Medical Ass'n of State of Ala. v. Schweiker, Civ. A. No. 81-276-N.

• Decision Date: 07 January 1983
• Docket Number: Civ. A. No. 81-276-N.
• Parties: The MEDICAL ASSOCIATION OF the STATE OF ALABAMA, and Daniel Gubin, M.D., Plaintiffs, v. Richard SCHWEIKER, Secretary of the United States Department of Health and Human Services, individually and in his official capacity, George A. Reich, M.D., Regional Health Administrator of the United States Department of Health and Human Services, individually and in his official capacity, Stephen H. King, M.D., Director of the Division of Health Service Delivery (Region IV), individually and in his official capacity, William B. Lyons, Executive Director (Region IV), individually and in his official capacity, Milton A. Watson, Jr., Public Health Advisor in the Division of Health Services (Region IV), individually and in his official capacity, Ray Overton, Chief of the Alabama/Georgia Section of the Primary Care Branch, Division of Health Services (Region IV), individually and in his official capacity, Denise Rouse, Former Executive Director and/or Public Health Advisor (Region IV), individually and in her former official capacity, Edward N. Brandt, M.D., Ph.D., Assistant Secretary and Director of Public Health Service individually and in his official capacity, Robert Graham, M.D., Acting Administrator of the Health Resources Administration, individually and in his official capacity, Howard V. Stambler, Director of the Division of Health Professions Analysis in the Bureau of Health Professions, individually and in his official capacity, John H. Kelso, Acting Administrator of the Health Services Administration, individually and in his official capacity, Edward Martin, M.D., Director of the Bureau of Community Health Services, individually and in his official capacity, Sandra Lichty, Ph.D., Director of Rural Health Programs (B.C.H.S.), individually and in her official capacity, Robert Schaeffer, Director of the Division of Monitoring and Analysis (B.C.H.S.), individually and in his official capacity, Rufus Wood, Project Director of the West El Health Services, Inc., individually and in his official capacity, West El Health Services, Inc., a private non-profit corporation, partially funded under the Rural Health Initiative Program, and X, Y, and Z being that person, firm or corporation who is responsible for the wrongful conduct or injury described herein whose names and legal descriptions are otherwise unknown but will be supplied by amendment when ascertained, Defendants, Society for the Advancement of Ambulatory Care, Defendant-Intervenor.
• Court: U.S. District Court — Middle District of Alabama

554 F. Supp. 955

The MEDICAL ASSOCIATION OF the STATE OF ALABAMA, and Daniel Gubin, M.D., Plaintiffs, v. Richard SCHWEIKER, Secretary of the United States Department of Health and Human Services, individually and in his official capacity, George A. Reich, M.D., Regional Health Administrator of the United States Department of Health and Human Services, individually and in his official capacity, Stephen H. King, M.D., Director of the Division of Health Service Delivery (Region IV), individually and in his official capacity, William B. Lyons, Executive Director (Region IV), individually and in his official capacity, Milton A. Watson, Jr., Public Health Advisor in the Division of Health Services (Region IV), individually and in his official capacity, Ray Overton, Chief of the Alabama/Georgia Section of the Primary Care Branch, Division of Health Services (Region IV), individually and in his official capacity, Denise Rouse, Former Executive Director and/or Public Health Advisor (Region IV), individually and in her former official capacity, Edward N. Brandt, M.D., Ph.D., Assistant Secretary and Director of Public Health Service individually and in his official capacity, Robert Graham, M.D., Acting Administrator of the Health Resources Administration, individually and in his official capacity, Howard V. Stambler, Director of the Division of Health Professions Analysis in the Bureau of Health Professions, individually and in his official capacity, John H. Kelso, Acting Administrator of the Health Services Administration, individually and in his official capacity, Edward Martin, M.D., Director of the Bureau of Community Health Services, individually and in his official capacity, Sandra Lichty, Ph.D., Director of Rural Health Programs (B.C.H.S.), individually and in her official capacity, Robert Schaeffer, Director of the Division of Monitoring and Analysis (B.C.H.S.), individually and in his official capacity, Rufus Wood, Project Director of the West El Health Services, Inc., individually and in his official capacity, West El Health Services, Inc., a private non-profit corporation, partially funded under the Rural Health Initiative Program, and X, Y, and Z being that person, firm or corporation who is responsible for the wrongful conduct or injury described herein whose names and legal descriptions are otherwise unknown but will be supplied by amendment when ascertained, Defendants, Society for the Advancement of Ambulatory Care, Defendant-Intervenor.

Civ. A. No. 81-276-N.

United States District Court, M.D. Alabama, N.D.

January 7, 1983.

COPYRIGHT MATERIAL OMITTED

John T. Mooresmith, Gen. Counsel, The Medical Ass'n of the State of Ala., and Wendell R. Morgan, Montgomery, Ala., for plaintiff Medical Ass'n.

Von G. Memory, Montgomery, Ala., for plaintiff Gubin.

John C. Bell, U.S. Atty., and Susan G. Bevill, Asst. U.S. Atty., M.D.Ala., Montgomery, Ala., for federal defendants.

Joe R. Whatley, Jr., Stewart, Falkenberry & Whatley, Birmingham, Ala., for defendants West El and Rufus Wood.

Jacqueline Leifer and James L. Feldesman, Boasberg, Klores, Feldesman & Tucker, Washington, D.C., for intervening defendant, Soc. for Advancement of Ambulatory Care.

