Huron Valley Hosp., Inc. v. City of Pontiac

• Decision Date: 17 June 1985
• Docket Number: No. 78-72970.,78-72970.
• Citation: 612 F. Supp. 654
• Parties: HURON VALLEY HOSPITAL, INC., A Michigan non-profit corporation, Plaintiff, v. CITY OF PONTIAC, a Michigan municipal corporation; City of Pontiac Hospital Building Authority, a Michigan municipal corporation; Pontiac Osteopathic Hospital, a Michigan non-profit corporation; Crittenton Hospital, a Michigan non-profit corporation; Sisters of Mercy Corporation, a Michigan non-profit corporation; Comprehensive Health Planning Council of Southeastern Michigan, a health systems agency; North Oakland County Planning Steering Committee, a planning group under the auspices of Greater Detroit Area Health Council, Inc., a Michigan corporation; United States Department of Health and Human Services, an executive agency of the United States; Margaret Heckler, as Secretary of the Department of Health and Human Services; Bailus Walker, Jr.; Maurice S. Reizen, M.D.; Herman A. Ziel, M.D.; Richard Reihmer; Paul Masseron, and Terence E. Carroll, Defendants.
• Court: U.S. District Court — Western District of Michigan

612 F. Supp. 654

HURON VALLEY HOSPITAL, INC., A Michigan non-profit corporation, Plaintiff, v. CITY OF PONTIAC, a Michigan municipal corporation; City of Pontiac Hospital Building Authority, a Michigan municipal corporation; Pontiac Osteopathic Hospital, a Michigan non-profit corporation; Crittenton Hospital, a Michigan non-profit corporation; Sisters of Mercy Corporation, a Michigan non-profit corporation; Comprehensive Health Planning Council of Southeastern Michigan, a health systems agency; North Oakland County Planning Steering Committee, a planning group under the auspices of Greater Detroit Area Health Council, Inc., a Michigan corporation; United States Department of Health and Human Services, an executive agency of the United States; Margaret Heckler, as Secretary of the Department of Health and Human Services; Bailus Walker, Jr.; Maurice S. Reizen, M.D.; Herman A. Ziel, M.D.; Richard Reihmer; Paul Masseron, and Terence E. Carroll, Defendants.

No. 78-72970.

United States District Court, E.D. Michigan, S.D.

June 17, 1985.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Lesinski, Kroll, Murphy & O'Neil by T. John Lesinski, Michael E. Murphy, Detroit, Mich., John P. Morris, Arizona State University College of Law, Tempe, Ariz., Kohn, Milstein, Cohen & Hausfeld by Jerry S. Cohen, Washington, D.C., for plaintiff.

Miller, Canfield, Paddock & Stone by Larry J. Saylor, Detroit, Mich., for defendants City of Pontiac and City of Pontiac Hosp. Building Authority.

Dykema, Gossett, Spencer, Goodnow & Trigg by Roger K. Timm, Detroit, Mich., for defendants Pontiac Osteopathic Hosp. and Crittenton Hosp.

Martin, Maxwell, Smith, Buhl & Hanson, P.C. by Robert A. Maxwell, Bloomfield Hills, Mich., for defendants Sisters of Mercy Corp.

Riley and Roumell by Timothy M. Guerriero, Detroit, Mich., for defendants Comprehensive Health Planning Council of Southeastern Michigan, Paul Masseron and Terence E. Carroll.

Long, Preston, Kinnaird & Avant by Grady Avant, Jr., Detroit, Mich., for defendants North Oakland County Planning Steering Committee, Greater Detroit Area Health Council, Inc.

Charles Sorenson, Dept. of Justice, Civ. Div., Washington, D.C., for defendants U.S. Dept. of Health and Human Services and Margaret Heckler.

Edwin M. Bladen, Asst. Atty. Gen., Lansing, Mich., for defendants Balius Walker, Jr., Maurice S. Reizen, M.D., Herman A. Ziel, M.D., Richard Reihmer.

OPINION

GILMORE, District Judge.

Once again, this matter is before the Court upon motions to dismiss and/or for summary judgment. The basic facts are set forth in this Court's prior opinion, Huron Valley Hospital, Inc. v. City of Pontiac, 585 F.Supp. 1159 (E.D.Mich.1984).

Here, the four state defendants, present and former officials of the Michigan Department of Public Health (MDPH) (Balius Walker, Jr., Richard Reihmer, Maurice S. Reizen, M.D., and Herman A. Ziel, M.D.) and the hospital defendants (Pontiac General Hospital, Pontiac Osteopathic Hospital, Crittenton Hospital, and the Sisters of Mercy Corporation) have filed motions to dismiss and for summary judgment. The MDPH, as an entity, was dismissed by stipulation on February 18, 1983.

I. STATE DEFENDANTS

A. Statute of Limitations

The first motion by the state defendants claims that the action is untimely under applicable statutes of limitation. The limitations period for an antitrust claim is four years under 15 U.S.C. § 15b, and for a 42 U.S.C. § 1983 claim, the applicable statute is Michigan's three year limitation on personal injury claims, M.C.L.A. § 600.5805(8). See Wilson v. Garcia, 471 U.S. ___, 105 S.Ct. 1938, 85 L.Ed.2d 254.

