NAACP v. Wilmington Medical Center, Inc.

• Decision Date: 07 April 1978
• Docket Number: Civ. A. No. 76-298.
• Citation: 453 F. Supp. 280
• Court: U.S. District Court — District of Delaware
• Parties: NATIONAL ASSOCIATION FOR the ADVANCEMENT OF COLORED PEOPLE et al., Plaintiffs, v. The WILMINGTON MEDICAL CENTER, INC., et al., Defendants.

453 F. Supp. 280

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, Delaware.

April 7, 1978.

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Douglas A. Shachtman, Community Legal Aid Society, Inc., Wilmington, Del. and Marilyn G. Rose, Christine B. Hickman and Herbert Semmel, Center for Law and Social Policy, Washington, D. C., and Louise Lander, New York City, for plaintiffs.

Jeffrey M. Goddess, City Sol., Charles H. Toliver IV, and Alan Bernard Scher, Asst. City Sol., Wilmington, Del., for plaintiff intervenor, City of Wilmington.

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.

James W. Garvin, Jr., U. S. Atty., Wilmington, Del., Barbara A. Babcock, Asst. Atty. Gen., Barbara B. O'Malley, Ann F. Cohen and Rebecca L. Ross, Trial Attys., Dept. of Justice, Washington, D. C., Stephanie W. Naidoff, Regional Atty., William Reinhart, Asst. Regional Atty., Philadelphia, Pa., and Jeffrey Champagne, Atty., Dept. of Health, Education and Welfare, Washington, D. C., for defendant Secretary of Health, Education and Welfare.

Edward F. Kafader, 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.

OPINION

LATCHUM, Chief Judge.

The controversy in this case arises over the decision of the defendant Wilmington Medical Center to relocate the major tertiary care components of its existing inner-city hospital system to an outlying suburban location. The plaintiffs,¹ five organizations and six individuals representing minority and handicapped persons residing primarily in the City of Wilmington,² brought this suit in September, 1976, charging that the proposed relocation discriminates against them in violation of their rights under Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 2000d ("Title VI") and Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794 ("Section 504"). Essentially, they contend the plan to relocate hospital services to the suburban location will cause disparities in the availability and quality of medical care for the urban community — a result that will impact disproportionately upon the poor, the elderly, ethnic and racial minorities, and the handicapped. Their complaint seeks, inter alia, a judgment (1) that declares the proposed relocation to be in violation of the above statutes and (2) that enjoins commencement of its construction phase pending the outcome of a civil rights "compliance review" of the proposal by the federal defendant.³ Subject matter jurisdiction is principally based upon 28 U.S.C. § 1331 (federal questions),⁴ 28 U.S.C. § 1343 (civil rights), and 28 U.S.C. § 1361 (mandamus against federal officials). In addition to the Wilmington Medical Center ("WMC"), the named defendants are the Secretary of the United States Department of Health, Education and Welfare (the "Secretary" or "HEW"), the Director of the Delaware Bureau of Comprehensive Health Planning ("BCHP"), and the Chairman of the Health Planning Council, Inc. of New Castle County ("HPC").

The case is presently before the Court on cross-motions for partial summary judgment filed by the plaintiffs and the Secretary⁵ and upon a motion for summary judgment filed by the defendant WMC.⁶ In essence, these motions⁷ call for judicial review of an informal determination⁸ by the Secretary that WMC's proposed hospital relocation, after substantial modification in accordance with various "assurances" given by WMC, will not contravene the policies intended to be effectuated by Title VI and Section 504. Moreover, assuming the matter is resolved in favor of the Secretary, the merits of the plaintiffs' claim against WMC will be necessarily settled in like manner and final judgment accordingly entered thereon. Because there are no issues of fact material to the resolution of this matter in dispute and because the matter is now ripe for judicial review, summary judgment is appropriate. Rule 56, F.R.Civ.P.

I. BACKGROUND

A description of the factual background of this hardfought and complicated law suit is essential to a full understanding of the issues and of the contending parties' claims.

