decided: February 1, 1980.
HOSPITAL ASSOCIATION OF PENNSYLVANIA ET AL., APPELLANTS,
GORDON K. MACLEOD, M.D., SECRETARY OF HEALTH, AND THE DEPARTMENT OF HEALTH OF THE COMMONWEALTH OF PENNSYLVANIA
No. 13 May Term, 1979, Appeal from the Decree of the Commonwealth Court of Pennsylvania at No. 716 C.D. 1978.
James H. Stewart, Jr., Michael C. Fox, Harrisburg, for appellants.
John G. Knorr, III, Dept. of Justice, Harrisburg, for appellee.
Eagen, C. J., and O'Brien, Roberts, Nix, Manderino, Larsen and Flaherty, JJ. Flaherty, J., filed a dissenting opinion, in which Larsen, J., joins. Manderino, J., did not participate in the decision of this case.
[ 487 Pa. Page 518]
OPINION OF THE COURT
Appellants, the Hospital Association of Pennsylvania and twenty-one Pennsylvania hospitals, contend that state regulations governing "general and special hospitals," 28 Pa.Code §§ 101.1 et seq., were promulgated without statutory authority by appellees, the Secretary and the Department of Health. We agree with appellees and the Commonwealth Court that ample basis for the challenged regulations is provided by article IX of the Public Welfare Code.*fn1 Accordingly, we affirm.
In 1972, appellees determined that the department's "Rules and Regulations for Hospitals," last revised in 1966, should again be revised. In full compliance with publication and notice requirements,*fn2 appellees published a set of proposed rules and regulations designed to replace the 1966 rules. 2 Pa.Bull. 1129 (1972). Between 1972 and 1977, appellees evaluated extensive public opinion on the proposed rules, including comment from the Hospital Association of Pennsylvania, and incorporated many suggestions into a revised draft. Again by proper notice, appellees published a revised set of rules and regulations. 7 Pa.Bull. 939 (1977). After further public comment, appellees modified the proposed rules and, in December, 1977, adopted them as modified. 7 Pa.Bull. 3631 (1977).
The challenged regulations span twenty-six chapters, ranging from such concerns as "Governance and Management"
[ 487 Pa. Page 519]
to "Construction Standards."*fn3 Within each chapter there are a series of specific regulations. For example, under the heading "Governance and Management," there appear regulations setting objectives for hospital by-laws, 28 Pa.Code § 103.3, establishing functions to be performed by a "governing body," id. at § 103.4, and directing formation of various "governing body committees." Id. at § 103.6. Also included are regulations establishing a "Patient's Bill of Rights," id. at §§ 103.21-103.24, managerial and administrative responsibilities, id. at §§ 103.31-103.39, and standards for fiscal control. Id. at §§ 103.41-103.46. In all, appellees promulgated over 500 specific regulations.
Before the effective date of the regulations, appellants filed a petition for review in the Commonwealth Court, alleging that appellees lacked statutory authority to promulgate the challenged rules and regulations. On appellees'
[ 487 Pa. Page 520]
motion for summary judgment, the Commonwealth Court sustained the regulations and denied appellants relief.*fn4 This appeal followed.*fn5
Section 902 of the Public Welfare Code expressly provides that the department shall have "supervision" over a number of facilities, including, under subsection (8), "[a]ll institutions for adults within this Commonwealth."*fn6 Appellants concede, as they must, that "general and special hospitals" "are institutions for adults."*fn7 They dispute, however, the
[ 487 Pa. Page 521]
scope of appellees' power of "supervision." Appellants claim they possess "managerial prerogatives" which may not be regulated by appellees.
The Public Welfare Code does not define the department's "supervisory powers" under section 902. Nevertheless, our review of the Code must recognize that "[s]ubstantive rule-making is a widely used administrative practice, and its use should be upheld whenever the statutory delegation can reasonably be construed to authorize it." Bernard Schwartz, Administrative Law § 56 at p. 151 (1976). As Dean Freedman points out, "[t]he existence of a body of standards tends to encourage greater deliberations, self-consciousness, and consistency in the exercise of administrative discretions and thereby reduces the likelihood that an agency will act arbitrarily." James O. Freedman, Crisis and Legitimacy: The Administrative Process and American Government 245 (1978). We are satisfied that, reasonably construed, the Public Welfare Code demonstrates that the Legislature fully intended to permit the department (A) to supervise hospitals' managerial practices and (B) to do so through promulgation of rules and regulations.
