Appendix — Wilmington United Neighborhoods v. U. S. Department of Health & Human Services

Supreme Court, U.

FILED

VOLUME ITI |

IN THE | WACHAEL RUOAK, JR.,

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1979 Bi

No. W9-1767

WILMINGTON UNITED NEIGHBORHOODS, et al.,

Petitioners,

vs.

U.S. DEPARTMENT OF HEALTH, EDUCATION,

AND WELFARE, et al.

Respondents.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Marilyn G. Rose, Esq.

Herbert Semmel, Esq.

Center for Law and

Social Policy

1751 N Street, N.W.

Washington, D.C. 20036

(202) 872-0670

Douglas Shachtman, Esq.

1823 Lancaster Avenue

Wilmington, Delaware 19805

(302) 655-1800

Attorneys for Petitioners

34r

APPENDIX B

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE

WILMINGTON UNITED

NEIGHBORHOODS, et al.,

Plaintiffs,

Vv.

UNITED STATES DEPARTMENT OF

HEALTH, EDUCATION AND WELFARE,

et al.,

Defendants.

WILMINGTON MEDICAL CENTER,

INC., a non-profit

corporation of the State of

Delaware,

Plaintiff,

Vv.

JOSEPH A. CALIFANO, JR., as

Secretary of the DEPARTMENT

OF HEALTH, EDUCATION AND

WELFARE,

Defendant,

and

WILMINGTON UNITED

NEIGHBORHOODS,

Defendant-

Intervenor.

a ee ee ee

)Civil

)Action

)

)

)

)No.

77-439

)Action

)No.

De ee ee ee ee ee ee ee ee

Decided September 22, 1978

{Names of Counsel omitted in printing].

OPINION

77-480

35a

LATCHUM, Chief Judge.

These actions represent another attempt

by certain consumers of medical services in

the Wilmington, Delaware metropolitan area

to prevent the Wilmington Medical Center

("WMC") from implementing its controversial

Plan Omega, which calls for the relocation

of the bulk of WMC's urban hospital services

to a suburban location.! on November ll,

1977, Wilmington United Neighborhoods, an

association of Wilmington community groups,

and eight individuals who are consumers of

WMC's medical services (collectively

"“plaintiffs") instituted Civil Action No.

77-439 against the United States Department

of Health, Education, and Welfare ("HEW"),

1 WMC, which currently operates three

hospitals within the City of Wilmington, is

the major hospital system in northern Dela-

ware. Plan Omega envisions the closing of

two of WMC's hospitals and the construction

of an 800-bed tertiary care facility (the

"Southwest" Division) approximately eight

miles southwest of Wilmington. For a more

detailed description of Plan Omega, see

NAACP v. Wilmington Medical Center, Inc.,

— F.Supp. — (D.Del. April 7, 1978) (slip

Oop. at pp. 4-9).

36a

the Delaware Health Council, Inc., and two

state officials (collectively the "State

defendants"), seeking to invalidate their

approval of Plan Omega under Section 1122

of the Social Security Act, 42 U.S.C.

§1320a-1 ("section 1122").2 The effect of

section 1122 approval is to assure a health

care provider that Federal funds provided

under medicare, medicaid, and programs for

maternal and child health care services

will not be reduced on the ground that the

provider's capital expenditure program

(Plan Omega in this case) was "unreasonable"

or "unnecessary."> Plaintiffs allege that

several of the actions taken by HEW and the

State defendants in connection with the

approval of Plan Omega violated the require-

ments of section 1122 and the regulations

implementing it (42 C.F.R. Part 100). The

complaint also asserts that defendants

violated plaintiffs' right to equal protec-

tion by providing a "fair hearing" to

2 Docket Item l.

3 NAACP v. Wilmington Medical Center, Inc.,

436 F. Supp. 1194, 1198 (D.Dei. 1977),

aff'd, — F.2d — (C.A.3, August 18, 1978).

37a

proponents of a capital expenditure dis-

satisfied with the result of a section 1122

review, while denying disappointed opponents

a similar opportunity to air their objec-

tions.

Plaintiffs later amended their complaint

to add WMC as a defendant, alleging that it

had violated its duties under section 1122

and the regulations implementing it by sub-

mitting unreliable financial data to the

reveiwing state agencies and entering into

a construction contract that authorized

costs far in excess of the figure that

received section 1122 approval and postponed

indefinitely commencement of construction. 4

With the exception of the Delaware Health

Council, Inc.,” all the defendants have

moved to dismiss the amended complaint or,

in the alternatiye, for summary judgment, &

4 Docket Item 9 (First Amended Complaint),

pars. 15, 62-64.

5 By stipulation of the parties, the time

within which Delaware Health Council, Inc.,

shall moye, answer or otherwise respond to

the complaint has heen extended until after

the Court determines the motion currently

pending in this action. Docket Item 20.

6 Docket Items 8, 15, and 17. Defendants

WMC and Amos M. Burke and Robert H.

Sweeney, the two state officials, filed

(continued next page)

38a

This opinion disposes of the issues raised

by those motions and plaintiffs' motions

for partial summary judgment against several

of the defendants, which are also currently

before the Court.’

Under HEW's regulations, the section

1122 approval of Plan Omega was due to

expire on December 15, 1977, unless on or

before that date WMC incurred an obligation

to build the project. On December 12, 1977,

WMC filed an action against Joseph Califano,

the Secretary of HEW (the "Secretary"),

(footnote continued from previous page)

motions to dismiss only, but all of them

have presented affidavits in support of

their positions. See Docket Items 21 and

42. Because the Court has considered

matters outside the pleadings, all the

pending motions by defendants will be

treated as motions for summary judgment.

F.R.Civ.P. 125).

7 Plaintiffs have moved for summary

judgment against HEW on their equal protec-

tion claim and on their claim that HEW's

failure to make an independent review of

Plan Omega constituted an abrogation of

its duties under section 1122. Docket

Item 28. Plaintiffs also seek summary

judgment against WMC on the issue whether

Plan Omega's section 1122 approval expired

on December 15, 1977.

39a

seeking declaratory and injunctive relief

from the threatened expiration of the

section 1122 approval. 8 Thereafter,

Wilmington United Neighborhoods ("W.U.N."),

a plaintiff in Civil Action No. 77-439, in-

tervened as a defendant and by filing a

counterclaim against WMC and a cross-claim

against the Secretary asserted the same

claims against those parties as it had in

the first action.? WMC has moved to dismiss

the counterclaim!9 and W.U.N. has moved for

a partial summary judgment against WMC,

declaring that the section 1122 certifica-

tion of Plan Omega expired on December 15,

1977.11 Because these motions and the

motions pending in Civil Action No. 77-439

present virtually the same issues, the

Court will dispose of them simultaneously.

8 Civil Action No. 77-480, Docket Item l.

In this opinion the Secretary and HEW will

be used interchangeably.

9 Id., Docket Items 6 and 10.

10 Id., Docket Item 13.

11 Id., Docket Item 23.

12 Unless otherwise noted, all references

hereafter to parties and pleadings will be

in terms of Civil Action No. 77-439. Since

the amount in controversy in each of these

actions exceeds $10,000, the Court has sub-

ject matter jurisdiction over both of them

under 28 U.S.C. § 1331.

40a

I. BACKGROUND

A. The Statutory Scheme

This is the second time the opponents

of Plan Omega have asked this Court to in-

validate its section 1122 approval. In

NAACP v. Wilmington Medical Center, Inc. , 1?

a different group of plaintiffs asserted

that the approval was invalid because the

Secretary had failed to prepare an environ-

mental impact statement in conjunction with

it as purportedly required by the National

Environmental Policy Act of 1969 ("NEPA") .14

This Court rejected the plaintiffs' argument,

holding that the Secretary reasonably had

concluded that section 1122 approval did not

constitute "major Federai action" within the

meaning of NEPA. The Third Circuit Court of

Appeals recently affirmed that decision.15

In deciding the NEPA issue, both this Court

and the Third Circuit reviewed the provisions

of section 112216 and several of those

13 436 F.Supp. 1194 (D.Del. 1977).

14 42 U.S.C. §4332(2) (C).

15 NAACP v. Medical Center, Inc., — F.2d

— , No. 77-2369 (C.A.3, August 18, 1978).

16 See NAACP v. Wilmington Medical Center,

Inc., 436 F.Supp. 1194, 1198-99 (D.Del. 1977)

and — F.2d — (C.A.3, August 18, 1978)

(slip op. at 12-15).

4la

provisions will be explored again in detail

in the course of this opinion. Accordingly,

only a brief overview of section 1122 and

its implementing regulations will be pro-

vided at this juncture.

The express purpose of section 1122 is

two-fold: (1) to assure that Federal funds

for medicare, medicaid and maternal and

child health programs "are not used to

support unnecessary capital expenditures”

for health care and (2) to “support plan-

ning activities with respect to health

services and facilities in the various

States." 42 U.S.C. § 1320a-1(a).

Under the statute the States retain

primary responsibility for developing

comprehensive local health planning pro-

grams for assessing the need for proposed

capital expenditures. State participation

is voluntary, however. Interested States

must enter into agreements with the

Secretary of HEW, which designate a

State planning agency ("DPA") to carry

out the State's responsibilities under

section 1122. 42 U.S.C. §1320a-1(b).+’

17 The Federal Government is authorized

to pay the costs incurred by the designated

planning agency ("DPA") in performing its

duties under the statute. 42 U.S.C.

§ 1320a-1(c).

42a

On March 15, 1974, Delaware made such an

agreement with the Secretary, designating

the Bureau of Comprehensive Health Plan-

ning ("BCHP") of the Delaware Department

18 as its

of Health and Social Services

DPA.

