Court Opinion

ID: 8903901
Source: CourtListenerOpinion
Date Created: 2022-11-27 01:34:06.205169+00
Date Added: 2024-06-11T17:08:02.351087
License: Public Domain

BAUER, Circuit Judge,
dissenting.
I respectfully dissent. The majority’s conclusion is that the high costs incurred by plaintiff resulted from Pleasantview’s failure to reduce the number of certified beds in view of its apparent escalating costs and declining occupancy rate. Thus, this Court is affirming the district court’s opinion that the plaintiff simply made a bad business judgment.
This is a review made from the position of hindsight. The case in its proper perspective, in my opinion, shows that plaintiff’s decision was not freely made; rather, it simply sought to conform to the regulations promulgated by the various governmental agencies involved.
In many respects plaintiff got caught in a bureaucratic trap. Many, if not all, of the factors that led to excessive per patient costs were due to conditions beyond the control of the plaintiff.
Plaintiff sought certification of certain distinct parts of its institution pursuant to directions provided in a Health, Education and Welfare bulletin. Health, Education and Welfare subsequently certified “distinct parts” of plaintiff’s institution. A major reason for the “distinct parts” was plaintiff’s judgment that senile persons ought not be placed with non-senile persons as a matter of medical and psychological concern.
In 1971 occupancy levels in the distinct parts were quite low. This was caused, at least in part, by the fact that Medicare extended care facility benefits suffered a cut back so that it was difficult, if not impossible, for the plaintiff to get Medicare patients. The majority opinion attaches little importance to the fact that it was conduct on the part of the Government, a named defendant in this suit, which made the business decision to operate distinct parts such a bad course to follow.
Another factor beyond the control of plaintiff was a requirement of the State of Illinois that mandated separate nursing staffs for each distinct part. This requirement substantially increased the per patient, per bed costs incurred by the plaintiff. Yet it is undisputed that no given item of cost (including the double nursing salaries) incurred by plaintiff was unreasonable. This appeal is not an attempt to recover outrageous profits. The parties agree that plaintiff actually incurred the costs in question, that the costs were reasonable per se, and that plaintiff still would not make a profit if reimbursed for actual costs incurred.
The majority also gives no consideration to the fact that there was no warning given *104to plaintiff that its decision to operate “distinct parts” might be a bad business decision. Health, Education and Welfare recommended that plaintiff operate its institution in such a fashion. Plaintiff was lulled by the repeated interim payments made on the basis of periodic cost reports. Pleasant-view was never advised that there might be some dispute over its figures.
In summary, I must agree with plaintiffs assertion that, having operated its facility under the direction of the defendants to designate distinct parts, it became the victim of government actions. The Court seems willing to accept the defendant’s view that after all the costs were in the plaintiff should not be reimbursed because the costs were not reasonable when compared to costs incurred by similar institutions. I believe such a position is inherently unfair to plaintiff in light of the facts that defendants gave them no indication that their costs would not be reimbursed, the factors that led to high costs were not within plaintiff’s control, and the decision to operate distinct parts was based on medical judgment and pursuant to Health, Education and Welfare’s recommendations. I would reverse the trial court’s grant of summary judgment.