Nowhere in article IX of the Code is "managerial prerogative" reserved. Compare Public Employe Relations Act, Act of July 23, 1970, P.L. 563, § 702, 43 P.S. § 1101.702 (Supp.1979) ("[p]ublic employers shall not be required to bargain over matters of inherent managerial policy"). Rather, hospital administration is expressly within the purview
[ 487 Pa. Page 522]
of existing departmental regulatory obligations. Surely it cannot seriously be disputed that proper, uniform managerial practices promote the quality and efficiency of the delivery of health care services to individual consumers requiring health care. It is precisely this goal which the Legislature requires the department to achieve. Section 921(c) of the Code, fully applicable to hospitals,*fn8 expressly directs the department to set "standards for the safe and adequate care of individuals," making "adequate and proper provision for . . . (x) humane care."
That managerial practices of hospitals are within the legislatively-defined competency of the department under section 921 is demonstrated by an analogous provision of article IX. Section 911 of the Code expressly contemplates the department's review of the managerial practices of "supervised institutions." Under section 911(a)(2), the Legislature places "all and every matter and thing" relating to the "usefulness, administration, and management" of "supervised institutions," and "to the welfare of the inmates thereof . . .," within the department's mandatory obligation of "inquir[y] and examin[ation.]"*fn9 Indeed, "supervised institutions," by definition, expressly includes "all hospitals, almshouses, or poor houses, maintained by any county, city, borough, township or poor district of this Commonwealth." We are convinced, therefore, that the Legislature
[ 487 Pa. Page 523]
has given the tribunal with experience and expertise over managerial practices of "supervised institutions" similar authority to supervise the managerial practices of hospitals subject to departmental standards under section 921.*fn10
We are also satisfied that section 902 of the Code authorizes the department to supervise managerial practices of hospitals through promulgation of "rules and regulations." No provision of article IX expressly confers authority upon the department to establish "rules and regulations" governing hospitals. Rather, under section 921(c), the department is required to establish "standards." Nonetheless, in discussing the appropriate means of enforcing these mandatory "standards," the Legislature clearly contemplates departmental "rules and regulations" affecting hospitals. Section 921(e) provides:
"Whenever the department shall upon inspection, investigation or complaint find any violation in any institution of rules or regulations adopted by the department, or any failure to establish, provide or maintain standards and facilities required by this act or by the department, it shall give immediate written notice thereof, to the officer or officers charged by law with or in any way having or exercising the control, government or management of such institution, to correct the said objectionable condition in the manner and within the time specified by the department;
[ 487 Pa. Page 524]
whereupon, it shall be the duty of such officer or officers to comply with the direction of the department. If such officer or officers fail to comply with such direction, the department may request the Department of Justice to institute appropriate legal proceedings to enforce compliance therewith, and the department may withhold any State money available for such institution until such officer or officers comply with such direction." (emphasis added)
Section 921(e) could contemplate "rules and regulations adopted by the department" only if some other provision of the Code grants the department authority. It must be remembered that "[e]very statute shall be construed, if possible, to give effect to all its provisions." 1 Pa.C.S. § 1921(a). To "give effect" both to the department's supervisory power under section 902 and the language "rules and regulations" found in section 921(e), it must be concluded that the department is empowered, under its power of "supervision," to formulate "rules and regulations."
For all the above reasons, none of the regulations appellants have challenged, including those affecting governance, establishing a "Patient's Bill of Rights," and setting appropriate considerations for admissions, can realistically be viewed as beyond the reach of departmental authority conferred under section 902. Accordingly, we hold that the Legislature has authorized the department to promulgate its rules and regulations concerning hospitals. We therefore affirm the decree of the Commonwealth Court denying appellants injunctive relief.*fn11
Decree affirmed. Each party pays own costs.
