Wilmington United Neighborhoods v. United States, Civ. A. No. 77-439

CourtUnited States District Courts. 3th Circuit. United States District Court (Delaware)
Writing for the CourtLATCHUM
Citation458 F. Supp. 628
PartiesWILMINGTON UNITED NEIGHBORHOODS et al., Plaintiffs, v. UNITED STATES DEPARTMENT OF HEALTH, EDUCATION AND WELFARE, et al., Defendants. WILMINGTON MEDICAL CENTER, INC., a Non-Profit Corporation of the State of Delaware, Plaintiff, v. Joseph A. CALIFANO, Jr., as Secretary of the Department of Health, Education and Welfare, Defendant, and Wilmington United Neighborhoods, Defendant-Intervenor.
Docket NumberCiv. A. No. 77-439,77-480.
Decision Date22 September 1978

458 F. Supp. 628

WILMINGTON UNITED NEIGHBORHOODS et al., Plaintiffs,
v.
UNITED STATES DEPARTMENT OF HEALTH, EDUCATION AND WELFARE, et al., Defendants.

WILMINGTON MEDICAL CENTER, INC., a Non-Profit Corporation of the State of Delaware, Plaintiff,
v.
Joseph A. CALIFANO, Jr., as Secretary of the Department of Health, Education and Welfare, Defendant,
and
Wilmington United Neighborhoods, Defendant-Intervenor.

Civ. A. Nos. 77-439, 77-480.

United States District Court, D. Delaware.

September 22, 1978.


458 F. Supp. 629
COPYRIGHT MATERIAL OMITTED
458 F. Supp. 630
Douglas Shachtman, Community Legal Aid Society, Inc., Wilmington, Del. and Marilyn G. Rose and Herbert Semmel, Center for Law and Social Policy, Washington, D. C., and Louise Lander, New York City, for plaintiffs in Civ. A. No. 77-439 and defendant-intervenor in Civ. A. No. 77-480

Rodney M. Layton, William J. Wade and Alesia Ranney-Marinelli of Richards, Layton & Finger, Wilmington, Del., for defendants The Wilmington Medical Center, Inc., Crawford H. Greenewalt and Joseph A. Dallas in Civ. A. No. 77-439 and for plaintiff in Civ. A. No. 77-480.

James W. Garvin, Jr., U. S. Atty., Wilmington, Del., Barbara Allen Babcock, Asst. Atty. Gen., Barbara B. O'Malley and R. Joseph Sher, Trial Attys., Dept. of Justice, Washington, D. C., and Joan E. Kaehne, Asst. Regional Atty., Dept. of Health, Education and Welfare, Philadelphia, Pa., for Department of Health, Education and Welfare and its Secretary, defendants in Civ. A. Nos. 77-439 and 77-480, respectively.

Edward F. Kafader, Asst. Atty. Gen., Dept. of Justice, Dover, Del., for defendants Amos M. Burke, Director of the Bureau of Health Planning and Resources Development, and Robert H. Sweeney, Chairman of the Interim State Comprehensive Health Planning Council, in Civ. A. No. 77-439.

458 F. Supp. 631

Michael D. Goldman and David A. Anderson of Potter, Anderson & Corroon, Wilmington, Del., for defendant Delaware Health Council, Inc., in Civ. A. No. 77-439.

OPINION

LATCHUM, Chief Judge.

These actions represent another attempt by certain consumers of medical services in the Wilmington, Delaware metropolitan area to prevent the Wilmington Medical Center ("WMC") from implementing its controversial Plan Omega, which calls for the relocation of the bulk of WMC's urban hospital services to a suburban location.1 On November 11, 1977, Wilmington United Neighborhoods, an association of Wilmington community groups, and eight individuals who are consumers of WMC's medical services (collectively "plaintiffs") instituted Civil Action No. 77-439 against the United States Department of Health, Education, and Welfare ("HEW"), the Delaware Health Council, Inc., and two state officials (collectively the "State defendants"), seeking to invalidate their approval of Plan Omega under section 1122 of the Social Security Act, 42 U.S.C. § 1320a-1 ("section 1122").2 The effect of section 1122 approval is to assure a health care provider that Federal funds provided under medicare, medicaid, and programs for maternal and child health care services will not be reduced on the ground that the provider's capital expenditure program (Plan Omega in this case) was "unreasonable" or "unnecessary."3 Plaintiffs allege that several of the actions taken by HEW and the State defendants in connection with the approval of Plan Omega violated the requirements of section 1122 and the regulations implementing it (42 C.F.R. Part 100). The complaint also asserts that defendants violated plaintiffs' right to equal protection by providing a "fair hearing" to proponents of a capital expenditure dissatisfied with the result of a section 1122 review, while denying disappointed opponents a similar opportunity to air their objections.

