Petition — Madry v. Sorel
Supreme Court brief1978
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Supreme Court, U. S,
FILED
Petanneneneemne! AT a
{MICHAEL RODAK, JR. CLERK |
IN THE
SUPREME COURT OF THE UNITED STATES
OCTOBER TERM, 1977
DR. JOHN G. MADRY, JR.,
Petitioner,
V
DR. OTTO G. SOREL, DR. EDITH K. MANGONE, DR. JOHN T. BLACKBURN,
DR. D. W. McMILLAN, BREVARD HOSPITAL ASSOCIATION, INC., et al.,
Respondents.
PETITION FOR WRIT OF CERTIORARI
To the United States Court of Appeals
for the Fifth Circuit
THEODORE M. FORBES, JR.
GAMBRELL, RUSSELL, KILLORIN &
FORBES
4000 First National Bank Tower
_ Atlanta, Georgia 30303
WILLIAM H. GLEASON
P.O. Box 3266
Indialantic
Melbourne, Florida 32903
723-5121 (A.C. 305)
THORWALD J. HUSFELD
LANDIS, GRAHAM, FRENCH, HUSFELD,
SHERMAN & FORD, P.A.
110 West Indiana Avenue
P.O. Box 329
DeLand, Florida 32720
Attorneys for Petitioner
St. Louis Law Printing Co.. Inc., 812 Olive Street 63101 314-231-4477
A Sa
INDEX
Page
PP bbc cc cen aNebu tase dses bi benneaane 2
CE Ske cae pakGess Feat pec e h Wae wee eS 2
I oon ck ck sinc ewneeanceuea 2
Constitutional Provisions and Statutes Involved ........ 3
I i ot cadcesémeescueneu ares 5
Reasons for Granting the Writ... 0.0... ee es 11
1. The decision of the United States Court of Appeals
for the Fifth Circuit conflicts with decisions of
other United States Courts of Appeals on the same
I $5 0-0.6 6h u che cuee clewdetanceseeeer ll
2. The question presented is one of national scope... 12
3. The issue is presented here sharply ............ 14
4. The question involved in this case has arisen with
sufficient frequency to warrant this Court's atten-
BN cekeced eke keae ve ee ekeaeeianeent 15
SE oda sb Oyen bicees seek ee Cae cae ease eees 16
Appendix
Cases involving Federal Jurisdiction based on Hill-Burton
EEE bh edechucavnes erence reeseaaenteate awa A-l
Order of United States District Court from which appeal
EE er ye eer ey Peer e eee ee A-5
Opinion of United States Court of Appeals ............ A-9
Judgment of the United States Court of Appeals ........ A-15
Notice from the Clerk of the United States Court of Appeals
that petitions for rehearing and rehearing en banc have
EE IE ee te PEA naka lars) say lene A-16
Copy of opinion in Greco v. Orange Memorial Hospital
Corp., $13 F.2d 873 (Sth Cir. 1975) .............. A-17
Copy of opinion in Sosa v. Board of Managers of the Val
Verde Memorial Hospital, 437 F.2d 173 (Sth Cir. 1971) A-37
Prior Order of United States District Court containing find-
ings of fact in the instant case ................005, A-47
Hospital Survey and Construction Act, 60 Stat. 1041 ....A-56
Hospital Survey and Construction Amendments of 1949,
63 Stat. 898
Hospital and Medical Facilities Amendments of 1964, 78
UE Ava dae we oc s oe cob wed mice reese A-82
Hospital Programs Extension Act of 1973, 87 Stat. 91 ..A-112
Table of Authorities
Cases
Bricker v. Sceva Speare Memorial Hospital, 339 F. Supp.
234 (D.N.H.), aff'd sub nom., Bricker v. Crane, 468 F.
re ere rrr 12
Bruner v. United States, 343 U.S. 112 (1952) .......... 15
Citta v. Delaware Valley Hospital, 313 F. Supp. 301 (E.D.
i Pt +. skareas ane uc ueeee snd tieuaul. 13
Commissioner v. Estate of Bosch, 387 U.S. 456 (1967)... 14
Doe v. Bolton, 410 U.S. 179 (1973) ................ 14
Don v. Okmulgee Memorial Hospital, 443 F.2d 234, 237
CO Gee GPE cok cccopudscevscesrccescadees 12
Foster v. Mobile County Hospital, 398 F.2d 227 (Sth Cir.
EE. 2. .uk inden ee 64s oS AVENE DS HOES oh OwEN eB 13
Greco v. Orange Memorial Hospital Corporation, 513 F.
2d 873 (Sth Cir.), cert. denied, 423 U.S. 1000
RET errr rere eye eee 6,7, 11, 13
Hodge v. Paoli Memorial Hospital, 433 F. Supp. 281 (E.D.
De, GEOR spec vec bacseciewesecenecsccesecenues 13
Jackson v. Norton-Children’s Hospitals, Inc., 487 F.2d
502 (6th Cir. 1973), cert. denied, 416 U.S. 1000 (1974) 12
O’Neill v. Grayson County War Memorial Hospital, 472
F.2d 1140 (6th Cir. 1973) ....... cece eee eee ees 13
Shaw v. Hospital Authority, 507 F.2d 625 (Sth Cir. 1975) 13
Simkins v. Moses H. Cone Memorial Hospital, 323 F.2d
959 (4th Cir. 1963) (en banc), cert. denied, 376 U.S.
PP rrTeTrerrTT irre rte 12
Sosa v. Board of Managers of Val Verde Memorial Hos-
pital, 437 F.2d 173 (Sth Cir. 1971) ........+.6,7, 11, 13
Taylor v. St. Vincents Hospital, 424 U.S. 948 (1976) .... 11
Ward v. St. Anthony Hospital, 476 F.2d 671 (10th Cir.
Pr err err Tr TT rrr ret kr er 12
Constitution
Fifth Amendment to the Constitution of the United States 6
Fourteenth Amendment to the Constitution of the United
2 ee eee ede ake ooh ae se 6
iv
Statutes
Health Programs Extension Act of 1973, 87 Stat.91..... 11
Section 401(b) (87 Stat. 95, 42 U.S.C.A. 300a-7) ... 14
Hospital Survey and Construction Act, 60 Stat. 1041
(1946), 42 U.S.C. §§ 291, et seq... 0... eee eee, 12
Section 601 (60 Stat. 1041, 42 U.S.C.A. § 291)... .12, 13
Section 622 (60 Stat. 1042, 42 U.S.C.A. § 29lc).... 10
Section 623 (60 Stat. 1043, 42 U.S.C.A. § 291d).... 8
Section 624 (60 Stat. 1045, 42 U.S.C.A. §211b)... 8
Section 625 (60 Stat. 1045, 42 U.S.C.A. §29le)... 8
Section 631 (60 Stat. 1046, 42 U.S.C.A.§ 29lo).... 13
Hospital Survey and Construction Amendments of 1949,
| PP re 9
Hospital and Medical Facilities Amendments of 1964, 78
WO, SEF oo vvccccnscebueee cee 9
58 UBL. § 125GG8) . 00 vckiveccenceeunene 2
8 VSL. § 1S00RD ... 06 snuddecesecne ee 6
42 US.C.A. § 1983, 17 Stat. 13 20... 0.0... eee. 6
Florida Statutes § 196.122 ................... 10
Miscellaneous
H.R. Rep. No. 93-227, 93d Cong., Ist Sess.; 1973 U.S.
Code & Cong. News at p. 1473 .................. 1]
H.R. Rep. 2519, 79th Cong., 2d Sess.; 1946 U.S. Code &
Comp, Moms 1908 oo... occcccccvucceceudeee 12
S. Rep. 790, 81st Cong., Ist Sess.; 1949 U.S, Code & Cong.
etna Ms MUTT 12
IN THE
SUPREME COURT OF THE UNITED STATES
OCTOBER TERM, 1977
J ae
DR. JOHN G. MADRY, JR.,
Petitioner,
v
DR. OTTO G. SOREL, DR. EDITH K. MANGONE, DR. JOHN T. BLACKBURN,
DR. D. W. McMILLAN, BREVARD HOSPITAL ASSOCIATION, INC., and
THE MEMBERS OF ITS BOARD OF GOVERNORS,’
Respondents.
et es ecto om mene
—— <i
PETITION FOR WRIT OF CERTIORARI
To the United States Court of Appeals
for the Fifth Circuit
Petitioner John G. Madry, Jr. respectfully prays for a writ
of certiorari to review the judgment and opinion on appeal
entered August 29, 1977 and the order denying rehearing and
rehearing en banc entered September 30, 1977 by the United
States Court of Appeals for the Fifth Circuit.
1 The individual members of the Board of Governors were named
as defendants. They are: James E. Holmes, Chairman; Frederick L.
McFarlin; Bernice §. Newell; R. P. Sullivan, Jr.; Harold E. O’Kelley;
Dr. T. J. Kaminski; Dr. John M. Langstaff; Kathryn R. Lowery;
Bernice A. Maxwell; John F. Turner, Jr.; Charles F. West, and James
A. Sewell.
OPINIONS BELOW
The order of the United States District Court for the Middle
District of Florida is not reported: copy thereof is set forth in
the Appendix hereto. The opinion of the United States Court
of Appeals for the Fifth Circuit is reported at 558 F.2d 303,
and copy is included in the Appendix hereto. The order of
the Court of Appeals denying rehearing and rehearing en banc
is noted at 561 F.2d 831; copy of letter informing counsel of
that ruling appears in the Appendix hereto.
JURISDICTION
The judgment of the United States Court of Appeals for the
Fifth Circuit was entered on August 29, 1977. Petitioner filed
a timely Petition for Rehearing and Suggestion for Rehearing
En Banc, which was denied on September 30, 1977. This peti-
tion for certiorari is filed within ninety days of the latter date.
This Court has jurisdiction pursuant to 28 U.S.C. §§254(1)
(1970 ed.).
THE QUESTION PRESENTED
Is sufficient “state action” present to invoke the “Federal
question” jurisdiction of a United States District Court over a
suit by a physician who asserts that his summary discharge
from the Medical Staff of the only hospital in his home City
of Melbourne, Florida denied him “due proceess of law,” in
violation of the Fifth and Fourteenth Amendments to the United
States Constitution, when the defendant hospital is financed
to the extent of 48% by a Federal Hill-Burton grant paid
through the State of Florida pursuant to a State-wide plan for
hospital construction adopted by the State of Florida and ap-
os pees
proved by the Surgeon General of the United States; and such
hospital is situated on twelve acres of land acquired by it from
the City of Melbourne for the nominal consideration of $1.00
following a public referendum approving the sale for that price;
and such hospital has been expanded under the Hill-Burton
program with 31% Federal funds; and elected county and
municipal officials ex officio comprise a majority of that hos-
pital’s Board of Governors; and such hospital provides subsi-
dized medical care to county welfare patients; and such hospital
is exempt by statute from ad valorem taxes?
CONSTITUTIONAL PROVISIONS AND
STATUTES INVOLVED
United States Constitution, Amendment V:
No person shall be held to answer for a capital, or other-
wise infamous crime, unless on a presentment or indictment
of a Grand Jury, except in cases arising in the land or
naval forces, or in the Militia, when in actual service in
time of War or public danger; nor shall any person be
subject for the same offence to be twice put in jeopardy
of life or limb; nor shall be compelled in any criminal
case to be a witness against himself, nor be deprived of
life, liberty, or property, without due process of law;
nor shall private property be taken for public use, with-
out just compensation. (Emphasis added)
United States Constitution, Amendment XIV:
Section 1. All persons born or naturalized in the United
States, and subject to the jurisdiction thereof, are citizens
of the United States and of the State wherein they reside.
No State shall make or enforce any law which shall abridge
the privileges or immunities of citizens of the United
States; nor shall any State deprive any person of life, liberty,
a ae
or property, without due process of law; nor deny to any
person within its jurisdiction the equal protection of the
laws. (Emphasis added)
28 U.S.C. $1331 (a) (1970 ed.):
(a) The district courts shall have original jurisdiction
of all civil actions wherein the matter in controversy ex-
ceeds the sum or value of $10,000, exclusive of interest
and costs, and arises under the Constitution, laws, or
treaties of the United States, except that no such sum or
value shall be required in any such action brought against
the United States, any agency thereof, or any officer or
employee thereof in his official capacity.
42 U.S.C.A. § 1983, 17 Stat. 13:
Every person who, under color of any statute, ordi-
nance, regulation, custom, or usage, of any State or Terri-
tory, 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.
Hospital Survey and Construction Act, 60 Stat. 1041 ef seq.,
as amended by Hospital Survey and Construction Amend-
ments of 1949, 63 Stat. 898 er seg., and Hospital and
Medical Facilities Amendments of 1964, 78 Stat. 447,
et seq.
Those statutes (popularly known as the “Hill-Burton Act”)
appear at 42 U.S.C.A. §§ 291 ff. By reason of their length,
they are set out separately in the Appendix hereto.
Health Programs Extension Act of 1973, 87 Stat. 91, section
401(b). This law also is set out in the Appendix hereto.
om.
ee
STATEMENT OF THE CASE
The question raised in this Petition is whether a pubdlicly-
controlled hospital, largely financed by Hill-Burton money? and
displaying other indicia of State direction and participation, is so
imbued with State activity that it must comply with “due process
of law” under the United States Constitution. If the hospital is
subject to the requirements of due process, then Petitioner's
action arises under the Constitution and laws of the United
States, and the Court of Appeals erred in holding that there
was no “Federal question” jurisdiction.
The Respondent Brevard Hospital, Inc., which owns and
operates “Brevard Hospital,” on May 27, 1966 removed Peti-
tioner from its Medical Staff in a manner found by the District
Judge (R. 613)* not to have met the requirements of due process
of law. Brevard Hospital is not only the only hospital in the
City of Melbourne, it is the only hospital within 22 miles (R. 8).
Its Medical Staff comprises the physicians whom the respond-
ent Hospital allows to treat patients in its facility. Revoca-
tion of Petitioner's membership thus denied him the right to
practice his specialty of obstetrics-gynecology in the only hos-
pital in the area (R. 3). (Brevard Hospital alleged that Petitioner
had violated its rules by sterilizing a female patient without her
written consent. The merits of that issue are not presented or
involved in the question that Petitioner asks this Court to ad-
judicate.)
Petitioner attempted unsuccessfully to get reinstated to the
Medical Staff on five occasions over three years, before filing
2 Federal funds appropriated specifically for hospital construc-
tion under the Hill-Burton Act (set forth in the Appendix hereto).
% The original record is cited as R. —— herein. Pages of the
original record are shown in the printed Joint Appendix from the
Court below.
aS
the instant action in the United States District Court for the
Middle District of Florida on June 27, 1969, to compel re-
instatement by court order. Petitioner averred jurisdiction under
28 U.S.C. § 1331 (a) on the ground that the action of the Hos-
pital constituted “state” action for purposes of the Fifth and
Fourteenth Amendments and 42 U.S.C.A. § 1983, 17 Stat. 13
~~.
On July 15, 197) (R. 612-14) and again on January 22,
i975 (R. 1371-82)* the District Judge ruled that Federal Court
jurisdiction existed by reason of the Hill-Burton financing and
other state involvements of Brevard Hospital, citing Sosa vy.
Board of Managers of Val Verde Memorial Hospital, 437 F.2d
173 (Sth Cir. 1971).°
On February 17, 1976, the District Judge entered an Order
(R. 1683-86 and commencing on page A-5 of the Appendix
hereto) dismissing the case for lack of Federal jurisdiction on
authority of Greco v. Orange Memorial Hospital Corporation,
513 F.2d 873 (Sth Cir.)," cert. denied, 423 U.S. 1000 (1975).
In Sosa, the Fifth Circuit Court of Appeals had held that
Federal and State financing of a hospital under the Hill-Burton
Act together with some minimal State involvement constituted
the requisite State action to entitle a physician denied medical
staff privileges on non-racial grounds to a due process hearing
under the Fourteenth Amendment. In Greco, a different panel
of that Court concluded that “absent a charge of racial dis-
crimination” (513 F.2d at 882), Federal jurisdiction does not
exist although the operative jurisdictional facts in the Sosa and
* The January 22, 1975 ruling contains important findings of fact
concerning “state action.” It is reproduced in the Appendix hereto
commiencing at page A-47.
* For convenience, this decision is reproduced in the Appendix
hereto, commencing at page A-37.
* For convenience, this decision is reproduced in the Appendix
hereto, commencing at page A-17.
4
Greco cases were substantially the same. The Greco decision
did not mention Sosa.
The following facts of record establish Brevard Hospital's
“state” identity. (See Order at p. A-47, post.)
Brevard Hospital Association, Inc., was chartered as 2 non-
profit corporation under Florida law, on August 7, 1931 (R.
258-63). In the middle of the Great Depression, a benefactor
donated to it a tract of land on the North Dixie Highway in the
City of Melbourne (“the City”). Shortly thereafter, the Hos-
pital and the City entered into an agreement by which the Hos-
pital was to convey that tract to the City and the City was to
obtain a loan from the Public Works Administration ( a Federal
agency) to provide funds for construction of a hospital building.
If the City were to fail to get the loan, or upon repayment of
the loan, the property was to be deeded back to the Hospital
(R. 255).
Pursuant to the agreement, the Hospital deeded the land to
the City, and the City in November 1935 applied to the Public
Works Administration for a loan equal to 45% of the cost of the
Hospital building (but not to exceed $20,450). The loan was
granted, and the City held a referendum election as to whether
it should issue $30,000 in revenue certificates to finance the
balance of the cost of construction. The vote was “yes,” the
certificates were issued, and construction commenced. In June
1937 the City accepted the hospital building as complete (R.
255). During the ensuing eight years, the Hospital was man-
aged under City supervision (R. 256).
In 1945 the Reconstruction Finance Corporation (also a
Federal instrumentality) held the outstanding $18,000 of revenue
certificates, and the Hospital embarked upon a program of re-
tiring them. In February of 1945 the City Commission of Mel-
bourne, finding that retirement of the indebtedness would be “for
the benefit of the Hospital, the City and the public in general,”
?
