Musso v. Suriano, s. 78-1216

• Decision Date: 02 November 1978
• Docket Number: Nos. 78-1216,78-1248 and 78-1302,s. 78-1216
• Citation: 586 F.2d 59
• Parties: Joseph MUSSO, Plaintiff-Appellant, v. Raffaele SURIANO, Dean, Loyola University School of Dentistry, John Madonia, Associate Dean, Loyola University School of Dentistry, and Loyola University School of Dentistry, Defendants- Appellees. Patrick BATT, Plaintiff-Appellant, v. MARION HEIGHTS, INC., Sister Lillian Van Domlen, Sister Rosalie Klein, Sister M. Mel O'Dowd, Sister Angiola Stickelmaier, Sister Peyton Ryan, Delores Gencuski, Mrs. A. Boehm, John Conway, Robert Hackett, Gerald Falci, and Roger N. Hamilton, Defendants-Appellees. Stephen J. KAVKA, M. D., Plaintiff-Appellant, v. EDGEWATER HOSPITAL, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 59

586 F.2d 59

Joseph MUSSO, Plaintiff-Appellant, v. Raffaele SURIANO, Dean, Loyola University School of

Dentistry, John Madonia, Associate Dean, Loyola

University School of Dentistry, and

Loyola University School of

Dentistry,

Defendants-

Appellees.

Patrick BATT, Plaintiff-Appellant, v. MARION HEIGHTS, INC., Sister Lillian Van Domlen, Sister

Rosalie Klein, Sister M. Mel O'Dowd, Sister Angiola

Stickelmaier, Sister Peyton Ryan, Delores Gencuski, Mrs. A.

Boehm, John Conway, Robert Hackett, Gerald Falci, and Roger

N. Hamilton, Defendants-Appellees.

Stephen J. KAVKA, M. D., Plaintiff-Appellant, v. EDGEWATER HOSPITAL, INC., Defendant-Appellee.

Nos. 78-1216, 78-1248 and 78-1302.

United States Court of Appeals Seventh Circuit.

Argued Sept. 15, 1978.

Decided Nov. 2, 1978.

David L. Walther, Milwaukee, Wis., Ralph E. Brown, Patrick T. Murphy, Chicago, Ill., for plaintiffs-appellants.

Bruce C. O'Neill, Milwaukee, Wis., William J. Campbell, Leon S. Conlon, Chicago, Ill., for defendants-appellees.

Before SPRECHER, Circuit Judge, NICHOLS, Judge, ^* and BAUER, Circuit Judge.

SPRECHER, Circuit Judge.

These three cases have been consolidated for opinion on the recurring issue of when the actions of a private entity can properly be characterized as occurring "under color of state law" allowing maintenance of an action under 42 U.S.C. § 1983.

I

In all three cases, the district court granted defendant's motions to dismiss the complaints for lack of subject matter jurisdiction. In each case the district court held that there were insufficient allegations of state or federal action. ¹

In Batt v. Marion Heights, Inc., plaintiff Patrick Batt brought suit for damages against the defendant nursing home, its Board of Directors and an individual serving as administrator of the facility. Batt had been employed by Marion Heights as personnel director. On May 6, 1977, Batt was discharged, allegedly for the sole reason that he was a homosexual. Batt claims his dismissal on this ground deprived him freedom of speech and association, his right to privacy, due process, and equal protection in violation of the First, Fourth, Fifth, Ninth and Fourteenth Amendments to the United States Constitution. In support of his charge that he was terminated "under color of state law," Batt relies principally on two factors: 1) Marion Heights receives extensive state and federal funding under Medicare and Medicaid as well as through specific governmental programs; and 2) Marion Heights is regulated and licensed by the State of Wisconsin. Plaintiff does not allege that this funding or regulation encouraged or required the defendants' decision to discharge homosexual employees.

In Kavka v. Edgewater Hospital, Inc., Dr. Stephen Kavka alleges that the hospital acted under color of state law in suspending him from the hospital staff for failure to self-insure against malpractice. This dismissal was alleged to be in violation of his rights to due process and equal protection secured by the Fifth and Fourteenth Amendments. State action, as formulated in the complaint, is supported by allegations of substantial state and federal funding to the defendant under Medicare, Medicaid, and the Hill Burton Act. Dr. Kavka does not allege any relation between the governmental funding and the hospital rule requiring staff physicians to maintain malpractice insurance. In plaintiff's memorandum in opposition to the defendants' motion to dismiss, and in his brief to this court, plaintiff expands the allegations of his complaint. He alleges that the State of Illinois in addition has undertaken to regulate the field of malpractice and has prohibited hospitals from using exculpatory clauses. Furthermore, he argues that the federal and state governments, in the course of regulating participants eligible for Medicare and Medicaid programs, have effectively approved the use of the insurance requirement imposed by Edgewater. ² But again, the plaintiff fails to demonstrate any relation between these actions of the State and the decision of the hospital.

In the third case, Musso v. Suriano, a dental student at Loyola University brought an action alleging that he was expelled by the University without a hearing, in violation of due process rights secured him by the Fifth and Fourteenth Amendments to the United States Constitution. It is argued that this expulsion was conducted under color of state law since Loyola receives substantial state and federal funding allegedly fifty percent of its budget. Additionally, it is stated that the Illinois Department of Registration and Education monitors the curriculum and graduation requirements of the Dental School. Plaintiff, however, does not allege any impact of governmental funding on Loyola's decision not to provide plaintiff with a pre-expulsion hearing.