Plaintiffs later amended their complaint to add WMC as a defendant, alleging that it had violated its duties under section 1122 and the regulations implementing it by submitting unreliable financial data to the reviewing state agencies and entering into a construction contract that authorized costs far in excess of the figure that received section 1122 approval and postponed indefinitely commencement of construction.4 With the exception of Delaware Health Council, Inc.,5 all the defendants have moved to dismiss the amended complaint or, in the alternative, for summary judgment.6 This opinion disposes of the issues raised by those motions and plaintiffs' motions for partial summary judgment against several of the defendants, which are also currently before the Court.7

458 F. Supp. 632

Under HEW's regulations, the section 1122 approval of Plan Omega was due to expire on December 15, 1977, unless on or before that date WMC incurred an obligation to build the project. On December 12, 1977, WMC filed an action against Joseph Califano, the Secretary of HEW (the "Secretary"), seeking declaratory and injunctive relief from the threatened expiration of the section 1122 approval.8 Thereafter, Wilmington United Neighborhoods ("W.U.N."), a plaintiff in Civil Action No. 77-439, intervened as a defendant and by filing a counterclaim against WMC and a cross-claim against the Secretary asserted the same claims against those parties as it had in the first action.9 WMC has moved to dismiss the counterclaim10 and W.U.N. has moved for a partial summary judgment against WMC, declaring that the section 1122 certification of Plan Omega expired on December 15, 1977.11 Because these motions and the motions pending in Civil Action No. 77-439 present virtually the same issues, the Court will dispose of them simultaneously.12

I. BACKGROUND

A. The Statutory Scheme

This is the second time the opponents of Plan Omega have asked this Court to invalidate its section 1122 approval. In NAACP v. Wilmington Medical Center, Inc.,13 a different group of plaintiffs asserted that the approval was invalid because the Secretary had failed to prepare an environmental impact statement in conjunction with it as purportedly required by the National Environmental Policy Act of 1969 ("NEPA").14 This Court rejected the plaintiffs' argument, holding that the Secretary reasonably had concluded that section 1122 approval did not constitute "major Federal action" within the meaning of NEPA. The Third Circuit Court of Appeals recently affirmed that decision.15 In deciding the NEPA issue, both this Court and the Third Circuit reviewed the provisions of section 112216 and several of those provisions will be explored again in detail in the course of this opinion. Accordingly, only a brief overview of section 1122 and its implementing regulations will be provided at this juncture.

The express purpose of section 1122 is two-fold: (1) to assure that Federal funds for medicare, medicaid and maternal and child health programs "are not used to support unnecessary capital expenditures" for health care and (2) to "support planning activities with respect to health services and facilities in the various States." 42 U.S.C. § 1320a-1(a).

Under the statute the States retain primary responsibility for developing comprehensive local health planning programs and for assessing the need for proposed capital expenditures. State participation is voluntary, however. Interested States must enter into agreements with the Secretary of HEW, which designate a State planning agency ("DPA") to carry out the State's responsibilities under section 1122. 42

458 F. Supp. 633
U.S.C. § 1320a-1(b).17 On March 15, 1974, Delaware made such an agreement with the Secretary, designating the Bureau of Comprehensive Health Planning ("BCHP") of the Delaware Department of Health and Social Services18 as its DPA

The designated planning agency is charged with reviewing proposed capital expenditures to determine whether they are consistent with the standards or plans developed to meet the need for adequate health care facilities in the area of the State affected. 42 U.S.C. § 1320a-1(b). The DPA must consult with local health planning agencies interested in a particular proposal and submit to the Secretary the findings of those agencies with respect to the proposed expenditure together with the DPA's own findings and recommendations and any supporting materials deemed necessary by the Secretary. Id. The statute also requires the DPA to establish procedures for affording proponents of a capital expenditure found to be unnecessary "an opportunity for a fair hearing." 42 U.S.C. § 1320a-1(b)(3).

The function of the Secretary when a designated State planning agency has approved a proposed capital expenditure is severely limited. As this Court stated in NAACP v. Wilmington Medical Center, Inc., supra, 436 F.Supp. at 1198:

If a section 1122 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. The Secretary, however, has no discretion as to whether the proposed expenditures are unwise. (Footnotes omitted).19

The statute does not authorize the Secretary to withhold Federal reimbursement for depreciation, interest on borrowed funds or other expenses related to a proposed capital expenditure that has received DPA approval, unless the Secretary determines that neither the DPA nor a local health planning agency had notice of the proposal at least sixty days before an obligation for it had been incurred. 42 U.S.C. § 1320a-1(d)(1)(A).

