Gordon v. Forsyth County Hospital Authority, Inc., C-75-25-WS.

• Decision Date: 15 January 1976
• Docket Number: No. C-75-25-WS.,C-75-25-WS.
• Citation: 409 F. Supp. 708
• Parties: Claude Wilson GORDON et al., Plaintiffs, v. FORSYTH COUNTY HOSPITAL AUTHORITY, INC., et al., Defendants.
• Court: U.S. District Court — Middle District of North Carolina

409 F. Supp. 708

Claude Wilson GORDON et al., Plaintiffs, v. FORSYTH COUNTY HOSPITAL AUTHORITY, INC., et al., Defendants.

No. C-75-25-WS.

United States District Court, M. D. North Carolina, Winston-Salem Division.

September 11, 1975.

Memorandum Order and Judgment filed January 15, 1976.

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B. Ervin Brown, II and James C. Gulick, Winston-Salem, N. C., for Legal Aid Society of Forsyth County, for plaintiffs.

Roddey M. Ligon, Jr., and Kathrine S. Miller, of Womble, Carlyle, Sandridge & Rice, Winston-Salem, N. C., for defendants.

FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER

HIRAM H. WARD, District Judge.

This action came on for hearing before the Court on July 8, 1975, on cross motions by the parties for summary judgment. The parties have stipulated as to certain of the material facts and have submitted interrogatories and depositions. All parties have agreed that there is no dispute as to any material fact in the case and that the matter is ready in all respects to be decided by the Court on the questions of law presented.

The plaintiffs seek declaratory and injunctive relief in a class action against the Forsyth County Hospital Authority, Inc., (Hospital Authority) and its officers requiring the defendants to provide the plaintiffs and others similarly situated with free hospital and medical care at Forsyth Memorial Hospital (Forsyth) and Reynolds Memorial Hospital (Reynolds), which are located in Winston-Salem, North Carolina, pursuant to the provisions of the Hospital Survey and Construction Act of 1946, 42 U.S.C. § 291 et seq. (hereinafter referred to as the "Hill-Burton Act" or "the Act"), and the implementing regulations of the Department of Health, Education, and Welfare issued in accordance therewith, 42 C.F.R. § 53.111.

In the alternative, should the Court determine that the terms of the Act apply only to Forsyth, the plaintiffs seek an injunction requiring defendants (a) to provide each of them with uncompensated care within the meaning of the Act at Forsyth and to notify patients at the time of their admission to Forsyth of their eligibility for such care; (b) to cease transferring those patients who are eligible for uncompensated care within the meaning of the Act from Forsyth to Reynolds; (c) to cease the practice of reporting uncollectible debts at Reynolds for the purpose of fulfilling its obligation to provide uncompensated care within the meaning of the Act at Forsyth; and (d) to notify eligible recipients under the Act at the time of their proposed admission to Reynolds that the required medical and hospital services are available free of charge at Forsyth.

The jurisdiction of this Court is based upon 28 U.S.C. §§ 1331, 1343, 2201, 2202, and 42 U.S.C. §§ 1983 and 1985(3).¹

Based upon the record and stipulations of the parties, the Court makes the following Findings of Fact.

Findings of Fact

1. Forsyth is owned by the County of Forsyth and was constructed on the west side of Winston-Salem with the aid of Hill-Burton funds and with funding from county bonds and donations. The hospital was opened in May 1964 and was operated by the County of Forsyth through 1968, at which time the hospital was leased to the Hospital Authority. Hill-Burton funds were received by Forsyth County for the following construction and modernization projects at Forsyth Memorial Hospital:

(a) April, 1964 - $4,500,000 - Construction-New 540-bed hospital

(b) September, 1964 - $506,000 - Construction - 200-bed School of Nursing

(c) August, 1966 - $432,575 - Construction - 60-bed Long Term Care Unit

(d) November, 1971 - $366,427 - Construction - Rehabilitation Center

2. Reynolds was built by the City of Winston-Salem on the east side of the city. The hospital was opened in January 1970 and title to the hospital property was transferred to the county of Forsyth in 1972. Also in 1972 the hospital was leased to the Hospital Authority, and that lease continued to on or about July 1, 1975, when the Forsyth County Board of Commissioners took over the control and operation of Reynolds.

3. Reynolds was built without the aid of any Hill-Burton funds, and it has not received Hill-Burton funds for any other purpose. Reynolds provides certain free care to patients, but not pursuant to the Hill-Burton Act, and persons who are admitted as patients to Reynolds are not told that the same services provided at Reynolds may also be available at Forsyth to qualified Hill-Burton patients.