SS...
a eon
appropriated $1,000 for that purpose and authorized the City
to give the Hospital a non-interest bearing note for $2,000 so as
to require the City to make similar payments during the next
two years (R. 329). In the meantime the Brevard Hospital Asso-
ciation apparently had conducted a successful solicitation of
contributions, because four weeks later the City Commission re-
ceived from the Association enough money to redeem the certifi-
cates in full, which was done (R. 329-30).
Seven years later, the Melbourne City Commission, on Febru-
ary 12, 1952, authorized the appropriation of $4,500 to the
Hospital to enable it to complete construction of a new wing
(R. 331).
By 1956, plans were afoot for construction of a new hospital
building. The City Commission called a special election for
April 24, 1956 to determine if it should sell lots 392 through
461 of Woodlawn Park subdivision, a 12 acre tract (R. 7), to
the Hospital for one dollar (R. 332). The affirmative carried
overwhelmingly, and the City Commission accordingly on May
9, 1956 directed the Mayor and City Clerk to convey the land
to the Hospital for $1, subject to the conditions that unless con-
struction of the building were “substantially begun” in five years
and the facility in use in six years, the land would revert to the
City (R. 334-35). The District Judge found the one dollar pay-
ment to be a “nominal consideration” (R. 1371, page A-47,
post).
Having acquired the land for a new hospital building, the
Hospital then applied to and through the appropriate State
agency for a grant of Federal funds under the Hill-Burton Act
(R. 1316). Sections 623, 624 and 625 of the 1946 Hill-Burton
legislation’ require each State to submit a hospital development
™ References herein to sections of the Hill-Burton legislation are
to Title VI of the Public Health Service Act, 58 Stat. 682, which
Title was added by Section 2 of the Hospital Survey and Construc-
tion Act (set out in full beginning at p. A-56, post). The latter
Pm
_—
plan to the Surgeon General of the United States. After he
approves it, the Federal money is allocated to the State. An indi-
vidual hospital applies to the State agency. If the State agency
and the Surgeon General both approve the hospital's plans, then
the State is authorized to grant the Federal funds to the hospital
for construction.
The foregoing procedures were carried out, and Brevard Hos-
pital obtained a Hill-Burton grant of $1,010,000. It added
thereto $1,114,827 from other sources, including sale of the
origina! hospital site and building that the City had helped pay
for (R. 7), and including funds received from a public fund-
raising drive (R. 7, 257).
The Hospital has continued to receive additional public sup-
port since it dismissed Dr. Madry in 1966. In 1968 it completed
a $3.5 million expansion with the aid of a Federal grant in excess
of $1.3 million (R. 257), and in 1974 it was arranging another
expansion by a Hill-Burton loan guarantee, which would guar-
antee 90% of a $3.2 million loan and pay three percentage
points of the interest due the lender. The loan commitment was
contingent upon Federal approval of the lender and the interest
rate (R. 1313-15).
Further evidencing local government financial support of
the Hospital, on April 17, 1969, the Brevard County Commis-
sion authorized the County Engineer to use County equipment
and labor to repave the Hospital's parking lot up to a cost of
$1,850, to be paid from the County's General Fund (R. 1437;
see also R. 1312).
At the time of Dr. Madry’s dismissal, the corporate by-laws
of the Brevard Hospital Association, Inc. provided for a Board
Act was the original “Hill-Burton Act.” In 1964 Title VI was re-
vised and its sections renumbered (see Hospital and Medical Fa-
cilities Amendments of 1964 ,p. A-82, post). The provisions relevant
to the issues here remained substantively unchanged. As Brevard
Hospital was financed and built before 1964, petitioner has cited
herein the 1946 Act as amended in 1949 (Hospital Survey and
Construction Amendments of 1949, p. A-74, post).
— we
of Governors comprising the Mayors of all the incorporated
municipalities in Districts 3 and 5 (11 mayors), plus the two
County Commissioners from those Districts, plus 12 elected
members of the Association (R. 84). The Mayors and County
Commissioners were largely inactive, but the District Judge
found that they were entitled to vote at meetings of the Board
and were in position to influence its decisions (Order of Jan-
uary 22, 1975; R. 1371, 1373; page A-49, post).
Brevard County depends upon the Hospital to care for its
welfare recipients who are ill. The Hospital receives from the
County a reduced fee per patient that is less than the cost of
providing the service (R. 1305-07). The Hospital is required
by § 622 of the Hill-Burton legislation to provide “a reasonable
volume of hospital services to persons unable to pay therefor,”
as a condition of receiving and retaining its Federal grant. Both
the lowered charge to the Hospital for County patients and the
fact that the Hospital is exempt from ad valorem taxes under
§ 196.122, Fla. Stat. reflect the interdependence of County and
Hospital.
—_' -
REASONS FOR GRANTING THE WRIT
i. The decision of the United States Court of Appeals for the
Fifth Circuit conflicts with decisions of other United States
Courts of Appeals on the same question.
The conflict among the Circuits has been noted previously by
the Chief Justice and one Associate Justice in their dissents to
denial of writs of certiorari in Greco v. Orange Memorial Hos-
pital Corp., 423 U.S. 1000 (1975), and Taylor v. St. Vincents
Hospital, 424 U.S. 948 (1976). The Appendix hereto contains
a list of the conflicting decisions (and see pp. 12-13 and A-1,2,
infra).
Congress has acknowledged the existence of the question
here presented, but has expressly avoided it. By Section 401 (b)
of the Health Programs Extension Act of 1973, 87 Stat. 9 (set
out at p. A-112, post), Congress prohibited the Federal courts
from compelling a physician or hospital to perform or permit
a sterilization or abortion. In its report on the measure, the
House Committee on Interstate and Foreign Commerce noted
the District Court's first ruling in Taylor v. St. Vincents Hos-
pital, D. Mont. Civ. No. 1090 (Nov. 1972)* that, “the fact
that the defendant is the beneficiary of Hill-Burton Act funds
is alone sufficient to support an assumption of jurisdiction.”*
The House Committee declared, “In recommending the enact-
ment of this provision, the Committee expresses no opinion as
to the validity of the Taylor decision.” H.R. Rep. No. 93-227,
93d Cong., Ist Sess.; 1973 U.S. Code & Cong. News at p. 1473.
* The Taylor case was a suit to compel a hospital to allow a
sterilization. Following enactment of §401(b), the District Court
dismissed the case. 369 F. Supp. 948 (D. Mont. 1973), aff'd, 523
F.2d 75 (9th Cir. 1975), cert. denied, 424 U.S. 948 (1976).
* This quotation is taken from the Committee Report; the decision
was not reported in F. Supp.
2. The question presented is one of National scope. It in-
volves an important question as to which there is a need for a
uniform rule in all the Circuits.
The Hill-Burton Act established an “integrated”'’ National
health care system. As it often does, Congress authorized dis-
tribution of the funds to and through the States, but the purpose
declared in Section 601 (42 U.S.C.A. § 291) and the result
achieved are National in scope and jurisdiction.’' Pursuant to
the Hill-Burton legislation billions of dollars in Federal funds
have been distributed to the States, and in turn disbursed by
the States if approved by the Surgeon General, for construction
of hospitals and other health care facilities in every corner of
the Nation.
Yet under existing case law, the legal duties of Hill-Burton
hospitals to their patients and staff physicians are subject to
the geopolitical accident of the Federal Judicial Circuit in
which a State is located. In the Fourth Circuit, Hill-Burton
hospitals clearly are required to follow due process of law.
Simkins v. Moses H. Cone Memorial Hospital, 323 F.2d 959
(4th Cir. 1963) (en banc), cert. denied, 376 U.S. 938 (1964).
The rule in the First Circuit is the same, according to a Dis-
trict Court. Bricker v. Sceva Speare Memorial Hospital, 339
F. Supp. 234 (D.N.H.), aff'd sub nom. Bricker v. Crane, 468
F.2d 1228 (ist Cir. 1972). The rule is unclear in the Tenth,
Sixth and Third Circuits. Compare Don v. Okmulgee Memo-
rial Hospital, 443 F.2d 234, 237 (10th Cir. 1971), with Ward
y. St. Anthony Hospital, 476 F.2d 671 (10th Cir. 1973);
compare Jackson v. Norton-Children’s Hospitals, Inc., 487 F.
2d $02 (6th Cir. 1973), cert. denied, 416 U.S. 1000 (1974),
10 HR. Rep. 2519, 79th Cong., 2d Sess.; 1946 U.S. Code & Cong.
News 1561.
1) § Rep. 790, 8ist Cong. Ist Sess.; 1949 U.S. Code & Cong.
News 2193.
with O'Neill v. Grayson County War Memorial Hospital, 472
F.2d 1140 (6th Cir. 1973); compare Hodge v. Paoli Memo-
rial Hospital, 433 F. Supp. 281 (E.D. Pa. 1977), with Citta v.
Delaware Valley Hospital, 313 F. Supp. 301 (E.D, Pa. 1970).
The other Circuits that have addressed the issue, except the
Fifth, appear not to require Hill-Burton hospitals to adhere to
due process of law. See cases cited in the opinion dissenting
from the denial of certiorari in the Greco case, 423 U.S. 1000,
—, 96 Sup. Ct. at 435, and the list at p. A-1, post.
In the Fifth Circuit, the test appears to be whether the hos-
pital is directly owned by a unit of local government. To be
eligible for Hill-Burton money, a hospital must be “public or
other nonprofit” in ownership and operation. See Hill-Burton
$§ 601(b) and 631(g).'* The test applied in the Fifth Circuit,
although easy to apply, creates the undesirable circumstance
of demanding or not demanding due process on the basis of
the State in which the physician lives. Contrast Foster v. Mo-
bile County Hospital, 398 F.2d 227 (Sth Cir. 1968) (Ala-
bama case), and Shaw v. Hospital Authority, 507 F.2d 625
(Sth Cir. 1975) (Georgia case), in which physicians were held
entitled to due process of law, with the instant case. The pro-
vision of due process also can depend upon in which Texas
county the hospital is located. Contrast Sosa v. Board of Mgrs.
of Val Verde Memorial Hospital, 437 F.2d 1973 (Sth Cir.
1971) (Val Verde County, Texas, due process required), with
Greco v. Orange Memorial Hospital, 513 F.2d. 873 (Sth Cir.),
cert. denied, 423 U.S. 1000 (1975) (Orange County, Texas,
due process not required). In Alabama and Georgia, “owner-
ship” of Hill-Burton hospitals is committed by state law to
special authorities. In Texas, the “owner's” nature apparently
varies from one county hospital to another. There thus is no
12 “(g) the term ‘non-profit hospital’ means any hospital owned
and operated by a corporation or association, no part of the net
earnings of which inures, or may lawfully inure, to the benefit of any
private shareholder or individual.”
—_
uniform rule in the Fifth Circuit applicable to all Hill-Burton
hospitals. Unfortunately for Petitioner, Hill-Burton hospitals in
Florida are “owned” by tax-exempt, non-profit corporations.
Petitioner urged in the Court below that the Sosa and Greco
cases are indistinguishable in principle. The line drawn be-
tween them in the case at bar surely is fine and tenuous, as
well as producing an unacceptable result. This Court should
grant certiorari to resolve the conflicting results within the
Fifth Circuit and among the other Circuits. Commissioner v.
Estate of Bosch, 387 U.S. 456 (1967).
3. The issue is presented here sharply. There are no shadows
from Doe v. Bolton, 410 U.S. 179 (1973), or $401(b) of the
Health Programs Extension Act of 1973 to obscure it. The
facts of the Hill-Burton financing and other “state” involve-
ment were found by the Trial Judge in his Order of January
22, 1975 (R. 1371 and commencing at page A-47, post)
and are undisputed. ,
The issue involves basic civil rights for patients and physicians.
A Florida citizen’s right to an elective abortion becomes
ephemeral if she cannot enforce it against a hospital built with
her and other taxpayers’ funds. A Florida physician who is a
member of a minority group could be excluded from a Hill-
Burton hospital’s medical staff (which position does not include
any employment relationship) for the most invidiously discrimi-
natory reasons, but have no recourse in the United States Courts.
And, as here, a physician can be barred from a publicly-financed
Hill-Burton hospital without opportunity to vindicate his medical
judgment and surgical procedure in a fair hearing held after
due notice, even though it is the only place within 22 miles where
he can engage in the practice of his profession.
The right to due process of law in a Hill-Burton hospital
should not depend on the form of “ownership,” a condition
which is decreed by local legislation.
—_—
4. The question involved in this case has arisen with suf-
ficient frequency to warrant this Court's attention. A list of all
the cases of which counsel are aware is included in the Appendix.
The context of the litigation has involved in each instance per-
sonal or property rights of such magnitude as to make it almost
certain that the issue will continue to arise in the Courts of
Appeals until this Court lays it to rest. Serious questions of
Federal court jurisdiction merit this Court's resolution. = 3s
Bruner v. United States, 343 U.S. 112 (1952).
_—_
CONCLUSION
The question raised by this petition involves enforcement in
the United States Courts of the right to due process of law
in a Federally-financed and State-sponsored hospital. The Courts
of Appeals for the several Circuits have reached opposing con-
clusions. The issue arises frequently, and a National uniform
rule of “Federal question” jurisdiction ought to be established
by this Court. The facile solution of the Court of Appeals in
the instant case allows the States to control access to the
Federal Courts and must not be allowed to stand.
This petition for a writ of certiorari should be granted.
Respectfully submitted,
THEODORE M. FORBES, JR.
GAMBRELL, RUSSELL. KILLORIN &
FORBES
4000 First National Bank Tower
Atlanta, Georgia 30303
WILLIAM H. GLEASON
P.O. Box 3266
Indialantic
Melbourne, Florida 32903
723-5121 (A.C. 305)
THORWALD J. HUSFELD
LANDIS, GRAHAM, FRENCH, HUSFELD,
SHERMAN & FORD, P.A.
110 West Indiana Avenue
P.O. Box 329
DeLand, Florida 32720
Attorneys for Petitioner
APPENDIX
7
—_-
CASES INVOLVING FEDERAL JURISDICTION BASED
ON HILL-BURTON FINANCING
Ascherman v. Presbyterian Hospital of Pacific Medical Center,
Inc., 507 F.2d 1103 (9th Cir. 1974);
No Federal jurisdiction.
Barrett v. United Hospital, 376 F. Supp. 791 (S.D.N.Y. 1974);
No Federal jurisdiction.
Barrio v. McDonough District Hospital, 377 F. Supp. 317
(S.D. Ill. 1974);
No Federal jurisdiction.
Bricker v. Sceva Speare Memorial Hospital, 339 F. Supp. 234
(D.N.H.), aff'd sub nom. Bricker v. Crane, 468 F.2d 1228
(1st Cir. 1972);
Federal! jurisdiction found.
Briscoe v. Bock, 540 F.2d 392 (8th Cir. 1976);
No Federal jurisdiction.
Chiaffitelli v. Dettmer Hospital, Inc., 437 F.2d 429 (6th Cir.
1971);
Federal jurisdiction found.
Chrisman v. Sisters of St. Joseph of Peace, 506 F.2d 308 (9th
Cir. 1974);
No Federal jurisdiction, by reason of § 401(b) of
Health Programs Extension Act.
Christhilf v. Annapolis Emergency Hospital Ass'n, Inc., 496 F.
2d 174 (4th Cir. 1974);
Federal jurisdiction found.
Citta v. Delaware Valley Hospital, 313 F. Supp. 301 (E.D. Pa.
1970);
Federal jurisdiction found.
—_
Doe v. Bellin Memorial Hospital, 479 F.2d 756 (7th Cir. 1973);
No Federal jurisdiction.
Doe v. Charleston Area Medical Center, Inc., 529 F.2d 638
(4th Cir. 1975);
Federal jurisdiction found.
Don v. Okmulgee Memorial Hospital, 443 F.2d 234 (10th Cir.
1971);
Federal jurisdiction found.
Eaton v. Board of Managers of James Walker Memorial Hos-
pital, 261 F.2d 521 (4th Cir. 1958), cert. denied, 359
U.S. 984 (1959);
No Federal jurisdiction.
Eaton v. Grubbs, 329 F.2d 710 (4th Cir. 1964);
Federal jurisdiction found.
Foster v. Mobile County Hospital Board, 398 F.2d 227 (5th
Cir. 1968);
Federal jurisdiction found.
Greco v. Orange Memorial Hospital Corp., 513 F.2d 873 (5th
Cir.), cert. denied, 423 U.S. 1000 (1975);
No Federal jurisdiction.
Hodge v. Paoli Memorial Hospital, 433 F. Supp. 281 (E.D. Pa.
1977);
No Federal jurisdiction.
Hodgson v. Lawson, 542 F.2d 1350 (8th Cir. 1976);
No Federal jurisdiction.
Holton v. Crozer-Chester Medical Center, 419 F. Supp. 334
(E.D. Pa. 1976);
an Spd <0
Jackson v. Norton-Children’s Hospitals, Inc., 487 F.2d 502
(6th Cir. 1973);
No Federal jurisdiction.
Meredith v. Allen County War Memorial Hospital, 397 F.2d 33
(6th Cir. 1968);
Federal jurisdiction found.
Mulvihill v. Julia L. Butterfield Memorial Hospital, 329 F.
Supp. 1020 (S.D.N.Y. 1971);
No Federal jurisdiction.
O'Neill v. Grayson County War Memorial Hospital, 472 F.2d
1140 (6th Cir. 1973);
Federal jurisdiction found.
Place v. Shepherd, 446 F.2d 1239 (6th Cir. 1971);
No Federal jurisdiction.
Poe v. Charlotte Memorial Hospital, Inc., 374 F. Supp. 1302
(W.D.N.C. 1974);
Federal jurisdiction found.
Pollock v. Methodist Hospital, 392 F. Supp. 393 (E.D. La.
