Florida Nursing Home Ass'n v. Page

• Decision Date: 16 May 1980
• Docket Number: 77-3467,Nos. 78-2745,s. 78-2745
• Citation: 616 F.2d 1355
• Parties: FLORIDA NURSING HOME ASSOCIATION et al., Plaintiffs-Appellants, v. William PAGE, Jr., et al., Defendants-Appellees, The Department of Health, Education and Welfare and Patricia Roberts Harris, Secretary of Health, Education and Welfare, Defendants. GOLDEN ISLES CONVALESCENT CENTER, INC., et al., Plaintiffs-Appellants, v. William PAGE, Jr., et al., Defendants, The Department of Health, Education and Welfare and Patricia Roberts Harris, Secretary of Health, Education and Welfare, Defendants-Appellees. GOLDEN ISLES CONVALESCENT CENTER, INC., d/b/a Hallandale Rehabilitation Center, etc., et al., Plaintiffs-Appellees, v. Patricia Roberts HARRIS, Individually and as Secretary of the Department of Health, Education and Welfare, Defendant, William J. Page, Jr., Individually and as Secretary of the Department of Health and Rehabilitative Services of the State of Florida, et al., Defendants- Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1355

616 F.2d 1355

FLORIDA NURSING HOME ASSOCIATION et al., Plaintiffs-Appellants, v. William PAGE, Jr., et al., Defendants-Appellees,

The Department of Health, Education and Welfare and Patricia

Roberts Harris, Secretary of Health, Education and

Welfare, Defendants.

GOLDEN ISLES CONVALESCENT CENTER, INC., et al., Plaintiffs-Appellants, v. William PAGE, Jr., et al., Defendants,

The Department of Health, Education and Welfare and Patricia

Roberts Harris, Secretary of Health, Education and

Welfare, Defendants-Appellees.

GOLDEN ISLES CONVALESCENT CENTER, INC., d/b/a Hallandale

Rehabilitation Center, etc., et al., Plaintiffs-Appellees, v. Patricia Roberts HARRIS, Individually and as Secretary of

the Department of Health, Education and Welfare, Defendant,

William J. Page, Jr., Individually and as Secretary of the

Department of Health and Rehabilitative Services

of the State of Florida, et al.,

Defendants- Appellants.

Nos. 78-2745, 77-3467.

United States Court of Appeals, Fifth Circuit.

May 16, 1980.

Dempsey & Slaughter, Bernard H. Dempsey, Jr., Harrison T. Slaughter, Jr., Joseph B. Whitebread, Jr., A. Thomas Mihok, Orlando, Fla., for Florida Nursing Home Ass'n et al.

Shaw & Segall, Elliott S. Shaw, Miami, Fla., for Golden Isles Convalescent Center, Inc., et al.

James G. Mahorner, Dept. of Health & Rehabilitative Services, Tallahassee, Fla., for Page et al.

James G. Mahorner, Tallahassee, Fla., Robert S. Greenspan, William Kanter, Attys. App. Staff, Civ. Div., Dept. of Justice, Washington, D. C., for Harris et al.

Shaw & Segall, Elliot S. Shaw, Miami, Fla., for plaintiffs in all cases.

Appeals from the United States District Court for the Southern District of Florida.

Before AINSWORTH and HENDERSON, Circuit Judges, and HUNTER, ^* District Judge.

AINSWORTH, Circuit Judge:

These consolidated appeals arise from separate orders of the United States District Court for the Southern District of Florida. The orders resulted from partial adjudications in two suits brought by several Florida nursing homes against the Florida Department of Health and Rehabilitative Services (DHRS) and its secretary and the secretary and regional director of the United States Department of Health, Education and Welfare (HEW) concerning plaintiffs' rights to receive payments on a "reasonable cost-related basis" for services rendered under the Medicaid program of the Social Security Act (the Act). ¹ 42 U.S.C. § 1396 et seq.

Both suits sought to have a regulation issued by HEW, 45 C.F.R. § 250.3(a)(3) (iv) (1976), declared invalid. This regulation establishes January 1, 1978 as the date by which states participating in the Medicaid program were required to implement a plan to reimburse providers of services on a reasonable cost-related basis. ² Section 249 of the Social Security Act, 42 U.S.C. § 1396a(a)(13)(E), however, fixes July 1, 1976 as the effective date for implementing such a plan for reimbursement. ³

In the first suit, brought by Golden Isles Convalescent Center, Inc. and other licensed nursing homes in Dade and Broward Counties, Florida (referred to collectively as Golden Isles), the district court upon plaintiffs' motion for summary judgment held the administrative regulation invalid as inconsistent with the congressional mandate provided for in the Act. ⁴ In partially granting Golden Isles' motion for summary judgment, the court held that plaintiffs were entitled to payment from the state on a reasonable cost-related basis prospectively from the date of its ruling, October 18, 1977. It also ordered Florida DHRS to submit a plan effective October 18 and approved by HEW in compliance with the Act's mandate for providing a cost-related reimbursement plan. The court reserved ruling on the question of plaintiffs' entitlement to reimbursement retroactively from July 1, 1976, the date set out in the statute. In its order the court also ruled that its exercise of jurisdiction and venue were proper, despite objections by defendants that exclusive jurisdiction lies in the United States Supreme Court and that venue was proper only in the Northern District of Florida, the location of the main offices of the DHRS. Defendant Florida DHRS appealed the court's order. ⁵ The issues raised by appellant constitute the substance of the first appeal before us, which appeal will be referred to as the Golden Isles case (No. 77-3467).

