Carman v. Richardson

• Decision Date: 22 March 1973
• Docket Number: Civ. A. No. 6766.
• Citation: Carman v. Richardson, 357 F.Supp. 1148 (D. Vt. 1973)
• Court: U.S. District Court — District of Vermont
• Parties: John A. CARMAN v. Elliott RICHARDSON, Secretary, United States Department of Health, Education & Welfare, et al.

357 F. Supp. 1148

John A. CARMAN v.Elliott RICHARDSON, Secretary, United States Department of Health, Education & Welfare, et al.

Civ. A. No. 6766.

United States District Court, D. Vermont.

March 22, 1973.

John T. Sartore, and Peter M. Collins, Paul, Frank & Collins, Burlington, Vt., for plaintiff.

William B. Gray, Asst. U. S. Atty., Rutland, Vt., and Lawrence E. Burstein, United States Dept. of H. E. W., Boston, Mass., for defendantsElliott Richardson, Secretary, U. S. Dept. of H. E. W., Harold Putnam, Director, Region I, U. S. Dept. of H. E. W. and Dr. Gertrude Hunter, Regional Health Director, Health Services and Mental Health Administration, U. S. Dept. of H. E. W.

Alan F. Sylvester, and Harold C. Sylvester, McNamara, Fitzpatrick, Sylvester, Farrell & Maley, Burlington, Vt., and Joseph F. Cahill, Jr., St. Albans, Vt., for St. Albans Hospital.

OPINION AND ORDER

COFFRIN, District Judge.

This is an action brought by John A. Carman, a citizen of Swanton, Vermont, and a resident of Area I-1 as designated in the Vermont State Health Plan, against Elliott Richardson, Secretary of the United States Department of Health, Education and Welfare, Arnold Putnam, Director, Region I, United States Department of Health, Education and Welfare, Dr. Gertrude Hunter, Regional Health Director, Health Services and Mental Health Administration, United States Department of Health, Education and Welfare and the St. Albans Hospital located in St. Albans, Vermont.

The complaint alleges that defendant St. Albans Hospital seeks a guarantee from the United States Department of Health, Education and Welfare of a proposed loan in the amount of approximately $1,250,000 to be made to it by the Connecticut General Life Insurance Company for the purpose of financing construction of an expanded hospital facility.The loan guarantee is sought under the applicable provisions of the Hill-Burton Act. 42 U.S.C. §§ 291j-1 to 291j-7(1971).

The complaint alleges that defendant Richardson as Secretary of Health, Education and Welfare, or those to whom the responsibility is delegated, may only approve the application of defendant St. Albans Hospital if it is found, inter alia, that the proposed project is in conformity with a state health plan adopted pursuant to the requirements of the Hill-Burton Act and the application has been approved by the state agency charged with administering the plan.The plaintiff alleges that defendants Putnam and Hunter have formally approved the application of defendant St. Albans Hospital for a Hill-Burton Act guarantee but further alleges that defendants Putnam and Hunter in so doing acted outside the authority granted to them by the Act.He contends that the project does not conform to the Vermont State Health Plan enacted under the provisions of the Hill-Burton Act and the proposed construction has not been approved by the Vermont Department of Health.The plaintiff alleges that he and others in Area I-1 will suffer immediate and irreparable injury in that the proposed construction project will increase the cost and lower the quality of medical services in the Area.Plaintiff seeks a preliminary and permanent injunction restraining the defendants Richardson, Putnam and Hunter from executing any guarantee of a loan to defendant St. Albans Hospital to finance any construction project not in conformity with the Vermont State Health Plan or lacking the approval of the Vermont Department of Health.Plaintiff also requests the court to issue a temporary restraining order and preliminary and permanent injunctions restraining the Board of Trustees of defendant St. Albans Hospital from using any funds from loans guaranteed by the Hill-Burton Act in the construction of hospital facilities.

The plaintiff initially alleged jurisdiction of this matter by virtue of the provisions of 28 U.S.C. §§ 1331(a),1361 (1971).Subsequently, plaintiff moved to amend his complaint and alleged that the provisions of the Administrative Procedure Act provided an additional ground for jurisdiction by this court.See5 U.S.C.A. §§ 701-705(1971).In his motion to amend the complaint, plaintiff alleged that defendants Putnam and Hunter acted outside their authority and "abused the discretion" delegated to defendant Richardson under the provisions of 42 U.S.C. § 291j-3(1971) and further alleged that the plaintiff is adversely affected and aggrieved by the actions of the Department of Health, Education and Welfare within the meaning of 5 U.S.C. § 702(1971).

