Euresti v. Stenner, 71-1393.

Decision Date13 June 1972
Docket NumberNo. 71-1393.,71-1393.
PartiesRafaela EURESTI et al., Plaintiffs-Appellants, v. Richard STENNER, as Administrator of the Weld County General Hospital, et al., Defendants-Appellees.
CourtU.S. Court of Appeals — Tenth Circuit

Marilyn G. Rose, Los Angeles, Cal. (Kirk Wickersham, Jr., Denver, Colo., and Jean Dubofsky, Boulder, Colo., on the briefs), for plaintiffs-appellants.

Ronald Lee Cooke, Denver, Colo. (Edward J. Krisor, Jr., Schneider, Shoemaker, Wham & Cooke, Denver, Colo., Samuel S. Telep, and Thomas A. Richardson, Greeley, Colo., on the brief), for defendants-appellees.

L. Patrick Gray, III, Asst. Atty. Gen., Dept. of Justice, James L. Treece, U. S. Atty., Walter H. Fleischer, Atty., Dept. of Justice, Sidney Edelman, Asst. Gen. Counsel, Dept. of Health, Education and Welfare, and Donald N. Young, Atty., Dept. of Health, Education and Welfare, filed a brief for the United States, amicus curiae.

Before CLARK*, Associate Justice, and HILL and DOYLE, Circuit Judges.

Mr. Justice CLARK:

Appellants seek through this class action to compel the administrators, trustees and county commissioners, who operate the Weld County Hospital, to provide a reasonable amount of free or below costs services to them and others similarly situated. The claim is based on Title VI of the Public Health Service Act, 42 U.S.C. § 291 et seq., popularly known as the Hill-Burton Act, which provides for federal grants of funds to a State and private parties to build or modernize a hospital facility on condition, inter alia, that the State be given assurances from the private parties that "there will be made available in the facility ... a reasonable volume of services to persons unable to pay therefor ..."1 Appellants filed this action on behalf of poor people within the area surrounding the hospital; they contend that the hospital has received $1.6 million under this Act but has never provided services in compliance with its obligation.

The District Court, 327 F. Supp. 111, concluded that the Act did not create any contractual relationship between the United States and appellees; that, if it did, appellants have no standing to sue; and that, in any event, the action was barred by the Act itself in 42 U.S.C. § 291m,2 limiting federal supervision or control of hospital administration. The complaint was therefore dismissed for failure to state a claim. We disagree and reverse the judgment for trial on the merits.3

I.

The District Court concluded that no contractual relationship existed between the United States and appellee and that, therefore, appellees' receipt of $1.6 million in federal funds created no obligations upon them enforceable by either the United States or appellants. Our view of the Hill-Burton Act and the undertakings made under it lead us to a different conclusion. There can be no doubt by adopting this portion of the Hill-Burton Act, Congress intended to benefit indigents in the position of appellants. Congress expressed its purpose in the Act as "to assist the several States in the carrying out of their programs ... to furnish adequate hospital, clinic, or similar services to all their people ...." 42 U.S.C. § 291(a). An examination of the legislative history of the bill also indicates Congressional concern for providing hospital services for indigents. When the bill was first referred to the Senate Committee, it did not contain the language now in question. During these hearings a medical officer for the Department of Agriculture suggested that the bill be revised to include "safeguards to ensure that hospitals will continue to carry out the purposes on which approval for their construction was based." Senator Taft, a major supporter of the bill, and Senators Pepper and Ellender pursued this problem in the following colloquy:

Senator Taft: Let me suggest something else. You would say a hospital accepting aid of this kind should have an obligation to take care of a certain number of indigent patients. Most of them do, but I mean if they are going to have Federal money, should there not be a definite obligation to handle a certain number of indigent patients?
Dr. Mott: Senator, I would think there would certainly be an obligation to meet the needs of all the people of that hospital service area for which the hospital was designed, which would, of course, include many indigent and medically indigent.
. . . . . .
Senator Pepper: This is what occurred to me, Senator .... that in determining the burden which the hospital should be expected to carry, they might not be able to get Federal aid unless they agreed to take a fixed number of indigent patients.
. . . . . .
Senator Ellender: If people in all localities were able to pay for hospitalization there would be no need for this bill. It seems to me that our primary purpose should be to devise means to take care of those who cannot take care of themselves. My reason for supporting a bill providing for Federal aid to build hospitals is to make it easy for the community in which a hospital is built to give aid to the indigent.

Hearings Before the Comm. on Educ. and Labor on S. 191, U. S. Senate, 79th Congress, 1st Sess., March 12, 1945, at pp. 190-91.

Thereafter, when the bill was reported to the Senate, it contained the more specific provisions of § 291c. Thus the legislative history and the expressed purposes of Congress indicate that the Act was passed to ensure that the indigent would be supplied sufficient hospital services when needed. With this clear intent, it is not decisive that the language of the Act included no explicit indication that indigents were to have a right to enforce the Act's provisions. A civil remedy may be implied for those clearly within the protective realm of legislation or regulations in the public interest. Texas & Pacific Ry. Co. v. Rigsby, 241 U.S. 33, 40, 36 S.Ct. 482, 60 L.Ed. 874 (1916). See Note, Implying Civil Remedies from Federal Regulatory Statutes, 77 Harv.L.Rev. 205 (1963). The implication of such a right is not dependent upon the existence of a formal contractual relationship. See Hooper v. Mountain States Sec. Corp., 282 F.2d 195 (CA 5 1960); cf. United States v. Feaster, 330 F.2d 671 (CA 5 1964); United States v. American Bell Tel. Co., 128 U.S. 315, 9 S.Ct. 90, 32 L. Ed. 450 (1888).

Even if a contractual relationship were required, we find it exists here. The contract between appellees and the State of Colorado explicitly incorporates the federal statutory obligation. In turn, the State's obligation to provide assurances of compliance is the sine qua non for the furnishing of federal funds. Indeed, appellee's obligation is set out specifically in the closing papers signed by the hospital, the State and federal authorities.4 Nothing could be clearer: In receiving federal funds, appellees obligated themselves to dispense a reasonable amount of free hospital services to those unable to pay.

II.

With the obligation established, it is clear that appellants have standing to enforce the obligation. The appellants are the intended beneficiaries of the Federal obligation sought to be enforced here and have standing to maintain this action. See Barlow v. Collins, 397 U.S. 159, 90 S.Ct. 832, 25 L.Ed.2d 192 (1970); Kentucky Utilities v. Collins, 390 U.S. 1, 88 S.Ct. 651, 19 L.Ed.2d 787 (1968); Gomez v. Florida State Employment Service, 417 F.2d 569 (C.A.5, 1969); Cook v. Ochsner Foundation Hospital, 319 F.Supp. 603 (D.C.1970). We find all of the necessary factors in support of the right to...

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