The Community Service Obligation of Hill-Burton Health Facilities

Boston College Law Review, Dec 1982

By Kenneth R. Wing, Published on 05/01/82

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The Community Service Obligation of Hill-Burton Health Facilities

The C ommunity Ser vice Obligation of Hill-Burton Health Facilities Kenneth R. Wing 0 1 0 Thi s Article is brought to you for free and open access by the Law Journals at Digital Commons @ Boston College Law School. It has been accepted for inclusion in Boston College Law Review by an authorized editor of Digital Commons @ Boston College Law School. For more information , please contact 1 Kenneth R. Wing, Th e Community Service Obligation of Hill-Burton Health Facilities , 23 B.C.L. Rev - Article 2 KENNETH R. WING * Financial barriers to adequate medical care are no longer a problem faced by only low income Americans. Today, hospital bills sometimes amount to tens of thousands of dollars.' Indeed, annual per capita spending on medical care now exceeds $1,000. 2 Even for those who can afford it, a typical medical insurance policy provides only limited coverage that ill-fits society's needs. 3 As for the welfare recipient, the unemployed, or the working poor — people for whom access to medical care has always been difficult — adequate medical care is literally becoming financially inaccessible. The problem of access to medical care in the United States, however, is only partially defined in financial terms. People who can afford to pay for medical treatment may find that other barriers to adequate health care exist. Many hospitals require patients to have a personal physician on the hospital's staff. Others demand pre-admission deposits before even emergency services are performed. The consumer with a Medicaid or Medicare card will find that for a variety of economic and non-economic reasons, many institutions are reluctant to provide government-sponsored care and some simply refuse altogether. In addition, discrimination against minorities, the handicapped, welfare recipients, and other "undesirables," continues disguised but unabated in medical care institutions as in other aspects of American life. 4 Those who are denied medical care for financial reasons, or because of other institutional barriers, nevertheless may be guaranteed access to medical facilities which have received federal funds for construction or modernization. Legislation originally enacted by Congress in 1946 5 initiated a federal spending program which provided funds for the capital development of a significant portion of the nation's hospitals and other health facilities. 6 This program, cornt Copyright © 1982 by Boston College Law School. * Assistant Professor, School of Law and School of Public Health, University of North Carolina, Chapel Hill; J.D., Harvard Law School, 1971; M.P.H., Harvard School of Public Health, 1972. The author would like to express his thanks for the research assistance of third year law student Robert Strand. See generally Freeland, Colat, & Schlender, Projections of National Health Expenditures, 1980, 1985, 1990, 1 HEALTH CARE FINANCING REV. I (1980). Id, at 12. For an excellent discussion of the nature and extent of private health insurance coverage, see A. SCHNEIDER, AN ADVOCATE'S GUIDE TO HEALTH CARE FINANCING 138-83 (1980). ' See generally Institute of Medicine, National Academy of Sciences, HEALTH CARE IN A CONTEXT OF CIVIL RIGHTS (1981). 5 The Hospital Survey and Construction Act, Pub. L. No. 79-725, 60 Stat. 1040 (1946). This Act was the initial authorization for what has popularly been known as the HillBurton program. See text at notes 40-55 infra for a discussion of later amendments. 6 As a financing program, Hill-Burton was remarkably successful. By 1974, over five monly known as the Hill-Burton program, was not intended only to provide funding for the construction and modernization of medical institutions. As the language of the authorizing legislation, its legislative history, and the overall structure of the program demonstrate, Congress also intended that medical services be provided in areas where they were especially needed and under conditions designed to carry out specified congressional objectives.' Both in its original form and as it was amended in the following three decades, the Hill-Burton program was intended to achieve a number of changes in the allocation and availability of health facility services by conditioning receipt of federal funds on compliance with a variety of legislative conditions. 9 Among the conditions explicitly included in the authorizing statute for the program was a provision imposing specific obligations on both the state agency administering the program and the recipient facility requiring the facilities to provide: (a) a reasonable volume of uncompensated services and (b) "community service," i.e., service to those who may be denied access to health care for reasons other than lack of financial resources. 9 These "charity care" obligations, as the two requirements have been frequently labeled, were an integral part of the original legislative scheme, as reflected both in the declaration of purposes and throughout other provisions of the original legislation." Indeed, the language of the original charity care obligations was specifically amended into the original draft of the Hill-Burton legislation, apparently as part of a political compromise to ensure broad-based congressional support for the legislation, as will be explained in more detail below." Moreover, as the Hill-Burton program expanded to include new funding mechanisms and additional categories of recipients, Congress continued to re-enact these obligations as pre-conditions to funding." Even when Congress terminated the program in billion dollars in grants and loans had been spent on the nation's health facilities, assisting over $14.5 billion worth of construction and modernization projects. Cambridge Research Institute, TRENDS AFFECTING THE U.S. HEALTH CARE SYSTEM 91-95 (1976) (commissioned by HEW). See also figures cited in S. REP. NO. 1285, 93d Cong., 2d Sess. 14-18 (1974), reprinted in 1974 U.S. CODE CONG. & AD. NEWS 7842-49. Over 496,000 hospital and long term care facility beds received financial assistance through the Hill-Burton program, roughly equivalent to 40% of the nation's current acute care hospital bed supply. American Hospital Association, HOSPITAL STATISTICS: 1979 (1980). As a major source of capital funds for hospitals and, to a lesser extent, other facilities, the federal HillBurton program played an important role in underwriting the development of the existing health care delivery system during three decades marked by rapid growth and systemic change. See Wing & Craige, Health Care Regulation: Dilemma of a Partially Developed Public Policy, 57 N.C. L. REV. 1165, 1169-72 (1979) [hereinafter cited as Wing & Craige]. See text and notes at notes 34-39 infra. See text and notes at notes 36-50 infra. 9 See text at note 60 infra for the text of the statute. See note 85 infra. " See note 75 infra. 12 The same requirements were imposed on recipients of funds under the expanded program established in 1954. See Public Health Service Act 5 653(a), as amended by Pub. L. No. 83-482, S 2, 68 Stat. 461 (1954), later recodified along with preexisting 5 633(1) in 1964. See notes 44-46 infra. For current codification, see 42 U.S.C. S 291c(e) (1978). The requirements were also 1974 the successor federal program attached virtually identical conditions" on receipt of funds." Congress also explicitly mandated additional federal efforts to insure rigorous enforcement of the charity care obligations imposed by the original Hill-Burton program and the new program." attached to the recipients of assistance under the loan funding authorized in 1964, see Public Health Service Act 5 610(a), as amended by Pub. L. No. 88-443, 5 3, 78 Stat. 457 (1964), now codified at 42 U.S.C. S 291j(b) (1978); and under the loan, loan guarantee and interest subsidy programs established in 1970, see Public Health Service Act 5 623(a), as amended by Pub. L. No. 91-296, 5 201, 84 Stat. 346 (1970), now codified at 42 U.S.C. S 291j-3(a) (Supp. II 1978). L See notes 14 and 163 infra. " The National Health Planning and Resources Development Act of 1974 included two provisions that created charity care obligations virtually identical to those included in the original Hill-Burton legislation. Public Health Service Act S 1602( 5 ),.S 1604(b)(1)(J), as amended by Pub. L. No. 93-641, 5 4, 88 Stat. 2259 (1974). There are, however, two differences between the charity care obligations imposed in 1974 and those that existed under Hill-Burton. First, 5 1604(b)(1)(J) provides that "an application of any project shall set forth . . reasonable assurance that at all times after such application is approved (i) the facility or portion thereof to be constructed, or modernized, or converted will be made available to all persons residing or employed in the area served by the facility . " (emphasis added). The expression "at all times" is not found in the Hill-Burton statutory language establishing the basis for the community service or uncompensated service obligations. Whether "at all times" was intended to have significance is not clear from the legislative history of the 1974 statute. The Department of Health, Education and Welfare (HEW), however, had taken the position that this language requires both charity care obligations to be imposed under the 1974 program for an unlimited duration, while the uncompensated service obligation of Hill-Burton facilities is limited to twenty years' duration. See 42 C.F.R. 5 124.501(b) (1980). Second, the definition of community service in S 1604(b)(1)(j) of the 1974 legislation requires availability to all persons "residing or employed" in the area of the facility, rather than merely persons "residing" in the area, as the statutory authorization of the Hill-Burton community service obligation. Section 1602( 5 ) was subsequently repealed by the 1979 health planning amendments, presumably to eliminate the slight differences between 5 1602( 5 ) and S 1604(b)(1)(J). See Pub. L. No. 96-79, 5 201, 93 Stat. 633 (1979). Section 1604(b)(1)(J) was redesignated S 1621(b)(1)(K) and reauthorized by the same 1979 amendment. Id. at 5 202. The net effect was that the charity care obligations of recipients under the new program established in 1974 were unchanged by the 1979 amendments and remained virtually identical to those imposed on recipients under the HillBurton program: . . . an application for a medical facilities project . . . shall . . set forth reasonable assurance that at all times after such application is approved (i) the facility or portion thereof to be constructed, modernized, or converted will be made available to all persons residing or employed in the area served by the facility, and (ii) there will be made available in the facility, or portion thereof to be constructed, modernized, or converted a reasonable volume of services to persons unable to pay therefor and the Secretary, in determining the reasonableness of the volume of services provided, shall take into consideration the extent to which compliance is feasible from a financial viewpoint. 42 U.S.C. S 300s-1(b)(i)(k) (Supp. [II 1979). 15 Under Public Health Service Act 5 1602(6), as amended by Pub. L. No. 93-641, 5 4, 88 Stat. 2258 (1974), HEW was required to issue regulations prescribing the manner in which the assurances under both the Hill-Burton and the new 1974 program would be enforced and to collect data concerning compliance: 5 160 z. The Secretary shall by regulation * * * (6) prescribe the general manner in which each entity which receives financial assistance under this title or has received financial assistance tide VI shall be While the uncompensated service obligation has been a subject of controversy among the government, the hospital industry, and various consumer groups for more than a decade, the community service obligation prior to 1979 had been virtually ignored." In May of 1979, however, the Department of Health, Education and Welfare (HEW) issued revised charity care regulations. These regulations demonstrate for the first time that the federal government recognizes the Hill-Burton community service obligation as a distinct substantive obligation that the government is prepared to monitor and enforce in a rigorous way." required to comply with the assurances required to be made at the time such assistance was received and the means by which such entity shall be required to demonstrate compliance with such assurances. The principle underlying the requirement of community service as stated in the new regulations is that a health facility: . . . shall make the services provided in the facility . . . available to all persons residing . . in the facility's service area without discrimination on the ground of race, color, national origin, creed, or any other ground unrelated to an individual's need for the service or the availability of the needed service in the facility , . . . 18 As defined by the regulations, the community service obligation is far more than a proscription on discrimination in the usual sense of that term. 19 Under the new regulations a hospital is required to accept virtually without exception anyone who is able to pay for medical services. Thus, people who do not have a physician on the facility's medical staff; people who "prObably can pay" but do not have cash, credit, or third party payment available; Medicaid and Medicare recipients; and, at least by implication, the privately insured, would be assured access by the regulations. 20 The regulations leave little doubt as to the meaning and intent of the community service requirement since they include a series of illustrative examples of applications of the obligation. 2 ' These examples indicate HEW's willingness to assert the community service obligation even in the face of time-honored admission practices. 22 Both the hospital industry and the medical profession have closed ranks in opposition to the enforcement of the community service requirement, and the American Hospital Association has brought suit to challenge the government's authority to issue the 1979 regulations." If the protracted struggle over the obligation. The significance of the new regulations derives from the fact that they clearly indicated an intent, for the first time, to monitor and enforce compliance. See notes 146-58 infra. The underlying substantive principles have been incorporated into the federal regulations at least since 1964. See notes 133-36 infra. 18 42 C.F.R. 5 124.603(a)(1) (1980). See text at notes 158-70 infra for further discussion of this principle. ' 9 The use of the term "discrimination" disguises the true meaning of these regulations somewhat. Among other things, the new regulations employ an "effects" test for measuring compliance. See 42 C.F.R. 5 124.603(d) (1980). For a full discussion of this matter, see text at notes 164-70 infra. " See note 174 infra. 21 See notes 173-80 infra. 22 42 C.F.R. § 124.603(d)(1)-(3) (1980), cited in full text at note 172 infra. The explanatory material that accompanied the issuance of the regulations also clarified HEW's intent. See note 157 infra. 23 The American Hospital Association (AHA) sought to enjoin enforcement of the 1979 regulations immediately following their enactment, arguing that the regulations exceeded HEW's statutory authority, conflicted with the Medicare conditions of participation, and violated its contractual rights. The district court denied plaintiff AHA a preliminary injunction, holding that it had not shown irreparable harm, that it had not demonstrated a reasonable likelihood of success, and that the balance of hardships favored denial of the injunction. American Hosp. Ass'n v. Harris, 477 F. Supp. 665, 668-69 (N.D. III. 1979), aff'd, 625 F.2d 1328; 1331-32 (7th Cir. 1980). The court of appeals affirmed in a brief opinion, giving little indication of the court's views on the merits. See 625 F.2d 1328, 1331-32 (7th Cir. 1980). Judge Pell in a dissenting opinion, however, exhaustively reviewed the merits of the case and indicated he was in agreement with many of the plaintiff's arguments. See id. at 1332-44. On remand, the district court upheld the validity of the 1979 regulations. American Hosp. Ass'n v. Schweiker, Hill-Burton uncompensated service regulations is any indication of the controversy that lies ahead, the pending community service litigation is only the first of many judicial, administrative, and possibly, legislative confrontations between the hospital industry and other medical care providers, consumer groups, and state and federal government officials. Even if the federal government's authority to issue the 1979 community service regulations is upheld, it is unlikely that any single judicial determination can definitively settle the seemingly endless array of jurisdictiona1, 24 procedura1, 28 and substantive issues that rigorous enforcement of community service will eventually raise. 26 If, as is likely, future federal administrations revise the federal posture on the regulations or their enforcement, a reshuffling of strategies and another round of challenges by all affected parties will undoubtedly ensue. 27 Although the charity care obligations of Hill-Burton hospitals have been repeatedly examined by judicial and administrative tribunals during the last ten years, such review has tended to focus on the uncompensated service, not the community service, obligation. 28 Even those courts which have purported to interpret both obligations have generally viewed community service and uncompensated service as deriving from parallel bases, ignoring or failing to appreciate the distinct statutory basis and administrative history of the community service obligation. 29 The legal literature concerning the Hill-Burton charity No. 78C 2269, N.D. III., Jan. 8, 1982. 2♦ See notes 159 and 163 infra. " The enforcement procedures and methods for determining compliance have been only generally outlined in the 1979 regulations. Subsequent to the regulations, HEW (later HHS) issued a series of draft policy directives to federal and state agencies and to affected institutions outlining compliance and assessment procedures. Most of these directives have been codified into a looseleaf manual available from regional HHS offices. PUBLIC HEALTH SERVICE, DEPARTMENT OF HEALTH AND HUMAN SERVICES, COMPLIANCE STANDARDS MANUAL: UNCOMPENSATED CARE AND COMMUNITY SERVICE OBLIGATIONS (first published in 1979) (also known as "Provider's Guide"). 26 See note 164 infra. Even if the regulations or enforcement policies are not changed during the current administration other federal policy shifts could have considerable impact on the meaning of the community service regulations. For example, should the Medicaid program be restructured to represent something less than "reasonable cost" reimbursement, see note 178 infra, then the notion that a Medicaid recipient has the ability to pay might require modification. 