Maxwell v. WymanMaxwell v. Wyman
Appellants, 148 proprietors of “skilled nursing homes” which care for 5,000 elderly patients in New York State, appeal from the denial of a preliminary injunction by the United States District Court for the Northern District of New York. This appeal was certified by Judge Port under
Title XIX is administered in each state by a “single State agency,”
Appellees contend that appellants’ state operating certificates are intact and not in question here. Appellants on the other hand argue that their state operating certificates will be “limited” if not “annulled” if the homes are ineligible for reimbursement under the federal scheme. Appellants contend that they will be driven out of business in a matter of weеks if they receive no reimbursement for the 75 per cent of their patients who are Medicaid recipients.
We turn then to the complex federal statutory and regulatory scheme to see what has occurred to appellants. Because New York does not have a fire and safety code approved by HEW, to qualify for a “provider agreement” after December 31, 1969, eaсh skilled nursing home in the state must conform with relevant provisions of the Life Safety Code of the National Fire Protection Association (1967 ed.)
. . . in accordance with regulations of [the Secretary of HEW], for such periods as it deems appropriate, specific provisions of such code which, if rigidly applied, would result in unreasonable hardship upon a nursing home, but only if such agency makes a dеtermination (and keeps a written record setting forth the basis of such determination) that such waiver will not adversely affect the health and safety of the patients of such skilled nursing home. . . .
We do not know in whаt specific respects appellants do not comply with this Code. On the basis of representations made on oral argument we assume that some appellants can comply with the Code and some cannot. But none has had a hearing of any kind before any state or federal agency regarding compliance with the Code. The state agency (Social Services) has refused to waive compliance, even though the federal statute and regulations permit it, because it refuses to make the necessary “determination . . . that such waiver will not adversely affect the health and safety of the patients . . ..” This is done, as we gather it, not by examination of appellants on a case-to-case basis,1 but apparently because the state agency believеs that, under the federal statute and regulations, any failure to comply with the Life Safety Code necessarily will affect the safety of the patients adversely. Thus appellants, and more to the point, appellants’ patients-many of whom might be forced into nursing homes outside the state of New York were appellants forced to close down-are victims of a rather wondrous bureaucratic shell game, in which a waiver of compliance is permitted by the federal agency, but the state agency says that it cannot issue a waiver under any circumstances-now you see it, now you don‘t.2
The district court denied injunctive relief against HEW, because before the Secretary may terminate payments to the State he must give the state agency “. . . reasonable notice and opрortunity for hearing . . ..”
The district court also denied injunctive relief against the two state departmеnts involved, although it assumed a likelihood of success insofar as a right to hearings is concerned.3 Its ground for denial was that appellants will not be irreparably harmed. If appellants (or any of them individually) lose on the merits, the court reasoned, the decision not to provide funds prior to hearings will be vindicated. If, the court went on to say, appellants prevail on the hearings-either because homes are “. . . without deficiencies or because the deficiencies may be waived . . .“-they would be entitled to a “so called ‘12 month’ agreement . . . effective from January 1, 1972 voluntarily . . or by order of the court.”4 The court concluded that, except for the legal question whether appellants are entitled to a hearing, “. . . this seems to be a policy problem, the solution of which aрpropriately lies within the province of the defendants.”
We disagree with the district court‘s view on this phase of the case because, as argument revealed, the State takes the blanket position that it cannot waive any failure to comply with the Life Safety Code, since such a failure necessarily adversely affects the safety of the patients. In doing so, the State, we think, misreads the federal regulations. In the case of each nursing home the state agency should, as we read
The question is whether, pending such individual determination, preliminary injunctive relief should be granted. Is there a reasonable likelihood of success on the merits? Unicon Management Corp. v. Koppers Co., 366 F.2d 199, 204 (2d Cir. 1966). Would there be irreparable harm to appellants if such relief were not granted?
