Wyoming Hospital Ass'n v. Harris
| Decision Date | 21 October 1981 |
| Docket Number | No. C80-0345B.,C80-0345B. |
| Parties | WYOMING HOSPITAL ASSOCIATION, Bishop Randall Hospital, Campbell County Memorial Hospital, Community Hospital, Converse County Memorial Hospital, De Paul Hospital, Fremont County Memorial Hospital, Hot Springs County Memorial Hospital, Ivinson Memorial Hospital, Johnson County Memorial Hospital, Memorial Hospital of Carbon County, Memorial Hospital of Laramie County, Memorial Hospital of Natrona County, Memorial Hospital of Sheridan County, Memorial Hospital of Sweetwater County, Niobrara Memorial Hospital, Powell Hospital, T.C.H.D. — St. John's Hospital, Uinta County Memorial Hospital, Waskakie Memorial Hospital, Weston County Memorial Hospital, West Park County Hospital District, Plaintiffs, v. Patricia R. HARRIS, Secretary of the United States Department of Health and Human Services, and the United States Department of Health and Human Services, Defendants. |
| Court | U.S. District Court — District of Wyoming |
COPYRIGHT MATERIAL OMITTED
James H. Barrett, Franklin D. Bayless, and Rhonda Woodard, of Trierweiler, Bayless, Barrett & McCartney, Cheyenne, Wyo., for plaintiffs.
Shalom Brilliant, Dept. of Justice, Civ. Div., Washington, D. C., Francis Leland Pico, Asst. U. S. Atty., Cheyenne, Wyo., for defendants.
ORDER ON MOTIONS FOR SUMMARY JUDGMENT
The above-entitled matter having come on for hearing before the Court upon a Motion for Summary Judgment filed by the Plaintiffs and a Cross-Motion for Summary Judgment filed by the Defendants; the Plaintiffs appearing by and through their attorneys James H. Barrett, Esq., Franklin D. Bayless, Esq., and Rhonda Woodard, and the Defendants appearing by and through their attorneys Shalom Brilliant, Esq., and Francis Leland Pico, Esq.; the Court, having reviewed the pleadings, exhibits, affidavits and briefs filed herein, having heard the arguments of counsel in support of and in opposition to the motions, and having taken the matter under advisement, and now, being fully advised in the premises finds, as follows:
FINDINGS OF FACT
This suit was brought by the Wyoming Hospital Association, on behalf of its institutional members, and by twenty-two (22) individual Wyoming hospitals, seeking declaratory and injunctive relief against the enforcement of new regulations issued under the "Hill-Burton" construction assistance program. The regulations were passed pursuant to Title VI and Title XVI of the Public Health Service Act, 42 U.S.C. § 291 et seq., and govern the manner of compliance with certain assurances made by each hospital on receipt of Hill-Burton construction funds. These assurances deal with the provision of hospital services to indigent patients and nondiscriminatory access. In the past, the assurances were complied with through an "open door" policy, by which the hospitals certified that no person would be denied medical attention based on the inability to pay. Under the new regulations, the "open door" policy has been replaced by strict compliance guidelines which, if unfulfilled in any particular year, will be carried forward indefinitely until the hospital has fully met its indigent care requirements.
Plaintiffs seek judicial review of the regulations promulgated by the Department of Health and Human Services (HHS) under 5 U.S.C. § 706. (See Title Page, Plaintiffs' Memorandum in Support of Motion for Summary Judgment.) Although not so designated in their Memorandum, Plaintiffs arguments will be examined under three of the subsections of 5 U.S.C. § 706 for purposes of this Order. To the extent that it is contended that the new regulations constitute a breach of an alleged contract that exists between each of the participating hospitals and the government, this challenge appears to fall within 5 U.S.C. § 706(2)(A), by which agency action may be declared invalid if "not in accordance with law." Plaintiffs also maintain that the new requirements are unconstitutional as having impaired the obligation of a contract and having been applied retroactively. This argument raises an issue under 5 U.S.C. 706(2)(B), which addresses agency action which is "contrary to constitutional right, power, privilege, or immunity." Finally, Plaintiffs argue that the regulations amount to an administrative act "in excess of statutory jurisdiction, authority, or limitations..." under 5 U.S.C. § 706(2)(C). Each of these components of the Plaintiffs' case shall be discussed in turn.
