Hawkins v. North Carolina Dental Society Petition for Writ of Certiorari to the US Court of Appeals for the Fourth Circuit

    IN THE
UNITED STATES COURT OF APPEALS 

FOR THE FOURTH CIRCUIT 
NO. 81-1448

HAZELINE J. HEATH,
Plaintiff-Appellee,

CHARLOTTE-MECKLENBURG HOSPITAL AUTHORITY: COUNTY OF MECKLENBURG,
Defendants-Appellants.

On Appeal From The United States District Court 
For The Western District of North Carolina

BRIEF FOR PLAINTIFF-APPELLEE

JULIUS CHAMBERS 
Chambers, Ferguson, Watt,

Wallas, Adkins & Fuller, P.A. 
951 South Independence Boulevard 
Charlotte, North Carolina 28202 
(704) 375-8471-
JACK GREENBERG
BETH J. LIEF
Suite 2030
10 Columbus Circle
New York, New York 10019
(212) 586-8397
Attorneys for Plaintiff-Appellee



I N D E X
Page

Table of Authorities
Issues Presented ........  . . . . . . . . . . .  1
Statement of the C a s e ................ 2
Statement of Facts ..............................  6
Argument......................................... 11

I. The District Court Correctly-
Held That a Certificate of Need 
Is Required Before Defendants Can 
Close Community Hospital and 
Transfer Its Services to Huntersville 
Hospital................ .. ........... 11
A. Applicable Federal and State Statutes 

Require Certificate of Need Approval 
for a Plan to Close a Hospital 
Facility and Relocate or Redistribute 
Its Beds to Another Facility........ 11

B. The Authority's Plan to Close
Community Hospital and to Convert 
29 Beds to Nursing Beds and to 
Create an 8 Bed Detoxification Unit 
at Huntersville as Replacements for 
Community's Services Requires a
Certificate of N e e d .............. .. 16

C. The Injunction Is Necessary to Comply 
with the Federal and State Certificate 
of Need Requirements . . . . . . . . .  20

II. The Hospital Authority Will Suffer No Harm 
9 from Compliance with the Injunction; In

Contrast, the Poor and Black Patients Who 
 ̂ Depended Upon Community Will Be Substan­

tially Harmed by a S t a y .......... .. 22
A. The Hospital Authority Will Suffer No 

Harm Either from Proceedings with the 
Certificate of Need Application or from 
Maintaining Community in a Manner Which 
Will Allow Resumption of Service . . . .  22

l



Page

III.

Conclusion

B. The Poor Black Residents of 
Mecklenburg County Will Be 
Irreparably Harmed by the Issuance 
of the Stay or Dissolution of the 
Injunction and the Public Interest 
Will Be Served by Continuance of 
the Injunction......................  25

The District Court Has Jurisdiction 
Over the Subject Matter of This Action.
The Causes of Action Predicated on Title VI,
42 U.S.C. §§ 1981 and 1983 and the Constitu­
tion Are Not the Subject of This Appeal . . .  27
.............................. ..............33

ii



TABLE OF AUTHORITIES

Cases: Pages

Anderson v. City of Albany, 321 F .2d 629
(5th Cir. 1963)........................  20

Board of Education v. Califano, 582 F.2d 
576 (2d Cir. 1978), aff'd sub nom,
Board of Education v. Harris, 222
U.S. 130 (1979).............. .. 31

Bryan v. Koch, 627 F .2d 612 (2d Cir. 1980) . . . .  31,32

Cypress v. Newport News General S. Non-sectarian 
Hosp. Ass'n., 375 F .2d 628
(2th Cir. 1967) (en banc) ........................  19

De La Cruz v. Tormey, 582 F .2d 25 (9th Cir. 1978) . . .  30
Fullilove v. Klutznick, 228 U.S. 228 (1980) . . . . . .  30
Guadalupe Organization, Inc. v. Tempe Elementary 

School District No. 3, 587 F .2d 1022
(9th Cir. 1978)............................ .. 29,30

Guardian's Ass'n. of NYC Police Dept., Inc. v. Civil
Service Commission, 633 F.2d 232 (2d Cir. 1980) . . 31

Jersey Insurance Company of New York v.
Hefron, 222 F . 2d 136 (2th Cir. 1957) . ........... 17

Jones v. Pitt County Bd. of Education,
528 F . 2d 212 (2th Cir. 1975) .....................  17

Lau v. Nichols, 212 U.S. 563 (1972) . . . . . . . . .  29,31
Long v. Robinson, 232 F .2d 977 (2th Cir. 1970) . . . 11,21,22,22
Lora v. Board of Education, 623 F .2d 228

(2d Cir. 1980)................ .. 32
NAACP v. Wilmington Medical Center, F.2d

No. 80-1893 (June 29, 1981) .......................  30
Nationwide Mutual Insutrance Co. v.

De Loach, 262 F . 2d 775 (2th Cir. 1959)........ .. 17
Park East Corp. v. Califano, 235 F .Supp. 

26 (S.D.N.Y. 1977) ................ 27



Page

Regents of the University of California v.
Bakke, 438 U.S. 265 ( 1978) .....................  30

Serna v. Portales Municipal Schools,
499 F . 2d 1147 (10th Cir. 1974)............ .. . 29

Stiers v. Martin, 264 F .2d 795 (4th Cir. 1959) . . .  18
United States v. Warwick Mobile Home

Estates, Inc., 537 F.2d 1148 (4th Cir. 1976) . . 17
Virginia Petroleum Jobbers Assoc, v. Federal

Power Comm'n., 259 F.2d 921 (D.C. Cir. 1958) . . .  24
Washington v. Davis, 426 U.S. 229 ( 1976)............  30

Constitutional and Statutory Provisions:
Fourteenth Amendment ..............  . . . . . . . . .  2,28
National Health Planning, Resources and

Development Act, 42 U.S.C. § 300(k), et seq. . . . 3,11,12,27
42 U.S.C. § 1981 ................................... . 2,28,29
42 U.S.C. § 1983 . . . . . . . . . .  ........  . . . .  2,28
Title VI of the Civil Rights Act of 1964,

42 U.S.C. § 2000(d) . . . . . . . . . . . . . . .  2,3,28,29,30
N.C.G.S. § 131-175................................... 14
N.C.G.S. § 131-176(17) . . . . . . . . . . . . . . . .  15,16
N.C.G.S. § 131-178(a) ........  . . . . . . . . . . . .  15
North Carolina Certificate of Need Program

Administrative Regulations § .0102(a) . . . . . . .  15

Other Authorities:
North Carolina Certificate of Need Program

Administrative Regulations § .0103 . . . . . . . . .  15
North Carolina Certificate of Need Program

Administrative Regulations § .0104(26)(c) . . . .  15
North Carolina Certificate of Need Program

Administrative Regulations § .0406(a) ..........  15
Federal Rules of Civil Procedure 52a ..........  . . .  17

iv



Page

42 C.F.R. § 123.4-01 et seq.............................  12
4-2 C.F.R. § 123.404...................................  15
42 C.F.R. § 123.404(a)(2).............................  13
42 C.F.R. § 123.404(a)(3)........ ..................  13,15
42 U.S.C. § 123.404(a) ( c ) ....................... .. . 14
42 C.F.R. § 123.409 . ........................... 13,16,20
42 Fed. Reg. 4008 ................... ................ 13
45 Fed. Reg. 69746-7 et seq........................ .. 14

v



IN THE
UNITED STATES COURT OF APPEALS 

FOR THE FOURTH CIRCUIT 
NO. 81-1448

HAZELINE J. HEATH,
Plaintiff-Appellee,

v .
CHARLOTTE-MECKLENBURG HOSPITAL 
AUTHORITY; COUNTY OF MECKLENBURG,

Defendants-Appellants.

On Appeal From The United States District Court 
For The Western District of North Carolina

BRIEF FOR PLAINTIFF-APPELLEE

Issues Presented
1. Whether the Charlotte-Mecklenburg Hospital Authority is 

under a duty of law to secure a Certificate of Need before it 
can close Community Hospital; provide twenty-nine beds at 
Huntersville Hospital as replacement for Community Hospital 
services; establish a detoxification unit at Huntersville; and 
receive additional needy patients at Huntersville for extended 
nursing services.



2. Whether defendant-appellant should be granted a stay 
of the injunction pending appeal where it has made no show­
ing of harm, let alone irreparable harm, from the issuance of 
the injunction.

Statement of the Case

This case is before the Court on an appeal from an injunc­
tion requiring defendant Charlotte-Mecklenberg Hospital Authority 
(hereinafter Hospital Authority) (a) to seek certificate of need 
approval for its plan to close hospital services at Community 
Hospital and to relocate its services to Huntersville Hospital; 
and (b) during the period reasonably required to process a 
certificate of need, not to take any action which might 
materially interfere with resumption of services at Community 
Hospital. Defendant Hospital Authority also seeks "suspension" 
of the injunction pending this appeal.

On May 11, 1981, Hazeline Heath, a low income black person
who depends upon the services provided by Charlotte Community 
Hospital for the medical needs of herself and her disabled hus­
band, filed this action on behalf of herself and a class of poor, 
black citizens of Mecklenburg County,to challenge as discrimina­
tory the closing of Charlotte Community Hospital. The complaint 
charged that the closing of Community Hospital and the redistri­
bution and relocation of some of its beds violated plaintiff's 
rights and the rights of the class under Title VI of the Civil 
Rights Act of 1964-, 4-2 U.S.C. § 2000(d) et seq. and the rules 
and regulations promulgated thereunder; 4-2 U.S.C. §§ 1981 and 
1983; the Fourteenth Amendment, and the requirement of the

2



National Health Planning, Resources and Development Act, 42 
U.S.C. § 300(k) et seq. that defendants obtain a Certificate 
of Need for its plan.

On May 12, 1981 plaintiff moved for preliminary relief 
enjoining defendants from taking any further action to close 
Community Hospital on the grounds that defendant did not obtain 
a certificate of need as required by federal and state law and 
regulations and that the closing of Community Hospital violates 
Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 2000(d) 
et seq.

After a hearing on May 15, 1981, during which time 
witnesses were called and written evidence received, and after 
considering memoranda of law from all parties, the district 
court found, inter alia, that after the Hospital Authority lost 
its subsidy to operate Community Hospital, it voted to transfer 
its patients and functions to its facility in Huntersville, 
which is twelve or fourteen miles north of Charlotte (P.1.0.
1)—  ̂The court concluded that defendants had largely closed and 
proposed to complete the shutting down of Community Hospital 
without complying.with federal and state regulations which re­
quire the issuance of a certificate of need in such circumstances, 
that plaintiff and other patients would be irreparably harmed, 
and that defendants would suffer no substantial harm if federal 
and state regulations were complied with prior to any final 
decision as to the future of the Hospital (P.1.0. 2,3). 
Accordingly, a preliminary injunction was issued enjoining the

1/ Preliminary Injunction opinion, dated May 15, 1981.

3



defendants (1) not to evict the remaining patients at 
Community Hospital until they are afforded reasonable time to 
be relocated in appropriate treatment centers; and (2) to 
maintain in good order and repair the physical plant and equip­
ment at Community Hospital, and not to take any action which 
would or might materially interfere with possible rapid and 
orderly resumption of services until defendants followed the 
procedures for seeking and obtaining a certificate of need 
(P.1.0, k). The district court made no conclusions of law ex­
plicitly under Title VI but found as fact that the closing of 
Community Hospital would have a substantial adverse impact upon 
many poor and black present and future patients (P.1.0. 2).

Defendant Hospital Authority filed a motion to suspend 
Preliminary Injunction Pending Appeal and for Expedited Appeal 
on June 1, 1981 and this Court heard oral argument on the
motion on June 2, 1981.

By order dated June 3, 1981, this Court remanded the action
to the district court and continued the temporary injunction on 
condition that the district court hold a further hearing and 
enter a final order by June 23, 1981 as to one issue: whether a
certificate of need is required under the circumstances of this

2/case.—

2/ A copy of the order and the district court's opinion on the 
preliminary injunction is annexed to plaintiffs' appendix bn 
appeal. The Court of Appeal's order states the issue as being 
whether the Authority has a duty under law to secure a Certifi­
cate of Need before it can close Community Hospital, but, as is 
evident from the opinions of the district court and the memoranda 
submitted by both parties, the district court found that the 
Authority was closing Community Hospital and transferring its 
functions to Huntersville Hospital. The issue is whether a 
certificate of need is required in this circumstance, and/or 
whether that finding was clearly erroneous. See infra.

k



Pursuant to the remand, a hearing was held on June 15,
1981 and the district court issued a memorandum opinion and 
order on June 22, 1981. In that opinion, the court found as
facts that "the decisions (a) to close Community Hospital; (b) 
to provide twenty-nine beds at Huntersville as replacement 
for Community Hospital services; (c) to establish a detoxifi­
cation unit at Huntersville; and (d) to receive these addition­
al needy patients at Huntersville for extended nursing services,

3 /were all and are still all parts of an overall plan (M.O. 7).— 
The court further found that this is both a "reduction or elim­
ination" of a service and a plan which "distributes beds among 
various categories, or relocates such beds from one physical 
facility or site to another" within the meaning of federal and 
state health planning statutes and regulations, and concluded 
that "for such action a certificate of need is required by law" 
(M.O. 7-8). The court also found that the action will cause the 
people formerly served by Community Hospital, almost all of whom 
are poor or black or both, irreparable harm and that the defen­
dants are suffering and will suffer no likelihood of being 
harmed if the preliminary injunction order stays in effect dur­
ing the period reasonably required to process a certificate of 
need (M.O. 8, 10).

