NAACP v. Wilmington Medical Center, Inc.

• Decision Date: 16 August 1977
• Docket Number: Civ. A. No. 76-298.
• 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

436 F. Supp. 1194

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.

August 16, 1977.

COPYRIGHT MATERIAL OMITTED

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

Charles H. Toliver, IV, and Alan Bernard Scher, Asst. City Sols., 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 Allen Babcock, Asst. Atty. Gen., Dennis G. Linder and Rebecca L. Ross, Trial Attys., Dept. of Justice, Washington, D. C., Stephanie W. Naidoff, Regional Atty., and William M. Reinhart, Asst. Regional Atty., Dept. of HEW, Philadelphia, Pa., for defendant Secretary of HEW.

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.

LATCHUM, Chief Judge.

Before the Court are cross-motions for partial summary judgment¹ filed by the defendant Secretary of Health, Education and Welfare (the "Secretary") and the plaintiffs directed to the issue of whether the Secretary's limited role in the implementation of Plan Omega under the provisions of § 1122 of the Social Security Act, 42 U.S.C. § 1320a-1, ("§ 1122") constitutes "major Federal action significantly affecting the quality of the human environment" as that phrase is found in § 102(2)(C) of the National Environmental Policy Act of 1969 ("NEPA"), 42 U.S.C. § 4332(2)(C).

Plan Omega of the defendant Wilmington Medical Center ("WMC"), the major hospital system in northern Delaware, envisions the closing of two of the WMC's three hospital facilities, all now located in Wilmington, and the construction of a major suburban tertiary care facility approximately eight miles southwest of Wilmington. The plaintiffs, who represent classes of minorities and handicapped persons residing primarily in Wilmington, oppose Plan Omega principally because they foresee a deterioration in the quality of health care available to them upon completion of Plan Omega.²

Congress, responding to a growing national concern for the protection of the environment, established its policy

"to use all practicable means and measures ... to create and maintain conditions under which man and nature can exist in productive harmony, and fulfill the social, economic, and other requirements of present and future generations of Americans."³

NEPA directs federal agencies to prepare detailed environmental impact statements before embarking upon major federal actions which significantly affect the quality of the human environment.⁴ The preparation of an environmental impact statement canvassing the environmental consequences of the proposed action and alternatives to that action has two important salutary effects. First, an environmental impact statement gives the decision makers a readily available source of detailed information about the environmental consequences of the contemplated action and thereby forces them to give serious consideration to environmental factors in making discretionary choices. Second, an impact statement provides the public with environmental information and indirectly encourages greater public participation in the decision-making process.⁵

However, from the outset of this litigation, the Secretary has consistently maintained that his contact with Plan Omega under § 1122 did not require the preparation of an environmental impact statement. On January 19, 1977, the Court ordered the Secretary to reconsider his position particularly in light of his environmental guidelines and to report to the Court the grounds for his decision.⁶ The Secretary, in his report⁷ which now provides the Court with an adequate basis for review of his decision,⁸ again concluded that an environmental impact statement was not required. Although acknowledging for the first time that Plan Omega would significantly affect the quality of the human environment, the Secretary persisted in asserting that his § 1122 role did not amount to "major federal action." Thus, the Secretary's review has narrowed the Court's task to deciding whether his role in the § 1122 review of Plan Omega involved "major federal action."

To understand the parties' arguments, it is first necessary to sketch the Secretary's powers and responsibilities under § 1122.

Recognizing that "sound health facility planning and the prudent use of capital funds are critical to controlling health costs,"⁹ Congress enacted § 1122 in order 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."¹⁰

Through § 1122 Congress sought to encourage, although it did not mandate, the development of comprehensive local health planning programs.

States voluntarily elect to participate in the § 1122 program. With the agreement of the Secretary, the State, in this case the defendant Bureau of Comprehensive Health Planning ("BCHP"), contracts with a local health planning group, in this case the defendant Health Planning Council ("HPC"), which studies the health care provider's proposed capital expenditure program. The local planning group considers, for example, whether the proposed project is necessary, whether the proposed project can be operated, whether the proposed project will be economically feasible, and whether costs will be contained or the quality of care will be improved as a result of the project.¹¹

In general terms, § 1122 facilitates local health planning efforts by assuring a health care provider that if it obtains approval of its capital expenditures from the health planning agency designated under § 1122 and if it and the local planning agency follow the procedures set forth in § 1122 and its implementing regulations,¹² the Secretary will not reduce the compensation for services provided to medicare, medicaid, and maternal and child health care (collectively, "medicare") patients because unreasonable or unnecessary capital costs are reflected in the charges.¹³ If the application has received complete approval when it reaches the Secretary, he then performs the ministerial act of assuring that the proper procedure has been followed.¹⁴ The Secretary, however, has no discretion as to whether the proposed expenditures are unwise.¹⁵

On the other hand, failure to comply with the § 1122 procedure does not necessarily mean that the health care provider will not be compensated for its capital expenditures. Instead, the health care provider that proceeds without approval under § 1122 merely runs the risk that his judgment on the need for certain capital expenditures may be questioned after the facility is in service.

WMC, however, decided to follow the course set by § 1122, and the Secretary does not deny that the WMC, which receives approximately 35% of its patient revenues from medicare, would not proceed with Plan Omega without the assurances provided through § 1122.¹⁶ The plaintiffs have estimated that bills submitted under medicare programs will initially include $3,000,000 per year that is attributable to the construction costs of Plan Omega which will not be fully depreciated for perhaps thirty years. Thus, as a practical matter at least from the viewpoint of the WMC, § 1122 approval by the Secretary was an essential link in the chain of events leading to the implementation of Plan Omega.

The Court must now turn to NEPA and the massive body of case law that it spawned to decide whether the Secretary must prepare an environmental impact statement for Plan Omega.

The concept of a "major federal action significantly affecting the quality of the human environment" has not proved readily susceptible to easy definition and application, and therefore, courts have found it necessary to analyze this issue on a case-by-case basis.¹⁷ Initially, it must be determined whether a federal act which is a step in a process that could eventually lead to significant environmental effects must be considered a "major" action. Some courts, evidently fearing a frustration of Congress' environmental goals, have viewed the action-forcing language of NEPA as setting a unitary standard.

"By bifurcating the statutory language, it would be possible to speak of a `minor federal action significantly affecting the quality of the human environment,' and to hold NEPA inapplicable to such an action. Yet, if the action has a significant effect, it is the intent of NEPA that it should be the subject of the detailed consideration mandated by NEPA; the activities of federal agencies cannot be isolated from their impact upon the environment."¹⁸

However, other courts have adopted a two-pronged approach by distinguishing the major federal action test from the environmental effects test.¹⁹ The two-pronged approach follows the statutory language more closely because the unitary interpretation, in effect, deletes the word "major" from NEPA's action-forcing provision. Also, Congress reasonably could have concluded that a minimal federal relationship with a project simply did not warrant the expenditure of scarce governmental resources for the preparation of an environmental impact statement. Finally, the advisory guidelines established by the Council on Environmental Quality advocate a multistep analysis.²⁰ Accordingly, the Court concludes that the "major federal action" concept is an...