27 As of this writing, federal administrative officials have announced their intention to continue to enforce the charity care regulations. It is not clear, however, whether the 1979 regulations will be revised. See Washington Report on Medicine and Health, January 18, 1982 at 3. 28 This is not to say that there has not been some judicial examination of the community service obligation. See cases cited at note 29 infra. But it is clear that the initial round of charity care litigation focused primarily on uncompensated service, see note 141 infra, and to the extent that derivative issues were pursued vigorously by the various proponents, it appears that the uncompensated service obligation was the primary focus of all concerned. See, e.g., Corum v. Beth Israel Medical Center, 373 F. Supp. 550 (S.D.N.Y. 1974). Obviously this is in part a reflection of the government's enforcement efforts. See text at notes 141-45 infra, summarizing the various attempts to establish an "uncompensated service" enforcement program. 29 Only a few federal district courts have directly addressed community service in any detail. See Cook v. Ochsner Found. Hosp., 61 F.R.D. 354, 356-58 (E.D. La. 1972); Perry V. Greater Southeast Wash. Community Hosp. Found., No. 721-71, 2-11 (D. D.C. June 28, 1972) (see explanation at note 146 infra). See also American Hosp. Ass'n v. Harris, 625 F.2d 1328, care obligations suffers from the same shortcoming. Though there has been substantial debate over the meaning and history of the Hill-Burton charity care obligations, the debate has been almost myopically focused on uncompensated service. 30 This article focuses squarely on the community service provision and the regulations promulgated thereunder. The analysis traces the statutory and regulatory history of the community service obligation and examines the scope of the discretion that has been delegated to federal and state agencies to define and enforce this obligation. The discussion begins with a brief history of the original Hill-Burton program and the several amendments and modifications of the program over the last several decades. Next, the legislative history of the community service obligation is examined in an effort to determine the scope of authority created by Congress in establishing the community service obligation. Specifically, this section addresses the questions of whether Congress intended the community service provision to impose an affirmative obligation upon funded facilities, and whether the requirement is one of general availability of medical services or simply a prohibition on racial discrimination. An examination of the regulatory history of the community service obligation follows, including a discussion of the 1979 regulations themselves. This section also addresses the questions of whether the 1979 regulations exceed the scope of authority as defined by previous regulations, and whether enforcement of the 1979 regulations has a retroactive effect which results in an unconstitutional impairment of contract and property rights. It will be submitted that the present community service regulations are indeed authorized by Congress and that retroactive application of the regulations, at least back to 1964, neither exceeds the scope of authority as set out previously by statute or regulation, nor unconstitutionally impairs contract or property rights. I. BACKGROUND OF THE HILL-BURTON PROGRAM The Hospital Survey and Construction Act of 1946, 3 ' the initial authorization for the Hill-Burton program, was a significant departure from 1342-43 (7th Cir. 1980) (Pell, J., concurring and dissenting). 3° See Rose, Federal Regulation of Services to the Poor Under the Hill-Burton Act: Realities and Piocalls, 70 Nw. U.L. REV. 168 (1975) [hereinafter cited as Rose]; Rosenblatt, Health Care Reform and Administrative Law: A Structural Approach, 88 YALE L.J. 243, 265-86 (1978) [hereinafter cited as Rosenblatt]; Note, Due Process for Hill-Burton Assisted Facilities, 32 VAND. L. REV. 1469 (1979) [hereinafter cited as Vanderbilt Note]; Note, The Hill-Burton Act, 1946-1980: Asynchrony in the Delivery of Health Care to the Poor, 39 MD. L. REV. 316 (1979) [hereinafter cited as Maryland Note]. These commentators generally have analyzed the statutory bases for the charity care obligations as if uncompensated service and community service had a single legislative history. They have also addressed the problem as if it were primarily a matter of inferring congressional intent in 1946. As this article will demonstrate, the proper inquiry should view community service as a related but distinct obligation, and the legislative analysis should involve at least two inquiries, one focusing on the 1946 legislation and the other on the 1964 legislation. See text at notes 56-129 infra. " Pub. L. No. 79-725, 60 Stat. 1040 (1946). previous federal policy and clearly represented the first major federal investment in mainstream medical care." in the three decades that followed, it was one of the principal vehicles through which the federal government became actively involved in the development and distribution of health care resources. While mild in comparison to some of the state and federal health financing and regulatory programs which would follow in ensuing decades, the Hill-Burton program laid the groundwork for many of these later efforts and initiated a new and active role for both federal and state government in health care delivery." The original 1946 legislation established a complicated administrative scheme under which federal financial assistance was provided to state governments34 to survey the need for health facility services and to develop a state plan for the construction of hospitals and related facilities." Public and nonprofit applicants that conformed to the federal and state requirements were " Prior to Hill-Burton, the federal government had maintained a limited role in the delivery of medical care, chiefly through programs of direct services to federal dependents, e.g., the merchant marine, Indians, and military service personnel and their dependents. In addition, the federal government had traditionally carried out a variety of federal public health and disease prevention programs. For a good history of these activities, see Chapman & Talmadge, Historical and Political Background of Federal Health Care Legislation, 35 L. & CONTEMP. PROB. 334 (1970). See also Wing & Silton, Constitutional Authority for Extending Federal Control Over the Delivery of Health Care, 57 N,C.L. REV. 1423, 1440 n.74 (1979) [hereinafter cited as Wing & Silton]. Nor did Hill-Burton mark the first time the federal government had subsidized health facility construction. See programs described in Feshback, What's Inside the Black Box: Allocative Politics in the Hill-Burton Program, 9 INT. J. HEALTH SERVICES 313, 317 (1979). See also COMMISSION ON HOSPITAL CARE, HOSPITAL CARE IN THE UNITED STATES 531 (1947). The significance of the Hill-Burton program was its enormous cost relative to the cost of previous programs and its initiation of direct federal involvement in the delivery of medical care to the public at large. For a discussion of the political implications of this sudden shift in federal policy, see notes 63-64 infra. 33 For an overview of the Hill-Burton program and its role in the emergence of federal and state health care financing and regulatory efforts, see Wing & Craige, supra note 6, at 1187; see also A. SOMERS, HOSPITAL REGULATION: THE DILEMMA OF PUBLIC POLICY 132-51 (1969) [hereinafter cited as SOMERS]. 34 See generally Public Health Service Act §5 612, 623, as amended by Pub. L. No. 79-725, 5 2, 60 Stat. 1041 (1946). The amount of federal funds for direct grants and, later, loans alloted to each state was determined by a complicated formula based on each state's population, financial need (according to per capita income), and the need for facilities. As the program was reauthorized and amended, this formula was revised in several minor ways. For example, in 1970 a "floor" was placed under each state's alloted share, Public Health Service Act 602(a), as amended by Pub. L. No. 91-296, 5 103, 84 Stat. 338 (1970). But throughout the program each state's share was determined primarily on the basis of population, relative income, and need. For current codification, see 42 U.S.C. 291b (1976). For an analysis of this allocation formula and its impact on the program's results, see Lawrence, Clark, Field & Koontz, The Impact of Hill-Burton: An Analysis of Hospital Bed and Physician Distribution in the United States, 1950-70, 18 MEDICAL CARE 532, 541-44 (1980). " The original legislation earmarked Hill-Burton funding for hospitals and public health centers. It allowed the funding of projects for other health facilities, but only when operated in connection with a hospital. See Public Health Service Act 55 622, 631, as amended by Pub. L. No. 79-725, 5 2, 60 Stat. 1041 (1946). Subsequent amendments allowed funding of other categories of facilities. See notes 42, 49 and 50 infra. eligible for federal construction grants." In addition to the federal planning requirements, participating states had to establish programs to maintain the quality and safety of funded projects 37 and meet a variety of other federal requirements in the administration of their survey and planning activities." Similarly, funded projects had to meet relatively extensive federal requirements relating to standards of construction, operation, maintenance and financial viability, as well as conform to the priorities established by the state plan . 3 9 Although the basic administrative structure remained the same throughout the history of the program, the original authorizing legislation was amended frequently by Congress, adding new categories of funding recipients, 4° supplementing the grant program with authorization for loans, loan guarantees, and loan interest subsidies, and reflecting a changing - and, apparently, ever growing - list of congressional priorities. 4 ' In 1954, for example, the program was expanded by authorizing HillBurton grants to various categories of health facilities not included in the original legislation, such as nursing homes, rehabilitation facilities, and other 36 Hill-Burton grants did not pay the full cost of approved projects. The original legislation established a program of direct grants, limited to 33 '/s % of the cost of the project. Public Health Service Act 5 625(b), as amended by Pub. L. No. 79-725, 5 2, 60 Stat. 1041 (1946). In 1949, the federal share was increased to no more than 6635 % or no less than 33 % %. Pub. L. No. 81-380, 5 3, 63 Stat. 899 (1949). This share remained essentially unchanged thereafter. However, the 1970 amendments authorized states to pay 90% of certain "high priority" projects. Pub. L. No. 91-296, 5 113(b)(4), 84 Stat. 341 (1970). For current codification, see 42 U.S.C. 55 2910(b)(2), 2910(b)(4) (1978). Note also that subsequent amendments to the HillBurton program allowed recipients to receive both a grant and a loan. See note 43 infra. " States were not specifically required to establish licensing programs for health facilities, but were required to establish licensing programs for health facilities, to "provide minimum standards . . for the maintenance and operation of hospitals which receive Federal aid . . . " See Public Health Service Act 55 623(a)(7), 623(d), as amended by Pub. L. No. 79-725, 5 2, 60 Stat. 1041 (1946). For current codification, see 42 U. S.C. 5 291d(a)(7) (1978). Under this authority, federal regulations were issued interpreting this provision that included 32 pages of detailed standards for construction and equipment for funded health facilities. These regulations were, in effect, de facto federal licensing standards. See 42 C.F.R. 5 53, Appendix A (1949). The result was that many states established licensing programs for all hospitals and other health facilities as a result of the original Hill-Burton legislation. See SOMERS, supra note 33, at 118-32. 38 Public Health Service Act 55 612, 622, 623, as amended by Pub. L. No. 79-725, 5 2, 60 Stat. 1041 (1946). For current codification, see 42 U.S.C. 291d (1978). For example, states were required to establish merit systems for employees in the administration of their planning and survey activities. 42 C.F.R. 5 53.158 (1949 ed., Supp. I). " See Public Health Service Act 55 622, 625, as amended by Pub. L. No. 79-725, 5 2, 60 Stat. 1041 (1946). For current codification, see 42 U.S.C. 5 291d(a)( 5 )-(7) (1978). 40 See notes 42, 49 and 50 infra. In addition to the supplemental financing mechanisms added later to the Hill-Burton program, see note 43 infra, and the various shifts in the programs priorities, see notes 45-50 infra, funding for a variety of related activities was frequently amended into the authorization for the Hill-Burton program. See, e.g. , the various research and demonstration grants authorized in 1949, Pub. L. No. 81-380, 5 5, 63 Stat. 900, or those added in 1961, Pub. L. No. 87-395, 5 4, 75 Stat. 825. long-term care facilities.'" In 1958, amendments allowed states to make loans as well as grants to health facilities out of their allotted funding.'" The Hospital and Medical Facilities Amendments of 1964" added several substantive changes to the explicit and underlying objectives of the program, 45 41 The 1954 legislation supplemented the hospital construction program by establishing a separate funding program for diagnostic or treatment centers, chronic disease hospitals, rehabilitation facilities, and nursing homes. Public Health Service Act 55 651-54, as amended by Pub. L. No. 83-482, S 2, 68 Stat. 461 (1954). These separate programs were later consolidated in the recodification of the Hill Burton legislation in 1964. See note 45 infra. The 1970 amendments, described in notes 49-50 infra, also expanded the types of projects that could be funded, including projects for new equipment not associated with construction projects, and projects for emergency and related services, and added a "laundry list" of special priorities, e.g., projects which have special significance for the treatment of alcoholism. Thus, in the span of three decades, the Hill-Burton program evolved from a program of rather narrow statutory focus, funding the construction of new hospitals, to a vehicle for providing federal financial assistance for a variety of capital and other expenditures by health care providers. " Amendments to the Hill-Burton program in 1958 authorized states to give loans for the construction of health facilities out of their allotments, but this was apparently intended to apply only in the case of religious-affiliated institutions that had conscientious objections to receiving grants from the federal government. Public Health Service Act 55 661-664, as amended by Pub. L. No. 85-589, 72 Stat. 489 (1958). See S. REP. No. 1846, 85th Cong., 2d Sess., reprinted in 1958 U.S. CODE CONG. & Au. NEWS 3255, 3255. In 1961, this loan authorization was extended without reference to religious institutions in the legislative history, and the authorization was increased from $30 million to $50.million a year. Pub. L. No. 87-395, 55 6, 8, 75 Stat. 826, 827 (1961). In lieu of a separate authorization for loans, the 1964 amendments allowed states to make loans to applicant facilities out of their allotments for grants, under the same terms and conditions as they make grants. Public Health Service Act 5 610, as amended by Pub. L. No. 88-443, 5 3, 78 Stat. 457 (1964). For current codification, see 42 U.S.C. 5 291j (1978). The 1970 amendments created two separate loan programs. The first program authorized: (1) loan guarantees and interest subsidies for private non-profit applicants and; (2) loan guarantees without interest subsidies for public applicants. This program was for either construction or modernization of projects of any type allowed under the legislation. See generally Public Health Services Act 55 621-626, as amended by Pub. L. No. 91-296, 5 201, 84 Stat. 344 (1970). The second loan program created by the 1970 amendments authorized a direct loan program for public applicants for construction or modernization projects of any kind permitted under the legislation. See generally Public Health Service Act 55 631-638, as amended by Pub. L. No. 91-296, 5 301, 84 Stat. 350 (1970). Among other essential differences between these programs and earlier authorizations for loans, applicants under the 1970 loan programs could receive Hill-Burton grants and also receive loan guarantees and subsidies for the remaining cost of the project. As noted above, the loan guarantees and direct loan programs established in 1970 significantly expanded the program; $2.4 billion in loan guarantees and $750 million in direct loans were authorized, more than double the 1970 authorization for direct Hill-Burton grants. For current codification of these loans programs, see 42 U.S.C. 5 291j-1 (1978). 44 Pub. L. No. 88-443, 78 Stat. 447 (1964). These amendments reorganized and recodified the statutory authorization of the Hill-Burton program, and made many substantive changes as well. See notes 45-46 infra. 