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.

WEST VIRGINIA UNIV. HOSPS., INC. v. CASEY

November 30, 1988

WEST VIRGINIA UNIVERSITY HOSPITALS, INC., Plaintiff,
v.
ROBERT CASEY, et al., Defendants


Sylvia H. Rambo, United States District Judge.


The opinion of the court was delivered by: RAMBO

ORDER

SYLVIA H. RAMBO, UNITED STATES DISTRICT JUDGE

 In accordance with the accompanying memorandum, IT IS HEREBY ORDERED THAT:

 1) the court declares the Commonwealth of Pennsylvania's medicaid prospective payment system as it applies to West Virginia University Hospital is violative of federal law;

 2) the court declares the Commonwealth of Pennsylvania's medicaid administrative appeals system as it applies to West Virginia University Hospital is violative of federal law;

 3) the court declares plaintiff's Fourteenth Amendment equal protection rights have been violated as a result of its treatment under the Commonwealth of Pennsylvania's medicaid prospective payment system;

 4) defendants shall, within ninety (90) days of the entry of judgment, formulate (and seek approval of same from the appropriate federal authority) a methodology and a medicaid prospective payment system for West Virginia University Hospital consistent with and in conformity with federal law as discussed in the accompanying memorandum;

 5) defendants shall, within ninety (90) days of the entry of judgment, formulate (and seek approval of same from the appropriate federal authority) an adequate and meaningful (as those terms are used in the accompanying memorandum) medicaid administrative appeals or exception system for West Virginia University Hospital;

 6) defendants shall permit West Virginia University Hospital to utilize the new appeals or exception system to challenge its reimbursements from the date this action was commenced;

 7) motions for reconsideration shall not be filed. However, the court will entertain motions to clarify this order to ensure it is consistent with the body of the accompanying memorandum;

 8) plaintiff's request for attorneys' fees pursuant to 42 United States Code section 1988 is granted. Counsel for the parties shall attempt to agree on the amount of said fees. On or before December 14, 1988 counsel shall submit a joint fee proposal to the court, or if no agreement can be reached, counsel shall separately file fee proposals;

 9) judgment will be entered upon the court's determination of appropriate attorneys' fees; and

 10) defendants' motion to file supplemental briefs is denied.

 {F. Supp. 498contd} [Editor's Note: The page numbers of this document may appear to be out of sequence; however, this pagination accurately reflects the pagination of the original published document.]

 MEMORANDUM

 Background

 West Virginia University Hospitals, Inc. (WVUH or the Hospital) commenced this action against the Commonwealth of Pennsylvania's Department of Public Welfare and individuals on July 26, 1986. Pursuant to stipulation, the Department of Public Welfare was dismissed as a defendant on February 25, 1987. WVUH brought this action under 42 U.S.C. section 1983 alleging Pennsylvania's medicaid reimbursement program for out-of-state hospitals violates federal payment standards and violates the equal protection clause of the fourteenth amendment of the United States Constitution. Plaintiff further alleges Pennsylvania's administrative appeals system for out-of-state hospitals is legally inadequate. The Hospital seeks injunctive and declaratory relief regarding its past treatment under Pennsylvania's reimbursement program and administrative appeals system. The trial in this action took place before the court on May 2, 3, 4, 5, 6, and 16, 1988. The parties have been given an opportunity to present arguments and proposed findings of fact and conclusions of law. The opinion of the court follows.

 Findings of Fact

 In accordance with Federal Rule of Civil Procedure 52(a) the court finds the following facts.

 I. The Parties

 1. WVUH is a non-stock, non-profit corporation organized under the laws of West Virginia. Plaintiff's Pretrial Memorandum Undisputed Facts No. 1. (Hereinafter referred to as "Facts.")

 2. Defendant Robert P. Casey is the Governor of the Commonwealth of Pennsylvania. Facts 2.

 3. The Secretary of the Department of Public Welfare (the Secretary) of Pennsylvania was Walter C. Cohen at the time this action was filed. The Secretary is now John F. White, Jr. Facts 3.