The statutory argument may very well succeed, because for all practical purposes ineligibility for a “provider agreement” may make the state operating certificate, concededly still outstanding, useless.7 In a real sense the certificate is being “limited.” This is true although the homes may still treat private patients. It is true although the homes may apparently continue to receive state and federal aid as “Intermediate Care Facilities” under
Despite the possible receipt of state and federal aid as “Intermediate Care Facilities” and the ability to retain approximately 1,70010 private patients, the inability to care for Medicaid patients will be costly to appellants and will require the discharge of trained personnel. That the public interest is also seriously affected is of no small concern to us. Neither state nor federal appellees dispute the proposition that there are presently no facilities in the state of New York to provide skilled nursing care for the patients now treated by appellants; how these patients would be cared for does not appear.
We must, of course, also consider the possibility of harm to appellees, and the patients whose interests they are, after all, seeking to protect by promulgating high safety standards. In this regard there is a possibility that harm will accrue to the State if HEW cuts off its reimbursement funds for state noncompliance. Since the federal statute and regulations are not easy to interpret and, as noted above, have in fact been misinterpreted by the State, and since oral argument disclosed that many states presently are not seeking in any way to enforce the federal standards, we assume thе HEW procedures will have sufficient flexibility to allow the State to afford appellants hearings if it does so on an accelerated basis.
Insofar as harm to the State is concerned, the State‘s position is essentially that it will afford hearings so long as it does not lose federal funds. Since the State is entitled to notice and hearing before federal funds are cut off,
Lest it be thought that in granting preliminary relief, the court is giving nursing home proprietors a carte blanche to avoid safety regulations and endanger patients, it should be pointed out that these homes have been operating under provider agreements and temporary waivers for some time, and it is only by virtue of a change in the federal regulations that appellants have come under the State‘s guns. Appellant Maxwell, for example, had a statement as of August 1971 from the Health Department that “This facility, though it is a two story wood frame, non-fire resistence [sic] structure, provides a safe and comfortable environment.” Social Services, familiar with the status of each appellant, can easily schedule its hearings on an expedited priority basis, hearing those cases in which there are strong potential hаzards first, those in which the danger is little or none later. Under
We therefore reverse and direct the granting of a preliminary injunction against the state departments, restraining them from terminating medical reimbursement to appellants until a hearing has been afforded on the question whether waiver will be permitted under the applicable federal regulations as we have construed them. These hearings shall be held as quickly as possible, the State to determine the order in which they will be held.
One additional procedural problem remains. We have throughout this opinion treated appellants аs a class, although the district court‘s opinion does not expressly do so. This is entirely appropriate under
Judgment in accordance with opinion.
Notes
Presumably the “area” will be somewhat less “grey” when the Supreme Court renders its decision in the trilogy of cases which were argued in January 1972. See Lynch v. Household Fin. Corp., 318 F.Supp. 1111 (D.Conn.1970), prob. juris. noted, 401 U.S. 935, 91 S.Ct. 962, 28 L.Ed.2d 214 (1971) (Civil Rights Act,
No home has been given the opportunity to contest this finding. The Life Safety Code itself has a grandfather clause permitting-in the cases of pre-existing homes such as appellants‘-modification of the Code requirements “by the authority having jurisdiction to allow alternative arrangements that will secure as nearly equivalent safety to life from fire as practical; but in no case shall the modification be less restrictive or afford less safety than compliance with the corresponding provision contained in the following part of this Code.” Subsection 10-2122. We do not pass upon the meaning of this provision, but, somewhat like the main regulations under consideration here, the left hand appeareth to take away what the right hand hath given. It is apparent that the regulations and Life Safety Code together constitute a Hall of Mirrors. He who enters it does so at the peril of being lost.
In interpreting this provision it must be noted first that the Life Safety Code does not permit buildings of one-hour protected wood-frame construction or one-hour protected ordinary construction more than one story in height. Thus, a facility which met the construction requirements of the Code would not have а level above the ground floor. However, the regulations provide that requirements of the Code may be waived in certain circumstances in individual cases by the single State agency in the case of Medicaid or the Social Security Administration in the case of Medicare. If the construction standard is waived with respect to a facility of one of these construction types with more than оne story and the facility is sprinklered in accordance with Section 10-234 of the Code, then blind, nonambulatory and physically handicapped patients may be housed above the street level floor.