The designated planning agency is

charged with reviewing proposed capital

expenditures to determine whether they

are consistent with the standards or plans

developed to meet the need for adequate

health care facilities in the area of the

State affected. 42 U.S.C. § 1320a-1(b).

The DPA must consult with local health

planning agencies interested in a par-

ticular proposal and submit to the

Secretary the findings of those agencies

with respect ot the proposed expenditure

together with the DPA's own findings and

recommendations and any supporting

materials deemed necessary by the

18 Docket Item l, pars. 12 and 18.

Defendant Amos M. Burke is the Director

of Bureau of Health Planning and Re-

sources Development, the successor

agency to BCHP. Id. par. 12. At all

times relevant to the instant litigation,

Burke was the Director of the DPA for

Delaware. Id. pars. 34 and 35.

43a

Secretary. Id. The statute also requires

the DPA to establish procedures for afford-

ing proponents of a capital expenditure

found to be unnecessary "an opportunity

for a fair hearing." 42 U.S.C. § 1320a-1

(b) (3).

The function of the Secretary when a

designated State planning agency has

approved a proposed capital expenditure

is severely limited. As this Court

stated in NAACP v. Wilmington Medical

Center, Inc., supra, 436 F. Supp. at 1198:

If [a section 1122] application

has received complete approval

when it reaches the Secretary,

he then performs the ministerial

act of assuring that the proper

procedure has been followed. The

Secretary, however, has no dis-

cretion as to whether the pro-

posed expenditures are unwise.

(Footnotes omitted) .19

The statute does not authorize the

Secretary to withhold Federal reimbursement

19 The Third Circuit agreed with this

holding and quoted it with approval in

affirming the NEPA decision. NAACP v.

Medical Center, Inc., supra, — F.2d at —

(slip op. at 15).

44a

for depreciation, interest on borrowed

funds or other expenses related to a

proposed capital expenditure that has

received DPA approval, unless the Secre-

tary determines that neither the DPA nor

a local health planning agency had notice

of the proposal at least sixty days before

an obligation for it had been incurred.

42 U.S.C. § 1320a-1(d) (1) (A).

The Secretary has broader discretion

with respect to expenditures found by the

DPA to be inconsistent with the State or

local health care facility needs or plans,

and he may in certain special circumstances

override the State's recommendation.29 It

is necessary to consider the scope of that

discretion in this case, however, because

Plan Omega was approved by the planning

groups concerned.

Finally, section 1122 provides that

any person dissatisfied with a deter-

mination of the Secretary may request

reconsideration within six months of

such determination. The statute ex-

pressly precludes any other administra-

tive or judicial review. 42 U.S.C.

§ 1122(f).

20 See 42 U.S.C. § 1320a-1(d) (2).

45a

Against this background, the Court

turns to the facts related to WMC's ac-

quisition of section 1122 approval for

Plan Omega.

B. Facts

For the most part, the facts in this

litigation are undisputed. WMC submitted

an application for section 1122 approval

of Plan Omega to the Bureau of Compre-

hensive Health Planning ("BCHP"), the

DPA for Delaware, on March 19, 1976.22

A supplement to the application was

filed on April 2, 1976, indicating an

increase from 625,000 to 650,000 in the

square footage of the proposed Southwest

Division due to a decision to provide

more private rooms and fewer semi-

private rooms. 22 Immediately thereafter,

the BCHP began its substantive review,

utilizing the services of a statewide

agency, the Interim State Comprehensive

Health Planning Council ("Interim

21 Docket Item 9, par. 23; Docket

Item 22B, ex. F.

22 Id.

46a

3 and a local agency, the

Council") ,?

Health Planning Council, Inc. ("HPC"

Both these agencies reviewed Plan Omega

),24

for consistency with applicable standards,

criteria and plans, and the Interim

Council held public hearings on May 3,

4 and 5, 1976.2> on June 3, 1976, the

HPC “comment[ed] favorably" on Plan

Omega as it had been submitted.2© on

June 9, 1976, WMC sent a letter to

defendant Burke, indicating that the

increase in square footage noted in the

April 2 supplement would be slightly

23 Id. par. 13. Defendant Robert H.

Sweeney was chairman of the Interim

Council at all times relevant to this

litigation. Id.

24 Id. pars. 18 and 28. Defendant

Delaware Health Council, Inc. is the

successor of the HPC. Id. par. 14.

25 Docket Item 21 (Affidavit of Amos

M. Burke).

26 The HPC limited its approval to

"Plan Omega, as submitted in the

[section] 1122 application dated March

19, 1976, providing the total construc-

tion project cost does not exceed $73.5

million, plus or minus 5 percent...."

Docket Item 9, par. 28.

47a

higher than estimated?’ and that the

construction costs of the Southwest

facility would be $2.3 million more than

the figure given in the March 19 appli-

cation. Nevertheless, WMC claimed in

the letter that the total project cost

would remain unchanged because of fac-

tors relating to the financing of the

project.28 On June 15, 1976, the

Interim Council voted to approve Plan

Omega and defendant Burke, acting on

behalf of the BCHP, accepted the Council's

recommendation and made a finding that

the proposal was in conformity with the

applicable standards, criteria and plans.

The following day Burke executed HEW's

form HRA-45, recording the DPA's find-

ing and recommending that federal reim-

bursement not be withheld. 2?

27 The June 9 letter estimated the

square footage of the Southwest Division

to be 659,000 instead of 650,000.

Docket Item 22b, ex. F.

28 Id. Plaintiffs dispute this claim.

29 Docket Item 9, pars. 33 and 34;

Docket Item 18, p. 8. Defendant

Burke also sent a letter to WMC on

June 16, 1976 notifying it that Plan

Omega had been approved. Id.

48a

In July, 1976, plaintiffs W.U.N. and

Joseph G. DiPinto asked defendant Burke

to permit them to contest the approval

of Plan Omega at a "fair hearing" but

he refused.39 on August 6, 1976, de-

fendant HEW, by the Acting Regional

Health Administrator of Region III,

approved Plan Omega for section 1122

purposes. 34

On September 10, 1976, several

organizations and individuals repre-

senting the poor, the elderly, the

handicapped and various racial and

ethnic minorities in Wilmington filed

an action in this Court challenging

Plan Omega under Title VI of the Civil

Rights Act of 1964, 42 U.S.C. § 2000d,

and Section 504 of the Rehabilitation

Act of 1973, 29 U.S.C. § 794.32

30 Docket Item 9, par. 36.

31 Id. par. 37.

32 NAACP, et al. v. Wilmington Medical

Center, Inc., et al, Civil Action No. 76-

298 (D.Del.). Although all the claims

in Civil Action No. 76-298 have either

been disposed of by way of summary judg-

ment or withdrawn, several issues are

still on appeal to the Third Circuit

and the mere pendency of the action has

served as a de facto injunction

against WMC's proceeding with Plan Omega.

49a

During the course of that litigation,

the Court ordered HEW to investigate

the claims that Plan Omega would vio-

late those two statutes.33 HEW's Office

of Civil Rights ("OCR") conducted the

investigation and in July 1977 announced

its conclusion that "implementation of

Plan Omega, as presently conceived,

would violate Title VI and Section 504."

The report further indicated that if WMC

would agree to several substantial

changes in the plan compliance could

be achieved. Several months of nego-

tiations ensued and on November 1, 1977

the Secretary entered into a Contract

of Assurances with WMC in which WMC

undertook, inter alia, to provide a

transportation system for patients,

visitors and employees between the re-

maining hospital in Wilmington and the

Southwest Division; to institute a

patient allocation system as to ser-

vices available at both locations to

preclude the development of racially

33 NAACP v. Wilmington Medical Center,

Inc., 426 F.Supp. 919, 925 (D.Del.

1977).

50a

differentiated utilization patterns;

and to alter construction plans for

both facilities to comply with the

requirements of Section 504.34

Shortly after the Court ordered

HEW to conduct its Title VI and Section

504 review of Plan Omega, plaintiffs

in the case sub judice exercised their

statutory prerogative3> to request the

Secretary to reconsider his August 6,

1976 determination to approve the

project under section 1122. Eight

months later, on September 7, 1977,

Harold Margulies, M.D., Acting Ad-

ministrator of the Health Resources

Administration of HEW, notified plain-

tiffs that upon reconsideration HEW

had decided to affirm its August 6, 1976

34 Docket Item 9, par. 46.

35 Section 1122(f) of the Act, 42

U.S.C. § 1320a-1(f). The request for

reconsideration was filed on February

4, 1977 and supplemented on May 24,

July 10, and August 30, 1977. Docket

Item 9, par. 41.

5la

decision approving Plan Omega. 3° The

decision on reconsideration, however,

contained the following qualification: 37

[C]ompliance with the July 5,

1977, findings of the Office

for Civil Rights, Region III

will alter the capital expen-

ditures proposed [by WMC]

sufficiently to require a

new capital expenditure review

under section 1122 of the

Social Security Act.

This statement implied that if WMC

agreed to make the modifications

required to comply with Title VI and

Section 504, it would have to submit

the modified Plan Omega in its entirety

to the BCHP for another section 1122

review.

However, on October 12, 1977,

Dr. Margulies disavowed that inter-

pretation in a letter to plaintiffs'

36 Docket Item 9, par. 44. Dr.

Margulies enclosed a seven page document

entitled "Reconsideration of the Deter-

mination of the Acting Regional Health

Administrator, Region III, of the

Section 1122 Application of the Wilming-

ton Medical Center, Inc., Wilmington,

Delaware" in which he set forth the

reasons for his decision to affirm the

August 6, 1976 determination. Docket

Item 22D, ex. F.

