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decided: July 2, 1981.


No. 80-2-254, Appeal from the Decree of the Commonwealth Court at No. 2313 C.D. 1979, entered December 19, 1979.


Margaret Hunting, Deputy Atty. Gen., Edward G. Biester, Jr., Atty. Gen., for appellant.

James H. Stewart, Jr., Harrisburg, for appellees.

Roberts, Nix, Larsen, Flaherty and Kauffman, JJ. Flaherty, J., joins the opinion with the understanding that the Court is not passing on the propriety of every aspect of the Appendix. O'Brien, C. J., and Wilkinson, J., did not participate in the consideration or decision of this case.

Author: Roberts

[ 495 Pa. Page 227]


This is an appeal from a decree of the Commonwealth Court granting a preliminary injunction in favor of appellees, the Hospital Association of Pennsylvania and 175 hospitals, and against appellant, the Commonwealth's Department of Public Welfare. The decree prohibits the Department from including certain provisions of a "non-discrimination clause" in its written agreements for inpatient hospital-care reimbursement with the hospitals. Since the entry of the preliminary injunction, all but two of the 175 hospitals have agreed that the injunction should be dissolved.

We are of the view that the preliminary injunction was improperly issued. Hence we vacate the decree and dismiss the motion for preliminary relief.


The Department's inclusion of a non-discrimination clause (reproduced at Appendix) is mandated by the "Contract Compliance Regulations" of the Pennsylvania Human Relations Commission. These regulations had their genesis in 1973 when, pursuant to Executive Order 1972-1 (December 6, 1972) and section 7(d) of the Pennsylvania Human Relations Act, Act of October 27, 1955, P.L. 744, 43 P.S. § 957(d) (1964), the Commission gave notice of proposed rulemaking. 3 Pa.Bull. 2432 (October 20, 1973). After review of public comments, the Commission prepared and proposed a revised set of rules. 3 Pa.Bull. 2966 (December 29, 1973). A first set of rules was adopted by the Commission in February of 1974 and made effective as of that March. 4 Pa.Bull. 409 (March 9, 1974). That same year the Commission proposed amendments, 4 Pa.Bull. 2534 (December 14, 1974), and adopted them, 5 Pa.Bull. 434 (March 8, 1975). The present rules, effective March 8, 1975, reflect those amendments.

[ 495 Pa. Page 228]

The "Policy and Purpose" section of the Contract Compliance Regulations provides:

"Nondiscrimination and equal opportunity are the policy of the Commonwealth and the Commission in all its decisions, programs and activities. The purpose of this Chapter is to achieve the aims of the United States and Pennsylvania Constitutions, Executive Order 1972-1, the Pennsylvania Human Relations Act (43 P.S. § 951 et seq.), and 43 P.S. § 153, by assuring that all persons are accorded equal employment opportunity without regard to race, color, national origin, ancestry, religious creed, age or sex. This Chapter applies to the contracting agencies of this Commonwealth and to contractors who perform under state contracts."

Accordingly, pursuant to 16 Pa.Code § 49.101(a),

"[e]very state contract . . . shall contain a nondiscrimination clause barring discrimination in employment because of race, color, religious creed, national origin, ancestry, sex or age."

"State contract" is defined as

"any agreement, purchase order or arrangement or modification thereof between the Commonwealth or any State contracting agency, and any person to be paid in whole or in part, directly or indirectly, by public funds or in kind contributions from the Commonwealth."

16 Pa.Code § 49.2(d) (as reported at 5 Pa.Bull. 434 (March 8, 1975)). Here, "medical assistance payments . . . in behalf of eligible persons" are made to hospitals which are

"qualified to participate under Title XIX of the Federal Social Security Act [(42 U.S.C. § 1396 et seq.)] and have entered into a written agreement with the [Department of Public Welfare] regarding matters designated by the secretary as necessary to efficient administration, such as hospital utilization, maintenance of proper cost accounting records and access to patients' records."

Public Welfare Code, Act of June 13, 1967, P.L. 31, § 443.1, 62 P.S. § 443.1 (Supp. 1981), added by Act of July 31, 1968, P.L. 904, § 5.

[ 495 Pa. Page 229]

The Human Relations Commission's regulations also specify the contents of the mandatory non-discrimination clause. 16 Pa.Code § 49.101(d). The clause covers the matters of applicants for employment, advertisements or requests for employment, collective bargaining agreements, delegation of employment practices, recruitment practices resulting in exclusion of "minority group persons," contractor compliance with the contract compliance regulations, and the scope of contractor obligations.

Also included in the mandatory non-discrimination clause, and the subject of the preliminary injunction here, are the following four provisions:

"(7) Contractor shall furnish all necessary employment documents and records to, and permit access to its books, records and accounts by, the contracting agency and the Human Relations Commission, for purposes of investigation to ascertain compliance with the provisions of the Contract Compliance Regulations, pursuant to § 49.35 of these Regulations. If Contractor does not possess documents or records reflecting the necessary information ...

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