45 In addition to emphasizing the funding of modernization projects and other major policy changes, see note 46 infra, the 1964 amendments gave priority to "facilities serving densely populated areas," adding to the list of program priorities that had previously included rural areas with relative small financial resources. In 1970, however, Congress de-emphasized services to rural areas, making it a priority at the option of the state, and gave highest priority to modernization projects in urban poverty areas. Pub. L. No. 91-296, 110, 84 Stat. 339 (1970). The 1964 amendments also authorized for the first time federal funding of areawide among them a requirement that a substantial portion of the hospital appropriations be spent for modernization projects — a significant shift in the program's policy." The 1964 amendments also greatly expanded authorization for loans.'" In 1970, Congress again revised and expanded the loan program, creating additional programs of direct loans to public applicants as well as a program of loan guarantees and interest subsidies for private non-profit applicants to supplement the grant program." The 1970 amendments also, for the first time, health planning agencies, albeit on a modest scale; $2.5 million for 1965; $5 million for each of the next four years. Pub. L. No. 88-443, 5 2, 78 Stat. 447 (1964). However, this authorization was superceded by the health planning program authorized under the Partnership for Health Amendments of 1967, Pub. L. No. 90-174, 81 Stat. 533 (1967), and was never fully implemented. +6 See Public Health Service Act NN 605, 606, as amended by Pub. L. No. 88-443, 5 3, 78 Stat. 454 (1964), now codified as 42 U.S.C. 291(f) (1976). While the original legislation theoretically allowed for the funding of both new construction and modernization, that legislation specifically required that priority be given to new construction projects in rural areas and in areas with few financial resources. The initial regulations also implied an administrative preference for "additional capacity" over "replacement." See 42 C.F.R. 5 53.43 (1949). As a consequence, most of the funding went to projects for new construction and, generally, new hospital construction. By 1964 the Hill-Burton program had funded 7,306 new construction projects, assisting in the construction of 311,000 inpatient hospital beds in 2,011 health facilities at a cost of $6.7 billion. See S. REP. No. 1274, 88th Cong., 2d Sess. 2, reprinted in 1964 U.S. CODE CONG. & An. NEWS 2800, 2800-01. However, the 1964 amendments and all subsequent authorizations specifically earmarked a large portion of the program funds for modernization and, in effect, the 1964 legislation shifted the emphasis of the program from new facility construction to modernization. In terms of dollar amounts, the 1964 legislation authorized a total of $840 million to be appropriated over the following five years for hospitals and public health centers. Of this amount, $680 million was designated for construction and $160 million was designated for modernization projects. However, up to $530 million of the grant funds could be transferred to modernization projects, at the option of each state. States could also transfer up to $70 million from modernization to new construction. Pub. L. No. 88-443, 5 602, 78 Stat. 448 (1964). In comparison, the 1964 legislation also authorized a total of $350 million for the construction of long-term care facilities, $100 million for the construction of diagnostic or treatment centers, and a total of $50 million for the construction of rehabilitation centers. See S. REP. NO. 1274, 88th Cong. 2d Sess. 1-2, reprinted in 1964 U.S. CODE CONG. & AD NEWS 2800, 2800-01. By 1969, only 25% of the program funds were being spent for new construction projects; apparently the states had opted to shift the bulk of their Hill-Burton allotments to modernization, See S. REP. No. 657, 91st Cong., 2d Sess. 9, reprinted in 1970 U.S. CODE CONG. & AD. NEWS 3332. When the program was reauthorized in 1970, the need for the modernization of existing hospital and long-term care beds was described as the "nation's gravest health facility problem" and there was estimated to be a need for modernizing or replacing 455,130 acute and long-term beds at a cost of $1 billion dollars, i.e., an investment nearly equal to the entire expenditures that had been assisted under the grant program prior to 1970. Id. at 6, reprinted in 1970 U.S. CODE CONG. & AD. NEWS at 3338. The 1970 authorizations reflected these findings and the program's growing focus on modernization financing: $920 million was authorized for construction of hospitals and public health centers, $515 million for modernization, and $155 million for construction of other types of health facilities, with slight changes in the options for shifting funds from one category to another. See Public Health Service Act 5 601, as amended by Pub. L. No. 91-296, 55 101-102, 84 Stat. 337 (1970). *7 See note 43 supra. 46 See note 30 supra for a description of these programs. authorized Hill-Burton assistance for freestanding clinics and ambulatory care facilities,'" and for the construction or modernization of emergency rooms and related services." In 1974 appropriations for the Hill-Burton program were discontinued and the program was effectively replaced by the enactment of the National Health Planning and Resources Development Act." The new legislation essentially reorganized several existing federal activities, including the HillBurton program, into a single health planning program." The new program authorized federal funding for the construction of health facilities in a manner similar to the Hill-Burton program, but with a significantly different emphasis and with the authority carried out in conjunction with other related resource planning activities by newly created state health planning programs." While Congress continued to authorize federal assistance for the construction of health facilities under the new Act, it has not yet appropriated funding for this part of the program. Given the political realities of the 1980's, 54 it appears unlikely that the kind of federal support for health facility construction or modernization that had been available under Hill-Burton will be forthcoming in the foreseeable future. 55 From its beginning, then, the Hill-Burton Act represented the efforts of Congress to use funding incentives to influence the construction and 52 For an explanation of this legislation and its background, see Wing & Craige, supra note 6, at 1190-92. 53 The new legislation authorizes resources development grants and loans, 42 U.S.C. 3000-300t-14 (Supp. III 1979) but the statute outlines a slightly different set of funding priorities, see $.5 300q(a)(1), 300r(a) and (b), than those of the original Hill-Burton program. Furthermore, the new scheme consolidates the resource development funding with other regulatory and planning functions performed by newly-created health systems agencies and state health planning programs. See 42 U.S.C. 300s-1(b)(1)(A) (Supp. III 1979). 54 Estimates vary, but there is general agreement that an excess of hospital capacity exists in this country, see Wing & Craige, supra note 6, at 1177-78, an excess created at least in part by the financial incentives of the Hill-Burton program. Thus, there is unlikely to be much political support for the continuation of federal financial assistance for health facility construction. Hospitals and other health facilities have generally turned to other sources for their capital funds. See Hilferty, Capital Financing For Hospitals: The New York Experience, 57 N.C. L. REV. 1383, 1384-85 (1979). Ironically, recent congressional amendments to the 1974 planning legislation allow for federal financial assistance to convert or discontinue use of health facility assets, a program which might be labeled a "reverse Hill-Burton program." See National Health Planning and Resources Development Act of 1979, Pub. L. No. 96-79, 93 Stat. 634, codified at 42 U.S.C. 5 300k et seq. (Supp. III 1979). " For a relevant discussion of the shift in federal health policy which has resulted in this reluctance to provide further federal funding of health facility construction, see Wing & Silton, supra note 32, at 1428-35. maintenance of the nation's health facilities in accordance with congressional objectives. As mentioned above, one of those objectives is the requirement of community service imposed upon funded facilities. To illustrate the substance of that requirement, it is necessary to examine the legislative history of the program. II. ANALYSIS OF THE LEGISLATIVE HISTORY In analyzing the legislative history of the statutory language authorizing Hill-Burton community service obligation, two questions of fundamental importance must be addressed: (1) whether Congress intended to impose an affirmative obligation on recipient facilities to provide community service, and (2) whether Congress intended the community service obligation to require general availability of services or only to prohibit racial discrimination. Both of these questions require an analysis of the text and legislative history of the original 1946 enactment, as well as the subsequent amendments to the original authorizing legislation. A. Did Congress Intend to Authorize Regulations Affirmatively Requiring Recipient Facilities to Provide "Charity Care" Services? Previous commentary on the legislative and administrative history of charity care — commentary which has focused primarily on the meaning of the uncompensated service obligation 56 — has stimulated a lively debate over the nature and extent of the government's authority to enforce charity care obligations. 57 Among other things, critics of rigorous enforcement of charity care in general and of the 1979 regulations in particular have argued that the obligations as originally enacted were not meant to be substantive conditions affirmatively requiring recipient facilities to provide services." Furthermore, relying 56 See note 30 supra. " See articles cited at note 30 supra. 'a See Vanderbilt Note, supra note 30, at 1475-80; see also Maryland Note, supra note 30, at 318-25; American Hosp. Ass'n v. Harris, supra note 23. The most extreme position is that taken by the Vanderbilt Note. The Note's analysis of the legislative history urges that the objective of the legislation — and not the means chosen to achieve it — was to finance only facilities, not services. Therefore, it is argued, Congress could not have intended the charity care provision to be interpreted to authorize regulations requiring recipient facilities to either provide uncompensated services or community service. See Vanderbilt Note, supra note 30, at 1475-76. See also Maryland Note, supra note 30, at 320-21. This "facilities-not-services" argument is an unconvincing one. Even a cursory reference to the declaration of purposes, see note 85 infra, or the statutory provisions outlining requirements for the state plan or allocation of funds, see notes 34-39 supra, indicates that the objective of Congress was not to fund facilities per se. Both Notes also seem to ignore the regulatory conditions that accompanied state and recipient facility funding. See note 39 supra. Why would there be priorities, allocation formulas, and a requirement of determining need, if Congress was not concerned with services and the populations that needed them? Further, the "facilities-not-services" argument in the Vanderbilt Note is based almost entirely on remarks made during the 1945 Senate hearings, remarks which preceded the inclusion of the "charity care" language in the statute. See note 73 infra. Even assuming the Senate on the observation that Congress' original intent in establishing the HillBurton program was only to finance hospital construction, not hospital services, some critics have reasoned that the language of the charity care provision could not have been intended to impose substantive obligations on recipient facilities to provide either uncompensated service or community service. As one commentator phrased it, charity care was meant only to be a "spirited promise."" On its face, the text of the original statute authorizing the charity care regulations seems to refute the contention that Congress intended merely to make a "spirited promise." The charity care legislation, containing the language from which both the community service and the uncompensated service obligations are derived, provided, in its original form, that: Within six months after the enactment of this title, the Surgeon General, with the approval of the Federal Hospital Council and the Administrator, shall by general regulation prescribe — (f) That the State plan shall provide for adequate hospital facilities for the people residing in a State, without discrimination on account of race, creed, or color, and shall provide for adequate hospital facilities for persons unable to pay therefor. Such regulation may require that before approval of any application for a hospital or addition to a hospital is recommended by a State agency, assurance shall be received by the State from the applicant that (I) such hospital or addition to a hospital will be made available to all persons residing in the territorial area of the application, without discrimination on account of race, creed, or color, but an exception shall be made in cases where separate hospital facilities are provided for separate population groups, if the plan makes equitable provision on the basis of need for facilities and services of like quality for each such group; and (2) there will be made available in each such hospital or addition to a hospital a reasonable volume of hospital services to persons unable to pay therefor, but an exception shall be made if such a requirement is not feasible from a financial standpoint. 6° hearing transcript reflected the interpretation that the Notes claim, reliance on these remarks as the basis for determining the congressional intent in an amendment subsequently added is questionable. See notes 75-76 infra. Similarly, it is difficult to understand the confidence with which the Maryland Note claims that "a reading of the transcripts shows" that the Congress did not intend by the charity care provision to impose substantive obligations on Hill-Burton recipients. See Maryland Note, supra note 30, at 321. Given the dearth of congressional commentary on the meaning of the statutory language, an overall reading does not provide much guidance as to the congressional intent with regard to charity care, and, in particular, community service. 59 See Vanderbilt Note, supra note 30, at 1479. 66 Public Health Service Act, 5 622(f), as amended by Pub. L. No. 79-725, 5 2, 60 Stat. 1041 (1946) (emphasis added). Note that an exception to the uncompensated care obligation was allowed in the original legislation if implementation was "not feasible from a financial standpoint." Public Health Service Act 5 622(0(2), as amended by Pub. L. No. 79-725, 60 Stat. 1041 (1946). This same exception is contained in all subsequent versions of the relevant provisions, even after the revisions in 1964. See note 45 .supra. See 42 U.S.C. S 291c(e) (1976). Presumably, facilities could be allowed to waive the "community service" obligation if its implementation were not "feasible from a financial standpoint." In practice, however, no grantee has ever been permitted to waive the obligation. See Rose, supra note 30, at 170. The plain meaning of the statutory language, then, foresees regulations requiring funded facilities to be "available to all persons" residing in the community (community service), and to provide a "reasonable volume of hospital services for those unable to pay therefor" (uncompensated services). In short, the legislation authorizes substantive conditions to be imposed upon recipient facilities. Furthermore if the original legislation and its history are examined closely, and with exclusive concern for the meaning of the "available to all" language which creates the community service obligation, it is clear that critics have vastly oversimplified the statutory scheme and that Congress' intent with regard to community service cannot be so easily inferred. Indeed, despite the inclinations of various critics to find clarity where there is none, 6 ' the specific meaning of the original "available to all" language may well defy definitive interpretation, however closely the legislative history is read." Yet it is difficult to read that history and conclude that Congress did not intend to impose an affirmative community service condition on recipient facilities, however it is specifically defined. In analyzing the legislative history of the charity care provision, it must be noted that the political dimensions of the legislative process which led to the enactment of the original Hill-Burton program are also not easily characterized. Clearly the legislation was a result of the genuine — and apparently universal — concern in Congress that there was a shortage of hospital services in many parts of the country during the Depression and World War 11. 63 But 61 See note 58 supra. " See text at notes 82-89 infra. 63 Throughout the public health and legal literature, commentators have uniformly and repeatedly described the Hill-Burton program as a response to the shortage and maldistribution of hospitals and other health facilities recognized by Congress following the Depression and World War II. Indeed, a straightforward reading of the legislative history of the original HillBurton proposal would certainly indicate that there was general — virtually unanimous — agreement within Congress and in public opinion as to the pressing need for more hospitals. Both in the congressional committee reports, S. REP. NO. 674, 79th Cong., 1st Sess. (1945); H.R. REP. NO. 2519, 79th Cong., 2d Sess., reprinted in 1946 U.S. CODE CONG. & An. NEWS 1558, and in the floor debates, see, e.g., 91 CONG. REC. 11,713-17 (1945) (remarks of Sen. Hill); 92 CONG. REC. 10,211 (1945) (remarks of Rep. Whittington), frequent and unchallenged claims were made that many areas of the country had insufficient hospital services and that some areas had no hospital services at all. The committee reports even went so far as to estimate the number of Americans without access to hospital care, see, e.g., S. REP. NO. 674 at 41, and to estimate that if the proposed federal program spent $75 million a year for five years that only 20% of the hospitals that would be needed would be built. Id. at 6. As the proposal was considered by Congress, no one contested the need for additional hospital services and virtually no one disputed the need for remedial legislation. Despite the range of ideological differences that prevailed during the period, see note 64 infra, liberals and conservatives from both parties rallied support for the legislation. There is no indication of any organized opposition to the proposition that there was a nationwide shortage of hospitals or to the call for remedial legislation. Though some provisions of the bill caused a series of lively skirmishes in committee and on the floor of both houses, they involved largely peripheral issues. There was some opposition from political conservatives who correctly anticipated that the Hill-Burton program would be just the beginning of even broader federal involvement in health care, e.g., 92 CONG. REC. 10,210 (1946) (remarks of Rep. Hill-Burton was also the result of the interaction of a variety of diverse political forces which, for somewhat different purposes, converged in support of a single proposal. This observation must qualify any attempt to infer congressional intent from the legislation's political history." On the other hand, while descriptions of the program's politics and their implication can vary, the legislative Jensen), but these objections were repeatedly answered by the assertion that there was a shortage of hospitals created by World War II and the Depression, and neither private initiative nor local government could underwrite the necessary capital investment. See, e.g., 92 CONG. REC. 10,209 (1946) (remarks of Rep. McCormack), 92 CONC. REC. 10,213 (1946) (remarks of Rep. Savage). Remarkably unanimous support for the concept of a health facility construction program also came from the private sector. Throughout the legislative process the bill received the active support of the American Hospital Association, but see note 64 infra, the American Public Health Association, the American Medical Association (which had traditionally opposed any form of government involvement in medical care, see 92 CONG. REC. 10,208 (1946) (remarks of Mr. Bulwinkle)), and a host of other lobbyist and political groups. For a list of organizational sponsors, see H.R. REP. NO. 2519 at 3, reprinted in 1946 U.S. CODE CONG. & AD. NEWS 1560. " A program to provide federal financial assistance for hospital construction was part of the legislative strategy of political forces from both ends of the political spectrum during the 1940's. Although once the Hill-Burton legislation had been submitted it moved through Congress with a speed that suggested a firmly-built political consensus, it is also clear that the proposal was the end-product of a long and hard-fought political struggle. In fact, the Hill-Burton program and the ease with which it was enacted may be best described in terms which emphasize that a health facility construction program was the single common ground among many ideological and political perspectives. Several health care reform programs had been advocated by liberal New Dealers throughout the Roosevelt administration, including a number of proposals for a national health insurance program. See generally Falk, Proposals For National Health Insurance in the USA: Origins and Evolution, and Some Perceptions for the Future, 55 MILBANK MEMORIAL FUND Q. 161, 167-71 (1977). Throughout the Depression and World War II years, Senator Wagner of New York sponsored a series of health care reform proposals and jointly sponsored the Dingell-Murray-Wagner bill, variations of which were first proposed as early as 1939, see, e.g., 5.1620, 76th Cong., 1st Sess., reprinted in 84 CONG. REC. 10,983 (1939), which would have established a nationalized health insurance program, funding for the development of prepaid group practices, expansion of federal research and public health programs, and a program of financial assistance for the construction of health facilities. While opposed to these broader reform measures, some political conservatives, eager to develop an alternative to President Roosevelt's New Deal politics and, later, the proposals of the Truman administration, attempted to forge a series of alternative health initiatives which called for programs which minimized federal involvement and relied more heavily on the private sector for delivery and financing of health care services. As early as 1939, Senator Taft from Ohio, a moderate Republican, proposed in a speech to the Cameron Medical Association the adoption of a federal hospital construction program — very much like the eventual 1946 legislation — arguing that it would be both good policy and a preferred alternative to the national health insurance proposals and other reform schemes proposed by Wagner and other liberals. See 84 CONG. REC. A3156 (1939). The interplay of conservative and liberal ambitions nearly resulted in the establishment of a health facility construction program in 1940, when a program very similar to the eventual Hill-Burton proposal was passed by the Senate but died in the House. The bill was sponsored by Senators George and Wagner and actively supported by Senator Taft, with some objections, and other Senate Republicans. See Hearings on S.3230 before the Senate Subcommittee of the Committee on Education and Labor, 76th Cong., 3d Sess. 8-12 (1940). 