NAACP v. Wilmington Medical Center, Inc., Civ. A. No. 76-298.

• Decision Date: 19 January 1977
• Docket Number: Civ. A. No. 76-298.
• Citation: 426 F. Supp. 919
• Parties: NATIONAL ASSOCIATION FOR the ADVANCEMENT OF COLORED PEOPLE et al., Plaintiffs, v. The WILMINGTON MEDICAL CENTER, INC., et al., Defendants.
• Court: U.S. District Court — District of Delaware

426 F. Supp. 919

NATIONAL ASSOCIATION FOR the ADVANCEMENT OF COLORED PEOPLE et al., Plaintiffs, v. The WILMINGTON MEDICAL CENTER, INC., et al., Defendants.

Civ. A. No. 76-298.

United States District Court, D. Delaware.

January 19, 1977.

COPYRIGHT MATERIAL OMITTED

Joseph S. Flowers, Wilmington, Del., Marilyn G. Rose and Christine B. Hickman, Center for Law and Social Policy, Washington, D.C., and Aida Waserstein and Douglas Shachtman, Community Legal Aid Society, Inc., Wilmington, Del., for plaintiffs.

Charles H. Toliver, IV, and Alan Bernard Scher, Asst. City Sols., Wilmington, Del., for plaintiff-intervenor.

Rodney M. Layton, Wendell Fenton and William J. Wade of Richards, Layton & Finger, Wilmington, Del., for defendants The Wilmington Medical Center, Inc., Crawford H. Greenewalt and Joseph A. Dallas.

W. Laird Stabler, Jr., U.S. Atty., Wilmington, Del., Rex E. Lee, Asst. Atty. Gen., David J. Anderson, Dennis G. Linder, and Rebecca L. Ross, Trial Attys., Dept. of Justice, Washington, D.C., Stephanie W. Naidoff, Regional Atty., and Diane C. Moskal, Asst. Regional Atty., Dept. of Health, Education and Welfare, Philadelphia, Pa., for defendant David Mathews, Secretary of Health, Education and Welfare.

Malcolm S. Cobin, Asst. Atty. Gen., Dept. of Justice, Dover, Del., for defendant Amos Burke, Director of the Bureau of Comprehensive Health Planning.

William C. Gordon, pro se.

MEMORANDUM OPINION

LATCHUM, Chief Judge.

Defendant Wilmington Medical Center, Inc. ("WMC") provides most of the hospital facilities for New Castle County, Delaware. Its operations center around three hospitals located within the City of Wilmington—the General Division, the Memorial Division, and the Delaware Division.¹ After an extensive planning effort, WMC concluded that a massive capital expenditure program was required in order to supply the quality and level of care that it thought necessary. The final proposal, labeled Plan Omega, involves the renovation of the Delaware Division, the closing of the Memorial and General Divisions, and the construction of a new 60 million dollar, 800 bed tertiary care facility in suburban Stanton, Delaware approximately 8 miles southwest of Wilmington.²

This suit was filed in September, 1976, roughly one month before WMC planned to issue construction bonds to generate the funds for the new facility. As a result of this litigation, WMC's efforts to market its bonds and to commence construction have been thwarted. It is anticipated that the cost of Plan Omega will increase substantially each month that construction is forestalled by the pendency of this suit. In recognition of the burden caused by any delay, the parties have made substantial efforts to expedite the course of this litigation.

Implementation of Plan Omega is challenged by several civic and religious organizations and by several individuals³ who allege that Plan Omega will discriminate against the poor, the elderly, ethnic and racial minorities, and the handicapped. The plaintiffs⁴ fear that construction of a large, modern suburban hospital will lead to the creation of a dual hospital system. The Stanton hospital, it is alleged, will serve the white, relatively affluent population of suburban New Castle County, while the one WMC facility remaining in Wilmington will serve primarily the poor, the elderly, blacks and Puerto Ricans, and the handicapped. The plaintiffs predict an eventual deterioration of the quality of care at the Delaware Division. Furthermore, they argue removal of certain services to the suburban hospital will make them inaccessible to many residents of Wilmington and northern New Castle County. In short, plaintiffs assert that Plan Omega violates Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 2000d ("Title VI"), and § 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794 ("§ 504"). WMC, however, vigorously denies that any discriminatory effect will result from Plan Omega.

