Catholic Med. Cen. of Brooklyn & Queens, Inc. v. Rockefeller

• Decision Date: 08 December 1969
• Docket Number: No. 69-C-641.,69-C-641.
• Citation: 305 F. Supp. 1268
• Parties: CATHOLIC MEDICAL CENTER OF BROOKLYN AND QUEENS, INC., Division of St. Mary's Hospital; The Niagara Falls Memorial Hospital; and other hospitals similarly situated, Plaintiffs, v. Nelson A. ROCKEFELLER, Governor of the State of New York; Hollis S. Ingraham, Commissioner of Health of the State of New York; George K. Wyman, Commissioner of Social Services of the State of New York; and T. Norman Hurd, Director of the Budget of the State of New York, Defendants.
• Court: U.S. District Court — Eastern District of New York

305 F. Supp. 1268

CATHOLIC MEDICAL CENTER OF BROOKLYN AND QUEENS, INC., Division of St. Mary's Hospital; The Niagara Falls Memorial Hospital; and other hospitals similarly situated, Plaintiffs, v. Nelson A. ROCKEFELLER, Governor of the State of New York; Hollis S. Ingraham, Commissioner of Health of the State of New York; George K. Wyman, Commissioner of Social Services of the State of New York; and T. Norman Hurd, Director of the Budget of the State of New York, Defendants.

No. 69-C-641.

United States District Court E. D. New York.

December 8, 1969.

Harris, Beach & Wilcox, Rochester, N. Y., for plaintiffs; by James M. Hartman, Rochester, N. Y., of counsel.

Louis J. Lefkowitz, Atty. Gen., State of New York, for defendants; by George D. Zuckerman, Asst. Atty. Gen., New York City, of Counsel.

James C. Callison, Regional Commissioner, Dept. of H. E. W., New York City, Amicus Curiae; by William D. Ruckelshaus, Asst. Atty. Gen., Edward A. Neaher, U. S. Atty., E.D.N.Y., Harland F. Leathers, Jeffrey F. Axelrad, Attys., Dept. of Justice, of counsel.

Before FRIENDLY, Circuit Judge, and MISHLER and JUDD, District Judges.

MEMORANDUM AND DECLARATORY JUDGMENT

JUDD, District Judge.

The Secretary of Health, Education and Welfare has submitted a brief amicus curiae in response to the invitation in this court's Interim Memorandum. 305 F.Supp. 1256.

The Interim Memorandum pointed out the apparent conflict between federal standards for payment for inpatient hospital services and the New York freeze of rates for such payment, but also took note of the state's arguments about H E W's administrative expertise and about the doctrine of primary jurisdiction, to the extent of deferring decision until H E W could express its views.

The H E W amicus brief deals with both the merits and the available remedies.

On the merits, H E W plainly states that the absence of retroactive adjustment for reasonable cost of inpatient hospital services under the New York statute is inconsistent with federal regulations issued under the Social Security Act, and specifically that

"there must be retroactive adjustments or an allowance in lieu of retroactive payments so that the hospitals are paid the full actual and current costs of the services furnished to eligible individuals."

Correspondence between the Regional Commissioner of Health, Education and Welfare and New York's Commissioner of Social Services, since this court's Interim Memorandum, states that the Regional Commissioner is unable to approve the change made in the New York State plan by the freeze legislation, and that the matter is being referred to the Administrator of the Social and Rehabilitation Service for final determination.

On the subject of remedies, the H E W brief points out that (1) the only federal administrative sanction is a prospective termination of payments to the state, and (2) H E W cannot compel New York State to pay the hospitals the difference between the rate to which they were entitled under Title XIX and the rate they were actually paid. However, it states that

"States often clear up problems in their programs when H E W points out that a question whether the State's Title XIX plan meets Federal requirements may be presented. However, the final decision whether to comply with the requirements of Title XIX rests with the State."

Finally, H E W states that hospitals have no standing as of right in an administrative hearing to terminate federal payments. Even if they were permitted to participate as amici curiae, the hearing could not compel New York to make back payments to the hospitals.

While H E W's position that the New York freeze violates the Social Security Act and the H E W regulations is not conclusive, we find its arguments entirely persuasive on a doubtful issue of construction where great weight should be given to administrative expertise. See Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 164, 89 L.Ed. 124 (1944).

Defendants have submitted a copy of an announcement by Governor Rockefeller of steps which New York State has taken, since the Interim Memorandum, to relieve some of the deficits of the hospitals who have provided service under Title XIX. For the period from July 1, 1967 to March 31, 1969, Governor Rockefeller has directed the State Health Commissioner to make payments retroactively (estimated at $30,000,000) for the actual costs in treating Medicaid patients, rather than according to the rate schedule. No adjustment has yet been proposed by New York State to assure payment of actual costs for the period from March 31, 1969 to December 31, 1969, the period covered by the statutory freeze, but the Governor's statement sets forth:

"However, it is clear that additional immediate steps are necessary to meet the fiscal crisis that confronts many hospitals and to insure the continuation of these vital health

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