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August 27, 1985


The opinion of the court was delivered by: CALDWELL

 I. Introduction.

 Plaintiffs and defendants have filed cross motions for summary judgment. Plaintiffs, The Harrisburg Hospital, The Good Samaritan Hospital, Philhaven Hospital, Seidle Memorial Hospital, nonprofit corporations, and Lebanon Valley Hospital, a business corporation, are hospitals located in central Pennsylvania. Defendants are Richard L. Thornburgh, Governor of the Commonwealth of Pennsylvania, Walter Baran, Pennsylvania's Secretary of General Services, and Pennsylvania State University (PSU), the Commonwealth's land grant institution of higher education. The action arises from Pennsylvania legislation, the Act of December 21, 1984, No. 231-1984, exempting PSU from the certificate of need requirement found in the Pennsylvania Health Care Facilities Act, Act of July 19, 1979, P.L. 130, No. 48, 35 P.S. § 448.101 et seq. (Purdon Supp. 1985), in connection with a specific expansion project contemplated by PSU for the Hershey Medical Center. The Medical Center, a division of PSU, includes a College of Medicine and the University Hospital. The Health Care Facilities Act was enacted in compliance with the National Health Planning and Resources Development Act of 1974, 42 U.S.C. § 300k et seq. (The National Act). Plaintiffs' complaint alleges that the exemption legislation violates the Supremacy Clause, *fn1" the due process and equal protection clauses of the Fourteenth Amendment, U.S. Const. Amend. XIV, § 1, and the National Act. *fn2" PSU asserts that plaintiffs lack standing to assert the Supremacy Clause claim but, along with the remaining defendants, contends that, in any event, the exempting legislation is constitutional in all respects. The parties have filed a stipulation of facts with attached exhibits, the issues have been fully briefed and argued, and the motions are ripe for disposition. For the reasons set forth below, we conclude that the plaintiffs do have standing to raise all their federal claims but that, under the well established test for granting summary judgment, see Fragale & Sons Beverage Co. v. Dill, 760 F.2d 469 (3d Cir. 1985), judgment must be granted in favor of the defendants.

 II. Facts.

 The National Act was passed in response to Congress's concern over the rising costs of health care in the United States. See 42 U.S.C. § 300k. It is legislation enacted pursuant to the "spending" or "general welfare" clause. *fn3" Greater St. Louis Health Systems Agency v. Teasdale, 506 F. Supp. 23 (E.D. Mo. 1980). The Act requires the Secretary of Health and Human Services to establish health service areas throughout the United States, consisting of geographic areas appropriate for the planning and development of health services. 42 U.S.C. § 300l(a)(1). A health systems agency (HSA), organized in accordance with criteria set forth in the Act, id. at § 300l-1, administers each area, providing, in part, health planning for the area. Id. § 300l-2.

 The National Act is not mandatory on the states but, as originally enacted, required them to adopt a program of health planning which conformed to the National Act if they wished to receive funding for programs tied to the Act. See 42 U.S.C. § 300m(d). A state establishing such a program had to designate a state agency to administer it, including the provision at the base of the plaintiffs' attack on the exempting legislation, the certificate of need requirement set forth in the National Act. Id. at 300m-2(a)(4)(B). This provision of the National Act required that a participating state first determine, through its designated state agency, that, among other things, a health care facility, such as The Hershey Medical Center, show the need for the additional health care services it intended to offer before being permitted to expand. Id. at 300n-1(c).

 In 1979, in response to the federal law, Pennsylvania enacted the Health Care Facilities Act, supra. The Department of Health was designated as the state agency to review requests for expansion by health care facilities. Under the National Act, the counties of Franklin, Adams, Cumberland, Perry, Dauphin, York, Lebanon and Lancaster were designated as the South Central Pennsylvania Health Service Area. Health Resources Planning and Development, Inc. (HRPD) was designated pursuant to the National Act, see id. at § 300l-4, as the HSA for the area. The plaintiff hospitals and the Hershey Medical Center are located in this service area.

 Against this legislative backdrop, in 1982 Pennsylvania decided to turn over to PSU the health care services the state was performing at Elizabethtown Hospital for Children and Youth (Elizabethtown). The Hospital was owned and operated by the state and primarily served children with brain and spinal cord injuries and neuro-developmental disabilities. By the Act of June 22, 1982, P.L. 573, No. 166, the General Assembly made PSU responsible for the services the state was performing at Elizabethtown and established a center at the Hershey Medical Center for that purpose. Because no new services were being contemplated and the transfer at that time represented only the acquisition by PSU of an existing health service, the Department of Health notified Elizabethtown that a certificate of need review was not necessary. Following the passage of Act 166, while awaiting construction of the new center, PSU has operated Elizabethtown through the Hershey Medical Center.