1975);
Federal jurisdiction found.
Sams v. Ohio Valley Gen’! Hospital Ass'n, 413 F.2d 826 (4th
Cir. 1969);
Federal jurisdiction found.
Shaw v. Hospital Authority of Cobb County, 507 F.2d 625 (Sth
Cir. 1975);
Federal jurisdiction found.
—- oo
Shulman v. Washington Hospital Center, 222 F. Supp. 59
(D.D.C. 1963), remanded with directions, 348 F.2d 70
(D.C. Cir. 1965);
No Federal jurisdiction.
Simkins v. Moses H. Cone Memorial Hospital, 323 F.2d 959
(4th Cir. 1963) (en banc), cert. denied, 376 U.S. 938
(1964);
Federal jurisdiction found.
Slavcoff v. Harrisburg Polyclinic Hospital, 375 F. Supp. 999
(M.D. Pa. 1974);
No Federal jurisdiction.
Sosa v. Board of Managers of Val Verde Memorial Hospital,
437 F.2d 173 (Sth Cir. 1971);
Federal jurisdiction found.
Taylor v. St. Vincent's Hospital, 523 F.2d 75 (9th Cir. 1975),
cert. denied, 424 U.S. 948 (1976);
No Federal jurisdiction, by reason of § 401(b) of
Health Programs Extension Act.
Ward v. St. Anthony Hospital, 476 F.2d 671 (10th Cir. 1973);
No Federal jurisdiction.
Watkins v. Mercy Medical Center, 520 F.2d 894 (9th Cir.
1975);
No Federal jurisdiction.
United States District Court
Middle District of Florida
Orlando Division
Dr. John G. Madry, Jr., )
Plaintiff,
VS. Case No.
" 69-136-Orl-Civ-Y
Dr. Otto G. Sorel, et al.,
Defendants.
ORDER
This cause came before the Court on several motions viz.,
the motion to dismiss upon suggestion of defendant Brevard
Hospital Association, Inc., that the Court lacks jurisdiction of
the subject matter; plaintiffs motion to set aside the order
adopting the alternative plan; plaintiff's motion to disqualify
the members of the ad hoc committee; motion to dismiss of
defendants Blackburn and McMillan; the motion to dismiss of
defendant Hoimes; and the motion to dismiss of Dr. Edith
Mangone. Immediately prior to the hearing, plaintiff had filed
an additional motion to amend the second amended complaint
by adding a fourth count based on alleged violations of the
antitrust laws.
The motion to dismiss on jurisdictional grounds filed by de-
fendant Brevard Hospital Association, Inc., and the conclusion
drawn by this Court from the principal authority cited in that
defendant’s memorandum, Greco v. Orange Memorial Hospital
Corp., 513 F.2d 873 (Sth Cir. 1975), cert. denied, 44 L.W.
3328, make unnecessary consideration of any other motions
except plaintiffs motion to amend his complaint.
—-
In orders of July 15, 1971 and January 22, 1975, this Court
had previously held that requisite state action existed for main-
tenance of the suit. The law, however, is neither rigid nor un-
changing. This Court's prior decisions were primarily based
upon Sosa v. Board of Managers of Val Verde Memorial Hos-
pital, 437 F.2d 173 (Sth Cir. 1971). That decision has been
overruled by implication in Greco vs. Orange Memorial Hos-
pital Corp., supra. Greco represents a distinct narrowing in
the concept of state action. Not only do the facts alleged in
this case indicate a level of involvement by the state much
below that in Greco, there is no allegation whatsoever that the
state was involved at all in the action complained of, the revo-
cation of Dr. Madry’s right to practice within the hospital.
Greco, supra, at 875, 881. Moreover, the Court in Greco
pointed out that the origin of the expanded concept of state
action foreshadowed in Burton v. Wilmington Parking Author-
ity, 365 U.S. 715, 6 L.Ed.2d 45 (1961), was the desire to
eradicate unconstitutional racial discrimination. The difficulties
engendered by this expansion of the state action concept when
applied to areas unaffected by racial discrimination are still
being unraveled by the Courts, see, Greco, supra, at 879-880,
but at the present stage of that process, the scrutiny given claims
with a racial or religious tinge must be greater than those rest-
ing on due process alone. Golden vs. Biscayne Bay Yacht Club,
§21 F.2d 344 (Sth Cir. 1975). Under the present state of the
law, then, this Court concludes that it does not have jurisdic-
tion and this cause must be dismissed. The dismissal, of course,
must operate as to all defendants since state action is neces-
sary under 42 U.S.C. $1981, et seq. to provide the jurisdic-
tional basis.
As to the motion to amend the second amended complaint
by adding a fourth count alleging antitrust violations, it is the
opinion of the Court that such an amendment simply comes
too late, that is, some six and one half years after the inception
of the suit. Additionally, even if this Court were to allow this
ae ae
suit to be kept alive by the proposed amendment, a single,
~ isolated instance of the denial of hospital privileges to one
doctor would not state a claim for which relief may be granted
under the Sherman Act. See, Sokol v. University Hospital, Inc.,
402 F. Supp. 1029 (D. Mass. 1975). Accordingly, it is
ORDERED that the motion of defendant Brevard Hospital As-
sociation, Inc., to dismiss for want of subject matter jurisdic-
tion, be and is hereby granted; it is further
ORDERED that the motion of plaintiff to amend his second
amended complaint be and is hereby denied; and it is further
¢
ORDERED that this cause be and is hereby dismissed as to all
defendants.
DONE AND ORDERED in Chambers at Orlando, Florida,
this 16th day of February, 1976.
s GEORGE C. YOUNG
Chief Judge
Copies to:
Thorwald J. Husfield [sic], Esquire
Post Office Box 329
Deland, Florida 32720
J. Compton French, Esquire
Post Office Box 5357
Daytona Beach, Florida 32020
William H. Gleason, Esquire
Post Office Box 3266
Indialantic, Florida 32903
Theodore M. Forbes, Jr., Esquire
4000 First National Bank Tower
Atlanta, Georgia 30303
—_*
Elting L. Storms, Esquire
Post Office Box 1376
Melbourne, Florida 32901
Ralph Geilich, Esquire
Post Office Box 820
Melbourne. Florida 32901
G. W. Hedman, Esquire
1103 Hibiscus Boulevard
Melbourne, Florida 32901
Marks, Gray, Yates, Conroy & Gibbs
Post Office Box 447
Jacksonville, Florida 32202
Pierce [sic] Wood, Esquire
542 Hammock Road
Melbourne, Florida 32901
—_* pe
Dr. John G. Madry, Jr.,
Plaintiff-Appellant
Vv.
Dr. Otto G. Sorel, et al.,
Defendants-Appellees
No. 76-1495
United States Court of Appeals, Fifth Circuit
Aug. 29, 1977
Appeal from the United States District Court for the Middle
District of Florida.
Before Thornberry, Godbold and Fay, Circuit Judges.
Fay, Circuit Judge:
The plaintiff-appellant, Dr. John G. Madry, SJr., joined the
staff of Brevard Hospital on January 1, 1961. In May of 1966,
Dr. Madry was “permanently suspended” from staff privileges
by the Board of Governors of the hospital after a series of al-
leged violations of hospital rules—the last of which was the
sterilization of a county welfare patient apparently without her
written consent. Dr. Madry filed this action on June 27, 1969
claiming he had been denied the due process of law guaranteed
by the Fourteenth Amendment when he was discharged from
the medical staff without notice or a hearing. Doctor Madry
sought a declaratory judgment, a permanent injunction, rein-
statement to the hospital medical staff, and damages in excess
of $1,000,000. After protracted litigation, the district court on
February 17, 1976 dismissed this case for lack of federal juris-
diction. The principle [sic] issue to be decided on appeal is
— A-10 —
whether actions by a private, non-profit hospital which admit-
tedly has received some financial assistance from federal and
local governments should be considered “state action” as that
term is used in the context of the Fourteenth Amendment. We
agree with the district court, and hold that the actions of Brevard
Hospital do not equal state action, and, consequently, the district
court lacked jurisdiction to hear this case.
In order to set forth a cause of action under the Fourteenth
Amendment, it is necessary to allege that one’s constitutional
rights were infringed upon as a result of “state action” since
the Fourteenth Amendment does not prevent invidious discrimi-
nation by private parties. Civil Rights Cases, 109 U.S. 3, 3
S.Ct. 18, 27 L.Ed. 835 (1883). The inquiry which must be
made in this case, therefore, is whether there is a sufficiently
close nexus between the state and the Brevard Hospital so that
the actions of the latter may be fairly treated as that of the
state itself. Jackson v. Metropolitan Edison Co., 419 U.S. 345,
351, 95 S.Ct. 449, 42 L.Ed.2d 477 (1974).
Twice before this Court has had the opportunity to examine
exactly what state action significance to attach to the various
activities of public and private hospitals. See Greco v. Orange
Memorial Hospital Corp., 513 F.2d 873 (Sth Cir. 1975), and
Sosa v. Board of Managers of Val Verde Memorial Hospital,
437 F.2d 173 (Sth Cir. 1971). In Sosa, a doctor was chal-
lenging his denial of admission to the medical staff of Val
Verde Memorial Hospital. Val Verde Memorial Hospital was a
county hospital established pursuant to Texas law. See Vernon's
Ann.Tex.Rev.Civ.Stat. arts. 4478 to 4494r-3. The hospital was
constructed and maintained with county funds supplemented by
federal aid under the Hill-Burton Act, 42 U.S.C. § 291 ef seq.
The governing board of Val Verde was appointed by the County
Commissioners of Val Verde County. This court held that the
Val Verde Memorial Hospital was a public body receiving both
state and federal funds and, therefore, the acts of the hospita!
were state acts which must comport with the Fourteenth Amend-
on frit .
ment. In Greco, a different situation was presented. Dr. Greco
was challenging a policy adopted by the hospital's board of
directors preventing further use of the hospital's facilities tor
the performance for non-therapeutic abortions. This court held
that the actions of the Orange Memorial Corporation, a private,
non-profit, tax exempt corporation, did not equal “state action”.
This result was reached even though the hospital was built with
federal and county funds, and was leased to the corporation
for the nominal sum of $1 per year. The holding rested upon
the fact that the local and federal governments had little to
do with the actual running of the hospital. The corporation
consisted of life and advisory members from which a board of
directors was elected. The board of directors was the ultimate
authority in determining hospital policy and acted independent
of any influence from Orange County. In fact, the lease be-
tween Orange County and the hospital explicitly provided that
the /essee would prescribe the terms and regulations of medical
care given in the facility. Given this factual setting, this Court
held:
In summary, we find that Orange County is not sufficiently
connected with the Orange Memorial Hospital Corpora-
tion’s activities to imbue those actions with the attributes of
the state. The involvement of the County is not sufficiently
related to the corporation's decision to prohibit elective
abortions to justify the imposition of Constitutional re-
Strictions upon the daily business of the hospital. Absent
a charge of racial discrimination we are disinclined to
press the state action doctrine and all that it entails into
the internal affairs of a hospital. Moreover we do not
perceive Orange Memorial Hospital as an entity exercising
peculiarly governmental functions which might, in the ab-
sence of constitutional restrictions, be employed in dero-
gation of a citizen’s fundamental rights.
Greco v. Orange Memorial Hospital, 513 F.2d 873, 882 (Sth
Cir. 1975).
— A-12 —
The plaintiff contends that our holdings in Sosa and Greco
are inconsistent. We do not agree. The Val Verde Memorial
Hospital was a hospital owned and operated by the county. The
policy decisions of the hospital were made by a board which
consisted of members appointed by the Val Verde County Com-
mission. On the other hand, Orange Memorial Hospital was a
private hospital which was operated by a board which was in-
dependent of Orange County. The sole fact that the hospital
had received a significant amount of local and federal funding
was not sufficient to subject the acts of the hospital to the re-
straints of the Fourteenth Amendment.
Given this legal background, it readily becomes apparent
that the case before us is controlled by our decision in Greco
and that the actions of the Brevard Hospital do not have to fall
within the parameters of the Fourteenth Amendment. Brevard
Hospital is a private, non-profit, tax exempt hospital. While it
is true that the land upon which the hospital was built was
purchased from the city of Melbourne, Florida for a nominal!
price, the hospital itself was paid for with funds received from
a public fund-raising drive and through the use of federal Hill-
Burton funds. All additions to the Brevard Hospital have been
paid for primarily with donations from the public, Hill-Burton
funds, and a mortgage loan from a savings and loan association.
The hospital itself admits that it has received financial support
from the local and federal governments, but the hospital cor-
rectly asserts that the receipt of financial assistance, in and of
itself, is not a sufficient nexus to make the acts of the hospital
equal the acts of the state.
Dr. Madry attempts to distinguish his case from Greco, and
to establish the requisite state action, by pointing out that the
Brevard Hospital's by-laws allowed two Brevard County Com-
missioners and the mayors of nine Brevard County municipali-
ties to serve as ex officio members of the Board of Governors
of the hospital. The plaintiff contends that this fact likens his
— A-13 —
situation to the situation found in Sosa in which the local gov-
ernment actually played a policy-making role in the running of
the Val Verde Hospital. We disagree. Dr. Madry seems to
overlook the actual manner in which the Brevard Hospital func-
tions. In addition to the ex officio members the Board of Gov-
ernors was composed of twelve persons who were elected from
the membership of the hospital corporation. There was evi-
dence before the Court that no ex officio member had ever
participated as a member of the Board, and that the Board acted
independent of the City of Melbourne and Brevard County.
In actuality, ex officio status was most likely granted the holders
of the various political offices as an attempt to improve the
hospital’s public relations. But, regardless of the reasons for
granting the ex officio status, there was in fact insufficient
public control over the running of the hospital to render the
actions of the hospital that of the state. The ex officio members
of the Board served (and we use the word “serve” in its loosest
sense) at the grace of the private corporation, and they could
be removed by a by-law amendment of the corporation without
the consent of the Florida Legislature, the Brevard County Com-
missioners or the officials of the various Brevard County mu-
nicipalities. This step was in fact taken some time after the
dismissal of Dr. Madry, so that presently there are no public
Officials serving as ex officio members of the Board. Also, the
plaintiff has brought before us no evidence whatsoever which
indicates that any public official, at any time, actually par-
ticipated as a member of the Board of Governors. There is evi-
dence in the record that no ex officio member had ever attended
a hospital board meeting.' Our decision in this case might be
very different if there was some indication that the ex officio
members had some purpose other than a ceremonial one, and
that they actually participated to some extent in the running
' The affidavit of the hospital administrator (App. p. 648) clearly
indicates that the municipal and county officials never participated
as members of the Board and had never attended a board meeting
since October, 1952, the date of the administrator's employment.
an fl =
of the hospital. Absent such an allegation by the plaintiff, we
are not willing to confine the actions of an otherwise private
hospital to the restraints of the Fourteenth Amendment.
Dr. Madry raises one other error on appeal.“ He contends
that the trial judge erred in denying his motion of January 22,
1976 to amend his complaint in order to add a new count based
on a violation of the Federal Anti-Trust laws. Dr. Madry
admits that he filed this motion largely because he anticipated
the dismissal of his case for lack of jurisdiction. and because
he realized that the statute of limitations had long since run
on this cause of action insofar as a new suit was concerned.
We hold that the trial judge did not abuse his discretion in
denying the plaintiff's motions. The proposed amendment was
proffered almost seven years after this litigation had begun, and
after the court had twice before granted the plaintiff leave to
amend his complaint. If untimeliness is ever a justification for
denying a motion to amend, this is the case. Consequently, the
judgment of the district court is Affirmed in all respects.
* The appellant did raise a third error on appeal regarding the
trial judge's failure to grant his motions to set aside the then pending
“plan” to afford plaintiff a due process hearing, and to disqualify for
bias certain members of the panel who were to serve as the forum
for that hearing. These points, however, were rendered moot by our
decision that the trial court lacked jurisdiction over the case.
—_Y
United States Court of Appeals
for the Fifth Circuit
No. 76-1495
D.C. Docket No. 69-136-Orl-Civ-Y
Dr. John G. Madry, Jr.,
Plaintiff-Appellant,
versus
Dr. Otto G. Sorel, et al.,
Defendants-Appellees.
Appeal from the United States District Court for the
Middle District of Florida
Before THORNBERRY, GODBOLD and Fay, Circuit Judges.
JUDGMENT
This cause came on to be heard on the transcript of the rec-
ord from the United States District Court for the Middle District
of Florida, and was argued by counsel;
On Consideraiion Whereof, It is now here ordered and ad-
judged by this Court that the judgment of the said District
Court in this cause be, and the same is hereby, affirmed;
It is further ordered that plaintiff-appellant pay to defendants-
appellees, the costs on appeal to be taxed by the Clerk of this
Court.
August 29, 1977
Issued as Mandate: Oct. 11, 1977
—_ <"
United States Court of Appeals
Fifth Circuit
Office of the Clerk
September 30, 1977
Edward W. Wadsworth Tel. 504-589-6514
Clerk 600 Camp Street
New Orleans, La. 70130
To All Parties Listed Below:
No. 76-1495—Dr. John G. Madry, Jr. v. Dr. Otto G.
Sorel, et al.
Dear Counsel:
This is to advise that an order has this day been entered denying
the petition( ) for rehearing,** and no member of the panel
nor Judge in regular active service on the Court having re-
quested that the Court be polled on rehearing en banc (Rule
35, Federal Rules of Appellate Procedure; Local Fifth Circuit
Rule 12) the petition( ) for rehearing en banc has also been
denied.
See Rule 41, Federal Rules of Appellate Procedure for issuance
and stay of the mandate.
Very truly vours,
EDWARD W. WADSWORTH
Clerk
By BRENDA M. HAUCK
Deputy Clerk
** on behalf of appellant, Dr. John G. Madry, Jr.,
cc: Mr. Theodore M. Forbes, Jr.