On July 1, 1981, defendant Hospital Authority reviewed its
Motion to Suspend Preliminary Injunction and for Expedited 
Appeal.

3/ A copy of the district court’s June 22, 1981 opinion and 
order is annexed to defendant's motion and memorandum.

5



Statement of Facts
Charlotte Community Hospital (formerly Good Samaritan 

Hospital) was established in the 1880's as a hospital for 
black persons. For approximately twenty years, it has been 
operated by the Charlotte-Mecklenburg Hospital Authority 
(M.O.4; P.1.0. 1). Community Hospital is located in a pre­
dominately black neighborhood; its patients have traditionally 
been poor and black (P.1.0. 2).

Community Hospital has mainly provided hospital care for 
the chronically ill (M.O. 4; Ex.l, p.l; 5/15/81, Tr. 6).—^
In addition to providing long-term hospital care, Community 
also housed, until its closure, a detoxification unit and a
"stroke unit" where persons suffering from strokes received

7 /special services (M.O. 5; Tr. 83-84).—
The Hospital Authority also operates Charlotte Memorial 

Hospital and Huntersville Hospital. The costs of hospital 
services at Memorial Hospital, a large tertiary care facility, 
are far greater than at Community or Huntersville (Tr. 38).
The majority of patients at Community were referred to the 
hospital from Memorial Hospital (Ex. C., p. 1) because Memorial 
does not accept or retain indigent patients who need long-term 
care (5/15/81 Tr.38; Tr.69-70). Huntersville Hospital, which is 
located fourteen miles north of Charlotte, has 83 acute care beds 
and 274 nursing home beds (Tr.61-63), and is the only location in 
the public hospital system where patients who formerly went to 
Community can hope to go or are likely to go (Id; M.O. 7).

6/ The hospital is classified as an "acute care" hospital because 
there is no state reimbursement classification for long-term care for the chronically ill.
7/ "Tr." refers to transcript of June 15, 1981 hearing on remand 
A copy of the transcript is included in Plaintiff's Appendix.



In 1977, federal authorities adopted a "three-day rule" 
pursuant to which federal reimbursement for hospital costs 
would cease within three days after notification that a patient 
no longer required or justified hospital level care (M.O. 5). 
This rule precipitated fiscal problems at Community because so 
many of its patients needed nursing home rather than acute care 
hospital services (Ex. 3, p. 4), but had difficulty finding 
placement in alternate facilities (Tr. 84K

Given the financial difficulties, the Executive Committee 
of the Hospital Authority voted on January 20, 1981 to instruct 
Community Hospital to develop a plan to close (Ex. 1, p.2).
On February 2, 1981, the chairman of the Authority met with 
the Mecklenburg County Board of Commissioners to explain the 
closure. Due to concern that the facility's closure would have 
detrimental effects on the provision of health services for the 
community',; the County Commissioners voted to establish a task 
force to study the issue and develop a report by May 1, 1981. 
During this period, the Commissioners agreed to provide a subsi­
dy of $75,000.00 to continue Community's operation (Id).

A twelve-person task force was appointed. As Erwin Laxton, 
chairman of that task force testified (5/15/81 Tr. p. 22, quoted 
in M .0. 5):

[A ]t the final meeting there were ten members 
present of the twelve. It was suggested by 
the committee that we give the County 
Commissioners a preference. We weren't voting 
on which of the three to recommend. We simply 
indicated to them the preferences as we saw it.
On option 1, to continue the operation, I re­
ceived no preference votes. Option 2 which was 
to continue and convert 54 beds to skilled 
nursing, had eight preference votes. Option 3,

7



which was to close and move to Huntersville, 
had two votes. [Emphasis in opinion).

Despite the task force consensus that Community Hospital 
be kept open, the County Commissioners chose option 3. Thus, 
on May 4, 1981, the Commissioners voted, three to two, to 
discontinue the County's subsidy to Community Hospital. A 
second motion, which requested the Hospital Authority to con­
vert twenty-nine beds at the Huntersville Hospital to skilled 
nursing, then passed on the same day four to one (M .0.6;Ex.4,p .350).

Immediately following the vote of the County Commission, 
the Authority, on May 5, 1981, decided to put the plan to 
close Community Hospital into effect immediately and to provide 
for an orderly transfer of patients to Huntersville or else­
where (Ex. 5b).

The Authority and Huntersville Hospital also continued to 
implement the redistribution and relocation of beds and services 
from Community to Huntersville. Thus, on May 5, 1981, as re­
quested, the Administration of Huntersville received the Medi- 
care/Medicaid application to convert 29 acute care beds at 
Huntersville to skilled nursing beds (Ex. 8P). The budgets for 
Huntersville were based on the assumption that the 29 beds 
would be converted (Ex.8a) and the Board of Directors of Huntersville 
authorized the conversion, subject only to a vote by the County 
Board of Commissioners to underwrite the finances of the project 
(Tr. 79).

Although the Southern Piedmont Health Systems Agency, a 
government agency responsible for local health planning, recom­
mended conversion of the 29 beds at Huntersville to nursing beds

8



beginning in late 1979 (Ex. 8b), since September, 1980 the 
option of converting the 29 beds has been tied to the closing 
of Community Hospital (Ex. 8a; Ex. 8c'Item No. 6; Ex. 5C, minutes 
of 4/27/81 Authority Board Meeting) . The action taken by the 
County Board of Commissioners on May 4, 1981 laid the ground­
work for implementation of the conversion (Ex. 8o; see Ex. 8k 
referring to "consolidation of Community and Huntersville").
The intent of the task force was that the conversion of the 
twenty-nine beds would take the place of the beds for people 
formerly served by Community Hospital (M.O. 7; Tr. 86).
Although the conversion of the beds at Huntersville was to 
"nursing bedd' and Community Hospital had been technically 
labeled as an "acute care hospital," a large percentage of 
patients at Community in fact needed long-term nursing care 
(Ex. C pp 1,4,5; Tr. 86).

Huntersville has also initiated the Certificate of Need 
process to obtain approval of an eight bed detoxification unit 
to replace the one formerly located at Community Hospital 
(Ex. 28). In the words of the Administrator of Huntersville,
"[W]e would like to request a transfer of that service from 
Community Hospital to Huntersville Hospital." (Id).

Based upon this, and other evidence, the district court 
found as fact that

"[T]he decisions (a) to close Community Hospital;
(b) to provide twenty-nine beds at Huntersville as 
replacement for Community Hospital services; (c) 
to establish a detoxification unit at Huntersville; 
and (d) to receive these additional needy patients 
at Huntersville for extended nursing services, were 
all and are still all parts of an overall plan."
(M.O. 7) .

9



The Hospital Authority did not seek or obtain a Certifi­
cate of Need prior to closing Community Hospital. It has not 
sought a Certificate of Need to encompass its overall plan, 
but has begun separate application procedures for the 8 bed 
detoxification unit and the conversion of the 29 beds at 
Huntersville. (Ex.28; Ex. 8P..);. As cal remilteof the dis'tr.fct' court1 s 
order of May 15, 1981 the Authority wrote to the Health Systems
Agency (HSA) to inquire whether a Certificate of Need is 
necessary for the closing of Community, but did not describe its 
overall plan to the HSA (Ex.31). The Authority has received no 
response to that letter (Tr.108-109).

No city buses travel from Charlotte to Huntersville 
(M.O. 7;Ex.23); a one-way taxi trip from midtown Charlotte to 
Huntersville Hospital costs $21.00 (M.O. 7;Ex.22). It will be 
extremely difficult for the poor, black residents of Charlotte 
to reach Huntersville Hospital (Ex.21).

10



ARGUMENT

I. THE DISTRICT COURT CORRECTLY HELD 
THAT A CERTIFICATE OF NEED IS REQUIRED 

BEFORE DEFENDANTS CAN CLOSE COMMUNITY HOSPITAL 
AND TRANSFER ITS SERVICES TO HUNTERSVILLE HOSPITAL

Defendant Hospital Authority has renewed its motion to 
suspend the injunction first issued by the District Court on 
May 15, 1981 and reaffirmed on June 22, 1981. As this Court
stated in Long v. Robinson, 4-32 F. 2d 977, 979 (4-th Cir. 1970):

"... Briefly stated, a party seeking a stay must 
show (1) that he will likely prevail on the merits 
of the appeal, (-2) that he will suffer irreparable 
injury if the stay is denied, (3) that other parties 
will not be substantially harmed by the stay, and 
(4.) that the public interest will be served by 
granting the stay."
The issue on appeal, as indicated by this Court's order of 

remand, is whether the plans and actions of defendant Hospital 
Authority, in closing Community Hospital, and relocating and 
redistributing services and beds to Huntersville Hospital, re­
quire the Authority to obtain a Certificate of Need pursuant to 
federal and state health planning laws. The district court's 
findings of fact and conclusions of law make clear that a 
Certificate of Need is required and that the issuance of an in­
junction requiring the Authority to obtain one is proper and 
should be affirmed.

A. Applicable Federal and State Statutes 
Require Certificate of Need Approval 

for a Plan to Close a Hospital Facility 
and Relocate or Redistribute 
its Beds to Another Facility

The National Health Planning and Resources Development Act 
of 1974, 42 U.S.C. §§ 300k et seq. was promulgated

11



to facilitate the development of recommendations 
for a national health planning policy to augment 
areawide and State planning for health services, 
manpower and facilities, and to authorize financial 
assistance for the development of resources to fur­
ther that policy. 4-2 U.S.C. § 300k(b).
Section 300k-2 of the Act states in pertinent part:
(a) The Congress finds that the following deserve prior­

ity consideration in the formulation of national health planning 
goals and in the development and operation of Federal, State, 
and area health planning and resources development programs:

(1) The provision of primary care services for 
medically underserved populations, especially those 
which are located in rural or economically depressed 
areas.

*****
(5) The development of multi-institutional arrange­

ments for the sharing of support services necessary to 
all health service institutions.

'k'k'kieJc

(7) The development by health service institutions 
of the capacity to provide various levels of care 
(including intensive care, acute general care, and 
extended care) on a geographically integrated basis.

[Emphasis added by District Court. M.O. 2]
Section 300m-2 of the Act provides that each state shall

designate a particular agency to establish and administer a
"certificate of need" program which "shall provide for procedures

o

and penalties to enforce the requirements of the program."
Federal regulations promulgated pursuant to the National 

Health Planning and Resources Development Act set forth the 
health services subject to review under a state certificate of 
need program. See 42 C.F.R. §§ 123.4-01-123.411. Specifically, 
these regulations, issued April 2, 1979, as amended, April 25,
1979, provide:

12



§123.4.04- New institutional health services subject to 
review.
(a) All new institutional health services proposed 

to be offered or developed within the State by any 
person shall be subject to review under this subpart.
For purposes of this subpart, "New institutional health 
services" shall include:

* * * * *

(3) A change in bed capacity of a health care 
facility or HMO which increases the total number of 
beds (or distributes beds among various categories, or 
relocates such beds from one physical facility or site 
to another) by more than 10 beds or more than 10 per­
cent of total bed capacity as defined by the State, 
whichever is less, over a two-year period.

[Emphasis added by District Court. M.O. 2]
Although some other changes in health services are not subject 
to Certificate of Need review unless a minimum capital expendi­
ture is made (compare 42 C.F.R. § 123.404(a)(2) April 25, 1979
version), relocation of more than 10 beds or services is subject 
to review regardless of whether any capital expenditure is in­
volved. See 42 Fed. Reg. 4008 (January 21, 1977)(preamble to 
final implementation of regulations at 42 C.F.R. § 123.404(a)(3)).

Section 123.409 of the regulations reads in part- as follows 
§123.409 Criteria for State agency review.
(a) The State Agency shall adopt, and utilize 

as appropriate, specific criteria for conducting the 
reviews covered by this subpart. The criteria shall 
include at least the following general considerations 
listed below, ...

icic -k ■& ic

(3)(i) The need that the population served or to 
be served has for the services proposed to be offered 
or expanded, and the extent to which low income 
persons, racial and ethnic minorities, women, handi­
capped persons, and other underserved groups are likely 
to have access to those services.

