178. In both fiscal years 1984-1985 and 1985-1986, WVUH treated in excess of 800 Pennsylvania medicaid patient cases. In fiscal year 1986-1987, it treated approximately 730 Pennsylvania medicaid patient cases. The next largest out-of-state provider treated fewer than 160 Pennsylvania medicaid patients. Plaintiff's Exhibit 56.
179. For fiscal years 1984-1985, 1985-1986 and 1986-1987, most out-of-state hospital providers treated fewer than ten Pennsylvania medicaid cases. Plaintiff's Exhibit 56(A). Facts 170.
VI. The Effect of MAP Payment to WVUH
180. Because WVUH treats so many MAP cases, inadequate MAP reimbursement will have substantial financial consequences for the Hospital and will jeopardize its continued ability to care for MAP patients. Testimony of Bernard Westfall, Transcript at 98, lines 2-22. December 28, 1987 Deposition of James Vertrees at 56, lines 4-8; 60, lines 5-22; 61, lines 1-15.
181. If WVUH withdraws from the Pennsylvania medicaid program, it will jeopardize some Pennsylvania medicaid recipients' access to needed health care services. Testimony of Bernard Westfall, Transcript at 96, lines 14-25; 97, lines 1-18; 98, lines 2-19.
182. The defendants' failure to reimburse the Hospital adequately will also curtail Pennsylvania medicaid recipients' freedom of choice if WVUH is compelled to withdraw from the Pennsylvania medicaid program.
183. On average, MAP reimburses in-state hospitals approximately 95% of the costs they incur in treating Pennsylvania medicaid recipients. In contrast, MAP reimburses WVUH for only approximately 54% of the costs it incurs in treating MAP patients. Testimony of Thomas Manak, Transcript at 663, lines 20-25; 664, lines 1-24.
184. MAP pays an in-state hospital $ 344.00 more to treat an average case than it pays WVUH to treat an average case. Testimony of Thomas Manak, Transcript at 244, lines 15-19.
185. MAP reimburses WVUH an increasingly lower proportion of WVUH's costs of caring for a Pennsylvania medicaid recipient. Testimony of Thomas Manak, Transcript at 246, lines 14-21. Plaintiffs' Exhibit 64.
VII. The MAP Appeals System
186. Pursuant to requirements of federal regulation 42 C.F.R. section 446.253(c), the Pennsylvania medicaid agency must provide hospitals with a system by which to appeal. Facts 175.
187. The administrative agency division which adjudicates the appeals is the Department of Public Welfare's Office of Hearings and Appeals (OHA). Testimony of David Feinberg, May 4, 5, and 6, 1988 Transcript at 87, lines 8-10.
188. OHA employs hearing officers, some of them attorneys, to hear appeals, take testimony, admit exhibits, make findings of fact, and determine whether the Pennsylvania Medicaid Agency properly applied its regulations. Defendants' Exhibits 31, 32.
189. The hearing officer recommends a decision to the Director of OHA, who either adopts or rejects the recommendation. Defendants' Exhibit 7. (General Rules of Administrative Practice); 1 Pa. Code, Part II; 55 Pa. Code § 1101.
190. Both parties to the administrative appeal, the Office of Medical Assistance and the provider, have the right to request reconsideration from the Secretary should the other party prevail. Id.; 1 Pa. Code §§ 33.61, 35.187(8) and 35.190.
191. Outside of the administrative appeals process, review of the decision of the Director of OHA or the Secretary of DPW may be sought from the judiciary of the Commonwealth of Pennsylvania.
192. The Commonwealth Court is the judicial body in Pennsylvania that is statutorily charged with the duty to review administrative decisions.
193. The administrative hearing officer in the Pennsylvania appeals system would provide no relief to an out-of-state hospital if the out-of-state hospital appealed on the grounds that it should be grouped as if it were an in-state hospital. Facts 177.
194. The administrative hearing officer in the Pennsylvania appeals system would provide no relief to an out-of-state hospital that appeals on the grounds that it should be reimbursed for the Pennsylvania medicaid share of its direct medical education costs. Facts 178.
195. The administrative hearing officer in the Pennsylvania appeals system would provide no relief for an out-of-state hospital that appeals on the grounds that it should be reimbursed as an in-state hospital for its specific capital costs. Facts 179.
196. The administrative hearing officer in the Pennsylvania appeals system would provide no relief for an out-of-state hospital seeking inclusion of its hospital specific costs during the phase-in of Pennsylvania's prospective payment system as was the case for in-state hospitals. Facts 180.
197. If an out-of-state hospital were to appeal the adequacy of its rate and if the defendants had correctly applied the reimbursement methodology, i.e., the hospital were properly grouped with all other out-of-state hospitals, the hospital received the correct payment for the out-of-state group, and there were no error in the calculations, that out-of-state hospital would not prevail in an administrative appeal before an administrative hearing officer in the Pennsylvania appeals system. Facts 181.
198. No provision of law, including regulations, provides any authority or criteria that governs the Secretary of Public Welfare's grant or denial of relief to a hospital upon the Secretary's reconsideration of an adverse administrative appeals decision. Defendants' Exhibits 2, 3, 4, 5, 15.