 In 1982, the General Assembly supplemented its capital budget for the fiscal year 1981-82 through the Act of December 6, 1982, P.L. 771, No. 222. The supplement authorized the Commonwealth, through its Department of General Services administered by defendant Baran, to construct two projects at the Hershey Medical Center. One project was for the services transferred from Elizabethtown and the other was for the addition of a child psychiatric unit. After the adoption of Act 222, the Hershey Medical Center analyzed the uses to which it wanted to put the appropriated funds and made some revisions to the proposed expansion. In response to a PSU request that appropriations more accurately reflect that expansion, the Commonwealth repealed Act 222, and passed the Act of May 18, 1984, P.L. 263, No. 62. Act 62 appropriated similar amounts of money but reflected the changed purposes for which PSU wanted to use the money. Those now included an in-patient geriatric psychiatric unit. Currently, PSU intends to use the new addition for the following purposes: (1) rehabilitation and outpatient clinic and child psychiatric unit; (2) outpatient surgery unit and child research observation; (3) rehabilitation inpatient unit; (4) occupational and physical therapy unit. There will also be a shell on the ground floor for future expansion. As a result of the new construction, in addition to the beds dedicated to the Elizabethtown transfer, the Hershey Medical Center will have sixty (60) more beds.

 In July of 1984, the Department of Health, apparently learning about the new expansion plans through a newspaper article, contacted the Hershey Medical Center concerning the requirement of a certificate of need. PSU wrote to Governor Thornburgh concerning its understanding that a certificate of need would not be required. When the Department of Health insisted that one was required, PSU sought legislative action to exempt the proposed construction. The exempting legislation was thereafter signed into law by Governor Thornburgh on December 21, 1984, and this lawsuit followed shortly thereafter. Plaintiffs request that the proposed expansion undergo the certificate of need review, showing the necessity for the services before construction begins at the Hershey Medical Center.

 III. Discussion.

 A. Plaintiffs' Standing.

 Defendant PSU argues that plaintiffs lack standing to bring a Supremacy Clause challenge to the exempting legislation. PSU claims that the economic injuries that would allegedly result from the expansion without a showing of need are too remote and speculative and not fairly traceable to the defendants' conduct to support standing. Plaintiffs argue the opposite, of course, and, additionally, assert that injury can be shown by the interference with the plaintiffs' rights under federal and state law to show that the proposed construction is not necessary.

 The Supreme Court set forth the constitutional standards governing the determination of a party's standing to maintain a lawsuit in Duke Power Co. v. Carolina Environmental Study Group, Inc., 438 U.S. 59, 72, 98 S. Ct. 2620, 2630, 57 L. Ed. 2d 595, 610 (1978) as follows:

The essence of the standing inquiry is whether the parties seeking to invoke the court's jurisdiction have "alleged such a personal stake in the outcome of the controversy as to assure the concrete adverseness which sharpens the presentation of issues upon which the court so largely depends for illumination of difficult constitutional questions." Baker v. Carr, 369 U.S. 186, 204, 7 L. Ed. 2d 663, 82 S. Ct. 691 (1962). As refined by subsequent reformulation this requirement of a "personal stake" has come to be understood to require not only a "distinct and palpable injury," to the plaintiff, Warth v. Seldin, 422 U.S. 490, 501, 95 S. Ct. 2197, 45 L. Ed. 2d 343 (1975), but also a "fairly traceable" causal connection between the claimed injury and the challenged conduct. Arlington Heights v. Metropolitan Housing Dev. Corp., 429 U.S. 252, 261, 97 S. Ct. 555, 50 L. Ed. 2d 450 (1977).

 Contrary to defendant's contention, there are distinct and palpable injuries claimed here. A loss of revenue, even a threatened loss of future revenue, certainly satisfies the injury in fact standard of prior Supreme Court decisions. Defendant's more substantive position is the argued lack of a fairly traceable causal connection between the claimed injury and the challenged conduct. PSU asserts that any loss of future revenues for the plaintiff hospitals would not result solely or primarily from the exempting legislation. It argues that a "myriad" of forces affect the health care industry and that plaintiffs' own business decisions may cause them adverse economic consequences in the future. Hence, the standing requirement is not satisfied here.

 In Duke Power Co., supra, the Supreme Court, discussing the causal connection element of standing, stated:

The more difficult step in the standing inquiry is establishing that these injuries "fairly can be traced to the challenged action of the defendant," Simon v. Eastern Ky. Welfare Rights Org., [426 U.S. 26, 41, 96 S. Ct. 1917, 48 L. Ed. 2d 450 (1976),] or put otherwise, that the exercise of the Court's remedial powers would redress the claimed injuries. 426 U.S. at 43, 96 S. Ct. 1917, 48 L. Ed. 2d 450.