37 Docket Item 22D, ex. F., p. 7.

52a

counsel, stating: "To the extent that

the Reconsideration may be so interpreted,

it is inconsistent with the section 1122

program regulations. "38 Dr. Margulies

expressed HEW's view that if changes

were made in Plan Omega to satisfy OCR,

those changes would be subject to

section 1122 review only to the extent

that any one or more of them amounted

to a "capital expenditure" as defined

by the regulations?? and were deemed by

38 Docket Item 22D, ex. H.

39 The regulations define a "capital

expenditure" as:

an expenditure...which, under

generally accepted accounting

principles, is not properly

chargeable as an expense of

operation and maintenance and

which (i) exceeds $100,000, or

(ii) changes the bed capacity

of the facility with respect

to which such expenditure is

made, or (iii) substantially

changes the services of th[at]

FaSLLLEY «<0

42 C.F.R. § 100.103(a) (1).

#*

53a

the DPA to warrant review. 4°

WMC executed a Contract of Assur-

ances with HEW's Office of Civil Rights

on November 1, 1977. To date, none of

the changes to Plan Omega specified

therein have been submitted to the BCHP's

successor agency for review.

Plaintiffs have asserted at least

fifteen separate claims in this action

challenging decisions made and proce-

dures used at virtually every step in

the administrative process just described.

All but two of those claims relate to

alleged violations of section 1122, the

regulations implementing it, or the

agreement entered into by Delaware and

HEW pursuant to the statute. The other

two claims pertain to alleged violations

of plaintiffs' constitutional right to

46 Under the regulations, the DPA

determines in the first instance whether

a proposed expenditure is a capital ex-

penditure within the meaning of section

1122. 42 C.F.R. § 100.103(d). Moreover,

in the content of a change in an approved

capital expenditure, the DPA has dis-

cretion to exempt from review changes

i pag only cost. Id. § 100.103(a)

(v).

54a

equal protection. Because defendants

have asserted threshhold defenses re-

lating to standing or reviewability with

respect to all the statutory or non-

constitutional claims, the Court will

discuss those claims first.

II. THE STATUTORY CLAIMS

Plaintiffs claim that each of the

defendants violated one or more of his

duties under section 1122, the regula-

tions, or the agreement between HEW

and Delaware in connection with the re-

view and ultimate approval of Plan Omega.

Before addressing those claims, the

Court notes that defendant WMC challen-

ges the standing of the plaintiffs

to assert the alleged violations.

Specifically, WMC argues none of the

plaintiffs has shown that he meets

the following three requirements for

standing: (1) the plaintiff must

have been injured in fact by the

**

55a

challenged action; 42 (2) there must be

a substantial probability that the re-

quested relief will alleviate the

+

41 Association of Data Processing Serv.

Orgs., Inc. v. Camp, 397 U.S. 150, 151-

52 (1960). In this regard the First

Amended Complaint (Docket Item 9) was

clearly deficient; except for an

allegation that Alice Wilson suffered

injury in her capacity as a member of

the Delaware Health Council, Inc.,

the complaint contained no allegations

of injury to any of the plaintiffs.

See Docket Item 9, pars. 3-10. In

order to rectify the situation,

plaintiffs have moved to amend para-

graphs 3 through 10 of the First

Amended Complaint to allege that

each of them has been injured by

the actions of the defendants

challenged in the complaint. Docket

Item 32. Defendant WMC stated in

its brief that it would oppose the

proposed amendment but it has never

advanced any reason for its objection.

Docket Item 41, p. 10. Because the

Court perceives no prejudice to the

parties likely to result from the

amendment, the motion to amend will

be granted.

56a

injury complained of; 4? and (3) the

interests allegedly infringed must be

“arguably within the zone of interests

to be protected" by section 1122.43

The parties briefed and vigorously

42 Simon v. Eastern Ky. Welfare Rights

Org., 426 U.S. 26, 38 (1976); accord,

Village of Arlington Heights v. Metro-

politan Hous. Dev. Corp., 429 U.S. 252,

260-61 (1977). It appears there are

disputed issues of material fact with

respect to whether the relief sought

here—rescission of the section 1122

approval of Plan Omega and institution

of a more rigorous review process—would

deter WMC from building Plan Omega and

thus alleviate the alleged injury to

plaintiffs. See Affidavits of James

P. Tyler, Docket Items 42 and 61;

Affidavit of Jerome Pollack, Docket

Item 57A. Consequently, even if it

were necessary to decide this issue,

which it is not, summary judgment

would not be appropriate.

43 See Warth v. Seldin, 422 U.S. 490,

498-500 (1975); Sierra Club v. Morton,

405 U.S. 727, 733 (1972). Unlike the

first two requirements, which derive

from Article III of the Constitution,

the zone of interest requirement is

a prudential limitation imposed by

the Supreme Court. Warth v. Seldin,

Supra, 422 U.S. at 499-500.

7

57a

contested the standing question. In

light of the Court's conclusions on the

merits of the plaintiffs' claims,

however, it is unnecessary to decide

whether any of the standing requirements

have been met. Thus, for purposes of

the pending motions the Court will

assume standing.

A. Claims Against HEW

At the risk of oversimplifying,

plaintiffs have asked this Court to re-

view substantive and procedural decisions

made by HEW and the State defendants

during the course of the section 1122

process with respect to three general

areas: (1) the original approval

of Plan Omega and the affirmance of

that decision upon reconsideration;

(2) the impact for section 1122 purposes

of the modifications to Plan Omega made

to achieve compliance with the civil

rights laws; and (3) the sufficiency

of the Gilbane Contract to meet the

obligation requirement of the regu-

lations. Defendants contend that

section 1122(f), 42 U.S.C. § 1320a-1(f)

precludes review of any of the decisions

58a

challenged on nonconstitutional claims. *4

Section 1122(f) provides:

(f£) Any person dissatisfied

with a determination by the Secre-

tary under this section may within

six months following notification

request the Secretary to reconsider

such determination. A determination

by the Secretary under this section

shall not be subject to adminis-

trative or judicial review.

(Emphasis supplied).

Although the language emphasized

appears in clear and unequivocable

terms to bar review by this Court of

44 None of the defendants have argued

that section 1122(f), which bars ju-

dicial review of a "determination by

the Secretary under [section 1122],"

precludes review of plaintiffs' consti-

tutional claims. Moreover, the Supreme

Court has construed similar statutory

language as not precluding judicial

review of decisions relating to the

constitutionality of the underlying

statute. Johnson v. Robison, 415

U.S. 361, 366-74 (1974); see Califano

v. Sanders, 430 U.S. 99, 109 (1977).

59a

any determination made by the Secretary

under section 1122, plaintiffs contend

that the preclusion of review extends

only to substantive determinations by

the Secretary and not to procedural

determinations. Thus, for example,

plaintiffs seek to avoid the bar of

section 1122(f) by challenging the

Secretary's refusal to make an inde-

pendent determination regarding the

consistency of Plan Omega with appli-

cable standards and plans, rather than

the approval itself. In evaluating

plaintiffs' argument, the Court must

look to the legislative history and

the purpose of section 1122.

The Administrative Procedures Act

("APA"), 5 U.S.C. § 701(a), authorizes

judicial review of agency action except

where "(1) statutes preclude judicial

review; or (2) agency action is

committed to agency discretion by law.".

The Supreme Court has held that:

60a

"{J]udicial review of a final

agency action by an aggrieved

person will not be cut off

unless there is a persuasive

reason to believe that such was

the purpose of Congress.” A

clear command of the statute will

preclude review; and such a command

may be inferred from its purpose

cans It is, however, “only upon

a showing of ‘clear and convincing

evidence' of a contrary legisla-

tive intent" that the courts

should restrict access to judicial

review.

Barlow v. Collins, 397 U.S. 159, 166-67

(1970) (citations omitted) (emphasis

supplied) (quoting Abbott Laboratories

v. Gardner, 387 U.S. 136, 140-41 (1967) ).

The issue here is whether Congress

intended to preclude review of all

determinations by the Secretary under

section 1122 or only substantive de-

terminations, such as whether the pro-

ponent of an approved capital expen-

diture had notified the DPA about it

at least sixty days before incurring

an obligation. "[E]Jach case raising

an administrative reviewability question

must be analyzed on the basis of the

specific statutory provisions involved."

**

6la "

Briscoe v. Bell, 432 U.S. 404, 414

(1977). The language of section 1122 (f)

is uncomplicated and on its face exempts

from review any "determination by the

Secretary under [section 1122]."

Nothing in the legislative history

suggests that Congress meant to pre-

clude review of "substantive" deter-

minations only or to limit the reach

of section 1122(f) in any other way.

The House Ways and Means Committee,

for example, simply paraphrased

section 1122(f) in its section-by-

section analysis of the bill that be-

came the Social Security Amendments

of 1972.4 The only evidence

_.45 The Committee Report stated:

Subsection (f) of the new

section 1122 provides that any per-

son dissatisfied with a determina-

tion under the section may request

reconsideration by the Secretary

up to 6 months after notification,

with such determinations not being

subject to other administrative

or judicial review.

H.R.Rep.No. 231, 92d Cong., 2d Sess.,

reprinted in [1972] U.S. Code Cong. &

Admin. News 5290.

