Wilmington United Neighborhoods v. U.S. Dept. of Health, Ed. and Welfare, 77-0439
| Decision Date | 06 February 1980 |
| Docket Number | 78-2634,No. 77-0439,Nos. 78-2633,No. 77-0480,77-0439,77-0480,s. 78-2633 |
| Parties | WILMINGTON UNITED NEIGHBORHOODS, Edith Beck, John J. and Frances Bradley, Joseph J. Breen, Thomas X. Carroll, Joseph G. DiPinto, Ethel B. Tynes, Alice Wilson, Appellants, v. UNITED STATES DEPARTMENT OF HEALTH, EDUCATION AND WELFARE, Amos M. Burke, as Director of the Bureau of Health Planning and Resources Development, Robert H. Sweeney, Delaware Health Council, Inc., Wilmington Medical Center, Inc. (D.C. Civil). WILMINGTON MEDICAL CENTER, INC., a non-profit corporation of the State of Delaware v. Joseph A. CALIFANO, Jr., as Secretary of the Department of Health, Education and Welfare and Wilmington United Neighborhoods, (Defendant-Intervenor), Appellant (D.C. Civil). |
| Court | U.S. Court of Appeals — Third Circuit |
Marilyn G. Rose, Herbert Semmel, (Argued), Center for Law and Social Policy, Washington, D. C., Douglas Shachtman Edward F. Kafader, (Argued), Deputy Atty. Gen., Dover, Del., for appellees, Amos M. Burke and Robert H. Sweeney.
Community Legal Aid Society, Inc., Wilmington, Del., for appellants in No. 78-2633 and defendant-intervenor-appellant in No. 78-2634.
William J. Wade, (Argued), Rodney M. Layton, Richards, Layton & Finger, Wilmington, Del., for appellee, Wilmington Medical Center, Inc.
Barbara Allen Babcock, Asst. Atty. Gen., Washington, D. C., James W. Garvin, Jr., U. S. Atty., Wilmington, Del., William G. Kanter, Alfred Mollin, (Argued), Appellate Staff, Civil Div., U. S. Dept. of Justice, Washington, D. C., for appellees, Joseph Califano, Jr. and Department of Health, Education and Welfare; Joan Garner, Dept. of Health, Education and Welfare, Philadelphia, Pa., of counsel.
Michael D. Goldman, Potter, Anderson & Corroon, Wilmington, Del., for appellee, Delaware Health Council, Inc.
Before ADAMS, HUNTER and HIGGINBOTHAM, Circuit Judges.
This appeal represents the latest chapter in a long battle by consumers of medical services to prevent the removal and relocation of hospital services from the inner-city to suburban Wilmington. The plaintiffs have appealed from orders granting various motions dismissing their case against the U. S. Department of Health, Education and Welfare (HEW), the Bureau of Comprehensive Health Planning of Delaware (BCHP) and the Wilmington Medical Center, Inc. (WMC). The court below held that it was precluded by Section 1122(f) of the Social Security Act, 42 U.S.C. § 1320a-1(f), from considering the appellants' challenges to certain administrative determinations made by the Secretary of HEW and the BCHP. It also held that the appellants, as consumers of medical services and not proponents of capital expenditures, were not entitled to a hearing under Section 1122 and therefore were not denied equal protection under the fifth and fourteenth amendments. We will affirm.
The Wilmington Medical Center, Inc. (WMC) is a private, nonprofit hospital and the primary provider of hospital services in New Castle County, Delaware. For several years, WMC has engaged in extensive planning to determine how best to restructure the hospital system in order to improve health care delivery. The product of this planning was Plan Omega, an $88 million capital expenditure program that would relocate major components of WMC's medical system to an outlying suburban location. The capacity of a remaining inner city facility would be reduced to approximately 250 beds.
WMC and its controversial Plan Omega are not strangers to this court. In NAACP v. Medical Center, Inc., 584 F.2d 619 (3d Cir. 1978), the plaintiffs individuals and organizations representing the poor, the elderly, the handicapped, and several racial and ethnic minorities of Wilmington argued unsuccessfully that HEW's approval of the Medical Center's capital expenditure plan constituted major federal action requiring the preparation of an environmental impact statement under the National Environmental Policy Act of 1969, 42 U.S.C. §§ 4321-4347. In NAACP v. Medical Center, Inc., 599 F.2d 1247 (3d Cir. 1979), the same plaintiffs subsequently asserted that they had a private right of action to challenge the proposed health facility relocation for its alleged discriminatory impact. Finding that Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 2000d, and Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794, created private rights of action for plaintiffs who seek relief other than funding termination, this court reversed the dismissal of the district court and remanded the cases to the district court for a trial on the merits.