 4. The Secretary reports to the Governor of Pennsylvania. The Secretary is responsible for implementing, administering and operating the medicaid program in Pennsylvania. The medicaid program in Pennsylvania is called the "Medicaid Assistance Program" (MAP). Facts 4.

 5. Since November, 1987, David S. Feinberg has been Acting Director of the proposed Office of Hospital and Outpatient Programs in the Department of Public Welfare (the Department or DPW). From 1979 to November, 1987, Feinberg was the Director of the Bureau of Policy and Program Development. Facts 5.

 6. Feinberg was responsible for the development of Pennsylvania's medicaid program's prospective payment system. Facts 6.

 II. The Hospital

 7. WVUH is located six miles south of the border between the State of West Virginia and the Commonwealth of Pennsylvania. Facts 10.

 8. The primary service area of the Hospital includes the West Virginia counties of Monongalia, Marion, Harrison, Taylor, Doddridge and Preston and the Pennsylvania counties of Fayette and Greene. Facts 11.

 9. Generally, Pennsylvania residents constitute approximately 16% of all WVUH inpatient admissions. Testimony of Katherine Douglass, Transcript *fn1" at 163, lines 6, 15-17.

 10. In 1985, 2,500 inpatient admissions to WVUH were attributable to Pennsylvania residents. 860 of the admissions were Pennsylvania medicaid recipients. Testimony of Katherine Douglass, Transcript at 163, lines 15-20.

 11. Approximately 204,000 people lived in Fayette and Greene counties in the mid-1980s. By the late 1980s, the population in Fayette and Greene counties is projected to grow to 209,000 people. Testimony of Katherine Douglass, Transcript at 158, lines 20-25.

 12. 1,200 persons from Fayette County received inpatient care at WVUH in 1985; 1,100 persons from Greene County received inpatient care. Testimony of Katherine Douglass, Transcript at 163, lines 21-25; 164, lines 1-7.

 13. The Hospital also serves patients from Washington County, Pennsylvania. In calendar year 1985 the Hospital had 102 Pennsylvania medicaid admissions from Washington County, Pennsylvania. Facts 14.

 Services Provided

 14. A "tertiary care" hospital is a hospital that provides a level of hospital and medical services that is inherently more complex and that is generally not provided in small or community hospitals. Testimony of Bernard Westfall, Transcript at 33, lines 2-25; 34, lines 1-25; 35 lines 1-15.

 15. WVUH is the closest source of tertiary care services to many individuals living in Greene and Fayette counties. Testimony of Katherine Douglass, Transcript at 159, lines 11-25; 160-161; 162, lines 1-24.

 16. Some Pennsylvania medicaid recipients who reside in Fayette, Greene and parts of Washington counties, and who must use the Hospital for complex or specialized medical services, otherwise must travel 20 to 70 additional miles to Pittsburgh, Pennsylvania, the next closest city (to the Hospital) in which such services are offered. Facts 16.

 17. Specialized or complex inpatient services available at the Hospital which are not available in the Pennsylvania hospitals in Fayette, Greene, and Washington counties include cardiac catheterization, angiography, open heart surgery, high risk obstetrics, neonatal intensive care, kidney transplant lithotripsy. Testimony of Katherine Douglass, Transcript at 159, lines 16-25; 160, lines 1-25; 161, lines 1-25; 162, lines 1-25; 163, lines 1-25; 164, lines 1-25; 165, lines 1-25; 166 lines 1-3. Facts 17.

 18. WVUH is a Level I trauma center equipped to deal with head and spine injuries as well as cardiac and other emergencies. It is the only Level I trauma center in the service area of WVUH. The next closest Level I trauma center is located in Pittsburgh. Testimony of Katherine Douglass, Transcript at 160, lines 11-25; 161, lines 1-5.

 19. WVUH provides an extensive prenatal referral system for high risk neonates and, as part of that system, provides high risk prenatal services to hospitals in the service area, including Greene County Memorial Hospital located in Greene County, Pennsylvania. Testimony of Katherine Douglass, Transcript at 161, lines 6-25; 162, lines 1-24.