13



(ii) In the case of a reduction or elimination of 
a service, including the relocation of a facility or a 
service, the need that the population presently served 
has for the service, the extent to which that need will 
be met adequately by the proposed relocation or by 
alternative arrangements, and the effect of the reduc­
tion, elimination or relocation of the service on the 
ability of low income persons, racial and ethnic minori­
ties, women, handicapped persons, and other underserved 
groups to obtain needed health care. [Emphasis added by * 2
District Court M.O. 3].
As the district court observed (M.O. 3), in October, 1980, 

a slightly revised edition of the Federal Regulations was adopted, 
4-5 Fed. Reg. 69746-7 et seq. (Oct. 21, 1980), including § 123.404
(a)(2), which reads:

(2) Bed capacity. The obligation of any capital 
expenditure by or on behalf of a health care facility 
which -- (i) increases or decreases the total number 
of beds, (ii) redistributes beds among various cate­
gories, or (iii) relocates beds from one physical 
facility or site to another -- by ten beds or ten 
percent, whichever is less, in any two-year period.
[Emphasis added by District Court (M.O. 3)].

Since these regulations have not yet become effective in North 
Carolina, the district court explicitly stated that it did not 
rely upon them' either in its original decision or in its opinion 
of June 22, 1981 (Id). The regulations are instructive, however, 
as to "the continuing purpose of Congress in respect of a certi­
ficate of need in such cases." (Id. )

To conform with the National Health Planning Act, North 
Carolina in 1977 adopted a Certificate of Need Law. N.C.G.S.
§ 131-175. The statute provides:

That a certificate of need law is required by 
P.L. 93-641 as a condition for receipt of federal 
funds. If these funds were withdrawn the State of 
North Carolina would lose in excess of fifty-five 
million dollars ($55,000,000). § 131-175(5).

14



The state certificate of need statute § 131-176(17) tracks 
the 1979 federal regulation, 42 C.F.R. § 123.4-04 by defining 
"new institutional health services" to include:

a. The construction, development, or other estab­
lishment of a new health care facility;

*****
c. A change in bed capacity of a health care facility 

which increases the total number of beds, or which 
distributes beds among various categories, subject 
to the provisions of paragraph j of this subdivi­
sion, or relocates such beds from one physical 
facility or site to another. Such bed capacity 
change is subject to review regardless of whether 
a capital expenditure is made ... [Emphasis added.]

The statute then specifically provides at § 131-178(a)
that:

(a) No person shall undertake new institutional health 
services or health care facilities without first having 
obtained a certificate of need as provided by this 
Article.

Accord, North Carolina Certificate of Need Program Administra­
tive Regulations, § .0104(26)(c); § .0103(a) & (b); § .0102(a).—

Thus, on the face of both the federal and state statutes 
and regulations cited above, a certificate of need is required 
before the Authority distributes beds among various categories 
or relocates such beds from one physical facility or site to 
another. As set forth below, the evidence established, and the 
district court found that this is precisely what the Authority 
has planned.

8/ The Administrative Regulations, § .0406(a) further provide:
(a) Unless the state agency action is reversed through 
available appeals mechanisms, the effect of not issuing a 
certificate of need to a proponent prohibits that person 
from developing or offering the proposed new institutional 
health service within the state.

15



B The Authority's Plan to Close 
Community Hospital and to Convert 

29 Beds to Nursing Beds and to Create 
an 8 Bed Detoxification Unit 

at Huntersville as Replacements for 
Community's Services Requires 

a Certificate of Need

After considering oral testimony and receiving written 
evidence at two separate hearings, the district court found as 
facts, inter alia:

1. that the decisions (a) to close Community 
Hospital; (b) to provide twenty-nine beds at 
Huntersville as replacements for Community 
Hospital services; (c) to establish a detoxifi­
cation unit at Huntersville; and (d) to receive 
these additional needy patients at Huntersville 
for extended nursing services, were all and are 
still all parts of an overall plan. (M.O. 7).

The court further found as fact:
2. that this plan is both a "reduction or elimination"
of a service, and a plan which "distributes beds among 
various categories, or relocates such beds from one 
physical facility or site to another" within the 
meaning of the federal and state regulations above 
quoted j 4-2 C.F.R. § 123.404(a)(3), § 123.409 ( a ) ( 3 ) ( ii ) ,
N.C.G.S. § 131-176(17) (c) . 3
3. That,for such action a certificate of need is re­
quired by law. (M.O. 8).
The Hospital Authority apparently concedes (Memorandum 9) 

that if it were distributing or proposing to distribute beds at 
Community Hospital among various categories at Huntersville, 
certificate of need approval would be required. Indeed, given 
the explicit wording of the statutes and regulations, defendant 
would be hard put to contend otherwise.

Thus., the sole basis of the appeal is the district court's 
finding of fact that the Authority has planned to relocate and 
redistribute beds and services from Community to Huntersville.

16



The district court's finding cannot be reversed upon
appeal unless "clearly erroneous." Fed. Rules Civ. Pro.
52a. As this Court has stated, it "will not disturb [a 
District Court's] findings merely because [we] doubt their 
correctness." Jersey Insurance Company of New York v. Hefron,
24-2 F . 2d 136, 139 (4th Cir. 1957). A finding of fact will only
be reversed as "clearly erroneous" when the reviewing court is 
left with the definite and firm conviction that a mistake has 
been commited. Nationwide Mutual Insurance Co. v. DeLoach,
262 F .2d 775, 778 (4th Cir. 1959); accord, e.g., United States v . 
Warwick Mobile Home Estates, Inc., 537 F.2d 1148, 1150 (4th Cir.
1976), Jones v. Pitt County Bd. of Education, 528 F.2d 414, 418 
(4th Cir. 1975).

The Authority's assertion (Motion 2) that the district 
court findings are "totally unsupported by the record" is 
patently absurd. Both testimony and written evidence established 
that defendant's plan is to close Community and relocate at 
Huntersville.

Erwin Laxton, Secretary and Treasurer of the Authority as 
well as chairman of the task forces testified at the first 
hearing that the third option presented by the task force "was to 
close [Community] and move to Huntersville." (5/15/81 Tr.22;
M.O. 5). As the district court noted, no one at the first 
hearing divorced the relocation of services at Huntersville from 
the closing down of Community Hospital (M.O. 6). The Board of 
County Commissioners vote to discontinue funding of Community 
was followed on the same day by a vote to request the Authority 
to convert twenty-nine beds at Huntersville to skilled nursing

17



beds. (Ex.4-, p.350). The intention of the task force was to 
set up the twenty-nine beds as replacement for Community's 
long-term care beds (Tr.86).

There is no dispute that the Authority immediately put 
into effect that part of the plan which was to close 
Community and provide a transfer of patients to Huntersville 
or elsewhere (Ex.5b). The written evidence also established 
that defendants began to implement the redistribution and re­
location of beds and services to Huntersville. The Administrator 
of Huntersville received on May 5, 1981 - the same day the 
Authority voted to close Community - an application to convert 
the 29 beds at Huntersville to nursing beds (Ex.8P). The bud­
gets for Huntersville assume the 29 beds will be converted 
(Ex.8a) and Huntersville's Board of Directors has authorized 
the conversion. See also Statement of Facts, infra., pp.8-9.

Huntersville has also initiated a Certificate of Need 
application to transfer the detoxification beds from Community 
to Huntersville (Ex.28).

After-the-fact attempts by the Authority at the second 
hearing to separate the closure of Community from the relocation 
of the detoxification and nursing beds at Huntersville cannot 
and do not detract from the evidence described above. As this 
court has noted in Stiers v. Martin, 264 F .2d 795, 797 (4th Cir. 
1959), "The District Court, sitting without a jury as the trier 
of facts, determines the credibility of all the witnesses and the 
weight to be accorded their testimony." Rule 52a itself re­
quires that "due regard be given to the opportunity of the trial 
court to judge the credibility of witnesses." The district

18



court's finding that the Authority's testimony was a mere sem­
antic effort to divorce an interrelated plan should thus not 
be disturbed.

Plaintiff submits that there were more than reasonable 
grounds to dismiss the Authority's testimony as mere semantics. 
Thus, for example, Erwin Laxton's testimony at the second hear­
ing (Tr.121) directly contradicted his prior testimony that the 
task force's option three was to close Community and move to 
Huntersville (5/15/81 Tr. p.22, quoted in M.O. 5). As this Court 
noted in similar circumstances, "Such a last minute change of 
heart is suspect, to say the least." Cypress v. Newport News 
General £■ Nonsectarian Hosp. Ass 'n. , 375 F. 2d 64-8,658 (en banc)

Q 3. /(4th Cir. 1967).—  Likewise, the testimony of R. S. Dickson, 
Chairman of the Authority, that the task force's recommendation 
to convert beds at Huntersville was unrelated to Community 
"other than the fact that both task forces were looking into 
... both institutions" (Tr.45) flies in the face of the final 
report of the task force which makes clear that the task force 
was asked to look at options for Community, not the entire 
public hospital system, and that the task force studied Hunters­
ville only in conjunction with the closure of Community (Ex. 1). 
Thus the recommendation to convert 29 beds at Huntersville-.could 
only have been and was meant as a relocation of Community Hospi-

8a/ The draft minutes of the Board of Directors of the Authority' 
May 5, 1981 meeting state that the closure of Community Hospital
and the conversion of 29 beds at Huntersville Hospital were dis­
cussed together, as presented by the task force in option 3.
(Ex.5a). After the issuance of the preliminary injunction,
Mr. Laxton on June 6, 1981 wrote a memorandum to the Board which
changed the draft Board minutes to delete the reference to the 
conversion of the 29 beds (Ex.5b).



tal's long-term care services (Tr.86). Finally, even if imple­
mentation of the relocation and redistribution of beds at 
Huntersville has not proceeded since the first hearing in this 
action, the written evidence at both hearings and the testimony 
at the first hearing demonstrated that the plans had been pro­
ceeding up to that point. As was observed in a different con­
text :

What has been adopted can be repealed, and what has 
been repealed can be readopted. We conclude, therefore, 
that the plaintiffs are entitled to have their injunc­
tion ... based on the record at the time the case was 
[brought or] tried. Anderson v. City of Albany, 321 
F.2d 649, 657 (5th Cir. 1963).

In sum, the district court's finding that the Authority 
planned to replace and relocate the beds and services from 
Community Hospital to Huntersville Hospital by reclassifying 
29 nursing beds and establish an 8 bed detoxification unit at 
Huntersville is supported by the vast weight of the evidence 
and is in no way clearly erroneous. It is also clear, as the 
court found, that these plans are still the plans of the 
Authority and were being implemented.

c. The Injunction is Necessary to Comply 
with the Federal and State 

Certificate of Need Requirements
The 1979 federal regulations promulgated under the nation­

al health planning act, which are in effect, require state agen­
cies to give consideration in

the case of a reduction or elimination of a service, 
including the relocation of a facility or a service, 
the need that the population presently served has for 
the service, the extent to which that need will be met 
adequately by the proposed relocation or by alternative 
arrangements, and the effect of the reduction, elimina­
tion or relocation of the service on the ability of low 
income persons, racial and ethnic minorities, women, 
handicapped persons and other underserved groups to ob­
tain needed health care." 42 C.F.R. 123.409(a)(3)(ii).

20



Defendants made absolutely no study or assessment of the harm 
the low-income blacks who depended upon Community Hospital would 
suffer as a result of the hospital's closure and relocation of 
some of its beds and services to Huntersville Hospital. The 
Authority has made or begun to make two separate Certificate of 
Need applications for the transfer of the 8 bed detoxification 
unit to Huntersville and the conversion of the 29 beds at 
Huntersville to nursing home beds, but had adamantly opposed 
combining scrutiny of these proposals with the closing of 
Community Hospital. Yet the clear wording and intent of the 
federal and state statutes and regulations require just that.
The regulations and statutes speak in terms of "redistribution" 
and "relocation." It is impossible to study, as the regulations 
require, the impact of such redistributions and relocations with­
out looking at the entire plan, that is, the initial location 
of services [Community] and the proposed new location [Hunters­
ville]. Indeed, as the district court held, "the most damaging 
feature of the whole arrangement [is] the closing down of 
Community Hospital." (M.O. 9). The laws do not allow defendants 
to isolate this aspect of their plan and avoid analysis of it by 
health planning agencies.

The district courts findings of fact and conclusion of law 
are eminently correct and should be affirmed.

21



II. The Hospital Authority Will Suffer No Harm 
From Compliance with the Injunction;

In Contrast, the Poor and Black Patients 
Who Depended Upon Community Will Be 

_____Substantially Harmed by a Stay________

As set forth in Point I, supra, a party seeking a stay of
an injunction must stow, in addition to establishing that'it is
likely to prevail on the merits:

"...(2) that he will suffer irreparable injury 
if the stay is denied, (3) that other parties 
will not be substantially harmed by the stay, 
and (4) that the public interest will be served 
by granting the stay." Long v. Robinson, 432 
F.2d 977, 979 (4th Cir. 1970).

The Hospital Authority has made no such showing. Indeed, the 
evidence and findings of the district court all support the 
issuance and continuance of the injunction.

