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Broderick v. Associated Hospital Service of Philadelphia

argued: March 22, 1976.

CAROLE BRODERICK, MARGARET RALPH, AND YOLANDA PICCONE, APPELLANTS
v.
THE ASSOCIATED HOSPITAL SERVICE OF PHILADELPHIA, TRADING AS BLUE CROSS OF GREATER PHILADELPHIA AND THE MEDICAL SERVICE ASSOCIATION OF PENNSYLVANIA, TRADING AS PENNSYLVANIA BLUE SHIELD, APPELLEES CANDACE S. CUMMINGS, MARGARET W. KEENEY AND ELLEN Q. SURIA, INTERVENOR PLAINTIFFS



APPEAL FROM AN ORDER OF THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA. (D.C. Civil No. 72-74)

Garth, Circuit Judge. Seitz, Chief Judge, concurring.

Author: Garth

GARTH, Circuit Judge.

On this appeal we must determine whether the mere requirement that Pennsylvania approve Blue Cross and Blue Shield contracts and the rates to be charged their subscribers is sufficient to constitute "state action" which would support a complaint brought pursuant to 42 U.S.C. § 1983. The plaintiffs' civil rights complaint*fn1 attacks the defendants' enrollment and rate policies claiming that they discriminate against married women. The district court dismissed the complaint holding that state action was not present. We affirm.

I.

The Associated Hospital Service of Philadelphia, trading as Blue Cross of Greater Philadelphia (Blue Cross), and the Medical Service Association of Pennsylvania, trading as Pennsylvania Blue Shield (Blue Shield), are nonprofit corporations which provide medical and hospitalization insurance to the general public of Eastern Pennsylvania. Both Blue Cross and Blue Shield are subject to regulation by the Insurance Department of the Commonwealth of Pennsylvania.*fn2 As part of the regulatory scheme, the Insurance Department must give its prior approval to all subscriber rates and contracts of Blue Cross and Blue Shield. 40 P.S. §§ 6124(a), 6329(a).

It is undisputed as to Blue Cross, that until 1972 married men could enroll under individual non-group coverage without enrolling their wives. Married women, however, could not obtain individual non-group coverage without enrolling their husbands. The minimum rates charged a married woman for her non-group coverage (which necessarily included her husband) were more than two times greater than the rate for individual non-group coverage then available to married men.*fn3 In 1972 Blue Cross amended its enrollment policy to require a married man as well as a married woman to enroll a spouse in order to obtain non-group coverage.*fn4 The rate for such coverage is the same for a married woman and her husband as for a married man and his wife.

As to Blue Shield, from 1939 to 1972, a married woman was required to enroll her husband in order to obtain non-group coverage, while a married man was permitted to obtain individual non-group coverage without enrolling his wife.*fn5 The rate charged a married woman who was obliged to enroll her husband was at least two times the rate charged a married man who chose not to enroll his wife.*fn6 In 1972 Blue Shield amended its enrollment policy to require all married non-group subscribers to enroll their spouses.*fn7 The rate for such coverage was the same whether the subscriber was the husband or wife. In 1973 Blue Shield again amended its enrollment requirements so as to allow either married women or married men to obtain non-group individual coverage at one-half the cost of two-person (husband and wife) marital coverage.*fn8

In summary therefore, prior to 1972, both Blue Cross and Blue Shield permitted a married woman to enroll as a non-group subscriber only if she purchased coverage which included her husband. No such requirement was imposed upon a married man. The rate applicable to such coverage was at least two times higher than the comparable individual non-group rate charged a married man.*fn9

In 1972, plaintiffs Carole Broderick, Margaret Ralph and Yolanda Piccone filed their complaint as a class action*fn9a in the United States District Court for the Eastern District of Pennsylvania alleging that the enrollment and rate requirements of Blue Cross and Blue Shield discriminated against married women. The complaint, which sought declaratory and injunctive relief and damages, also contained a pendent state claim for violation of the Pennsylvania Constitution.*fn10

On January 10, 1975 plaintiffs*fn11 moved for partial summary judgment seeking relief from the alleged discriminatory enrollment and rate requirements. They contended that the Pennsylvania statutory scheme which requires that the rates of Blue Cross and Blue Shield be first approved by the Pennsylvania Insurance Department created such a nexus with the Commonwealth as to constitute action taken by the defendants under color of state law.

On July 31, 1975, the district court filed its opinion in which, relying on the recent Supreme Court decision of Jackson v. Metropolitan Edison Co., 419 U.S. 345, 42 L. Ed. 2d 477, 95 S. Ct. 449 (1974), it held that the actions of Blue Cross and Blue Shield were not taken under color of state law. Thereafter, an order dismissing the action for lack of subject matter jurisdiction was entered on August 4, 1975.*fn11a This appeal followed.

II.

In order to maintain an action under 42 U.S.C. § 1983*fn12 the plaintiffs were required to establish that the actions of the defendants in adopting the alleged discriminatory policies and rates constituted state action. Jackson v. Metropolitan Edison Co., 419 U.S. 345, 42 L. Ed. 2d 477, 95 S. Ct. 449 (1974); Shelley v. Kraemer, 334 U.S. 1, 92 L. Ed. 1161, 68 S. Ct. 836 (1948). The Supreme Court has recognized that there is no easy answer to the question of whether particular discriminatory conduct is "private" or has such a state involvement or nexus which would permit relief under § 1983. Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 172, 32 L. Ed. 2d 627, 92 S. Ct. 1965 (1972). The facts in each case must be sifted and the ...


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