Defendants Richardson, Putnam and Hunter, through the United States Attorney for the District of Vermont, seasonably filed a motion to dismiss on the grounds that plaintiff has no standing to bring this action, the action is barred because the United States has not consented to be sued and because the plaintiff has stated insufficient grounds to sustain jurisdiction of this court for the granting of temporary or permanent relief.Defendant St. Albans Hospital likewise has filed a motion to dismiss on the ground that the court lacks jurisdiction under the provisions of 28 U.S.C. § 1331(a)(1971)and28 U.S.C. § 1361(1971).Subsequently defendant Richardson filed an additional ground to his earlier motion to dismiss stating that the complaint fails to state a claim upon which relief could be granted.

A discussion was held between counsel for the parties and the court on November 10, 1972, at which time, the court, with the agreement of counsel, continued the hearing on the temporary restraining order to the 16th day of November, 1972.On the 16th day of November, 1972, a further discussion was held between counsel and the court as a result of which the plaintiff withdrew his request for a temporary restraining order and it was agreed that the court would examine the question of its jurisdiction on the basis of the pleadings of the parties, including the plaintiff's amended complaint.Subsequently, the parties filed a stipulation consenting to the amendment of the plaintiff's complaint and the amendment was duly allowed by this court on November 29, 1972.

By its interim order dated December 13, 1972, the court deferred the hearing and determination of defendants' motions until the time of trial as permitted by Rule 12(d) of the Federal Rules of Civil Procedure and consolidated plaintiff's motion for a preliminary injunction with the trial of the action on the merits as authorized by Rule 65(a)(2) of the Federal Rules of Civil Procedure.In the same order, the court requested that the parties file memoranda of law pertaining to the class action requested by the plaintiff.On December 29, 1972, the plaintiff moved to amend his complaint by deleting his request that the matter proceed as a class action, which motion was granted at the time of trial on February 13, 1973.Thereafter the matter proceeded for the benefit of the plaintiff alone.

In its answer filed December 23, 1972, defendant St. Albans Hospital included a counterclaim against the plaintiff.No evidence was heard by the court on this counterclaim as it was withdrawn by the defendant following the close of the plaintiff's case.

FINDINGS OF FACT

There are two hospitals located in Franklin County, both of which are in the City of St. Albans.Defendant St. Albans Hospital, located on Ferris Street, was established in 1883.The Kerbs Memorial Hospital, located on Fairfield Street, was established in 1950.The hospitals are situated within five minutes driving time of one another.St. Albans is the center for Area I-1 as designated in the Vermont State Health Plan prepared pursuant to the provisions of section 604(a),Title VI of the Public Health Service Act.¹The enabling legislation necessary to establish the Vermont Health Plan is found at 18 V.S.A. §§ 1801-14(1968).Area I-1 as so designated consists of Franklin County, plus the towns of North Hero, Isle LaMotte and Alburg.The population of Area I-1 was 33,179 in 1970, according to the United States Census figures, and is expected to increase to 34,838 by 1977.This represents 7.4 per cent of the total population of the State of Vermont.Area I-1 is economically depressed and Franklin County has the highest unemployment rate of any County in the State.

The St. Albans Hospital has 57 nonconforming beds² and the Kerbs Hospital 91 conforming beds for a total in Area I-1 of 148 hospital beds.Both hospitals are accredited by the Joint Commission on Accreditation of Hospitals and both are Medicare certified.In April, 1971 the St. Albans Hospital filed an "Application for Project Construction" with the Vermont State Department of Health.This application was for a loan guarantee and interest subsidy under the provisions of the Hill-Burton Act³ to enable the St. Albans Hospital to replace its non-conforming beds with 54 conforming beds.The construction program was undertaken because the State had indicated it would no longer permit the hospital to operate without replacing its non-conforming beds.The proposed construction will remedy this situation by replacing the non-conforming portion of the building (formerly a wooden home) with a new facility housing conforming beds, as well as certain new supportive services including a new surgical suite, a dietary department, a laundry, and the like.

The application was revised after it was originally submitted and was executed on behalf of the Hospital in its revised form by a duly authorized agent on December 27, 1971.On that date it was resubmitted to the State Health Department.The application proposes to finance the new construction by obtaining a loan to be guaranteed by the United States Department of Health, Education and Welfare(hereinafter referred to as HEW) to the extent of 90 per cent of the eligible cost of construction.In addition HEW will pay the holder of the loan a dollar amount sufficient to reduce the net interest rate by 3 per cent per annum.The Connecticut General Life Insurance Company has...