 20. WVUH also provides specialized outpatient services to Pennsylvania residents. These services include pediatric cardiology, pediatric neurology, neurosurgery, and other highly technical types of care. Testimony of Katherine Douglass, Transcript at 165, lines 16-22.

 21. The outpatient services identified in the paragraph above are not available at hospitals located in Fayette and Greene counties. If patients did not use WVUH for such services, the next closest hospital would be located in Pittsburgh. Testimony of Katherine Douglass, Transcript at 165, lines 23-25; 166, lines 1-3.

 22. WVUH also provides Pennsylvania residents with routine hospital care such as routine obstetrics, normal newborn care and tonsillectomies. Defendants' Exhibit 76.

 23. The types of routine cases seen at WVUH are similar to the routine types of cases seen at most university teaching hospitals. Testimony of James Vertrees, Transcript at 77, lines 8-14.

 24. WVUH has approximately the same Case Mix Index (CMI) as university teaching hospitals located in Pennsylvania and other similarly situated hospitals. Plaintiff's Exhibit 66.

 WVUH is a University Affiliated Teaching Hospital

 25. The Hospital is a university affiliated teaching hospital: the West Virginia University uses the Hospital to train health professionals. Facts 39.

 26. WVUH is a major academic medical center, one of only 121 such centers in the country. Testimony of Gerard Anderson, Transcript at 392, lines 1-12.

 27. 1,300 persons completed their physician and dentist residency training programs at the Hospital between 1960 and 1984. Facts 40.

 28. Approximately 7% of the 1,664 total living alumni of the West Virginia University School of Medicine's four-year medical program live in Pennsylvania. Facts 47.

 29. MAP recognizes that the provision of graduate medical education programs improves the quality of care at a hospital. Testimony of Gerard Anderson, Transcript at 320, lines 12-23. Plaintiff's Exhibit 8.

 WVUH's Medicaid Volume

 30. Historically, WVUH has provided significant numbers of Pennsylvania medicaid recipients with hospital care.

 31. In Calendar year 1981, the Hospital treated 610 Pennsylvania medicaid admissions on an inpatient basis. Facts 22.

 32. In calendar year 1982, the Hospital treated 692 Pennsylvania medicaid admissions on an inpatient basis. Facts 23.

 33. In calendar year 1983, the Hospital treated 783 Pennsylvania medicaid admissions on an inpatient basis. Facts 24.

 34. In calendar year 1984, the Hospital treated 828 Pennsylvania medicaid admissions on an inpatient basis. Facts 25.

 35. In calendar year 1985, the Hospital treated 853 Pennsylvania medicaid admissions on an inpatient basis. Facts 26.

 36. In calendar year 1986, the Hospital treated 840 Pennsylvania medicaid admissions on an inpatient basis. Facts 27.

 37. In calendar year 1987, the Hospital treated 552 Pennsylvania medicaid admissions from the period January 1 through September 30, 1987. Facts 28.

 38. The number of patients identified in paragraphs 31 through 37 above does not include the number of Pennsylvania medicaid recipients who utilized the outpatient services of the Hospital. Facts 29.

 39. The annual number of outpatient visits at the Hospital attributable to Pennsylvania medicaid recipients ranges from 7,000 to 7,500. Facts 30.

 40. Pennsylvania medicaid recipients residing in Fayette, Greene, and Washington counties have "freedom of choice" in selecting their medical care providers. This means absent special rules, (none of which are applicable to this case), Pennsylvania recipients of medicaid may use the services of any hospital they choose. Testimony of David Feinberg, May 4, 5, and 6, 1988 Transcript at 124, lines 22-25; 125, lines 1-25; 126, lines 1-25; 127, lines 1-21.

 41. Some Pennsylvania residents, including Pennsylvania medicaid recipients, living in the counties of Fayette, Greene, and Washington desire and require access to the Hospital's services and facilities. Facts 32.