The attack on Plan Omega in this case is directed at the approval of the Plan by HEW and various state agencies under a system established by Section 1122 of the Social Security Act, 42 U.S.C. § 1320a-1.
Section 1122 is a program designed to curb unnecessary capital expenditures by hospitals and other health care facilities. In general, this goal is accomplished by requiring hospitals to secure advance approval of their capital projects from state health care planning agencies. Health facilities that submit plans of proposed capital expenditures to the State and subsequently have them approved are reimbursed with federal funds for that portion of a patient's bill constituting capital costs, that is, depreciation, interest or return on equity capital.
The State of Delaware has entered into such an agreement with HEW and designated the BCHP as the State's designated planning agency (DPA) to carry out its responsibility under Section 1122. Under the statute, the DPA 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 is required to consult with local health planning agencies interested in a particular proposal and to submit to the Secretary of HEW the findings of those agencies on the proposed expenditure and the DPA's own findings and recommendations, along with any supporting materials deemed necessary by the Secretary. Id. The DPA is also required 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).
Following its approval by the DPA, the Secretary then performs the ministerial act of assuring that the proper procedure has been followed. If, however, the expenditures have been found by the DPA to be inconsistent with the state or local health care facility needs or plans, the Secretary may, in certain limited instances, override the State's recommendation. 42 U.S.C. § 1320a-1(d) (2). Finally, Section 1122(f) provides:
Any person dissatisfied with a determination by the Secretary under this section may within six months following notification of such determination request the Secretary to reconsider such determination. A determination by the Secretary under this section shall not be subject to administrative or judicial review.
42 U.S.C. § 1320a-1(f). This provision and its meaning are at the heart of this appeal.
On March 19, 1976, WMC sought Section 1122 approval for Plan Omega. As required by the statute, WMC made an application to the Delaware BCHP and to a local health planning group for review of the relocation plan. Following a substantive review of Plan Omega, the state and local agencies certified it as necessary. 1 The DPA forwarded its finding to the Secretary who then issued a Section 1122 approval of Plan Omega in August of 1976. As a result of this approval, WMC was assured that the Secretary would not withhold payment of the capital component of WMC's charges to patients under Medicare, Medicaid, and child health programs on the ground that the component charge was the product of an unnecessary capital expenditure.
On September 10, 1976, the complaint, challenging Plan Omega under Title VI of the Civil Rights Act, was filed in the district court. On January 19, 1977, the district court ordered HEW to investigate the charges of those plaintiffs that Plan Omega was in violation of Title VI and Section 504 and to report its findings back to the court. 426 F.Supp. 919 (D.Del.1977).
On July 5, 1977, during the course of that litigation, the Secretary of HEW, through the Office for Civil Rights (OCR), found Plan Omega in violation of Title VI. The Secretary indicated that Plan Omega might comply with Title VI and Section 504 if WMC made certain changes in the Plan. As a result, a contract was executed between WMC and HEW on November 1, 1977 in which WMC agreed: to provide a transportation system for patients, employees, and visitors between the urban and suburban locations; to institute a patient allocation system for services that were available at both locations; and to alter construction and renovation plans in order to accommodate handicapped persons.
In the interim, on February 4, 1977, the plaintiffs in the instant case exercised their statutory prerogative under Section 1122(f) by requesting the Secretary to reconsider his August 6, 1976 determination to approve Plan Omega under Section 1122. On September 7, 1977, Harold Margulies, M.D., Acting Administrator of the Health Resources Administration of HEW, responded to the request for reconsideration and affirmed the prior determination of August 6, 1976 which approved the plan. Dr. Margulies' letter stated that if WMC agreed to make the modifications required to comply with Title VI and Section 504, it would have to submit the modified Plan Omega in its entirety to the BCHP for another Section 1122 review. On October 12, 1977, however, Dr. Margulies disavowed such an interpretation stating that any such reconsideration would be inconsistent with the Section 1122 program regulations. He stated...
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