Robinson v. Houston-Galveston Area Council

• Decision Date: 04 April 1983
• Docket Number: Civ. No. H-81-2458.
• Parties: James S. ROBINSON, et al., Plaintiffs, v. HOUSTON-GALVESTON AREA COUNCIL, et al., Defendants.
• Court: U.S. District Court — Southern District of Texas

566 F. Supp. 370

James S. ROBINSON, et al., Plaintiffs, v. HOUSTON-GALVESTON AREA COUNCIL, et al., Defendants.

Civ. No. H-81-2458.

United States District Court, S.D. Texas, Houston Division.

April 4, 1983.

Robert J. Swift, Fulbright & Jaworski, Robert G. Darden, Asst. U.S. Atty., Houston, Tex., Suzanne Cochran, Dallas, Tex., for defendants; Frank V. Smith, III, Dallas, Tex., of counsel.

Stefan Presser, American Civil Liberties Union, Houston, Tex., James Wyckoff, Wyckoff, Russell Dunn & Frazier, Houston, Tex., for plaintiffs.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

SINGLETON, Chief Judge.

FINDINGS OF FACT

The Houston-Galveston Area Council ("H-GAC") is a Regional Planning Commission composed of elected officials in thirteen counties in this region of Texas. The H-GAC was created and organized under the laws of the State of Texas, Tex.Rev.Civ. Stat.Ann. art. 1011m (Vernon's Supp. 1963-1982), for the purpose of improving the health, safety, and general welfare of the citizens within these counties. As such, it is a political subdivision of the state. Id. § 4.

In 1976, the H-GAC sought designation from the Secretary of the Department of Health, Education, and Welfare (presently the Department of Health and Human Services) as this region's Health Systems Agency ("HSA") pursuant to the National Health Planning and Development Act, 42 U.S.C. § 300 et seq. This Act authorizes the Secretary to enter into contracts with local organizations, and thereby provide federal funding, in order to improve the health of the residents and the quality of health care services within a region. See id. §§ 300l-2(a), 300l-4, 300l-5. Under the Act, a public regional planning body, such as the H-GAC may be designated as an HSA if it establishes a separate governing body for health planning that has exclusive authority for carrying out the dictates of the Act. Id. § 300l-1(b)(1)(B), 300l-1(b)(3)(A), (B). The Secretary is authorized to establish standards regulating the structure and functioning of HSA's, which requirements must be met by the designee.

As prescribed by the Act, the H-GAC created a governing body, called the Area Health Commission, (the "Commission") for health care planning. The H-GAC was conditionally designated this region's HSA in 1976, and conditional designation was extended for another year in 1977. To achieve conditional designation, applicants such as the H-GAC must assure the Secretary that upon completion of the period of conditional designation the applicant will meet the requirements of the Act and be qualified to perform all of the required functions, and during the period of conditional designation, the Secretary is to make a determination that the designee in fact has met the requirements and is able to perform the functions set out in the Act. Id. § 300l-4; 42 C.F.R. § 122.104(a)(12).

Upon receiving conditional designation in 1976, the H-GAC appointed plaintiffs to be Commissioners of the Area Health Commission. A total of seventy-two commissioners were appointed. Commissioners were charged under the Act with responsibility for the internal affairs of the Commission, including matters of staff and budget and procedures applicable to the Commission's functions. P.L. 93-641, § 1512(3)(B), reprinted in (1974) U.S.Code Cong. & Ad. News 2594. During 1976 and 1977, however, the H-GAC controlled the internal affairs of the Commission including matters of personnel and budget.

Testimony at trial revealed constant disputes between the H-GAC and the Commission concerning the amount of control exercised by the H-GAC over the Commission's affairs. The plaintiffs contend that the H-GAC's control hampered the Commissioner's ability to carry out the mandates of the Act. Specifically, the plaintiffs charged that H-GAC's accounting procedures were deficient and that they therefore could not adequately assess how much of the health care grant had been spent at any given time and thus could not plan future programs. The plaintiffs further charged that their planning abilities were disrupted by the H-GAC's refusal or delayed payment of the Commission's bills, and that the degree of interference contributed to the high staff turnover of the Commission, which caused additional disruption of their work.

