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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1980
- **Citation:** 449 U.S. 827

## Text

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

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_2351%3A3. Public record. Not legal advice.