Corum v. Beth Israel Medical Center

• Decision Date: 01 June 1973
• Docket Number: No. 72 Civ. 2654.,72 Civ. 2654.
• Citation: 359 F. Supp. 909
• Parties: Jeannette CORUM et al., Plaintiffs, v. BETH ISRAEL MEDICAL CENTER et al., Defendants.
• Court: U.S. District Court — Southern District of New York

359 F. Supp. 909

Jeannette CORUM et al., Plaintiffs, v. BETH ISRAEL MEDICAL CENTER et al., Defendants.

No. 72 Civ. 2654.

United States District Court, S. D. New York.

April 27, 1973.

Motion Denied June 1, 1973.

COPYRIGHT MATERIAL OMITTED

Louise Lander, MFY Legal Services, Inc., Robert P. Borsody, Community Health Law Project, New York City, for plaintiffs.

Lipkowitz, Plaut, Salberg & Harris, New York City, for defendants Beth Israel Medical Center, Trussell and Vorzimer; Irving D. Lipkowitz, K. Wendy Slote, New York City, of counsel.

Whitney North Seymour, Jr., U. S. Atty., New York City, Peter A. Herbert, Asst. U. S. Atty., for Richardson.

MEMORANDUM

LASKER, District Judge.

By this action under the Hill-Burton Act, Title VI of the Public Health Service Act, 42 U.S.C. § 291 et seq., two individual and two corporate plaintiffs seek a declaratory judgment and an injunction obligating Beth Israel Medical Center ("BIMC") to provide "a reasonable volume of services to persons unable to pay therefor" as required by § 291c(e)(2) of the Act and the regulation issued thereunder (42 C.F.R. § 53.111). Defendants are BIMC, its general director and its director of ambulatory health services hereinafter collectively referred to as the "Beth Israel defendants" and Elliot Richardson in his then capacity as Secretary of the United States Department of Health, Education and Welfare ("HEW").

The Beth Israel defendants move to dismiss, or in the alternative for summary judgment, on the grounds that 1) The complaint does not allege in haec verba that BIMC does not provide a reasonable volume of uncompensated services as required by the Act; 2) no obligation arises under the statute until the facility or portion of the facility for which funds are being received is actually completed (the rehabilitation facility not having been completed at the time the motion was brought); 3) the complaint fails to state a claim against the directors in their individual capacities; 4) the corporate plaintiffs lack standing to sue; 5) the court does not have subject matter jurisdiction of the claim, since primary jurisdiction is vested in the state Hill-Burton agency and HEW; and 6) the amount of uncompensated services rendered by BIMC exceeds the presumptive compliance guideline established by the regulation. The Secretary also moves to dismiss on the grounds that the facility was not completed (as it was not at the time the motion was made) and so no obligation had vested and that the agencies have primary jurisdiction. Since these motions were argued, the rehabilitation medical center for which federal funds were expended has been completed, thus removing one ground for defendants' motions to dismiss.

Plaintiffs move to supplement the complaint with two new causes of action which have accrued since suit was filed. The first supplemental cause of action alleges that BIMC's limitation on the availability of outpatient care violates its obligations under New York's Ghetto Medicine Law, L.1968, ch. 967, and a contract between it and the New York City Commissioner of Health. Plaintiffs seek to add the Commissioner, Joseph Cimeno, as a defendant. The second supplemental cause of action challenges the validity of the regulation for two reasons: 1) The power of approval given the Federal Hospital Council is an improper delegation of power and 2) three of the regulation's provisions are inconsistent with the statute. The second supplemental complaint would add as defendants the twelve current members of the Federal Hospital Council. The Beth Israel defendants oppose both motions to supplement; the Secretary does not oppose the second and takes no position on the first. Plaintiffs also seek a class action determination.

I.

The Hill-Burton Act makes the following provision for hospital services for needy persons:

"The Surgeon General, with the approval of the Federal Hospital Council and the Secretary of Health, Education and Welfare, shall by general regulations prescribe—

* * * * * *

(e) that the State plan shall provide for adequate hospitals, and other facilities for which aid under this part is available, for all persons residing in the State, and adequate hospitals (and such other facilities) to furnish needed services for persons unable to pay therefor. Such regulations may also require that before approval of an application for a project is recommended by a State agency to the Surgeon General for approval under this part, assurance shall be received by the State from the applicant that . . . (2) there will be made available in the facility or portion thereof to be constructed or modernized a reasonable volume of services to persons unable to pay therefor, but an exception shall be made if such a requirement is not feasible from a financial viewpoint." 42 U.S.C. § 291c (emphasis added).

