196 Conn. 451 | Conn. | 1985
Pursuant to the requirements of General Statutes § 19a-156 (a) the plaintiff hospital submitted to the defendant commission on hospitals and health care for its approval a proposed operating and capital expenditures budget for the fiscal year 1985 (October 1, 1984, through September 30, 1985). The commission disapproved the budget as submitted and ordered substantial reductions in operating expenses, revenues and capital expenditures. The hospital appealed the commission’s order pursuant to General Statutes §§ 19a-158 and 4-183 to the Superior Court. In conjunction with its appeal the hospital applied for a stay of the commission’s order until the appeal should be decided in the trial court. After a hearing the court issued a stay subject to several conditions. From this judgment staying the order until a decision on the merits of the appeal in the trial court, the commission, after obtaining certification under General Statutes § 52-265a on the grounds “that a substantial public interest is involved and that delay may work a substantial injustice,” has appealed to this court.
The plaintiff Griffin Hospital is a nonprofit institution that operates a 281 bed acute care general hospital in Derby. Its proposed operating budget for the 1985 fiscal year would provide $42,454,000 of “net patient revenue” and allow $39,210,000 of operating expenses. Its capital expenditures budget was $1,917,000. The defendant commission, after a hearing upon the proposed budget, ordered that net patient revenues be reduced to $31,114,000 and that capital expenditures be limited to $517,000.
Upon the hospital’s appeal from this order and its application for a stay thereof, following an evidentiary hearing that occupied two trial days, the court ordered a stay subject to the conditions that 20 percent of the revenues received in excess of those allowed under the commission’s order should be held in escrow, that patients’ bills contain a notice of possible refunds, and that the hospital report monthly to the commission its revenues and the amount held in escrow.
The hospital had also appealed the commission’s order of reductions in its operating and capital expenditures budget for the 1984 fiscal year. The trial court, Curran, J., had ordered a stay pending the outcome of that appeal and also had imposed conditions similar
I
The claim of the commission that § 4-183 (c) of the Uniform Administrative Procedure Act (UAPA) is inapplicable when an appeal is taken from orders relating to hospital budgets is based upon the assumption that, absent commission approval, none of the proposed charges or expenditures may be implemented. The commission analogizes its function in approving hospital budgets to the rate-making authority of the public utilities control authority where a stay pursuant to an appeal by a regulated company merely leaves in effect previously approved rates and does not allow the collection of a requested increase that has been denied by the agency. See Connecticut Light & Power Co. v. Public Utilities Control Authority, 34 Conn. Sup. 172, 175, 382 A.2d 1003 (1977). This feature of rate regulation by that agency is based upon a statutory provision that expressly prohibits a public service company from charging rates in excess of those previously approved. General Statutes § 16-19. No comparable provision is found in the statutes defining the powers of the commission on hospitals and health care; General Statutes §§ 19a-145 through 19a-166; though its ultimate authority to control rates and budgets, after an opportunity for judicial review, cannot be disputed. See Hospital of St. Raphael v. Commission on Hospitals & Health Care, 182 Conn. 314, 317, 438 A.2d 103 (1980).
General Statutes § 19a-158 provides expressly that health care institutions aggrieved by a decision of the commission may appeal in accordance with § 4-183 of
The provision for “a stay upon appropriate terms” gives the court broad authority to fashion appropriate relief to protect the interests of all those involved during the pendency of an administrative appeal. The court, therefore, was not confronted with a Hobson’s choice of adopting wholly the budgets favored by either the hospital or the commission. In granting a stay upon “appropriate terms” it could modify those proposals or effectuate its own budgetary plan as a modus vivendi.
II
The commission claims next that the trial court used an erroneous standard in deciding to grant a stay. The court did not file a memorandum of decision but, in announcing the judgment at the conclusion of the tes
The state argues for a more demanding test in granting a stay, such as that developed by the federal courts in appeals arising under the federal administrative procedure act. Hamlin Testing Laboratories, Inc. v. United States Atomic Energy Commission, 337 F.2d 221, 222 (6th Cir. 1964); Virginia Petroleum Jobbers Assn. v. FPC, 259 F.2d 921, 925 (D.C. Cir. 1958). This standard for a stay was applied in another trial court decision, Waterbury Hospital v. Commission on Hospitals & Health Care, 30 Conn. Sup. 352, 354-55, 316 A.2d 787 (1974). The federal standard focuses upon: (1) the likelihood that the appellant will prevail; (2) the irreparability of the injury to be suffered from immediate implementation of the agency order; (3) the effect of a stay upon other parties to the proceeding; and (4) the public interest involved.
In the analogous situation of a temporary injunction to preserve the status quo until the rights of the parties can be determined after a full hearing on the merits, we have said that “the court is called upon to balance the results which may be caused to one party or the other, and if it appears that to deny or dissolve it may result in great harm to the plaintiff and little to the defendant, the court may well exercise its discretion in favor of granting or continuing it, unless indeed, it is very clear that the plaintiff is without legal right.” (Emphasis added.) Olcott v. Pendleton, 128 Conn. 292, 295, 22 A.2d 633 (1941). This criterion necessarily requires consideration of the probable outcome of the litigation. Decisions of our trial courts have frequently referred to the burden of an applicant to show a reasonable degree of probability of success before a temporary injunction to preserve the status quo may be granted. Connecticut State Medical Society v. Connecticut Medical Service, Inc., 29 Conn. Sup.
