in 1946, enacted Title VI of the Public Health Service Act,42 U.S.C. § 291 et seq.(1976)(the Hill-Burton Act), to assist states in constructing and modernizing public hospitals, and to stimulate development of and research about new medical facilities.Id.§ 291.Title VI made federal funds available for these purposes.As a condition for receiving federal money, the recipient had to assure that it would provide "a reasonable volume of services to persons unable to pay therefor"(charity care) and that the facility or the portion modernized would "be made available to all persons residing in the territorial area of the applicant . . . "(community service).Id.§ 291c(e).In 1972, partly in response to suits brought alleging inadequate compliance with the "charity care" and "community service" assurances, HEW promulgated regulations.42 C.F.R. §§ 53.111and53.113 (1978).These regulations defined "reasonable volume" and "persons unable to pay," and established a standard for compliance with the community service requirement.

Funding for Title VI was discontinued in 1974. 43 Fed.Reg. 49,954(Oct. 25, 1978).In 1975, to provide for new programs of federal loans, loan guarantees, and grants for the improvement of medical facilities, Congress enacted Title XVI to replace the program of assistance under Title VI. 42 U.S.C. §§ 300o et seq.(1976).Title XVI continued to require the same two basic assurances from grant and loan recipients that were contained in Title VI, namely, the charity care and community service obligations.Id.§ 300o -3(b)(1)(J).

In 1979, HEW promulgated new regulations.42 C.F.R. § 124, Subparts F and G.The new regulations, promulgated pursuant to explicit authority to issue regulations contained in Titles VI and XVI, purport to improve the effectiveness of the charity care and community service assurances contained in the statutory sections.The regulations, which became effective September 1, 1979, apply to hospitals which have already received federal assistance and have already made assurances, and expand the nature and scope of these hospitals' obligations for the future.Among other changes the new regulations increased the length of time of the obligation to provide uncompensated services, provide for uniform patient eligibility requirements based only on income, make it more difficult to comply with the charity care assurance by eliminating the "open door" provision of the old regulations, ¹ require that a failure to comply with the charity care assurance in one year will result in the amount of the deficit being added to the compliance level for future years, and expand the community service obligation by specifying that a recipient of federal funds may not deny admission on any grounds unrelated to the need for hospital services.

The plaintiff, the American Hospital Association(AHA), acting on behalf of its member organizations, brought suit in the district court seeking to have the new regulations preliminarily enjoined.In an order dated October 1, 1979, Judge Bua refused to grant a preliminary injunction finding that the AHA had not shown that its member organizations would suffer irreparable harm, that the AHA had not demonstrated a reasonable likelihood of success on the merits, and that the balance of hardships favored the denial of a preliminary injunction.The AHA appealed that decision to this court.We affirm.

The purpose of a preliminary injunction is to preserve the status quo pending a final hearing on the merits.Morgan v. Fletcher, 518 F.2d 236, 239(5th Cir.1975).The decision to grant or deny injunctive relief is addressed to the sound discretion of the trial court and appellate review of that decision is very limited.Kolz v. Board of Education of City of Chicago, 576 F.2d 747, 748(7th Cir.1978)(per curiam);Banks v. Trainor, 525 F.2d 837, 841(7th Cir.1975)cert. denied, 424 U.S. 978, 96 S.Ct. 1484, 47 L.Ed.2d 748(1976);American Medical Association v. Weinberger, 522 F.2d 921, 924(7th Cir.1975).The discretion of the district court is not totally unrestrained, however, but must be exercised in the context of balancing the four prerequisites for injunctive relief: "a reasonable probability of success on the merits, irreparable injury, the lack of serious adverse effects on others, and sufficient public interest."Kolz, 576 F.2d at 478.While no one factor is determinative, "if a court finds that under applicable law there is no probability of success on the merits and no irreparable injury, it is unnecessary for the court to consider the other factors."576 F.2d at 749.

The AHA asserts that the trial court erred in finding that AHA would not suffer irreparable harm pending a full hearing on the merits.Specifically, the AHA argues that the charity care and community service provisions of the new regulations may force member hospitals to rearrange its medical staffs and organizational policies, will cause the abandonment of hospitals' sound fiscal policies, will result in a loss of revenues to the hospitals, will limit allowable credit, and that the administrative costs of compliance with the regulations will be high.

We find that the district court did not abuse its discretion in deciding that the AHA's member organizations would not suffer irreparable harm pending a final hearing on the merits.We note first that to constitute irreparable harm "the threatened injury must be, in some way, 'peculiar.' "A. O. Smith Corp. v. FTC, 530 F.2d 515, 527(3d Cir.1976)."Mere injuries, however substantial, in terms of money, time and energy necessarily expended in the absence of a stay, are not enough."Morgan v. Fletcher, 518 F.2d at 240(quotingVirginia Petroleum Jobbers Association v. Federal Power Commission, 259 F.2d 921, 925(D. C. Cir.1958)).Only harm that the district court cannot remedy following a final determination on the merits may constitute irreparable harm.A. O. Smith, 530 F.2d at 527.In addition, injury resulting from attempted compliance with government regulation ordinarily is not irreparable harm.Id.

Here, as the district court noted, many of the complained of costs should already have been incurred prior to the hearing on the preliminary injunction if the member hospitals hoped to be in compliance with the regulations by September 1, 1979, the day the regulations became effective.In addition, the district court properly concluded that some of the complained of harm to the AHA could be remedied by the court should the AHA succeed at the final hearing on the merits.We further believe that the district court acted within its discretion in concluding that any remaining injury was unduly speculative or too insubstantial to constitute threatened irreparable harm.The district court properly considered the claimed injuries to the AHA and its member hospitals and did not abuse its discretion by finding that the claimed injuries did not amount to a showing of irreparable harm.

The district court also concluded that the AHA had not exhibited a reasonable likelihood of success on the merits.The required showing of probability of success on the merits "varies with the quality and quantum of harm that (the moving party) will suffer from the denial of an injunction.'(W)here it appears that a lack of showing of irreparable damage * * * exists . . . the party seeking a preliminary injunction has a burden of convincing with a reasonable certainty that it must succeed at (the) final hearing.' "District 50, United Mine Workers of America v. International Union, United Mine Workers of America, 412 F.2d 165, 168(D. C. Cir.1969)(quotingDino de Laurentiis Cinematografica v. D-150, Inc., 366 F.2d 373, 375(2d Cir.1966)).

The AHA claims that the new regulations exceed the statutory authority delegated to HEW, are in certain respects inconsistent with expressed congressional intent, unlawfully alter the contractual rights of Hill-Burton hospitals, and conflict with the Medicare conditions of participation.We have reviewed the arguments of the parties and have decided that the district court was within its discretion in concluding that the AHA had not established with reasonable certainty that it would eventually prevail.

The record, following only a hearing on the preliminary injunction, is abbreviated.Both parties presented extensive argument on the statutory language and legislative history.The district court considered the appropriate legal issues.While we do not intend to prejudge the merits of the AHA's case, our review of the record, as presented so far, does not establish that the district court abused its discretion in finding that the AHA had not shown, with a reasonable certainty, that it would prevail on the merits.²

Accordingly, we affirm the denial of the preliminary injunction.³

AFFIRMED.

PELL, Circuit Judge, concurring in part and dissenting in part.

Although the issue presented by this appeal might be thought...