The Secretary has broader discretion with respect to expenditures found by the DPA to be inconsistent with the State or local health care facility needs or plans, and he may in certain special circumstances override the State's recommendation.20 It is unnecessary to consider the scope of that discretion in this case, however, because Plan Omega was approved by the planning groups concerned.

Finally, section 1122 provides that any person dissatisfied with a determination of the Secretary may request reconsideration within six months of such determination. The statute expressly precludes...

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10 practice notes
  • N. A. A. C. P. v. Wilmington Medical Center, Inc., No. 82-1072
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • November 8, 1982
    ...the district court rejected a claim that HEW's approval of Plan Omega violated section 1122. Wilmington United Neighborhoods v. HEW, 458 F.Supp. 628 (D. Del. 1978), aff'd, 615 F.2d 112 (3d Cir. 5 The court of appeals reserved the issue under the Administrative Procedure Act, and found no oc......
  • NAACP v. Wilmington Medical Ctr., Inc., Civ. A. No. 76-298.
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Delaware)
    • December 21, 1981
    ...merits plaintiffs' various challenges to HEW's approval of Plan Omega under Section 1122. Wilmington United Neighborhoods v. HEW etc., 458 F.Supp. 628 (D.Del.1978). Again this opinion was affirmed by the Court of Appeals. 615 F.2d 112 (C.A.3, Following the remand of this case by the Third C......
  • NAACP v. Wilmington Medical Center, Inc., Civ. A. No. 76-298.
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Delaware)
    • May 13, 1980
    ...rev'd in part 599 F.2d 1247 (C.A.3, 1979); NAACP v. WMC, 453 F.Supp. 330 (D.Del. 1978); Wilmington United Neighborhoods v. H.E.W., 458 F.Supp. 628 (D.Del.1978), aff'd 615 F.2d 112 (C.A.3, 2 Docket Item ("D.I.") 1. 3 This Court granted summary judgment in favor of HEW on the NEPA claim, NAAC......
  • Wilmington United Neighborhoods v. U.S. Dept. of Health, Ed. and Welfare, No. 77-0439
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • February 6, 1980
    ...rejected all of WUN's claims and granted all of the motions for summary judgment that had been filed against WUN by the defendants. 458 F.Supp. 628 (D.Del.1978). This appeal II. Standing We address first the threshold question of whether the appellants have standing. At the outset, we note ......
  • Request a trial to view additional results
10 cases
  • N. A. A. C. P. v. Wilmington Medical Center, Inc., No. 82-1072
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • November 8, 1982
    ...the district court rejected a claim that HEW's approval of Plan Omega violated section 1122. Wilmington United Neighborhoods v. HEW, 458 F.Supp. 628 (D. Del. 1978), aff'd, 615 F.2d 112 (3d Cir. 5 The court of appeals reserved the issue under the Administrative Procedure Act, and found no oc......
  • NAACP v. Wilmington Medical Ctr., Inc., Civ. A. No. 76-298.
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Delaware)
    • December 21, 1981
    ...merits plaintiffs' various challenges to HEW's approval of Plan Omega under Section 1122. Wilmington United Neighborhoods v. HEW etc., 458 F.Supp. 628 (D.Del.1978). Again this opinion was affirmed by the Court of Appeals. 615 F.2d 112 (C.A.3, Following the remand of this case by the Third C......
  • NAACP v. Wilmington Medical Center, Inc., Civ. A. No. 76-298.
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Delaware)
    • May 13, 1980
    ...rev'd in part 599 F.2d 1247 (C.A.3, 1979); NAACP v. WMC, 453 F.Supp. 330 (D.Del. 1978); Wilmington United Neighborhoods v. H.E.W., 458 F.Supp. 628 (D.Del.1978), aff'd 615 F.2d 112 (C.A.3, 2 Docket Item ("D.I.") 1. 3 This Court granted summary judgment in favor of HEW on the NEPA claim, NAAC......
  • Wilmington United Neighborhoods v. U.S. Dept. of Health, Ed. and Welfare, No. 77-0439
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • February 6, 1980
    ...rejected all of WUN's claims and granted all of the motions for summary judgment that had been filed against WUN by the defendants. 458 F.Supp. 628 (D.Del.1978). This appeal II. Standing We address first the threshold question of whether the appellants have standing. At the outset, we note ......
  • Request a trial to view additional results

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