Lugo v. Simon, Civ. No. C 74-345.

• Decision Date: 21 April 1978
• Docket Number: Civ. No. C 74-345.
• Parties: Refugio LUGO et al., Plaintiffs, v. William E. SIMON et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

453 F. Supp. 677

Refugio LUGO et al., Plaintiffs, v. William E. SIMON et al., Defendants.

Civ. No. C 74-345.

United States District Court, N. D. Ohio, W. D.

April 21, 1978.

COPYRIGHT MATERIAL OMITTED

John P. Worcester, Advocates for Basic Legal Equality, Toledo, Ohio, Marvin H. Feingold, Bowling Green, Ohio, Marilyn G. Rose, Joseph N. Onek, Center for Law and Social Policy, Washington, D. C., for plaintiffs.

Sidney Edelman, Asst. Gen. Counsel for Public Health, Dept. of Health, Education and Welfare, Rockville, Md., Shirley Moscow, Dept. of Health, Education and Welfare, Chicago, Ill., Patrick J. Foley, Asst. U. S. Atty., Toledo, Ohio, for HEW.

John J. McCarthy, Chief, Gen. Litigation Section, Tax Div., U. S. Dept. of Justice, John M. Cunningham, Donald J. Gavin, Trial Attys., Tax Div., U. S. Dept. of Justice, Washington, D. C., Patrick J. Foley, Asst. U. S. Atty., Toledo, Ohio, for Sec. of Treasury and Commissioner of IRS.

William J. Brown, Atty. Gen. of Ohio, William J. McDonald, Asst. Atty. Gen., Columbus, Ohio, for state defendants Ackerman and Shirkey.

Richard B. McQuade, Swanton, Ohio, for defendants Fulton County Health Center and Director Victor Sernio.

MEMORANDUM AND ORDER

DON J. YOUNG, District Judge.

This cause came to be heard upon motion for summary judgment and to dismiss filed with respect to both the Hill-Burton claims and federal tax claims of plaintiffs. The pending motions concerning the Hill-Burton branch of the case will be dealt with first.

Plaintiffs have filed motions for summary judgment against both the Secretary of Health, Education and Welfare and the state defendants, defendants Ackerman and Shirkey, who are the Director of the Ohio Department of Health and the Chief of the Division of Medical Facilities of the state department. Both motions and this branch of plaintiffs' complaint concern the asserted failure of HEW and the state defendants to undertake their responsibilities with regard to enforcement of assurances under Title VI of the Public Health Services Act, 42 U.S.C. § 291 et seq. (hereafter referred to as Title VI or the Hill-Burton Act). Plaintiffs' claims at issue concern the assurances made by federally assisted facilities under Title VI to provide a "reasonable volume of services to persons unable to pay therefor." 42 U.S.C. § 291c(e) (hereafter this assurance will be referred to as the "reasonable volume" assurance.) The motions for summary judgment are opposed by both HEW and the state defendants. Both HEW and the state defendants have filed motions which seek alternatively for the complaint to be dismissed or summary judgment to be entered against plaintiffs.

The Secretary of HEW has also filed a motion for summary judgment against the state defendants with regard to his cross-claim against them. The state defendants oppose this motion as well.

One of the few issues in this case which is not disputed is that under both Title VI of the Public Health Services Act and the regulations promulgated pursuant to the authority granted under the Act, 42 C.F.R. Part 53, a condition precedent to the provision of assistance under the Act was the submission of a state plan and approval of the plan by the Secretary. 42 U.S.C. §§ 291d(a), 291e(b)(3). Under 42 U.S.C. § 291d(a)(1) the state was required to designate a single state agency for the administration or the supervision of the administration of the plan. Under Ohio's plan, the agency designated was the Ohio Department of Health (Division of Medical Facilities).

Under 42 U.S.C. § 291c(e), regulations were to be issued prescribing:

(e) that the State plan shall provide . . Such regulations may also require that before the 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 (1) the facility or portion thereof to be constructed or modernized will be made available to all persons residing in the territorial area of the applicant community service assurance; and (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. reasonable volume assurance

Regulations were in fact issued requiring the community service and reasonable volume assurance for participation in Title VI funding. 42 C.F.R. 53.111 and 53.113. The reasonable volume assurances apply to facilities for a period of 20 years after the completion of construction of any facility with respect to which funds were paid under the Act or for a longer period as provided under 42 C.F.R. 53.111(a). The regulations also provide (in accordance with the prior order of this Court) that the community service assurances apply for an indefinite period. 42 C.F.R. 53.113(a).

