Massachusetts Hospital Ass'n, Inc. v. Harris

• Decision Date: 29 October 1980
• Docket Number: Civ. A. No. 78-583-K.
• Citation: 500 F. Supp. 1270
• Parties: MASSACHUSETTS HOSPITAL ASSOCIATION, INC., on its own behalf and on behalf of its Member Hospitals participating in the Medicaid Program, Plaintiff, v. Patricia R. HARRIS, as she is Secretary of Health and Human Services, Commonwealth of Massachusetts, Department of Public Welfare, Alexander E. Sharp, II, Individually and as he is Commissioner of Public Welfare, David Pratt, as he is successor in office to Alexander E. Sharp, Rate Setting Commission, Stephen M. Weiner, Individually and as he is Chairman of the Rate Setting Commission, and Shelby P. Mudarri, Individually and as he is Commissioner of the Rate Setting Commission, Charles Stover, Individually and as he is Commissioner of the Rate Setting Commission, Peter Hiam, successor in office to Stephen M. Weiner, Defendants.
• Court: U.S. District Court — District of Massachusetts

500 F. Supp. 1270

MASSACHUSETTS HOSPITAL ASSOCIATION, INC., on its own behalf and on behalf of its Member Hospitals participating in the Medicaid Program, Plaintiff, v. Patricia R. HARRIS, as she is Secretary of Health and Human Services, Commonwealth of Massachusetts, Department of Public Welfare, Alexander E. Sharp, II, Individually and as he is Commissioner of Public Welfare, David Pratt, as he is successor in office to Alexander E. Sharp, Rate Setting Commission, Stephen M. Weiner, Individually and as he is Chairman of the Rate Setting Commission, and Shelby P. Mudarri, Individually and as he is Commissioner of the Rate Setting Commission, Charles Stover, Individually and as he is Commissioner of the Rate Setting Commission, Peter Hiam, successor in office to Stephen M. Weiner, Defendants.

Civ. A. No. 78-583-K.

United States District Court, D. Massachusetts.

October 29, 1980.

COPYRIGHT MATERIAL OMITTED

Edward D. Kalman, Kenneth A. Behar, O'Leary, Behar & Kalman, Boston, Mass., for plaintiff.

S. Stephen Rosenfeld, Carl Valvo, Asst. Attys. Gen., Boston, Mass., Donald Anderson, Asst. U.S. Atty., Nancy S. Nemon, Deputy Regional Atty., Dept. of Health & Human Services, Boston, Mass., for defendants.

MEMORANDUM AND ORDER

KEETON, District Judge.

I. Introduction

The Massachusetts Hospital Association, Inc. (MHA), a nonprofit corporation of 151 member hospitals, has brought this action challenging Massachusetts' system for reimbursing hospitals for the costs of inpatient services provided to Medicaid patients. The Commonwealth's Medicaid cost reimbursement program is administered by the Department of Public Welfare (DPW) pursuant to rate setting regulations promulgated by the Rate Setting Commission (the Commission). The regulations are a component of Massachusetts' state plan for medical assistance (the state plan), and were approved by the Secretary of Health and Human Services (the Secretary) pursuant to Title XIX of the Social Security Act, 42 U.S.C. § 1396a(a)(13)(D). MHA claims that the state plan, on its face and as applied, violates the federal and state constitutions, Title XIX, the Secretary's regulations, and Massachusetts law. The Association also argues that the Secretary failed to conduct a proper prior-to-implementation review of the state plan now in effect, as well as of an earlier state plan, as required by § 1396a(a)(13)(D). Named as defendants are the Commonwealth of Massachusetts, the Commission, its chairman, members, and Stephen M. Weiner, its former chairman, the Department of Public Welfare, its Commissioner, and its former Commissioner, Alexander E. Sharp (all of whom are referred to collectively as the state defendants), and the Secretary of Health and Human Services.

The plaintiff has filed a motion for partial summary judgment, which is considered in Part II of this memorandum.

Both the state and federal defendants have filed motions to dismiss the amended complaint.¹ The issues raised by the motions to dismiss were divided into two categories for the purpose of oral argument. In the first category are the issues relating to the jurisdiction of this court to hear the claims and grant the relief requested by the plaintiff, i. e., subject matter jurisdiction, standing, mootness, sovereign immunity, exhaustion of state remedies, and abstention as well as two issues relating strictly to the legal sufficiency of the complaint. These issues have been fully briefed and argued. They are discussed in Parts IV and V of this memorandum.

Issues in the second category raised by the defendants' motions to dismiss concern the proper scope of judicial review of the Secretary's approval of the state plan and the sufficiency of the plaintiff's allegations of constitutional and statutory violations. On March 4, 1980, the court entered a procedural order inviting the parties to submit memoranda on the question of the proper scope of judicial review. No oral argument on this issue has yet taken place. This memorandum does not decide issues in the second category. They are discussed in Part VI, infra.

