American Medical Association v. Weinberger

• Citation: 395 F. Supp. 515
• Decision Date: 05 June 1975
• Docket Number: No. 75 C 560.,75 C 560.
• Court: U.S. District Court — Northern District of Illinois
• Parties: AMERICAN MEDICAL ASSOCIATION, for itself and its members, et al., Plaintiffs, v. Caspar W. WEINBERGER, Secretary of the United States Department of Health, Education & Welfare, Defendant.

395 F. Supp. 515

AMERICAN MEDICAL ASSOCIATION, for itself and its members, et al., Plaintiffs, v. Caspar W. WEINBERGER, Secretary of the United States Department of Health, Education & Welfare, Defendant.

No. 75 C 560.

United States District Court, N. D. Illinois, E. D.

June 5, 1975.

COPYRIGHT MATERIAL OMITTED

Newton N. Minow, Sidley & Austin, Robert D. McLean, Jack R. Bierig, Chicago, Ill., for plaintiffs.

Carol Mosley, Asst. U. S. Atty., Chicago, Ill., for defendant.

MEMORANDUM OF DECISION

JULIUS J. HOFFMAN, Senior District Judge.

In this action by the American Medical Association and others for declaratory and injunctive relief from the enforcement of regulations promulgated by the defendant Secretary of the Department of Health, Education & Welfare, plaintiffs move for a temporary restraining order and a preliminary injunction pending disposition on the merits.

Plaintiffs include not only the American Medical Association (AMA), which has filed suit against HEW for the first time in its history, but also five physicians, six recipients of Medicare benefits, two recipients of Medicaid benefits, and three other persons not participating in Medicare or Medicaid but desiring medical treatment. The challenged regulations, 20 CFR § 405.1035(e)(f) and 45 CFR § 250.19(a)(1)(viii), condition Medicare and Medicaid reimbursement on the establishment by hospitals of "utilization review" committees which must assess the "medical necessity" of a patient's admission within 24 hours, or one working day, thereof. Plaintiffs allege that these regulations interfere, in violation of the First, Fifth, and Ninth Amendments, with a physician's right to practice medicine according to his best medical judgment and a patient's right to be treated according to the best medical judgment of his or her attending physician. The complaint also challenges the authority of the Secretary under the Social Security Act to issue the regulations, and asserts that the Secretary failed, prior to promulgation, to make specific findings as required by the Administrative Procedure Act and the Fifth Amendment. Jurisdiction is based on 28 U.S.C. § 1331, which confers upon the district courts original jurisdiction over civil actions arising under the Constitution or laws of the United States and in which the amount in controversy exceeds $10,000.00.

As the court has stated on several occasions during these proceedings, it regards this case as critically important to patients and physicians throughout the country, as well as to the Secretary, who seeks to limit the increasing costs of federal health insurance. The court has therefore proceeded deliberately, with the benefit of extensive written and oral presentations by the attorneys for the plaintiffs and the defendant.

On February 20, 1975, plaintiffs filed their complaint and motion for preliminary injunction together with a forty-two page memorandum in support. Four days later, the court set the matter down for hearing March 4 on the motion for preliminary injunction, and granted leave to defendant to file a memorandum in opposition exceeding the fifteen page limit prescribed by the local rules. On February 14, defendant moved for the convening of a three-judge court. After briefing and argument by the parties, the court denied that motion for the principal reason that plaintiffs seek an injunction against the enforcement of federal administrative regulations as opposed to an underlying enabling statute. A hearing on the motion for preliminary injunction was held from March 4 through March 7, at the completion of which the court ordered the parties to file, contemporaneously on March 21, proposed findings of fact and conclusions of law, and memoranda in support thereof. Also at the close of the hearing, plaintiffs moved for a temporary restraining order pending decision on the motion for a preliminary injunction. On March 10, defendant filed a memorandum in opposition to the motion for a temporary restraining order pursuant to his request for leave to submit written opposition to that motion. Shortly after submission, with respect to the motion for preliminary injunction, of the proposed findings of fact and conclusions of law and supporting memoranda, counsel for the Secretary advised the court by letter that the original February 1 effective date had been amended to July 1, 1975. On April 15, the court held a hearing for consideration of the question whether, in view of the amended effective date, the issues raised by the motion for preliminary injunction were ripe for judicial determination and on April 18, the parties filed memoranda on the issue. On May 14, plaintiffs filed their motion for summary judgment, and the following week, on May 23, defendant filed his cross motion for summary judgment.