A. WMC and the Evolution of Plan Omega

Defendant WMC, a privately owned, non-profit general hospital organized and incorporated under the laws of the State of Delaware, was formed in 1965 as a result of "the first full corporate merger between three voluntary, nonsectarian, acute care general hospitals in the United States. These long-established institutions are now divisions of WMC and include the Delaware Hospital, the Wilmington Memorial Hospital and its rehabilitation facility, the Eugene duPont Memorial Hospital, and the Wilmington General Hospital."⁹ As a multi-unit hospital system, WMC is in the enviable position of being the principal health care resource for the State of Delaware and especially for the city of Wilmington and the surrounding metropolitan area. Of the eight general hospitals in the state, four are controlled by WMC; its three major divisions, moreover, operate about 1,100 beds or nearly 75 percent of the available acute care beds in the city and New Castle County.¹⁰ Besides its uniqueness as a statewide hospital system, WMC is one of a handful of urban medical centers that has developed in the context of a manpower production center, surrounded by the vast chemical complexes and related industries and research facilities established in the Wilmington area. Finally, the geographic compactness of the State and the proximity of a major university and nearby medical schools have also contributed to WMC's unique position.¹¹

Nevertheless, a variety of factors — not the least of which are the "growth pains" present in any new organization — have combined to alter WMC's unique situation. For example, during the past ten years New Castle County, similar to other metropolitan areas, has witnessed a population exodus from the city to the suburbs. Wilmington's population approaches 80,000, but 15,000 more persons left than entered the city between the 1960 and 1970 censuses, while the suburban areas to the south and west of the city increased by 10,000 during the same time period. And the trend in the population shift evidently continues unabated. In pointing out a further problem encountered by the managers of WMC, a commentator has observed:

"Many multiple-unit hospital systems have developed in a unit of service configuration like a doughnut with the acute care tertiary care center occupying the hole of the doughnut and satellite or branch facilities located on the periphery. WMC hospitals are all within the hole of the doughnut . . .."¹²

For more than a decade WMC engaged in an extensive planning process intended to develop the most feasible method to improve the efficiency and quality of its delivered health care and to respond to the growing need for a hospital facility in the southwestern region of New Castle County. In October, 1975, WMC's Board of Directors unanimously adopted a proposal, commonly known as Plan Omega, that envisioned a major realignment of the health resources presently available at its three major inner-city divisions.¹³ Under this plan numerous nonemergency inpatient and outpatient services offered by the three Wilmington divisions will be transferred to a major 800-bed tertiary care facility to be constructed on a 200-acre site located about eight miles southwest of the city in Stanton, Delaware (the "Southwest" or "Stanton" Division).¹⁴ Although the General and Memorial Divisions will be closed, a restored and modernized Delaware Division will remain as WMC's only sophisticated health care resource in the city. The Delaware Division will continue to offer sophisticated ambulatory and emergency services in addition to regular hospital services, although the plan calls for it to be reduced in size from 542 to 250 beds. The estimated total cost of the project, about 88 million dollars, will be financed primarily with funds generated through charitable contributions and the marketing of tax exempt revenue bonds.¹⁵

In 1975, nearly 35 percent of WMC's operating revenues (20 million dollars) were derived from federal funds through medicare, medicaid and other federal health assistance reimbursement programs.¹⁶ Moreover, because a hospital's patient fee structure includes a capital component designed to recapture a portion of every dollar spent on capital improvements, continued reimbursement under these federal programs will assure that a respectable part of Plan Omega's construction costs will be furnished by federal sources. According to the plaintiffs' calculations, for example, construction costs related to Plan Omega, which will not be fully depreciated for perhaps thirty years, will be recovered at the rate of three million dollars annually through hospital charges paid to WMC by the government under medicare.¹⁷

B. Section 1122 of the Social Security Act

An integral step along the path leading to Plan Omega's realization was taken in early March, 1976, when WMC submitted the plan to defendant BCHP for review under section 1122 of the Social Security Act, 42 U.S.C. § 1320a-1 ("section 1122").¹⁸ That section was enacted by Congress to assure that funds provided under medicare,¹⁹ medicaid²⁰ and programs for maternal and child health services²¹ (collectively, "medicare") are not used to support unnecessary capital expenditures by or on behalf of health care facilities reimbursed under such programs.²²

Since medicare programs pay a hospital's "reasonable costs," including depreciation on buildings and equipment, debt service and other capital-related costs reasonably apportioned to a hospital's...