The state defendants were named in a proposed amended complaint, but the amendment was denied by Judge Kennedy in 1979¹. Therefore, they did not become defendants in this action until they were named in the amended complaint filed on November 15, 1983. Thus, the crucial date for any antitrust claim is four years before that, or November 15, 1979, and for any civil rights claim, November 15, 1980, in the absence of tolling.² These defendants argue that the latest act that even arguably could gave rise to a cause of action was the failure of MDPH to issue a second certificate of need for an additional 150 beds in the hospital within 90 days after the request for it was filed on June 1, 1978—90 days representing the time within which the MDPH was required to act upon an application for a Certificate of Need (CON) under 42 C.F.R. § 100.101. In other words, the defendants argue that plaintiff's cause of action accrued, if at all, on August 30, 1978 at the latest, thus barring both the Section 1983 claim and the antitrust claim.

This argument overlooks the fact that both the district court³ and the court of appeals⁴ held that this action was not ripe for adjudication until the state administrative and judicial proceedings were complete. Indeed, the case was stayed at the direction of the Court of Appeals for two years. The state proceedings were not completed until October 27, 1982, when the MDPH finally issued plaintiff a CON in a reasonable amount.

In addition, plaintiff has alleged that these defendants engaged in a continuing conspiracy to prevent the construction of this hospital that extended at least until April of 1982 as to these defendants. Although defendants argue that the allegations of continuing conspiracy have not been pled with sufficient particularity, the complaint does contain several general allegations of continuing conspiracy, and the Sixth Circuit has held that a complaint may be dismissed as time-barred under Fed.R. Civ.P. 12(b)(6) only if "the statement of the claim affirmatively shows that plaintiff can prove no set of facts that would entitle him to relief." Ott v. Midland-Ross Corp., 523 F.2d 1367, 1369 (6th Cir.1975) (emphasis in original). This Court cannot say that the complaint in this case shows such a deficiency on its face. In addition, the Supreme Court held, in Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 338, 91 S.Ct. 795, 806, 28 L.Ed.2d 77 (1971), that in a "continuing conspiracy to violate the antitrust laws ... each time a plaintiff is injured by an act of the defendants a cause of action accrues to him to recover the damages caused by that act and that, as to those damages, the statute of limitations runs from the commission of the act."

Finally, these claims are not barred by the statute of limitations because they relate back to the date of the filing of the original complaint, November 16, 1978. Because the original complaint described alleged illegal acts on the part of MDPH, the state agency of which these defendants were officials, and because the amended complaint proposed in January 1979 named these defendants individually and sought to add a Section 1983 claim, the requirements of Fed.R.Civ.P. 15(c) for relation back of an amendment are met as to these defendants.⁵ Therefore, for the reasons given, there is no basis for dismissing these defendants because of the running of the statute of limitations. The suit is timely as to them.

B. Res Judicata

These defendants next claim that plaintiff's Section 1983 claims could and should have been raised in prior state proceedings, and that plaintiff's failure to do so is res judicata in this action.⁶ This assertion is without merit. The state proceedings were simply appeals from administrative determinations, limited under the state Administrative Procedures Act⁷ to a determination of whether the administrative decision was supported by competent, substantial evidence on the record taken as a whole. Avon Township v. Boundary Commission, 96 Mich.App. 736, 293 N.W.2d 691 (1980); Murphy v. Oakland County Dept. of Health, 95 Mich.App. 337, 290 N.W.2d 139 (1980). That fact distinguishes this case from Allen v. McCurry, 449 U.S. 90, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980), and Migra v. Warren City School District Board of Education, 465 U.S. 75, 104 S.Ct. 892, 79 L.Ed.2d 56 (1984), which held that any claims which either were or could have been litigated in a prior state proceeding were barred in a subsequent federal Section 1983 action, because the state proceedings in those cases afforded the opportunity to raise the issue on which the Section 1983 claims were based.

Plaintiff did raise some due process arguments during the state proceedings in this case.⁸ Those allegations were limited, however, to defects in the administrative process, and did not encompass the broad allegations of conspiracy raised by the Section 1983 claim in the instant case.

The state defendants also claim that the earlier dismissal with prejudice of MDPH, of which these defendants were officials, is res judicata to them as individuals. The settlement agreement expressly provides, however, that "such dismissal is not intended, and shall not be construed to effect the liability, if any, of any of MDPH's officials, employees or agents, but is intended to apply to the Department, as an agency of government, only."

Therefore, it is clear that plaintiff's claims are not barred by res judicata.

C. 11th Amendment

These defendants next assert that this suit is actually against the Michigan state treasury, and is therefore barred by the 11th Amendment's prohibition on suits against the states in federal court. While it is true that a suit against a state official which seeks damages from the public treasury is generally barred by the 11th Amendment, the Supreme Court has held that "damages against individual defendants are a permissible remedy in some circumstances notwithstanding the fact that they hold public office." Scheuer v. Rhodes, 416 U.S. 232, 238, 94 S.Ct. 1683, 1687, 40 L.Ed.2d 90 (1974). In the Scheuer case, the Court held that an award of money damages from a state official may be permissible if the defendant cannot show that his actions were characterized by good faith and reasonableness, and reversed the dismissal of a § 1983 action against the Governor of Ohio...