5.3230 was apparently the result of a proposal made earlier that year by President Roosevelt, see H.R. DOC. NO. 604, 76th Cong., 2d Sess. 1-3 (1940). Note also that this same section included a community service provision. Curiously, this same "community service" language was not included in the 1945 Hill-Burton proposal, but was amended to that proposal during committee deliberations, possibly at the inhistory of the original proposa1, 65 is surprisingly short and straightforward, particularly with regard to the charity care provision and the portion of that provision which established the statutory basis for the community service obligation. sistence of Senator Taft. See note 75 infra. A similar proposal was also spawned by hearings held in 1944 before the Senate Subcommittee on Wartime Health and Education, chaired by Senator Pepper, later one of the principal actors in the consideration of the Hill-Burton proposal, which also documented a need for additional hospital services in this country and for remedial federal legislation. Investigation of the Educational and Physical Fitness of the Civilian Population as Related to National Defense . Hearings on S.74 before the Subcommittee on Wartime Health and Education of the Committee on Education and Labor, 78th Cong., 2d Sess. 1873-74 (1944). Apparently, by the end of World War II, the political debate in Congress centered principally on the scope and form of health reform legislation, not whether legislation in any form was appropriate. During this same period, representatives of the hospital industry, realizing their inability to secure private or local government sources to finance capital expansion, were also actively pursuing federal health legislation to assist health facility construction. In 1942 the American Hospital Association (AHA) sponsored the establishment of a private commission to study the future of the American hospital industry; after two years of study, the commission issued a report purporting to document a shortage of hospital facilities and urging a national survey and planned effort. COMMISSION ON HOSPITAL CARE, HOSPITAL CARE IN THE UNITED STATES (1947). Although the final report was not published until after the Hill-Burton program was enacted, the AHA-backed commission apparently worked closely with congressional representatives, see id. at 3-7, and it has been reported by several authorities that the commission and the AHA were influential in writing the first draft of the original Hill-Burton proposal. See SOMERS, supra note 33, at 133-34; Feshback, supra note 32, at 316-18. See note 70 infra. The commission and AHA representatives were also actively involved in the public debate over this program and some commentators have credited them with a substantial role in the behind the scenes maneuvering. See Feshback; supra note 32, at 319. For a good history and description of the composition of the Commission on Hospital Care, see id. at 317-19. From a broader perspective, some commentators have also argued that the Hill-Burton proposal was only one part of a broader social and economic strategy and essentially a compromise between organized labor, business interests, and the government in an attempt to stabilize the economy and avoid post-war labor unrest. See Feshback, supra note 32, at 314-16. See also E.R. BROWN, ROCKEFELLER MEDICINE MEN 198-212 (1979). 65 As some commentators have argued, the original Hill-Burton program may have been principally a rejection of liberal reform proposals, such as the Dingell-Murray-Wagner bill, see note 64 supra, and a victory for those who favored a more conservation approach to the hospital shortage problem. See Vanderbilt Note, supra note 30, at 1478. See also Maryland Note, supra note 30, at 320. Conversely, Rosenblatt, supra note 30, at 266-68, describes the enactment of Hill-Burton more as a compromise victory for moderate conservatives who made several significant concessions to secure liberal support. Rose, supra note 30, at 172, also characterizes the legislative history in these terms. This latter characterization appears to be more accurate. During the time that the HillBurton proposal was working its way through Congress, it is clear that liberals still hoped to secure a more sweeping bill. There were several attempts to attach broader reforms to the HillBurton proposal by amendment. See, e.g., 91 CONC. REC. 11,799 (1946). Some Senate liberals made clear that their support for 5.191 came only from a preference for broader but unattainable reforms and that they considered Hill-Burton only a first step in the right direction. See, e.g., S. REP. NO. 674, supra note 63, at 21 (minority view of Senator Murray). When the Senate-passed bill was before the House, the committee deliberations continually involved a comparison of 5.191 to several other health facility construction program proposals, some of which involved maintenance funding, and to the pending National Health Act of 1945, H.B. 4730, the latest version of the Dingell-Murray-Wagner bill. See, e.g., Hospital Con Following the introduction of the original proposal by Senator Hi11, 66 six days of public hearings were held before the Senate Committee on Education and Labor in February and March of 1945. 67 During the public hearings, a special subcommittee composed of Senators Hill, Taft, Ellender, Tunnel], and LaFollette held several weeks of closed and undocumented "study sessions" during which Hill's original bill was in large part rewritten." This revised bill was approved by the committee, reported back to the Senate floor, and, after a relatively short debate, passed by a virtually unanimous vote in December, 1945. 69 In the House, the Senate bill followed a similar course. The House Committee on Interstate and Foreign Commerce held five days of hearings and reported the Senate bill favorably back to the House floor, but with several apparently controversial amendments concerning the appropriations authorized and the method for allocating funds to each state." With these amendments and following a lively but short debate, the bill was passed by the House."' While the two houses were of like mind with regard to most provisions of the bill, they locked horns over the House amendments. A joint conference negotiated a compromise, but the House rejected the first conference report." A second report, essentially calling for the Senate to accede to the House amendments, was eventually accepted," and the bill was signed into law by President Truman in August of 1946. 74 Thus, in the span of one session Congress enacted an unprecedented spending program and drastically revised federal health policy. Understandably, the bill provoked a series of lively skirmishes on both floors and in committee. But opposition to the bill was surprisingly short-lived and generally focused on peripheral issues such as the powers of the federal hospital council or the method and amount of appropriations to each state. Congress, it appears, was primed for prompt action. Weighty issues of federal-state relations, trade-offs for other social programs, the over-all impact on the federal budget, and other policy considerations were dispatched with surprising speed and virtual unanimity. As a consequence, the relatively minor issue of the scope and nature of the conditions that could be imposed on recipient facilities received little attention and infrequent mention throughout the short legislative deliberations. In fact, the entire legislative history of the community service obligation involves a single thread of legislative events to which little coloration can be added. The charity care provision including the "available to all" language was added as one of the revisions made during the closed "study sessions" that coincided with the Senate hearings. It appeared for the first time with many other amendments but without elaboration in the Senate committee report." Once added to the rewritten bill, the provision remained unchanged through both and resubmitted. Id. at 10,484. " Id. at 10,619, 10,667. 74 Id. at 10,741. 7' See S. REP. NO. 674, supra note 63, at 9. Senate 191 in its original form mentioned neither obligation, but only established the general goal of "furnishing adequate service to all of the people" in the declaration of purposes. 5.191, 79th Cong., 1st Sess., $ 601 (1945), as cited in Rosenblatt, supra note 30, at 266 n.78. More specific standards were to be left to the discretion of the Federal Hospital Council. Id. at 266 n.79. The language of the charity care obligations appeared for the first time in the amended 5.191 that emerged from the closed executive sessions held by the Senate study committee, during the hearing on S.191 in November, 1945. See note 67 supra. Rose, supra note 30, at 167, credits Senator Taft with authorship of the charity care provision during the closed executive session, drawing attention to his earlier remarks during the public hearings indicating that a "free service" requirement might be an appropriate amendment. Id. at 168. While his specific authorship of the "community service" language has never been suggested, he did play a major role in the legislation and in the redrafting of the proposal during the closed study session. See S. REP. No. 674, supra note 63, at 2. The chronology of events and the fact that the bill was rewritten in subcommittee are critical aspects of the legislative history. Some critics have attempted to infer congressional intent from the statements of witnesses and legislators made at the public hearings prior to the redrafting and prior to the inclusion of the charity care amendments. For example, the Vanderbilt Note, supra note 30, at 1474-75, goes into great detail in analyzing the committee deliberations during the public hearing in an effort to determine congressional intent of the subsequent amendment. Oddly, the Note ignores any of the subsequent legislative deliberations, including parallel hearings in the House. At the least, a legislative history should only begin with a reference to the 1945 Senate hearings, but focus on inferring the intent of the subsequent amendments and the ly reiterated verbatim the statutory language, however, giving no indication of how "available to all" would be defined, and, perhaps more significantly, giving no indication of how either of the charity care obligations would be monitored or enforced.'" In 1964, after the amendment to the statutory language required by the Simkins ruling, HEW issued new regulations. 133 These regulations provided the 5 53.6 General. The State plan shall provide for adequate hospital facili ties for the people residing in a State without discrimination on account of race, creed, or color and shall provide for adequate hospital facilities for persons unable to pay therefor. S 53.6 Non-discrimination. Before a construction application is recommended by a State Agency for approval, the State Agency shall obtain assurance from the applicant that the facilities to be built with aid under the act will be made available without discrimination on account of race, creed, or color to all persons residing in the area to be served by that hospital. However, in any area where separate hospital facilities are provided for separate population groups, the State Agency may waive the requirement of assurance from the construction applicant if (a) it finds that the plan otherwise makes equitable provision on the basis of need for facilities and services of like quality for each such population group in the area, and (b) such finding is subsequently approved by the Surgeon General. Facilities provided under the Federal Act will be considered as making equitable provision for separate population groups when the facilities to be built for the group less well provided for heretofore are equal to the proportion of such group in the total population of the area, except that the State plan shall not program facilities for a separate population group for construction beyond the level of adequacy for such group. 5 53.63 Hospital servicers for persons unable to pay therefor. Before a construction application is recommended by a State Agency for approval, the State Agency shall obtain assurance that the applicant will furnish a reasonable volume of free patient care, As used in this section, "free patient care" means hospital service offered below cost or free to persons unable to pay therefor, including under "persons unable to pay therefor," both the legally indigent and persons who are otherwise self-supporting but are unable to pay the full cost of needed hospital care. Such care may be paid for wholly or partly out of public funds or contributions of individuals and private and charitable organizations such as community chests or may be contributed at the expense of the hospital itself. In determining what constitutes a reasonable volume of free patient care, there shall be considered conditions in the area to be served by the applicant, including the amount of free care that may be available otherwise than through the applicant. The requirement of assurance from the applicant may be waived if the applicant demonstrates to the satisfaction of the State Agency, subject to subsequent approval by the Surgeon General, that furnishing such free patient care is not feasible financially. 42 C.F.R. 5 53.62-63 (1949) (emphasis added). Sections 53.61-63 were recodified without substantial amendment into two sections, 5 53.111-112, in 1956. 21 Fed. Reg. 9841 (1956). 132 There were a few instances in which HEW took action to enforce community service in its broader sense even prior to the 1964 statutory amendments and subsequent regulations. Apparently in 1963 HEW took the position that Group Health Cooperative of Puget Sound (a "closed" prepaid group practice) could not received Hill-Burton funds because it was not open to everyone. See Cook v. Ochsner Found. Hosp., 61 F.R.D. 354, 363 (E.D. La. 1970). Thus, on at least one occasion prior to 1964 HEW indicated its willingness to interpret "available to all" in its broader sense. 133 It should be noted that while the statutory authorization for the community service regulations is permissive, the issuance of regulations immediately following the 1946 legislation and again following the 1964 amendments made the obligation, however vaguely defined, manfirst specific interpretation of the community service obligation." 4 In order to comply with the statute, funded facilities were required to refrain from discriminating on the basis of race, creed, color, or national origin, and to furnish community service.' 55 "Community service," as defined by the 1964 datory on receipt facilities. See note 131 supra. ' 34 The former 55 53.111-112 were expanded into three sections following the Simkins decision, see note 103 supra, and the amendments to the Hill-Burton statute. 29 Fed. Reg. 18,447 (1964). Although the charity care obligations as interpreted by earlier regulations were reorganized, the only major substantive change was a reinterpretation of the "available to all" language, including, for the first time, the use of the term "community service." As amended, the charity care regulations read: 53.111 Community service; services for persons unable to pay; nondiscrimination on account of creed. Before an application for the construction of a hospital or medical facility is recommended by a State agency for approval, the State agency shall obtain assurance from the applicant that: (a) The facility will furnish a community service; (b) The facility will furnish below cost or without charge a reasonable volume of services to persons unable to pay therefor. As used in this paragraph, "persons unable to pay therefor" includes persons who otherwise are selfsupporting but are unable to pay the full cost of needed services. Such services may be paid for wholly or partly out of public funds or contributions of individuals and private and charitable organizations such as community chest or may be contributed at the expense of the facility as itself. In determining what constitutes a reasonable volume of services to persons unable to pay therefor, there shall be considered conditions in the area to be served by the applicant, including the amount of such services that may be available otherwise than through the applicant. The requirements of assurance from the applicant may be waived if the applicant demonstrates to the satisfaction of the State agency, subject to subsequent approval by the Surgeon General, that to furnish such services is not feasible financially; and regulations, meant "that (1) the services furnished are available to the general public or (2) admission is limited only on the basis of age, medical indigency, or type or kind of mental or medical disability. " 136 HEW also adopted the view that the essential obligation remained unchanged by the statutory amendment, except for the elimination of the "separate-but-equal" exception. Thus, the agency considered the new regulations applicable to all recipient facilities, including those that received funding prior to 1964. 