II. Plaintiff's Motion for Summary Judgment

Plaintiff's motion for partial summary judgment was filed on December 17, 1979. At the same time, pursuant to paragraph 2 of this court's Procedural Order Regarding Motions for Dismissal or Summary Judgment,² MHA filed a "Statement of Uncontroverted Facts" consisting of 260 paragraphs extending over 102 pages. Concerned about the length and complexity of the Association's submission, at a hearing on January 29, 1980 this court directed MHA to inform the clerk within one week whether its statement complied with the procedural order, and with supplemental directions given at the hearing, that only facts both undisputed and essential to its summary judgment motion be set forth. On February 5, 1980, counsel for MHA wrote to the court stating that with respect to its motion for partial summary judgment against the state defendants

The plaintiff is not prepared to say that all facts set forth in its Statement are "undisputed" within the meaning of the court's standard pretrial order, because in the context of that order plaintiff understands that the word "undisputed" means "uncontrovertible."

At a hearing on February 12, 1980 the court questioned counsel for the plaintiff about the meaning of the quoted portion of his letter. Referring to the state defendants' opposition to its summary judgment motion, plaintiff's counsel stated:

Now with that in mind I would like to differentiate between the defendants because I think it is important. As to the Secretary, I think our statement stands as uncontroverted.

Tr. of February 12, 1980 hearing, p. 25.

Later at that same hearing, the court ordered MHA to identify those facts in its Statement which related to its demand for judgment against the Secretary. Plaintiff did so in a statement filed February 19, 1980 that listed fifty-six purportedly undisputed facts. At a hearing on March 11, 1980, counsel for the Secretary sought relief from its obligation under paragraph 3 of the court's procedural order to respond to MHA's Statement of undisputed facts by underlining those facts which the Secretary asserted were genuinely in dispute. Tr. of March 11, 1980 hearing, pp. 45-50. Counsel for the Secretary called to the court's attention several allegations in MHA's Statement as to which the Secretary contended a genuine dispute clearly existed in the evidence. After an extensive discussion with plaintiff's counsel, the court granted the Secretary's request for relief from its procedural order. Id. at 54. Implicit in its decision to do so was a determination that MHA had violated paragraph two of the procedural order by listing plainly disputable facts in its Statement.

Because the court's directions supplementing the procedural order required that only undisputed facts essential to the plaintiff's motion for summary judgment be included in its submission to the court, this court could deny plaintiff's motion for summary judgment simply on the basis of plaintiff's representation that every fact stated is essential and on its determination that some of the facts represented to be essential are in dispute. However, it is likely that counsel's representations arose from a misunderstanding of the court's procedural order and of the limited function of a trial court in considering a motion for summary judgment. When deciding such a motion, the court can neither weigh evidence nor make findings of fact on disputed issues. In these circumstances, it is more appropriate to strike plaintiff's motion for partial summary judgment without prejudice to its later filing a motion in compliance with procedural orders that have been or may be entered in relation to motions for summary judgment.³

III. The Statutory Context of This Controversy

A state electing to participate in the Medicaid program must submit a state plan to the Secretary of Health and Human Services describing how it will satisfy the conditions set forth in Title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq., and the Secretary's regulations. Section 1396a(a)(13)(D) of Title 42 requires that a state plan

provide ... for payment of the reasonable cost of inpatient hospital services provided under the plan, as determined in accordance with methods and standards, consistent with Section 1320a-1 of this title limiting the use of federal funds for capital expenditures by hospitals which shall be developed by the State and reviewed and approved by the Secretary and (after notice of approval of the Secretary) included in the plan, except that the reasonable cost of any such services as determined under such methods and standards shall not exceed the amount which would be determined under section 1395x(v) of this title as the reasonable cost of such services for purposes of sub-chapter XVIII governing the Medicare program of this chapter.

Before the passage of the Social Security Amendments Act of 1972 (the 1972 Act), Pub.L. 92-603, 86 Stat. 1410, the Secretary and the courts had interpreted Title XIX to require the states to reimburse hospitals participating in the Medicaid program in the same manner as had developed under the Medicare program, i. e., by reimbursing the hospitals for the "costs actually incurred" in providing services. See Massachusetts General Hospital v. Weiner, 569 F.2d 1156, 1158 (1st Cir. 1978). This practice of fully reimbursing all expenses incurred by service providers provoked sharp criticism for doing nothing to hold down the spiraling costs of medical assistance programs. Staff of Senate Comm. on Finance, 91st Cong., 1st Sess., Report: Medicare and Medicaid: Problems, Issues and Alternatives 50 (Comm. Print 1970). Responding to this criticism, Congress enacted section 232 of the 1972 Act amending 42 U.S.C. § 1396a(a)(13)(D) to give the states authority, subject to the Secretary's approval, to implement their own methods of...