The opinion of the court was delivered by: LASKER
By this action under the Hill-Burton Act, Title VI of the Public Health Service Act, 42 U.S.C. § 291 et seq., two individual and two corporate plaintiffs seek a declaratory judgment and an injunction obligating Beth Israel Medical Center ("BIMC") to provide "a reasonable volume of services to persons unable to pay therefor" as required by § 291c(e)(2) of the Act and the regulation issued thereunder (42 C.F.R. § 53.111). Defendants are BIMC, its general director and its director of ambulatory health services [hereinafter collectively referred to as the "Beth Israel defendants"] and Elliot Richardson in his then capacity as Secretary of the United States Department of Health, Education and Welfare ("HEW").
The Beth Israel defendants move to dismiss, or in the alternative for summary judgment, on the grounds that 1) The complaint does not allege in haec verba that BIMC does not provide a reasonable volume of uncompensated services as required by the Act; 2) no obligation arises under the statute until the facility or portion of the facility for which funds are being received is actually completed (the rehabilitation facility not having been completed at the time the motion was brought); 3) the complaint fails to state a claim against the directors in their individual capacities; 4) the corporate plaintiffs lack standing to sue; 5) the court does not have subject matter jurisdiction of the claim, since primary jurisdiction is vested in the state Hill-Burton agency and HEW; and 6) the amount of uncompensated services rendered by BIMC exceeds the presumptive compliance guideline established by the regulation. The Secretary also moves to dismiss on the grounds that the facility was not completed (as it was not at the time the motion was made) and so no obligation had vested and that the agencies have primary jurisdiction. Since these motions were argued, the rehabilitation medical center for which federal funds were expended has been completed, thus removing one ground for defendants' motions to dismiss.
Plaintiffs move to supplement the complaint with two new causes of action which have accrued since suit was filed. The first supplemental cause of action alleges that BIMC's limitation on the availability of outpatient care violates its obligations under New York's Ghetto Medicine Law, L. 1968, ch. 967, and a contract between it and the New York City Commissioner of Health. Plaintiffs seek to add the Commissioner, Joseph Cimeno, as a defendant. The second supplemental cause of action challenges the validity of the regulation for two reasons: 1) The power of approval given the Federal Hospital Council is an improper delegation of power and 2) three of the regulation's provisions are inconsistent with the statute. The second supplemental complaint would add as defendants the twelve current members of the Federal Hospital Council. The Beth Israel defendants oppose both motions to supplement; the Secretary does not oppose the second and takes no position on the first. Plaintiffs also seek a class action determination.
The Hill-Burton Act makes the following provision for hospital services for needy persons:
"The Surgeon General, with the approval of the Federal Hospital Council and the Secretary of Health, Education and Welfare, shall by general regulations prescribe --
(e) that the State plan shall provide for adequate hospitals, and other facilities for which aid under this part is available, for all persons residing in the State, and adequate hospitals (and such other facilities) to furnish needed services for persons unable to pay therefor. Such regulations may also require that before approval of an application for a project is recommended by a State agency to the Surgeon General for approval under this part, assurance shall be received by the State from the applicant that . . . (2) there will be made available in the facility or portion thereof to be constructed or modernized a reasonable volume of services to persons unable to pay therefor, but an exception shall be made if such a requirement is not feasible from a financial viewpoint." 42 U.S.C. § 291c (emphasis added).
On July 22, 1972,
issued an interim regulation implementing the statute's "reasonable volume" requirement, which was approved, without substantial modification, as a final regulation by the Federal Hospital Council on March 13, 1973. The regulation (42 C.F.R. § 53.111) sets a presumptive compliance guideline for uncompensated services to be provided each year of "not less than the lesser of 3 percent of operating costs or 10 percent of all Federal assistance provided to . . . the applicant under the Act." Id. at (d)(1). The regulation also establishes a procedure for fixing the level of uncompensated services required to satisfy a facility's obligations.
On April 2, 1969, HEW awarded BIMC a Hill-Burton grant of $400,000 to reconstruct and modernize its rehabilitation facility. The new facility is completed and operating. There is no dispute that, under Federal law and by contract,
part of the quid pro quo for the grant is the requirement that BIMC afford poor persons a reasonable amount of free or below cost services.
Until July 1, 1971, BIMC accepted as patients in its outpatient clinics all persons who applied for treatment. The amounts charged for services rendered were established according to a sliding scale, ranging from one to sixteen dollars per visit, relative to ability to pay and eligibility for Medicare and Medicaid. This policy was discontinued as of that date, at which time BIMC began to accept as patients only those who pay forty-five dollars per visit or are eligible for Medicare or Medicaid. Plaintiffs contend that the new policy violates BIMC's statutory and contractual obligations. They claim further that the Secretary of HEW's failure to enforce BIMC's alleged obligations makes injunctive and declaratory relief appropriate as to him.
Before discussing defendants' motions to dismiss, we turn to plaintiffs' motion to supplement the complaint by a second federal cause of action attacking the validity of the regulation, since it bears on ...