137 As with earlier charity care regulations, however, the 1964 regulations made no provision for monitoring or enforcing compliance with the charity care obligations. The regulations as amended in 1964 remained unchanged and, undoubtedly, unenforced, for nearly ten years.'" In fact, for the first 25 years of the program, none of the federal or state Hill-Burton agencies took action to interpret the meaning of these obligations, nor is there any evidence of government efforts to monitor or enforce compliance.' 39 Until 1972, the federal regulations implementing the Hill-Burton program did little more than restate the charity care provision of the statute, and similar language was appended into state Hill-Burton plans and individual grants without further elaboration.'" In the early 1970's, however, a series of privately-initiated lawsuits forced HEW to give more than pro forma recognition to the charity care obligations."' As a result, HEW reluctantly issued interpretive regulations in 1972 specifying the meaning of the obligation to provide uncompensated service. More critically, the 1972 regulations outlined a program for monitoring compliance by Hill-Burton facilities, relying heavily on state agencies for its implementation.'" HEW specifically declined the opportunity to amend or to 136 42 C.F.R. 4 53.1(p), as added by 29 Fed. Reg. 18,449 (1964) defined "community service" to mean: . . the (1) services furnished are available to the general public or (2) admission is limited only on the basis of age, medical indigency, or the type or kind of medical or mental disability, or (3) the facility constitutes a medical or nursing care unit of a home or other institution which home or other institution is available in accordance with subparagraph (1) or (2) of this paragraph. Id, at 409. '" See explanation given later by HEW. 43 Fed. Reg. 49,954 (1978). In See Cook v. Ochsner Found. Hosp., 61 F.R.D. 354, 361-62 (E.D. La. 1972). Among other things, the court found that during the preceding 25 years there had not been any federal personnel assigned to investigate or enforce the charity care assurances and there had not been any federal process for handling individual complaints or issuing interpretations with regard to individual facilities. See also Newsom v. Vanderbilt Univ., 453 F. Supp. 401, 409 (M.D. Tenn. 1978). 139 See Rose, supra note 30, at 169. See also Newsom v. Vanderbilt Univ., 453 F. Supp. ' 49 See 42 C.F.R. 5 53 (1947). See also 42 C.F.R. 5 53 (1971). ' 4 ' See, e.g., Cook v. Ochsner Found. Hosp., 559 F.2d 968 (5th Cir. 1977) (note two earlier decisions: 319 F. Supp. 603 (E.D. La. 1970) and 61 F.R.D. 354 (E.D. La. 1972)); Euresti v. Stenner, 458 F.2d 1115 (10th Cir. 1972); Organized Migrants in Community Action v. James Archer Smith Hosp., 325 F. Supp. 268 (S.D. Fla. 1971); Perry v. Greater Southeast Wash. Hosp. Found., No. 721-71 (D.C. June 28, 1972). See also Saine v. Hospital Auth. of Hall County, 502 F.2d 1033 (5th Cir. 1974). 142 These charity care regulations were first issues in interim form, 37 Fed. Reg. 14,179 specify the meaning of community service, however.' 43 Subsequent litigation by private consumer groups again attacked the adequacy of the government's efforts,'" resulting in further amendments to the uncompensated service regulations in 1975.' 45 It was not until 1974 — and again under court order' 46 — that HEW (1972). The final version (with slight changes) was issued in 1973. 38 Fed. Reg. 16,353 (1973). For a discussion of the circumstances leading to their initial issuance, see Rose, supra note 30, at 174-76; Rosenblatt, supra note 30, at 270-77. '43 37 Fed. Reg. 14,720 (1972). See Rose, supra note 30, at 178. The 1972 regulation (actually finalized in 1973, see Rose, supra note 30, at 177 n.57) did recodify the references to community service and the prohibitions on discrimination on the basis of race, color, or national origin, in effect, renumbering 5 53.111-113. However, there were no substantive changes in the community service provisions in 1972, other than in the substantive requirements regarding the "free care" obligation. 144 See Corum v. Beth Israel Medical Center, 373 F. Supp. 550 (S.D.N.Y. 1974), and related decisions, Corum v. Beth Israel Medical Center, 373 F. Supp. 558 (S.D.N.Y. 1974), Corum v. Beth Israel Medical Center, 359 F. Supp. 909 (S.D.N.Y. .1973). See also Rose, supra note 30, at 194-201. 14' 40 Fed. Reg. 46,203 (1975), amending provisions relating to billing patients prior to uncompensated service determinations. 146 Cook v. Ochsner Found. Hosp., 61 F.R.D. 354 (E.D. La. 1972). The findings of the court read in part: The defendant Secretary, who is the Federal government official responsible for implementing the Hill-Burton program, has failed to insure that HillBurton hospitals meet their obligations to treat all persons in the territorial area in providing a community service. The defendant Secretary has not issued any rulings, regulations, standards, or taken any specific action with respect to these hospitals, nor to this Court's knowledge, as to any other hospital, to see to it that they terminate their practices and/or policies of excluding substantially all Medicaid beneficiaries. The failure of the Secretary of Health, Education, and Welfare to "prescribe regulations" which would prohibit such discriminatory admission practices by the defendant hospitals is in disregard of the provisions and intent of the Hill-Burton Act. Id. at 361. In a related case, Perry v. Greater Southeast Wash. Community Found., No. 725-71 (D.D.C. June 28, 1972), the federal district court for the District of Columbia came to a similar conclusion with regard to the adequacy of the existing federal regulations, holding that the inadequacy of the federal community service regulations prevented a determination of whether or not the defendant hospital was in compliance with its community service obligation. While holding that the interpretation of "community service" was properly a matter for the federal administrative agency, the court did make several relevant observations. First, the court was of the opinion that the "available to all" language in the statute prior to 1964 was only a proscription of discrimination on the basis of race, creed, or color; not an affirmative obligation to provide something called "community service." Id. at 5-6. The court recognized, however, that the 1964 amendments and the regulations to follow did impose such an affirmative obligation on recipient facilities, albeit an obligation that the federal agency would have to specify in order to enforce. Id. at 6. In the language of the court: There are not standards by which the Court could determine whether whatever community services the hospital performs are or are not reasonably related to the standard; and without that, there is no way that the Court can function except by considering itself some kind of an administrative agency in a rule-making and administative process, which is not the role of the Court. Id. Thus, the district court did not rule that the broader interpretation of "community service" could not be imposed on facilities funded after 1964, only that without specification the enforcement could not be pursued by private litigants through the courts. For further discussion, see Rosenblatt, supra note 30, at 274-75. finally issued regulations further interpreting the community service obligation."' The major substantive revision added by the 1974 regulations was to specify that community service included the requirements that recipient facilities must participate in Medicaid and Medicare, and must take "such steps as necessary" to insure that Medicaid and Medicare patients were admitted without discrimination.'" But while the 1974 regulations clarified the meaning implied in the community service provisions of the 1964 regulations, they stopped short of imposing explicit standards for assessing compliance with the substantive requirements.'" In addition, monitoring and enforcement pro In order to comply with its community service assurance an applicant Must: (1) (i) Make the services it furnished available to general public, or (ii) Limit the availability of such services only on the basis of age, medical indigency, or type or kind of medical or mental disability, or (iii) If the facility constitutes a medical or nursing care unit of a home or other institution, make such home or other institution available in accordance with paragraph (d)(1)(i) or (ii) of this section; and (2) (i) Make arrangements, if eligible to do so, for reimbursement for services with: (A) Those principal State and local governmental third-party payors which provide reimbursement for services that is not less than the actual cost of such services as determined in accordance with accepted cost accounting principles; and (B) Those Federal governmental third-party programs, such as Medicare and Medicaid, to the extent that the applicant is entitled to reimbursement at reasonable cost under a formula established in accordance with applicable Federal law. (ii) Take such additional steps as may be necessary to ensure that admission to and services of the facility will be available to beneficiaries of the governmental programs specified in paragraph (2)(i) without discrimination (or preference) on account of their being such beneficiaries. As noted earlier, see note 146 supra, the federal district court in Cook v. Ochsner mandated this substantive amendment. The court declined, however, to rule on plaintiff's argument that as a matter of law a policy to accept only patients who had a private physician on the facility's medical staff violated the obligation as well, holding that the issue would have to be tried and would be dependent on individual circumstances. 61 F.R.D. at 359-60. This issue is resolved in the 1979 community service regulations. See 42 C.F. R. 5 125.603(d)(1) (1980), set forth at note 172 infra. It is also worth noting that the nine hospital defendants (in addition to HEW) in the Cook litigation agreed to take various steps to accept Medicaid patients under a stipulated settlement entered into prior to trial on the community service issue. 61 F.R.D. at 354-55. Apparently, they acceded to an interpretation of "community service" that included an obligation to provide services to Medicaid patients prior to the issuance of the 1974 regulations. For a discussion of this interpretation of "community service," see Rosenblatt, supra note 30, at 279. "9 In many respects, it appears that HEW was trying to imply standards and specify meaning without explicitly doing so. For example, the regulations in proposed form would have required recipients to make arrangements with private third party payors, but the specific requirement was dropped in the final regulations as both "infeasible and unnecessary." According to the explanatory material that accompanied the final regulations, HEW felt it could not develop specific regulatory language which would not disrupt the reimbursement relationship between providers and most private insurers. 39 Fed. Reg. 31,766 (1974). However, that same explanation claims that HEW felt such a provision, in any event, was unnecessary, since arrangements with private third party payors would be compelled under the general language of S 53.113(d)(1). Id. As another example of HEW's lack of specificity, the term "without discrimination" cedures were only generally referred to in the 1974 regulations, and almost total discretion was given to the state Hill-Burton agencies to develop methods for evaluation and enforcement of this obligation. 150 The 1974 regulations also limited the duration of the community service obligation to 20 years."' This provision, however, was invalidated by a federal district court in 1977 and HEW has acceded to that position ever since.' 52 In 1978, HEW proposed new charity care regulations, ostensibly under the mandate of the 1974 health planning legislation"' but clearly prodded as well by the continuing efforts of private consumer groups."' The new regulations were intended to give more specific meaning to the terms of the uncompensated and community service obligations, 155 and to federalize the enwas used, but no clear guidelines for measuring discrimination were included. See 42 C.F.R. 53.113(e) (1975). The explanatory language in the introductory material of the federal regulations added some indication of what was intended but still stopped short of specific meaning: Beneficiaries of the covered programs must thus be considered for admission to and treatment in each facility on an equal basis with persons who pay their charges through other means, in accordance with the policies which are generally applicable to patients of the facility. Steps designed to ensure this result might include, for example, notification to physicians on the facility's staff that beneficiaries of the covered programs are eligible for admission in accordance with the institution's normal admission procedures. 39 Fed. Reg. 31,767 (1974). See notes 163-74 infra for a comparison of similar provisions in the 1979 regulations. "° See 42 C.F.R. $ 53.113(e)-113(g) (1975). Until 1978 HEW and its predecessors had taken the position that enforcement of the charity care obligations was primarily a matter for state Hill-Burton agencies, as were most other administrative aspects of the program. See Cook v. Ochsner Found. Hosp., 61 F.R.D. 354, 364 (E.D. La. 1972), Lugo v. Simon, 426 F. Supp. 28, 31 (N.D. Ohio 1976). While that position seems consistent with the general scheme contemplated by the statute, it hardly explains the virtual silence of the regulations on matters such as methods for determining compliance, or enforcement activities, or even data collection. Moreover, the state agencies, apparently taking the lead from their federal counterparts, did not in any meaningful way carry out their responsibility for charity care enforcement. Testimony given at the 1978 hearings almost uniformly describes the state enforcement activities as non-existent, almost to the point that strains credulity. DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, TRANSCRIPT OF PROCEEDINGS: PUBLIC HEARINGS ON PROPOSED HILL-BURTON REGULATIONS December 5-6 (1979) (two volumes). See, e.g., testimony of Edward Tetelman, Vol. II at 115; Dolores Bullert, Vol. II at 191; Tony Whitson, Vol. II at 228. See also Rose, supra note 30, at 186-94. '" 42 C.F.R. 5 53.113(a) (1975). "2 Lugo v. Simon, 426 F. Supp. 28, 36 (N.D. Ohio 1976). See .43 Fed. Reg. 49,955 (1978). Section 53,113(e) was amended accordingly. 42 Fed. Reg. 16,780 (1977). A similar limitation was imposed on the free care obligation by the 1972 amendments to the charity care regulations, but it has been held to be valid by both the Cook and Lugo courts. See 42 C.F.R. 53.111(a) (1975). "32 See note 15 supra. 1 43 Fed. Reg. 49,954-56 (1978). Both Newsom v. Vanderbilt, 653 F.2d 1100, 1105 (6th Cir. 1981) and Lugo v. Simon, 453 F. Supp. 677, 686 (N.D. Ohio 1978) interpreted the 1974 legislation to require new charity care regulations. Both parties in Lugo agreed to a stipulation settlement under which HEW would develop new regulations and under which the 1979 regulations were issued. See Fiori, Bureau of Health Facilities Increasing Responsibilities in Assuring Medical Care for the Needy and Services Without Discrimination, 95 PUBLIC HEALTH REPORTS 164, 167 (1980). "3 The explanatory materials that accompanied the proposed and final regulations emforcement and monitoring responsibilities.' 56 Indeed the language of the proposed and final regulations and the voluminous explanatory material that accompanied the regulations 157 reflected an unusual frankness by HEW both in describing the inadequate enforcement efforts of the past and in affirming the agency's intent to come to grips with these controversial obligations and establish meaningful enforcement procedures.'" In their broadest outlines, the new regulations added nothing to the substantive definition of community service, at least as it has been defined since 1964. Recipients' 59 of Hill-Burton assistance from both the Hill-Burton program and the new program established in 1974' 6 ° are essentially required to make their services available to all residents of the area they serve,' 6 ' without discrimination on the basis of race, color, creed, national origin 162 or on any phasized that the new regulations were attempts to clarify the existing obligations, rather than adopt new substantive standards. See 44 Fed. Reg. 29,397-99 (1979). For example, the specific requirements of $ 124.603(a) are described as making explicit what was implied in pre-existing $ 53.113(d)(1). Id. at 29,397. 156 The shift of the primary responsibility for monitoring and enforcement activities from the state agencies to the federal agency may well be one of the most significant aspects of these regulations from a practical point of view. Both the proposed regulations, 43 Fed. Reg. 49,956 (1978), and the final regulations, 44 Fed. Reg. 29,372 (1979), make specific reference to congressional concern over the lax enforcement practices of many states. HEW strongly implied that the 1974 health planning legislation mandated that these new regulations be issued and administered by the federal agency, citing Public Health Service Act 5 1612(c), as amended by Pub. L. No. 93-641, 5 4, 88 Stat. 2264 (1974). See note 15 supra for subsequent recodification of 5 1612(c). States have not, however, been totally precluded from enforcement or monitoring activities under the 1979 regulations. Both the free service and community service regulations allow the federal government to delegate responsibilities to state agencies under some circumstances. See 42 C.F.R. $ 124.607 (1980). '" The final issuance of federal regulations required 38 pages of the Federal Register, including a 17-page summary of public comments and 11 pages of economic analysis. There were also nine pages of explanation incident to the proposed regulations. These explanatory materials include many specific interpretations of the regulations and such things as HEW's analysis of its own legal authority. Ironically, the economic analysis, required by executive order as an incident to issued regulations, analyzes only the cost of uncompensated services and makes no mention of community service. See 44 Fed. Reg. 29,399-401 (1979). 