Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Wilmington United Neighborhoods v. United States Department of Health

decided: February 6, 1980.

WILMINGTON UNITED NEIGHBORHOODS, EDITH BECK, JOHN J. & FRANCES BRADLEY, JOSEPH J. BREEN, THOMAS X. CARROLL, JOSEPH G. DIPINTO, ETHEL B. TYNES, ALICE WILSON, APPELLANTS
v.
UNITED STATES DEPARTMENT OF HEALTH, EDUCATION AND WELFARE, AMOS M. BURKE, AS DIRECTOR OF THE BUREAU OF HEALTH PLANNING AND RESOURCES DEVELOPMENT, ROBERT H. SWEENEY, DELAWARE HEALTH COUNCIL, INC., WILMINGTON MEDICAL CENTER, INC., WILMINGTON MEDICAL CENTER, INC., A NON-PROFIT CORPORATION OF THE STATE OF DELAWARE V. JOSEPH A. CALIFANO, JR., AS SECRETARY OF THE DEPARTMENT OF HEALTH, EDUCATION AND WELFARE AND WILMINGTON UNITED NEIGHBORHOODS, (DEFENDANT-INTERVENOR), APPELLANT



ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE (D.C. Civil No. 77-0439) (D.C. Civil No. 77-0480)

Before Adams, Hunter and Higginbotham, Circuit Judges.

Author: Higginbotham

Opinion OF THE COURT

This appeal represents the latest chapter in a long battle by consumers of medical services to prevent the removal and relocation of hospital services from the inner-city to suburban Wilmington. The plaintiffs have appealed from orders granting various motions dismissing their case against the U. S. Department of Health, Education and Welfare (HEW), the Bureau of Comprehensive Health Planning of Delaware (BCHP) and the Wilmington Medical Center, Inc. (WMC). The court below held that it was precluded by Section 1122(f) of the Social Security Act, 42 U.S.C. § 1320a-1(f), from considering the appellants' challenges to certain administrative determinations made by the Secretary of HEW and the BCHP. It also held that the appellants, as consumers of medical services and not proponents of capital expenditures, were not entitled to a hearing under Section 1122 and therefore were not denied equal protection under the fifth and fourteenth amendments. We will affirm.

I.

The Wilmington Medical Center, Inc. (WMC) is a private, nonprofit hospital and the primary provider of hospital services in New Castle County, Delaware. For several years, WMC has engaged in extensive planning to determine how best to restructure the hospital system in order to improve health care delivery. The product of this planning was Plan Omega, an $88 million capital expenditure program that would relocate major components of WMC's medical system to an outlying suburban location. The capacity of a remaining inner city facility would be reduced to approximately 250 beds.

WMC and its controversial Plan Omega are not strangers to this court. In NAACP v. Medical Center, Inc., 584 F.2d 619 (3d Cir. 1978), the plaintiffs individuals and organizations representing the poor, the elderly, the handicapped, and several racial and ethnic minorities of Wilmington argued unsuccessfully that HEW's approval of the Medical Center's capital expenditure plan constituted major federal action requiring the preparation of an environmental impact statement under the National Environmental Policy Act of 1969, 42 U.S.C. §§ 4321-4347. In NAACP v. Medical Center, Inc., 599 F.2d 1247 (3d Cir. 1979), the same plaintiffs subsequently asserted that they had a private right of action to challenge the proposed health facility relocation for its alleged discriminatory impact. Finding that Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 2000d, and Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794, created private rights of action for plaintiffs who seek relief other than funding termination, this court reversed the dismissal of the district court and remanded the cases to the district court for a trial on the merits.

The attack on Plan Omega in this case is directed at the approval of the Plan by HEW and various state agencies under a system established by Section 1122 of the Social Security Act, 42 U.S.C. § 1320a-1.

a. Statutory Background

Section 1122 is a program designed to curb unnecessary capital expenditures by hospitals and other health care facilities. In general, this goal is accomplished by requiring hospitals to secure advance approval of their capital projects from state health care planning agencies. Health facilities that submit plans of proposed capital expenditures to the State and subsequently have them approved are reimbursed with federal funds for that portion of a patient's bill constituting capital costs, that is, depreciation, interest or return on equity capital.