Enactment of Medicare and Medicaid into the Social Security Act established the federal government as the largest health insurer in the United States. Established under Title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq., Medicaid is a federal-state matching funds program providing medical assistance to elderly, blind, disabled and other individuals with insufficient resources to meet the cost of necessary medical care, as well as families with dependent children. Medicare is a federally funded and administered program created by Title XVIII of the Social Security Act providing hospital and outpatient insurance benefits to elderly persons. Principally to reduce the rising costs of these programs, the Secretary promulgated the challenged regulations. As the court has noted, the regulations require hospitals to implement by July 1, 1975, a "utilization review" procedure under which a committee of two or more physicians, "with the participation of other professional personnel," determines, within 24 hours or one working day, whether the admission of a patient is "medically necessary." Findings by the committee that admissions are not "medically necessary" result in denial of Medicare or Medicaid reimbursement.

I.

Standing and Ripeness

A. Standing

The Secretary asserts that, with respect to the American Medical Association, the complaint alleges solely that the AMA is an association of state medical societies in the United States, and contends that this allegation is insufficient, under Sierra Club v. Morton, 405 U.S. 727, 92 S.Ct. 1361, 31 L.Ed.2d 636 (1972), to establish the AMA's standing to sue. More specifically, defendant contends that because the complaint lacks allegations that the AMA itself will be injured and that any of the plaintiffs are members of the AMA, it necessarily lacks an allegation that any member of the AMA is, or will be, injured by the regulations under attack. Defendant maintains also that the allegations of the complaint are insufficient to establish the standing of the patient plaintiffs.

As a practical matter, a ruling on the standing of the American Medical Association may be of small consequence, for the court holds that the patient plaintiffs have standing in any event. See, e. g. Doe v. Bolton, 410 U.S. 179, 93 S.Ct. 739, 35 L.Ed.2d 201 (1973), one of the two recent abortion decisions by the Supreme Court, in which the Court observed that "inasmuch as Doe and her class are recognized, the question whether the other appellants — physicians, nurses, clergymen, social workers, and corporations — present a justiciable controversy and have standing is perhaps a matter of no great consequence." 410 U.S. at 188, 93 S.Ct. at 745.

In the first paragraph of the complaint, all plaintiffs allege that the action arises in part under the Administrative Procedure Act, 5 U.S.C. § 551 et seq. Section 10(a) of the Act, 5 U.S.C. § 702, provides that a person suffering legal wrong, or "adversely affected" or "aggrieved" by agency action within the meaning of a relevant statute, is entitled to judicial review of that action. Recently, in United States v. SCRAP, 412 U.S. 669, 93 S.Ct. 2405, 37 L.Ed.2d 254 (1973), the Supreme Court restated with clarity the requirements for standing under the Administrative Procedure Act as announced the previous year in Sierra Club v. Morton. In SCRAP, the Court stated that standing is conferred upon those who can show that the challenged action had caused them "injury in fact," and "where the alleged injury was to an interest `arguably within the zone of interests to be protected or regulated' by the statutes that the agencies were claimed to have violated." 412 U.S. at 686, 93 S.Ct. at 2415. Articulating precisely what allegations are required, the Court went on to state that "a plaintiff must allege that he has been or will in fact be perceptibly harmed by the challenged agency action . . .." Id. at 688, 93 S.Ct. at 2416. (emphasis supplied). Here, the patient plaintiffs allege that the regulations will interfere with their right to be hospitalized in accordance with the best judgment of their respective physicians, will reduce the quality of medical care because non-medical matters will complicate the decision to hospitalize, and delay admissions, to the detriment of their health and proper treatment.

These allegations, which, at the very least, assert "perceptible harm," are more specific than those held sufficient in SCRAP. In that case, the plaintiff SCRAP (Students Challenging Regulatory Agency Procedures), an unincorporated association of five law students, claimed, inter alia, that the use by each of its members of forests, streams, mountains and other resources was disturbed by the adverse environmental impact "caused by the nonuse of recyclable goods brought about by a rate increase on those commodities." 412 U.S. at 685, 93 S.Ct. at 2415.

It is, moreover, evident that the interests of the plaintiff recipients of Medicare and Medicaid benefits are arguably within the zone of interests sought to be regulated or protected. The programs exist to serve them. Their allegations are, therefore, sufficient to confer...