Los Angeles County v. State Dept. of Public Health

Decision Date17 March 1958
Citation158 Cal.App.2d 425,322 P.2d 968
PartiesCOUNTY OF LOS ANGELES, Petitioner and Respondent, v. STATE DEPARTMENT OF PUBLIC HEALTH et al., Respondents and Appellants. COUNTY OF LOS ANGELES, Plaintiff and Respondent, v. STATE DEPARTMENT OF PUBLIC HEALTH et al., Defendants and Appellants. Civ. 22242, 22243.
CourtCalifornia Court of Appeals Court of Appeals

Edmund G. Brown, Atty. Gen., Henry A. Dietz, Asst. Atty. Gen., Lee B. Stanton, Deputy Atty. Gen., for appellants.

Harold W. Kennedy, County Counsel, Robert C. Lynch, Deputy County Counsel, Los Angeles, for respondent.

ASHBURN, Justice.

This is a controversy over certain tuberculosis subsidy payments claimed by the County of Los Angeles to be payable to it under the Tuberculosis Subsidy Law but withheld by the State Department of Public Health. The trial court ruled that such payments, in an aggregate amount of $330,715.69, had been improperly withheld from the county, should be paid over to it, and that future subsidies payable under the statute (§§ 410-414, 3099-3342, Health & Safety Code) must be computed in accordance with the claim of the county. The application of the statute to partial-pay patients in county hospitals is the focal point of the dispute. The State Department of Public Health and other defendants have appealed.

The above mentioned sections of the Health & Safety Code are a codification of the Tuberculosis Subsidy Law first enacted in 1915 (Stats.1915, Ch. 766, p. 1530). It provided for a state subsidy to any city or county maintaining a tuberculosis ward or hospital of $3 a week 'for each person in the active stages of tuberculosis cared for therein at public expense who is unable to pay for his support' etc. An administrative construction was placed upon this language to the effect that it included no one who could pay all or part of the expense of his keep. The Attorney General so ruled (No. 8471 (2-14-33)) and the law was so applied. 1 In 1919 the statute was amended by inserting in § 3 (which later became § 3300, Health & Safety Code) the sentence: 'Said hospitals shall be allowed to receive pay patients.' Stats.1919, Ch. 464, p. 853. When codification took place in 1939 that sentence remained in the principal section, No. 3300, Health & Safety Code, which now reads: 'Each city, county, city and county, or group of counties may establish and maintain a tuberculosis ward, hospitals, or sanatorium for the treatment of persons suffering from tuberculosis. Each city, county, or city and county that establishes and maintains a tuberculosis ward, hospital, or sanatorium shall receive from the State the sum provided in Section 3301.5, and each county that participates jointly with one or more other counties in the establishment and maintenance of a tuberculosis hospital, ward, or sanatorium shall receive from the State the sum specified in Section 3301.6, for persons suffering from tuberculosis, cared for therein at public expense, who are unable to pay for their support and who have no relatives legally liable and financially able to pay for their support; except that the city, county, or city and county is not entitled to receive this state aid unless the tuberculosis ward, sanatorium, or hospital conforms to the regulations of and is approved by the State Department of Public Health. The hospitals shall be allowed to receive pay patients.' Section 3301.5 has been amended from time to time by making increases in the subsidy. It now in graduated according to the number of patient days of care per year, ranging from $1.75 to $2.60 per patient day.

The question of whether subsidy should be paid for a part-pay patient remained an uncertain one until the department, under the guidance of the Attorney General (7 Op.Cal.Atty.Gen. 224), undertook to solve it by adopting in August, 1946, a regulation No. 5175, which was renumbered 5198 and became a part of Title 17, California Administrative Code. It reads: 'A patient who pays any amount toward his support or in whose behalf contributions are received or anticipated, is not eligible for subsidy, unless it is agreed that such contributions will be used to reimburse the state up to the total amount of subsidy paid in behalf of the patient.' In 1949 the Los Angeles County Counsel advised the Board of Supervisors that the regulation is at variance with § 3300 of the statute and hence void; also, that the county is entitled to subsidy payments on the following basis: 'Full subsidy shall be claimed in every case, including partial pay patients, where the amount of subsidy plus the amount paid for care does not exceed the cost of care. Should payments and subsidy exceed the cost of care, refund to the State of the difference shall be made on subsequent claims.' Thereafter, claims for subsidy submitted by the county to the Department failed to show all amounts collected from patients. The court found upon the basis of stipulated facts: '[T]hat in the preparation and submission of claims for tuberculosis subsidy, the County of Los Angeles has not, since July 1, 1951, complied with Section 5198 * * * and that in the tuberculosis subsidy claims submitted by the County of Los Angeles for the semiannual periods from July 1, 1947, through June 30, 1951, one hospital prepared its claims in the manner prescribed by Section 5198 * * * while the other three hospitals did not comply with Section 5198 * * *.' This text implies, and it seems not to be disputed, that none of the Los Angeles County hospitals complied with § 5198 after July 1, 1951.