 Id. at 74, 98 S. Ct. at 2631, 57 L. Ed. 2d at 612 (brackets added). The Court further noted that: "Our recent cases have required no more than a showing that there is a 'substantial likelihood' that the relief requested will redress the injury claimed to satisfy the second prong of the constitutional standing requirement. [citations omitted]." Id. n.20, 98 S. Ct. at 2631 n.20, 57 L. Ed. 2d at 612 n.20 (brackets added).

 In the instant case, plaintiffs point out that federal regulations provide that "there shall be less than four non-federal, short-stay hospital beds for each 1,000 persons in a health service area except under extraordinary circumstances." 42 C.F.R. § 121.201(a). The regulations emphasize that four beds per 1,000 population represents a ceiling, not the optimum number. Id. at § 121.201(b). HRPD has determined that only 3.7 acute care beds per 1,000 population is appropriate for the South Central Pennsylvania Health Service Area but the Harrisburg Medical Service Area, a part of the former area, had 4.8 acute care beds per 1,000 population in 1984. (Stipulation of Facts 52, 53, 70). *fn4"

 These facts indicate that the requested relief, i.e., submission by PSU to the certificate of need review, would have a substantial likelihood of redressing the injury claimed. Such a review would take into consideration the excess bed capacity in the health service area caused by the excess in the medical service area. While there may be a myriad of forces influencing a health care provider's costs and revenues, as defendant PSU asserts, we must agree with plaintiffs that an increase in beds in a service area already in excess according to the governmental body charged with making those determinations, will be a major factor in decreasing revenues for health care facilities competing with each other in the same health service area. We do not believe that plaintiffs have to show a "but for" relationship between the challenged conduct and the threatened economic harm to establish standing. It is sufficient to show, as here, that the requested remedy will have the substantial likelihood of bringing about the desired relief. See Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 96 S. Ct. 1917, 48 L. Ed. 2d 450 (1976).

 PSU cites Warth v. Seldin, 422 U.S. 490, 95 S. Ct. 2197, 45 L. Ed. 2d 343 (1975) to support its contention that, because plaintiffs are merely speculating that forcing a Department of Health review here would grant plaintiffs the real relief they seek, prevention of the project, they lack standing. Defendants argue it is not guaranteed that the Department of Health would deny the certificate even if PSU was forced to undergo the review. Warth, however, is inapposite. Plaintiffs there included residents of Rochester, New York who sued the nearby town of Penfield, and its zoning hearing board, alleging that the town's zoning ordinance effectively prevented people of low and moderate incomes from living in the town. In connection with the standing of the low and moderate income individuals, the Court stated:

Here, by their own admission, realization of petitioners' desire to live in Penfield always has depended on the efforts and willingness of third parties to build low and moderate cost housing. The record specifically refers to only two such efforts. . . . But the record is devoid of any indication that these projects, or other like projects, would have satisfied petitioners' needs at prices they could afford, or that, were the court to remove the obstructions attributable to respondents, such relief would benefit petitioners. . . . In short, the facts alleged fail to support an actionable causal relationship between Penfield's zoning practices and petitioners' asserted injury.

 Id. at 506-07, 95 S. Ct. at 2208-09, 45 L. Ed. 2d at 359.

 Here, of course, plaintiffs, unlike the petitioners in Warth, have established facts indicating that their situation would have been better if the defendants had not acted and would improve if the court were to grant relief. We conclude that plaintiffs have standing, based upon threatened economic injury, to assert a Supremacy Clause claim.

 Additionally, we believe that plaintiffs can assert standing for injury to perceived procedural rights conferred upon them by the National and State Acts. In Teasdale, supra, the court held that the plaintiff HSA and certain individuals had standing to contest provisions of the Missouri law enacted in compliance with the National Act. There, plaintiffs alleged that the state law did not protect certain procedural rights conferred upon them by the National Act. While the court concluded that plaintiffs had no standing to contest the validity of certain state statutory sections because they did not affect plaintiffs' rights under the National Act, it did go on to invalidate a definitional section of the state law because its affect might be to eliminate the state agency's responsibility to notify HSAs within the state of agency decisions on certificates of need. Federal regulations contemplated that an HSA would be able to appeal any decision contrary to its own recommendation. The court concluded that such a requirement:

is a reasonable one, and one that helps to insure that certificates of need will be granted or denied only after full weight has been given to the views of the local agencies, which are presumably most familiar with the needs of their areas. Accordingly, § ...

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