Original jurisdiction in case of Metropolitan Hospital on behalf of themselves and all others similarly situated v. Department of Public Welfare, Commonwealth of Pennsylvania, and Don Jose Stovall, Director of Public Welfare, Commonwealth of Pennsylvania.
Pace Reich, with him Judith Eichen, and Modell, Pincus, Hahn & Reich, for plaintiffs.
Norman J. Watkins, Deputy Attorney General, with him Lawrence Silver, Deputy Attorney General, and Robert P. Kane, Attorney General, for defendants.
President Judge Bowman and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Mencer, Rogers and Blatt. Opinion by Judge Crumlish, Jr. Dissenting Opinion by Judge Kramer.
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Metropolitan Hospital, on behalf of itself and all others similarly situated (Plaintiff) instituted a three count complaint in equity challenging the establishment and operation of the Utilization Review Committee (Committee) of the Department of Public Welfare (Defendant). This Committee, required by federal law,*fn1 has as
[ 21 Pa. Commw. Page 119]
its purpose the monitoring of Medicare and Medicaid disbursements to providers of inpatient hospital care and attempts to insure that only reasonable costs of medically necessary medical procedures are subsidized with state and federal funds.
Plaintiff alleges that: 1) the establishment of the Committee and its operation violates its existing contract with Defendant; 2) failure to promulgate rules, regulations and standards by Defendant makes Plaintiff's compliance impossible, and thus, deprives Plaintiff of property without due process of law; and 3) failure to provide Plaintiff further review for a period in excess of one year is violative of the parties' contract and the Constitutions of both the United States and of this Commonwealth. Plaintiff now prays that this Court compel Defendant to retroactively restore all disallowed payments.*fn2
Defendants have lodged preliminary objections to the complaint in equity. They are:
1. This Court lacks equity jurisdiction over the cause in that Plaintiffs have not exhausted adequate and available statutorily imposed administrative remedies.
2. The cause of action is not properly maintainable as a class action.
We must decide the validity of these objections.
Initially, we will examine the exhaustion of statutory remedies objection. Key to this inquiry is Section 9421.54 of the Department of Public Welfare Medical Assistance Manual which provides:
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"The Department's decision to deny payment or to seek reimbursement of payment for services from the hospital or to bar the hospital from participation may be appealed upon request of the hospital administrator to the Department. (Administrative Agency Law 1945, June 4, P.L. 1388.)
"The request for the appeal must be initiated within 30 days from the date of the Department's disapproval letter; it is sent to the Director of the Division of Utilization Review, Bureau of Medical Assistance, P.O. Box 2675, Harrisburg, Pennsylvania 17120.
"In such an event, an informal pre-hearing conference is first held with the Department's Office of Legal Counsel. If the hospital and Department do not agree at this preliminary conference, a hearing examiner is then appointed by the ...