62a

of legislative intent offered by

plaintiffs to support their construc-

tion of the statute is a statement

made by former Secretary of HEW, Elliot

Richardson, at a hearing before the

Senate Finance Committee in 1970. 7° A

single statement by an executive

official made at a hearing two years

before the enactment of section 1122(f)

46 In response to a question from

Senator Talmadge about the effect of

a preclusion-of-review provision nearly

identical to section 1122(f), former

Secretary Richardson replied:

[T]here is always an opportunity

of going to a Federal court to

seek to maintain the proposition

that the Secretary has acted

arbitrarily or beyond his

authority. What this means,

in effect, is that there is no

judicial review strictly on the

administrative basis of deter-

minations made within the scope

of the Secretary's discretion.

Proposed Amendments to the Social

Security Act: Hearings on H.R. 17559

Before the Senate Comm. on Finance,

9lst Cong., 2d Sess. 76 (1970).

63a

does not provide a sufficient basis for

ignoring the plain language of the

statute and inferring a Congressional

intent to preclude review of substan-

tive determinations only.

The Supreme Court's recent decision

in Briscoe v. Bell, 432 U.S. 404 (1977),

strongly supports the Court's conclusion

that section 1122(f) absolutely bars ju-

dicial review of procedural as well as

substantive determinations by the

Secretary. In the Briscoe case, the

Governor of Texas challenged actions

by the Attorney General of the United

States and the Director of the Census

that led to a determination that Texas

was subject to the 1975 Amendments to

the Voting Rights Act. Under section 4

(b) of the Act,4/’ the Attorney General

and the Director were responsible for

determining whether specified pre-

conditions for application of the Act

to a particular jurisdiction were met.

47 42 U.S.C. § 1973b(b).

64a

The Governor sought a declaratory

judgment determining " ‘how and under

what circumstances the determinations

--.- Should be made.‘ " Briscoe v.

Bell, supra, 432 U.S. at 407. He

argued, inter alia, that the Attorney

General failed to consider a required

factor in making his determination

and that the Director of the Census

misinterpreted a clause of the

statute. 48

The Supreme Court was called upon

to construe the following provision of

section 4(b): "A determination of the

Attorney General or the Director of

the Census under this section ... shall

not be reviewable in any court...."

48 432 U.S. at 407 n. 6. The Governor

also argued that the Attorney General

and the Director violated their

statutory duties by failing to afford

Texas a pre-determination hearing and

by making an incorrect calculation

with respect to applicability. Id.

**

65a

Id. at 408. For all practical purposes,

the language is identical to that in

section 1122(f). The District Court

and the Court of Appeals construed the

preclusion-of-review provision narrowly

and found that they had jurisdiction

to consider the "pure legal question"

whether the officials had correctly

interpreted the statute or had acted

in a fashion “plainly in excess of

[their] statutory authority." Id.

Both courts then considered and re-

jected on their merits the Governor's

procedural and statutory construction

arguments. Id. at 409. The Supreme

Court, however, found the intent of

Congress to preclude judicial review

unmistakable and ordered dismissal of

the complaint without reaching the

merits, holding that “the courts

below erred in finding that they had

jurisdiction to review petitioners'

claim of erroneous application of

§4(b)." Id. at 415.

Plaintiffs contend Briscoe v.

Bell is distinguishable because it

involved challenges to determinations

66a

by the Attorney General and the Director,

while the instant case involves an attack

on the Secretary's "failure to make any

determinations or findings at al1."49

The Court disagrees. Plaintiffs'

argument that the Secretary had a

statutory duty to make an independent

review of Plan Omega before approving

it was presented to the Secretary in

the February 4, 1977 Request for

Reconsideration. >?

The Secretary

rejected the argument on the ground

that section 1122 did not authorize

him to make an independent judgment of

the consistency of a DPA-approved capi-

tal expenditure with applicable

standards, criteria and plans. >1

49 Docket Item 30, pp. 19-20.

50 Docket Item 22B, p. 2.

51 Docket Item 22D, ex. F. Even if the

Court were to reach the merits of the

claims that the Secretary violated his

duties under section 1122 by failing to

conduct an independent review of Plan

Omega either before approving it or,

at least, upon reconsideration, the

Secretary would be entitled to summary

judgment. For, as previously stated,

the Secretary's duties under section

1122 are severely limited when the

state agency has approved a proposed

(continued next page)

67a

Thus, plaintiffs' claims are indistin-

guishable from the statutory interpre-

tation claims held nonreviewable in

Briscoe v. Bell, supra. And borrowing

the language of Justice Marshall's

conclusion in Briscoe, this Court

concludes:

[Section 1122(f£)] could

hardly prohibit judicial review

in more explicit terms.... The

language is absolute on its face

and would appear to admit of no

exceptions. The purposes and

legislative history of [section

1122] strongly support this

straightforward interpretation.

432 U.S. at 409-10.

The Court also considers Thermtron

Products, Inc. v. Hermandorfer, 423 U.S.

336 (1976), a case cited by plaintiffs,

inapplicable in the circumstances of

this case. The Thermtron case involved

28 U.S.C. § 1447(d), which precludes

review of a Federal court order re-

manding a case removed from a State

(footnote continued from previous page)

capital expenditure and he has no

discretion to overturn an approval by

the DPA. NAACP v. Wilmington Medical

Center, Inc., supra, 436 F.Supp. at 1198.

68a

court back to the court from which it had

been removed. The Supreme Court held

that Congress did not intend to extend

the prohibition against review beyond

orders entered pursuant to 28 U.S.C.

§ 1447(c). Id. at 346. Therefore,

the Court permitted review of an order

based "on grounds wholly different from

those upon which §1447(c) permits

remand." Id. at 344; see Briscoe v.

Bell, supra, 432 U.S. at 414 n. 13.

None of the actions or omissions

alleged by the plaintiffs in the case

sub judice are so clearly outside the

Secretary's statutory authority as

to require consideration of the

applicability of the Thermtron decision

here.

Turning to the specific claims

asserted against HEW, the Court con-

cludes that section 1122(f) precludes

review of each of them. The first

claim, that the Secretary had a duty

to make an independent finding, has

already been discussed. Plaintiffs

also contend that the Secretary's

October 12, 1977 determination that

69a

Plan Omega, as modified to comply with

the civil rights laws, would not have to

be reviewed again in its entirety under

section 1122 violated the statute. As

the October 12 letter to plaintiffs'

counsel illustrates, however, the

Secretary based his decision on his

interpretation of the statute and the

regulations implementing it.>2 The

fact that HEW apparently had reached

a contrary conclusion only a month

earlier, or that the interpretation

may be erroneous as a matter of law,

or that the Secretary's decision may

have been influenced by a letter from

a business leader and personal friend

52 Docket Item 22D, ex. H. While the

Secretary's interpretation of the

applicable statutory and regulatory

proyisions may not be the only possible

interpretation, it is clearly not an

unreasonable one.

70a

of the President>? is irrelevant,

because in any of those events section

1122(£) would still preclude judicial

review. See Briscoe y. Bell, supra,

432 U.S. at 409-15.

Plaintiffs asserted no other

statutory claims directly against HEW,

but several of the claims against

defendants Burke and WMC cha lenge

actions that were either upheld by HEW

upon reconsideration or taken by HEW

in the first instance. Consequently,

those claims raise additional issues

of revyiewability.

53 Plaintiffs have alleged and vig-

orously argued that the Secretary re-

versed his decision regarding the

effect of modifying Plan Omega to

comply with the civil rights lawa as

a result of a letter he received on

September 30, 1977, from Irving

Shapiro, Chairman of the Board of the

DuPont Company and allegedly a friend

of the President. Docket Item 9,

pars. 42 and 43. Even if this alle-

gation were true and the Secretary

did consider Mr. Shapiro's letter,

he still would haye been acting

within his authority under section

1122 and therefore this Court would

lack jurisdiction to review his

determination under section 1122(f).

7la

B. Claims Against State Defendants

Plaintiffs' claims against the

State defendants may be subdivided into

two groups: substantive claims and

procedural claims. The substantive

claims charge that defendant Burke

as Director of the DPA, defendant

Sweeney as Chairman of the Interim

Council, and defendant Delaware Health

Council, Inc. as successor to the HPC,

the local health planning agency in-

volyed, respectively, “acted in an

arbitrary and capricious manner and

in violation of § 1122" in approving

Plan Omega because it "was in fact

.-- inconsistent with applicable

standards, criteria, and plans.">4

At the outset, the Court notes

that the decisions of the Interim

Council and the HPC to recommend

approval of Plan Omega are not final

54 Docket Item 9, pars. 54, 60 and

61. No other claims have been asserted

against defendants Sweeney and Delaware

Health Council, Inc.

72a

actions subject to judicial review,

because they were only interim steps in

the administrative process. The

Supreme Court has stated:>>

[T]he relevant considerations

in determining finality are

whether the process of adminis-

trative decisionmaking has

reached a stage where judicial

review will not disrupt the

orderly process of adjudication

and whether rights or obligations

have been determined or legal

consequences will-flow from the

agency action. ICC vy. Atlantic

Coastline R. Co., 383 U.S. 576,

602 (1966); Rochester Telephone

Corp. v. United States, 307 U.S.

125, 143 (1939).

Because the BCHP had full discretion to

accept or reject the findings and

recommendations of the Interim Council

and the HPC, © those findings clearly

were "advisory opinions" and did not

55 Port of Boston Marine Terminal

Ass'n y. Rederiakliebolaget Trans-

atlantic, 400 U.S. 62, 71 (1970).

56 See 42 U.S.C. § 1320a-1(b), (d);

42 C.F.R. §§ 100.104(a) (2) (i), (da);

Docket Item 22E, Agreement, par. II.A(d).