Mr. William H. Gleason
Mr. Thorwald J. Husfeld
Messrs. Ralph Geilich
Elting L. Storms
Mr. James Rinamon
Mr. Peirce Wood
ee
= fl? =
John C. GRECO, Plaintiff-Appellant,
Ve
ORANGE MEMORIAL HOSPITAL
CORPORATION et al.,
Defendants-Appellees.
No. 74-2102.
United States Court of Appeals,
Fifth Circuit.
May 29, 1975.
Rehearing and Rehearing En Banc
Denied June 26, 1975.
Physician brought an action for < judgment declaring that a
hospital policy prohibiting performance of elective abortions was
unconstitutional. The United States District Court for the East-
ern District of Texas, William M. Steger, J., dismissed, 374 F.
Supp. 227, and physician appealed. The Court of Appeals,
Gewin, Circuit Judge, held that the physician had standing to
sue, and that where the board of directors of the private hos-
pital, which operated on a premises leased from a county, had
exclusive control of the hospital's medical policy, neither the
county nor state had sought to regulate or influence said policy
and in particular had remained neutral with respect to the per-
formance of elective abortions, there was no “state action” in-
volved in the policy and thus, district court lacked jurisdiction
under the Civil Rights Act of 1871.
Affirmed.
Clark, Circuit Judge, filed concurring opinion.
— A-18 —
1. Declaratory Judgment Key 300
Physician who sought declaratory judgment that hospital's
policy prohibiting performance of elective abortions was un-
constitutional had standing to sue based on his individual
economic interest, on his right to practice medicine free from
the imposition of arbitrary restraints and on the right to privacy
of patients seeking abortions.
2. Civil Rights Key 13.5(2)
Constitutional Law Key 254
Federal financial assistance does not constitute “state action”
and bring otherwise private facility within parameters of Civil
Rights Act of 1871 and Fourteenth Amendment. 42 U.S.C.A. §
1983; U.S.C.A. Const. Amend. 14.
See publication Words and Phrases for other judicial
constructions and definitions.
3. Civil Rights Key 13.5(4)
Constitutional Law Key 254
Private hospital is subject to provisions of Civil Rights Act
of 1871 and Fourteenth Amendment only if its activities are
significantly affected with state involvement. 42 U.S.C.A. §
1983; U.S.C. A.Const. Amend. 14.
4. Civil Rights Key 13.13(1)
Deprivation of constitutional rights by defendant acting under
color of state law must be proved in order to recover under
Civil Rights Act of 1871. 42 U.S.C.A. § 1983.
t
— oo -——— — +4 =
—
5. Civil Rights Key 13.5(2)
Generally, “state action” and “under color of law” are per-
ceived as alternative ways of expressing same legal principle. 42
U.S.C.A. § 1983; U.S.C.A. Const. Amend. 14.
See publication Words and Phrases for other judicial
constructions and definitions.
6. Courts Key 284(4)
Where board of directors of private hospital, which operated
on premises leased from county, had exclusive control of medical
policy, neither county nor state had sought to regulate or influ-
ence medical policy and in particular had remained neutral with
respect to performance or nonperformance of elective abortions,
there was no “state action” involved in policy and federal court
was without jurisdiction under Civil Rights Act of 1871. 42
U.S.C.A. § 1983; U.S.C.A.Const. Amend. 14.
James R. Weddington, Austin, Tex., for plaintiff-appellant.
John D. Rienstra, Beaumont, Tex., L. W. Anderson, Dallas,
Tex., Thomas B. Weatherly, Frank C. Gibbs, Houston, Tex.,
Richard N. Evans, Beaumont, Tex., Bill Sexton, Orange, Tex.,
Cleve Bachman, Lipscomb Norvell, Jr., Beaumont, Tex., Frank
W. Hustmyre, Orange, Tex., for defendants-appellees.
Don Burgess, Jim Sharon Bearden, Orange, Tex., for County
Commissioner.
Appeal from the United States District Court for the Eastern
District of Texas.
Before Gewin, Bell and Clark, Circuit Judges.
— A-20 —
Gewin, Circuit Judge:
The plaintiff-appellant, Dr. John C. Greco, a licensed phy-
sician authorized to practice obstetrics and gynecology, joined
the staff of the Orange Memorial Hospital in 1960. In early
1973 after the United States Supreme Court invalidated the
Texas criminal abortion statute, the appellant began to perform
elective abortions. Eight elective abortions were performed
by Dr. Greco in Orange Memorial Hospital before the hospital’s
board of directors adopted a motion of the medical staff to pre-
vent further use of the hospital's facilities for the performance of
non-therapeutic abortions. Following the institution of this
policy six of Dr. Greco’s patients who desired non-therapeutic
abortions were denied admission to the hospital.
Facts stipulated by the parties indicate that surgical pro-
cedures technically indistinguishable from elective abortions are
performed in Orange Memorial Hospital and that the hospital's
facilities are adequate to accommodate patients seeking elective
abortions. Dr. Greco filed suit against the Orange Memorial
Hospital Corporation, its board of directors and medical staff,
and the Commissioners Court of Orange County, seeking de-
claratory and injunctive relief, as well as damages, for their al-
legedly unconstitutional policy. Prior to trial the district court
ordered the damage claim severed and held in abeyance pending
resolution of the other issues presented. The court found the
board of directors ultimately responsible for hospital policy and
dismissed the medical staff from the case. Subsequent to the
presentation of Dr. Greco’s evidence the court dismissed the
remaining defendants holding that absent a showing of “state
action” the court was without the subject matter jurisdiction re-
quired by 42 U.S.C. § 1983 and the Fourteenth Amendment to
hear the case.' We agree with the district court in all respects
and affirm. The opinion of the district court is reported in 374
F.Supp. 227 (E.D.Tex.1974).
! See, Parish v. National Collegiate Athletic Association, 506 F.2d
1028, 1031 (Sth Cir. 1975).
— —a—_—————_@
— A-21 —
Dr. Greco raises two questions on appeal: (1) whether the
district court erroneously decided that the actions of the hospital
staff and the board of directors did not constitute “state action”,
or “action under color of law”; (2) whether the district court
erroneously dismissed the cause of action against the medical
staff. The appellees present a cross specification of error con-
tending that the district court erroneously found that Dr. Greco
had standing to bring the suit.
(1] Addressing first the question of standing, we find that
in the circumstances Dr. Greco had standing to litigate on be-
half of his patients who were allegedy deprived of constitutional
rights by the Orange Memorial Hospital's restrictive abortion
policy, and on his own behalf because of his individual economic
and liberty interest. Dr. Greco's personal stake in this litigation
is primarily his right to practice medicine free from the imposi-
tion of arbitrary restraints, and the physician's interest in the
context of this case is inextricably bound up with the right to
privacy of the patients seeking an abortion. The existence of
such a personal interest in the controversy is assurance enough
of the adversarial character of the litigation necessary to sharply
focus the issues for this court.2 See Nyberg v. City of Virginia,
495 F.2d 1342, 1344 (8th Cir. 1974); Shaw v. Hospital Author-
ity of Cobb County, 507 F.2d 625 (Sth Cir. 1975); Roe v.
Wade, 410 U.S. 113, 93 S.Ct. 705, 35 L.Ed.2d 147 (1973);
YWCA v. Kugler, 342 F.Supp. 1048, 1055 (D.N.J. 1972).
- The district court stated its conclusion on the issue of standing
as follows:
This Court is in agreement with the reasoning of the Court in
Young Women’s Christian Association of Princeton, N. J. v.
Kugler, that the plaintiff physician has standing to litigate any
deprivations of the constitutional rights of his pregnant women
patients. Further, he has standing to litigate on his own behalf
because he has suffered some, albeit small, economic loss and
— the hospital rule may infringe on his right to practice
medicine.
374 F.Supp. at 232.
— A-22 —
See generally, Standing to Assert Constitutional Jus Tertii, 88
Harv.L.Rev. 423 (1974).
The difficult questions on this appeal are those present2d by
Dr. Greco. He asserts essentially that Orange Memorial Hos-
pital and Orange County are engaged in a symbiotic relationship,
that Orange County has delegated its authority to the hospital
corporation, and that the hospital is performing a public func-
tion, all of which indicate that the hospital should be subject
to constitutional restrictions. Dr. Greco takes specific issue with
the district court’s construction of Moose Lodge No. 107 v.
Irvis, 407 U.S. 163, 92 S.Ct. 1965, 32 L.Ed.2d 627 (1972) and
Doe v. Bellin Memorial Hospital, 479 F.2d 756 (7th Cir. 1973)
to the effect that he must show that Orange County is involved
in the very activity challenged in order to prove “state action.”
He argues that the evidence shows the state to be a joint par-
ticipant in the operation oi the private entity and that the state
is perforce involved in the challenged activity.
In order to provide the proper perspective for addressing these
questions we must delve more deeply into the factual back-
ground of the Orange Memorial Hospital and, once ascertained,
perceive the facts of this case in the context of the legal morass
of the ever evolving state action doctrine.
This history of the hospital's creation was stipulated by the
parties. In 1954 land on which the hospital is located was
donated to Orange County by private individuals. In the same
year county voters authorized the issuance of $1,762.000.00 in
hospital bonds. The local money was combined with a Hill-
Burton grant of $1,250,000.00 in order to erect the original
hospital building. In later years more land was donated to the
county by private individuals and the county commissioners,
without the explicit approval of the voters, issued approximately
$670,000.00 worth of hospital time warrants so that additions
could be made to the onginal building. The county owns both
—_
the land and the building which houses the Orange Memorial
Hospital. Orange County citizens pay eight and one-half cents
of every tax dollar to retire the bonds and time warrants.
[2] In 1957 Orange Memorial Hospital under the auspices
of the non-profit hospital corporation, opened its doors to the
public. Daily operating expenses are assumed by the hospital
corporation and paid with funds generated by the hospital's
services. To-date income from patients has been sufficient to
defray all expenses. The corporation leases the land and hos-
pital building from the county for one dollar per year and is
exempt from all taxation, state, local, and federal. The term
of the lease between the county and the hospital corporation
is for a period of 5 years, and the lease may be renewed for 5
year terms indefinitely. Under the provisions of the lease the
hospital corporation agreed to the following: (1) to operate the
hospital as a non-profit institution and to furnish to the general
public medical and surgical care subject to such terms and regu-
lations as the lessee may prescribe; (2) to carry out the assur-
ances required of the lessor in order to obtain federal funds and
to relinquish possession of the hospital in the event it fails to
adequately comply;* (3) to have all equipment and supplies in-
ventoried, in a manner approved by lessor, and to dispose of
worthless, damaged, or worn out equipment only with the prior
approval of the Commissioners Court; (4) to be responsible for
* The Hospital! Survey and Construction Act (Public Law 725,
79th Congress) Tit. 42 U.S.C.A. § 291 et seq. provides pa for
conditions upon which federal assistance is available for the con-
struction of hospitals. For example, § 29le requires that laborers
engaged in construction of the facility be paid wages not less than
those prevailing on similar work in the particular locality. No con-
dition is imposed with respect to the performance or non-performance
of elective abortions.
Federal financial assistance does not bring an otherwise private
facility within the parameters of 42 U.S.C. § 1983 and the Fourteenth
Amendment. See, e. g., Barrett v. United Hospital, 376 F.Supp.
791, 800-01 (S.D.N.Y. 1974).
—A—=
the expense of the day to day operation and maintenance of the
hospital; (5) to make additions to the hospital with the written
consent of lessor and at its own expense; (6) to keep all appropri-
ate insurance in effect; (7) to submit an annual audit to lessor and
to furnish any information which lessor feels is necessary to in-
form the people of Orange County about the operation and
financial condition of the institution; (8) to accept indigent pa-
tients certified by the lessor subject to the prior obligation to re-
ceive emergency cases. The lessee is given an option to purchase
the hospital during the term of the lease and an unlimited option
to renew the lease for additional 5 year periods as indicated
earlier. The lessor reserves the cight through its County Health
Office to advise the lessee that an indigent is being kept in the
hospital for a longer period of time than neceessary, and that the
lessor shall no longer be liable for expenses. The lessor-county
specifically indicates in the lease that the lessee “has undertaken
to relieve lessor of the responsibility and expense of operatingya
hospital.”
The lessee-Orange Memorial Hospital Corporation was char-
tered as a non-profit, tax exempt, private corporation for the
purpose of supporting charitable and educational undertakings
including the operation and maintenance of the hospital, and
the general promotion of the health of the community. The cor-
poration consists of life and advisory members. Life membership
is obtained by contributing $1000.00 to the corporation. Any
citizen and qualified voter of Orange County who owns taxable
property may become an advisory member by attending the an-
nual meetings of the corporation. The direction and manage-
ment cf the affairs of the corporation is vested in the board of
directors composed of 9 persons. Five members of the board
must be life members and four members are elected from the
advisory group. The by-laws of the corporation do not pre-
cisely define the relationship between the board of directors
and the medical staff but do indicate that the board is the ulti-
mate authority in determining hospital policy. The board is
a ee -_
ae
$= re oe — -~
— A-25 —
authorized to receive and consider recommendations of the
medical staff.*
[3-5] The district court correctly held that a private hospital
is subject to the provisions of 42 U.S.C. § 1983° and the Four-
4 For example, Article IX §§ |, 2. 9 of the Hospital Corporation's
By-Laws provide that: *
SECTION 1
The Board of Directors shall appoint a Medical Staff of the
Orange Memorial Hospital Corporation which shall, subject to
the approval of the Board of Directors of the Corporation, adopt
its own By-Laws. Such By-Laws shall not be inconsistent with
the By-Laws of the Corporation, and shall include a provision
for review of decisions concerning qualifications and privileges
of members of the Medical Staff and applicants for membership,
including the right of the individual practitioner to be heard upon
request, at each step of the process.
SECTION 2
The Medical Staff shall have the authority to evaluate the pro-
fessional competence of staff members, and applicants for staff
— and shal! be responsible for making appropriate
recommendations to the Board of Direc.ors concerning the ap-
pointment, reappointment, granting of privileges, and curtail-
ment of privileges of members, and as appropriate, applicants
for membership on the professional staff.
SECTION 9
The Board of Directors shall be kept informed of the recom-
mendations generated from the Medical Staff's peer review of
the clinical practice, and utilization review functions. The Chief
of the Medical Staff shall be requested periodically (at regu-
larly scheduled meetings of the Board of Directors) to provide
the Board with a verbal briefing concerning these functions.
* The Civil Rights Act of 1871 (42 U.S.C.A. § 1983) states in
pertinent part: “
Every person, who, under color of any statute, ordinance, regu-
lation, custom, or usage, of any State . . . subjects, or causes to
be subjected, any citizen . . . to the deprivation of any rights,
privileges, or immunities secured by the Constitution and laws,
shall be liable . . . in an action at law, suit in equity... .
— A-26 —
teenth Amendment? only if its activities are significantly affected
with state involvement.’ Section 1983 and the Fourteenth
Amendment do not preclude invidious discrimination by private
parties. Civil Rights Cases, 109 U.S. 3, 11, 3 S.Ct. 18, 21, 27
L.Ed. 835, 841 (1883). The problem in state action cases is
that demarcation of the spheres, public and private, is a dy-
namic process, and the boundaries between the two shift and
are adumbrated by the various factual situations which are pre-
6 Section | of the Fourteenth Amendment states in pertinent part:
No State shall make or enforce any law which shall abridge the
privileges or immunities of citizens of the United States; nor
shall any State deprive any person of life, liberty, or property,
without due process of law; nor deny to any person within its
jurisdiction the equal protection of the laws.
7 Two elements must be proved in order to recover under § 1983:
(1) deprivation of a constitutional right by a defendant, (2) acting
under color of law. See Smith v. Young Men’s Christian Ass’n of
Montgomery, 462 F.2d 634, 647 (Sth Cir. 1972); Hathaway v.
Worcester City Hospital, 475 F.2d 701, 705 (1st Cir. 1973), and
discussion of Dr. Greco’s standing to bring this suit, in text, supra.
Generally speaking the labels “state action” and “under color of
law” are perceived as alternative ways of expressing the same legal
principle. Note, State Action: Theories for Applying Constitutional
Restrictions to Private Activity, 74 Col. L. Rev. 656, n. 4 (1974)
(hereinafter cited as State Action: Theories); Parish v. National
Collegiate Athletic Association, 506 F.2d 1028, 1031 n. 6 (Sth Cir.
1975). Justice Brennan is of the view that “under color of law” is
more restrictive than the concept of “state action.” Adickes v. Kress
& Co., 398 US. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142, 184-85
(1970) (opinion of Brennan, J.).
‘ The Civil Rights Cases not only articulate the dichotomy be-
tween state and private action, but also illustrate the confusion which
sometimes arises in the analysis of state action problems regarding
the question of Congressional power to legislate against private dis-
criminatory conduct. See generally, State Action, Congressional
Power and Creditors’ Rights: Burke and Reber An Essay on the
Fourteenth Amendment, 46 Cal.L.Rev. 1005, 1011 (1973) (herein-
after cited State Action, Congressional Power and Creditors’ Rights).
For examples of decisions discussing the scope of Congressional
power see, Griffin v. Breckenridge, 403 U.S. 88, 95 S.Ct. 1790, 29
L.Ed.2d 338 (1971); United States v. Guest, 383 U.S. 745, 86
S.Ct. 1170, 16 L.Ed.2d 239 (1966).
Se Oe
cc arnt rence cit wr A ae nc A at tn tI ih wn 2
ew ee cree. weirs 0 to. 00 2
——
am 99 ae
sented for review.” As the Court in Burton v. Wilmington Park-
ing Authority said, “Only by sifting facts and weighing circum-
stances can the nonobvious involvement of the State in private
conduct be attributed its true significance." It is enlightening,
however, to consult the substantial body of “state action” case
law for illustrations of the kind and degree of state involvement
which justify the imposition of Constitutional restraints upon an
ostensibly private entity.
