Yale-New Haven Hospital v. Matthews , 32 Conn. Super. Ct. 539 ( 1974 )

The plaintiff's demurrer to the defendants' second special defense under the Hill-Burton Act should have been overruled.

The initial question with respect to the demurrer is whether the defendants have standing to raise as a defense the Hill-Burton Act provision that "there will be made available in the facility or portion thereof [of a hospital or other medical facility] to be constructed or modernized a reasonable volume of services to persons unable to pay therefor." 42 U.S.C. § 291c (e)(2) (1970). The type of standing to be considered is standing to raise an issue rather than standing to be a party, which the defendants, as potential debtors in an action for payment for services, certainly have.

The standing of the defendants to raise that issue can be compared to that of defendants who raise federal constitutional issues. "It is fundamental that no one will be heard to question the constitutionality of a statute unless he is adversely affected by it." State v. Hurliman,143 Conn. 502, 506; State v. Donahue, 141 Conn. 656, 665. The defendants in this case, claiming that a federal statutory defense negates the usual common-law duty to pay for hospital services, will certainly be adversely affected monetarily if they have to pay this hospital bill. Therefore, they have standing to raise the Hill-Burton Act provision on services to the poor.

The second and primary issue is whether the Hill-Burton Act provision cited above and its accompanying regulation actually constitute a defense for an individual in an action by a hospital receiving Hill-Burton Act funds for payment for services rendered. Before that question is fully addressed, the Hill-Burton Act should be described. Under the act, federal funds are allotted to the states in order to assist them, inter alia, in carrying out their programs for the construction and modernization of hospitals and other medical facilities. Any state desiring to participate in the federal program may submit a state plan, which must designate a state agency as the sole agency for administering the plan. In order to receive Hill-Burton funds, a state must comply with certain general regulations prescribed by the surgeon general.42 U.S.C. § 291c (e) (1970) is quoted, in part, in a footnote.¹ Pursuant to that statutory provision, a regulation, 42 C.F.R. § 53.111 (b) (1972), set out in the majority opinion, was promulgated. That regulation was in effect at the time of the rendition of hospital service in this case.

The question whether the statutory provision and regulation above constitute a defense for an individual who is a person unable to pay in an action by a hospital for the payment of a bill is one of first impression, deserving of careful and thorough study and deliberation. I am aided in that task by a number of recent federal court cases interpreting the provision and regulation which are not exactly on point but which do reveal the thrust of the law in that area.

In Cook v. Ochsner Foundation Hospital, 319 F. Sup. 603, the plaintiffs sought in a class action to compel the defendant hospitals to provide a reasonable volume of services to persons unable to pay therefor. The court held that a private civil action may be implied under the Hill-Burton Act. It rested its conclusion on Gomez v. Florida StateEmployment Service, 417 F.2d 569. In that case twenty-nine migrant workers sued as individuals to obtain relief from injuries suffered as a result of alleged violation by their employer of housing and minimum wage regulations promulgated under the Waguer-Peyser Act, 48 Stat. 113;29 U.S.C. § 49-49K (1970). That act establishes the United States Employment Service and provides funds for state employment agencies, which must comply with regulations issued pursuant to that act. As with the Hill-Burton Act, the Waguer-Peyser Act contains no provision for an action by a private individual to obtain relief under the statute. The court in Gomez implied, however, a private civil action by migratory farm workers under the act in order to effectuate the purpose of the statute and regulation, i.e., the protection of migrant farm workers.

The court in Cook found that the Hill-Burton Act and the Wagner-Peyser Act were similar in that both did not expressly authorize "civil actions by private individuals to enforce their provisions" but provided for the allotting of federal appropriations to state agencies on the condition that the states undertake certain obligations. Cook v. Ochsner Foundation Hospital, supra, 606. The court extended the reasoning of Gomez in these words: "In the case at bar, we hold that the Hill-Burton Act is designed, at least in part, to benefit persons unable to pay for medical services. Such people are not the sole beneficiaries of the act, but they certainly are the object of much of the act's concern. . . . [W]e are of the opinion that the act, by its own terms, makes it plain that persons unable to pay for medical services are one of the chief sets of beneficiaries of this legislation. It is a matter of the clearest logic that the only real beneficiaries of a hospital program are the people who need or may need medical treatment. This includes people of all classes, whether rich or poor."