 42. In fiscal years 1984-85, 1985-86 and 1986-87, WVUH provided inpatient hospital care to more Pennsylvania medicaid patients than over one-half of the hospitals located in Pennsylvania. Testimony of Thomas Manak, Transcript at 251, lines 8-25, 252, lines 1-7. Plaintiff's Exhibit 51(a).

 43. Five percent of all WVUH inpatient admissions are attributable to Pennsylvania medicaid recipients. Testimony of Stephen Pickett, Transcript at 170, lines 12-13; 175, lines 18-20. 44. In addition to serving Pennsylvania recipients, the Hospital served the following numbers of West Virginia medicaid admissions on an inpatient basis: July 1, 1982 - June 30, 1983 2,049 July 1, 1983 - June 30, 1984 2,261 July 1, 1984 - December 31, 1984 1,181 Calendar Year 1985 2,319 Calendar Year 1986 1,848 January 1, 1987 - October 31, 1987 1,618

 45. Twenty-three percent of all WVUH inpatient admissions are recipients of medicaid. Testimony of Stephen Pickett, Transcript at 170, lines 8-9.

 46. Seventeen percent of all WVUH inpatient admissions are West Virginia medicaid recipients. Testimony of Stephen Pickett, Transcript at 170, lines 12, 13.

 WVUH's Incorporation History

 47. In 1982 the West Virginia Board of Regents commissioned a study to determine how to resolve deficiencies cited by the national accreditation board for hospitals. The West Virginia Board of Regents was advised that given the structural problems of the existing facility, it was more prudent to replace the facility than to renovate it. Testimony of Bernard Westfall, Transcript at 49, lines 22-25; 50, lines 1-25; 51, lines 1-25; 52, lines 1-19.

 48. The West Virginia legislature concurred. See § 18-11C-2(c) of the Code of West Virginia.

 49. The entity that the legislature created to operate the facility is WVUH. Testimony of Bernard Westfall, Transcript at 59, lines 18-20.

 50. WVUH and its predecessor entity, West Virginia University Hospital, are the same. They are both creatures of the West Virginia legislature and subject to its control. The legislature simply changed the form of the hospital organization. Testimony of Bernard Westfall, Transcript at 142, lines 12-25.

 51. The West Virginia legislature has never relinquished ownership of the Hospital's assets and control. Plaintiff's Exhibit 71. See § 18-11C-3 of the Code of West Virginia.

 52. The change from West Virginia University Hospital to WVUH was a change in the form of organization, not a change of ownership or control. Testimony of Bernard Westfall, Transcript at 142, lines 12-25; 688, lines 3-13; 690, lines 5-25; 691, lines 1-7.

 The Provider Agreement With MAP

 53. West Virginia University Hospital, the predecessor entity to WVUH, entered into an agreement with the Pennsylvania Medicaid Assistance Program. Defendants' Exhibit 35.

 54. The provider agreement, which was not dated, is self-perpetuating unless terminated. Defendants' Exhibit 35.

 55. The defendants have never terminated the provider agreement. Testimony of Donna Hoffmaster, Transcript at 482, lines 6-9.

 56. MAP has reimbursed WVUH for inpatient services provided to Pennsylvania medicaid patients without interruption, except for one seven week interruption beginning in December, 1987. The reason for withholding payment was due to an alleged failure to report a change in ownership. Testimony of Amy Leopard, May 3, 1988 Transcript at 7, lines 3-25; 8, lines 1-25; 9, lines 1-25, 10, lines 1-13; Plaintiff's Exhibit 67; letter dated December 2, 1987 from Virginia Antonoplos.

 57. The payments were interrupted and withheld after MAP employees consulted with counsel for MAP. The interruption of payments was related to this litigation. Testimony of Amy Leopard, May 3, 1988 Transcript at 13, lines 9-21.

 58. The defendants offered no evidence demonstrating a change in West Virginia University Hospital's ownership. Defendants testified only that they were aware that WVUH uses a tax payer identification number for its short procedure unit (not related to inpatient care) that is different from some other numbers utilized by WVUH. Testimony of Donna Hoffmaster, Transcript at 477, lines 16-25; 478, lines 1-12.