II

In two recent cases, Cannon v. University of Chicago, 559 F.2d 1063 (7th Cir. 1976), Cert. granted, --- U.S. ----, 98 S.Ct. 3142, 57 L.Ed.2d 1159 (1978), and Cohen v. Illinois Institute of Technology, 524 F.2d 818 (7th Cir. 1975), Cert. denied, 425 U.S. 943, 96 S.Ct. 1683, 48 L.Ed.2d 187 (1976), this court outlined the elements of "state action" prerequisite to any 42 U.S.C. § 1983 civil rights action. ³ Cohen and Cannon, fairly read, leave no doubt as to the prevailing legal requirements for a section 1983 claim. Nonetheless, actions are still being filed, as represented by the three complaints in issue here, without regard to the dictates of those decisions, necessitating another admonition concerning the allegations essential to establish state action.

The plaintiffs in each of these three actions on appeal support their allegation of state (or federal) action primarily through reliance on the distribution of substantial state and federal funds to defendants and the imposition of accompanying regulatory measures. ⁴

The allegations of governmental funding and general regulation, standing alone, however, cannot support a finding of state action. The courts, including this one, have uniformly dismissed claims of state action grounded merely on governmental funding and regulation where neither has fostered the challenged activities of private health care facilities such as defendants Edgewater Hospital and Marion Heights, Hodge v. Paoli Memorial Hospital, 576 F.2d 563 (3d Cir. 1978); Schlein v. Milford Hospital, Inc., 561 F.2d 427 (2d Cir. 1977); Greco v. Orange Memorial Hospital Corp., 513 F.2d 873 (5th Cir.), Cert. denied, 423 U.S. 1000, 96 S.Ct. 433, 46 L.Ed.2d 376 (1975); Doe v. Bellin Memorial Hospital, 479 F.2d 756 (7th Cir. 1973); Mills v. Fox, 421 F.Supp. 519 (E.D.N.Y.1976) (nursing home); Doyle v. Unicare Health Service, Inc., 399 F.Supp. 69 (N.D.Ill.1975), Aff'd mem., 541 F.2d 283 (7th Cir. 1976) (nursing home), or of educational institutions such as defendant Loyola University. Lamb v. Rantoul, 561 F.2d 409 (1st Cir. 1977); Cannon v. University of Chicago, 559 F.2d 1063 (7th Cir. 1976); Cohen v. Illinois Institute of Technology, 524 F.2d 818 (7th Cir. 1975), Cert. denied, 425 U.S. 943, 96 S.Ct. 1683, 48 L.Ed.2d 187 (1976); Spark v. Catholic University of America, 167 U.S.App.D.C. 56, 510 F.2d 1277 (1975); Sanford v. Howard University, 415 F.Supp. 23 (D.D.C.1976), Aff'd mem., 179 U.S.App.D.C. 128, 549 F.2d 830 (1977).

Cannon and Cohen, adhering to Supreme Court decisions in Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 92 S.Ct. 1965, 32 L.Ed.2d 627 (1972) and Jackson v. Metropolitan Edison Co., 419 U.S. 345, 95 S.Ct. 449, 42 L.Ed.2d 477 (1974), established that a claim under section 1983 must be based on no less than the state's "affirmative support" of the private conduct challenged. Cannon v. University of Chicago, 559 F.2d at 1069; Cohen v. Illinois Institute of Technology, 524 F.2d at 825-26. The Supreme Court's most recent opinion on state action, Flagg Brothers, Inc. v. Brooks, 436 U.S. 149, 98 S.Ct. 1729, 56 L.Ed.2d 185 (1978), leaves open the question whether even "affirmative support" short of compulsion will suffice to render a private act attributable to the state. ⁵ The question need not be reached here, however, since plaintiffs have not established any degree of state encouragement of the challenged activity. Plaintiffs have not claimed that state regulations encouraged, or that state funds were conditioned upon, defendants' dismissal of homosexual employees, suspension of hospital physicians who refuse to carry malpractice insurance, or denial of hearings to dental students expelled for disciplinary reasons. Plaintiffs have failed to allege any "nexus." Dismissal of the complaints on that ground by the respective district courts was therefore proper.

Plaintiffs argue that the level of state support of defendant institutions is so high that they are relieved of the necessity for pleading or proving a nexus, citing our decision in Cohen. We do not suggest that nexus is the exclusive means of establishing state action. Cohen and Cannon held that under certain limited circumstances the plaintiff need not establish a nexus between the state funding and/or regulation and the challenged act. The language of reservation in the cases cannot be extrapolated as the plaintiffs have done here, however, to support the assertion that a high level of financial support, without more, gives rise to state action. The passage in Cohen cited by plaintiffs states that IIT "is not so heavily dependent on the State as to be considered the equivalent of a public university for all purposes and in all its activities," and then goes on to distinguish in a footnote cases of other courts where financial support was far greater. 524 F.2d at 825 & n.18.

The alternative to nexus referred to in Cohen sufficient to sustain a claim of state action is not simply a higher level of state support. Rather, nexus can be avoided only by an allegation of facts suggesting that the ostensibly private entity has acted as a state instrumentality or a "joint participant," in the language...