In the spring of 1976 WMC sought approval of Plan Omega under § 1122 of the Social Security Act, 42 U.S.C. § 1320a-1 ("§ 1122") by the defendant Secretary of Health, Education and Welfare (the "Secretary"). The significance of § 1122 approval reflects the narrow Congressional purpose of encouraging state and local health planning efforts. In essence, § 1122 certification before construction merely assures WMC that the Secretary will not later withhold federal funds under medicare,⁵ medicaid,⁶ and programs for maternal and child health services⁷ because the capital component of the hospital charges is the result of an unnecessary capital expenditure. If WMC had not applied for § 1122 approval or if its § 1122 application had been rejected, it simply ran the risk of not being fully reimbursed for services provided to federally assisted patients.⁸

The studies to determine the need for the expenditures envisioned by Plan Omega were carried out under federally funded contracts by a local health planning group, the defendant Health Planning Council, Inc. ("HPC") and review by a state agency, the defendant Bureau of Comprehensive Health Planning ("BCHP"). HPC approved Plan Omega on June 3, 1976; BCHP's favorable consideration was completed by June 15, 1976; the Secretary issued § 1122 approval on August 6, 1976.⁹

Plaintiffs contend that, although no federal funds flow immediately to WMC in support of Plan Omega, § 1122 certification is tantamount to approval of massive federal support for the operation of the new hospital under the guise of federal medical assistance programs. Thus, they charge that the Secretary has violated his duties under Title VI and § 504 by, in effect, approving a hospital relocation program that will discriminate against minorities and the handicapped. The plaintiffs also argue that BCHP and HCP are subject to requirements of Title VI and § 504 because both groups received federal funds to perform their § 1122 duties and because federal contracts such as those involving state and local planning agencies under § 1122 implicitly impose Title VI and § 504 duties.

The Secretary has filed a motion to dismiss or, alternatively, for summary judgment,¹⁰ and BCHP has moved to dismiss.¹¹ In response, the plaintiffs have moved for partial summary judgment against the Secretary.¹²

The complexity of the issues and social concerns implicated in this litigation has frustrated efforts to focus on the immediate and critical questions raised by these motions. Congress enacted § 1122

"to assure that medicare, medicaid, and the maternal and child health programs are consistent with State and local health facility planning efforts, in order to avoid paying higher costs unnecessarily in the future where these costs result from duplication or irrational growth of health care facilities." 1972 U.S.Code Cong. & Adm.News p. 5065.

Therefore, it appears that the legislative purpose behind § 1122 was limited and specific. The threatened reduction of federal financial assistance was viewed as adequate incentive to discourage efforts to make wasteful expenditures for health care facilities. Also, the express prohibition on judicial review of the Secretary's decision set forth in § 1122(f) indicates the desire of Congress to avoid creating another vehicle for the intervention of federal courts in the planning efforts of local and state health officials.

On the other hand, Title VI and § 504 were designed to eliminate discrimination against minorities and the handicapped in programs receiving federal financial assistance.¹³ E.g., Joy v. Daniels, 479 F.2d 1236, 1240-41 (C.A. 4, 1973). Furthermore, it is clear that anti-discrimination statutes have a significant impact on all federal financial assistance programs. Shannon v. HUD, 436 F.2d 809, 817 (C.A. 3, 1970).

This somewhat simplistic overview of statutory entanglement is necessary to understand the various views of the parties toward this litigation. No party suggests that WMC can select a site for a new hospital which will have the effect of discriminating against minorities or the handicapped. In stead, much commotion has been raised over the proper method of determining whether construction of the Stanton facility will have discriminatory consequences. The Secretary has indicated concern that the plaintiffs are seeking to require Title VI and § 504 compliance studies whenever a § 1122 approval is sought. The plaintiffs, however, appear to be more interested in obtaining Title VI and § 504 compliance reviews when a site relocation is involved in a § 1122 application. Through the smoke of the battle between plaintiffs and the Secretary, which obviously has far-ranging significance, WMC asserts that Plan Omega will not have a discriminatory effect on either minorities or the handicapped.

Thus, the Court is confronted with two separate, but closely related, questions. The first question involves whether Plan Omega will have a discriminatory impact; the second question requires a detailed consideration of the relationship between § 1122 and Title VI and § 504. The need for prompt resolution of the first question is readily apparent. If the Stanton hospital will eventually be built, minimization of cost is a goal which all parties can support. If the Stanton hospital will not be built because of a finding of discriminatory effect, alternate solutions may then be quickly developed because it appears that at least two of WMC's three hospitals are running some risk of loss of accreditation.¹⁴ The broader, second question, which deserves full consideration and timely disposition, does not warrant an expedited review and deserves mature reflection on the consequences and ramifications of any decision by the Court. Accordingly, it is the Court's view that the issues directly related to Plan Omega must be resolved separately.

The Secretary and the BCHP argue that this suit must be dismissed because plaintiffs have failed to exhaust their administrative remedies.¹⁵ The Secretary's regulations, ...