Generally speaking, questions of “state action” arise when
the state has involved itself in the activity under scrutiny or
* See, e. g., James v. Pinnix, 495 F.2d 206, 209 (Sth Cir. 1974);
Wimbish v. Pinellas Co., Fla., 342 F.2d 804 (Sth Cir. 1965). Com-
pare Doe v. Bellin Mem. Hosp., 479 F.2d 756 (7th Cir. 1973) with
Jackson v. Statler Foundation, 496 F.2d 623 (2d Cir. 1974). See
generally, State Action: Theories at 656-57.
_ The concepts of state action developed primarily in cases involv-
ing racial discrimination. The broad pronouncements articulated by
the courts in some of these decisions are in the process of being more
precisely defined. particularly in litigation free from racial overtones.
See, e. g., Jackson v. Metropolitan Edison Co., — U.S. —, 95 S.Ct.
449, 42 L.Ed.2d 477 (1974): James v. Pinnix, 495 F.2d 206, 209
(Sth Cir. 1974) (“Some state involvement in the Reitman-Moose
Lodge sense may be present here but it is simply not enough, given
the nonracial nature of the case, to constitute state action.”). See
also, Black, The Supreme Court, 1966 Term: Foreword: “State Ac-
tion”, Equal Protection and California's Proposition 14, 81 Harv.
L.R. 69, 70 (1967) (hereinafter cited as Supreme Court 1966
Term); State Action, Congressional Power and Creditors’ Rights.
Compare, The Reemergence of the “State Action” Requirement in
Race Relations Cases, 22 Cath.U.L.R. 39 (1972).
- 3s U.S. 715, 722, 81 S.Ct. 856, 860, 6 L.Ed.2d 45, 50
( .
Because the virtue of the right to equal protection of the laws
could lie only in the breadth of its application, its constitutional
assurance was reserved in terms whose imprecision was neces-
sary if the right were to be enjoyed in the variety of individual-
state relationships which the Amendment was designed to em-
brace. For the same reason, to fashion and apply a precise
formula for recognition of state responsibility under the Equal
Protection Clause is an “impossible task” which “This Court
has never attempted.”
Id. (citation omitted ).
— A-28 —
when a private entity has of its own volition assumed a state or
public function. See generally, State Action: Theories; State
Action, Congressional Power and Creditors’ Rights; State Ac-
tion and the Burger Court, 60 Va.L.Rev. 840 (1974); Case Note,
43 Fordham L.Rev. 288 (1974); The Reemergence of the “State
Action” Requirement in Race Relations Cases, 22 Cath.U.L.R.
39 (1972); Developments in the Law: Academic Freedom, 81
Harv.L.Rev. 1045, 1056-64 (1968). A state’s involvement may
be manifested in multifarious ways. For example, the state may
sanction or seek to enforce the claims of private parties,’’ may
give financial assistance to private institutions,’* may regulate
the activities of private organizations,'* or may employ private
parties to promote state interests.'* On the other hand, the state
may not be involved at all. A private party may assume a gov-
ernmental character by participating in activities such as those
described in Terry v. Adams'® or Marsh v. Alabama.'® The
instant appeal involves some aspects of both state involvement
and the assumption of a public function by private parties. Under
neither approach do we feel that the circumstances warrant im-
position of constitutional restrictions upon Orange Memorial
Hospital.
11 See, e. g., Shelley v. Kraemer, 334 U.S. 1, 68 S.Ct. 836, 92
L.Ed. 1161 (1948); Reitman v. Mulkey, 387 U.S. 369, 87 S.Ct.
1627, 18 L.Ed.2d 830 (1967); Brantley v. Union Bk. & Trust Co.,
498 F.2d 365 (Sth Cir. 1974).
i2 See, e. g., Smith v. YMCA, 462 F.2d 634 (Sth Cir. 1972);
Hammond v. University of Tampa, 344 F.2d 951 (Sth Cir. 1965);
Grafton v. Brooklyn Law School, 478 F.2d 1137 (2d Cir. 1973).
13 See, e. g., Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 92
S.Ct. 1965, 32 L.Ed.2d 627 (1972); Grafton v. Brooklyn Law
School, 478 F.2d 1137 (2d Cir. 1973).
14 See, ce. g., Derrington v. Plummer, 240 F.2d 922 (Sth Cir.
1956).
1° 345 U.S. 461, 73 S.Ct. 809, 97 L.Ed. 1152 (1953).
16 326 U.S. 501, 66 S.Ct. 276, 90 L.Ed. 265 (1946).
eee
— A-29 —
[6] Orange County gives the hospital corporation financial
support to the extent that a publically owned building and the
land upon which it is situated are leased for the nominal sum
of one dollar per year. The hospital corporation is a non-profit,
charitable, tax exempt, organization explicitly dedicated to main-
taining the facility and to promoting community health care.
Burton v. Wilmington Parking Authority, 365 U.S. 715, 81
S.Ct. 856, 6 L.Ed.2d 45 (1961) involved a somewhat similar
but not identical situation. The Authority, in order to make
bond financing of its parking facility practicable by ensuring
income in addition to parking fees, entered into long term leases
with commercial tenants, including the Eagle Coffee Shoppe.
The Eagle Coffee Shoppe, at its own behest, adopted a policy
of racial discrimination, refusing to serve blacks. The Court
emphasizing the facts that the parking facility was publically
owned, that the restaurant’s premises constituted physically and
financially integral parts of the State’s parking project, that up-
keep and maintenance of the building were public responsibili-
ties, that the lease provisions enabled the State to demand that
Eagle provide non-discriminatory service, and that the res-
taurant was located in a building devoted to public purposes,
found a degree of state participation in the Eagle's discrimina-
tory action which was precluded by the Fourteenth Amend-
ment.'* The Court observed that the mutually beneficial rela-
tionship between the Authority and Eagle infused the respective
projects with attributes of a joint venture.'* Absent close scrutiny
One might argue that Burton v. Wilmington Parking Authority
controls the instant appeal. There are, however, significant
differences in the two sets of circumstances.
The most obvious distinguishing factor is that Orange Me-
morial Hospital is not accused of racial discrimination. The
'¥ Burton v. Wilmington Parking Authority, 365 U.S. 715, 81
S.Ct. 856, 6 L.Ed.2d 45, §1-2 (1961).
1s Id.
— A-30 —
doctrine of state action developed primarily in the area of racial
discrimination. See State-Action Theories at 657 and footnote
10, supra. The concepts developed in this area, explicitly sup-
ported by constitutional and legislative mandates, were neces-
sarily broadly drawn in order to implement Congressional intent
in circumstances of positive and frequent state obfuscation and
delay. The potentially explosive impact of the application of
state action concepts designed to ferret out racially discrimina-
tory policies in areas unaffected by racial considerations has led
courts te define more precisely the applicability of the state ac-
tion doctrine. See James v. Pinnix, 495 F.2d 206, 209 (5th
Cir. 1974) and footnote 10, supra. See also Brantley v. Union
Bk. & Trust Co., 498 F.2d 365 (Sth Cir. 1974); Calderon v.
United Furniture Co., 505 F.2d 950 (Sth Cir. 1974), Derring-
ton v. Plummer, 240 F.2d 922 (Sth Cir. 1956); Blouin v. Loyola,
506 F.2d 20 (Sth Cir. 1975); Grafton v. Brooklyn Law School,
478 F.2d 1137, 1142 (2nd Cir. 1973). Compare, Simkins v.
Moses H. Cone Mem. Hosp., 323 F.2d 959 (4th Cir. 1963).
cert. denied, 376 U.S. 938, 84 S.Ct. 793, 11 L.Ed.2d 659
(1964). The policy of the Orange Memorial Hospital Corpora-
tion does not impinge upon the rights of a racial group seeking
admittance and treatment, but rather affects primarily only the
internal affairs of the facility. A secondary effect of the corpora-
tion's policy is admittedly to discriminate against persons seeking
to obtain and physicians desiring to perform elective abortions.
We feel, however, that the interest of the hospital in ordering
its internal administrative affairs outweighs the interest of the
people disadvantaged in this case.
A second factor distinguishing the instant situation from that
described in Burton v. Wilmington Parking Authority is also
noted in Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 92
S.Ct. 1965, 32 L.Ed.2d 627, 638 (1972):
[T]here is nothing approaching the symbiotic relationship
between lessor and lessee that was present in Burton, where
—_ A391
the private lessee obtained the benefit of locating in a build-
ing owned by the state-created parking authority, and the
parking authority was enabled to carry out its primary
public purpose of furnishing parking space by advantage-
ously leasing portions of the building constructed for that
purpose to commercial lessees such as the owner of the
Eagle Restaurant.
The symbiotic relationship in Burton v. Wilmington Parking
Authority included an obligation on the part of the Authority
to maintain and repair Eagle's premises. In addition the Au-
thority provided the restaurant with heat and electricity. In
contrast, the Orange Memorial Hospital Corporation is ulti-
mately responsible for the daily maintenance, upkeep, and opera-
tion of the facility. The lease requires the lessee to maintain
and operate the hospital at its own expense and to hold the
lessor harmless from any liability incurred in operating the fa-
cility. The lessee is required during the term of the lease to
provide adequate fire, tornado, and explosion insurance and in
the event of any damage to use the proceeds to repair the hos-
pital.
In addition to the absence of a physical relationship like the
one found between the Authority and the restaurant in Burton
v. Wilmington Parking Authority, there is also no showing of
other “benefits mutually conferred” which allows us to charac-
terize the hospital and the county as joint venturers. There are
unquestionably indirect benefits accruing to Orange County by
virtue of the corporation’s operation of the hospital. As the
lease states, the county is relieved of the expense and responsi-
bility of operating a hospital. There is, however, no indication,
as there was in Burton v. Wilmington Parking Authority that
the benefits accruing to the county were directly attributable
to the objectionable activities of a joint venturer. In Burton
the financial success of the State’s project depended at least in
part upon the popularity and income of the Eagle Restaurant.
The restaurant owners believed that a policy of racial discrimi-
nation was necessary in order to ensure the maximum volume of
business and the Authority, in its own interest, acquiesced in
this policy. In short, the intimate physical and financial rela-
tionship enjoyed by the Eagle Restaurant and the Parking Au-
thority in Burton is not present in this case. The interdepend-
ence of the entities, so important to the decision in Burton, is
absent here.
The independence of the Orange Memorial Hospital and
Orange County is also reflected in the absence of a nexus be-
tween the County's involvement with the Hospital and the Hos-
pital’s abortion policy presently under scrutiny. As the court
said in Doe v. Bellin Memorial Hospital, 479 F.2d 756, 761
(7th Cir. 1973):
There is no claim that the state has sought to influence hos-
pital policy respecting abortions, either by direct regulation
or by discriminatory application of its powers or its bene-
fits. Insofar as action of the State of Wisconsin or its agents
is disclosed by the record, the State has exercised no in-
fluence whatsoever on the decision of the defendants which
plaintiffs challenge in this litigation.
In fact the lease between Orange County and the Hospital Cor-
poration explicitly provides that the /essee shall prescribe the
terms and regulations of medical care given in the facility. The
record affirmatively shows that the county officials neither di-
rectly nor indirectly participated in the formulation of the pres-
ently disputed hospital policy. See text, infra. See also, Jackson
v. Metropolitan Edison Co., 419 U.S. 345, 95 S.Ct. 449, 42
L.Ed.2d 477 (1974); Moose Lodge No. 107 v. Irvis, 407 U.S.
163, 92 S.Ct. 1965, 32 L.Ed.2d 627, 639 (1972); Blouin v.
Loyola, 506 F.2d 20 (Sth Cir. 1975); Driscoll v. International
Union of Op. Eng., Local 139, 484 F.2d 682 (7th Cir. 1973);
Pendrell v. Chatham College, 370 F.Supp. 494 (W.D.Pa.
1974).
— A-33 —
Finally, we note that in contrast to the situation in Burton v.
Wilmington Parking Authority, the Commissioner's Court of
Orange County retained no power to amend the hospital cor-
poration’s decision to prohibit the performance of elective abor-
tions. The lease explicitly provides that the
Lessee agrees to operate the hospital situated on the above
described property for the duration of this lease as a non-
profit institution, and thereby furnish to the general public
medical and surgical care and treatment, subject to such
terms and regulations as Lessee may prescribe. (emphasis
added )
There is no evidence that in acquiring federal funds or in leasing
the hospital facility the corporation ever accepted a condition
relating to the performance or non-performance of abortions.
Doe v. Bellin Memorial Hospital, 479 F.2d 756, 761 (7th Cir.
1973). The Parking Authority in Burton, on the other hand,
was specifically obligated to operate in a non-discriminatory
manner.
We would be less than candid not to acknowledge Orange
County's limited involvement and interest in the hospital fa-
cility. The lease does obligate the hospital corporation to serve
the general public, to admit indigent patients, to abide by the
provisions of the Hospital Survey and Construction Act, to pro-
vide the county auditor with a yearly financial report (and any
other information requested), and to obtain county approval
before disposing of hospital property. These factors are not un-
usual in the lessor-lessee relationship. The Court in Jackson
v. Metropolitan Edison Company, 419 U.S. 345, 95 S.Ct. 449,
453, 42 L.Ed.2d 477, 484 (1974) fairly summarizes Orange
Memorial Hospital's status:
It may well be that acts of a heavily regulated utility with
at least something of a governmentally protected monopoly
will more readily be found to be “state” acts than will the
=~ i
acts of an entity lacking these characteristics. But the in-
quiry must be whether there is a sufficiently close nexus
between the State and the challenged action of the regu-
lated entity so that the action of the latter may be fairly
treated as that of the State itself.
We do not feel that the nature of Orange County's involvement
with the hospital facility justifies a finding of state action.
Dr. Greco’s assertion that the instant appeal is governed by
Marsh v. Alabama, 326 U.S. 501, 66 S.Ct. 276, 90 L.Ed. 265
(1946) and Terry v. Adams, 345 U.S. 461, 73 S.Ct. 809, 97
L.Ed. 1152 (1953) is also ill-founded. Recent decisions have
more explicitly defined the applicability of Marsh and Terry
stating that a business is not a state actor merely because the
enterprise is affected with a public purpose. See Jackson v.
Metropolitan Edison Co., 419 U.S. 345, 95 S.Ct. 449, 42 L.Ed.
2d 477, 485 (1974); Central Hardware Co. v. NLRB, 407
U.S. 539, 92 S.Ct. 2238, 33 L.Ed.2d 122, 128-29 (1972);
Lloyd Corp. v. Tanner, 407 U.S. 551, 92 S.Ct. 2219, 33 L.Ed.
2d 131 (1972). In Marsh, Gulf Shipbuilding Corporation held
title to all the land in the “company town” and assumed the
responsibilities of providing traditional muricipal services, in-
cluding police protection, to the residents of the town. Terry
involved a duplicitous county primary scheme designed to dis-
enfranchise black voters. No such peculiarly governmental
function has been assumed by the Orange Memorial Hospital
Corporation. Lloyd Corp. v. Tanner, 407 U.S. 551, 92 S.Ct.
2219, 33 L.Ed.2d 131, 143 (1972).
In summary, we find that Orange County is not sufficiently
connected with the Orange Memorial Hospital Corporation's
activities to imbue those actions with the attributes of the state.
The involvement of the County is not sufficiently related to the
corporation’s decision to prohibit elective abortions to justify
the imposition of Constitutional restrictions upon the daily busi-
— A-35 —
ness of the hospital.'* Absent a charge of racial discrimination
we are disinclined to press that state action doctrine and all that
it entails into the internal affairs of a hospital.2° Moreover we
do not perceive Orange Memorial Hospital as an entity exercis-
ing peculiarly governmental functions which might, in the ab-
sence of constitutional restrictions, be employed in derogation
of a citizen's fundamental rights.
19 We are not willing to hold that the district court erred in reach-
ing the following conclusion:
In the present case the Court finds that the Orange Memorial
Hospital is a private hospital operated by the Orange Memorial
Hospital Corporation, which is a non-profit corporation. The
evidence supports the conclusion that Orange County and the
State of Texas have never sought to regulate or influence the
medical policy to be followed within the hospital and in par-
ticular with respect to the performance or non-performance of
elective abortions therein. The County and State have remained
completely neutral on the medical policy of the hospital. There-
fore, there is no state action involved and the defendants were
not acting under color of state law.
374 F.Supp. at 233.
20 In an entirely different context this court sitting en banc has
recently dealt with the state action concept in Fitzgerald v. Estelle,
505 F.2d 1334 (Sth Cir. 1975). In Fitzgerald a state prisoner peti-
tioned for a writ of federal habeas corpus claiming that his state trial
was unfair, that he was denied the effective assistance of counsel and
that state action was involved. He buttressed his claims with the
assertion that the adjudication of state criminal cases is a vital and
structured function of the state. He argued that state action was in-
volved because he was prosecuted by a state prosecutor, in a state
court, before a state judge in a state courthouse before a jury selected
according to state law and paid by the state. Indeed he asserted that
from arrest to ultimate release he was in the hands of a state operated
system and that even his privately retained counsel was a crucial part
of the state adjudicatory machinery. These facts were undisputed.
We succinctly concluded:
{the] conclusion that the Fourteenth Amendment state action
requirement is satisfied in every ineffectiveness of retained coun-
sel case “because the state adjudicatory machinery is inextrica-
bly intertwined with the conduct of an accused person's re-
tained attorney” reaches far too far.
505 F.2d at 1337.
The complaint of Dr. Greco is important and we have tried to give
his arguments and allegations careful consideration. However, all of
— A-36 —
For the reasons stated we affirm the judgment of the district
court.?!
Affirmed.
Clark, Circuit Judge (concurring):
Despite Judge Gewin's forceful opinion, I remain convinced
that Orange County and this hospital enjoy precisely the sort
of symbiotic relationship defined in Burton. To their mutual
advantage, the county furnished land, buildings and facilities
while operation and supervision by the hospital board and medi-
cal staff provided the general county community with health
services and provided priority medical care for the county's in-
digent citizens.
However, I still come down on the side of affirming the dis-
missal because the particular claim asserted is not actionable.