[ 487 Pa. Page 525]
FLAHERTY, Justice, dissenting.
I cannot sit idly by while the majority of my colleagues give an unwarranted license to a governmental agency to enact social legislation in the form of regulation without a semblance of authority to be found in the enabling legislation. A governmental regulation to be valid must gain its life from a clearly defined delegation of statutory origin. The obvious reason for this principle has its foundation in the nature of our concept of government. The law by which the people of our society are governed emanates from them, through their elected representatives in the legislative branch of government. The executive branch cannot make law, while the judiciary has the duty to determine whether any restrictions on human freedom are valid, and that includes the duty to determine whether regulations promulgated by an agency of the executive branch of government fall within the limits of authority delegated to that agency by legislation. When regulations go beyond the purpose of the enabling statute, or bear no rational relationship to the purpose of that legislation, they are of no force and effect and must be set aside.
The Public Welfare Code,*fn1 § 921(c) provides:
The department shall establish standards for the safe and adequate care of individuals, not inconsistent with the laws of this Commonwealth and the rules and regulations of the various departments of the Commonwealth, for all such institutions within this Commonwealth, which standards shall make adequate and proper provisions for (i) fire protection, (ii) water supply and sewage disposal, (iii) sanitation, (iv) lighting and heating, (v) ventilation, (vi) safety, (vii) equipment, (viii) bed space, (ix) keeping of
[ 487 Pa. Page 526]
records of identification of residents in the institution and their next of kin, of medical care provided and all pertinent admission and discharge data, and (x) humane care.
It is not difficult to glean the clear meaning of this language. "The department shall establish standards for the safe and adequate care of individuals . . . which standards shall make adequate and proper provisions for . . . ." The plain language provides for no other construction than a requirement for minimum standards in the enumerated areas. In § 902 of the Code there is a provision for the supervision over institutions for adults, and § 921(c) sets forth the subjects for that supervision. The majority opinion draws upon §§ 902 and 911(a)(2) of the Code in an attempt to justify regulation of hospital management methods on the theory that the department must have been intended by the legislature to apply its management abilities, acquired in examining "supervised institutions", to preempt and control hospital management generally under § 921(c).*fn2 Such a far-reaching construction strains to grant
[ 487 Pa. Page 527]
this agency a power not expressly or impliedly delegated to it. In Pennsylvania Human Relations Commission v. St. Joe Minerals Corporation, 476 Pa. 302, 310, 382 A.2d 731, 735-736 (1978), this court repeated a longstanding principle:
In delimiting the scope of an administrative agency's power, we do not write on a blank slate, and the controlling principles are firmly established:
"The principle guiding to decision is this: The power and authority to be exercised by administrative commissions must be conferred by legislative language clear and unmistakable. A doubtful power does not exist. Such tribunals are extra-judicial. They should act within the strict and exact limits defined." Green v. Milk Control Comm'n, 340 Pa. 1, 3, 16 A.2d 9 (1940).
The regulations here challenged have no bearing on the statutory purpose of supervision of standards of care set forth in § 921(c), but rather represent a manifesto for a complete take over by government of management prerogatives in the operation of hospitals. Put another way, a socialization of private hospitals!