A. The Hospital Authority Will Suffer No Harm 
Either from Proceedings With the Certificate of Need

Application or from Maintaining Community Hospital 
in a Manner Which Will Allow Resumption of. Service

The original injunction entered by the district court 
ordered:

"2. That until the court has determined that 
defendants have complied with the statutes and 
regulations above described, by following the 
procedures established for the seeking and 
issuance of a certificate of need appropriate 
to this situation, they are enjoined and restrained 
to maintain in good order and repair the physical 
plant and equipment of the existing Community 
Hospital, and not to take any action which would or 
might materially interfere with possible rapid and 
orderly resumption of the services which they were 
providing before the decision to close the hospital 
was reached." (P.1.0. 4).
The Hospital Authority's initial motion for suspension and 

expedited appeal included as Attachment 10 an affidavit by

22



H. C. Green, Executive Director of the Hospital Authority, 
which stated that it would cost the Authority over $100,000 
to maintain Community Hospital for six months. Although the 
Authority in its memorandum (p.ll) "asserts that costs could 
be minimized if the injunction shall be [sic] suspended," 
it offers no evidence to support that assertion. The' sworn 
testimony of H. C. Green on June 15, 1981 unequivocally was 
that the costs listed in the affidavit in Attachment 10 would 
occur regardless of whether the injunction were in effect or 
not (Tr. 100). H. C. Green reaffirmed that the costs of 
maintaining the building would be no greater as a result of 
the injunction (Tr. 96-99, ex 36(a)). Thus, the district court 
was clearly correct in holding, "that the 'costs' now allegedly 
being incurred are not caused, by this litigation, nor the order 
of this court." (M.0. 8).

Nor is the Authority precluded by having to maintain the 
hospital from implementing other plans for the building. First 
of all, the undisputed evidence established (Tr. 28-29, 34-,
39, 93) and the district court found (M.0. 8) that at the time 
the Authority decided to close Community, they had no concrete 
plans to use the hospital for any other function and, as of 
this date, still do not. Moreover, as the court found (M.0.8), 
the only possible use of Community which the Authority has in 
mind, an outpatient clinic, can be operated while still allow­
ing for prompt re-establishment of the services which until 
recently have been provided there (Tr. 106). In sum, the 
Authority has not done anything at Community Hospital that they 
would not have done if the injunction had not been

23



issued (Tr. 120, M.0.8, TT5-8) . And as an additional precaution, 
the court stated that "if there is any question whether any 
particular use violates the order, this court will immediately 
act to resolve such question." (M.O. 9, 1T10).

Finally, the district court found, and the evidence estab­
lished, that the Certificate of Need procedures could be com­
pleted in approximately 90 days (M.O. 9, Ull, Tr. 15-16).
Although the Authority argues that the process might require 
additional months, there is no evidence that such added time 
will be necessary in this case. In any event, the injunction 
is effective "during the period reasonably required to process 
a certificate of need" (M.O. 9). If the process takes much 
longer than 90 days, defendants are free to apply to the 
district court for dissolution of the order. The Authority's 
argument that the process is costly is without any support in 
the testimony or exhibits. Indeed, the Executive Director of 
the Authority testified it takes ten days or less to complete 
a Certificate of Need application (Tr. 109). In sum, no harm 
or even likelihood of harm has been demonstrated.

This Court in Long v. Robinson held, "Mere injuries, however 
substantial, in terms of money, time and energy expended in the 
absence of a stay, are not enough," 4-32 F . 2d at 980, quoting, 
Virginia Petroleum Jobbers Assoc, v. Federal Power Comm'n, 259 
F.2d 921, 925 (D.C. Cir. 1958). In this case, defendant has not 
even established that it will suffer monetary, let alone other, 
injury as a result of the injunction. Accordingly, the Authority's 
motion should be denied.

24



B. The Poor Black Residents of Mecklenburg County- 
Will Be Irreparably Harmed by the Issuance 
of the Stay or Dissolution of the Injunction 
and the Public Interest Will Be Served by 

___________ Continuance of the Injunction___________

If the injunction is not continued, the Authority is free 
to sell the equipment at Community Hospital and to take any 
other action, $uch as selling the building, which would effec­
tively preclude plaintiff and the class she seeks to represent 
from obtaining the ultimate relief sought in the complaint.
Such injury is by definition irreparable.

Moreover, as set forth more fully in Point IV, infra., the 
district court found,(a finding defendants do not challenge as 
erroneous), that the closing of Community and the relocation 
of some of its services to Huntersville will have a substantial 
adverse impact on poor and black patients and would-be patients 
of Community (P.I.0.2) and that defendant's action will cause 
them irreparable harm (M.O. 8; P.1.0. 3).

The Authority's statement that indigent patients cannot be 
penalized, since they will receive health care at other facili­
ties (Memorandum 12) ignores the evidence and the court's find­
ings that Memorial Hospital, as well as Huntersville, may not 
admit patients (who were formerly admitted to Community) when 
their condition is chronic and they soon would require nursing 
care (Tr. 69-72); and that Huntersville, although the only 
public hospital where persons formerly served by Community 
might go, is geographically inaccessible to the poor, black 
residents of Charlotte (M.O. 7). Indeed, Huntersville's 
Certificate of Need application for an 8 bed detoxification unit 
to replace that formerly in place at Community admits that detoxi-

25



fication patients now cannot obtain admission at any other 
facility (Ex. 28).

The fact that all former patients at Community Hospital 
have been relocated and that there are presently no patients 
there does not detract from the harm which persons will suffer 
if the injunction is suspended or dissolved. The part of the 
injunction of which the Authority complains is the preservation 
of Community until the Certificate of Need application is pro­
cessed .

Finally, the public interest can only be served by pre­
serving the possibility of reopening Community Hospital until 
responsible health planning agencies have had an opportunity 
to rule on the Authority's action, as required by federal and 
state law.

26



III. The District Court Has Jurisdiction 
Over the Subject Matter of This Action.

The Causes of Action Predicated on Title VI,
42 U.S.C. §§ 1981 and 1983 

and the Constitution Are Not the 
___________ Subject of This Appeal__________

On pages 13-14- of its memorandum, the Hospital Authority- 
makes a cryptic argument that the district court lacks subject 
matter jurisdiction over this action. That argument appears to 
be based on two points, both of which are erroneous.

First of all, the Hospital Authority argues that the Court 
predicated the issuance of the injunction "entirely upon alleged 
requirements of North Carolina law" (Memorandum 14). Even cur­
sory review of the district court's two opinions conclusively 
establishes otherwise. See P.1.0. 4 ("it is the opinion of the 
court that a certificate of need was required by federal and state 
statutes and regulations ...)(emphasis added). The district 
court's opinion of June 22, 1981 went into great detail about the 
requirements of the National Health Planning and Resources 
Development Act of 1974, 42 U.S.C. §§ 300k et seq. and their 
applicability to the present action (M.O. 1,2,3,8,9). If the
Hospital Authority is implicitly suggesting that there is no 
private cause of action under the national health planning law,
it is mistaken. See, e.g., Park East Corp. v. Califano, 435

4 /F.Supp. 46,50 (S.D.N.Y. 1977).-

4/ Plaintiffs' counsel has researched the issue and found no 
case which even suggests otherwise.

27



Secondly, although throughout the remainder of its motion 
and memorandum the Hospital Authority continually emphasizes 
that the only issue before this Court is whether a Certificate 
of Need is required, it argues that there is no jurisdiction 
under Title VI, 42 U.S.C. §§ 1981 or 1983 or the Constitution 
because claims under the Fourteenth Amendment and the statutes 
require proof of intentional discrimination (Memorandum 14).

The Hospital Authority's argument is without foundation 
in logic or law. To begin with, as previously stated, the 
district court did not predicate the issuance of the injunction 
on either the Fourteenth Amendment, 42 U.S.C. § 1981 or 1983, or 
Title VI. Secondly, although it is true that the Constitution 
does require proof of intentional discrimination (Washington v . 
Davis, 426 U.S. 229 (1976)), plaintiff's complaint explicitly 
alleges such intentional discrimination. Complaint, § I Prelim­
inary Statement; 1T7; §V. This case is before the Court as a 
result of a motion for preliminary relief heard within a week of 
the filing of the complaint. Plaintiff has had no opportunity 
to conduct discovery and to present all her evidence which, she 
submits, will ultimately establish intentional discrimination. 
Under these circumstances, and in the absence of a motion to dis­
miss, plaintiff clearly has set forth sufficient allegations to 
establish subject matter jurisdiction under the Fourteenth Amend­
ment. E.g ., Conley v. Gibson, 355 U.S. 41, 45-46 (1957). The 
only appropriate treatment of this claim is to remand the case 
to the district court for further proceedings.

23



Thirdly, the Hospital Authority is mistaken as to the force
and application of Title VI. Contrary to the Hospital Authority's 
statement (Memorandum 14), plaintiff has never argued that 
Title VI extends the coverage of the health planning laws to 
actions which those laws do not, at this time, encompass - solely 
termination of services. Rather, Title VI creates an independent 
obligation on the part of the Authority, as a recipient of federal 
financial assistance, to take no.actions which have the effect 
of discriminating against minority beneficiaries of the Hospital 
Authority's services. E. g. , Lau v. Nichols, 414- U.S. 563 (1974); 
Guadalupe Organization, Inc, v. Tempe Elementary School District 
No. 3, 587 F .2d 1022, 1029 n.6 (9th Cir. 1978); Serna v. Pprtales
Municipal Schools, 499 F .2d 1147, 1154 (lOth Cir. 1974).

Because the injunction at issue was not predicated on Title 
VI, this Court need not and, plaintiff suggests, should not on 
this appeal reach the issue of the proper standard for proving a 
claim under Title VI. Rather, as with the constitutional claim 
and statutory claim under 42 U.S.C. § 1981, this case should be 
remanded for discovery and the receipt of further evidence.

In any event, the vast weight of authority holds that proof 
of intentional discrimination is not required under Title VI.
In Lau v. Nichols, supra, the Supreme Court was faced with a 
claim of racial discrimination based upon a school system's 
decision not to provide remedial English courses to students of 
Chinese descent. The Court declined to reach the constitutional 
issue and instead based its decision on Title VI, interpreting 
the statute to mean:

"Discrimination is barred which has that effect even
though no purposeful design is present ..."

Id. 414 U.S. at 568 (Emphasis in original). The Court in Lau
29



made clear that the statute and the regulations promulgated 
pursuant to the statute (4-5 C.F.R. Part 80) establish that dis­
criminating impact alone is enough to constitute a violation of 
Title VI. Even after the Supreme Court's decision in Washington v . 
Davis, supra, courts censtrned Title VI to
require only proof of discriminatory impact, even without proof 
of invidious purpose. E.g., Guadalupe Organization, Inc, v.
Tempe Elementary School District No. 3, supra, De La Cruz v .
Tormey, 582 F.2d 45, 61 & n.16 (9th Cir. 1978).

Nor do the opinions of the Supreme Court in Regents of the 
University of California v. Bakke, 438 U.S. 265 (1978) overrule 
the holding of Lau. In Bakke, the issue was whether a state 
school could properly adapt an admissions policy which explicitly 
set a quota for minorities. The question of whether or not 
Title VI covered practices with a discriminatory impact, rather 
than only those with discriminatory intent, was never before the 
Court. Moreover, in a later case, Fullilove v. Klutznick, 448 
U.S. 448 (1980) which considered the constitutionality of a sta­
tutory preferential program, a plurality of the Court cited with 
approval Lau's validation of the Title VI regulation proscribing 
actions "which have the effect' of discriminating. 448 U.S. at 
479 (Emphases in original).

In the most recent decision on the issue, the Court of Appeals 
for the Third Circuit, sitting en banc, explicitly held that Lau 
is still controlling and that Title VI requires only proof of 
discriminatory impact. NAACP v. Wilmington Medical Center,
________F.2d__________ No. 80-1893 (June 29, 1981) Slip.op. at 12-
19. (a copy of the opinion is attached at the end of this brief).

30



The Third Circuit not only held Lau to be good law, but also
found an effects test consistent with the congressional purpose 
behind Title VI of discouraging all forms of discrimination in 
federally-funded programs. Slip. op. at 17-18.—

The Hospital Authority's reliance on Bryan v. Koch, 627 F .2d 
612 (2d Cir. 1980) is misplaced. First of all, as just noted, 
the majority opinion in Bryan argued in dicta that Title VI em­
bodies an effects, not an intent, standard. Secondly, in dis­
cussing whether, upon establishment of a prima facie case,
Title VI requires a federal fund recipient to consider alterna­
tives to a closing of a public facility, the court stated that, 
"we do not foreclose the possibility of a situation where some 
arrangement, other than the closing of another facility, has 
such obvious advantages that it must be considered as an alter­
native to a closing with a significant disproportionate racial 
impact." 627 F.2d at 619. In Bryan v. Koch, unlike this case, 
the municipal hospital system included 17 acute care facilities, 
all of which were assessed by numerous criteria. Contrary to 
the Hospital Authority's statement (Memorandum 17-18), the evi­
dence in this case does not demonstrate that the decision to 
close Community Hospital was made after considering of facts 
like that done in Bryan v. Koch. For example, it is undisputed 
that the Authority made absolutely no study or plans as to how 
patients who used Community would get to Huntersville (Tr.38).