On the basis of Cook, the court in Organized Migrants in CommunityAction, Inc. v. James Archer Smith Hospital, 325 F. Sup. 268, 271, also held that "plaintiffs have a private right of action under the provisions of the Hill-Burton Act." The same conclusion was reached in Euresti v.Stenner, 458 F.2d 1115, 1118, where the court declared: "Thus the legislative history and the expressed purposes of Congress indicate that the Act was passed to ensure that the indigent would be supplied sufficient hospital services when needed. With this clear intent, it is not decisive that the language of the Act included no explicit indication that indigents were to have a right to enforce the Act's provisions. A civil remedy may be implied for those clearly within the protective realm of legislation or regulations in the public interest."

What the defendants in the instant case request is that the reasoning of Cook, Organized Migrants in Community Action, Inc., and Euresti be brought a step further to allow a defense based on the Hill-Burton Act. The crux of the issue is not, however, whether the procedural mechanism of a defense should be allowed but whether the Hill-Burton Act confers an individual right on a member of the benefited class, i.e., "persons unable to pay therefor [for hospital services]," to receive free or below cost hospital services. It is contended that in the cases cited above, class actions were brought for declaratory and injunctive relief to enforce a program of free or below cost hospital services for the class of poor people and that, in light of the provision that only a reasonable volume of services is to be supplied, no single indigent individual has a right, personal to himself, to obtain such services. For example, if an indigent individual were treated by a hospital at the end of the year when the hospital had already provided a reasonable volume of services to the poor, that individual could not claim any benefits. That is conceded, but it does not justify the proposition that the indigent has no individual right under the act. A poor person could just as easily be a patient at the beginning of the year when a reasonable volume of services had not already been provided. He should be entitled to prove that the hospital was required to provide such services to him, even though it did not have to provide them to another indigent.

Furthermore, the defendants in this case have rights to free or below cost services as third party beneficiaries of the contract, incorporating the federal statutory obligations, between the hospital and the state, which in turn is obligated to assure compliance in return for federal funds. Euresti v. Stenner, supra, 1118; Corum v. Beth Israel MedicalCenter, 359 F. Sup. 909, 913. As the court in Euresti states: "Nothing could be clearer: In receiving federal funds, appellees [the administrators of the hospital] obligated themselves to dispense a reasonable amount of free hospital services to those unable to pay." Since the indigents are characterized as third party beneficiaries of the contract between the hospital and the state, they certainly have individual rights to free or below cost hospital services, subject to the conditions stated above, for the essence of third party beneficiary status is that the promisor (in this case the hospital) assumes a direct obligation to the third party.Knapp v. New Haven Road Construction Co., 150 Conn. 321, 325; Congress Daggett, Inc. v. Seamless Rubber Co., 145 Conn. 318, 324.

Now that it has been established that 42 U.S.C. § 291c (e) (1970) and 42 C.F.R. § 53.111 (b) (1972) secure for persons unable to pay individual, albeit limited, rights to free or below cost hospital services, it is not difficult to show that the defendants in this case should be allowed to interpose a defense based on those statutory and regulatory provisions in this action by the hospital for payment of its bill. The other Hill-Burton Act cases did involve requests for declaratory and injunctive relief, but it would be absurd to limit the holdings of those cases to the idea that only those types of relief are permissible, when those cases do not do so. As in Gomez v. Florida StateEmployment Service, supra, which discussed money damages and other forms of relief, the most appropriate form of relief should be applied in this case.

A special defense would be the most effective and appropriate form of relief. The Hill-Burton Act beneficiary, by means of a defense in a collection suit, will be able to assert his rights in the context of a dispute which then and there affects his economic interests. He should not be requested to use the more cumbersome procedure of a class action seeking declaratory and injunctive relief before he asserts his legal rights. It is true that such a defense is novel, but "[a] n action or defense, although one of first impression, may be maintained if, under any recognized principle of law, the facts involved constitute a violation of a legal right." 1 C.J.S., Actions, § 16.

To disallow the special defense interposed by the defendants in this case would permit a subversion of the legislative pattern of the Hill-Burton Act. The holdings of Cook, Organized Migrants in CommunityAction, Inc., and Euresti, which implied a cause of action under the Hill-Burton Act for "persons unable to pay" for hospital services, should be extended to allow a defense based on the act to those persons in actions by funded hospitals and other facilities for services rendered.

For the reasons stated above, the plaintiff's demurrer to the defendants' second special defense should have been overruled. I concur, however, with the majority opinion with respect to its conclusions on the waiver of the defect in the summary judgment, the motion to expunge, and the motion to erase.