73a

determine any "right or obligation,"

so that “legal consequences" would flow

therefrom. Thus, the Court holds that

decisions by statewide and local health

planning agencies assisting the DPA are

not final decisions subject to judicial

review. Accordingly, summary judgment

will be entered against plaintiffs on

their claim against Interim Council

Chairman Sweeney and the Court also

will enter judgment in favor of de-

fendant Delaware Health Council, Inc.

and against plaintiffs based on the

law of the case.

With respect to the substantive

claim against defendant Burke, the

Court will assume arguendo that the

DPA's approval of Plan Omega consti-

tuted final action for administrative

review purposes. Before embarking on

a review of the DPA's determination

that the proposal was consistent with

applicable standards and plans, however,

the Court must decide whether Congress

intended to preclude the Federal courts

from reviewing actions by the

74a

ppa.>? The initial inquiry is whether

judicial review has been expressly pre-

cluded by statute—-section 1122(f) in

this case. Plaintiffs contend that

section 1122(f) is inapplicable because

it only precludes judicial review of

"determination[s] by the Secretary."

Since a decision of the DPA to approve

a proposed capital expenditure is

binding on the Secretary, the Court

57 The issue is phrased in terms of

"prohibition" rather than "authorization"

of judicial review because the Supreme

Court has held that "judicial review of

a final agency action by an aggrieved

person will not be cut off unless there

is persuasive reason to believe that

such was the purpose of Congress."

Abbott Laboratories v. Gardner, 387

U.S. 136, 140 (1967). In the circum-

stances of this case, the presumption of

reviewability may not be applicable.

Unlike the situation under the APA and

the cases in which the Supreme Court

has recognized the presumption, the

instant case involves an attempt to

obtain review of action by a State,

rather than a Federal, agency. Compare

id. and cases cited therein; 5 U.S.C.

§ 701(b) (1). In view of the clear

legislative purpose to preclude review,

however, the Court need not decide the

issue.

75a

will assume that such decisions are

not preliminary actions to be integrated

for review purposes into final deter-

minations by the Secretary and that

section 1122(f) does not expressly

preclude judicial review of DPA

approvals.

Absent express preclusion, non-

reviewability may be inferred from a

statute's purpose and its legislative

history. However, courts should re-

strict access to judicial review only

upon a showing of clear and convincing

evidence that Congress so intended.

Barlow v. Collins, supra, 397 U.S.

at 167.

The legislative purpose behind

section 1122 is limited and specific.

Congress intended (1) to contain

"hospital expenditures by limiting

federal reimbursements covering capital

expenditures for health care to those

expenditures deemed necessary by the

state" and (2) to encourage "rational

health planning by the states." NAACP

v. Medical Center, Inc., — F.2d —

(C.A.3, August 18, 1978) (slip op. at

12-13) (emphasis added), aff'g 436 F.Supp.

76a

1194 (D.Del. 1978).°° ‘The House Ways

and Means Committee stated that the

statute "would in no way change the

autonomy or authcrity of existing State

39 In keeping

or local planning agencies."

with the purpose of section 1122 to

support State and local health planning

efforts, Congress left the primary

responsibility for evaluating the merits

of a proposed capital expenditure with

the State agencies. Once the DPA

approves a proposal, the Secretary's

role is purely ministerial; he has no

discretion to determine whether the

proposed expenditure is unwise. The

limited role of the Secretary under

section 1122 clearly evinces Congress'

intent to avoid Federal°” interference

58 See 42 U.S.C. § 1320a-1(a).

59 H.R. Rep. No. 231, 92d Cong., 2d

Sess., reprinted in [1972] U.S. Code

Cong. & Admin. News 5066.

60 The regulations and the agreement

between HEW and Delaware pursuant to

section 1122 recognize that judicial

review may bé available under State

law or regulation to a proponent of an

expenditure disapproved by the DPA.

42 C.F.R. § 100.106(c) (4); Docket Item

22E, Agreement, par. II.B3(d). Although

(continued next page)

77a

with substantive planning decisions made

on the State and local level. Given the

prohibition on judicial review of the

Secretary's decision set forth in

section 1122(f), it is inconceivable

that Congress could have intended the

Federal judiciary to play a more active

role than the Secretary by reviewing

under any standard the substance of the

DPA's approval of a proposed capital

expenditure. Thus, the Court discerns

a clear Congressional intent to preclude

judicial review of the BCHP's approval

of Plan Omega on June 15, 1976 and will

(footnote continued from previous page)

plaintiffs contend this fact supports

their position, the Court considers it

irrelevant. Nothing in the statute,

regulations or agreement suggests that

the availability of judicial review on

the State level at the behest of a dis-

satisfied opponent of a proposal was

ever contemplated. More importantly,

judicial review by State courts of sub-

stantive decisions by the DPA is totally

consistent with the legislative intent

to have planning determinations made at

the State and local level. Review of

such decisions in Federal court, on the

other hand, would directly contravene

the purpose of section 1122.

78a

enter summary judgment in favor of

defendant Burke on plaintiffs' claim

that he acted in an arbitrary and capri-

cious manner in approving the plan.

In addition to the substantive

claims, plaintiffs charge that defendant

Burke violated the requirements of section

1122, its implementing regulations, and

Delaware's agreement with HEW in the

following ways: (1) by failing to make

an independent: finding on behalf of

Delaware's DPA, the BCHP, that Plan

Omega was consistent with applicable

standards and plans; (2) by failing to

determine whether the modifications

noted in the June 9, 197@ letter from

WMC constituted a new capital expendi-

ture subject to section 1122 review;

(3) by failing to send HEW "copies of

all comments from all parties participa-

ting in the review process at both

local and State levels" when he notified

the Secretary of the BCHP's approval

of Plan Omega; and (4) by failing to

require that Plan Omega as modified

to comply with the findings of HEW's

Office of Civil Rights undergo a new

79a

61 The first of

these "procedural" claims were submitted

section 1122 review.

to HEW in connection with the Request

for Reconsideration. °7 Because HEW

considered and rejected both of those

contentions in its September 7, 1977

o3 the

Court concludes that it lacks jurisdic-

Decision upon Reconsideration,

tion to review either of them. This

conclusion is based on the express

preclusion of review contained in

section 1122(f).

61 Docket Item 9, pars. 53, 56, 57

and 58.

62 Docket Item 22B, pp. 5-6.

63 Docket Item 22E, ex. F., pp. 3-5.

The Secretary found that the DPA had

made the required findings and recommen-

dation regarding Plan Omega. Id. pp. 3-4.

As to the changes noted in the June 9,

1976 letter, the Secretary found that

they did not necessitate additional

review because the letter also indicated

that the changes wouid not cause an

increase in the total amount of the

proposed capital expenditure submitted

on March 19, 1976. Id. pp. 4-5.

80a

Likewise, plaintiffs cannot prevail

on their claim that defendant Burke

breached the agreement between Delaware

and HEW under section 1122 by failing to

submit copies of the comments and reports

of the Interim Council and HPC to HEW

along with the findings of those agencies

and the DPA. Given the ministerial role

of the Secretary with respect to proposed

capital expenditures that have received

DPA approval, submission of the reports

of the subordinate State and local health

planning agencies would be a useless act

and a needless burden on both the DPA

and HEW. While it is arguable, and the

Court has assumed, that plaintiffs have

suffered injury in fact as a result of

the approval of Plan Omega under section

1122, there is no evidence that any of

the plaintiffs was injured by defendant

Burke's failure to send the comments

and reports of the Interim Council and

HPC to HEW. Because most if not all

of those reports were in fact submitted

to HEW in connection with the Request

for Reconsideration®@ and the Secretary

64 See Docket Items 22B and 22C and ex-

hibits attached thereto.

8la

still affirmed the approval of Plan

Omega, it is obvious that plaintiffs

have not been injured by the challenged

action. Accordingly, the Court finds

that the plaintiffs lack standing to

assert their third procedural claim

against defendant Burke. See

Association of Data Processing Service

Organizations, Inc. v. Camp. 397 U.S.

150, 151-52 (1960).°>

The final claim, which concerns

the DPA's failure to require the entire

Plan Omega as modified to undergo a

65 The claim based on defendant Burke's

failure to transmit certain reports is

based solely on the agreement between

Delaware and HEW under section 1122;

neither the statute nor the regulations

require the DPA to submit such reports.

The Secretary, therefore, clearly had

the authority to waive complaince with

the alleged reporting requirement. It

is clear from section 1122(f), and the

general purpose of the statute that

Congress did not intend the courts to

become inyolved in the day-to-day pro-

cedures employed by HEW in administering

section 1122. Consequently, even if

plaintiffs had standing, the Court

seriously doubts that it would have

jurisdiction to entertain a claim based

on an alleged technical breach of the

agreement between Delaware and HEW.

(continued on next page)

82a

new section 1122 review, is closely

related to another claim asserted against

WMC. The two claims are discussed to-

gether in the next section of this

opinion.

C. Claims Against WMC

Plaintiffs have asserted three

claims against defendant WMC, but only

two warrant serious discussion. °® They

both pertain to the requirement in the

regulations (42 C.F.R. §100.109 (a) )

that the proponent of an approved

capital expenditure incur an obligation

for it within, at most, eighteen months

of the date it was approved by the

(footnote continued from previous page)

In view of its conclusion regarding

standing, however, the Court need not

reach this issue.

66 The Court finds no merit in the

claim that WMC violated the require-

ments of section 1122 by submitting to

the BCHP a preliminary financial report

which it knew or should have known "was

based on grossly unrealistic and un-

trustworthy assumptions as to projected

revenues and costs." Docket Item 9,

par. 62. The financial report sub-

mitted with the application for review

(continued on next page)

83a

ppa. °7 The BCHP approved Plan Omega

on June 15, 1976. Under the regulations,

(footnote continued from previous page)

of Plan Omega included the caveat that

it was a "preliminary report" and "should

not be used to assist in obtaining fi-

nancing for the project." Docket Item

22B, ex. F. The assumptions upon which

the projected financial statements were

based were clearly identified. Id.