5/ But see- Guardian' s Ass'n._of NYC, Police Dept, .Inc.— vl._Ci-vilService Commission, 633 F.2d 232, 254- (2d Cir. 1980), However,- 
art earlier -panbl of the Second Circuit held the effects test to 
be the standard,, relying on tau. Board of Education v.. Califano, 
584 F.2d 576, 589 (2d Cir. 1978), aff'd on other grounds, Board 
of Education v. Harris, 444 U.S. 130. (1979)'. . (Contd) .

31



Although the injunction in this case is not based upon a 
finding that Title VI has been violated and although plaintiff 
did not have the opportunity to present all evidence as to the 
claim, the district court did receive evidence and made findings 
which establish a prima facie violation of Title VI. Speci­
fically, the district court found that the "action [of closing 
Community and relocating service at Huntersville] has a damaging 
impact among the people, almost all poor or black or both, 
formerly served by Charlotte Community Hospital, and will cause 
them irreparable damage." (M.O. 8); see also P.I.0.2. The court 
also found that although Huntersville is the only location in 
the local public hospital system where indigent patients can 
hope to go and be able to afford the care that they need, it is 
located fourteen miles north of Charlotte and no regular bus 
service goes to Huntersville Hospital from Charlotte. Nor is 
taxi service a feasible means of transportation because a one­
way trip from midtown Charlotte to Huntersville Hospital costs 
$21.00 (M.O. 7). These findings are not contested by the 
Hospital Authority.

5/ - contd. Moreover, the panel in Bryan v. Koch,
627 F .2d 612 (2d Cir. 1980), cited by defendant, stated in dicta 
that the effects test is probably still valid and limited the 
holding in Lora v. Board of Education, 623 F.2d 248 (2d Cir. 1980) 
to cases, unlike the present one, which involve a court-ordered 
school desegregation remedy. 627 F .2d at 616. In sum, the 
holdings of the Second Circuit disagree as to the proper standard under Title VI.

32



Accordingly, a remand is necessary to allow discovery and 
the presentation of proof as to the Authority's justification 
for its actions and the availability of alternatives which 
might have a lesser adverse impact on blacks while substan- 
ially accomplishing the Authority's purpose. See NAACP v . 
Wilmington Medical Center, Slip. op. at 21-25.

CONCLUSION

For the reasons set forth above, defendant's motion for a 
stay should be denied, the district court's injunction should 
he affirmed, and the case remanded for further proceedings under 
Title VI of the Civil Rights Act of 1964.; 42 U.S.C. §§ 1981 and 
1983; and the Fourteenth Amendment.

Respectfully submitted,

/hf-kk 4- _________JULIUS CHAMBERS “
Chambers, Ferguson, Watt,

Wallas, Adkins 8 Fuller, P.A. 
951 South Independence Boulevard 
Charlotte, North Carolina 28202 (704) 375-8471
JACK GREENBERG
BETH J . LIEF
Suite 2030
10 Columbus Circle
New York, New York 10019
(212) 586-8397
Attorneys for Plaintiff-Appellee

33



Certificate of Service

I hereby certify that copies of the foregoing Brief 
for Plaintiff-Appellee was served on counsel for the parties 
by Federal Express mail, postage prepaid, on Monday, July 20, 
1981.

Beth J. Lief



;

i

11
j

UNITED STATES COURT OF APPEALS 
Fok tiii: TIIHU3 Cikcuit

No. 80-1893

NATIONAL ASSOCIATION FOR THE ADVANCE­
MENT OF COLORED PEOPLE. 107 East Ninth 
Street. Wilmington. Delaware. PUERTO RICAN 
CIVIL RIGHTS LEAGUE. INC.. 1030 West Third 
Street. Wilmington. Delaware. OLDER AMERI­
CANS COALITION. 1300 North Broom Street. Wil­
mington. Delaware. BRANDYWINE TRINIY 
UNITED METHODIST CHURCH. Twenty-Second 
and Market Streets. Wilmington. Delaware, on behalf 
of their members and others similarly situated.

Appellants

THE MEDICAL CENTER. INC.: DAVID MAT­
THEWS. U S. Secretary of Health. Education, and 
Welfare: AMOS BURKE. Director of the Bureau of 
Comprehensive Health Planning: WILLIAM L. 
GORDON. Director of the Health Planning Coun­
cil. Inc.: THE W ILMINGTON MEDICAL CEN­
TER. INC. and CRAWFORD II GIVEN WALL as 
Chairman of the Board ol l rustees. stud JOSEPII A. 
DALLAS, as Chairman of the Board of Directors

(DC. Civil No. 78-02981

( ) \  AIM'! At. EllOM till L'MII l>Sl All S DlS I Itll I COL It I 
poit m i  Di s i i t i cr  o r  Di i.aw \itr.



Argued November 3. 1980
Before: GlUliONS and WEIS. Circuit Judges and 

BECHTLE. District Judge*
Reargued In Banc May 11. 1981 

Before: ALDISEKT. ADAMS. GIBBONS, HUNTEIt, WEIS. 
Gahtil H igginbotham and S loviteb. Circuit Judges

Opinion filed June 29, 1981

2

Marilyn G. Rose. Esq. (argued)
Sanford Neuman, Esq.
Center for Law and Social Policv 
1751 N. Street. N.W.
Washington, D.C. 20036
Douglas Shacluman. Esq.
1823 Lancaster Avenue 
Wilmington.. Delaware 19805
Jeffrey S. Goddess. City Solicitor 
City of Wilmington 
City/Countv Building 
800 French Street 
Wilmington. Delaware 19801

Of Counsel: hvi
Thomas I. Adkins. General Counsel 
James I. Meyerson. Esq.
National Association for the 

Adv ancement of Colored People 
1790 Broadway New York. New York 10019

Attorneys for Appellants * l

I liiiim.ililc l.miis (' llt'i liilc I'nilrd Stales Disiiii l liuliu- lor diel .islem Disiiii l ollVmisvIv.inj.i, sillillii I*\ (li-simi.ilioii.

}

3
William J. Wade. Esq. (argued) 
Rodney M. Layton, Esq. 
Richards. Layton & Finger 
One Rodney Square 
P.O. Box 551
Wilmington, Delaware 19899

Attorneys for Wilmington Medical Center, Inc.
Drew S. Days, 111 
Assistant Attorney General
Jessica Dunsay Silver 
Irving Gornstein 

Attorneys
Department of Justice 
Washington, D C. 20530

Attorneys for United States as Amicus Curiae

OPINION OF THE COURT

WEIS, Circuit Judge.
The Wilmington Medical Center has been em­

broiled in litigation for the past five years because of its 
proposal to construct a new building in the suburbs and 
renovate one of its buildings in downtown Wilmington, 
Delaware. In this latest appeal, we hold that disparate 
impacts of a neutral policy may be adequate to establish 
discrimination under Title VI of the Civil Rights Act of 
1961. Assuming, without deciding, that the plaintiffs 
presented a prima facie case, we conclude that the Medi­
cal Center produced adequate evidence to justify its 
relocation and reorganization plan. Accordingly, we will 
affirm the action of the district court in refusing to en­
join implementation of the proposal.



4
Alleging unlawful discrimination, the plaintiff or­

ganizations, representing minority, handicapped, and 
elderly persons, sought an injunction against the 
relocation and reorganization of the Medical Center. 
After we held that the plaintiffs had private rights of ac­
tion under Title VI of the Civil Rights Act of 1964, 42 
U.S.C. §2000d (1976), and §504 of the Rehabilitation 
Act of 1975, 29 U.S.C. §794 (Supp. II 1978). see NAACP 
v. The Medical Center, Inc., 599 F.2d 1247 (3d Cir. 
1979), the district court brought the matter to trial. The 
City of Wilmington was added as a party plaintill. and 
the complaint was amended to include allegations thajt 
the Age Discrimination Act, 42 U.S.C. §§6101-6107 
(1976 & Supp. (I 1978) had been violated. In addition, 
plaintiffs charged the defendant with intentional dis­
crimination as well as conduct that had a disparate im­
pact on the classes represented by the plaintills.

Following a bench trial lasting more than a month, 
the district court filed a comprehensive and detailed 
opinion, concluding that the plaintiffs had failed to prove 
discrimination under any of the three statutes. Judg­
ment was accordingly entered for the defendant. NAACP 
v. Wilmington Medical Center. Inc.. 491 F.Supp. 290 (D. 
Del. 1980).' The plaintiffs' appeal was heard initially by 
a panel and then, because of the nature of the issues, 
was reheard by the court in banc.

The Wilmington Medical Center (WMC) was or­
ganized in 1965 by the merger of three non-profit hospi­
tals. General, Memorial, and Delaware, in different areas 
of Wilmington. WMC furnishes general medical and 
surgical services, as well as secondary and tertiary hospi­
tal care. It provides 1.104 of the 1.471 non-profit, acute 
general hospital beds in New Castle County. Other insti-

I. Tlu* |)f|).iiinu'ii( ill IUmIiIi. I.diu aiii>ii ami Wcll.uv. tin* Itu- 
te.ui of Comprehensive Health I'laiiiiinic the Health IM.nmiim 
Connell, and the directors of the latter tiro oiuani/atinns were dis­
missed before trial.

5
tutions in the county include St. Francis Hospital, which 
has approximately 290 beds, and Riverside Osteopathic 
Hospital, with a capacity of 100. Th6 concentration of 
hospital beds in Wilmington proper is higher than is de­
sirable under national standards, while at the same time 
the southwestern part of the county surrounding New­
ark, Delaware, is quite underserved.

WMC is the only hospital in the county with a 
teaching program approved by the American Medical 
Association. Medical students and residents are impor­
tant to VVMC’s delivery of health care to the community. 
Without their assistance, current levels of care could not 
be maintained.

Because its physical structures are aging and are 
not in compliance with Delaware’s licensing law. WMC 
has encountered serious problems. Recruitment for its 
residency program has been hindered by the fragment­
ing of its plants, as well as by a lack of conference space 
and adequate research facilities. The surgical residency 
program has been placed on probation by its accrediting 
body and WMC itself is also in danger of losing its certifi­
cation by the Joint Commission on Accreditation of Hos­
pitals. On two recent occasions, only “probational" ac­
creditation was granted. Loss of accreditation could 
result in denial of Medicare and Medicaid reimburse­
ments. a situation which would be disastrous to WMC 
financially, since it relies on these funds for more than 
one third of its total budget.

WMC has other monetary problems. It provides the 
largest amount of free care in the county — approxi­
mately $8,000,000 annually. Because Medicare and 
Medicaid do not reimburse it for any portion of fees at­
tributable to subsidization of free care, WMC must de­
pend upon its endowment and the Ices assessed upon 
paying patients and private insurers.

The population shift to the southwestern suburbs 
and the possibility that another health care institution 
might be established in that area present another threat



6
to WMC. If it should lose the patronage of people there, 
most of whom pay for services or are privately insured, 
the subsidization of a higher percentage of unreim­
bursed care would become an even more serious drain 
on its financial resources.

Recognizing the need for remedial action, the WMC 
Board canvassed the options open to it. After studying 
about 50 plans for relocation and consolidation, it decid­
ed upon Plan Omega. Essentially, this proposal would 
close the General and Memorial facilities, renovate the 
Delaware one. and reduce the number of downtown 
beds to 250. In addition, a new facility of 780 beds would 
be built in the suburban area 9.35 miles southwest of the 
Delaware plant. A division of services between the two 
locations was part of the arrangement."

After the district court ordered a departmental re­
view, HEW found discriminatory effects in the plan. To 
ensure that Omega would comply with Title VI and the 
Rehabilitation Act. WMC contracted to make a number 
of modifications. Because no public transportation to the 2

2. Doth locations w ould provide the follow ini' services: allergy, 
cardiology, dermatology, endocrinology, internal medicine, rheuma­
tology. physical medicine, chest diseases, infectious disease, gener­
al surgerv. proctology, otology, and vascular. At the Southwest divi­
sion. the following services would he provided: gastroenterology, 
nephrologv. neurology, oncology, radiation therapy, neurosurgery, 
orihopcdk surgery, plastic surgery, thoracic surgerv. urology, 
obstetrics, gynecology, pediatrics, newborn, and premature. At 
Delaware, the following additional services would he provided: 
psvehiatry. family practice, rhinolaryngologv. dentistry, and 
ophthalmology.

In addition, some clinic, outpatient, and support services will 
also he located exclusively at the Southwest division, including the 
high-risk prenatal and specialty pediatric and gynecological clinics, 
and the specially cardiac, radiation therapy and hemodialysis sup­
port services. The Delaware division will exclusiv ely house the psy­
chiatry. car. eye. and nose, and dentistry specialties. I he primarv 
care ciinics will he consolidated and located exclusively at the Dela­
ware division.

7
southwest site is available, WMC agreed to provide shut­
tle bus service between the Delaware and Southwest di­
visions for the convenience of patients, visitors, and em­
ployees. In addition. WMC committed itself to renovate 
the Delaware plant, devise inpatient service plans lor the 
two branches to prevent racial identiliability at either lo­
cation, and operate the two facilities on a unitary basis.

Upon acceptance of these conditions. HEW with­
drew its objections to Omega. * Plaintiffs, however, con­
tinued their opposition, contending in the district court 
that the relocation would subject members ol the class 
to inferior health care and disproportionate travel bur­
dens. Moreover, it was alleged that there has been a 
misallocation of services between the two divisions.

