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UNITED STATES v. PENNSYLVANIA

May 7, 1975

UNITED STATES OF AMERICA, Plaintiff
v.
COMMONWEALTH OF PENNSYLVANIA, MILTON SHAPP, Governor of the Commonwealth of Pennsylvania; HELENE WOHLGEMUTH, Secretary of the Department of Public Welfare of the Commonwealth of Pennsylvania; PAUL SMITH, Secretary of the Department of Labor and Industry of the Commonwealth of Pennsylvania; DR. J. FINTON SPELLER, Secretary of the Department of Health of the Commonwealth of Pennsylvania, Defendants MILTON J. SHAPP, Governor; HELENE WOHLGEMUTH, Secretary, Department of Public Welfare; PAUL SMITH, Secretary, Department of Labor and Industry; J. FINTON SPELLER, Secretary of the Department of Health of the Commonwealth of Pennsylvania, Plaintiffs to the Counterclaim v. UNITED STATES OF AMERICA, CASPAR W. WEINBERGER, Secretary of the Department of Health, Education and Welfare; WILLIAM E. SIMON, Secretary, Department of the Treasury; FRANK C. CARLUCCI, Undersecretary of the Department of Health, Education and Welfare; GORHAM L. BLACK, JR., Regional Director, Region III, Department of Health, Education and Welfare; ALWYN L. CARTY, Regional Commissioner, Region III, Social and Rehabilitative Services, Defendants to Counterclaim



The opinion of the court was delivered by: HERMAN

The United States Government filed suit in this court seeking an injunction to compel the Commonwealth of Pennsylvania and various of its officials to enforce provisions of Medicare, 42 U.S.C. § 1395 ff., and Medicaid, 42 U.S.C. § 1396 ff. with respect to skilled nursing home facilities.

 This memorandum is concerned with the Government's motion to dismiss a counterclaim filed by the Commonwealth.

 Medicaid, for the purposes of this memorandum, is essentially a contractual arrangement between the two governments by which the federal government directly pays the state which in turn pays nursing homes that provide medical assistance to the blind, aged or disabled. In order for the state to qualify for reimbursement it must submit a plan to the federal government insuring that the facilities receiving payments meet certain minimum standards. *fn1"

 The federal government has conceded that at all times relevant to the matters of this suit Pennsylvania has had an approved plan (Complaint, para. 5 (a)).

 Medicare, Title XVIII of the Social Security Act of 1935, 42 U.S.C. § 1935 ff., is a system of aid to the elderly. Payments under Medicare do not pass through state agencies. Instead, the state serves as the contractual policing arm of the federal government insuring that participating facilities are certified to be in compliance with the Life Safety Code. So long as the state certifies to the federal government that a facility is so operating then occupants of the facility remain eligible for payments directly from the federal government. Under this program the state conducts essentially the same type of supervision as under Medicaid, including requiring compliance with the Life Safety Code.

 The thrust of the complaint is the federal government's contention that Pennsylvania failed to meet its supervisory obligations. The complaint charged that "at least 134" nursing homes were then operating without complying with the Life Safety Code under Medicaid. Further, the complaint alleged that an additional 52 such homes participating in Medicare had not properly been certified as being in compliance with the Life Safety Code.

  The Commonwealth's counterclaim *fn2" asserts that the named federal officials, based on the Government's stated allegations, have wrongfully withheld funds which have been recently estimated at $12 million. The funds making up the counterclaim are those withheld by the counterclaim defendants because of the alleged failure of the Commonwealth to adequately police Pennsylvania's nursing home facilities under Medicaid and Medicare. The Commonwealth alleges jurisdiction pursuant to the Administrative Procedure Act, 5 U.S.C. § 702, et seq.; the Declaratory Judgment Act, 28 U.S.C. § 2201, et seq.; the Mandamus Statute, 28 U.S.C. § 1361, and the federal question statute, 28 U.S.C. § 1331.

 The counterclaim defendants have moved to dismiss the Commonwealth's counterclaim on four grounds: (1) lack of subject matter jurisdiction, (2) sovereign immunity, (3) failure to exhaust administrative remedies, and (4) failure to state a claim upon which relief can be granted.

 JURISDICTION

 Administrative Procedure Act.

 The Commonwealth first alleges subject matter jurisdiction pursuant to the Administrative Procedure Act, 5 U.S.C. § 702, et seq. The law of the Third Circuit clearly establishes that the APA does not confer subject matter jurisdiction. CHAUDOIN v. ATKINSON, 494 F.2d 1323, 1328 (3d Cir. 1974); GETTY OIL CO. v. RUCKELSHAUS, 467 F.2d 349, 367 (3d Cir. 1972). But see, STATE HIGHWAY COMM'N v. VOLPE, 479 F.2d 1099, 1105 n.7 (8th Cir. 1973).

 Declaratory Judgment Act.

 The defendants' jurisdictional reliance on the Declaratory Judgment Act, 28 U.S.C. § 2201, et seq. is equally misplaced. SKELLY OIL CO. v. PHILLIPS PETROLEUM CO., 339 U.S. 667, 671-72, 94 L Ed 1194, 1199-1200, 70 S. Ct. 876 (1950); RAGONI v. UNITED ...


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