Doe and Roe teach that a state cannot forbid certain types of
abortions, but they do not create any duty on Orange County’s
part to furnish facilities for such operations. Just as the Eagle
Coffee Shop in Wilmington’s parking garage could not have been
forced to furnish kosher food or serve fish on Friday, so the
Orange County Hospital cannot be compelled to allow its facili-
ties to be used for elective abortions. Contra, Doe v. Hale Hos-
pital, 500 F.2d 144 (1st Cir. 1974), and Nyberg v. City of
Virginia, supra.
his assertions relate only to his alleged right to conduct a certain
type of surgical procedure at one specific hospital. On the other hand,
Fitzgerald's petition for Great Writ presented an appealing plea for
liberty which had been abridged by a state prison sentence confining
him to a state prison for a substantial number of years. The claims of
Dr. Greco are not nearly so ominous as those of Fitzgerald.
21 Dr. Greco’s contention that the medical staff was improperly
dismissed from the suit is, therefore, moot.
—-
—_—~<
Doctor Robert Sosa, Plaintiff-Appellee,
Vv.
Board of Managers of the Val Verde Memorial Hospital,
Defendant-Appellant.
No. 29458.
United States Court of Appeals,
Fifth Circuit.
Jan. 6, 1971.
Rehearing Denied Feb. 16, 1971.
Doctor brought suit claiming that hospital board had violated
due process and equal protection clauses of Fourteenth Amend-
ment in denying him admission to medical staff of hospital. The
United States District Court for the Western District of Texas,
Dorwin W. Suttle, J., entered judgment, and hospital board
appealed. Hospital board’s motion for stay of injunction pend-
ing appeal was granted, 425 F.2d 44, but subsequently stay was
vacated. The Court of Appeals, Goldberg, Circuit Judge, held
that where hospital governing board concluded for stated rea-
sons that plaintiff doctor should not be admitted to staff of hos-
pital and reasons bore important and reasonable relationship
to proper management of hospital but record did not show
whether doctor was afforded procedural due process in the
hearing, case would be remanded for determination of propriety
of procedures used by board.
Reversed and remanded.
— A-38 —
1. Constitutional Law Key 213
Hospital governing board was public body receiving both
state and federal funds and its acts were state acts and had to
comport with provisions of Fourteenth Amendment. U.S.C.A.
Const. Amend. 14; Vernon’s Ann.Tex.Civ.St. arts. 4478 to
4494r-3; Public Health Service Act, § 600 et seq., 42 U.S.C.A.
§ 291 et seq.
2. Hospitals Key 6
A doctor has no constitutional right to staff privileges of
hospital merely because he is licensed to practice medicine.
3. Hospitals Key 6
Fact that doctor met requirements of by-laws of hospital
governing board that member of medical staff be graduate of
approved medical school, legally licensed to practice in state
and practicing in the community or within a reasonable distance
of hospital would not confer an unconditional right to hospital
privileges, and hospital board could properly require additional
standards as to character, qualifications and standing in the com-
munity.
4. Hospitals Key 6
Subjectives of selection of member of medical staff of hospital
cannot be minutely codified and governing board of hospital
must be given great latitude in prescribing necessary qualifica-
tions for potential applicants.
5. Constitutional Law Key 318
In exercising its broad discretion, hospital governing board
must refuse staff applicants only for those matters which are
a
—- 49 —
reasonably related to operation of hospital, and procedural due
process must be afforded applicant so that he may explain or
show to be untrue those matters which might lead board to
reject his application. U.S.C.A.Const. Amend. 14.
6. Hospitals Key 6
So long as staff selections for hospital are administered with
fairness, geared by rationale compatible with hospital responsi-
bility and unencumbered with irrelevant considerations, a court
should not interfere with board’s determination. U.S.C.A.Const.
Amend. 14.
7. Courts Key 406.9(9)
Where hospital governing board conciuded for stated reasons
that plaintiff doctor should not be admitted to staff of hospital
and reasons bore important and reasonable relationship to
proper management of hospital but record did not show whether
doctor was afforded procedural due process in the hearing, case
would be remanded for determination of propriety of procedures
used by board. U.S.C.A.Const. Amend. 14; Vernon's Ann.
Tex.Civ.St. arts. 4478 to 4494r-3; Public Health Service Act,
§ 600 et seq., 42 U.S.C.A. § 291 et seq.
C. Dean Davis, Davis & Nobles, Austin, Tex., for defendant-
appellant.
Arturo Gonzalez, Del Rio, Tex., for plaintiff-appellee.
Before Tuttle, Bell, and Goldberg, Circuit Judges.
Goldberg, Circuit Judge:
This case poses the problem of the conflict between the right
of a doctor to be on the staff of a hospital and the obligation
— A-40 —
of the hospital to exact professional competence and the ethical
spirit of Hippocrates as conditions precedent to such staff privi-
leges.
Dr. Robert Sosa brought this suit against the Board of Mar-
agers of the Val Verde Memorial Hospital, claiming that the
Board had violated the due process and equal protection clauses
of the Fourteenth Amendment to the United States Constitution
in denying him admission to the Medical Staff of the hospital.
{1] The Board of Managers is the governing body of the Val
Verde Memorial Hospital, which is a county institution estab-
lished pursuant to Vernon’s Ann.Tex.Rev.Civ.Stat. arts. 4478
to 4494r-3. The Board is appointed by the County Commis-
sioners Court of Val Verde County, and the hospital was con-
structed and is maintained and operated with county funds sup-
plemented by federal aid under the Hill-Burton Act, 42 US.
C.A. § 291 et seq. It is perfectly clear, therefore, that the Board
of Managers of the Val Verde Memorial Hospital is a public
body receiving both state and federal funds. Its acts are thus
state acts and must comport with the provisions of the Four-
teenth Amendment. Sams v. Ohio Valley General Hospital As-
sociation, 4 Cir. 1969, 413 F.2d 826; Foster v. Mobile County
Hospital Board, § Cir. 1968, 398 F.2d 227; Meredith v. Allen
County War Memorial Hospital Commission, 6 Cir. 1968, 397
F.2d 33; Simkins v. Moses H. Cone Memorial Hospital, 4 Cir.
1963, 323 F.2d 959, cert. denied, 376 U.S. 938, 84 S.Ct. 793,
11 L.Ed.2d 659.
Dr. Sosa’s dispute with the Board began in 1967 when he
first sought admission to the Medical Staff of the hospital. This
initial application was refused. Throughout 1968 Dr. Sosa made
various additional attempts to gain admission to the staff, but
these efforts were unavailing. His final application was sub-
mitted in August, 1969, and, like those which had preceded it,
met with refusal. This suit was filed October 22, 1969, and
alleged that the rejection of Dr. Sosa’s application by the Board
—_ Ye
was arbitrary and discriminatory and further constituted a de-
nial of procedural due process by reason of the Board’s failure
to supply him with any reasons for its action.
The district court, after trial, found that the refusal of the
Board to allow Dr. Sosa staff privileges had under the circum-
stances violated the doctor’s constitutional rights secured by the
Fourteenth Amendment. The court enjoined the Board from
refusing Dr. Sosa membership on the Medical Staff, but condi-
tioned his admission on “such reasonable limitations as the Board
of Managers may formally impose under their by-laws.”
Before the hospital acted on this order, Dr. Sosa made a mo-
tion before the district court that the defendants be held in con-
tempt for failing to allow him admission to the hospital staff
pursuant to the court’s order. The defendani= countered with
a motion to stay the injunction pending appeal. On March 17,
1970, the district court denied the motion for stay and ordered
that Dr. Sosa “be afforded membership on the Medical Staff of
Val Verde Memorial Hospital for the purpose of general prac-
tice, including general medicine, diagnosis, non-operative ob-
stetrics, minor surgery, and first aid in emergency, and that de-
fendant herein continue to process plaintiff's application for fur-
ther privileges consistent with their by-laws and the rules and
regulations of the Medical Staff.” On March 20, 1970, the dis-
trict court entered a further order carrying the motion for con-
tempt with the case and expanding the staff privileges to be
accorded Dr. Sosa, ordering that in addition to the privileges
heretofore granted, Dr. Sosa be allowed “to practice general
medicine in the hospital doing both major and minor work, and
general surgery, both major and minor, the same as every other
Staff physician.” The Board of Managers appealed from these
actions of the district court.
On April 10, 1970, a panel of this court granted the Board of
Managers’ motion for a stay of the injunction pending appeal.
On October 6, 1970, our panel, after oral argument, vacated
—e
the stay of injunction and reinstated the district court’s order
of March 17, granting Dr. Sosa limited hospital privileges. This
court further ordered that the processing of Dr. Sosa’s application
for further privileges, required by the district court’s order of
March 17, be completed within 30 days and a report transmitted
to this court immediately.
The Hospital Board complied with our instructions and held
a hearing concerning Dr. Sosa’s admission to the Medical Staff
and the privileges to be accorded him. The Board voted unani-
mously that Dr. Sosa be denied any further privileges over and
above those ordered by the district court in its March 17, 1970,
order and further voted unanimously that “had the court not
ordered Dr. Sosa placed on the Staff, based on the testimony
received * * *, it is the decision of the Board that Dr. Sosa’s
application for Medical Staff privileges be denied for the follow-
ing reasons:
1) Abandonment of obstetrical patients while in active labor,
who had previously received pre-natal care from Dr.
Sosa, because they could not pay his bill.
2) Lack of knowledge of basic minor surgery techniques,
basic operating procedures, and instrument identification
and use, sufficient to jeopardize patient care.
3) Unstable physical demeanor, visible indecision and ner-
vousness in operating room situations, likely to jeopardize |
helpless and unconscious patients.
4) Unstable and potentially dangerous mental condition
manifested by numerous examples of anger and fits of
rage towards patients, fellow physicians, and support per-
sonnel.
5) Unsatisfactory reports from references listed in Dr. Sosa’s
application.
6) Itinerant medical practice patterns since completing his
formal medical education.
—_— Se
7) Pleas of guilty for two felony charges.
8) Suspension of medical license by Texas and Michigan
Boards of Medical Examiners.
9) Violation of five of the ten Principles of Medical Ethics.”
Since the trial court has had no opportunity to examine this
latest action of the Hospital Board, we think the case must be
remanded for a determination of whether the proceedings com-
ported with standards of due process. In so doing we think it is
appropriate for this court to establish some guidelines for the
district court in this matter.
[2] Suits by physicians who have been denied hospital staff
privileges are not new. It has been clearly established for years
that a doctor has no constitutional right to the staff privileges
of a hospital merely because he is licensed to practice medicine.
Hayman v. Galveston, 1927, 273 U.S. 414, 47 S.Ct. 363, 71
L.Ed. 714. Rather, in speaking of staff selection the Supreme
Court in Hayman said:
“In the management of a hospital, quite apart from its use
for educational purposes, some choice in methods of treat-
ment would seem inevitable, and a selection based upon a
classification having some basis in the exercise of the judg-
ment of the state board whose action is challenged is not a
denial of the equal protection of the laws. * * *” 273 U.S.
at 417, 47 S.Ct. at 364.
In the instant case the by-laws of the Hospital Board require
the Board to appoint a Medical Staff composed of those who are
“(1) graduates of an approved medical school, (2) legally
licensed to practice in the State of Texas, and (3) practicing in
the community or within a reasonable distance of the hospital.”
The by-laws also provide the procedures which the Board must
follow in exercising its appointment functions. The Credentials
Committee of the Medical Staff must first investigate the char-
— A-44 —
acter, qualifications, and standing of the applicant and report its
findings to the Medical Staff. The Medical Staff then reports
its recommendations to the Board, which must either accept the
recommendation of the Medical Staff or refer the matter back
to the Medical Staff for further consideration.
[3] Dr. Sosa clearly met the three “paper qualifications” stated
in the hospital by-laws. He was a graduate of an approved
medical school, was licensed to practice medicine in the State
of Texas, and was in practice within a reasonable distance from
the hospital. We do not think, however, that this stated triad
confers an unconditional right to hospital privileges if the Hos-
pital Board chooses to exact additional standards reasonably
related to the operation of the hospital. Foster v. Mobile County
Hospital Board, supra; Cypress v. Newport News General and
Non-Sectarian Hospital Association, Inc., 4 Cir. 1967, 375 F.2d
648; North Broward Hospital District v. Mizell, Fla. 1962, 148
So.2d 1; Green v. City of St. Petersburg, 1944, 154 Fla.,339,
17 So.2d 517; Sussman v. Overlook Hospital Association, 1967,
95 N.J.Super. 418, 231 A.2d 389; Davidson v. Youngstown
Hospital Association, 1969, 19 Ohio App.2d 246, 250 N.E.2d
892; Duson v. Poage, Tex.Civ.App.1958, 318 S.W.2d 89, error
ref. n. r. e.
In the present case the Board had seen fit to require additional
standards beyond the minimal criteria specified in the by-laws
and had authorized the Credentials Committee to examine ap-
plicants for character, qualifications, and standing in the com-
munity, and to report its findings to the Medical Staff. Follow-
ing the Committee report the Medical Staff obviously determined
that Dr. Sosa did not meet its standards in these areas. It there-
fore recommended that the Board not appoint Dr. Sosa, and
the Board followed this recommendation.
[4] We think the stated factors used by the Credentials Com-
mittee of the Medical Staff to evaluate staff applicants are reason-
able. This court has recently indicated that staff appointments
onan
may be constitutionally refused if the refusal is based upon “any
reasonable basis, such as the professional and ethical qualifica-
tions of the physicians or the common good of the public and
the Hospital.” Foster v. Mobile County Hospital Board, supra,
398 F.2d at 230. Admittedly, standards such as “character
qualifications and standing” are very general, but this court
recognizes that in the area of personal fitness for medical staff
privileges precise standards are difficult if not impossible to
articulate. North Broward Hospital District v. Mizell, supra.
The subjectives of selection simply cannot be minutely codified.
The governing board of a hospital must therefore be given
great latitude in prescribing the necessary qualifications for po-
tential applicants. Foster v. Mobile County Hospital Board,
supra; North Broward Hospital District v. Mizell, supra; Suss-
man v. Overlook Hospital Association, supra. Contra, Milford
v. People’s Community Hospital Authority, 1968, 380 Mich. 49,
155 N.W.2d 835. So long as the hearing process gives notice
of the particular charges of incompetency and ethical fallibilities,
we need not exact a précis of the standard in codified form.
(5) On the other hand, it is clear that in exercising its broad
discretion the board must refuse staff applicants only for those
matters which are reasonably related to the operation of the hos-
pital. Arbitrariness and false standards are to be eschewed.
Moreover, procedural due process must be afforded the applicant
so that he may explain or show to be untrue those matters which
might lead the board to reject his application. Foster v. Mobile
County Hospital Board, supra; Meredith v. Allen County War
Memorial Hospital Commission, supra; Citta v. Delaware Valley
Hospital, E.D. Penn. 1970, 313 F.Supp. 301.
(6) In the instant case there was considerable evidence regard-
ing Dr. Sosa’s ethical and professional competency. No court
should substitute its evaluation of such matters for that of the
Hospital Board. It is the Board, not the court, which is charged
with the responsibility of providing a competent staff of doctors.
The Board has chosen to rely on the advice of its Medical Staff,
A
— A-46 —
and the court cannot surrogate for the Staff in executing this
responsibility. Human lives are at stake, and the governing
board must be given discretion in its selection so that it can have
confidence in the competence and moral commitment of its staff.
The evaluation of professional proficiency of doctors is best left
to the specialized expertise of their peers, subject only to limited
judicial surveillance. The court is charged with the narrow re-
sponsibility of assuring that the qualifications imposed by the
Board are reasonably related to the operation of the hospital and
fairly administered. In short, so long as staff selections are ad-
ministered with fairness, geared by a rationale compatible with
hospital responsibility, and unencumbered with irrelevant con-
siderations, a court should not interfere. Courts must not at-
tempt to take on the escutcheon of Caduceus.
[7] In its last hearing the Hospital Board of the Val Verde
Memorial Hospital concluded for various reasons that Dr. Sosa
should not be admitted to the staff of the hospital. We think
many of the reasons adduced bear an important and reasonable
relationship to the proper management of the hospital and each
appears to be supported by substantial evidence presented to the
Board at its last hearing. We cannot tell from the record before
us, however, whether Dr. Sosa was afforded procedural due proc-
ess in the latest Board hearing. We therefore remand this case
to the district court to determine the propriety of the procedures
used by the Board in making its latest determination. If the
Board’s procedures do comport with due process requirements,
then its determination to deny staff privileges to Dr. Sosa should
be affirmed. )
The judgment of the court below is reversed and the cause re-
manded for further proceedings not inconsistent with this opin-
ion. Until the further dec'sion by the trial court of this issue
remanded to it, Dr. Sosa’s privileges shall remain as they are
now under our order of October 6, 1970.
Reversed and remanded.
—_s
United States District Court
Middle District of Florida
Orlando Division
Dr. John G. Madry, Jr., )
Plaintiff,
VS. Case No.
> 69-136-Orl-Civ-Y.
Dr. Otto G. Sorel, et al.,
Defendants. J
ORDER
(1) Defendant Brevard Hospital Association, Inc. is a non-
profit Florida corporation and owns and operates Brevard Hos-
pital. The property where said Hospital is now situated, and at
all times pertinent hereto has been situated, was acquired by
the defendant Association from the City of Melbourne for the
nominal consideration of one dollar, the property to revert to
the City if it should cease to be used for a hospital. The original
facility located on that property was paid for by contributions
by the public and funds appropriated by the Federal Govern-
ment pursuant to the Hill-Burton Act, 42 U. S.C. A. § 291
ef seq., in approximately equal portions, in 1962.
In 1967 the facility was expanded, again using Hill-Burton
funds for approximately one-third of the cost and the remainder
being derived from public contributions and private loan. Plans
exist for a further expansion, and the defendant Association has
a commitment from the United States Department of Health,
Education & Welfare to guarantee pursuant to the Hill-Burton
Act, a loan for 90% of the cost of the expansion and to pay
three percentage points of the annual interest charges on such
loan. There thus will be a continuing infusion of Federal funds
into the hospital during the life of the loan.