The question presented in the pending motions before this Court is not whether these assurances are binding on Title VI assisted facilities, but who is responsible for their enforcement and whether declaratory and equitable relief should be granted to assure that enforcement responsibilities under the Act are indeed performed.

Under 42 U.S.C. § 291e(b)(3), applications for assistance under Title VI could not be approved unless they were in conformity with the state plan and contained the community service and reasonable volume assurances required under § 291c(e) and regulations issued thereunder. Under § 291d(a)(2) a requirement for state participation in Title VI assistance was that the state plan:

(2) contain satisfactory evidence that the State agency designated in accordance with paragraph (1) of this subsection will have authority to carry out such plan in conformity with this part.

The regulations concerning community service and reasonable volume assurances specifically require that the state plan provide that the designated state agency will provide means of enforcement of these assurances. The regulations concerning both reasonable volume and community service assurances contain identical provisions concerning the responsibilities of the designated state agency for enforce assurances:

The State plan shall provide for adequate methods of enforcement of the assurance, including effective sanctions to be applied against any facility which fails to comply with such assurance. Such sanctions may include, but need not be limited to, license revocation, termination of State assistance, and court action. 42 C.F.R. 53.111(k)(3) and 53.113(f)(2).

Under the Ohio plan the Director of the Ohio Department of Health assumed certain duties with regard to enforcement of assurances under Title VI. With regard to the reasonable volume assurance the plan provides in pertinent part that:

IX. Other Duties of the Director:

A. Annually perform evaluations of the amount of various services provided in each facility to determine whether the assurances submitted by the facility are in compliance. Evaluate each facility for uncompensated services using financial statements filed pursuant to Section 646 of the Federal Act to show the financial operations of the facility and charges made for providing such services.

B. Investigate complaints charging a facility with failure to provide a reasonable volume of free care.

C. Provide adequate methods of enforcement of the assurances, including effective sanctions to be applied against any facility which fails to provide a reasonable volume of free services. Such sanctions may include, but are not limited to, termination of State assistance or court action. (Emphasis added).

D. Annually report to the Secretary the evaluation of each facility's compliance with the assurance, the disposition of each complaint received and proposed action.

* * * * * *

G. The Director will apply, evaluate and enforce all of the requirements as published in the Federal Register, Volume 37, Number 142, as reprinted on July 22, 1972, and any amended guidelines that may be adopted either by the Department of Health, Education and Welfare or the Director, and deemed within the authority of the Director's office.

Under 42 U.S.C. § 291g, the Secretary is granted authority to terminate Title VI assistance where the state agency is not complying with the provisions of its state plan which are mandatory under § 291d.

It is not disputed that since the approval of the Ohio state plan, Title VI assistance has been provided to health care facilities in Ohio in the amount of $52,203,035. The enforcement of assurances issues in the case, however, are complicated first by the fact that the last appropriations available under Title VI ceased during the pendency of this action (on September 30, 1976) and, secondly, by the enactment of provisions under Title XVI of the National Health Planning and Resource Development Act (hereafter Title XVI), which affect the enforcement of assurances made to secure Title VI assistance. The relevant statutory enactments are 42 U.S.C. §§ 300o-1 and 300p-2(c).

Section 300o-1 requires the Secretary of HEW to promulgate regulations to prescribe in a general manner the requirements for compliance with Title VI assurances and to set forth the means by which assisted entities shall be required to demonstrate compliance. Under § 300o-1, the Secretary also is required to implement a procedure under which assisted entities are to submit data and information to the Secretary which reasonably supports a finding of compliance with Title VI assurances. Under § 300p-2(c), the Secretary is required to implement an independent monitoring procedure under which periodic investigations are to be conducted to ascertain compliance with Title VI assurances. The section also provides for private civil actions to obtain compliance with Title VI assurances under certain circumstances. The relevant statutory provisions are set forth below:

§ 300o-1. The

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