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
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1 Kenneth R. Wing, Th e Community Service Obligation of Hill-Burton Health Facilities , 23 B.C.L. Rev
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Legislation originally enacted by Congress in 1946 5 initiated a federal spending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
' 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(
),.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.
) was subsequently repealed by the 1979 health planning amendments,
presumably to eliminate the slight differences between 5 1602(
) 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
. . . 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
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
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
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)(
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
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
" 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
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
+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
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
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,
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
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
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
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
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.
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
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
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,
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
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
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
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
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
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.
'" 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.
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.
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
In order to comply with its community service assurance an applicant
(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
(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
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).
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
"° 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
'" 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.
"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
"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
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
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)
(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
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
13 See 44 Fed. Reg. 29,397-99 (1979) (explanatory material accompanying the
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
'°' 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
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
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
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
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
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
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
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
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
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
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
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°
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
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
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: • • •