15a e.g., 43 Fed. Reg. 49,955 (1978). ' 59 While there is no definition of "federal assistance" for purposes of the community service obligation, "federal assistance" is defined for purposes of the free service regulations as including grants, loan guarantees, and interest subsidies. See 42 C.F.R. 5 124.502 (1980). Presumably, the same definition applies to community service. 160 The community service obligation of future recipients under the 1974 health planning legislation is slightly different. See note 14 supra. 16' area" is defined for purposes of community service as the area defined in the most recent state Hill-Burton plan. 42 C.F.R. 124.602 (1980). This definition will lead to controversy in some areas. Most of these plans have not been revised since Hill-Burton was effectively repealed in 1974, and some may not be available at all. Apparently, HEW could not find a more satisfactory definition of this potentially controversial issue. See 44 Fed. Reg. 29,397 (1979). "Resident" for purposes of these regulations, is defined to include anyone living permanently or indefinitely in the service area, or living in the area for purposes of employment or living with a resident family member. 42 C.F.R. 124.603(a)(2) (1980). For an interpretation of this definition as applied to migrants and other groups, see 44 Fed. Reg. 29,399 (1979). 162 The original charity care regulations, 42 C.F.R. $ 53.61-63, later renumbered 55 other basis except narrowly prescribed factors.'" The critical definition under the new regulations reads: In order to comply with its community service assurance, a facility shall make the services provided in the facility or portion thereof constructed, modernized, or converted with Federal assistance under Title VI or XVI of the Act available to all persons residing (and, in the case of facilities assisted under Title XVI of the Act, employed) in the facility's service area without discrimination on the ground of race, color, national origin, creed, or any other ground unrelated to an individual's need or the service or the availability of the needed service in the facility. Subject to paragraph (b) (concerning emergency services) a facility may deny services 53.111-112, see note 131 supra, specifically prohibited discrimination on the basis of race, color, or creed, although it allowed a "separate-but-equal" exception, reiterating the language of the original statute. After the statutory amendments in 1964, as well as the enactment of the Civil Rights Act of 1964, Pub. L. No. 88-352, 78 Stat. 241, these regulations were amended, see note 134 supra, and the reference to discrimination on the basis of race, color, or creed, was replaced by a new 5 53.112 drawing attention to the 1964 civil rights legislation prohibiting discrimination on the basis of race, color, or national origin (but not creed). It was at that time that the first reference to community service was made, as part of a new 5 53.111. This new 5 53.111 also prohibited discrimination on the basis of creed. When the revised free service regulations were issued in 1972, the separate provisions referring to discrimination and community service were consolidated into a single 5 53.112. In 1974, a new 5 53.113 was created for the expanded definition of community service. Thus the race discrimination provisions which had originally been the central, and perhaps only, focus of the regulations implemented under the statutory language "available to all," and then partially considered as one aspect of community service, became, in effect, a third obligation, i.e., Hill-Burton facilities must provide free service, a community service, and not discriminate on the basis of race, color, national origin, or creed. The regulations proposed in 1978 purport to amend 5 53.111 and 5 53.113, but not 5 53.112. See 43 Fed. Reg. 59,954 (1978). But note that the obligation of 5 53.112 is incorporated into the new regulations as part of the community service obligation, and the same language is used in the final community service regulation. See 42 C.F.R. 5 124.603(a)(1) (1979). To add to the confusion, HEW justified this language in the 1979 regulations, not on the basis of the Civil Rights Act of 1964, but on the ground that discrimination on the basis of race, creed, color, or national origin was implied in the earlier definition of community service in 53.113(d)(1) (1977). Consistent with this reasoning, this same explanation also claims that the reference to racial discrimination was dropped from the statute in 1964 "apparently as redundant." See 43 Fed. Reg. 49,962 (1978). In any event, discrimination on the basis of race, color, or national origin, but not creed is also prohibited by Title VI of the Civil Rights Act of 1964, 42 U.S.C. 5 2000(d) (1976), and would apply to all Hill-Burton recipients as recipients of federal funds. Consequently, the regulations anticipate some overlap in enforcement responsibilities. See 43 Fed. Reg. 49,962 (1978). 163 As in previous community service regulations, see notes 151-52 supra, there is no durational limitation on the community service obligation as defined in the 1979 regulations. Interestingly, in the material accompanying the issuance of the regulations HEW contended that because of prior judicial decisions there is no limit on the community service obligation of Title VI (Hill-Burton) facilities. See 44 Fed. Reg. 29,397 (1979). But HEW imposed no limit on the community service obligation of Title XVI facilities (the new program established in 1974) because of the "at all times" language of the 1974 legislation. See note 14 supra. It must be noted that the regulation failed to clarify how this unlimited duration will be treated in the event of a closure or a conversion of a facility more than twenty years after the receipt of federal assistance. The explanatory material in the federal regulations purported to answer the question, but failed to do so. See 44 Fed. Reg. 29,399 (1979). to persons who are unable to pay for them unless those persons are required to be provided uncompensated services under the provisions of Subpart F. • • A facility is out of compliance with its community service assurance if it uses an admission policy that has the effect of excluding persons on any ground other than those permitted under paragraph (a) of this section The principal substantive difference between these community service regulations and prior interpretive efforts lies in their level of specification. At least since 1964, Hill-Burton facilities have been specifically prohibited from discriminating against people who can pay for their services. 165 And, since 1946, facilities have been required by both regulation and statute to "be available to all. "166 The prior regulations, however, gave little indication of how these principles would be applied in practice.'" Even had there been a governmental interest in enforcing the earlier regulations, which quite plainly there was not, there would have been no regulatory standard by which state or federal agencies could measure compliance with community service.'" For that matter, the prior regulations appear purposefully to avoid addressing some critical — and obvious — issues.'" 1 " 42 C.F.R. § 124.603(a)-(d) (1980), as amended by 44 Fed. Reg. 29,380 (1979). The use of the term "effect" and the expression of the standard of compliance in these terms has particular significance, since the substantive obligation is defined as a proscription on "discrimination" against any resident. By explicitly defining an "effect" test for compliance, the regulation avoids any implication that a recipient facility must also show some kind of intent or a specific purpose as a basis for use of an exclusionary practice, an interpretation surely to be challenged should these regulations be enforced. 16s description of the 1964 community service regulations in text at note 136 supra. Note that the 1964 regulations outlined a slightly different list of factors upon which admission could be limited, but did impose ostensibly the same substantive requirements on recipient facilities, i.e., recipient facilities were prohibited from discriminating against anyone except under specified circumstances. 161 The regulations issued in 1947 merely reiterated the "available to all" language of the original statute, see note 131 supra, but they did make the permissive language of the statute mandatory and thus impose an "available to all" requirement on all subsequent recipients of program funds. 167 There is no record that any further formal or informal interpretative materials were ever produced, at least prior to 1972. 168 Even the 1974 community service regulations which purported to specify the meaning of "community service" gave little or no indication of how compliance would be measured or whether an "intent" or an "effects" test would be employed. For that matter, the 1974 regulations were virtually silent as to the method or procedures of enforcement. See notes 148-50 supra. 169 For example, the 1974 regulations require facilities to make arrangements with "federal governmental third party programs, such as Medicare and Medicaid, to the extent that the applicant is entitled to reimbursement at reasonable cost under a formula established in accordance with applicable Federal law." 42 C.F.R. 53.113(d)(2)(i) (1975). Given that Medicaid and Medicare had been in effect for at least eight years and that a large portion of the American population relied on these federal programs to pay for hospital care, it is difficult to understand how the federal agency responsible for enforcing these regulations could fail to decide whether Medicaid and Medicare were, for purposes of enforcement, "reimbursement at a reasonable cost . . . in accordance with applicable Federal law." For other examples of obvious omissions from prior interpretive regulations, see note 149 supra. The new community service regulations, however, leave no doubt as to their intent or their application to critical circumstances. By defining "available to all" in terms of discrimination and measuring discrimination in terms of an "effect test," the regulations quite explicitly preclude the exclusion of anyone who is in need of the services offered by the facility'm and is able to make some manner of payment.' 71 This substantive standard is buttressed by a series of illustrative examples' 72 which clarify the application of the standard in 170 42 C.F.R. $ 124.603(a) (1980). A facility is also precluded from excluding any resident who requires emergency services even without an ability to pay. 42 C.F.R. 5 124.603(b) (1980) reads: (1) A facility may not deny emergency services to any person who resides (or, in the case of facilities assisted under Title XVI of the Act, is employed) in the facility's service area on the ground that the person is unable to pay for those services. (2) A facility may discharge a person that has received emergency services, or may transfer the person to another facility able to provide necessary services, when the appropriate medical personnel determine that discharge or transfer will not subject the person to a substantial risk of deterioration in medical condition. In addition, under these regulations, a recipient facility cannot deny services to people who cannot pay if the facility has not satisfied its concomitant uncompensated service obligation. 42 C.F.R. 124.603(a)(1) (1980). '" According to the 1979 regulations, non-compliance could be demonstrated either on the basis of an individual complaint, 42 C.F.R. 5 124.606 (1980), or based on statistical inferences derived by a comparison of the characteristics of the patients admitted to a Facility to the characteristics of the population of the area served by the facility. Set 42 C.F.R. 124.605 (1980). For a full explanation of how HHS proposes to conduct such investigations, see PUBLIC HEALTH SERVICE, DEPARTMENT OF HEALTH AND HUMAN SERVICES, COMPLIANCE STANDARDS MANUAL: UNCOMPENSATED CARE AND COMMUNITY SERVICE OBLIGATIONS (first published in 1979). In The regulations list three illustrative examples: (1) A facility has a policy or practice of admitting only those patients who are referred by physicians with staff privileges at the facility. If this policy or practice has the effect of excluding persons who reside (or for Title XVI facilities, are employed) in the community from the facility because they do not have a private family doctor with staff privileges at the facility, the facility would not be in compliance with its assurance. The facility is not required to abolish its staff physician admissions policy as a usual method for admission. However, to be in compliance with its community service assurance it must make alternative arrangements to assist area residents who would otherwise be unable to gain admission to obtain services available in the facility. (2) A facility, as required, is a qualified provider under the Title XIX Medicaid program, but few or none of the physicians with staff privileges at the facility or in a particular department or sub-department of the facility will treat Medicaid patients. If the effect is that some Medicaid patients are excluded from the facility or from any service provided in the facility, the facility is not in compliance with its community service assurance. To be in compliance a facility does not have to require all of its staff physicians to accept Medicaid. However, it must take steps to ensure that Medicaid beneficiaries have full access to all of its available services. • (3) A facility requires advance deposits (pre-admission or pre-service deposits) before admitting or serving patients. If the effect of this practice is that some persons are denied admission or service or face substantial delays in gaining admission or service solely because they do not have the necessary cash on hand, this would constitute a violation of the community service assurance. While the facility is not required to forego the use of a deposit policy in all situations, it is required to make alternative arrangements to ensure that persons who probably can pay for several regards, anticipating important, controversial questions which will undoubtedly arise in any rigorous enforcement effort.'" First, unlike earlier regulations, the 1979 regulations explicitly clarify the obligations of Hill-Burton recipients with regard to people who rely on Medicaid or Medicare for their payment, 171 an issue adroitly muddled by earlier regulations.'" Though virtually all hospitals take Medicaid and Medicare patients, and many rely heavily on these public programs for a large part of their revenues,'" some hospitals take very few Medicare and, particularly, Medicaid patients;' 77 all do so with increasing reluctance."e the services are not denied them simply because they do not have the available cash at the time services are requested. For example, many employed persons and persons with other collateral do not have savings, but can pay hospital bills on an installment basis, or can pay a small deposit. Such persons may not be excluded from admission or denied services because of their inability to pay a deposit. 42 C.F.R. 5 124.603(d)(1)-(3) (1980). Following these illustrations are examples of "alternative arrangements" that a facility might, but is not necessarily required to, undertake, incuding hiring additional physicians, requiring physicians to take Medicaid or other patients, and other alterations of day-to-day hospital practices. 13 See 44 Fed. Reg. 29,397-99 (1979) (explanatory material accompanying the regulations). 174 42 C.F.R. 5 124.603(c) (1980) requires facilities to be certified as Medicaid and Medicare providers. The illustrations that follow require further that all Medicaid and Medicare recipients seeking treatment must be accepted. 42 C.F.R. 5 124.603(d)(2) (1980). Although it is not specifically required by the regulations, the explanatory materials that accompany the regulations indicated that facilities must also make arrangements with private reimbursers such as Blue Cross and Blue Shield. 44 Fed. Reg. 29,374 (1979). But there is no specific reference to private third party payors in the text of the regulations. Such a requirement is implied, however, by the general requirement to accept all residents who are able to pay. See 42 C.F.R. 5 124.603(c) (1980). Note also that HEW earlier had taken the position that arrangements with private third party payors were part of a facility's community service implied but not stated in the federal regulations issued in 1974. See notes 145 and 169 supra. '" See note 149 supra. "8 The American Hospital Association counted 6,293 hospitals in their national survey in 1979. AMERICAN HOSPITAL ASSOCIATION, HOSPITAL STATISTICS: 1979, 191 (1980). Not all of these hospitals are acute care facilities. See id. at xii. The latest government figures indicate that 6,128 acute care hospitals were certified for participation in Medicare in 1979. Id. at 2. Hence, virtually all acute care hospitals participate. More importantly, Medicare paid for over 26% of all hospital care in 1979. Gibson, National Health Expenditures, 1979, 2 HEALTH CARE FINANCING REVIEW 1, 6 (1980). Figures for the participation of hospitals in Medicaid are generally not available, except from each individual state agency. In aggregate amount, however, Medicaid paid for nearly 10% of the services provided in the nation's acute care hospitals. Id. 177 See Rosenblatt, supra note 30, at 280-81. 