The opinion of the court was delivered by: LASKER
A brief description of the prior proceedings in this case provides a necessary background to the present motions. The action was brought under the Hill-Burton Act, 42 U.S.C. § 291 et seq., to compel Beth Israel Medical Center ("BIMC") to provide "a reasonable volume of services to persons unable to pay," id. at § 291c(e) (2). The Court granted plaintiffs leave to amend their complaint to attack the validity of the regulation issued under the statute (42 CFR § 53.111) and denied defendants' motions to dismiss. 359 F. Supp. 909 (S.D.N.Y. 1973). In declining to dismiss, the court stated, however, that two of the grounds were substantial and granted permission to defendants to seek dismissal again in the event that plaintiffs' challenge to the regulation failed. The grounds were primary jurisdiction and Beth Israel's alleged compliance with the maximum obligation imposed by the regulation's presumptive compliance guideline. Plaintiffs subsequently moved, in response to court instructions, for summary judgment declaring the regulation invalid. Although the motion was granted as to a single provision, the regulation as a whole survived the attack and remains in effect. 373 F. Supp. 550, Civ. No. 72-2654 (January 17, 1974). Consequently, the federal and Beth Israel defendants renew their motions to dismiss because of primary jurisdiction. The latter also move for summary judgment on the ground that the services they now provide exceed the presumptive compliance guideline.
Plaintiffs oppose the latter motion on two grounds. First, they controvert the figures submitted by the Beth Israel defendants to establish their presumptive compliance. Principally, however, they argue that providing medical care only in the emergency clinic cannot, no matter how great the volume, satisfy BIMC's obligation. The second argument finds support in our previous decision in which we held that a Hill Burton grantee could not unilaterally decide what type of services would satisfy the "reasonable volume" requirement of the statute. 359 F. Supp. at 917. We thus rejected the argument which underlies the renewed motion for summary judgment, namely, that providing services in the emergency room (or in any other portion of the hospital selected by the grantee) in an amount equal to or greater than the maximum requirement permitted by the regulation ipso facto satisfies the statutory requirement. Id. We left open the question who should determine the amount and type of services required under the regulation, since it raised the issue of primary jurisdiction, consideration of which was deferred. Id. at 917-18.
We turn now to the primary jurisdiction question. The statute requires that state plans be approved by the Secretary of Health, Education and Welfare (42 U.S.C. § 291d(b)) and administered by designated state agencies (id. at § 291d(a) (1)). It provides:
"Any State desiring to participate in this part may submit a State plan. Such plan must --
(1) designate a single State agency as the sole agency for the administration of the plan, or designate such agency as the sole agency for supervising the administration of the plan." Id.
Thus, the Secretary, the Federal Hospital Council and the state agency (in this case, the New York State Department of Health) are Congress's chosen agents for carrying out all the purposes of the Act, including enforcement of the reasonable volume provision. In furtherance of their duties with regard to the latter, the Secretary and Council adopted the regulation at issue here, and we have previously upheld the regulation's validity. 373 F. Supp. 550 (Civ. No. 72-2654 (January 17, 1974)). The regulation sets guidelines for determining the amount (42 CFR § 53.111(d)) and the type (id. at § 53.111(h) (2)) of services required under the statute. It places the power to make these determinations in the hands of the state Hill-Burton agency and provides a detailed procedure to be followed in doing so.
Plaintiffs contend that deference to the state agency is nonetheless inappropriate, because the regulation, unlike the regulations which preceded it,
provides the court with a standard by which to judge BIMC's compliance with the "reasonable volume" requirement. They argue that promulgation of a detailed regulation leaves only an essentially judicial task, that of applying the standard to the case at hand, which we are as well equipped to perform as the state agency.
This view is overly mechanistic. It is true that the regulation provides a formula for computing the maximum cost of the uncompensated services which a funded facility is required to provide. This computation, however, merely provides a maximum ; in its discretion, the agency can require a lesser amount. Furthermore, determining the amount of required services is not all that is necessary to decide whether a facility is complying with its obligations. As discussed above, a decision as to the kind as well as the amount of services required is inherent in the concept of "reasonable volume". The regulation reflects the necessity for this type of determination, by providing for annual computation of the required level of uncompensated services based on the following criteria:
"(i) The financial status of the applicant, taking account of income from all sources, and its financial ability to provide uncompensated services;
(ii) The nature and quantity of services provided by the applicant;
(iii) The need within the area served by the applicant for the provision, without charge or at a charge which is less than reasonable cost, for services of the nature provided or to be provided by the applicant; and
(iv) The extent and nature of joint or cooperative programs with other facilities for the provision of uncompensated services, and the extent and nature of outreach services directed to the needs of underserved areas." 42 C.F.R. § 53.111(h) (2). (Emphasis supplied)
The necessity for interpretation and a flexible approach is well illustrated by the case at hand. BIMC's grant totalling $400,000, it would comply with the regulation if it provided annually $40,000 in uncompensated services. To require it to provide care within this limit in all its patient-care units would appear impractical if not unreasonable. Plaintiffs argue, on the other hand, and we have previously held, that to allow the hospital to allot the entire amount at will to any type of service it considers convenient would leave too much to its discretion. The regulation adopts neither a mechanistic formula for determining compliance nor gives full discretion to the grantee. Rather, it places the responsibility for deciding what amount and kind of services a funded facility must provide in the state agency designated for that purpose.
Furthermore, the procedure which it establishes provides, in a meaningful manner,