—_e
When the parking lot of the Hospital was expanded, Brevard
County supplied labor and equipment to accomplish the work,
without charge to the Hospital or Association.
(2) At the time the Hill-Burton funds were obtained for con-
struction of the original facility in 1962, the by-laws of the
defendant Association provided in Article III, Secvtion 1, Para-
graph (A) as follows:
“Composition of the Board of Governors—A Board of
Governors comprising, ex-officio, the Mayors of the in-
corporated municipalities in Brevard County Commissioner
District 3 and 5 and the Brevard County Commissioners
of Districts 3 and 5; together with 12 elected members of
the Association of whom four are elected at each annual
meeting of the Association for a term of three years.”
On June 6, 1973 [sic.; should be 1963], the by-laws of the
defendant Association were revised. Article III, Section 1, Para-
graph A of the revised by-laws provided:
“Composition of the Board of Governors—A Board of
Governors comprising, ex-officio, the Mayors of the In-
corporated Municipalities in Brevard County Commis-
sioner Districts 3 and 5 and the Brevard County Commis-
sioners of the Districts 3 and 5; together with 12 elected
members of the Association of whom four are elected at
each annual meeting of the Association for a term of three
years. No member of the Board of Governors or the
spouse of an elected member of the Board of Governors
shall be an employee of Brevard Hospital.”
At the hearing on August 14, 1974 counsel for the defendant
Association acknowledged that the by-laws had been amended
again after Dr. Madry’s dismissal and after this suit was begun
to eliminate the county and municipal officials who theretofore
had been members of the Board of Governors. Counsel for the
—_Y
Hospital urged that because the Mayors and County Commis-
sioner members were “ex officio”, they were not entitled to vote.
There was no such restriction on their participation in the by-
laws, and the Court does not so interpret the phrase “ex officio”.
In any event, the municipal and county officers were entitled to
be members of the Board of Governors and presumably could
have had some influence upon its deliberations and decisions
even though there is no evidence that they did.
(3) The Brevard Hospital accepts medically indigent patients
from the Brevard County Health Department and receives a
flat fee per patient, which is not sufficient to cover the cost of
the medical services. One such patient was the woman whose
treatment by Dr. Madry, plaintiff herein, was the event that
triggered his expulsion from the Hospital’s Medical Staff, as
pointed out hereinafter.
(4) Brevard Hospital is exempt from the ad valorem taxes
levied generally upon real property by Brevard County and the
City of Melbourne. That exemption constitutes an indirect
payment of County and City funds to the Hospital and is equally
as effective a contribution to the Hospital as a direct payment
would be. That tax exemption is created by § 196.192, Fla.
Stat., a law of the State of Florida.
(5) By reason of the participation of municipal and county
Officials, as members of the Board of Governors, in the affairs
of the Hospital prior to the time of Dr. Madry’s expulsion; by
reason of the application of City property, County property and
Services and Federal funds to the construction, expansion and
improvement of the Hospital; by reason of the indirect sub-
sidization of the Hospital by the County and City through tax
exemption pursuant to State law; and by reason of the relation-
ship between the Hospital and Brevard County for care of in-
digents, the acts of the Board of Governors of Brevard Hospital
Association, Inc. at the time of Dr. Madry’s expulsion were
sufficiently infused with state action so as to require that such
— A-50 —
acis Must comport with the requirements of “due process of law”
within the meaning of the Fifth and Fourteenth Amendments of
the United States Constitution. See Sosa v. Board of Managers
of Val Verde Memorial Hospital, 437 F.2d 173, 174 (Sth Cir.
1971), and cases there cited. This Court previously so ruled
herein by its orders of July 15, and September 1, 1971.
(6) This case arises under the Constitution and laws of the
United States, and the amount in controversy exceeds $10,000,
exclusive of interest and costs. Therefore, this Court has juris-
diction of the case under 28 U.S.C.A. § 1331.
(7) Plaintiff Dr. John G. Madry was a member of the Medi-
cal Staff of Brevard Hospital. Following a series of events that
occurred over a period of several years, Dr. Madry was on
May 27, 1966 “permanently suspended” for [sic] his professional
privileges at that Hospital and his appointment to its Medical
Staff “terminated”.
(8) As previously ruled herein, Dr. Madry’s original expul-
sion from the Medical Staff did not meet the requirements of
due process of law for a fair hearing before an impartial tribunal
after adequate notice of the hearing and of the matters to be
asserted against him. Although the practice of medicine in a
particular hospital may be a privilege and not an absolute right,
yet the blemish upon a professional reputation and the restric-
tion of a physician's opportunity to earn a livelihood that result
when he is expelled from a hospital constitute a sufficient prop-
erty right to require that the expulsion be accomplished in
accordance with due process of law. Sosa v. Val Verde Hos-
pital, supra; Woodbury v. McKinnon, 447 F.2d 839 (Sth Cir.
1971).
(9) Therefore, by Orders entered July 15, 1971 and Sep-
tember 1, 1971, this Court directed the defendant Board of
Governors of the Brevard Hospital Association to hold a “due
process of law hearing” of the charges brought against plaintiff.
on ft m-
Said Board of Governors (ten of its twelve members sitting)
held hearings over a period of six days and 60 hours during
November 1971, and on November 19, 1971, the Board’s
counsel filed with this Court “Findings of the Board of Gov-
ernors of Brevard Hospital Regarding Dr. John G. Madry, Jr.”
Of the nine charges against plaintiff, the Board in such “Find-
ings” found no evidence cuncerning Charge 9 and found
Charge 3 not substantiated. It found the remaining charges
“substantiated” and concluded, “The Board does hereby reaffirm
the permanent suspension of Dr. John G. Madry from member-
ship on the Medical Staff of Brevard Hospital.”
\
After the transcript of the hearings before the Board of
Governors was prepared and filed with this Court, plaintiff
filed a “Motion (1) To Set Aside ‘Findings of the Board of
Governors of Brevard Hospital Regarding Dr. John G. Madry,
Jr.’; (2) For Summary Judgment for Plaintiff; (3) For Tem-
porary and Permanent Injunctive Relief; and (4) In the Alter-
native, for a Hearing Before a Fair and Impartial Tribunal.”
After consideration of the written and oral arguments of
counsel for all parties addressed to those motions, and upon
consideration of all the pleadings and all the evidence of rec-
ord, the Court finds further:
(10) The hearings before the Hospital’s Board of Gov-
ernors in November, 1971, failed to accord plaintiff the “due
process of law” to which this Court has previously found him
to be entitled. At the beginning of such hearings plaintiff
challenged the ability of the Board of Governors to grant
plaintiff the fair and impartial hearing that is an essential in-
gredient of due process of law. In connection therewith, plain-
tiff was allowed to examine each of the Board’s members
present as to such member’s interest, bias, prejudice, or pre-
conceived ideas. Additionally, plaintiff has interrogated some
of the Board’s members by depositions.
—_—<
In the deposition of Board Member Harold E. O’Kelley, it
developed that on October 2, 1969, he wrote a letter to 4,000
persons soliciting proxies for himself for the 1969 meeting of
the Brevard Hospital Association. In that letter he repre-
sented that he would cast the votes for which he held the proxies
to elect members of the Board of Governors who would pre-
vent Dr. Madry’s reinstatement to the Medical Staff of Bre-
vard Hospital.
A similar letter was written by Board Member Kathryn R.
Lowery, who also was Secretary to the Brevard Hospital Asso-
ciation, on September 25, 1969, to a large number of Brevard
County residents; and yet another such letter was written on
October 14, 1969, by Jane H. Jones, President of the Brevard
Hospital Service Guild.
The efforts of Mr. O’Kelley and Mme. Lowery and Jones
to obtain proxies were successful. Mr. O’Kelley and Mrs.
Lowery remained on the Board, as did most of their colleagues,
at least until the time of the November, 1971, hearings. There-
after, solicitation of proxies became unnecessary, as the Brevard
Hospital Association by-laws were amended (Art. H, Sec. 1)
to empower the Board of Governors to name its own members.
(11) From the record herein it is patent that the dispute
between Dr. Madry and Brevard Hospital became a cause
celebre in the community that the hospital serves. The news-
paper editorial attached to Mr. O’Kelley’s letter evidences a
vigorous political assault by Dr. Madry to achieve reinstate-
ment and an equally vigorous political defense by the Board
of Governors of its prior decision reached without a hearing.
(12) The Board of Governors refused to hear Dr. Madry’s
side of the case until ordered by this Court to do so. Moreover,
when that hearing was held, the Board considered not only the
charge that precipitated Dr. Madry’s dismissal from the Medical
Staff, the alleged sterilization of a woman without specific writ-
wees as bo Re she Mee Oe
— A-53 —
ten consent, but everything that Dr. Madry had ever done since
his first appearance in Brevard County, including other charges
which went back for ten years and for which he had suffered
the penalties as they went along. It had not been the Court’s
understanding when this case was sent back to the Board that
all these charges were going to be drawn into the hearing.
(13) The Chairman of the Board of Governors, Mr. Holmes,
is a defendant in damages in this case and therefore has an eco-
nomic interest adverse to that of Dr. Madry.
(14) At the beginning of the November 1971 hearing, each
Board member declared that he or she would listen to the evi-
dence presented and decide the case according to that evidence
without considering the prior determination, made without a
hearing, that Dr. Madry should be dismissed from the Medical
Staff. Without in any way questioning the good faith of the
Board members’ declarations, the Court nevertheless finds that
“the lc_al realities underlying this case” (Berryhill v. Gibson,
93 Sup. Ct. 1689, 1698) require it to be determined by some
one other than the Board of Governors as constituted. As said by
Mr. Justice Black, the Constitution “may sometimes bar trial by
judges who have no actual bias and who would do their very best
to weigh the scales of justice equally between the contending par-
ties. But to perform its high function in the best way ‘justice
must satisfy the appearance of justice’. Offutt v. United States,
348 U. S. 11, 14.” In re Murchison, 349 U. S. 133, 136
(1955).
(15) Moreover the November 1971 hearings were conducted
in the atmosphere of giving Dr. Madry an opportunity to prove
his innocence of the charges against him. In the voir dire, the
tenor of the expressions of “impartiality” by the Board’s mem-
bers was that they would consider the evidence and vacate their
prior decision if it was proved wrong. Such a shift in the burden
— Ass —
of proof from the charging party to the respondent also is in-
consistent with due process.
(16) The Board of Governors of Brevard Hospital Associa-
tion, Inc. cannot, as constituted, in the light of the history of this
case, itself provide plaintiff a hearing that meets the requirements
of due process of law.
(17) Defendants are hereby ordered to file with this Court
(serving copies upon other counsel) within 20 days from the
date hereof, a plan for a proposed procedure for a reconsidera-
tion of the record of the November 1971 hearings that will meet
the requirements of due process of law, to the satisfaction of the
Court.
DONE AND ORDERED in Chambers at Orlando, Florida
this 22nd day of January, 1975.
/s/ George C. Young
Chief Judge
Copies to:
Thorwald, J. Husfeld, Esquire
Post Office Box 329
Deland, Florida 32720
J. Compton French, Esquire
Post Office Box 5357
Daytona Beach, Florida 32020
William H. Gleason, Esquire
121 Fifth Avenue
Indialantic, Melbourne, Florida 32903
Theodore M. Forbes, Jr., Esquire
4000 First National Bank Tower
Atlanta, Georgia 30303
— A-55 —
Elting L. Storms, Esquire
Box 1376
Melbourne, Florida 32901
Ralph Geilich, Esquire
Post Office Box 820
Melbourne, Florida 32901
G. W. Hedman, Esquire
1103 Hibiscus Boulevard
Melbourne, Florida 32901
Leon H. Handley, Esquire
Post Office Box 1273
Orlando, Florida 32802
Messrs. Marks, Gray, Yates,
Conroy and Gibbs,
P. O. Box 447
Jacksonville, Florida 32202
—&$§—
HOSPITAL SURVEY AND CONSTRUCTION ACT
60 Stat. 1041
An Act to amend the Public Health Service Act to authorize -
grants to the States for surveying their hospitals and pub-
lic health centers and for planning construction of addi-
tional facilities, and to authorize grants to assist in such
construction.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That:
This Act may be cited as the “Hospital Survey and Con-
struction Act”.
Sec. 2. The Public Health Service Act (consisting of titles
I to V, inclusive, of the Act of July 1, 1944, 58 Stat. 682) is
hereby amended by adding at the end thereof the following
new title:
“Title VI—Construction of Hospitals
“Part A—Declaration of purpose
Sec. 601. The purpose of this title is to assist the several
States—
“(a) to inventory their existing hospitals (as defined in
section 631(e)), to’ survey the need for construction of
hospitals, and to develop programs for construction of
such public and other non-profit hospitals as will, in con-
junction with existing facilities, afford the necessary phy-
sical facilities for furnishing adequate hospital, clinic, and
similar services to all their people; and
“(b) to construct public and other nonprofit hospitals
in accordance with such programs.
—_
“Part B—Surveys and planning
“Authorization of appropriation
“Sec. 611. In order to assist the States in carrying out the
purposes of section 601(a), there is hereby authorized to be
appropriated the sum of $3,000,000, to remain available until
expended. The sums appropriated under this section shall be
used for making payments to States which have submitted, and
had approved by the Surgeon General, State applications for
funds for carrying out such purposes.
“State applications
“Sec. 612. (a) To be approved, a State application for funds
for carrying out the purposes of section 601(a) must—
“(1) designate a single State agency as the sole agency
for carrying out such purposes: Provided, That after a
State plan has been approved under section 623, any
further survey or programming functions shall be carried
Out, pursuant to section 623(a)(10}, by the agency desig-
nated in accordance with section 623(a)(1);
“(2) pfovide for the designation of a State advisory
council, which shall include representatives of nongovern-
ment organizations or groups, and of State agencies, con-
cerned with the operation, construction, or utilization of
hospitals, including representatives of the consumers of
hospital services selected from among persons familiar
with the need for such services in urban or rural areas,
to consult with the State agency in carrying out such pur-
poses;
“(3) provide for making an inventory and survey in
accordance with section 601 (a) containing all information
required by the Surgeon General, and for developing a
program in accordance with section 601(a) and with regu-
lations prescribed under section 622; and
— A-58 —
(4) provide that the State agency will make such re-
ports, in such form and containing such information, as
the Surgeon General may from time to time reasonably
require, and give the Surgeon General, upon demand,
access to the records on which such reports are based.
“(b) The Surgeon General shall approve any application for
funds which complies with the provisions of subsection (a).
“Allotments to States
“Sec. 613. (a) Each State for which a State application under
section 612 has been approved shall be entitled to an allot-
ment of such proportion of any appropriation made pursuant
to section 611 as its population bears to the population of all
the States, and within such allotment it shall be entitled to
receive 33% per centum of its expenditures in carrying out
the purposes of section 601(a) in accordance with its applica-
tion: Provided, That no such allotment to any State shall be
less than $10,000. The Surgeon General shall from time to
time estimate the sum to which each State will be entitled un-
der this section during such ensuing period as he may deter-
mine, and shall thereupon certify to the Secretary of the Treas-
ury the amount so estimated, reduced or increased, as the case
may be, by any sum by which the Surgeon General finds that
his estimate for any prior period was greater or less than the
amount to which the State was entitled for such period. The
Secretary of the Treasury shall thereupon, prior to audit or
settlement by the General Accounting Office, pay to the State,
at the time or times fixed by the Surgeon General, the amount
so certified.
bal
“(b) Any funds paid to a State under this section and not
expended for the purposes for which paid shall be repaid to
the Treasury of the United States.
= ~ _ = > or
m=
“Part C—Construction of Hospitals and Related Facilities
“Authorization of Appropriations
“Sec. 621. In order to assist the States in carrying out the
purposes of section 601 (b) there is hereby authorized to be ap-
propriated for the fiscal year ending June 30, 1947, and for
each of the four succeeding fiscal years, the sum of $75,000,000
for the construction of public and other nonprofit hospitals; and
there are further authorized to be appropriated for such con-
struction the sums provided in section 624. The sums appropri-
ated pursuant to this section shall be used for making payments
to States which have submitted, and had approved by the Sur-
geon General, State plans for carrying out the purposes of sec-
tion 601 (b); and for making payments to political subdivisions
of, and public or other nonprofit agencies in, such States.
“General regulations
“Sec. 622. Within six months after the enactment of this title,
the Surgeon General, with the approval of the Federal Hospital
Council and the Administrator, shall by general regulation pre-
scribe—
“(a) The number of general hospital beds required to provide
adequate hospital services to the people residing in a State, and
the general method or methods by which such beds shall be
distributed among base areas, intermediate areas, and rural
areas: Provided, That for the purposes of this title, the total of
such beds for any State shall not exceed four and one-half per
thousand population, except that in States having less than twelve
and more than six persons per square mile the limit shall be five
beds per thousand population, and in States having six persons
or less per square mile the limit shall be five and one-half beds
per thousand population; but if, in any area (as defined in the
regulations) within the State, there are more beds than required
—_—
by the standards prescribed by the Surgeon General, the excess
over such standards may be eliminated in calculating this maxi-
mum allowance.
“(b) The number of beds required to provide adequate hos-
pital services for tuberculosis patients, mental patients, and
chronic-disease patients in a State, and the general method or
methods by which such beds shall be distributed throughout the
State: Provided, That for the purposes of this title the total num-
ber of beds for tuberculosis patients shall not exceed two and
one-half times the average annual deaths from tuberculosis in
the State over the five-year period from 1940 to 1944, inclusive,
the total number of beds for mental patients shall not exceed five
per thousand population, and the total number of beds for
chronic-disease patients shall not exceed two per thousand popu-
lation.