VIII. MAP's Findings and Assurances to the Health Care Financing Administration
199. None of the findings and assurances MAP submitted to the Secretary of Health and Human Services (HHS) concerning the Pennsylvania prospective payment system for inpatient care directly references or is applicable to out-of-state hospitals. Defendants' Exhibit 15.
200. Defendants made no assurances to HHS specifically related to the adequacy of MAP reimbursement to out-of-state hospitals. Testimony of Peter Goodman, Transcript at 525, lines 20-25.
201. The Health Care Financing Administration did not "look behind" MAP's assurances concerning the adequacy of its reimbursement rates, including its payment rates to out-of-state hospitals, nor did it require Pennsylvania to set forth the Commonwealth's specific findings concerning the adequacy of those rates. Testimony of Peter Goodman, Transcript at 531, line 25; 532, lines 1-7.
Defendants challenge plaintiff's standing to bring this action. In Warth v. Seldin, 422 U.S. 490, 45 L. Ed. 2d 343, 95 S. Ct. 2197 (1975), the Supreme Court stated:
In essence the question of standing is whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues. This inquiry involves both constitutional limitations on federal court jurisdiction and prudential considerations on its exercise. . . . In its constitutional dimension, standing imports justicability: whether the plaintiff has made out a 'case or controversy' between himself and the defendant within the meaning of Art. III. . . . A federal court's jurisdiction . . . can be invoked only when the plaintiff himself has suffered 'some threatened or actual injury resulting from the putatively illegal action. . . .' [The prudential considerations involve] limits on the class of persons who may invoke the court's decisional and remedial powers.
Id. at 498-99 (citations omitted). In order for a plaintiff to satisfy prudential considerations, he or she generally must be asserting his or her own legal rights and interests, not the rights or interests of third parties. Id. at 499. Furthermore, a plaintiff's injury must be somewhat individualized. "When the asserted harm is a 'generalized grievance' shared in substantially equal measure by all or a large class of citizens, that harm alone normally does not warrant exercise of jurisdiction." Id.
With regard to the constitutional requirements for standing, defendants' only "argument" is as follows: "Nothing requires plaintiff to participate in the program. It has no real injury and Article III's requirements have not been met." Defendants' Post-Trial Memorandum at 62. To its credit, WVUH does not respond to this argument. With regard to the prudential considerations, defendants argue that plaintiff, as a provider of medical services, does not have interests within the zones protected by the sections of Title XIX on coverage and protection afforded recipients, neither are plaintiff's interests within the zone protected by the section of Title XIX on payment for hospital services.
The "zone-of-interests" test refers to "the question whether the interest sought to be protected by the complaint is arguably within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question." Association of Data Processing Service Orgs., Inc. v. Camp, 397 U.S. 150, 153, 25 L. Ed. 2d 184, 90 S. Ct. 827 (1970).
The primary beneficiaries of Title XIX are recipients of health care services. However, providers "can properly seek to enforce the reimbursement standards of the Medicaid statute both in their own right and as representatives of Medicaid recipients." Wilmac Corp. v. Heckler, 633 F. Supp. 1000, 1006 (E.D.Pa. 1986), vacated on other grounds, 811 F.2d 809 (3d Cir. 1987). Because WVUH seeks to enforce the federal standards on reimbursement, it has standing to assert claims under Title XIX. See, e.g., Washington State Health Facilities Ass'n v. State of Washington Dept. of Social and Health Services, 698 F.2d 964 (9th Cir. 1982) (providers successfully sought injunction to prevent state from enforcing a regulation which deviated from the federally approved state medicaid plan by altering the method of reimbursing nursing care facilities without receiving federal approval); Edgewater Nursing Center, Inc. v. Miller, 678 F.2d 716 (7th Cir. 1982) (nursing home owners unsuccessfully challenged the validity of the cutoff date for determining the year of construction or latest acquisition in Illinois' method of reimbursing capital costs); Troutman v. Cohen, 588 F. Supp. 590 (E.D.Pa. 1984), aff'd without opinion, 755 F.2d 924 (3d Cir. 1984) (providers unsuccessfully sought injunction against implementation of Pennsylvania's reimbursement regulations).
Defendants also contend the Hospital does not have a cause of action under 42 U.S.C. section 1983 to assert defendants' violations of the Social Security Act. As plaintiff points out, defendants do not challenge the court's jurisdiction to hear a challenge to the state's compliance with federal law; the court has jurisdiction to hear such challenges pursuant to 28 U.S.C. section 1331. Rather, defendants raise a question as to whether the remedy of a section 1983 cause of action is available. 42 U.S.C. section 1983 provides in pertinent part:
Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress.
In 1980, the Supreme Court, rejecting an argument that the phrase "and laws" should be read as limited to civil rights or equal protection laws, stated unequivocally:
The plain language of the statute [ 42 U.S.C. § 1983] undoubtedly embraces respondents' claim that petitioner violated the Social Security Act.