On July 22, 1972,¹ HEW² issued an interim regulation implementing the statute's "reasonable volume" requirement, which was approved, without substantial modification, as a final regulation by the Federal Hospital Council on March 13, 1973. The regulation (42 C. F.R. § 53.111) sets a presumptive compliance guideline for uncompensated services to be provided each year of "not less than the lesser of 3 percent of operating costs or 10 percent of all Federal assistance provided to . . . the applicant under the Act." Id. at (d)(1). The regulation also establishes a procedure for fixing the level of uncompensated services required to satisfy a facility's obligations.

On April 2, 1969, HEW awarded BIMC a Hill-Burton grant of $400,000 to reconstruct and modernize its rehabilitation facility. The new facility is completed and operating. There is no dispute that, under Federal law and by contract,³ part of the quid pro quo for the grant is the requirement that BIMC afford poor persons a reasonable amount of free or below cost services.

Until July 1, 1971, BIMC accepted as patients in its outpatient clinics all persons who applied for treatment. The amounts charged for services rendered were established according to a sliding scale, ranging from one to sixteen dollars per visit, relative to ability to pay and eligibility for Medicare and Medicaid. This policy was discontinued as of that date, at which time BIMC began to accept as patients only those who pay forty-five dollars per visit or are eligible for Medicare or Medicaid. Plaintiffs contend that the new policy violates BIMC's statutory and contractual obligations. They claim further that the Secretary of HEW's failure to enforce BIMC's alleged obligations makes injunctive and declaratory relief appropriate as to him.

II.

Before discussing defendants' motions to dismiss, we turn to plaintiffs' motion to supplement the complaint by a second federal cause of action attacking the validity of the regulation, since it bears on some of the issues raised by the motions to dismiss.

The second supplemental complaint alleges that the regulation (now final, but only interim at the time the motion was brought on) is defective because three of its provisions conflict with the Hill-Burton Act. Specifically, the claim is made that the Act does not permit a regulatory scheme which 1) sets a maximum presumptive compliance guideline limiting the amount of services which the state agencies can require; 2) establishes a twenty year limit on the length of a facility's commitment; and 3) permits a facility to postpone determination that an individual is unable to pay until after the rendition of bills. Furthermore, the second supplemental complaint attacks the regulation in its entirety because its adoption required the approval of the Federal Hospital Council which, plaintiffs allege, constitutes an improper delegation of legislative or executive power. At the time the motion to supplement was made, plaintiffs also sought to invalidate the interim regulation because of procedural deficiencies in the means by which it was adopted. These defects were not present in the adoption of the final regulation and that part of the proposed supplemental complaint is no longer operative.

The Secretary has withdrawn his opposition to this motion. The Beth Israel defendants take the position that we should dismiss as to them and allow the suit to proceed, if at all, against the Secretary and the defendants plaintiffs wish to add.

The suggestion of the Beth Israel defendants does not present a realistic approach to the situation. Contrary to their argument, the grounds on which they seek dismissal are not unaffected by the issues raised by the second supplemental complaint. In particular, a decision that the first cause of action should be dismissed to permit exhaustion of the administrative remedies created by the regulation would be pointless if plaintiffs were to prevail in having the regulation declared a nullity because of the manner in which it was adopted.

Furthermore, even if we were to agree with the Beth Israel defendants that the first cause of action should be dismissed, it does not follow that the case should then proceed without them. Although the second supplemental complaint does not state a new cause of action against them, nonetheless its ultimate aim, like that of the other causes of action, is to require them to provide additional outpatient services. They are, therefore, directly affected by the second federal cause of action and by its resolution. This is merely to say that the thrust of the complaint as a whole is against the Beth Israel defendants to require them to provide more services for the poor. It should not be broken into parts to be considered in isolation from each other, as urged by the Beth Israel defendants.

Accordingly, since the proposed supplementary pleading sets forth transactions and occurrences which have happened since the date of the original pleading, its filing should be allowed pursuant to Rule 15(d) (Fed.R.Civ.P.). No purpose would be served by obliging plaintiffs to commence a...