We have never held that the power to regulate is the power to manage, per se; quite to the contrary. In North Pennsylvania Power Company v. Public Utility Commission, 333 Pa. 265, 267-268, 5 A.2d 133, 134-135 (1939), where this
[ 487 Pa. Page 528]
Court held that the P.U.C. lacked power to prevent a certain utility merger, we said:
The Public Utility Commission is not a super board of directors for the public utility companies of the State and it has no right of management of them. Its sole power is to see that in the matter of rates, service and facilities, their treatment of the public is fair. Speaking through the present Chief Justice, we said: "It was not intended by the Legislature that the commission should be a board of managers to conduct and control the affairs of public service companies; but it was meant that, where certain of their powers and obligations had intimate relation to the public through fairness, accommodation, or convenience, the commission should have an inquisitorial and corrective authority to regulate and control the utility in the field specifically brought within the commission's jurisdiction. * * * The company manages its own affairs to the fullest extent consistent with the protection of the public's interest, and only as to such matters is the commission authorized to intervene, and then only for the special purposes mentioned in the act." Coplay Cement Mfg. Co. v. Public Ser. Comm., 271 Pa. 58, 61, 114 A. 649, 16 A.L.R. 1214. "It must never be forgotten that, while the state may regulate with a view to enforcing reasonable rates and charges, it is not the owner of the property of public utility companies, and is not clothed with the general power of management incident of ownership." Southwestern Bell Tel. v. Public Ser. Comm., 262 U.S. 276, 289, 43 S.Ct. 544, 546, 67 L.Ed. 981, 31 A.L.R. 807. (emphasis added)
North Pennsylvania Power Company was overruled in York v. Pennsylvania Public Utility Commission, 449 Pa. 136, 295 A.2d 825 (1972) by a holding that the P.U.C. had specific statutory authority to review mergers. However, the North Pennsylvania Power view of noninterference in management was not disturbed. Thus, unless clear statutory authority is found for an agency to control management matters, it should not be implied.
[ 487 Pa. Page 529]
A web of more than five hundred "regulations" has been promulgated by appellees' rules which include controls on hospital organization, patients' dealings with administrators, admissions standards, fiscal controls, medical and social services to be provided, and management methods to be used in meeting care standards. Far from simply assuring supervision of minimum quality standards of health care, the obvious legislative purpose, the rules put the department in a self-appointed position as creator and manager of a socialized integrated health care system, and constitute an enactment or sweeping "social legislation" in the guise of an executive regulation, completely bypassing and usurping the functions of the General Assembly. The executive branch of government must not be permitted to adopt such schemes without clear legislative action, as such systems are to be adopted by the will of the people, expressed through legislators -- not through executive regulators. For this reason, scrutiny of the department's power is an important obligation of this Court.
An understanding of the great hazard created by the holding of the majority becomes evident when considering the scope and detail of these regulations. Hospitals are deprived of their right as private institutions to structure and govern their own organizations by rules which describe ownership,*fn3 boards,*fn4 bylaws contents (including a requirement of a Patient's Bill of Rights),*fn5 duties of those who
[ 487 Pa. Page 530]
govern the institution (including a duty to devote resources to emotional and spiritual care for patients),*fn6 the manner in
[ 487 Pa. Page 531]
which committees shall be run,*fn7 and requirements for financial disclosure to the governing body.*fn8 These far-reaching restrictions on private freedom in conducting business deserve close scrutiny for statutory authority -- authority which is here totally lacking.
In addition, the rules require job descriptions,*fn9 educational programs,*fn10 rate schedules,*fn11 insurance programs,*fn12 and written purchasing policies.*fn13
[ 487 Pa. Page 532]
A most disturbing set of regulations controls a hospital's ability to determine which persons shall be admitted for care by limiting reasons for refusing admission.*fn14
By restricting the right of choice, the regulations force hospitals to assume responsibilities and potential liabilities far beyond those traditionally accorded them. Certainly, to allow such a novel change, not by statute, but by executive regulation which exceed the bounds of clear authority, is to set a most dangerous precedent.
The regulations also govern admission to medical staffs,*fn15 medical staff committee memberships and duties,*fn16 conduct
[ 487 Pa. Page 533]
of medical staff meetings,*fn17 and continuing education requirements.*fn18 Review is required of utilization of not only hospital facilities but even out-of-hospital services.*fn19
[ 487 Pa. Page 534]
Governmental agencies must not be allowed to go unchecked in their natural tendency to continually create rules which stretch their authority, while invading more and more areas traditionally proper for private freedom of action.
The majority, it would appear, adopts the view that government can best run our hospitals. There are those who would disagree. In any event, a legislative enactment, not a "regulation", should be necessary where there is a usurpation of heretofore private managerial prerogatives.
I, therefore dissent.