THE VALIDITY OF THE REGULATIONS AS A MATTER OF CONTRACT LAW AND UNDER 5 U.S.C. § 706(2)(A)
Plaintiffs maintain that the obligations imposed on the hospitals upon receipt of funds under the Hill-Burton Act were based on a contract that was made by approval of their applications in accordance with the Act. Thus, they argue, the assurances required with regard to indigent care and community service became a part of that contract and were governed by the statutes and regulations in effect at that time. Plaintiffs direct the Court to cases in which federal courts have characterized the relationship between a hospital receiving Hill-Burton funds and the government as contractual. Such was the holding in Euresti v. Stenner, 458 F.2d 1115 (10th Cir., 1972), which involved an action by indigent patients to enforce their rights to medical care as third-party beneficiaries to the hospitals' Hill-Burton contract. The court noted, however, that a contractual relationship would not be required to enforce their rights to medical care. On similar facts, the court in Corum v. Beth Israel Medical Center, 359 F.Supp. 909 (S.D.N.Y., 1973), relied on language in Euresti to find a contractual relationship intended to benefit indigent patients. Finally, Judge Pell, in his concurring and dissenting opinion filed in American Hospital Association v. Harris, 625 F.2d 1328 (7th Cir., 1980), stated in no uncertain terms that the relationship between the hospitals receiving Hill-Burton funds and the relevant administrative agencies were of a "contractual nature" and that the same regulations challenged by the Plaintiffs in this case were beyond the original contractual terms.1
For Plaintiffs to prevail on this issue, they must show not only the existence of a contract, but also that the statutes and regulations in effect at the time any contract was executed were incorporated into the obligations imposed thereunder. Thus, the existence, vel non, of a contract is not necessarily the determinative issue in this case. Rather, it is the authority of the Secretary to define how hospitals must comply with the assurances after the execution of the alleged contracts that will be dispositive. A careful analysis of the applicable statutes and regulations, along with the documents executed in association with the funding program, indicates that the regulations in effect at the time the applications submitted by the hospitals were accepted were not indelibly etched into their agreement. The regulations challenged by the Plaintiffs do not exceed any contractual or regulatory limits when considered in light of the purpose of this Hill-Burton Act and with the breadth of the language contained in the statute and the applications submitted thereunder.
Much has been said, in this case and others, concerning the purpose of the Hill-Burton Act when it was passed by Congress on July 1, 1946. Plaintiffs argue that the basic thrust of the Act was towards the construction and modification of hospital facilities. Thus, they argue, the "uncompensated care assurance" and the "community care assurance" required of the applicants were merely to ensure the availability of hospital care to all citizens of the community and were not intended as broadbased health care programs for the needy. Judge Pell argued in the same vein in his concurring and dissenting opinion in American Hospital Association when he concluded that:
Clearly no fair reading of the (relevant text of the 1945 Hearings held on the Act) supports the position advanced by the intervenors that Congress intended for the Hill-Burton Act, standing alone, to impose broad indigent care obligations on participating hospitals. Neither does the language of the assurances themselves support such a proposition. 625 F.2d at 1335-6.
Yet, such speculation on the intent of Congress in passing the original version of the Hill-Burton Act fails to surmount the unambiguous and unqualified language of 42 U.S.C. § 291c(e), which requires that:
(An) assurance shall be received by the State from the applicant that (1) the facility or portion thereof to be constructed or modernized will be made available to all persons residing in the territorial area of the applicant; and (2) there will be made available in the facility or portion thereof to be constructed or modernized a reasonable volume of services to persons unable to pay therefore, ...
Upon examination of the same issue in Euresti v. Stenner, supra, at 1118, the court reached the following conclusion:
Thus the legislative history and the expressed purposes of Congress indicate that the Act was passed to ensure that the indigent would be supplied sufficient hospital services when needed. With this clear intent, it is not decisive that the language of the Act included no explicit indication that indigents were to have a right to enforce the Act's provisions.
The subject was again addressed in Cook v. Ochsner Foundation Hospital, 319 F.Supp. 603, 606 (E.D.La., 1970).
In the case at bar, we hold that the Hill-Burton Act is designed, at least in part, to benefit persons unable to pay for medical services. Such people are not the sole beneficiaries of the act, but they certainly are the object of much of the act's concern. We do not feel that it is necessary to delve into the legislative history of the Hill-Burton Act in order to reach this conclusion. Rather, we are of the opinion that the act, by its own terms, makes it plain that persons unable to pay for...
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