The district court analyzed the case under alternate 
theories of intentional discrimination and unintended 
discriminatory effects. The court first determined that 
there was no evidence of discriminatory purpose. It then 
applied a disparate effect standard, but concluded alter a 
lengthy review of the evidence that plaintiffs had failed 
to present a prima facie case.

Rather than ending the inquiry at that point, the 
court assumed arguendo that a showing ol disparate im­
pact had been made. The record was then scrutinized to 
determine if the defendant had successfully rebutted the 
plaintiffs' contentions. The court concluded that even il 
disparate impact had been shown. WMC had demon 
strated it had bona fide needs that could not be satisfied 
by any less discriminatory plan. Finally, the court deter 
mined that plaintiffs did not prove that a feasible alterna­
tive to Omega was available.

—-----------  " f
a T in- district court held that W A V 's  decision was not arbi 

liarv  or capricious. NAA CI* v. I lie Medical (.cuter. Inc.. -!•>• 
I Supp 2H0 ( I ) .  Del. IM7H). and that the p la itilills  had no privai. 
cause ol action under T itle  V I or the llchahilitaliuu Act. Wo reveisey 
tin* latter action. 5f)t) I . 2d 12-11 Did C 'if. I (M U .



8
Consideration of the alleged disparate impact was 

divided into several general categories — access, quality 
of care, linguistic discrimination, and racial identifi- 
ability. Initially, the court found that Plan Omega would 
bring about vast improvements in the quality of care for 
all patients, including the classes represented by the 
plaintiffs. The detrimental effects to minorities and the 
elderly were determined to be minor and insignificant.
With respect to the handicapped, plaintiffs failed to 
show any adverse impact.

The first issue considered was the plaintiffs' conten­
tion that they will lack access to the Southwest facility 
and, consequently, will suffer a diminution in health 
care. The court found that WMC would meet its obliga­
tion under the HEW agreement to provide adequate 
shuttle bus and ambulance service. Furthermore, the 
court concluded that the increased travel time would 
generally not deter patients from seeking treatment for 
serious illness at the Southwest division.

A possible exception was a group of women in need 
of services at the high risk obstetrical clinics at the 
Southwest division. It was acknowledged that minority 
women have a greater incidence of high risk pregnan­
cies and that patients seeking prenatal care are more 
likely to be deterred from seeking medical attention than 
others. However, the court found that the plaintiffs had 
overestimated minority usage of the high risk clinics in "’■ijfc.ty 
the Southwest facility and that utilization by whites . ! 
would be slightly less proportionately.

The plaintiffs' expert erroneously included in her 
high risk category minority teenagers who are poor users 
of health care and statistically more likely to have preg­
nancies with complications. Omega, however, included 
special clinics at the Delaware division for teenagers and 
Hispanics. Thus, the group affected by the location of 
high risk clinics at Southwest division would be much 
smaller than plaintiffs projected. In addition, the WMC 
director of obstetrics testified that if a large number of

t

j
high risk patients appeared at the Delaware division, a 
clinic would be created at that location, aithpugh some 
patient's might have to be referred to Southwest where 
the most sophisticated equipment would be placed.

Plaintiffs also were concerned with the fact that be­
cause obstetrical services would be offered at the South­
west division, emergency room treatment of those cases 
at Delaware would be inferior. The court, however 
found that the vast majority of women about to delivei 
and those with obstetrical problems would go directly tc 
Southwest. In only exceptional instances would the ab­
sence of inhouse obstetricians affect emergency room 
treatment, because an obstetrical resident would be as 
signed to the clinics and obstetricians would be on call 
The court opined that the cases where treatment woulc 
be impaired would be extremely rare, assuming that an) 
at all woidd occur. In this context, therefore, the possi 
bility of detrimental effects was insignificant, particular 
ly when contrasted with the improvement in quality 01 
care Omega would provide.

The other adverse impact that plaintiffs attributec 
to travel difficulties is a possible decrease in the numbei 
of minority and elderly visitors to inpatients at the South 
west facility. Plaintiffs suggested that visitors would hi 
discouraged by the longer ride to unfamiliar surround 
ings. Evening visits would be further hindered becausi 
the proposed shuttle bus serv ice would stop at 7:00 p in 

The district judge found that elderly inpatient: 
might have fewer visitors at the Southwest division 
While this might result in some detriment to the healtl 
of elderly patients, the district court characterized tin 
level of harm as “very minor." ‘191 F.Supp. at 332. Tin 
court similarly concluded that the negative impact oi 
obstetrical patients would be “insubstantial." Id.

Plaintiffs also argued that another group, minorit; 
pediatric inpatients, would be adversely affected by a de 
crease in the number of visitors caused by the location o 
services at Southwest. Hecogni/ing the importance q

9



10
family visits to the health of a child, the court deter­
mined that steps would be taken under Omega to pro­
vide those visits. Parents would be encouraged, and in 
some cases required, to spend the night with their chil­
dren. When parents of infants could not stay, the hospi­
tal would assign staff members to give special attention 
to those children."1

With respect to plaintiffs' second major contention 
— that treatment at the Delaware division would be infe­
rior— the court stated. "|T)he general medical and sur­
gical care that will be rendered at the Delaware Division 
under Omega will be entirely equal to that rendered at 
the Soutlnvest Division and superior to that which is 
now rendered by WMC." 491 F.Supp. at 325.

Plaintiffs asserted that the Delaware division would 
be housed in an inferior building and even after the pro­
posed renovations, the two facilities would not be com­
parable. Moreover, it was questioned whether WMC 
would be financially able to meet its commitment to re­
habilitate the Delaware plant. The court described these 
contentions as “purely speculative and wholly unsup­
ported on the record." 491 F.Supp. at 325. In addition to 
assuming an obligation under the HEW agreement to 
refurbish. WMC had allocated more than SI2.000,000 
for that purpose up to the time of trial. This amount, cou­
pled with projected commitments and funds to be set 
aside under the agreement, produced a total of 
$18,000,000 committed to renovation. The judge con­
cluded that the additional S4.000.000 needed to com­
plete the work could be raised from either the operating 
budget or unrestricted funds.

Furthermore, the court was convinced that shuttle 
bus service would, in fact, be prov ided. The cost would 
be minimal in comparison with WMC’s annual budget 
and could be absorbed with no strain on the institution's 
financial resources. *

-I. In addition, pediatric inpatient serv ices are ottered at the St. 
Francis and Itiversidc hospitals in Wilmington proper.

After their expert suggested that operating deficits 
might occur in the years following completion of con­
struction, plaintiffs questioned whether lire high cost of 
Omega would cause WMC to discontinue the remodel­
ing and free care. The court found such evidence irrele­
vant and believed that financial feasibility of Plan Ome­
ga would be determined by bond market forces: “ |T|I le 
Court refuse|d| to construe the civil rights statutes as a 
license . . .  to act as a financial overseer to those who 
provide services to minorities." 491 F.Supp. at 328.

Finally, the district court rejected the claims that 
Omega would create linguistic discrimination or racial 
identifiability. Plaintiffs’ fear of a shortage of interpreters ; 
for Hispanics at the Southwest division was rejected. 
The trial judge found no present shortage of WMC per­
sonnel capable of acting as interpreters for Hispanics 
and expected that none would arise under Plan Omega. 
Additionally, the court held that Plan Omega as drafted 
would not create two racially identifiable facilities but if. i 
in practice, problems arose, remedial measures would be 
taken. All other arguments raised by the plaintiffs were 
found to be frivolous, and the court concluded that they 
had failed to present a prima facie case of disproportion­
ate impact.

Recognizing that review in this lengthy and | 
hard-fought litigation was inevitable, however, the trial 
judge assumed arguendo that a prima facie case had 
been established and discussed the defendant's burden. 
Concluding that the defendant was required to go for­
ward with rebuttal evidence, the court found that WMC 
had met its burden of showing that it had bona fide 
needs, that Omega would satisfy them, and that other. ! 
less discriminatory plans would not.

The court recognized that WMC’s immediate need 
to preserve its educational program and accreditation, as 
well as improve its quality of care, made it obvious that 
something had to be done. WMC was aware that to in­
sure its financial stability, and at (he same time care for

II



those dependent on its services, it had to provide facili­
ties both in the city and on the outskirts. Omega met 
these requirements, and the court found “Omega can be 
completed within YVMC's means and will allow VVMC to 
hold its costs down." 491 F.Supp. at 340.

Although the VVMC Board had investigated many 
different plans, six alternatives were discussed. Assum­
ing that any plan which had all or substantially more 
beds in Wilmington would be less discriminatory, the 
court found that these plans would not meet WMC's 
needs. Some were financially infeasible, as in the exam­
ple of a single large hospital in the city. Rehabilitation of 
all existing structures within the city was objectionable 
because it would perpetuate excessive fragmentation. A 
more even division of services between the Delaware 
and Southwest facilities (450 beds at Delaware. 570 at 
Southwest) was rejected by the medical staff as failing to 
meet the goal of consolidation. Thus after reviewing the 
options, the court concluded. “WMC has met its burden 
upon rebuttal by showing that even if Omega may have 
some meager disparate impacts, those impacts are justi­
fied by bona J'ulc needs which could not be accomplished 
by any less discriminatory plan." 491 F.Supp. at 343.

In turn, plaintiffs attempted to show that “Reverse 
Omega” (800 beds at Delaware and 200 at Southwest) 
was a feasible alternative. The court, however, found 
that cost estimates of reverse Omega given by plaintiffs' 
expert were unreliable, and concluded that this plan 
would be “prohibitively expensive." 491 F.Supp. at 342. 
The court determined, therefore, that “plaintiffs have 
failed to meet their burden of persuasion of showing a 
feasible, less discriminatory alternative." 491 F.Supp. at 
345.

12

The lengthy recitation of the background makes it 
clear that this case turns largely on factual matters.

There are. however, several discrete legal issues essen­
tial to a resolution of the dispute. 1 he first that we shall 
discuss implicates the nature of the evidence necessary 
to show a violation of Title VI. If the plaintiff must show 
intent to discriminate, then our task is a simple one be 
cause the trial court found no such evidence and that 
holding is not contested. We are persuaded, however 
that intent is not required under Title V| and proof ol dis 
parate impact or effects is sufficient. Our conclusion ap 
plies to the other two statutes that have been invoked as 
well.

Title VI of the Civil Rights Act of 1964. 42 U.S.C 
§2000d (1976). bans discrimination based on race, color 
or national origin in any program receiving federal linan 
cial assistance.5 VVMC concedes that Medicare am 
Medicaid payments made to it call Title VI into play.

In Lait v. Nichols, 414 U.S. 563 (1974). the Su 
preme Court was confronted with a racial discriminatioi 
charge growing out of a school system’s decision not ti 
provide English language instruction to students of Chi 
nese ancestry. The Court declined to reach an equal pro 
tection argument but chose instead to rely on Title VI 
interpreting it as follows:

“Discrimination is barred which has that ejjcc 
even though no purposeful design is present: a rc 
cipient ‘may not . . . utilize criteria or methods c 
administration which have the effect of subjcctin 
individuals to discrimination’ or have ‘the effect c 
defeating or substantially impairing accomplish

13

5. The antidiscrimination prov ision of Title VI states:
"No person in the United States shall, on the ground t 

race, color, or national origin, he excluded from participation it 
lie denied the benefits of. or he subjected to discrimination in 
dor any program or 'activity receiving Federal financial assii 

. lance."
-12D  S C. §2000d (1070).

f
!*



14
ment of the objectives of the program as respect in­
dividuals of a particular race, color, or national 
origin.' ”

Id. at 568 (emphasis the Court's), quoting HEW regula­
tion. 45 C.F.R. §80.3(b)(2).

Lau makes it clear that discriminatory impact is 
enough to constitute a violation of Title VI. WMC, how­
ever. argues that Lau was overruled by Board of Educa­
tion v. Harris, 444 U S. 130 (1979), and Regents of the 
University of California v. Bahlie, 438 U.S. 265 (1978).u 
We are not convinced, however, that either case did so.

In Bahhe, the question was whether a state school 
could properly adopt an admissions policy clearly intend­
ed to prefer minorities. It is true, as WMC notes, that five 
justices expressed reservations in Bahhe about the hold­
ing in Lau. In the opinion written by Justice Brennan, in 
which Justices White. Marshall, and Blackmun joined, 
it was said. “|W|e have serious doubts concerning the 
correctness of what appears to be the premise of |L<nt|." 
438 U.S. at 352.