4. The Hospital Authority is governed by a twenty-four member Board of Trustees appointed by the Forsyth County Board of Commissioners and by the Winston-Salem Board of Aldermen. The chief executive officer is the president who is appointed by the Board of Trustees. While the medical-dental staffs and certain managerial functions have been consolidated for efficiency, the two hospitals operate as separate divisions, and the revenues and assets of one hospital may not be used to provide services at the other. Each hospital has separate contracts (and separate provider numbers) with Medicare, Medicaid, and Blue Cross. Separate accounting records and separate bank accounts are maintained for each hospital although federal and state taxes are paid jointly under single I.D. numbers. In the past, working capital has been advanced from one hospital to the other, but these advancements are temporary in nature and are required to be repaid.

5. Reynolds operates (a) the out-patient clinic known as the Forsyth County Family Health Center, (b) an in-patient general nursing unit of fifty beds primarily for patients who no longer need to be near surgical, cardiac monitoring facilities, or the like, and (c) a 28-bed psychiatric unit to which patients needing both mental health care and alcoholic rehabilitation are admitted. None of these sections of Reynolds have received Hill-Burton assistance. Forsyth is a 740-bed general hospital providing all services commonly found in an acute care hospital.

6. Forsyth elected the "3% of operating costs" method of satisfying its Hill-Burton obligation pursuant to the provisions of 42 C.F.R. § 53.111(d) during the year of July 1, 1973, through June 30, 1974. During the 1973-74 fiscal year, Forsyth filed a compliance report stating net operating costs of $11,257,870 for that year and reporting $348,661 as the amount of uncompensated services provided, or almost $11,000 more than the required 3% figure of $337,736.² In computing the 3% figure of uncompensated services provided by Forsyth, amounts expended by Reynolds, or any of its subdivisions such as the Family Health Center, for uncompensated health care were not counted to meet the Hill-Burton requirement.³

7. Forsyth's credit policy requires that patients whose admission is elective⁴ must either pay a deposit or show proof of third-party coverage (e. g., insurance, Medicare, etc.) before admission. Patients whose admission is emergency or urgent (see footnote 4) are admitted without regard to financial considerations but are required to make arrangements as soon after admission as possible for payment of their hospital bill, if they are financially able to pay.⁵ All patients admitted without making a deposit and without showing proof of third-party coverage are interviewed as soon after admission as possible, but only when their medical condition permits. If, during the interview, the patient's financial and family condition indicates that the patient is eligible for uncompensated care under Hill-Burton requirements, the patient is urged to apply for same. Whenever a patient's third-party coverage denies liability or leaves a substantial balance, contact with the patient is made and it is determined if the patient qualifies for Hill-Burton uncompensated care.

8. In the procedures cited in Finding of Fact No. 7, Forsyth normally postpones determination of a person's inability to pay until after the services are rendered and sometimes until after a bill has been sent and has remained unpaid, such procedure being in accordance with 42 C.F.R. § 53.111(f)(1).

9. Hill-Burton qualified patients are occasionally transferred from Forsyth to the 50-bed unit at Reynolds. The determination as to which patients are transferred is a decision made by the patient's doctor without the direct participation of the Hospital Authority, although it is the agency which grants staff privileges to the doctors who practice in its facility. Such transfer decisions are made by each individual doctor and are motivated by the doctor's requirement for bed space for his patients in one facility or the other. For instance, should a patient who is in Forsyth no longer require acute care and that bed space is needed for another patient in need of acute care, the doctor might transfer the non-acute care patient to Reynolds to acquire bed space at Forsyth. Such a procedure, however, requires that the patient be discharged from Forsyth and readmitted to Reynolds.

10. Because of the type of their illness, certain patients are treated at Reynolds as opposed to Forsyth due to a division of labor to achieve economy and efficiency between the two medical facilities. Although the ambulatory outpatient would likely receive treatment faster at the Family Health Center of Reynolds than he would at Forsyth for a nonemergency medical problem, the resources to treat all problems encountered at Reynolds are available, as time and space permit, at Forsyth.

11. On or about June 7, 1974, plaintiff Charlotte Mock Daniel was admitted to the GYN Division at Forsyth. Neither at the time of her admission nor at any subsequent time was plaintiff informed by defendants or their agents that she was eligible or ineligible for uncompensated care under the Act.

12. Subsequent to plaintiff Charlotte Mock Daniel's admission to the GYN Division at Forsyth, she was discharged by her physician on June 12, 1974, and thereafter on the same day without her knowledge, and on a...