The State of Delaware has entered into such an agreement with HEW and designated the BCHP as the State's designated planning agency (DPA) to carry out its responsibility under Section 1122. Under the statute, the DPA is charged with reviewing proposed capital expenditures to determine whether they are consistent with the standards or plans developed to meet the need for adequate health care facilities in the area of the state affected. 42 U.S.C. § 1320a-1(b). The DPA is required to consult with local health planning agencies interested in a particular proposal and to submit to the Secretary of HEW the findings of those agencies on the proposed expenditure and the DPA's own findings and recommendations, along with any supporting materials deemed necessary by the Secretary. Id. The DPA is also required to establish procedures for affording proponents of a capital expenditure found to be unnecessary "an opportunity for a fair hearing." 42 U.S.C. § 1320a-1(b)(3).

Following its approval by the DPA, the Secretary then performs the ministerial act of assuring that the proper procedure has been followed. If, however, the expenditures have been found by the DPA to be inconsistent with the state or local health care facility needs or plans, the Secretary may, in certain limited instances, override the State's recommendation. 42 U.S.C. § 1320a-1(d) (2). Finally, Section 1122(f) provides:

Any person dissatisfied with a determination by the Secretary under this section may within six months following notification of such determination request the Secretary to reconsider such determination. A determination by the Secretary under this section shall not be subject to administrative or judicial review.

42 U.S.C. § 1320a-1(f). This provision and its meaning are at the heart of this appeal.

b. Facts

On March 19, 1976, WMC sought Section 1122 approval for Plan Omega. As required by the statute, WMC made an application to the Delaware BCHP and to a local health planning group for review of the relocation plan. Following a substantive review of Plan Omega, the state and local agencies certified it as necessary.*fn1 The DPA forwarded its finding to the Secretary who then issued a Section 1122 approval of Plan Omega in August of 1976. As a result of this approval, WMC was assured that the Secretary would not withhold payment of the capital component of WMC's charges to patients under Medicare, Medicaid, and child health programs on the ground that the component charge was the product of an unnecessary capital expenditure.

On September 10, 1976, the complaint, challenging Plan Omega under Title VI of the Civil Rights Act, was filed in the district court. On January 19, 1977, the district court ordered HEW to investigate the charges of those plaintiffs that Plan Omega was in violation of Title VI and Section 504 and to report its findings back to the court. 426 F. Supp. 919 (D.Del.1977).

On July 5, 1977, during the course of that litigation, the Secretary of HEW, through the Office for Civil Rights (OCR), found Plan Omega in violation of Title VI. The Secretary indicated that Plan Omega might comply with Title VI and Section 504 if WMC made certain changes in the Plan. As a result, a contract was executed between WMC and HEW on November 1, 1977 in which WMC agreed: to provide a transportation system for patients, employees, and visitors between the urban and suburban locations; to institute a patient allocation system for services that were available at both locations; and to alter construction and renovation plans in order to accommodate handicapped persons.

In the interim, on February 4, 1977, the plaintiffs in the instant case exercised their statutory prerogative under Section 1122(f) by requesting the Secretary to reconsider his August 6, 1976 determination to approve Plan Omega under Section 1122. On September 7, 1977, Harold Margulies, M.D., Acting Administrator of the Health Resources Administration of HEW, responded to the request for reconsideration and affirmed the prior determination of August 6, 1976 which approved the plan. Dr. Margulies' letter stated that if WMC agreed to make the modifications required to comply with Title VI and Section 504, it would have to submit the modified Plan Omega in its entirety to the BCHP for another Section 1122 review. On October 12, 1977, however, Dr. Margulies disavowed such an interpretation stating that any such reconsideration would be inconsistent with the Section 1122 program regulations. He stated further that if changes were made in Plan Omega to satisfy OCR, those changes would be subject to Section 1122 review only to the extent that any one or more of them amounted to a "capital expenditure" as defined by the regulations*fn2 and were deemed by the DPA to warrant review.*fn3