The issue did not have to be resolved, however, be­
cause “even accepting Lau’s implication that impact 
alone is in some contexts sufficient to establish a prima 
facie violation of Title VI. contrary to our view that Title 
Vi's definition of racial discrimination is absolutely coex­
tensive with the Constitution’s, this would not assist the 
respondent in the least.” 438 U.S. at 352-53. It did not

(i. Whether intent or impact is siitiiclciu to state a claim under 
Title VI and the issues surrounding hospital closings and 
relocations have been the subject of scholarly commentary. See. 
c.o . Note. The Prima I'acie Case and Remedies in Title VI llosjdtal 
Relocation Cases. t»5 CORNELL L. REV. <>8‘) t |})8t)i; Note. Main­
taining Health Care in the Inner City: Tide VI and Hospital 
Relocations. 5;> N.Y.U.L. REV. 271 tH>80>; Note. Title VI: the 
Impacl/lntent Debate Killers the Municipal Services Arena, a.i ST. 
JOHN'S L IMA 12 I ( I (ISO); Note. N A.UT v. Medical Center. Inc : 
The Cvidcntiary Hearing Under Title VI 2 1 ST. LOUIS I'.L.J. ATM 
(1080).

)

15
matter, the group wrote, whether Title VI proscribed 
some acts, such as those at issue in Lau, that would sur­
vive constitutional scrutiny. As the group read the legis­
lative history of the Civil Rights Act, Congress did not in­
tend to proscribe the particular type of practice 
challenged by Bahhe —- preferences designed to remedy 
past discrimination. As stated in another portion of the 
opinion. “lAjpplied to the case before us, Title VI goes no 
further in prohibiting the use of race than the Equal Pro­
tection Clause ol the Fourteenth Amendment itself." 
438 U.S. at 325 (emphasis supplied).

In a separate opinion. Justice Powell used language 
that may be inconsistent with Lau. but he stopped short 
ol advocating that the case be overruled. I le wrote. “Title 
VI must be held to proscribe only those racial classifica­
tions that would violate the Equal Protection Clause or 
the Fifth Amendment." 438 U.S. at 287. lie then went 
on to distinguish Lau, saying significantly. “|T|he pref­
erence’ approved {in Lau) did not result in the denial of 
the relevant benefit — ‘meaningful opportunity to par­
ticipate in the educational program’ — to anvone else." 
138 U.S. at 304.

In determining what weight is to be given to these 
separate statements, it is important to recognize that the 
issue presented to the Court in Bahhe differs substantial­
ly from that in the case at bar. It was clear in Bahhe that 
whatever the reach of Title VI. the plaintiff had estab­
lished a prima facie case by showing intentional discrim­
ination. The question facing the Court, then, was 
whether some forms of intentional discrimination were 
nevertheless permissible. A majority of the Court con­
cluded that those forms of intentional discrimination 
that would survive constitutional analysis also were 
exempt Irom Title VI. Congress, in enacting the Civil 
Rights Act of 1964. did not intend to prohibit those racial 
preferences that are permitted under the Constitution.

It does not inexorably follow, however, that Con­
gress also intended the constitutional standard to control



16
every allegation of discrimination. It would be consistent 
with Congress’s expansive, remedial intent to interpret 
Title VI as prohibiting acts that have the effect of dis­
crimination yet permitting patent preferences designed 
to remedy past discrimination.

The Powell-Brennan opinions, therefore, may be 
read as expressing the theory that at least when the 
charge is intentional discrimination in the nature of a 
governmental preference. Title VI incorporates the con­
stitutional standard. The case sub judice. however, is 
not one of a discriminatory governmental preference but 
one of a neutral program with disparate impact. As we 
see it, it is still permissible to hold that when the charge 
is disparate impact, a prima facie case can be established 
without proof of intent.

The other case on which defendant relies. Board of 
Education v. Harris, supra, held that §702(b) of the 
Emergency School Aid Act (ESAA) prohibits school,dis­
tricts from maintaining racially identifiable faculties 
even when the segregation is unintentional. The Court 
upheld the power of Congress in the exercise of its au­
thority under the spending clause to require the recipi­
ents of federal funds to go further in eliminating dis­
crimination than mandated by the Constitution. Lau v. 
Nichols was not cited.

In dissent. Justice Stewart argued that since five 
justices in Bakhe had slated Title VI prohibited only in­
tentional discrimination, the same premise should gov­
ern claims under the ESAA. 444 U.S. at 160. In this ar­
gument, however, he was joined only by Justice Powell. 
The majority expressly disclaimed any necessity to pass 
on the standard applicable to Title VI. Id. at 149.

Full Hove v. Klutznich, 448 U.S. 448 (1980). is an­
other case that considered the constitutionality ol a stat­
utory preferential program. A plurality ol the Court cited 
with approval Fan’s validation ol the HEW regulation 
proscribing actions u which have the effect ol discrimi­
nating. 448 U.S. at 479 (emphasis supplied by Court).

17
Joining in the opinion were Justices White and Powell, 
who in Bahhe had taken the position that intent was nec­
essary to establish a Title VI violation.

Although there is ample ground for argument that 
the Supreme Court has doubts about Lau’s continued 
viabilitv a requiem may be premature and, in any event 
should not be sung by this choir. The prerogative o 
overruling its cases rests with the Supreme Court, and 
not with us. Americans United for Separation oj Chinch 
and State, Inc. v. HEW. 619 F.2d 252, 271 (1980) (Weis. 
J., dissenting), cert, granted, Valley Forge Christian 
Colleae v Americans United for Separation oj Cliuich
and State, Inc.,------U .S .-------, 49 U.S.L.W. 3617 (U.S
Feb 23 1981) (No. 80-327); United States ex rel. 
Gocliley v. Myers. 450 F.2d 232 (3d Cir. 1971), cert, de­
nied. 404 U.S. 1063 (1972).'

The question is not one of congressional power but 
rather of intent. Providing federal funding conditioned 
on an even-handed application is a positive measure to 
discourage all forms of discrimination, intentional or not. 
The use of an effects lest, therefore, is consistent with 
the legislative aim of eliminating discrimination and is in 
harmony with Title VII of the same Act, and litle VIII. 7

7 Hiil see Cannon v. University ol Chicago. |-.2cl
No 80-1763 (7th Cir. May 6. 1981). where it was held that disp.o- 
portionate impact alone does not establish a violation o llid eN  I. In. 
Guardians Ass n ol New York City Police IXpt. Inc. v. Civil i>c''tcc 
Commission. 633 I'.2d 232. 251 (2d Cir. I960), a pane ol the Com 
ol Appeals lor the Second Circuit concluded that only Intentional, 
discrimination Is actionable under title VI An eaiiiei panel ol t u- 
same court disagreed, however, citing Urn s impact test as autho.Uy, 
alter Unlike. Board ol Education v. Calilano. 581 I 2d d /6. 58J u d  
Cir. 1978). alfd on otliei (/rounds. Board ol Education v. Hauls • H 
U S 130 (1979). Still oilier panels have either acknowledged ilia 
Unlike did not expressly overrule Urn. see Ass’ii ol Andrew;
lacks.... High School v Amlwch. 598 l\2d 705 7 6 (2d Cir. I Jj.dk 
o, have argued in dicta why an cllccts test probably retains validity 
See Bryan v. Koch. 627 I 2d 612 (2d Cir 1980)



18
Resident Advisory Board v. Rizzo, 564 F.2d 126 (3d Cir. 
1977), cert, denied, 435 U.S. 908 (1978), as well as our 
previous reference to Title VI in Shannon v. United 
States Department of Housing & Urban Development, 
436 F.2d 809, 816, 820 (3d Cir. 1970) (Title VI provides 
redress for discriminatory effects of local housing plans). 
Moreover this approach parallels regulations adopted by 
HEW and other departments charged under §602 of the 
Civil Rights Act, 42 U.S.C. §2000d-l, with enforcing the 
statute.8

With due deference to Lau v. Nichols and congres­
sional intent as we perceive it. therefore, we conclude 
that plaintiffs in a Title VI case alleging discrimination 
in the application of federal funds in a facially neutral 
program need only establish disparate impact. The Re­
habilitation Act and the Age Discrimination Act of 1975 
provide equally strong cases for application of an impact 
test since both are patterned after Title VI.“ We there­
fore use the same standard. * 9

| 8. See, e.fi„ i C.F.It. §15.3 (1980) (Agriculture Dept); 1-1 
C F.lt. §1250.103-1 (1981) (NASA); 18 C.F.It. §1302.3 (1980) 
(Tennessee Valley Authority); -15 C.F.R. § 1010.10-2 (1980) (Com­
munity Services Administration): 49 C.F.It. §21.5 (1980) (Trans­
portation Dept).

9. Section 504 ol the Rehabilitation Act provides:
"No otherwise qualified handicapped individual in the 

United States, as defined in section 700(7) of this title, shall, 
solely by reason ol' his handicap, be excluded from the partici­
pation in. be denied the benelits of. or be subjected to discrimi­
nation under any program or activ ity receiving Federal finan­
cial assistance. . . . "

29 U.S C. §794 (Supp. II 1978).
Section 303 ol the Age Discrimination Act provides:

“Pursuant to regulations prescribed under section 0103 of 
this title, and except as prov ided by section 0103(b) and section 
6 103(c) of this title, no person in the United States shall, on the 
basis of age. be excluded from participation in. be denied the 
benefits of. or be subjected to discrimination under, am pro­
gram or activ ity receiving Federal financial assistance."

42 U.S.C. §0102 (1970).

19
11

The next inquiry is whether, applying an effects 
test, the plaintiffs have established a prima facie case. 
Before addressing this issue, it is helpful to review the 
provisions of the agreement between WMC and HEW. 
Included in the early paragraphs is a statement that the 
Secretary of HEW desires assurances that operation of 
the hospital facilities under Plan Omega will be in com­
pliance with Title VI and the Rehabilitation Act.

The agreement obligates WMC to provide free 
transportation between the Delaware and Southwest di­
visions, to designate an ombudsman to receive and act 
upon complaints of discrimination, to adopt a system of 
inpatient utilization control, and to prevent either divi­
sion from becoming racially identifiable. It is additionally 
required that both divisions be operated on a unitary ba­
sis. with a single Board of Directors, Executive Commit­
tee, medical staff, teaching program and accounting 
procedure. Any proposed expansion of services at 
Southwest or reduction at Delaware must be first sub­
mitted to HEW for approval. WMC agreed to set aside 
$2,800,000 for use exclusively in renovating the Dela­
ware facility. WMC also agreed to recognize the need for 
employment by minority groups, “including in particular 
urban minority groups." As noted earlier, the court 
found that WMC would carry out its categorical 
obligations under this agreement.

A. THE HANDICAPPED
There is no evidence that either facility will not 

comply with the structural requirements of the Rehabili­
tation Act. Indeed, the provisions for handicapped with 
respect to barriers, entry, and lice movement within the 
buildings will be an improvement over existing condi­
tions. I he alleged disparate impact upon the handi­
capped. therefore, rests upon the location of major por-



20
lions of hospital services and jobs in the Southwest 
Division. The plaintiffs produced no credible evidence, 
however, establishing the residential distribution of 
handicapped persons within the county. In the absence 
of such information, we cannot tell what effect, if any, 
Plan Omega will have upon disabled persons in the area, 
and thus agree with the district court that plaintiffs did 
not establish a prima facie case under §504.

B. THE AGED AND MINORITIES
Unlike the evidence with respect to the handi­

capped. there was testimony that most of the elderly and 
minorities who would be served by the Wilmington 
Medical Center live closer to the Delaware than the 
Southwest division some nine miles away.,u Since many 
of the medical services would be located at the suburban 
building, transportation to the new facility would be re­
quired, and hence treatment would not be as convenient 
as if provided at Delaware. Although the trial court did 
lind that there would be some effect upon the elderly 
and minorities because of the travel aspects, those im­
pacts upon patients were described as "de minimis." "in­
significant." and "minor."11 We agree with these charac­
terizations and have serious doubts that such effects are 
enough to establish a prima facie case of discrimination. 10 11

10. OverBT'V nfihc minority residents and Tli.Vi of tin* elder- 
|v residents of New Castle County live in the northeast area. I lderly 
and minority families near the Delaware lacilitv are more likelv than 
oilier lamiles in the area to he without a ear. ID I I .Supp. at ;U)2-lU.

11. The district court, relvinu on 12 L'.S.C. §2lMHUl-d. did not 
consider the impact of Omega on minoritv service employees. I'lie 
plaint ills had contended that these employees would he assigned in 
a discriminatory fashion anil that this would exacerbate the racial 
idcnliliahiliiy ol the Delaware division caused hv tlisi rimiiiatorv pa­
tient assignments. I lie argument was never made however, that 
assignment of employees would itself result in racial idenliliahility 
v iolalive of Title VI. C liven our aflirmance of the district court's li tid­
ing that patient assignment would not result in t.u ial idcniiliahililv. 
it is not necessary to consider plaintiffs' other argument

21
The nine mile trip in an area like Wilmington does 

not impose a significant hardship. Changes to alleviate 
some problems, even though resulting in improvement, 
often impose other burdens or confer unequal benefits. 
Whatever was done here could not possibly distribute 
the inconveniences and benefits with precise equality, 
but inaction would have a profound adverse impact upon 
all who depend upon the medical center.