178 There are a number of reasons for this reluctance. Both programs allegedly impose burdensome paperwork on providers seeking reimbursement. In particular, Medicaid reimbursement payments are delayed for many months in some states. Both programs also reimburse hospitals on the basis of a complicated assessment of "reasonable costs." The result is that facilities often receive for their services an amount somewhat less than the rate they charge to some private-pay patients for the same services. The impact of Medicaid and Medicare reimbursement on a facility's willingness to take these patients is complicated by the fact that reimbursement of physicians for services rendered to patients in hospitals is separate from reimbursement to the hospital and, particularly under Medicaid, often far less than the physician's customary charges. See Rosenblatt, supra note 30, at 280-81. For a good analysis of this problem, see D. ROWLAND, PHYSICIAN PAYMENT: ASSURING The definition of ability to pay as illustrated in the regulations also severely limits the use of pre-admission cash deposits. While not prohibited by the regulations, deposits cannot be used where the effect is to exclude people who do not have cash but who could pay on an installment basis, or people from whom some other form of payment "probably" could be collected.'" In addition, if a facility admits only those patients who are referred by members of the hospital's medical staff — a practice employed by virtually all non-teaching hositals — the facility must provide an alternative means for admitting people who are otherwise admissible under the regulations but who do not have a personal physician on the facility's staff.'" As the foregoing examination of the development of the community service regulations indicates, the community service regulations of 1979 impose conditions on recipient facilities which are far more concrete than the vague conditions imposed by the 1947 regulations. The critical issue is whether such regulations are a valid exercise of administrative authority. B. Challenges to the 1979 Regulations Critics of the present charity care regulations have argued that the regulations are invalid because they exceed the scope of authority allowed by the statute. In addition, they argue, the regulations cannot be applied retroactively without impairing the contract or property rights of recipient facilities. The question of whether the 1947 regulations exceed the scope of the statute depends upon an interpretation of the 1946 legislation. If the original statute allows a broad interpretation, as this article contends,i 8 ' then so would the reiterated language in the 1947 regulations. Accordingly, there is no legal principlem or compelling argument in equity' 83 which would prevent an agency, through rule-making or adjudication, from defining a vague statutory conACCESS AND CONTAINING COST (published by the Legal Services Corporation, March, 1980). "9 The regulations do not prohibit "cash only" or "pre-admission cash" policies, as was considered by HEW at the time the regulations were imposed, but instead attempt to limit the use of such policies when they tend to exclude some people who arguably can pay, but not in cash. See 42 C.F.R. 124.603(d)(3) (1980), cited in full at note 172 supra. The critical term "probably can pay" is unquestionably vague but does indicate the intent of the regulation, if not its exact meaning. It is certain, therefore, to be the focus of enforcement problems. Ste 44 Fed. Reg. 29,399 (1979). 'a° 42 C.F.R. 124.603(d)(1) (1980). 1 " See text at notes 91-100 supra. 192 Whether dealing with an interpretation embodied in a subsequent interpretive regulation, or an interpretation incident to an individual enforcement action, an administrative agency has broad discretion to interpret the substantive standards incorporated in prior regulations, limited only by the usual requirement that an interpretation be reasonable and within the scope of the statute that created the administrative authority. See United States v. Larionoff, 431 U.S. 864, 869-73 (1977); Udall v. Tallman, 380 U.S. 1, 16-17 (1965). Indeed, "extra weight may be given to an interpretive rule because of such factors as agency specialization, statutory reenactment, contemporary construction, and longstanding effectiveness." K. DAVIS, ADMINISTRATIVE LAW OF THE SEVENTIES 5.05, 162 (1976). These factors arguably apply to the present inquiry. '°' See text at notes 187-88 infra. dition. 184 If it were determined, however, that the original statute allows only a narrow interpretation, then expansive definitions of statutory terms, such as the 1979 regulations, might be invalid as applied to facilities that received funds while the 1947 regulations were in effect. A similar analysis must be applied to determine whether the 1979 regulations impair the contract or property rights of Hill-Burton recipients prior to 1964 by imposing retroactive conditions upon them.'" The essence of the critic's argument is that subsequent administrative action established a new condition that was not part of the original transaction that created vested interests on the part of Hill-Burton recipients. If, rather than creating a new condition, however, the 1979 regulations merely delineated a vague, existing statutory condition, then the administrative action should withstand judicial scrutiny on constitutional or equitable grounds.'" Both inquiries, therefore, principally turn on the characterization of the "available to all" language which appears in the original statute and in the 1947 regulations. If this language is viewed as a vague condition allowing subsequent interpretation, the broad interpretation of the statute and of the original regulation may be upheld as an act within the scope of the agency's authority. Consequently, the subsequent specification of conditions created by the provision would also be upheld. Yet if the statutory language is viewed narrowly, any subsequent regulation or administrative interpretation defining community service in its broader sense would be tantamount to the creation of a new obligation. Whether phrased in constitutional terms or simply in terms of equity, the creation of what is viewed by the courts as a new condition, and 184 See note 130 supra. 186 If a subsequent administrative action to enforce a new condition is applied after the receipt of funds and is viewed as impairing established property or contract rights, constitutional principles may require that the administrative action be judicially examined, perhaps even closely scrutinized. There is substantial authority that suggests that a subsequent interpretation of a statute or regulation that is in effect a retroactive change in a previous interpretation may be invalid, particularly under circumstances where individuals affected by the change can claim detrimental reliance on the initial interpretation. See Automobile Club of Mich. v. Commissioner of Internal Revenue, 353 U.S. 180, 183 (1957); Helvering v. Griffiths, 318 U.S. 371, 403 (1943); Manhattan Gen. Equip. Co. v. Commissioner, 297 U.S. 129, 134 (1936). See also NLRB v. Pease Oil Co., 279 F.2d 135, 139 (2d Cir. 1960). See Vanderbilt Note, supra note 30, at 1480-94. But note that the reasoning of these cases applies to interpretations that are both retroactive in their application and alterations of previous interpretations, not further specifications of a vague or unsettled rule. See K. DAVIS, ADMINISTRATIVE LAW TEXT 5.09 (1959). A subsequent interpretation of the 1947 community service regulation to clarify its meaning would not be a change in a previously stated rule but a clarification of a vaguely termed requirement. It might not even be retroactive in effect, depending upon such factors as the circumstances of the subsequent interpretation, and the terms of remedial measures required for non-complying facilities. Similarly, and more importantly, as discussed in the text at notes 205-25 infra, the 1979 regulations interpreting the 1964 community service regulations were intended only to clarify further, not alter retroactively, previously established rules. For that matter, since the general thrust of the enforcement provisions incorporated in the 1979 community service regulations is to require remedial steps to facilitate future compliance — there is no deficit "makeup" or punitive sanction authority — the new regulations may be viewed as prospective in their actual impact. 186 See note 182 supra. its retroactive application to previous recipients of funds is unlikely to withstand judicial scrutiny)" Turning to an analysis of the Hill-Burton legislation itself, it would be difficult for a court to conclude that the regulations issued in 1947 allow the enforcement of a community service obligation as subsequently specified in 1979 — at least as applied to facilities that received funding after 1946 but before 1964) 88 A court possibly could find that by enacting the original "available to all" language, Congress created statutory language with the intent of allowing subsequent administration discretion to dictate the scope of its meaning; it would be more difficult to find that the administrative agency in 1947 had a similar intent in issuing the "available to all" regulations, particularly when viewed after three decades of inaction. None of these criticisms apply, however, to the validity of administrative attempts to establish a broadly defined community service obligation or, more particularly, to the validity of the 1979 regulations when considered in light of the 1964 amendments 189 to the "available to all" statutory language or the regulations issued thereafter)" The amended "available to all" provision included in the 1964 legislation and the legislative history of that amended language offer a clear picture of congressional intent to authorize a broadly interpreted "available to all" requirement)" Significantly, that authority was exercised immediately following the enactment of the 1964 amendment, and in a manner that left no doubt as to HEW's interpretation of Congress' intent)" As summarized earlier, under the regulations issued in 1964 following the statutory amendment, recipient facilities were prohibited from discrimination on the basis of race, creed, color, or national origin, 193 and required to provide 187 This is only assuming that the new interpretations would be applied retroactively, i.e., to facilities that had received Hill-Burton assistance before the issuance of a new interpretation. Had the federal agency subsequent to 1947 (and prior to 1964) issued new community service regulations to be applied to future applicants, strong arguments could be made that this was in accordance with the discretion created in the 1946 statute. See note 178 supra. This would have eliminated the basis for a constitutional or equitable objection to community service enforcement, since all future applicants would be aware of the interpretation of the condition at the time of receipt of funds. See text at note 185 supra. "6 Virtually all courts that have considered the validity of a community service obligation as derived from the 1946 statute or 1947 regulations have come to this conclusion. See American Hosp. Ass'n v. Harris, 625 F.2d 1328, 1342-43 (7th Cir. 1980) (Pell, J., concurring and dissenting); Perry v. Greater Southeast Wash. Community Hosp. Found., No. 721-71 at 5 (D.D.C. June 28, 1972). "9 See text at notes 44-47 and 104-06 supra. "° It must be noted that the 1964 amendments, by explicit provision of that legislation, apply only to recipients of funds after 1964. See Pub. L. No. 88-443, 3(b), 78 Stat. 462 (1964). Thus, facilities that received funds prior to 1964 could only be held to whatever obligation was created by the statute and regulations that existed prior to that date. Notwithstanding, there were a substantial number of hospitals and other health facilities that received Hill-Burton assistance after 1964. According to HEW estimates, 1742 projects were funded from 1966 through 1971, at a cost of nearly $944 million. DHEW, HILL-BURTON PROJECT REPORT 29 (1972). 191 See text at notes 107-18 .supra. "2 See Cook v. Ochsner Found. Hosp., 61 F.R.D. 354, 360 (E.D. La. 1972). 193 More correctly, the 1964 regulations prohibited discrimination based on creed, and May 19821 community service, explicitly defined in the text of the regulations as making "services . . . available to the general public, or . . . limited only on the basis of age, medical indigency or type or kind of medical or mental disability."'" Without further administrative interpretation the 1964 regulations may have been insufficiently specific to allow for independent judicial enforcement, absent agency action.' 95 For that matter, the definition of community service includes some perplexing language.' 96 Yet the substantive parameters of the obligation created are clearly defined: after 1964 recipient facilities were to provide their services to any member of the public, except for people who are excepted under the community service definition. This definition included among those excepted from the community service definition the medically indigent, meaning, presumably, people who cannot pay their medical bills.' 97 There can be little room to argue that these regulations were beyond the scope of the discretion created by the 1964 legislation or that the general meaning of these regulations is unclear. 19 " Therefore, at the very least, facilities that received funds after the 1964 regulations were issued should be bound to comply with any reasonable administrative application of these substantive standards.' 99 Any subsequent regulations or administrative action interpreting the drew attention to the Civil Rights Act of 1964 which prohibited discrimination based on race, color, or national origin. See notes 77-79 supra and explanation at note 158 supra. 194 For the full text, see notes 134 and 136 supra. ' 95 See note 146 supra and note 199 infra. From the viewpoint of administrative enforcement, the 1964 regulations obviously had major problems, most particularly the failure to specify the procedures by which these requirements would be applied and enforced. Presumably, state Hill-Burton agencies were expected to monitor compliance as they monitored compliance with the other requirements im*losed on recipient facilities. Subsequent experience indicated, however, that the states were either unwilling or unable to do so, see note 150 supra, justifying later amendments to these regulations in 1974 and 1979. See notes 202 and 208-17 infra. While the failure to specify the method of application of these requirements may well have been a political signal to recipients that the federal government had a lax attitude towards enforcement, it is hardly a basis for the creation of a judicially enforceable expectation of nonenforcement. For that matter, without further amendment to the regulations or specific delineation of enforcement procedures, HEW could have undertaken to enforce these regulations, or asked states to do so, using general administrative procedures and standards developed on a case-by-case basis. 196 For example, it is not clear what is meant by allowing limitation of services based on age. See note 136 supra. In recent years "age discrimination" has come to mean primarily discrimination against older people. Was this intended by the 1964 regulation? Or at the other extreme, was this an exception merely to allow such institutions as children's hospitals to receive Hill-Burton assistance without violating the community service obligation? There is nothing in the administrative or legislative history further specifying the meaning of this exception, or indicating what was intended by this language. 197 It is important in this context to note that community service was one of two charity care obligations; the other, the requirement of uncompensated service, defines the amount of service recipient facilities must provide free or below cost; uncompensated service is a separate and distinct obligation, but one which must be read together with community service. For a lengthy discussion, see Rose, supra note 30. See text at notes 167-75 supra. 199 Cook v. Ochsner Found. Hosp., 61 F.R.D. at 360. The court in Perry, though critical of the enforceability of the community service regulations by judicial process, nonetheless recognized the validity of the obligation created by the 1964 statute and subsequent regulations. conditions created by the 1964 regulations would be valid as applied retroactively to 1964 in monitoring or enforcing compliance by post-1964 recipients of assistance. Therefore, if subsequent regulations are a reasonable administrative application of the substantive standards outlined in the 1964 legislation and regulations, they are neither an invalid exercise of administrative authority, nor a retroactive application of a new condition. Turning to the 1974 community service regulations,"° the validity of which went unchallenged by the hospital industry, it seems clear that they are valid extensions of the 1964 amendments and regulations. In requiring recipient facilities to participate in Medicaid and Medicare and to take "such steps as necessary" to insure that Medicaid and Medicare recipients were admitted without discrimination, the 1974 regulations did not create a new obligation."' Rather, they were an interpretation by HEW of the substantive obligation created by statute in 1964 with specific reference to one form of payment which experience had indicated presented a substantial enforcement problem. 202 In fact, HEW was making such a specification under a court order to issue further interpretative regulations providing for the enforcement of the obligation created in 1964 and specifying that the obligation required facilities to be available to Medicaid or Medicare recipients." 3 The 1974 regulations are vulnerable to criticism for failing to incorporate into the substantive interpretation of "available to all" a clear statement of how compliance with the obligation would be monitored and enforced.'" For See Perry v. Greater Southeast Wash. Hosp. Found., No. 721-71 at 6 (D.D.C. June 28, 1979). In fact, after noting that the 1964 community service regulations were lacking in enforceable standards — meaning standards that would allow judicial enforcement of the obligation absent agency action — the court strongly urged HEW to issue clarifying regulations. Id. at 7. This strongly implies the court's belief in the validity of the 1964 statute and regulations and the need for further specification of enforcement standards and procedures. Similarly Judge Pell's dissent in Harris, while quite critical of HEW's interpretation of uncompensated service, limits his criticism of the community service as interpreted in 1979 to the narrow issue of the adequacy of the methods of enforcement. American Hosp. Ass' n v. Harris, 625 F.2d at 1342-43. See note 217 infra. Unfortunately, some critics have failed to consider the impact of the 1964 regulations, For example, the elaborate chart of Hill-Burton regulations found in the Vanderbilt Note, supra note 30, at 1057, omits any reference to the 1964 regulations. Such consideration is necessary for an accurate assessment of the validity of later regulations. 200 See text at notes 146-49 supra. 201 HEW explicitly stated in the introduction to the 1974 regulations that the new regulations were only intended to make previously established requirements of community service more explicit. 39 Fed. Reg. 31,766 (1974). 202 HEW had substantial basis for issuing further regulations. Experience had indicated that further specification of "available to all" was necessary to deal with the type of circumstances that would likely be presented in compliance review. See examples cited in Rosenblatt, supra note 30, at 270-71 n.104-06. The need for further specification of the obligation was also noted by many witnesses testifying on the uncompensated service regulations issued in 1972-73. See 37 Fed. Reg. 14,719 (1973). 2" In Cook v. Ochsner Found. Hosp., 61 F.R.D. 354 (E.D. La. 1972), HEW was ordered to issue new interpretive regulations allowing for the enforcement of community service and specifically required to indicate whether community service included service to Medicaid and Medicare recipients. Id. at 360-61. See also cases cited in note 146 supra. 