“(c) The number of public health centers and the general
method of distribution of such centers throughout the State,
which for the purposes of this title, shall not exceed one per
thirty thousand population, except that in States having less
than twelve persons per square mile, it shall not exceed one per
twenty thousand population.
“(d) The general manner in which the State agency shall
determine the priority of projects based on the relative need of
different sections of the population and of different areas lacking
adequate hospital facilities, giving special consideration to hos-
pitals serving rural communities and areas with relatively small
financial resources.
“(e) General standards of construction and equipment for
hospitals of different classes and in different types of location.
“(f) That the State plan shall provide for adequate hospital
facilities for the people residing in a State, without discrimina-
tion on account of race, creed, or color, and shall provide for
— A-61 —
adeyuate hospital facilities for persons unable to pay therefor.
Such regulation may require that before approval of any applica-
tion for a hospital or addition to a hospital is recommended by
a State agency, assurance shall be received by the State from the
applicant that (1) such hospital or addition to a hospital will be
made available to all persons residing in the territorial area of
the applicant, without discrimination on account of race, creed,
or color, but an exception shall be made in cases where separate
hospital facilities are provided for separate population groups,
if the plan makes equitable provision on the basis of need for
facilities and services of like quality for each such group; and
(2) there will be made available in each such hospital or addition
to a hospital a reasonable volume of hospital services to persons
unable to pay therefor, but an exception shall be made if such
a requirement is not feasible from a financial standpoint.
“(g) General methods of administration of the plan by the
designated State agency, subject to the limitations set forth in
section 623 (a) (6) and (8).
State plans
“Sec. 623. (a) After such regulations have been issued, any
State desiring to take advantage of this part may submit a State
plan for carrying out the purposes of section 601 (b). Such
State 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;
“(2) contain satisfactory evidence that the State agency
designated in accordance with paragraph (1) hereof will
have authority to carry out such plan in conformity with
this part;
ee Done
(3) provide for the designation of a State advisory coun-
cil which shall include representatives of nongovernment
organizations or groups, and of State agencies, concerned
with the operation, construction, or utilization of hospitals,
including representatives of the consumers of hospital serv-
ices selected from among persons familiar with the need for
such services in urban or rural areas, to consult with the
State agency in carrying out such plans;
“(4) set forth a hospital construction program (A) which
is based on a State-wide inventory of existing hospitals and
survey of need; (B) which conforms with the regulations
prescribed by the Surgeon General under section 622 (a),
(b), and (c); (C) which, in the case of a State which has de-
veloped a program under part B of this title, conforms to
the program so developed except for any modification re-
quired in order to comply with regulations prescribed pur-
suant to section 622 (a), (b), and (c), and except for any
modification recommended by the State agency designated
pursuant to paragraph (1) of this subsection and approved
by the Surgeon General; and (D) which meets the require-
ments as to lack of discrimination on account of race,
creed, or color, and for furnishing needed hospital services
to persons unable to pay therefor, required by regulations
prescribed under section 622 (f);
“(5) set forth the relative need determined in accordance
with the regulations prescribed under section 622 (d) for the
several projects included in such programs, and provide
for the construction, insofar as financial resources avail-
able therefor and for maintenance and operation make
possible, in the order of such relative need;
“(6) provide such methods of administration of the State
plan, including methods relating to the establishment and
maintenance of personne: standards on a merit basis (ex-
cept that the Surgeon General shall exercise no authority
—
with respect to the selection, tenure of office, or compensa-
tion of any individual employed in accordance with such
methods), as the Surgeon General prescribes by regulation
under section 622 (g);
“(7) provide minimum standards (to be fixed in the
discretion of the State) for the maintenance and operation
of hospitals which receive Federal aid under this part;
“(8) provide for affording to every applicant for a con-
struction project an opportunity for hearing before the
State agency;
“(9) provide that the State agency will make such re-
ports in such form and containing such information as the
Surgeon General may from time to time reasonably re-
quire, and give the Surgeon General, upon demand, access
to the records upon which such information is based; and
“(10) provide that the State agency will from time to
time review its hospital construction program and submit
to the Surgeon General any modifications thereof which it
considers necessary.
“(b) The Surgeon General shall approve any State plan and
any modification thereof which complies with the provisions of
subsection (a). If any such plan or modification thereof shall
have been disapproved by the Surgeon General for failure to
comply with subsection (a), the Federal Hospital Council shall,
upon request of the State agency, afford it an opportunity for
hearing. If such Council determines that the plan or modifica-
tion complies with the provisions of such subsection, the Sur-
geor General shall thereupon approve such plan or modifica-
tion.
“(c) No changes in a State plan shall be required within two
years after initial approval thereof, or within two years after
any change thereafter required therein, by reasor. of any change
— A-64 —
in the regulations prescribed pursuant to section 622, except
with the consent of the State, or in accordance with further
action by the Congress.
“(d) If any State, prior to July 1, 1948, has not enacted legis-
lation providing that compliance with minimum standards of
maintenance and operation shall be required in the case of hos-
pitals which shall have received Federal aid under this title,
such State shall not be entitled to any further allotments under
section 624.
“Allotments to States
“Sec. 624. Each State for which a State plan has been ap-
proved prior to or during a fiscal year shall be entitled for such
year to an allotment of a sum bearing the same ratio to the sums
authorized to be appropriated pursuant to section 621 for such
year as the product of (a) the population of such State and (b)
the square of its allotment percentage (as defined in section
631 (a)) bears to the sum of the corresponding products for all
of the States. The amount of the allotment to a State shall be
available, in accordance with the provisions of this part, for
payment of 33% per centum of the cost of approved projects
within such State. The Surgeon General shall calculate the al-
lotments to be made under this section and notify the Secretary
of the Treasury of the amounts thereof. Sums allotted to a
State for a fiscal year for construction and remaining unobli-
gated at the end of such year shall remain available to such
State for such purpose for the next fiscal year (and for such year
only), in addition to the sums allotted for such State for such next
fiscal year. Any amount of the sum authorized to be appropriated
for a fiscal year which is not appropriated for such year, or which
is not allotted in such year by reason of the failure of any State
or States to have plans approved under this part, and any amount
— A-65 —
allotted to a State but remaining unobligated at the end of the
period for which it is available to such State, is hereby authorized
to be appropriated for the next fiscal year in addition to the sum
otherwise authorized under section 621.
“Approval of projects and payments for construction
“Sec. 625. (a) For each project for construction pursuant to a
State plan approved under this part, there shall be submitted
to the Surgeon General through the State agency an application
by the State or 2 political subdivision thereof or by a public or
other nonprofit agency. Such application shall set forth (1) a
description of the site for such project, (2) plans and specifica-
tions therefor in accordance with the regulations prescribed by
the Surgeon General under section 622 (c), (3) reasonable assur-
ance that title to such site is or will be vested solely in the ap-
plicant, (4) reasonable assurance that adequate financial support
will be available for the construction of the project and for its
maintenance and operation when completed, and (5) reasonable
assurance that the rates of pay for laborers and mechanics en-
gaged in construction of the project will be not less than the
prevailing local wage rates for similar work as determined in ac-
cordance with Public Law 403 of the Seventy-fourth Congress,
approved August 30, 1935, as amended. The Surgeon General
shall approve such application if sufficient funds to pay 33%
per centum of the cost of construction of such project are avail-
able from the allotment to the State, and if the Surgeon General
finds (A) that the application contains such reasonable assur-
ance as to title, financial support, and payment of prevailing
rates of wages, (B) that the plans and specifications are in ac-
cord with the regulations prescribed pursuant to section 622,
(C) that the application is in conformity with the State plan ap-
proved under section 623 and contains an assuran © that the
applicant will conform to the applicable requirements of the
— A-66 —
State plan and of the regulations prescribed pursuant to section
622 (f) regarding the provision of facilities without discrimina-
tion on account of race, creed, or color, and for furnishing
needed hospital facilities for persons unable to pay therefor, and
an assurance that the applicant will conform to State standards
for operation and maintenance, and (D) that it has been ap-
proved and recommended by the State agency and is entitled to
priority over other projects within the State in accordance with
the regulations prescribed pursuant to section 622 (d). No ap-
plication shall be disapproved until the Surgeon General has
afforded the State agency an opportunity for a hearing.
“(b) Upon approving an application under this section, the
Surgeon General shall certify to the Secretary of the Treasury an
amount equal to 33% per centum of the estimated cost of con-
struction of the project and designate the appropriation from
which it is to be paid. Such certification shall provide for pay-
ment to the State, except that if the State is not authorized by
law to make payments to the applicant the certification shall
provide for payment direct to the applicant. Upon certification
by the State agency, based upon inspection by it, that work
has been performed upon a project, or purchases have been
made, in accordance with the approved plans and specifications,
and that payment of an installment is due to the applicant, the
Surgeon General shall certify such installment for payment by
the Secretary of the Treasury: except that if the Surgeon Gen-
eral, after investigation or otherwise, has ground to believe that
a default has occurred requiring action pursuant to section 632
(a) he may, upon giving notice of hearing pursuant to such sub-
section, withhold certification pending action based on such
hearing.
“(c) Amendment of any approved application shall be subject
to approval in the same manner as an original application.
Certification under subsection (b) may be amended, either upon
approval of an amendment of the application or upon revision
o> £6? —
of the estimated cost of a project. An amended certification
may direct that any additional payment be made from the ap-
plicable allotment for the fiscal year in which such amended
certification is made.
“(d) The funds paid under this section for the construction of
an approved project shall be used solely for carrying out such
project as so approved.
“(e) If any hospital for which funds have been paid under
this section shall, at any time within twenty years after the com-
pletion of construction, (A) be sold or transfered to any person,
agency, Or organization, (1) which is not qualified to file an
application under this section, or (2) which is not approved as
a transferee by the State agency designated pursuant to section
623 (a) (1), or its successor, or (B) cease to be a nonprofit hos:
pital as defined in section 631 (g), the United States shall be
entitled to recover from either the transferor or the transferee
(or, in the case of a hospital which has ceased to be a nonprofit
hospital, from the owners thereof) 33% per centum of the then
value of such hospital, as determined by agreement of the
parties or by action brought in the district court of the United
States for the district in which such hospital is situated.
“Part D—Miscellaneous
“Definitions
“Sec. 631. For the purposes of this titl—
“(a) the allotment percentage for any State shall be 100 per
centum less that percentage which bears the same ratio to 50
per centum as the per capita income of such State bears to
the per capita income of the continental United States (excluding
Alaska), except that (1) the allotment percentage shall in no
case be more than 75 per centum or less than 33% per centum,
— A-68 —
and (2) the allotment percentage for Alaska and Hawaii shall
be 50 per centum each, and the allotment percentage for Puerto
Rico shall be 75 percentum,
“(b) the allotment percentages shall be promulgated by the
Surgeon General between July 1 and August 31 of each even-
numbered year, on the basis of the average of the per capita
incomes of the States and of the continental United States for
the three most recent consecutive years for which satisfactory
data are available from the Department of Commerce. Such
promulgation shall be conclusive for each of the two fiscal years
in the period beginning July 1 next succeeding such promulga-
tion: Provided, That the Surgeon General shall promulgate
such percentages as soon as possible after the enactment of this
title, which promulgation shall be conclusive for the fiscal year
ending June 30, 1947;
“(c) the population of the several States shall be determined
on the basis of the latest figures certified by the Department of
Commerce;
“(d) the term ‘State’ includes Alaska, Hawaii, Puerto Rico,
and the District of Columbia;
“(e) the term ‘hospital’ (except as used in section 622 (a) and
(b)) includes public health centers and general, tuberculosis,
mental, chronic disease, and other types of hospitals, and related
facilities, such as laboratories, out-patient departments, nurses’
home aad training facilities, and central service facilities oper-
ated in connection with hospitals, but does not include any
hospital furnishing primarily domiciliary care;
“(f) the term ‘public health center’ means a publicly owned
facility for the provision of public health services, including
related facilities such as laboratories, clinics, and administrative
offices operated in ~onnection with public health centers,
— A-69 —
“(g) the term ‘nonprofit hospital’ means any hospital owned
and operated by a corporation or association, no part of the
net earnings of which inures, or may lawfully inure, to the bene-
fit of any private shareholder or individual;
“(h) the term ‘construction’ includes construction of new build-
ings, expansion, remodeling, and alteration of existing build-
ings, and initial equipment of any such buildings; including
architects’ fees, but excluding the cost of off-site improvements
and, except with respect to public health centers, the cost of
the acquisition of land; and
“(i) the term ‘cost of construction’ means the amount found
by the Surgeon General to be necessary for the construction of
a project.
“Withholding of certification
“Sec. 632. (a) Whenever the Surgeon General, after reason-
able notice and opportunity for hearing to the State agency
designated in accordance with section 612(z) (1), finds that
the State agency is not complying substantialiy with the pro-
visions required by section 612 (a) to be contained in its appli-
cation for funds under part B, or after reasonable notice and
opportunity for hearing to the State agency designated in ac-
cordance with section 623 (a) (1) finds (1) that the State agency
is not complying substantially with the provisions required by
section 623 (a), or by regulations prescribed pursuant to sec-
tion 622, to be contained in its pian submitted under section
623 (a), or (2) that any funds have been diverted from the
purposes for which they have been allotted or paid, or (3)
that any assurance given in an application filed under section
625 is not being or cannot be carried out, or (4) that there
is a substantial failure to carry out plans and specifications ap-
proved by the Surgeon General under section 625, the Surgeon
~~
General may forthwith notify the Secretary of the Treasury
and the State agency that no further certification will be made
under part B or part C, as the case may be, or that no further
certification will be made for any project or projects designated
by the Surgeon General as being affected by the default, as the
Surgeon General may determine to be appropriate under the
circumstances; and, except with regard to any project for which
the application has alreary been approved and which is not
directly affected by such default, he may withhold further cer-
tifications until there is no longer any failure to comply, or, if
compliance is impossible, until the State repays or arranges for
the repayment of Federal moneys which have been diverted or
improperly expended.
“(b) (1) If the Surgeon General refuses to approve any appli-
cation under section 625, the State agency through which the
application was submitted, or if any State is dissatisfied with
the Surgeon General's action under subsection (a) of this sec-
tion, such State may appeal to the United States circuit court
of appeals for the circuit in which such State is located. The
summons and notice of appeal may be served at any place in the
United States. The Surgeon General shall forthwith certify and
file in the court the transcript of the proceedings and the record
on which he based his action.
“(2) The findings of fact by the Surgeon General, unless
substantially contrary to the weight of the evidence, shall be
conclusive; but the court, for good cause shown, may remand
the case to the Surgeon General to take further evidence, and
the Surgeon General may thereupon make new or modified
findings of fact and may modify his previous action, and shall
certify to the court the transcript and record of the further pro-
ceedings. Such new or modified findings of ‘act shall likewise
be conclusive unless substantially contrary to the weight of the
evidence.
—_*
“(3) The court shall have jurisdiction to affirm the action of
the Surgeon General or to set it aside, in whole or in part. The
judgment of the court shall be subject to review by the Supreme
Court of the United States upon certiorari or certification as
provided in sections 239 and 240 of the Judicial Code, as
amended.
“Federal hospital council; administration of title
“Sec. 633. (a) The Surgeon General is authorized to make
such administrative regulations and perform such other func-
tions as he finds necessary to carry out the provisions of this
title. Any such regulations shall be subject to the approval of
the Administrator.
“(b) In administering this title, the Surgeon General shall con-
sult with a Federal Hospital Council consisting of the Surgeon
General, who shall serve as Chairman ex officio, and eight
members appointed by the Administrator. Four of the eight
appointed members shall be persons who are outstanding in
fields pertaining to hospital and health activities, three of whom
shall be authorities in matters relating to the operation of hos-
pitals, and the other four members shall be appointed to rep-
resent the consumers of hospital services and shal! be persons
familiar with the need for hospital services in urban or rural
areas. Each appointed member shall hold office for a term of
four years, except that any member appointed to fill a vacancy
Occurring prior to the expiration of the term for which his
predecessor was appointed shall be appointed for the remainder
of such term, and the terms of office of the members first tak-
ing office shall expire, as designated by the Administrator at
the time of appointment, two at the end of the first year, two
at the end of the second year, two at the end of the third year,
and two at the end of the fourth year after the date of appoint-
ie A-T2
ment. An appointed member shall not be eligible to serve con-
tinuously for more than two terms but shall be eligible for re-
appointment if he has not served immediately preceding his
reappointment. The Council is authorized to appoint such spe-
cial advisory and technical committees as may be useful in
_ carrying out its functions. Appointed Council members and
members of advisory or technical committees, while serving on
business of the Council, shall receive compensation at rates
fixed by the Administrator, but not exceeding $25 per day,
and shall also be entitled to receive an allowance for actual
and necessary travel and subsistence expenses while so serving
away from their places of residence. The Council shall meet as
frequently as the Surgeon General deems necessary, but not less
than once each year. Upon request by three or more members.
it shall be the duty of the Surgeon General to call a meeting
of the Council.
“(c) In administering the provisions of this title, the Surgeon
General, with the approval of the Administrator, is author-
ized to utilize the services and facilities of any executive de-
partment in accordance with an agreement with the head
thereof. Payment for such services and facilities shall be made
in advance or by way of reimbursement, as may be agreed
upon between the Administrator and the head of the executive
department furnishing them.
“Conferences of state agencies
“Sec. 634. Whenever in his opinion the purposes of this title
would be promoted by a conference, the Surgeon General may
invite representatives of as many State agencies, designated in
accordance with section 612 (a) (1) or section 623 (a) (1), to
confer as he deems necessary or proper. Upon the applica-
tion of five or more of such State agencies, it shall be the duty
of the Surgeon General to call a conference of representatives
—*. a
of all State agencies joining in the request. A conference of
the representatives of all such State agencies shall be called
annually by the Surgeon General.
“State control of operations
“Sec. 635. Except as otherwise specifically provided, nothing
in this title shall be construed as conferring on any Federal officer
or employee the right to exercise any supervisio
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