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June 11, 1987

Metropolitan Hospital, et al.
Honorable Richard L. Thornburgh, et al.

The opinion of the court was delivered by: DITTER


 In June, 1983, Metropolitan Hospital, an osteopathic hospital, applied to the Pennsylvania Department of Health ("DOH") and the Health Systems Agency of Southeastern Pennsylvania, Inc. ("HSA"), a non-profit corporation created pursuant to federal law, for a certificate of need ("CON") to provide cardiac catheterization and open heart surgical services. 42 U.S.C. § 300 1-1. *fn1" Approval of a CON application is governed exclusively by the criteria set forth in 35 Pa. Cons. Stat. Ann. § 448.707 (Purdon Supp. 1986). The HSA processed Metropolitan's application and its board of directors recommended disapproval. Subsequently, the DOH disapproved the application. Metropolitan appealed this decision to the State Health Facility Board, an administrative hearing board within the Pennsylvania Department of Justice. On December 15, 1985, the board affirmed the administrative decision. On January 16, 1986, Metropolitan appealed the denial of its application to the Pennsylvania Commonwealth Court. Id. at § 448.507. This appeal is still pending. *fn2"

 Metropolitan, two osteopathic physicians, and EHI, a medical services corporation, brought this suit against several allopathic hospitals and members of their staffs, the HSA and members of its staff, and several state officials. In counts I, II, IV, and V, plaintiffs Metropolitan and EHI allege defendants violated civil rights law, federal-antitrust law, and state law in connection with the denial of Metropolitan's application for a CON to provide cardiac catheterization and open heart surgical services. In counts I, II, and IV, they seek damages as well as a declaration and order that the CON be issued to Metropolitan. In count III, plaintiff-physicians allege that several of the defendant-hospitals denied them staff privileges in violation of section 1 of the Sherman Act. They seek to restrain this unlawful conduct, and treble damages.

 Defendants now move to dismiss or, in the alternative, to stay the action pending a final state decision. For the reasons that follow, I will abstain from ruling on plaintiffs' request for equitable relief on count I and stay all action on plaintiffs' claims on counts II, IV, and V, and their claim for damages on Count I, pending completion of state proceedings. In addition, I will remove the temporary stay on discovery with respect to count III.

 Plaintiffs Metropolitan and EHI allege defendants conspired to deny Metropolitan's CON application in violation of their constitutional rights and federal antitrust law. Specifically, they assert that defendant hospitals and their staffs submitted false information that was purportedly relied upon during the administrative process with knowledge of its falsity. Because they were based on false information, the administrative decisions were pretextual and in derogation of the statutory criteria. Plaintiffs also allege that defendants failed to consider properly the need for osteopathic services as required by the NHPRDA and the Health Care Facilities Act ("HCFA"), 35 Pa. Cons. Stat. Ann. § 448.101-448.904 (Purdon Supp. 1986). Plaintiffs assert that the state defendants furthered the conspiracy by intervening on behalf of Pennsylvania Hospital's request for a CON which was approved by the DOH subsequent to the denial of Metropolitan's application.

 In a line of cases beginning with Younger v. Harris, 401 U.S. 37, 27 L. Ed. 2d 669, 91 S. Ct. 746 (1971), the Supreme Court has held that a federal court should not enjoin certain pending state proceedings absent extraordinary circumstances so long as the state system affords the opportunity to pursue federal claims. Younger abstention is based on the notion of comity and federalism as well as avoidance of "unwarranted determination of federal constitutional questions." Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 107 S. Ct. 1519, 95 L. Ed. 2d 1 (1987). See also Ohio Civil Rights Commission v. Dayton Christian Schools, 477 U.S. 619, 106 S. Ct. 2718, 91 L. Ed. 2d 512 (1986).

 Under Younger and its progeny, abstention is appropriate if three conditions are satisfied. First, there must be an ongoing state judicial proceeding. Second, the state proceeding must implicate important state interests. Third, there must be an "adequate opportunity" in the state proceedings to raise federal constitutional challenges. See Middlesex County Ethics Committee v. Garden State Bar Association, 457 U.S. 423, 432, 73 L. Ed. 2d 116, 102 S. Ct. 2515 (1982). Here, Metropolitan's appeal to the commonwealth court clearly satisfies the first requirement. Metropolitan argues, however, that the last two elements are not satisfied.

 A. State Interest

 The Third Circuit has consistently held that a state's interest is not sufficient for Younger abstention where the state proceeding is initiated by a private litigant. See, e.g., Harris v. Pernsley, 755 F.2d 338 (3d Cir.), cert. denied, 474 U.S. 965, 106 S. Ct. 331, 88 L. Ed. 2d 314 (1985). But see Tunstall v. Office of Judicial Support of the Court of Common Pleas, 820 F.2d 631, slip op. at 4 n.1 (3d Cir. 1987) (questioning this rule in light of Pennzoil). In Pennzoil, however, the state judicial action was between two private litigants. There, the Supreme Court held that Younger abstention is appropriate not only when criminal or quasi-criminal proceedings are pending, "but also when certain civil proceedings are so important that exercise of the federal judicial power would disregard the comity between the States and National Government." Pennzoil, 107 S. Ct. at 1526. See also Middlesex, 457 U.S. at 433 n.12. The critical inquiry under Pennzoil is not the identity of the moving party in the state proceeding, but the importance of the state's interest in that proceeding and the challenged action. Here, the Commonwealth clearly has an important interest in the state proceedings.

 The express purpose of the HCFA is to establish an "orderly and economical distribution of health care resources" through governmental involvement to ensure a "sound health care system which provides for quality care at appropriate health care facilities throughout the Commonwealth." 35 Pa. Cons. Stat. Ann. § 448.102 (Purdon Supp. 1986). The NHPRDA and the HCFA were enacted to control the escalating costs of medical care throughout Pennsylvania and the nation. To effectuate its goals, the Commonwealth, in conjunction with federal law, established a detailed criteria governing CON applications and a multi-step state administrative process reviewable by state courts. See also 42 U.S.C. § 300 n-1(b)(12)(E) (repealed) (providing for review of adverse decision in an "appropriate State court").

 The Fifth Circuit has concluded that a state's interest in its health-care services program created pursuant to the NHPRDA is an interest sufficient to warrant Younger abstention. *fn3" Women's Community Health Center v. Texas Health Facilities Commission, 685 F.2d 974 (5th Cir. 1982). As noted by the Fifth Circuit, a state's interest in such a program is no less important than other state interests that are sufficient for Younger abstention. *fn4" See, e.g., Pennzoil, 107 S. Ct. at 1527 (state interest in protecting the authority of its judicial system); Middlesex, 457 U.S. at 434 ("interest in maintaining and assuring the professional conduct of the attorneys it licenses.")

 The Fifth Circuit also concluded that the state's interest was significant even though the NHPRDA created a joint federal-state program. 685 F.2d at 980. Under the NHPRDA, the state has the central role in the administration and the sole role in enforcement of its CON program. The state's detailed regulatory scheme and its strong interest in curbing medical costs while at the same time assuring a high ...

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