 III. Pennsylvania Medicaid Program Reimbursement of In-State Hospitals

 The Nature of the Medicaid Program

 59. Medicaid is a federal-state program that pays for medical services provided to the eligible poor in accordance with Title XIX of the Social Security Act and the applicable state and federal regulations. Facts 55, 57.

 60. The state designs and administers the medicaid program within the broad parameters established by Title XIX of the Social Security Act, implementing federal regulations, and the applicable state laws and regulations. Facts 57.

 62. The Commonwealth of Pennsylvania participates with the federal government in providing a medicaid program to eligible Pennsylvania residents. Facts 59.

 63. As a part of its agreement with the federal government to participate in medicaid, the defendants submitted a state plan for medical assistance to the United States Secretary of Health and Human Services for approval. Facts 60.

 64. Pennsylvania's state plan for medical assistance has been approved by the United States Secretary of Health and Human Services, including the Pennsylvania state plan provisions that govern reimbursement of general acute care hospitals which provide health care services to Pennsylvania medicaid recipients. Facts 61.

 The Change From Retrospective "Reasonable Cost" Reimbursement to Prospective Reimbursement

  65. Prior to 1981, the Social Security Act required states to pay hospitals the "reasonable cost" of rendering inpatient hospital services to medicaid recipients. Facts 62.

  66. "Reasonable cost" was a term defined and used in the medicare program and adopted for use in the medicaid program. Facts 63.

  67. As a general rule, the "reasonable cost" standard of reimbursement meant that states were required to reimburse hospitals their actual, allowable costs (capital costs and operating costs) of the care provided to medicaid recipients. Facts 64.

  68. "Reasonable cost" reimbursement was a retrospective form of reimbursement, involving the payment of interim rates during the fiscal year with an end-of-year cost settlement once a hospital reported its claimed actual, allowable medicaid costs. A hospital's reported costs were generally subject to audit. Facts 65.

  69. On July 31, 1981, the United States Congress enacted the Omnibus Budget Reconciliation Act of 1981, Public Law 97-35 (OBRA), which changed the requirement that state medicaid programs reimburse hospitals the "reasonable" cost of providing services. Facts 66.

  70. Effective for fiscal year 1984-1985, the Commonwealth of Pennsylvania replaced the reasonable cost system of reimbursement for acute care inpatient services in hospitals in the medicaid program. Facts 72.

  71. In place of the reasonable cost standard Pennsylvania adopted a "prospective payment system" for acute care inpatient services in hospitals. Facts 73.

  72. Under a prospective payment system of reimbursement a hospital is told in advance what its payment will be for specified services. Facts 74.

  73. The Pennsylvania prospective payment system was designed, in part, to implement the OBRA standard and to contain the rising cost of health care. Facts 75.

  74. One of the goals of Pennsylvania's system of prospective payment is to provide hospitals with the incentive to become more efficient and economical by providing them a fixed amount of reimbursement for each case regardless of the provider's actual costs of treating those cases. Facts 76.

  In-State Hospital Reimbursement of Operating Costs of Inpatient Care Under the MAP Prospective Payment System

  Grouping

  75. Under Pennsylvania's medicaid prospective payment system of reimbursement, all participating in-state hospitals were separated into seven groups, excluding children's hospitals. Facts 78.

  76. The purpose of the grouping system was to place hospitals with similar roles and potential for costs in the same group. December 28, 1988 Deposition of James Vertrees at 35, lines 4-13; 53, lines 11-21. Defendants' Exhibit 2 at 2198.

  77. The underlying assumption was that similar hospitals have similar costs and that reimbursement of the average cost of similarly situated hospitals would be an equitable means of payment. Testimony of Thomas Manak, Transcript at 213, lines 14-17.

  78. Pennsylvania used a complex formula to identify the similarities among hospitals. Testimony of Thomas Manak, Transcript at 213, lines 18-19.

  79. Pennsylvania's groupings for in-state hospitals take into account four concepts: each hospital's teaching status, its medicaid volume, its environmental ...


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.