Newsom v. Vanderbilt University

• Citation: 653 F.2d 1100
• Decision Date: 17 July 1981
• Docket Number: Nos. 79-1026,s. 79-1026
• Parties: Callie Mae NEWSOM on behalf of herself and on behalf of all others similarly situated, Plaintiff-Appellee, Cross Appellant, v. VANDERBILT UNIVERSITY, Defendant-Appellant, Cross Appellee, and United States of America, Defendant-Appellant, Cross Appellee. to 79-1028.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 1100

653 F.2d 1100

Callie Mae NEWSOM on behalf of herself and on behalf of all

others similarly situated, Plaintiff-Appellee, Cross Appellant, v. VANDERBILT UNIVERSITY, Defendant-Appellant, Cross Appellee, and United States of America, Defendant-Appellant, Cross Appellee.

Nos. 79-1026 to 79-1028.

United States Court of Appeals, Sixth Circuit.

Argued Feb. 4, 1981.

Decided June 2, 1981.

Rehearing and Rehearing En Banc Denied July 17, 1981.

William N. Ozier, Bass, Berry & Sims, Hal D. Hardin, U. S. Atty., Margaret M. Huff, Nashville, Tenn., for Vanderbilt University.

G. Gordon Bonnyman, Jr., Robert L. Ray, Legal Services of Nashville and Middle Tennessee, Inc., John L. Carroll, Morris Dees, Jr., Southern Poverty Law Center, Montgomery, Ala., for Newsom.

Carol C. Conrad, John Daniel Kiser, Florence E. Abrams, Public Health Division, Dept. of Health, Ed. and Welfare, Rockville, Md., for federal defendants.

Kenneth R. Wing, Counsel for the American Public Health Ass'n, Chapel Hill, N. C., for amicus curiae American Public Health Ass'n.

James Blumstein, Vanderbilt Law School, Nashville, Tenn., for amicus curiae Tennessee Hospital Ass'n.

Before WEICK and KENNEDY, Circuit Judges, and BERTELSMAN, District Judge. ^*

CORNELIA G. KENNEDY, Circuit Judge.

All parties appeal from the judgment of the District Court construing the obligation of a hospital which had received monies for construction or modernization under the Hill-Burton Act, 42 U.S.C. §§ 291 et seq., to provide free or below-cost services for those unable to pay and the procedures the hospital must follow in carrying out that obligation.

Plaintiff Newsom filed this class action on behalf of all persons in Tennessee who have been, are now, or will be in need of health services for which they are unable to pay. She sued Vanderbilt University Hospital (Vanderbilt), claiming the hospital had never complied with its Hill-Burton obligation, and the Tennessee Department of Public Health and the Department of Health, Education and Welfare (HEW), claiming the state and federal agencies had not fulfilled their duty under the statute to promulgate regulations and to enforce the Hill-Burton obligation. She further alleged that the practices followed by the hospital and permitted by agencies violated due process under the Fifth and Fourteenth Amendments.

Plaintiff Newsom had been hospitalized at Vanderbilt for 23 days in 1971. Medicaid paid for part of the time, but did not pay for the remaining time. The hospital billed plaintiff for the unpaid balance and eventually started a collection suit against her in state court. When plaintiff initiated this class action suit, she requested an injunction of the state court proceeding. She also prayed for an injunction requiring the hospital to provide free services and mandamus requiring the agencies to promulgate regulations and enforce the Hill-Burton Act.

The District Court granted a temporary injunction against prosecuting the state collection suit and certified the class. After this action was filed, plaintiff Newsom filed a complaint with HEW, charging that Vanderbilt was failing to comply with its obligation under Hill-Burton to provide a reasonable volume of services to persons unable to pay therefor, which was dismissed. In a published opinion, 453 F.Supp. 401 (M.D.Tenn.1978), the court determined plaintiff's claim on the merits. It held that plaintiff was entitled to a de novo review in the federal court of the claim filed with HEW. It found no proof of noncompliance before 1973. For the period after 1973, the District Judge found that the regulations limited the hospital's obligation to twenty years from the date of completion of construction, which he held to be the date the funds were finally approved. He found the hospital had not complied with the regulations after 1973. He further found that plaintiff and the class had been denied due process as there was state action involved in Vanderbilt's providing free services and the class had a right to free services, but the class had no notice or opportunity to be heard. Therefore, the court held that new regulations were needed, but did not issue a writ of mandamus as the Secretary of HEW indicated that new regulations were being written. Since then, new regulations have been promulgated which differ in significant respects from what the District Court's opinion indicated due process required.