Thus it appears that the Board of Health claims all support moneys paid by part-pay patients and refuses to include them in the subsidy calculation unless the county agrees to pay and actually pays over those moneys to the state; failure to do so precludes any subsidy with respect to a part-pay patient. 'The position of the appellants, based upon the opinions of the Attorney General over a period of many years, has been that the actual cost to the County has no bearing the balance paid to the County as State to be paid to the County; that any amount contributed by the patient must be deducted from the amount of the subsidy, and only the balance paid to the County as State tuberculosis subsidy.' Opening Br. pp. 15-16. On the other hand the county, conceding there can be no subsidy to the extent that the statutory aid plus the patient's contribution exceeds the actual cost of his keep, contends that the payment of the subsidy is mandatory and that it is entitled to keep the same in addition to the amount paid by the patient unless the sum of the two items exceeds the actual expense to the county of supporting that patient.

The Attorney General rendered an opinion in July, 1951 (18 Op.Cal.Atty.Gen. 29) upholding the validity of the regulation. The county never made any agreement such as the regulation prescribes and did not comply with the same, but its claims for subsidy were paid in full for the period from July 1, 1947, to June 30, 1951. A post-audit of such claims was made by the controller over a period extending from October, 1952, to July, 1953; it disclosed the county's failure to report on part-paypatients patients in the manner contemplated by regulation No. 5198, and the discrepancy amounted to $224,540.57 for the period covering July 1, 1947, to December 31, 1951, inclusive. This amount (plus $2,969.89 representing deductions made by reason of matters other than the application of § 5198) was deducted from the county's claim for the six months period of January 1 to June 30, 1953. The appellants currently disallowed a portion of each subsidy claim filed by the county for each semiannual period from July 1, 1951, through December 31, 1953, in the total sum of $106,175.12, making a grand total deduction of $330,715.69, the amount of the judgment rendered herein. Though these figures seem large, they amount to approximately four per cent of the $7,634,202.71 subsidy apportioned to the County of Los Angeles for the period from July 1, 1947, to December 31, 1953, inclusive.

On August 7, 1953, the county sought a writ of mandate to compel payment of said sum of $330,715.69 to it, but the writ was denied without opinion in the District Court of Appeal. Thereupon two suits (now under review) were filed, one seeking mandate and the other declaratory relief. Judgment favorable to the county was entered in each and the instant appeals were taken therefrom.

The controlling question is whether regulation 5198 is a valid administrative implementation of the statute. Initially it is to be observed that the statute provides a true subsidy, payable to the county, not the patient, the amount being computed according to the number of patient-hours of care provided to tuberculosis patients at public expense. The generally accepted definition of the term 'subsidy' is stated in 83 C.J.S. p. 760 as follows: 'Something, usually money, donated or given or appropriated by the government through its proper agencies; a grant of funds or property from a government, as of the state or a municipal corporation, to a private person or company to assist in the establishment or support of an enterprise deemed advantageous to the public; a subvention.' The title to an amending act of 1939 characterizes § 3300 as 'relating to grants in aid for the support and care of persons afflicted with tuberculosis.' Stats.1939, Ch. 1070, p. 2996. Section 3300 itself refers to the payments as 'state aid.' The title to the amending statute of 1947 (Stats.1947, Ch. 1000, p. 2266) refers to the subsidy payments as 'state grants-in-aid to counties * * * for the treatment and care of persons suffering from tuberculosis.'

Counsel for both sides concede, as they must, that one who pays in full for his care is not hospitalized at public expense, and hence cannot be included in the basis for computing the...

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