OPINION

MYRON H. THOMPSON, District Judge.

The plaintiffs Dr. Daniel Gubin and the Medical Association of the State of Alabama have brought this cause of action attacking the federal Rural Health Initiative Program in the State of Alabama. First, they challenge the constitutionality under the first and fifth amendments to the United States Constitution of various provisions of the Public Health Service Act—in particular, 42 U.S.C.A. §§ 254c, 254e, 300e-1, 300l-2—and the regulations promulgated pursuant to these provisions, which provisions authorized the Secretary of the Department of Health and Human Services to establish the Rural Health Initiative Program; and, second, in the alternative, assuming the statutory provisions and regulations are constitutional, they challenge the actions of the defendants in this cause as being violative of the above provisions and section 300m, 42 U.S.C.A., of the same act and the regulations promulgated pursuant to these statutory provisions, the actions of the defendants as being violative of the first and fifth amendments to the United States Constitution, and the actions of the defendants as being violative of the Sherman Antitrust Act, 15 U.S.C.A. §§ 1, et seq.¹

I. BACKGROUND

In order to increase the availability of and access to primary health services for residents of medically underserved areas, the Public Health Service Act, 42 U.S.C.A. §§ 201, et seq., was amended in 1975 to authorize the Secretary of Health and Human Services to provide funds, in accordance with certain criteria, to public and private nonprofit entities for the establishment of community health centers in such areas. In carrying out his duties under the act, the Secretary administratively established the Rural Health Initiative Program to meet the needs of medically underserved rural areas, and he established the Urban Health Initiative Program to do the same for urban areas.

The events giving rise to this lawsuit as they appear from the complaint are rather simple. In 1978, West El, a nonprofit private corporation, was funded by the Secretary under the Rural Health Initiative Program as a community health center in Elmore County, Alabama. About the same time, Dr. Daniel Gubin established a medical practice in Elmore County in the same area served by West El. Two years later the Alabama Medical Association, with a membership of over 2000 physicians, and Dr. Gubin, a member of the association, filed this lawsuit alleging that competition from West El and other community health centers established throughout the State of Alabama as a part of the Rural Health Initiative Program was financially hurting the medical practices of Dr. Gubin and other physicians in Alabama and, in some instances, driving physicians out of business.

In their complaint, Dr. Gubin and the association, in addition to challenging the authority of Congress to establish the community health center program in 1975, charged, in so many words, that the Secretary of the Department of Health and Human Services and his subordinates

commenced granting millions of dollars, regardless of need, to public and private non-profit organizations. Grant applications, at an accelerated rate came, from every corner. Few applications, if any, were refused and the efforts of the entire organization Department of Health and Human Services were directed almost exclusively toward rapidly and reckless sic spending the entire Congressional appropriation. Grant applications were reviewed in a cursory manner and existing grantees were not monitored. In essence, all efforts of the Federal defendants were directed to fueling the "train" with no thought directed to the "track" ahead or behind. And, sure enough, through lack of safeguards and program supervision, substantial and wholesale abuse, fraud and mismanagement became rampant in the program.

Plaintiffs' brief, filed September 4, 1981, p. 3. Dr. Gubin and the association in their complaint further charged that West El was created and funded without the required need, that its application for funding contained materially false and misleading information, and that it has failed and continues to fail to comply with statutory and regulation requirements.

The defendants sued are (i) the federal defendants: Richard Schweiker, Secretary of the Department of Health and Human Services; Edward N. Brandt, Assistant Secretary of the Department; George A. Reich, Regional Health Administrator of the Department (Region IV); Stephen H. King, Director of the Division of Health Service Delivery (Region IV); William B. Lyons, Executive Director (Region IV); Ray Overton, Chief of the Alabama/Georgia Section (Region IV); Milton A. Watson, Jr., Public Health Advisor (Region IV); Denise Rouse, former Public Health Advisor and/or Executive Director (Region IV); Robert Graham, Acting Administrator for the Health Resources Administration; Howard V. Stambler, Director of the Division of Health Professions Analysis; John H. Kelso, Acting Administrator of the Health Services Administration; Edward Martin, Director of the Bureau of Community Health Services, Health Services Administration, Public Health Service; Sandra Lichty, Director of Rural Health Programs, Bureau of Community Health Services, Health Services Administration, Public Health Service; and Robert Schaeffer, Director of the Division of Monitoring and Analysis, Bureau of Community Health Services, Health Services Administration, Public Health Service;² (ii) the private defendants: West El Health Services, Inc. and Rufus Wood, Project Director of West El; (iii) the defendant-intervenor: Society for the Advancement of Ambulatory Care, a society composed of community health centers, including Rural Health Initiative Program Projects; and (iv) various fictitious defendants.³

This cause of action is now before the court on the defendants' motions to dismiss, filed July 8 and 20, August 12, and September 4 and 29, 1981, contending, among other things, (i) that the plaintiffs lack "standing" to pursue their claim that various provisions of the Public Health Service Act and the regulations promulgated pursuant to the provisions are unconstitutional, and further that they lack standing to pursue their claims that the defendants have violated various statutory provisions from the same act and the regulations promulgated pursuant to the provisions and that the defendants have violated the first and fifth amendments; and (ii) that the plaintiffs' antitrust claim, their only remaining claim, fails to state a claim upon which relief can be granted. For reasons which follow, the court is of the opinion that the motions have merit and that, accordingly, this cause of action is due to be dismissed.

II. STANDING

The court will first...