In the second suit, the court also granted a partial summary judgment in favor of plaintiffs, Florida Nursing Home Association and its nursing home members (collectively referred to as Florida Nursing Home). In its order the court incorporated its opinion in the Golden Isles case invalidating the HEW regulation and requiring the state to reimburse plaintiffs on a reasonable cost-related basis from October 18, 1977 prospectively. Once again, a ruling on plaintiffs' right to retroactive relief was reserved by the district court until it considered written memoranda submitted by the parties. No appeal was taken by defendants from this order.

While Florida's appeal from the partial summary judgment in the Golden Isles case was still pending in this court, the district court consolidated for trial the Golden Isles and Florida Nursing Home cases for a determination whether the current approved plan submitted by Florida DHRS complies with the applicable Social Security statute. ⁶ In its order the court also entered judgment in favor of defendant Florida DHRS denying plaintiffs Golden Isles and Florida Nursing Home retroactive reimbursement from the state on a reasonable cost-related basis for services rendered prior to October 18, 1977. Plaintiffs appealed the court's ruling regarding their right to retroactive payments. The issue of plaintiffs-appellants' entitlement to reimbursement from the state on a reasonable cost-related basis prior to October 18, 1977 constitutes the substance of the second appeal to be addressed by us, which we will refer to as the Florida Nursing Home case (No. 78-2745).

Golden Isles Case (No. 77-3467)

In its appeal of the court's partial granting of Golden Isles' motion for summary judgment, appellant Florida DHRS asserts the district court erred in four respects. We disagree and affirm the court's ruling.

I.

Appellant first contends that the district court was without jurisdiction to hear this controversy because original and exclusive jurisdiction lies in the United States Supreme Court. Florida argues that since this action constitutes a controversy between a state and its own citizens under article III, section 2, clause 2 of the United States Constitution, the Supreme Court has original and exclusive jurisdiction. Appellant's contention is erroneous.

It is well established that the United States Constitution grants neither original nor exclusive jurisdiction to the United States Supreme Court over controversies between a state and its own citizens. C. Wright, Law of Federal Courts 557 (3d ed. 1976). The first paragraph of section 2 of article III of the Constitution provides in pertinent part:

The judicial Power shall extend . . . to Controversies to which the United States shall be a Party; to controversies between two or more States; between a State and Citizens of another State; between citizens of different States . . . .

The second clause, which appellant relies on here, states:

In all Cases . . . in which a State shall be a Party, the supreme Court shall have original Jurisdiction. In all other Cases before mentioned the supreme Court shall have appellate Jurisdiction . . . .

In interpreting these provisions, the Supreme Court several years ago in California v. Southern Pacific Co., 157 U.S. 229, 258, 15 S.Ct. 591, 602, 39 L.Ed. 683 (1895), made it clear that the language of clause 2 "(i)n all Cases . . . in which a State shall be (a) Party," means in all the cases enumerated in clause 1 of article III, section 2. Nowhere in clause 1 is there mention of a controversy between a state and its own citizens. As the Supreme Court firmly stated: "By the Constitution . . . this court has exclusive jurisdiction of all controversies of a civil nature where a state is a party, but not of controversies between a state and its own citizens . . . ." Id. at 258, 15 S.Ct. at 602. See Texas v. Interstate Commerce Commission, 258 U.S. 158, 163, 42 S.Ct. 261, 263, 66 L.Ed. 531 (1922); Minnesota v. Northern Securities Co., 184 U.S. 199, 245-46, 22 S.Ct. 308, 325-26, 46 L.Ed. 499 (1902).

This rule has been codified in the statutory provision which describes the original jurisdiction of the Supreme Court. See 28 U.S.C. § 1251. ⁷ Although section 1251(b)(3) provides for the Supreme Court's original, but not exclusive, jurisdiction of all actions by a state against the citizens of another state, there is no provision for controversies between a state and its own citizens.

Golden Isles brought this suit alleging violations by Florida of 42 U.S.C. § 1396a. The district court's ruling that it had jurisdiction over this action pursuant to 28 U.S.C. § 1331(a), ⁸ which provides for the district court's jurisdiction of all actions arising under the laws of the United States wherein the amount in controversy exceeds $10,000, was thus proper.

II.

Appellant Florida DHRS next contends that venue was proper only in the Northern District of Florida where the principal offices of DHRS and its secretary are located. It asserts that when a state officer or agency is sued for the purpose of compelling official action, venue lies only in the district where the agency and its executive officers maintain their official residences. Our review of the statute and the important considerations underlying the choice of a proper forum lead us to conclude that appellant's assertion that venue is improper in the Southern District of Florida is erroneous.

Venue is governed by the federal venue statute, 28 U.S.C. § 1391(b), which provides:

A civil action wherein jurisdiction is not founded solely on diversity of...