Thus, the BCHP and other reviewing

agencies had notice that the financial

projections were only preliminary and

chose to accept them anyway. There is

no allegation that WMC deliberately

withheld information available to it or

that it failed to provide information

requested by the DPA.

67 The regulation provides in pertinent

part:

[W]here the designated planning

agency has found that a proposed

capital expenditure is in confor-

mity with the standards, criteria,

and plans described in § 100.104

(a) (2), the obligation for such

capital expenditure shall be in-

curred not more than one year

following the date of such finding,

or such shorter period as may be

required by applicable State law:

Provided, That in the absence of any

State law to the contrary, the

designated planning agency may,

pursuant to a showing of good cause

by the person proposing such ex-

penditure, extent the period during

(continued on next page)

84a

WMC had one year from that date to incur

an obligation for Plan Omega or suffer

termination of the DPA approval. For

good cause shown, however, the DPA was

authorized to extent the period for

incurring an obligation for up to an

additional six months. WMC obtained

a six-month extension from the BCHP in

June 1977, giving it until December 15,

1977 to incur an obligation. On

December 14, 1975, WMC entered into a

contract with the Gilbane Building

Company ("Gilbane Contract") for the

construction of Plan Omega as modified

to comply with the civil rights laws.

Plaintiffs assert two claims

against WMC with respect ot the Gilbane

Contract. First, they contend that the

Contract authorizes costs which are

open-ended and far in excess of the

(footnote continued from previous page)

which such obligation must be in-

curred for up to an additional six

months. If no such obligation is

incurred within such period, the

designated planning agency's

approval shall, for purposes of

this subpart, be deemed to be

terminated upon the expiration of

such period.

42 C.F.R. § 100.109 (a).

85a

68 Second,

costs approved by the DPA.

plaintiffs argue that the Gilbane

Contract does not satisfy the require-

ments of the regulations with respect

to incurring an obligation for a capital

expenditure and, therefore, that the

BCHP's approval of Plan Omega has

terminated.

The former contention and the claim

that defendant Burke had a duty to order

Plan Omega as modified to undergo another

section 1122 review raise questions con-

cerning the procedure for handling changes

to proposed capital expenditures made

after approval has been obtained.

Section 1122(g) defines a "capital

expenditure" for purposes of the

statute as "an expenditure which...is

not properly chargeable as an expense

of operation and maintenance and which

(1) exceeds $100,000, (2) changes the

bed capacity of the [affected] facil-

ity..., or (3) substantially changes

the services of the [affected]

facility." 42 U.S.C. § 1320a-1(g);

68 Docket Item 9, par. 63

69 Id. par. 64.

86a

see 42 C.F.R. §100.103(a) (1). The

statute does not address the effect of

changes in an approved capital expen-

diture, but the regulations do deal

with the problem. The regulations

provide that:

Any change in a proposed

capital expenditure which itself

meets the criteria set forth in

this paragraph, shall, for pur-

poses of this subpart, be deemed

a capital expenditure; Provided,

That an increase or decrease in

the cost of a proposed capital

expenditure which increase or

decrease is not related to a

change in bed capacity or a

subatantial change in services

may, at the option of the planning

agency, be exempt from review

under this subpart.

42 C.F.R. §100.103(a) (2) (v). Further-

more, a determination by the DPA that a

proposed expenditure or a change therein

is not a capital expenditure within the

meaning of the statute and regulations,

or that it should be exempt from review

or that it is otherwise not subject to

section 1122 review is expressly made

binding upon the Secretary by the

regulations. Id. §100.103(d). On the

other hand, if the DPA determines that

a change in a proposed expenditure is

87a

a capital expendure, the proponent moy

appeal to the Secretary. Id.

The essence of plaintiffs’ claim

against defendant Burke is that WMC's

decision to alter Plan Omega to comply

with the findings of the Office of

Civil Rights so substantially changed

Plan Omega that it gave rise to a duty

on Burke's part to require the modified

proposal to undergo a complete section

1122 review. Neither the statute nor

the regulations explicitly imposes such

a duty on the DPA or authorizes the DPA

to vacate the approval of a capital

expenditure on the basis of subsequent

changes in the proposed expenditure.

Moreover, in this case, the Secretary

has considered the issue and rejected

plaintiffs' position. In a letter to

plaintiffs" counsel, dated October 12,

1977, Dr. Margulies explained HEW's

position as follows:

Wilmington Medical Center has

received approval, for purposes

of the section 1122 review program,

for Plan Omega. Plan Omega is a

specific proposal to construct a

new facility of a stated bed capa-

city to provide stated health

88a

services, as well as to remove

certain services from the Delaware

Division and to remodel that facility,

at a given cost. To the extent that

the capital expenditure actually

made by Wilmington Medical Center

deviates from Plan Omega in such

a way that any of the three cri-

teria set forth above is met, then

reimbursement for amounts related

to the capital expenditure which

was not a part of Plan Omega may

be withheld from payments to the

facility. This applies equally

to any capital expenditure which

was not a part of Plan Omega and

which results in the termination

of a health service. If Wilming-

ton Medical Center should in fact

make such a change and not submit

notice to the DPA in accordance

with the requirement of [42 C.F.R.]

§100.106(a) (1), then the Regional

Health Administrator, upon ascer-

tainment of such non-compliance,

will make a determination that

timely notice (for that change)

was not given. In that case,

reimbursement related to the

change in the capital expenditure

will be withheld....

Docket Item 22D, ex. H, p. 3. In light

of HEW's position, which under section

1122(f) is not subject to judicial

review, it is clear that defendant

Burke did not violate the statute or

its regulations by failing to vacate the

approyal of Plan Omega in its original form.

LA

89a

For the same reasons, the fact that

the costs of construction under the

Gilbane Contract may exceed significantly

the costs contained in the application

for section 1122 approval presented -to

the DPA and the State and local health

planning agencies on March 10, 1976 does

not render the original approval of Plan

Omega invalid. By incurring an obliga-

tion for more than the amount approved,

WMC simply exposes itself to the risk

that to the extent the capital costs

related to Plan Omega exceeded the

amount originally approved, those costs

will not be reimbursed from Federal funds.

Section 1122 imposes no obligations on

WMC in this regard; instead, it imposes

conditions for obtaining a guarantee

that Federal funds will not be withheld

on the ground that WMC's capital ex-

penditures were unnecessary or unreason-

able. Accordingly, summary judgment

will be entered in favor of WMC on

plaintiffs' claim that it violated the

cost containment policies of section

1122.

90a

Plaintiffs' final statutory claim

is that the BCHP's approval of Plan

Omega expired on December 15, 1977 due

to WMC's faliure to incur an obligation

for that capital expenditure within

eighteen months of obtaining approval as

70 Plain-

required by the regulations.

tiffs contend that the Gilbane Contract

does not constitute an “obligation"

within the meaning of section 1122 and

its implementing regulations.

The regulations define an

"obligation" for a capital expenditure,

such as Plan Omega as “an enforceable

contract...for the construction, ac-

quisition, lease or financing of a

capital asset." 42 C.F.R. §100.103(c)

(1). Plaintiffs argue that the Gilbane

Contract is not such an obligation

because it postpones the commencement

of construction to an unspecified

future date and gives WMC the discre-

tion not to proceed at all. The

argument is based on three clauses of

70 See 42 C.F.R. §100.109(a) set forth in

note 67 supra. Plaintiffs moved for par-

tial summary judgment against WMC on this

issue. Docket Item 43.

9la

the Gilbane Contract ’* which condition

WMC's obligation to deliver a direction

~

71 The clause read as follows:

5.2 CM [Construction Manager] shall

commence the Work not later than

thirty (30) days following the

receipt by CM of Owner's written

direction therefore. It is ac-

knowledged by CM that (i) litigation

pending at the date hereof has sus-

pended the financing of the Project

and (ii) Owner has advised CM that

it anticipates final resolution

of such litigation prior to July

1978. Prior to the receipt of

Owner's direction to commence the

Work CM shall incur no expenses

payable by Owner hereunder.

5.3 Promptly following the final

resolution of the [litigation] and

the receipt of the financing re-

ferred to in Section 5.2 hereof,

Owner shall deliver to CM a written

direction to commence work.

12.2.4 If on July 1, 1978, litiga-

tion pending against Owner or other-

wise, whether instituted prior or

subsequent to the date hereof, and

affecting adversely Owner's ability

to obtain financing for the Project

upon terms and conditions deemed

reasonable and prudent by Owner in

its sole discretion, shall remain

pending or shall have been resolved

(continued on next page)

92a

to commence work to Gilbane upon final

resolution of the litigation relating

to Plan Omega and WMC's receipt of fi-

nancing. Under these clauses and subject

to certain conditions that now appear to

have been satisfied, WMC also has the

right after July 1, 1978, to terminate

the Contract unilaterally upon giving

seven days written notice to Gilbane.

According to plaintiffs, the Gilbane

Contract is so contingent in nature that

it is illusory and unenforceable under

general principles of contract law and

within the meaning of HEW's regulations.

To some extent, the Court shares the

plaintiffs' concern that the Contract

constitutes mere paper compliance with

the regulatory requirements and that it

tends to undermine the credibility of the

(footnote continued from preyious page)

adversely to Owner, or if prior

to such date Owner shali have

been unable to obtain or obtain

commitments for such financing

then from and after July 1, 1978,

Owner shall have the right to

terminate the Contract by the

giving of seven days prior written

notice to CM.