On November 11, 1977, Wilmington United Neighborhoods (WUN) initiated Wilmington United Neighborhoods, et al. v. Department of Health, Education and Welfare, et al., (WUN v. HEW ), (No. 78-2633), seeking to invalidate the approvals under Section 1122 of Plan Omega by HEW and the state and local health planning agencies on the grounds that they had violated their duties as mandated by Section 1122 and the fifth and fourteenth amendments to the constitution. On December 22, 1977, WUN amended its complaint naming WMC as a party-defendant, seeking, inter alia, a declaration that WMC had violated regulations implementing Section 1122 on several grounds.

WMC initiated Wilmington Medical Center, Inc. v. Califano, (WMC v. Califano ) (No. 78-2634) arguing in its complaint, which was accompanied by a Motion for a Temporary Restraining Order, that the litigation challenging Plan Omega amounted to a de facto injunction since it precluded WMC from obtaining favorable financing. WMC requested, inter alia, a declaration that the time within which WMC was required by regulation to secure a contract for its proposed capital expenditure be tolled during the pendency of litigation challenging Plan Omega. On December 13, 1977, the district court denied WMC's Motion for a Temporary Restraining Order and granted WUN's motion to intervene as a party-defendant in WMC v. Califano. On December 14, 1977, one day before Section 1122 approval was to lapse, WMC signed a contract with the Gilbane Building Company. On December 27, 1977, five days after the amended complaint in WUN v. HEW was filed naming WMC as a party-defendant, WMC filed an Answer, Cross-Claim and Counterclaim in WMC v. Califano, in which it raised all the same issues that had been raised in WUN v. HEW. The only distinction, therefore, between the two cases is the claim by WMC for a declaratory judgment against HEW. This latter claim was denied, and no appeal taken.

The district court rejected all of WUN's claims and granted all of the motions for summary judgment that had been filed against WUN by the defendants. 458 F. Supp. 628 (D.Del.1978). This appeal followed.

II. Standing

We address first the threshold question of whether the appellants have standing. At the outset, we note our agreement with the oft-quoted language of Justice Douglas that "(generalizations) about standing to sue are largely worthless as such." Association of Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150, 151, 90 S. Ct. 827, 829, 25 L. Ed. 2d 184 (1960). However, out of this muddled area of the law, two inquiries for determining standing can be distilled: whether the plaintiffs have shown an injury to themselves that is likely to be redressed by a favorable decision*fn4 and whether the interest sought to be protected "is arguably within the zone of interests to be protected or regulated by the statute . . ."*fn5

The appellants are residents of Wilmington and consumers of health services. WMC is at present the primary provider of health care services at Wilmington. Its Plan Omega would result in the relocation of a substantial portion of the hospital services presently offered Wilmington's residents. The Department of HEW and the various state and local planning agencies approved Plan Omega for Section 1122 purposes. As a result of this approval, HEW committed itself not to withhold the capital cost component of WMC's charges to patients under Medicare, Medicaid and child health programs. The gravamen of the complaint is that the Section 1122 approval was based on improper statutory and administrative procedures and untrustworthy information; and that absent such approval, Plan Omega is not financially feasible.*fn6 Thus, it is clear that the Section 1122 approval could result in the loss to the plaintiffs of "necessary, accessible and cost efficient health care."*fn7

Section 1122 denies reimbursement for unnecessary capital expenditures in the hope of promoting rational health planning and cost containment. Implicit in this legislative scheme is the assumption that more efficient use of health care dollars results in more effective delivery of health care services. We believe that the appellants, as consumers of health care services in Wilmington, have a sufficient stake in the ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.