204 As mentioned before, the original regulations can also be criticized for failing to provide methods for monitoring compliance other than delegating compliance responsibility to state agencies in iota, without any specification or delineation of this responsibility. See text at notes example, while it was made explicit in 1974 that Medicaid recipients are within the broad category of people for whom Hill-Burton facilities must be made available, the 1974 regulations are conspicuously silent concerning the methods by which this availability would be measured. It is not clear under the 1974 regulations if a facility must merely show it had no policy or intent to discriminate against Medicaid recipients or whether it must prove Medicaid recipients were in fact provided services in order to comply with the community service requirement. The same issues can be raised with regard to any group or individual within the broad protection apparently secured by the community service obligation. Without further specification, it is not clear whether the agency interpreted the obligation to be merely a negative injunction on "classical" discrimination, or an affirmative obligation to provide service to certain groups. Consequently, compliance with the community service obligation could be realistically determined only on an ad hoc, case-by-case basis, if at all, and not by reference to any administrative interpretation of the standard of compliance. Such a situation is hardly beneficial either to the public or to any Hill-Burton recipient that sought to make a good faith effort to comply with their obligations. By further specifying the substantive standards enunciated in 1964, the 1979 regulations respond to the fundamental criticisms of the 1974 regulations, 705 and increase the likelihood for more uniform and realistic community service enforcement activities. The essential substantive 206 elements of the new regulations, as outlined earlier, 207 define the principle of "available to all" in terms far more detailed than the perplexing explication of the 1964 regulations, or the 1974 amendments, and describe quite specifically how those substantive standards should be applied and enforced particularly with regard to certain circumstances. Most importantly, the 1979 regulations clarify the general prohibition on discriminationm against people who have the ability to pay. As discussed earlier the regulations adopted an "effects" test for determining compliance 133-38 and note 195 supra. 205 See citation to HEW's explanation of the need for further regulations at notes 155-58 supra. HEW was also responding to criticism Congress leveled during consideration of the 1974 legislation, see note 153 supra, and to various issues raised by consumer lawsuits, see note 154 supra. 2°6 The essential procedural element in the 1979 regulations, of course, is the "federalization" of the enforcement activities. See notes 156 and 195 supra. The 1974 regulations had delegated virtually all responsibility for enforcement and monitoring and enforcing compliance to the state Hill-Burton agencies, without any specification of the means or procedures to be followed. Presumably, no one challenges the authority of the federal administrative agency to amend the community service obligation in this manner, particularly after the 1974 and 1979 legislative mandates to HEW to do so. See notes 14-15 and 121-29 supra. Nonetheless, the impact of this change in the regulations could be as substantial as any other aspect of the 1979 regulations. 207 See notes 159-80 supra. 2°8 As noted earlier, the regulations also add a final note of clarity to the prohibition on discrimination against Medicaid and Medicare as stated in the 1974 regulations. See notes 169 and 174 supra. with the substantive obligation of community service, 209 and illustrate both applications of that test and remedial steps that would be sought if a facility were not in cornpliance. 21 ° For example, the regulations make it clear that if a decision or practice by a member of the recipient facility's medical staff has the effect of excluding anyone from the facility who is a Medicaid or Medicare recipient, or who has any other ability to pay, then the facility must take some measure to provide for the admission of that person by alternative means. 2 " This approach avoids the difficulty of divining an overt policy or specific intent from the complexity of relationships inherent in the modern health facility — a concession to administrative convenience — while also avoiding the hardship of holding the recipient facility necessarily responsible for the actions of any one individual physician, or even a group of physicians. 212 It does, however, require a facility to take steps to insure compliance 213 where those actions result in a measurable effect on the total services provided by the institution as a whole. Thus, the regulations clarify the application of community service in such a way as to both anticipate and allow voluntary compliance and facilitate realistic enforcement activities. For similar reasons, the 1979 regulations address the issue of access to recipient facilities by people who have the ability to pay for services but do not have a personal physician on the facility's medical staff. Such individuals are often effectively denied admission by the traditional practice in most nonteaching hospitals of admitting patients only on the order of a member of the facility's medical staff. The 1979 regulations again rely on the pragmatic "effects" test. The regulations do not go so far as to prohibit the traditional practice, but only require that a Hill-Burton facility make alternative arrangements for the admission of any person otherwise admissible but without a personal physician. 211 2" 42 C.F.R. 124.603(a)-(d) (1980). See note 164 supra. 2" See text at notes 172-80 supra. 211 See text of 42 C.F.R. 124.603(d)(2) (1980) and note 172 supra. 2 " It must be noted that the 1979 regulations, for the first time, directly refer to the problem of medical staff physicians. Given the virtually complete control physicians exercise over admissions in most hospitals, it is hard to believe that earlier federal or state regulations could have avoided addressing how the actions or policies of physicians would be considered in determining compliance of the facilities in which they practice. The text of the 1979 regulations and the explanatory material that accompanied the issuance of the regulations explain both the legal basis for this new and, finally, realistic interpretation of "community service" and the policies behind it. See 44 Fed. Reg. 29,399 (1979). While neither the hospital industry nor the medical profession may be comfortable with the specific reference to this sensitive issue, this approach seems on its face to be both a reasonable and a practical approach to community service enforcement, making some concession to administrative convenience but also avoiding the harsher implications of holding a facility responsible for any physician's conduct per se. In any event, it is a vast improvement over previous regulations which, somehow, chose to ignore this critical issue. 213 See notes 172-73 supra. 214 42 C.F.R. 124.603(d)(1) (1980). A similar approach is also taken to the issue of pre-admission or "cash only" deposits. The practice is not prohibited per se, but where the prac The specification of the standards by which the community service obligation would be measured, and the illustrations of its application, are buttressed by the delineation — again for the first time in the federal regulations — of remedial steps that may be required of a facility that fails to provide community service.'" While broaching sensitive issues, the regulations again come to grips with an issue that without specification would make individual compliance or enforcement extremely unlikely. Furthermore, the specified remedies are stated in such a manner as to make considerable concession to the practical problems that a facility may encounter in gaining the cooperation of its medical staff.'" Non-complying facilities are not required to alter administration of their facility or to require compliance with the requirements of community service by their medical staff in any particular way. In keeping with the "effects" test, Hill-Burton facilities are only required to make alternative arrangements that will result in admission of those people who are protected by community service, but who are excluded by the practices or policies of the institution or its medical staff; recipient facilities are not given a list of exclusive remedies that they must adopt, but are given specific examples of the kind of remedial steps which could be taken or that could be required if the facility fails to develop an acceptable alternative.'" The 1979 regulations may have been written with unprecedented specificity and therefore have served as an invitation to controversy, but they were also necessary prerequisites to the enforcement of the obligation. This is hardly a matter of speculation, given the experience of the last several decades. Nor is it even a matter exclusively for the judgment of the federal administrative agency. Repeated judicial, administrative, and legislative inquiries into the meaning of community service and state and federal enforcement of that obligation have come to the same conclusion: additional interpretive regulations and additional specification of the procedures by which the obligation would be monitored and enforced were clearly required. Indeed, further regulations were mandated by the courts and by Congress. rice has the effect of excluding people who "probably" can pay, alternative arrangements must be made. 42 C.F.R. $ 124.603(d)(3) (1980). See note 179 supra. 215 See 42 C.F.R. 5 124.603(d)(1)(i-v) and 5 124.603(d)(2)(i-v) (1980). 216 may be especially important for facilities that have considerable trouble gaining the cooperation of medical staff physicians, particularly in regions of the country where the shortage of physicians gives the facility little choice but to offer privileges to non-cooperating physicians. 217 Surprisingly, the dissent in American Hosp. Ass'n a. Harris, criticizes this aspect of the new "community service" regulations. Indeed, this is apparently the only fault Judge Pell found with the community service regulations promulgated in 1979. He had a number of objections to the uncompensated service regulations. 625 F.2d at 1343. Judge Pell found the enumeration of examples of compliance as tantamount to requiring those exemplified activities as the only proper form of remedy. HEW's explanation of the regulations that accompanied the issuance of the regulations effectively rebuts this assertion, and lays out a rationale for this approach. See 44 Fed. Reg. 29,398 (1979). Essentially, the agency was trying to avoid tying the hands of facilities while attempting to clarify remedial steps—a legitimate concern given that any community service enforcement would be unprecedented by administrative experience. The statutory basis created in 1964, and exercised by regulation shortly thereafter, without looking further, seems to have created sufficient authority for these regulations.m In addition, Congress in 1974219 and again in 1979220 specifically applauded — and virtually required — efforts to issue further interpretive community services regulations. Significantly, none of those authorities questioned the statutory authority of HEW to issue further interpretive regulations, nor did they note any constitutional barriers to their promulgation. 22 ' Moreover, the circumstances which allow the argument that administrative agencies are prohibited from retroactively imposing obligations or altering those previously established are not presented, 222 at least on the face of the regulations as enacted in 1979. That is, HEW attempted only to specify the obligations created in 1964 and provide for monitoring and enforcement of compliance. Thus, the agency did not create new conditions for post-1964 recipients. In short, if the 1979 regulations interpreting community service were anything less than they are, that is, if the critical issues of compliance standards and remedies had not been addressed in specific terms, it would be hard to imagine any realistic federal monitoring or enforcement activities. Without these regulations, community service would mean little more than what each facility would choose it to mean. Moreover, in issuing the 1979 regulations, HEW supported the exercise of discretion with considerable documentation, 229 particularly with regard to the need for further specification of the standards of compliance and the procedures for enforcement.'" As argued earlier, HEW was entitled to wide discretion in adding further specifications to the 1964 and 1974 regulations for the purpose of clarifying the meaning of community service as applied to specific circumstances and to facilitate an enforcement program. 225 Viewed as such, the new regulations did not create new obligations or alter previously established policies. Given the nature of these regulations federal officials could hardly be surprised by the controversy they have spawned. These regulations create, for the " 6 See notes 107-18 supra. 219 See notes 120-25 supra. 22° See notes 126-29 supra. 2" The Maryland Note, supra note 30, at 337-69, seems to argue that HEW, then the courts, and finally the Congress misinterpreted the federal statute. In particular the author accused Congress as falling prey to "emotional" arguments in 1974 and attempting to enact sub rosa a form of national health insurance by twisting the meaning of the charity care obligation. Whatever merit this undocumented and somewhat novel political analysis may have, it hardly suffices as a method of statutory interpretation. Presumably even when reading a legislative enactment of an "emotional" Congress, one is still attempting to determine what Congress, emotional or otherwise, intended to enact. 222 See text at notes 185-86 supra. 221 See note 157 supra. 224 Note, however, that the issue of statutory authority presents a more formidable barrier to enforcement if applied to facilities that received funds prior to 1964. See notes 182-87 supra. 222 See discussion of agency discretion at note 182 supra. first time, the prospect for realistic enforcement of the assurance of community service given by recipient facilities for at least a decade. Unlike earlier efforts, these regulations establish that enforcement will require far more than pro forma assurances or paper compliance. Community service will require, if enforced in the spirit in which the new regulations were written, that facilities provide their services to everyone in their communities without discrimination. Admittedly there is some element of inequity present. The vague statement of the obligation and the obvious omission of reference to compliance standards in earlier regulations may have created the unstated expectation that compliance with community service would not be closely monitored. This inequity, however, must be weighed against the benefits that will be created by community service enforcement, benefits that have been recognized and supported in law but unenforced for at least two decades. It is the consumer public that can make the far greater case of inequity: the continued failure of state and federal government to make any attempt to monitor or enforce the legally recognized right to community service. Should the federal government retreat from its apparent willingness to pursue community service enforcement, the controversy sparked by the objections of recipient facilities would only be replaced by a re-initiation of the consumer efforts that originally prodded the federal government to enforce community service. 22° CONCLUSION The Hill-Burton program marked the beginning of federal involvement in mainstream medical care. By conditioning the receipt of facility construction funds on compliance with certain statutory requirements, Congress hoped to increase the availability of institutionally-based health care in areas where services had been shown to be lacking. Among those requirements were so-called "charity care" provisions, requiring funded facilities to engage in a reasonable volume of uncompensated health care and to provide community service. Despite a congressional mandate in 1964 that re-affirmed congressional support for the community service obligation, both federal and state administrative agencies largely ignored Congress' intent. Regulations issued in 1964 did little to facilitate enforcement of this obligation; nor did 1974 regulations. Finally, in 1979, the most comprehensive explanation of the "communi226 It should be noted that enforcement of the assurances given as conditions to HillBurton grants and loans is only one of several ways that this obligation could be recognized. A similar "community service" obligation is also imposed on all non-profit health facilities as part of the quid pro quo for receipt of tax-exempt status. Indeed, a government effort to enforce this obligation would affect more health facilities than enforcement of the assurances of Hill-Burton facilities. It is also conceivable that a community service obligation could be made a condition of licensure, at least in jurisdictions where the enabling legislation created sufficient authority in the licensing agency. See New jersey Assoc. of Health Facilities v. Finley, 83 N.J. 67, 415 A:2d 1147 (1980), cm. denied, sub. nom. Wayne Haven Nursing Home, et al..v. Finley, 449 U.S. 944 (1980). ty service" obligation of the Hill-Burton program and its successor program was issued by HEW. The regulations, through their specific instructions, made enforcement of the statutory and regulatory requirements a practical possibility for the first time. These regulations, critical to the implementation of the HillBurton program's legislative and regulatory framework, are clearly within the discretionary authority granted to federal agencies to implement federal programs. The regulations are not an embodiment of new conditions to be imposed retroactively on funded facilities, but rather stand as the first serious attempt to implement a congressional directive first issued over three decades ago. To deny their validity would not be just to ignore a congressionally-mandated program — it would be to subvert it. 43 Public Health Service Act $ 621(a), as amended by Medical Facilities Construction and Modernization Amendments of 1970, Pub . L. No. 91 - 296 , 5 201 , 84 Stat . 344 ( 1970 ). 5° 1970 amendments authorized $20 million for three years for grants for the construction or modernization of emergency rooms, communication networks, or transportation systems . Public Health Service Act 5 601 , as amended by Pub. L. No. 91 - 296 , 84 Stat. 350 ( 1970 ). 51 Pub. L. No. 93 - 641 , 88 Stat. 2225 ( 1974 ), codified at 42 U.S.C. 300k et seq . (Supp. III ' 47 39 Fed. Reg . 31 , 767 ( 1974 ). 148 42 C.F.R . § 53 .113( d ), as added by 39 Fed. Reg . 31 , 767 ( 1974 ), read in part: • • •


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Kenneth R Wing. The Community Service Obligation of Hill-Burton Health Facilities, Boston College Law Review, 1982,