Docket Item 36A (Civil Action No. 77-480),

ex. 3, pp. 13, 28-29.

93a

section 1122 process. However, the Court

is not convinced that it has the power to

review the Gilbane Contract to determine

whether it satisfies the regulatory re-

quirement that an obligation be incurred

within eighteen months of receiving DPA

approval.

The procedures for section 1122

review established by the regulations

in 42 C.F.R. Part 100 do not address the

question: who determines whether a

particular contract for a capital ex-

penditure constitutes an "obligation"

as defined in 42 C.F.R. §100.103(c).

Likewise, there is nothing in the

agreement or the DPA Manual regarding

the issue. Nonetheless, the Court

finds that the statutory and regulatory

scheme gives rise to a strong inference

that the DPA was intended to determine

in the first instance whether a contract

satisfies the obligation requirement

and that at least proponents of a capital

expenditure dissatisfied with the DPA's

decision would be able to appeal to the

Secretary.

94a

In arguing that the Gilbane Contract

does not constitute an "obligation," plain-

tiffs rely on two decisions by the Penn-

sylvania Department of Health, /?

terminating section 1122 approval for

proposed capital expenditures because

the construction contracts entered into

by the proponent health care providers

did not satisfy the obligation requirement

of 42 C.F.R. §100.109(a). One decision

involved a sixty-bed Medicenter to be

built in Oil City, Pennsylvania. The

proponent obtained section 1122 approval

for the project and in June 1976 (eighteen

months later) forwarded a contract re-

quiring, inter alia, commencement of

construction within 120 days to the

local health planning agency, which

accepted it as a binding legal contract.

In October 1976, however, the parties

to the contract extended the required

commencement date by about fifteen months

without notifying either the local agency

or the DPA. Upon being apprised of the

72 Docket Item 36A (Civil Action No.

77-480), exs. 4 & 5.

95a

amendment, the DPA made the following

determination:

[T]he October 8 amendment, signed

22 months after approval..., so

substantially changed the contract

and delayed project completion...

that for purposes of Section 1122,

the approval of Soren Prject...

lapsed on that date. /3

In the second decision relied upon

by plaintiffs, /4

the proponent of a capital

expenditure had not given the DPA a con-

tract for construction until several days

after the eighteen-month time period had

expired. In addition, the contract con-

tained no specific date for commencement

of construction and ten months after it

was signed construction still had not

begun. For these reasons, the Pennsyl-

vania Department of Health decided that

section 1122 approval for the capital

expenditure had expired.

73 Docket Item 36A (Civil Action

No. 77-480), ex. 4, p. 2.

74 Id., ex. 5 (Memo, dated March 20,

1978, re: Termination of an 1122

Approval for Witt Home for the Aging).

96a

WMC argues that the Gilbane Contract

is distinguishable from the contracts

inyolved in the two Pennsylvania decisions,

but it is unnecessary to decide that issue.

The Court considers the decisions by the

Pennsylvania Department of Health relevant

to the instant case primarily because

they support the conclusion that the DPA

is the proper body to determine initially

whether the regulatory requirement of

an obligation has been met. 7? Nothing

in the statute or regulations indicates

that this Court is empowered to decide

independently or to review decisions by

the DPA or HEW as to whether the Gilbane

Contract constitutes an "obligation."

Thus, in the absence of any evidence to

the contrary, the Court concludes that

section 1122(f) precludes review of

determinations by the Secretary or DPA

75 It is also noteworthy that in

both instances the Pennsylvania Depart-

ment of Health's determination was

forwarded to HEW, suggesting the

possibility of review by that agency.

Id., exs. 4 and 5.

97a

in this area. /®

To determine whether HEW had made

a determination with respect to the

obligation issue, the Court asked its

counsel, Mr. Sher, at oral argument

whether HEW had interpreted the term

"obligation" or ruled on the Gilbane

Contract. Mr. Sher responded that

"after some considerable review of the

matter .... [T]he position of HEW is

that if the contract appears to be fair

on its face, as [the Gilbane Contract]

does, it is sufficient to satisfy the

requirement of the regulation."’/

In light of Mr. Sher's statement

and the failure of the Delaware DPA to

76 Plaintiffs have attempted to

circumvent the preclusion-of-review

provision by asserting their claim

against WMC instead of HEW or the State

agencies. The Court will not permit

plaintiffs to accomplish indirectly

what the statute prevents them from

doing directly and therefore holds

that section 1122(f) governs this

issue.

77 Transcript of Oral Argument ("Tr."),

Docket Item 64, p. 108.

98a

object to the Gilbane Contract, the Court

finds that the Secretary has made a

determination on this issue. Because

section 1122(f) expressly precludes

judicial review of determinations by

the Secretary under section 1122, de-

fendant WMC is entitled to summary

judgment on plaintiffs' claim that the

section 1122 approval of Plan Omega

has expired.

III. THE EQUAL PROTECTION CLAUSE

Lastly, plaintiffs have asserted two

constitutional claims. Those claims re-

volve about section 1122(b) (3), 42 U.S.C.

§ 1320a-1(b) (3), which provides in

relevant part:

(b) The Secretary...shall

make an agreement with any State

which is able and willing to do

so under which a designated

planning agency...will —

* & ® &

(3) establish and main-

tain procedures pursuant to

which a person proposing any

such. capital expenditure may

appeal a recommendation by the

[DPA] and will be granted an

opportunity for a fair hearing....

99a

whenever and to the extent that

the findings of such [DPA]...

indicate that any such expenditure

is not consistent with the

[applicable] standards, criteria,

or plans.... (Emphasis supplied).

The statute requires participating states

to establish procedures by which the pro-

ponents of a capital expenditure may

appeal adverse decisions by the ppa, 7°

but it does not require the establishment

of similar appeal procedures for opponents

of proposals that have been approved.

The HEW regulations and the BCHP pro-

cedures also provide an opportunity for

a fair hearing only to unsuccessful pro-

ponents of an expenditure. /?

78 See section 1122 (d) (1) (B) (ii), 42

U.S.C. § 1320a-1(d) (1) (b) (ii); H.R.

Rep. No. 231, 92 Cong., 2d Sess.,

reprinted in [1972] U.S. Code Cong.

& Admin. News 5004.

79 There is a dispute concerning

whether the statute actually precludes

HEW and the DPA from affording consumer

opponents of a proposed expenditure a

fair hearing. Defendants contend that

it does, while plaintiffs assert that

both the Secretary and the DPA have

discrétion under the statute to provide

such hearings. It is unnecessary to

resolve that dispute, however, because

(continued on next page)

100a

Plaintiffs claim the Secretary's

failure to accord opponents of a proposed

capital expenditure the same appeal rights

as proponents thereof constitutes a vio-

lation of their right to equal protection

aS guaranteed by the Due Process Clause

of the Fifth Amendment. 80 Virtually,

the same claim has been asserted against

defendant Burke, the director of BCHP,

under the Equal Protection Clause of the

Fourteenth Amendment. °+ Plaintiffs admit

(footnote continued from previous page)

in either case the Court finds that the

classification drawn between proponent

health care providers and opponent con-

sumers is not violative of the plaintiffs'

right to equal protection.

80 Schneider v. Rusk, 377 U.S. 163,

168 (1964); Bolling v. Sharpe, 347 U.S.

497, 499 (1954). “Equal protection

analysis in the Fifth Amendment area is

the same as that under the Fourteenth

Amendment." Buckley v. Valeo, 424 U.S.

1, 93 (1976).

81 Although the Amended Complaint appears

to base this claim on the Due Process

Clause of the Fourteenth Amendment as

well as the Equal Protection Clause

(Docket Item 9, par. 55), the plaintiffs

have adjured any intention of asserting

a due process claim against defendant

Burke. Tr. at 41, 70-71; Docket Item 30,

p. 34 (Plaintiffs' Memorandum of Points

and Authorities).

10la

that the classification at issue here

does not impinge upon any "fundamental

interest" or affect with particularity

any "suspect class." Therefore, the

test of constitutionality is whether the

classification bears a rational relation

to a legitimate state interest. Ohio

Bureau of Employment Services v. Hodory,

431 U.S. 471, 489 (1977); Massachusetts

Board of Retirement v. Murgia, 427 U.S.

307, 312-14 (1976) (per curiam); City of

New Orleans v. Dukes, 427 U.S. 297,

303 (1976) (per curiam). The Supreme

Court examined a state classification

under the rational basis standard in

Massachusetts Board of Retirement v.

Murgia, supra, and observed:

This inquiry employs a relatively

relaxed standard reflecting the

Court's awareness that the drawing

of lines that create distinctions

is peculiarly a legislative task

and an unavoidable one.... Such

action by a legislature is pre-

sumed to be valid.

427 U.S. at 314 (footnote omitted).

In this case, the Court finds

that the distinction drawn in the statute

and the regulations and procedures im-

plementing it between the hearing rights

102a

accorded to proponents and to opponents,

like the plaintiffs, of a proposed capital

expenditure is rationally related to a

legitimate government interest served

by section 1122. One purpose of section

1122 is to "aboid the use of Federal funds

to support unjustified capital expendi-

tures" by health care providers. °”

Congress sought to accomplish this

bojective by authorizing the Secretary

to withhold reimbursements under medicare,

medicaid, and maternal and child health

programs to providers for depreciation,

interest and other capital costs re-

lated to capital expenditures that are

determined to be inconsistent with

State or local health facility plans. °?

