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February 10, 1977.

Philip L. TOIA, as Commissioner of Social Services of the State of New York, et al., Defendants.

The opinion of the court was delivered by: LASKER


LASKER, District Judge.

By judgment and order of August 2, 1976, the defendants were enjoined from applying three regulations (10 N.Y.C.R.R. §§ 86.14(b); 82.21(k) and 82.26) to determine the reimbursement rates for inpatient care afforded Medicaid patients by the plaintiffs before they were approved by the Secretary of HEW, and were further enjoined from applying any regulation effecting a change in the state plan providing for such reimbursement without obtaining prior HEW approval of the amendment to the state plan. The state defendants were directed to "promptly recompute and pay reimbursement rates for inpatient medical services rendered on and after January 1, 1976 in accordance with the approved New York State plan...." Defendants appealed from this judgment, and the Court of Appeals remanded for our determination of whether HEW approval of the challenged regulations (which occurred on August 16, 1976) was retroactive. On November 9, we found that HEW approval was not retroactive, and again directed the defendants to comply with the terms of the August 2nd order. The defendants did not move for a stay of judgment until November 19th; their motion was denied on November 22nd. On December 14th, the Court of Appeals also denied the defendants' application for a stay of judgment. Plaintiffs thereupon moved, by order to show cause, to hold the state defendants in contempt for wilfully and deliberately disobeying the court's order of August 2nd, by failing to recalculate and pay reimbursement rates owed the plaintiffs from January 1st to August 16, 1976. Upon the state's representation on December 17th that recalculation in accordance with the previous order would proceed forthwith, no action was taken on the motion for contempt.

 By letter and accompanying affidavit of January 13, 1977, the Health and Hospitals Corporation (HHC) sought to renew the application to hold the defendants in contempt. HHC, which is a member of the plaintiffs' class but which is also appearing separately for purposes of litigating issues relating only to HHC, claims that although the state has now recalculated its rates for HHC it has done so in disobedience of the court's order that the recalculation be in accordance with the 1975 approved New York State Plan. It specifies three violations:

 "(a) No longer would HHC's hospital system receive a single composite reimbursement rate, but rather individual rates for the 17 facilities would be established;

 (b) for the first time, ceilings based on the costs of groups of voluntary hospitals would be applied to HHC's individual facilities; and

 (c) in computing the ceilings applicable to HHC facilities, the costs of the HHC hospitals would be excluded from the computation of the ceilings made applicable to these hospitals."

 (Affidavit of Peter Nadel, in support of HHC's application to renew motion to hold state defendants in contempt, [*] 10.) In all three respects, HHC claims that the methodology employed was not authorized by the 1975 New York State approved plan; that the changes were in fact the subject of a fourth new regulation, § 86.14(e), which was also approved by HEW on August 16th; and that the new regulation is itself proof that the changes were not authorized by the previous state plan.

 The defendants' answer that they believe in good faith that the computations made are in accordance with the 1975 plan and any changes made in reimbursement methodology for the January 1 - August 16, 1976 period were authorized by the 1975 plan; that HHC has been treated more leniently than is authorized under the earlier plan; and, quite unpersuasively, that the purpose of the amendment is simply to require HHC's rates to be computed in a manner already permitted under the 1975 Approved plan.

 Before reaching the merits, one procedural issue requires attention, although not briefed by either of the parties. Rather than making a separate motion for contempt, HHC has denoted its present application as a renewal of the contempt motion previously filed on behalf of the entire plaintiff class. That motion was clearly intended as a motion to hold the state defendants in criminal contempt. The state defendants were accused of a "willful failure and refusal to obey the... Judgments and Orders of this Court;" the defendants were directed to show cause why they "should not be punished for engaging in such contemptuous behavior." (Order to Show Cause, signed December 15, 1976.) See Gompers v. Bucks Stove & Range Co., 221 U.S. 418, 31 S. Ct. 492, 55 L. Ed. 797 (1911). But there is no basis for finding the state defendants in criminal contempt of court on the facts alleged in HHC's present moving affidavit. The regulation in question, § 86.14(e), was not before this court on any of the earlier motions or judgments. See Order to Show Cause and Amended Complaint each dated July 16, 1976; Judgment and Order dated July 30th and entered August 2, 1976; Judgment filed October 15th and entered October 29, 1976; Memorandum Opinion filed November 9, 1976. Indeed, the first motion of § 86.14(e) was not made until the Second Amended Complaint was filed on September 29, 1976; and HHC did not appear separately in this action until November 15, 1976, long after the underlying judgment, which it is claimed the defendants have violated, was entered. Since whether the three changes in methodology are violations of that order is not readily apparent, a determination of criminal contempt would be inappropriate particularly where the conduct complained of had never been the subject of a decision on the merits.

 We proceed to determine whether a civil contempt has been committed.

 The defendants do agree that the August 2nd order was not limited by its terms to the three regulations which it specifically mentioned, but rather, prohibited the state from employing any change in the state plan governing reimbursements for inpatient care without obtaining prior HEW approval of the change. Specifically, they agree that by the terms of the earlier order, regulation § 86.14(e) may not be validly applied to the period prior to approval by HEW on August 16, 1976. Their position on this motion is that the changes in methodology, which they concede were employed, were authorized by the approved state plan in existence in 1975.

 Accordingly, we treat HHC's application as a motion to hold the state defendants in civil contempt for failing to comply with the Judgment and Order of August 2, 1976. On a civil contempt motion, the fundamental question is whether the conduct complained of was in fact prohibited (or required) by the court's decree; no finding of wilfulness or wrongful intent is necessary:

 "The absence of wilfulness does not relieve from civil contempt. Civil as distinguished from criminal contempt is a sanction to enforce compliance with an order of the court or to compensate for losses or damages sustained by reason of noncompliance.... Since the purpose is remedial, it matters not with what intent the defendant did the prohibited act. The decree was not fashioned so as to grant or withhold its benefits dependent on the state of mind of respondents. It laid on them a duty to obey... An act does not cease to be a violation of a law and of a decree merely because it may have been done innocently. The force and ...

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