Each party appeals some portion of the District Court's decision. Plaintiffs and amicus curiae American Public Health Association attack the District Court's failure either to require the hospital to prove compliance before 1973 or to apply the twenty-year provision for twenty years following 1973. The hospital, HEW, and amicus curiae Tennessee Hospital Association appeal the findings that the hospital did not comply after 1973 and that plaintiffs' due process rights have been denied. They argue that the District Court was required to accept the decision of HEW unless it was not supported by substantial evidence. They object to the court's interpretation of the regulations. They further argue that there is no state action present, there is no entitlement to free services, and no right to as much process as the court insisted upon. Even if plaintiffs have some due process rights, they argue, the new regulations give plaintiffs all the process that is due.

The Tennessee Hospital Association claims the District Court had no jurisdiction. HEW raises a claim to sovereign immunity.

I. STATUTES AND REGULATIONS OVERVIEW

The Hill-Burton Act was enacted in 1946. The stated purpose of the Act was to assist the several states to survey the need for construction of hospitals and develop programs for the construction of public and nonprofit hospitals as will, with existing facilities, "afford the necessary physical facilities for furnishing adequate hospital, clinic, and similar services to all their people" and "to construct public and other nonprofit hospitals in accordance with such programs." Hospital Survey and Construction Act of 1946, Pub.L. No. 725, § 601, 60 Stat. 1040, 1041. The Surgeon General was required to promulgate regulations to insure that the state plan provide for adequate hospital facilities for the people residing in the state and for adequate hospital facilities for persons unable to pay. The Surgeon General was authorized, but not required, to require assurances from any hospital which sought Hill-Burton funds that it would be available to all persons in the territorial area and that a reasonable volume of hospital services would be provided to persons unable to pay, unless such requirement was not financially feasible. Pub.L. No. 725, § 622(f), 60 Stat. 1043 (codified at 42 U.S.C. § 291c(e)). The Surgeon General did promulgate a regulation requiring hospitals to make these two assurances, although the regulation did not elaborate beyond the statute as to what was required. See Note, Due Process for Hill-Burton Assisted Facilities, 32 Vand.L.Rev. 1469, 1472 (1979). The authority of the Surgeon General was later transferred to HEW. Id. at 1471.

Various amendments, none pertinent here, were made to the Act. The regulations remained unchanged with respect to the reasonable volume of free or below-cost care until 1972 when new regulations were issued in response to litigation. These regulations, which were applicable to Vanderbilt July 1, 1973, set up a twenty-year limitation on the Hill-Burton free care assurance and determined specific levels of care which would constitute reasonable compliance. At that point, the regulations allowed the hospital to claim as its Hill-Burton obligation any services provided for which there had not yet been a collection effort other than billing. These regulations were amended in 1975, again in response to litigation, so that the hospital must determine eligibility for Hill-Burton care before rendering the service. See id. at 1472-74.

The Hill-Burton Act was amended again in 1975 as part of a comprehensive statute that sought to combine several existing statutes. The statute now read that the Secretary of HEW shall promulgate regulations to require assisted facilities to comply with their free service assurances and to demonstrate that compliance. The entities were required to submit periodic reports to support their claims of compliance, which the Secretary may not waive. See National Health Planning and Resources Development Act of 1974, Pub.L. No. 93-641, § 1602(6), 88 Stat. 2225, 2259 (enacted January 4, 1975) (codified at 42 U.S.C. § 300o -1(6)). The Secretary was required to investigate periodically and ascertain whether entities were complying and if any entity failed to comply, the Secretary was required to take action to enforce compliance. "An appropriate action to effectuate compliance with any such assurance may be brought by a person other than the Secretary only if a complaint has been filed by such person with the Secretary" and the Secretary either dismissed the complaint or a civil action was not brought within six months for compliance. See Pub.L. No. 93-641, § 1612(c), 88 Stat. 2264 (codified at 42 U.S.C. § 300p-2(c)). ¹ The regulations were entirely rewritten in 1979.

II. JURISDICTION

Amicus Tennessee Hospital Association (THA) challenges the jurisdiction of the District Court on several grounds, some of which were never raised by the parties. This Court seriously questions whether it should consider grounds raised by an amicus curiae which have not been raised by the parties, see Knetsch v. United States, 364 U.S. 361, 370, 81 S.Ct. 132, 137, 5 L.Ed.2d 128 (1960) (Court had no reason to pass upon argument advanced by amicus curiae, but not advanced by petitioners), but this Court need not decide this issue as the Court finds the jurisdictional challenges have no merit.

THA advances four arguments for its claim that the District Court lacked jurisdiction. First, that the suit was in violation...