These considerations involve essentially the application of familiar equitable principles in the context of adjusting the rights of the parties during the pendency of litigation until a final determination on the merits. See Stocker v. Waterbury, 154 Conn. 446, 451, 226 A.2d 514 (1967); Sisters of St. Joseph Corporation v. Atlas Sand, Gravel & Stone Co. 120 Conn. 168, 176-77, 180 A. 303 (1935). We have indicated that the same principles are pertinent to the “due administration of justice” criterion of Practice Book § 3065 in deciding whether a stay following a judgment in the trial court should be terminated while an appeal is pending in this court. Northeastern Gas Transmission Co. v. Benedict, 139 Conn. 36, 42-43, 89 A.2d 379 (1952). It is not possible to reduce all of the considerations involved in stay orders to a rigid formula, however, as the commission claims the federal standards to require.
While we thus approve the “balancing of the equities” test employed by the trial court, we do not in its application eschew such factors as the likely outcome of the appeal, the irreparability of the prospective harm
In sum, the claim that the court applied the wrong standard must be rejected because we approve the
In arguing that the court applied an inappropriate standard, the commission claims that the hospital failed to make “any showing” in respect to (1) irreparable injury and (2) the probability of overturning the agency order. Our review indicates sufficient support for the stay in both these respects. There was testimony that the hospital would experience serious difficulties in rebilling patients for additional charges if its proposed 1985 budget should be upheld on appeal and that substantial amounts of revenue would be irretrievably lost. Many programs and facilities, such as the emergency department, the psychiatric department, the teaching program, and one medical-surgical unit would have to be closed immediately. These services presumably would have to be reestablished if the appeal should be successful.
With respect to the likelihood of success, the hearing on the stay did not purport to explore fully the merits of the hospital’s appeal, but the court did have the benefit of the decision concerning the 1984 budget appeal, in which $2,150,000 was restored to the hospital’s operating budget and $689,000 to its capital budget. Although this 1984 budget decision has since been appealed to this court, where it is still pending, it was significant with respect to the merits of at least some of the issues, because the commission used its
Ill
The remaining claim is that the stay as ordered did not adequately protect the interests of patients or uphold the regulatory powers of the commission. The central issue raised is whether the trial court abused its discretion in concluding from the evidence that the circumstances warranted a stay upon the conditions imposed. See Hartford v. Hartford Electric Light Co., supra, 14; Northeastern Gas Transmission Co. v. Benedict, supra, 41.
The commission claims that, since the purpose of a stay is to preserve the status quo pending the outcome of a suit, the court should have required that all of the revenue collected by the hospital in excess of that authorized in the revised 1985 budget ordered by the commission be placed in escrow instead of only 20 percent, as provided in the stay order. From the testimony presented, however, the court could reasonably have found that the amount ordered to be escrowed would be sufficient to reimburse any patients who might ultimately prove to have been overcharged. It appeared that only 10 percent of the patients paid their charges directly. About 45 percent of hospital revenues came from Medicare patients whose bills were not paid on the basis of
There is no error.
In this opinion the other judges concurred.
In Laurel Park, Inc. v. Pac, 194 Conn. 677, 678-79 n.l, 485 A.2d 1272 (1984), we determined that appeals certified pursuant to General Statutes § 52-265a are not subject to the final judgment restriction upon our jurisdiction imposed by General Statutes § 52-262.
This federal standard is similar to the 1981 version of the Model State Administrative Procedure Act, 14 U.L.A. (1985 Sup.) § 5-111 (c), which provides:
“(c) If the agency has found that its action on an application for stay or other temporary remedies is justified to protect against a substantial threat
“(1) the applicant is likely to prevail when the court finally disposes of the matter;
“(2) without relief the applicant will suffer irreparable injury;
“(3) the grant of relief to the applicant will not substantially harm other parties to the proceedings; and
“(4) the threat to the public health, safety, or welfare relied on by the agency is not sufficiently serious to justify the agency’s action in the circumstances.”
This standard under the 1981 revision is applicable only after an agency has denied a requested stay and claims that such denial “is justified to protect against a substantial threat to the public health, safety, or welfare.” In the present case no such application was made or denied and no such finding is contained in the record. Our own adaptation of the Model Administrative Procedure Act under the title, Uniform Administrative Procedure Act, General Statutes §§ 4-166 through 4-189, has not been amended to incorporate § 5-111 (c) of the 1981 revision.
It is not clear from the testimony how the amount of the liability of the hospital for refunds to Blue Cross would have been affected by this discount arrangement. If the provision for the discount were applicable only to the charges as billed in accordance with the hospital’s proposed budget and were inapplicable to the rates as established by the commission, there would be a substantial reduction in this potential liability. The failure of the commission to request a further articulation on this point makes it impossible to ascertain what reliance the court placed upon this testimony in determining that a 20 percent escrow was adequate.
The potential liability of the hospital for refunds to commercial insurers would not differ essentially from its liability to self-payers. The court might have concluded, however, that these institutional payers, by virtue of their ongoing indebtedess to the hospital as a result of their continuing business relationship, required less protections in the form of an escrow than individual self-payers.