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W. Va. Univ. Hosps., Inc. v. Casey - 701 F. Supp. 496 (M.D. Pa. 1988)

Rule:

In cases involving economics and social welfare wherein classifications and resultant "imbalanced" treatment occur, the United States Supreme Court looks for links between legitimate governmental interests and the classifications. 

Facts:

Plaintiff West Virginia University Hospitals, Inc. (WVUH) commenced this action against defendants, which included the Commonwealth of Pennsylvania's Department of Public Welfare and Governor Casey. WVUH alleged that Pennsylvania's medicaid reimbursement program for out-of-state hospitals violated federal payment standards and the Equal Protection Clause of the Fourteenth Amendment.  The central question in this action was whether defendants satisfied the federal law requirements set forth in 42 U.S.C. § 1396(a)(13)(A), known as the Boren Amendment, in reimbursing WVUH for inpatient hospital services provided to Pennsylvania medicaid recipients. WVUH further alleged that Pennsylvania's administrative appeals system for out-of-state hospitals was legally inadequate. WVUH sought injunctive and declaratory relief regarding its past treatment under Pennsylvania's reimbursement program and administrative appeals system. Because WVUH sued state officials in their official capacities, defendants raised its Eleventh Amendment sovereign immunity defense to all retrospective relief demanded by WVUH.

Issue:

Does the state medicaid reimbursement program violate a hospital's equal protection rights?

Answer:

Yes

Conclusion:

The United States District Court found that Pennsylvania's prospective medicaid program as it applied to WVUH did not comply with federal law. Because defendants did not take the WVUH's situation vis a vis low income patients into consideration in setting the Hospital's rates, they violated the Boren Amendment and its implementing regulations, and government approval of the state plan did not demonstrate its validity. Defendants did not articulate a rational connection between their asserted interests and the classifications of in-state versus out-of-state hospitals. Defendants' decision to classify out-of-state hospitals in the manner they did was arbitrary, not related to legitimate state interests, and the classification resulted in invidious discrimination. As such, its treatment under the program, was violative of WVUH's equal protection rights. Moreover, the administrative appeals system, as it applied to WVUH, was inadequate and did not comply with federal law.

 

The Court granted injunctive relief; however, it noted that it could not order a recovery of money damages. The Court explained that although  there is no bright line distinction, the differences between the two types of relief--retrospective relief and prospective relief--are discernible. The Court found that the sole purpose for WVUH's requested relief of ordering the State to entertain an appeal for the years 1984 and 1985 was to compensate for past violations. The Eleventh Amendment bars such compensation. The Court found, however, that the Eleventh Amendment does not bar an injunction ordering the State to permit the Hospital to appeal the reimbursements received from the date the complaint was filed.

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