Absent section 1122, health care pro-

viders like WMC would be entitled to

reimbursement for their capital costs

from Federal funds appropriated under

medicare and the other programs mentioned.

82 H.R. Rep. No. 231, 92d Cong., 2d

Sess., reprinted in [1972] U.S. Code

Cong. & Admin. News 5065; see 42 U.S.C.

§ 1320a-1(a).

83 H.R. Rep. No. 231, supra, at 5065-66.

103a

A finding .that a proposed capital ex-

penditure is inconsistent with State

plans and needs could cause a health

care provider to be denied its entitlement

to reimbursement from Federal funds.

Arguably at least, the affected provider

would have a right under the Due Process

Clause to a hearing before reimbursements

to it were finally terminated.

The interests of health care

consumers and others who might oppose

a particular capital expenditure are

much. less tangible and substantial.

Indeed, plaintiffs admit their purported

right to a hearing stems not from the

deprivation of any interest protected by

the Due Process clause, but rather from

the fact that Congress decided to accord

hearing rights to health care providers.

Plaintiffs‘ argument rests on the pre-

mise that their interests are indistin-

guishable from those of providers.

Because the Court considers the interests

under section 1122 of proponents of a

disapproved capital expenditure to be

at least arguably worthy of protection

under the Due Process Clause while the

interests of opponents of approved

104a ‘

proposals do not appear to deserve such

protection, plaintiffs' argument must be

rejected.

Another basis for the distinction

between proponents and opponents of a

capital expenditure is the desire eyi-

dent in both the statute and the im-

plementing regulations to streamline the

section 1122 review process and to avoid

delaying the construction of needed

facilities. This concern explains

Congress" decision to preclude judicial

review of the Secretary's determinations

pursuant to section 1122 and the Secre-

tary's promulgation of a regulation

(42 C.F.R. §100.106(a) (4)) requiring

the DPA to complete its review of an

application within 60 to 90 days of

receiving it. If the Secretary fails

to rule within the time frame allotted

to him, the proposal is deemed approved

for section 1122 purposes. Providing

proponents of an expenditure disapproved

by a DPA with a fair hearing is not

inconsistent with this objective,

because there has been an initial

finding that the proposed expenditure

is unnecessary. The same cannot be said

105a

be said with respect to according

opponents of a DPA-approved proposal

a right to a hearing. Moreover,

contrary to plaintiffs' contentions,

the statute and regulations protect the

interests of consumers in other ways.

For example, section 1122(b), 42 U.S.C.

§ 1320a-1(b), requires that every DPA

have "a governing body or advisory

board at least half of whose members

n84 and,

in this case at least, consumers and

represent consumer interests.

other opponents of Plan Omega had an

opportunity to state their views on Plan

Omega at several public hearings held by

the Interim Council during the initial

, : 85

review period.

84 The regulations contain the same

requirement. 42 C.F.R. §100.105(b).

85 Three of the individual plaintiffs

participated in those hearings. Affi-

davit of Amos M. Burke, Docket Item 21.

106a

For these reasons, the Court holds

that defendants HEW and Burke are en-

titled to summary judgment on the

constitutional claims asserted against

them. °°

An Order will be entered in accor-

dance with this Opinion.

86 Since the Court has found that

defendant Burke has not violated plain-

tiffs' rights under the Constitution

or section 1122, he is entitled to

summary judgment against the plaintiffs

with respect to their claim against him

under 42 U.S.C. §1983 (Docket Item 9,

par. 59).

107ay

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE

WILMINGTON UNITED

NEIGHBORHOODS, et al.,

)

)

Plaintiffs, :

- Civil

2 ) Action

UNITED STATES DEPARTMENT ) No. 77-439

OF HEALTH, EDUCATION AND )

WELFARE, et al., )

Defendants. )

WILMINGTON MEDICAL CENTER,

INC., a non-profit

corporation of the State

of Delaware,

Plaintiff,

Vv. Civil

JOSEPH A. CALIFANO, JR., as gay

Secretary of the DEPARTMENT

OF HEALTH, EDUCATION AND

WELFARE,

Defendant,

and

WILMINGTON UNITED

NEIGHBORHOODS,

Defendant-

Intervenor.

JUDGMENT

108a

For the reasons stated in the Court's

opinion entered on this date in this

case, it is

ORDERED:

1. The motion of the plaintiffs

in Civil Action No. 77-439 ("plaintiffs")

to amend the first amended complaint in

that action pursuant to Rule 15(a),

F.R.Civ.P., (Docket Item 32) is hereby

granted.

2. The motion of defendant United

States Department of Health, Education

and Welfare ("HEW") in Civil Action

No. 77-439 to dismiss or, in the

alternative, for summary judgment

(Docket Item 17) will be treated as

a motion for summary judgment and is

hereby granted in favor of defendant

HEW and against plaintiffs on all the

claims asserted against HEW in Civil

Action No. 77-439.

3. Because in Civil Action No.

77-480 defendant-intervenor Wilmington

United Neighhorhoods ("W.U.N.") filed

a cross-claim (Docket Item 10) against

the defendant Secretary of HEW

("Secretary") asserting the same claims

as plaintiffs had asserted against

109a

defendant HEW in Civil Action No. 77-439,

and because summary judgment has been

granted in favor of defendant HEW on

the latter claims (2, supra), summary

judgment is hereby entered in favor of

defendant Secretary and against defendant-

intervenor W.U.N. on its cross-claim

in Civil Action No. 77-480.

4. The motion of defendants Amos

M. Burke, as Director of the Bureau of

Health Planning and Resources Development,

and Robert H. Sweeney, as Chairman of

the Interim State Comprehensive Health

Planning Council, to dismiss (Docket

Item 8) pursuant to Rule 12(b) (1) and

(6), F.R.Civ.P., will be treated as a

motion for summary judgment and summary

judgment is hereby granted in favor of

defendants Burke and Sweeney and against

plaintiffs on all the claims asserted

by plaintiffs in Civil Action No. 77-439

against those defendants.

5. Summary judgment is hereby

entered in favor of defendant Delaware

Health Council, Inc. and against plain-

tiffs on the claim asserted against

that defendant by plaintiffs in Civil

110a

Action No. 77-439 based on the law of

the case (see 44, supra).

6. The motion in Civil Action

No. 77-439 of defendant Wilmington

Medical Center, Inc. ("WMC") to dismiss

(Docket Item 15) pursuant to Rule 12(b)

(b), F.R.Civ.P., will be treated as a

motion for summary judgment and summary

judgment is hereby entered in favor of

defendant WMC and against the plaintiffs

with respect to all the claims asserted

against WMC in that action.

7. The motion in Civil Action

No. 77-480 of plaintiff WMC to dismiss

(Docket Item 13) pursuant to Rule 12(b),

F.R.Civ.P., the counterclaim asserted

against it by defendant-intervenor

W.U.N. will be treated as a motion for

summary judgment and summary judgment

is hereby granted in favor of plain-

tiff WMC and against W.U.N. on the

counterclaim.

8. The motion of plaintiffs in

Civil Action No. 77-439 for partial

summary judgment (Docket Item 28)

against defendants HEW and Burke with

respect to the issues set forth below

is hereby denied:

(a)

(b)

(c)

lila

Whether defendant HEW vio-

lated the Due Process Clause

of the Fifth Amendment by

adopting regulations that

require designated State

planning agencies under

section 1122 of the Social

Security Act (42 U.S.C.

§ 1320a-1) to provide a

fair hearing to proponents

of a disapproved capital

expenditure but not to

opponents of an approved

expenditure;

Whether the failure of

defendant HEW to make an

independent finding as to

whether Plan Omega is con-

sistent with applicable

standards, criteria, and

plans when it originally

approved Plan Omega and

its refusal to do so upon

reconsideration constitute

a violation of section

1122;

Whether defendant Burke

violated the Equal Protec-

tion Clause of the Four-

teenth Amendment by denying

the request of plaintiffs

DiPinto and W.U.N. for a

fair hearing on his purported

findings that Plan Omega was

consistent with applicable

standards, criteria, and

plans, while making fair

hearings availabie to pro-

ponents of capital

ll2a

expenditures as to which

negative findings had been

made.

9. The motions of plaintiffs in

Civil Action No. 77-439 (Docket Item 43)

and defendant-intervenor W.U.N. in Civil

Action No. 77-480 (Docket Item 23) for

partial summary judgment against WMC on

the issue whether the approval of Plan

Omega by the Bureau of Comprehensive

Health Planning expired on December 15,

1977 are hereby denied.

10. In view of the fact that

summary judgment has been granted in

favor of WMC and against defendant-

intervenor W.U.N. with respect to

W.U.N.'s counterclaim in Civil Action

No. 77-480 (47, supra), the motion of

WMC to amend its complaint in Civil

Action No. 77-480 (Docket Item 41)

is hereby denied.

11. Since summary judgment has

been granted on the cross-claim and

the counterclaim advanced by W.U.N. in

Civil Action No. 77-480 (4 3 and 7,

supra), the only claims remaining to be

adjudicated are those asserted by plain-

tiff WMC in the complaint in that action.

113a

Because the Court perceives no prejudice

to any adverse party likely to result

from the dismissal without prejudice of

the remaining claims in Civil Action No.

77-480, the motion of WMC, the plaintiff

in that action, for an order dismissing

its complaint without prejudice (Docket

Item 42), pursuant to Rule 41(a) (2),

F.R.Civ.P., is hereby granted.

12. This Order shall constitute

a final adjudication of all issues in

the two abovementioned actions.

/s/ James L. Latchum

Chief Judge

Dated: September 22, 1978