In January and February 1977, correspondence from the Chief Health Planning and Facilities Branch Division of Resources Development and the Regional Health Administrator to the Chairman of the H-GAC clarified the relationship between the H-GAC and the Commission. This correspondence made it clear to the H-GAC that the Commission was responsible for administrative functions, such as hiring the Director of Health Planning, developing policies for hiring consultants, and executing contracts to perform required activities, as well as budgeting functions.

Conflicts between the H-GAC and the Commission, however, persisted. A Special Assessment Report of the H-GAC, prepared by the Regional Office of the Department of Health, Education, and Welfare following an on-site visit of October 1977, documented the on-going conflict between the two groups. In addition to the difference in opinion regarding the issuance of contracts and the hiring of a director for the Commission, the report noted the deficiencies in the H-GAC's financial management, dissatisfaction by members of the Commission over the amount of indirect cost charged to the HSA grant in comparison to the services or support received for such costs,¹ and a physical intermingling of the Commission's staff with the staff of the H-GAC which was disruptive and not conducive to organized management and productivity.

In its report, the regional office recommended that the indirect cost issue be resolved prior to submission of an application for redesignation staff space for Commission staff be established along with appropriate equipment provided for them to perform staff functions, and a system for documenting commission costs be implemented. Finally, the report notes that "continued HEW grant support of the H-GAC health planning component is dependent upon a viable partnership of mutual trust between the H-GAC Board of Directors and the Commission" and that, "to successfully relate to the community, the agency will have to develop an identity of its own, separate and apart from H-GAC."

In August 1978, the conditional designation of the H-GAC as this area's HSA was extended for ninety days. During this period, the Department of Health, Education, and Welfare, in an October 1978 briefing from the Director of the Office of Regional Health Planning to the Regional Health Administrator, considered the option of the Commission seeking HSA designation as a nonprofit entity due to the differing views of the H-GAC and the Commission.

In an effort to avoid losing HSA designation, the H-GAC adopted a set of by-laws for the Commission which recognized plaintiff's authority to manage the HSA's budget and personnel. The H-GAC subsequently submitted these by-laws to the Department of Health, Education, and Welfare in their application for full designation, as required by the Department's regulations. 42 C.F.R. § 122.104(b)(1). Thereafter, the H-GAC was granted full HSA status.

The plaintiffs testified at trial that, after having been given authority to control their internal affairs without interference from the H-GAC, they and the other Commissioners were able to carry out the mandates of the Act. Specifically, they testified that over the next two years, the Commission was able to institute a number of programs in the areas of infant mortality, chemical abuse, and emergency health care, as well as programs for the treatment of cancer and the terminally ill.

In September 1979, Congress amended the National Health Planning and Resources Development Act, 42 U.S.C. § 300 et seq., allowing for umbrella groups, such as the H-GAC, to assume budget and personnel rule making authority. P.L. 96-79, § 110, 93 Stat. 603-05, (Oct. 4, 1979). It was not until April 1981 that the H-GAC adopted a resolution to resume control over the HSA's budget and personnel. The H-GAC alleged that they did so as an economy measure in anticipation of reduced federal funding. This resolution amended the Commission's by-laws. The H-GAC did not seek prior approval of their actions with the Department of Health and Human Services, although the acting Director of the Bureau of Health Planning stated that preclearance with the department was required for changes to the by-laws. On April 27, 1981, plaintiffs passed a resolution in which they declared the H-GAC's resolution a nullity and directed that the Commission would continue to operate as if the H-GAC had not passed the resolution.

Upon hearing that the H-GAC planned to make additional changes in the internal operations of the Commission by altering the method for selecting Commissioners, the plaintiffs wrote the regional and national offices of the Department of Health and Human Services requesting clarification regarding procedures for revising the selection process. The regional office replied that the H-GAC could not take actions contrary to the by-laws, as this could lead to termination of the designation and grant. Thus, any change in the selection process would require an amendment to the by-laws, and the revision process contained in the by-laws would have to be followed. The revision process as contained in the by-laws requires that amendments to the by-laws originate with the Commission.

From the national office, plaintiffs were apprised that Dr. Colin Rorrie, Director of the Bureau of Health Planning, questioned whether the H-GAC's resumption of control over the Commission's internal operations was in fact cost efficient. On April 29, 1981, Dr. Rorrie requested an on-site inspection of the H-GAC to determine the reasonableness of the indirect rate charged by the H-GAC to the HSA grant. The inspection revealed that the Commission was bearing an...