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AMERICAN NURSING HOME ASSN. v. COST OF LIVING COUN

February 7, 1974

AMERICAN NURSING HOME ASSOCIATION, Plaintiff,
v.
The COST OF LIVING COUNCIL, et al., Defendants


Gasch, District Judge.


The opinion of the court was delivered by: GASCH

GASCH, District Judge.

This action concerns the continuing challenge by plaintiff to the Cost of Living Council regulatory scheme governing nursing homes. *fn1" On December 5, 1973, this Court granted plaintiff's requested relief and through the consolidation of the preliminary and final injunctive questions, permanently enjoined the enforcement of 6 C.F.R. § 300.18. D.C., 368 F. Supp. 490. The effect of this ruling was that defendants were enjoined from interfering with or limiting the amount of cost reimbursement which nursing homes are entitled to receive under the Medicare and Medicaid Programs. *fn2" Concomitant with this ruling, the Court found on the basis of the record that the strict regulation of the nursing home industry through the aforementioned regulations was unwarranted in the light of the minimal impact of nursing home care as an inflationary factor in the economy. Accordingly, these regulations were declared arbitrary and capricious.

 The government moved for reconsideration and an opportunity to present additional evidence on the merits of this matter. By Order of December 28, 1973, the Court granted defendants this opportunity, amending the previous Order to be preliminary in effect. After oral argument the Court gave the government further time to submit additional evidence. While admitting in a later pleading that the Court's previous decision was "reasonably based upon the factual record as it appeared at the time of the motion for preliminary injunction," *fn3" defendants argue that the Court's finding is "insupportable when considered in the light of the additional information submitted since that decision." *fn4"

 At this time, therefore, the Court is called upon to consider defendants' additional submissions and to decide whether a permanent injunction shall issue. *fn5"

 I.

 The heart of this controversy, and the essence of plaintiff's case, is the conflict between the cost reimbursement scheme devised by Congress under Titles XVIII and XIX of the Social Security Act and both the old and new Cost of Living Council regulations which would withhold this "reasonable cost" reimbursement provided by Congress if that reimbursement would increase the average realized revenues per diem over the 6.5 percent ceiling mandated by the COLC. In the Memorandum of December 5, 1973, the Court held that these regulations could not overrule the intent of Congress to provide reasonable reimbursement with all the attendant controls such as careful audit which Congress provided. The government's additional information has not convinced the Court that its prior holding was erroneous.

 Plaintiff, citing Perry v. Commerce Loan Co., 383 U.S. 392, 86 S. Ct. 852, 15 L. Ed. 2d 827 (1966), and United States v. American Trucking Associations, Inc., 310 U.S. 534, 60 S. Ct. 1059, 84 L. Ed. 1345 (1940), argues that there is no more persuasive evidence as to the intent of Congress to provide reasonable cost reimbursement without interference from the COLC than the plain language of the statute. Additionally, plaintiff contends that when the statute expresses this Congressional intent in reasonably clear, plain language, the common meaning of the words used must be accepted. Hudson Distributors, Inc. v. Eli Lilly & Co., 377 U.S. 386, 84 S. Ct. 1273, 12 L. Ed. 2d 394 (1964). Thus, plaintiff asks the Court to simply read the Medicare and Medicaid provisions of the Social Security Act *fn6" and determine that Congress intended reasonable cost reimbursement thus preventing the Cost of Living Council from promulgating these challenged regulations.

 It is true that the language of these statutes is clear. However, it is the emergency nature of the Economic Stabilization Act of 1970 that demands that this Court look further to determine if in fact it intended its own statutory programs to be negated by an agency endowed with great power. As noted previously by this Court, *fn7" the Cost of Living Council should be given great deference by any court due to the enormous burden and the emergency nature of its tasks. *fn8"

 The first direction in which the Court must look in determining Congressional intent is the language of the Economic Stabilization Act itself. Under Section 203(j) of that Act, Congress provided that:

 
Nothing in this title may be construed to authorize or require the withholding or reservation of any obligational authority provided by law or by any funds appropriated under such authority.

 Although this section would apply more directly to a clear impoundment fact situation, it is convincing evidence of Congressional intent that funds appropriated for specific programs should not be withheld without a clear Congressional directive. This language of § 203(j) is applicable by analogy to the question at bar where, in fact, the Economic Stabilization Act is being used as a rationale to withhold from federal programs monies intended to be expended in what Congress believed was a rational and prudent manner.

 The government can present as persuasive evidence only the language of Congressman Wilbur Mills of the House Ways and Means Committee in furtherance of its contention that Congress intended the COLC to control nursing home price levels without regard to the "reasonable cost" reimbursement scheme already statutorily mandated. A brief explanation of the context of Mr. Mills' remarks is necessary.

 Section 225 of Public Law 92-603, enacted in 1970, placed a five percent limitation on the annual increases in nursing home costs which would be reimbursed by the government under the Medicaid program. *fn9" However, this provision was repealed by the 93rd Congress under Public Law 93-66, 1973 U.S. Code and Administrative News, p. 1799. It was in the context of this repeal that Congressman Mills, the House Manager of the repeal bill, stated:

 
The final medicaid provision in the Senate amendment would delete a provision in present law which limits the average per diem costs for skilled nursing facilities and intermediate care facilities to no more than 5 percent a year. The wage-price guidelines which apply to such institutions already perform the type of function intended by this provision will no doubt continue to do so for some time. The Department of Health, Education and Welfare estimates that there will be no cost of this provision if the wage-price ...

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