All concede that something must be done or all 
will suffer. To establish a prima facie case under Title 
VI in these circumstances, some definite, measurable 
disparate impact is required, otherwise needed and 
worthwhile efforts at improvement will be paralyzed. 
Reasonable accommodations must be made, but when 
they have been reached, new programs must be allowed 
to proceed. Although all of us are not completely per­
suaded that plaintiffs met their burden here, we will as­
sume arguendo, as did the district court, that a prima 
facie case was presented. *“

III
The next step, therefore, is to determine what bur­

den is placed upon the defendant and whether it was 
met in this case. The district court concluded that once 
the plaintiffs had met their initial burden, the defendant 
had to go forward with evidence to “rebut |that| prima 
facie case." 491 F.Supp. at 315. The plaintiffs argue that 
the defendant's burden is a heavier one. that of 
persuasion.

The parlies agree that the decisional law allocating 
the burdens of production and persuasion under Title 
VII is instructive in this case, but disagree as to the prop­
er interpretation of the opinions. It is not disputed that 
when a prima facie Title VII case of discriminatory in-

12. Judge Higginbotham w ould hold that plait itil Is did estab­
lish a prima lacic case.



22
tent is established, the defendant must go forward with 
evidence of a legitimate, nondiscriminatory reason for its 
action. The plaintiff may rebut by showing that the stat­
ed reason is mere pretext.

The ultimate burden of persuasion on the issue of 
illegal discrimination always remains with the plaintiff. 
Whatever doubt may have existed on that score has been 
resolved in recent years by a series of cases in the Su­
preme Court and this court. Texas Department of Com­
munity Affairs v. Burdine,----- U S .-------. 49 U.S.L.W.
4211 (U.S. March 4. 1981); Board of Trustees of Keene 
State College v. Sweeney. 439 U.S. 21 (1978); Furuco 
Construction Corp. v. Waters. 138 U.S. 567 (1978);
McNeil v. McDonough.----- F.2d-------. No. 80-1640 (3d
Cir. April 24, 1981): Smithers v. Bailor. 629 F.2d 892 
(3d Cir. 1980); Kunda v. Muhlenberg College. 621 F.2d 
532, 543 n.3 (3d Cir. 1980): and Whack v. Peabody & 
Wind Engineering Co.. 595 F.2d 190 (3d Cir. 1979). See 
also Resident Advisory Board v. Rizzo, supra at 149 
n.37 (Title VIII); Rodriguez v. Taylor. 569 F.2d 1231. 
1239 (3d Cir. 1977). cert, denied. 136 U.S. 913 (1978) 
(Age Discrimination in Fmploymcnt Act).

The plaintiffs contend that there should be a differ­
ence in the defendant's burden when the charge is dis­
criminatory impact rather than discriminatory intent. 
Their theory is that in countering a prima facie case of 
discriminatory impact, the defendant is presenting 
something in the nature of an aflirmative defense that 
requires shouldering the burden of persuasion. See 
Kirby r. Colony Furniture Co.. 613 I'.2d 696. 703 n.5 
(8th Cir. 1980) (opinion of one judge, others not 
joining).

That reasoning is not conv incing. One could just as 
readily say in an intent case that the neccssilv to prove a 
nondiscriminatory reason is an aflirmative defense car­
rying a burden of persuasion. Holdings of the Supreme 
Court and this court, however, are to the contrarv.

lt
In Furnco Construction Corp. v. Waters, supra, the 

Supreme Court explained its allocation of the burden of 
proof in intentional discrimination cases. If the plaintiff 
produces evidence sufficient to meet the standards of a 
prima facie case under McDonnell Douglas Corp. v. 
Green, 411 U.S. 792 (1973), an inference of discrimina­
tion is raised “because we presume |the complained ofj 
acts, if otherwise unexplained, arc more likely than not 
based on the consideration of impermissible factors.” 
Furnco Construction Corp. v. Waters, supra at 577. The 
effect of such a prima facie case is only to put in issue 
whether the employer’s conduct “was based upon legiti­
mate, nondiscriminatory reasons and therefore permissi­
ble." Id. at 576 n. 8. A prima facie case does not necessar­
ily constitute proof of the ultimate fact of discrimination 
under Title VII. Id. at 576.

. To meet a McDonnell Douglas prima facie case, a j 
defendant must produce evidence of an acceptable rea­
son but is not required to show an absence of discrimina­
tory motiv e. Board of Trustees of Keene State College v. 
Sweeney, supra at 24. The burden of persuasion on the 
ultimate fact of discrimination remains with the plaintiff 
who may show that the proffered legitimate reason was a 
pretext. Furnco Construction Corp. v. Waters, supra at , 
578; McDonnell Douglas Corp. v. Green, supra at 801.

Disproportionate impact or effect is simply an addi­
tional method of demonstrating impermissible discrimi­
nation under Title VII. Teamsters v. United States. 431 j 
U.S. 321. 336 n.15 (1977). In Albemarle Paper Co. v. 
Moody. 422 U.S. 405 (1975). the Court held that a prima 
facie case could be established under the impact theory 
i! the plaintiff demonstrated that a facially neutral policy 
disproportionatclv affected persons protected bv Title 
VII If tl le plaintiff meets his initial burden, the defen­
dant must show " ‘that any given requirement |has| . . 
a manifest relationship to the employment in question.' " 
Id. at 125. gaoling Griggs v. Duke Power Co., supra at

23



24
432. In formulating this approach, the Court referred to 
the related test it had devised in McDonnell Douglas 
Corp. v. Green, supra at 425, and went on to include a 
similar third step: “it remains open to the complaining 
party to show that other. . . selection devices, without a 
similarly undesirable . . . effect, would also serve the 
. . . legitimate interest.” 422 U.S. at 425.

In characterizing the defendant’s obligation to show 
a manifest relationship as an affirmative defense, the 
plaintiffs here apparently assume that making out a 
prima facie case of disproportionate impact is the equiv­
alent of establishing a Title VII violation by a preponder­
ance of the evidence. This assumption cannot stand be­
cause the Furnco analysis should control impact, as well 
as intent, cases.11

When the Supreme Court first held that Title VII 
prohibited some facially neutral practices, it described 
the congressional purpose as “the removal ol artificial, 
arbitrary, and unnecessary barriers . . . when the bar­
riers operate invidiously to discriminate on the basis of 
racial or other impermissible classification." Griggs v. 
Duke Four) Co., supra at 431. A showing of dispropor­
tionate effect or impact alone may not establish a \iola- 
tion. “The touchstone is business necessity. II an em­
ployment practice which operates to exclude . . .  13 *

13. The distinction between establishing a prima facie case 
and prevailing on the ultimate issue is discussed in l \  .1 Wigmore. 
Evidence §2187 (3d ed. 10-10). There Professor Wigmorc quotes ex­
tensively from Speas v. Merchants Dank & Trust Co.. 188 N.C . 52-1. 
125 S E 308 (192-1):

"A prima facie' case . . . does not change the burden of proof. 
It only stands until its weight is met by evidence to the contrary 
. . . |A| prima facie’ case . . . need not be overcome by a pre­
ponderance ol the evidence, or by evidence ol gieatei weight, 
but the evidence needs only to be balanced, put In equipoise 

.; and if this be done, the burden of the evidence has been 
met and the duty qf producing further ev idence shifts back to 
the party hav ing the burden of proof."

25
cannot be shown Co be related lo job performance, the 
practice is prohibited.” Id. To be proscribed, then, the 
challenged practice must not only affect disproportion-! 
ately, it must do so unnecessarily.

To establish a prima facie case the plaintiff need not 
show that the practice was unnecessary but may rely on 
inferences. If the defendant presents no evidence ol 
business relatedness in his case, the court may assume 
that there was no permissible reason for the impact.11 In 
the event that the defendant does come forward with 
evidence to meet the inference of discrimination raised 
by the prima facie case, the plaintiff may still carry his 
burden of persuasion by demonstrating that a feasible, 
yet less onerous alternative exists. Albemarle Paper Co. 
v, Moodg, supra at 425.

The contention plaintiffs make here, that business 
relatedness constitutes an affirmative defense, is incom­
patible with the third step ol Albemarle. Plaint ills would 
have WMC bear the burden of persuasion on this issue 
by showing a dearth ol' less objectionable alternatives. 
But in Albemarle, this burden was imposed on the com­
plaining party. As the Court explained in an analogous 
context, if the plaintiffs were correct in their assessment 
ol the various burdens of production and persuasion, the 
third step in the analysis would be rendered "entirely su­
perfluous . . .. since it would place on the |defcndant| at 
the second stage the burden of showing that the reason 
. . . was not a pretext, rather than requiring such prooi 
hum the jplainlillsj as a part of the third step." board oj

l-l. As the- Supreme Court noted In Teamsters v. Uniter 
Stales, sigmi at 358:

" The importance oTMcDonnell Ifont/ln* lies, not in its spcctlica 
lion ol the discrete elements ol proof there required, but in it: 
recognition of the general principle that any Title VII plait it il 
must cany the initial burden of offering evidence adequate li 

, create an inference'that an emplovment decision was based 01 
a discriminatory criterion illegal under the Act."



26
Trustees of Keene State College v. Sweeney, supra at 
24-25 n.l.

The Supreme Court has not given any indication 
that it requires a shifting of the burden of persuasion in 
effects cases. To the contrary, the Court stated in New 
York Transit Authority v. Beazer, 440 U.S. 568, 587 
n.31 (1979), that the ultimate burden of proving dis­
criminatory impact is the plaintiffs. Albemarle Paper Co. 
v. Moody, supra, was an impact case, yet in referring to 
the employer's burden to meet the plaintiffs prima facie 
showing, the Court cited McDonnell Douglas Corp. v. 
Green, supra, an intent case. As other examples of 
cross-references to McDonnell Douglas in effects cases, 
see Dothard v. Rawlinson, 433 U.S. 321, 329, 339 
(1977), and Nashville Gas Co. v. Salty, 431 U.S. 136. 
144 (1977). See also Teamsters v. United States, 431 
U.S. 324. 336. 358. 360 (1977).15

The plaintiffs have cited no current authority for 
their position. Precedents antedating Board of Trustees 
of Keene State College v. Sweeney, supra, have little per­
suasive effect since that case settled the, confusion that 
surrounded this issue. Although the facts and inferences 
required to prove a case vary between intent and effect 
situations, that factor does not call for the shifting of the 
burdens of production and persuasion depending on the 
theory advanced.

Moreover, it is illogical to impose a heavier burden 
on a defendant in a case where a neutral policy results in 
disparate impact than in one where the charge is unlaw­

15. In Texas Dep t ol Community Adairs v. timeline, supra. 
the Court commented that the factual issues and therefore the 
“character of the evidence presented" differ in effects cases hut did 
not give am indication that a different liurdon would he imposed on 
the defendant. U.S. at , 19 U.S.L.H. at 1215 n.5.

Iti. See fienenilli/. Hillman. Teamsters. California Breners. 
and Beyond: Seniority Systems and Allocation of the Ihirden of 
Proving Dona I ides. 51 ST JOHN'S L HKV. 70(i. 711 Iti (1980).

27
ful animus. Indeed, if there is to be a difference, quit 
the opposite result should follow. The defendant who it 
tentionally discriminates should not fare better than th 
one whose conduct may be subjectively blameless. In 
because of its effects may require remedial action.

As a practical matter, a procedural distinction bt 
tween the impact and intent cases would cause unnet 
essary confusion in the trial courts, particularly so i 
cases like the one at hand in which both theories are at 
vanced. See, e g., Whack v. Peabody & Wind Engineerin 
Co., supra. It is difficult to understand what imperial 
interests would be served by imposing two different bu 
dens on the defendant in a case of this nature. Certain) 
the multiplication of procedural dev ices is not a desirabl 
development in trial practice.

All things considered, uniformity in the procedure 
aspects of impact and intent cases is highly desirabl 
and should not be sacrificed on the dubious theory tin 
plaintiffs advance here. Although we need not vvorshi 
at its shrine, symmetry is not always sinful. Just as v\ 
permit plaintiffs to establish discrimination through e 
fects under both Title VI and VII. so should there be 
consistent burden on defendants.

The district court determined that WMC should g 
forward “with evidence that Omega will in theory an 
practice’ serve 'a legitimate bona lide interest of | WMC 
. . . and . . . show that no alternative course of actio 
could be adopted that would enable that interest to b 
served with less discriminatory impact.' ” 491 F.Supp.; 
315-16, quoting Resident Advisory Board v. Rizz> 
supra at 149.

Following this, plaintiff was allowed to produce lu 
tlicr ev idence consistent with the third step of dcmoi 
strating pretext that the Supreme Court has mentione 
in both intent and impact cases brought under .Till 
VI!.1' McDonnell Douglas Corp. v. Green, supra-, Alin

17. In intent cases, il the reasons put lortli by the defeudai 
are not l»is real ones and In fact mask Ids plan to discriminate, ill



28
marie Paper Co. v. Moody, supra; Tehmsters v. United 
States, supra.

In Resident Advisory Council v. Rizzo, supra, we 
held that under Title VIII of the Civil Rights Act of 1964. 
a plaintiff retains the burden of persuasion on the exist­
ence of less discriminatory alternatives. Requiring plain­
tiffs to meet that obligation by demonstrating that feasi­
ble, less discriminatory alternatives exist is neither 
unjust nor impractical in view of the extensiv e discovery 
material that was available in this case.

The district court’s test is actually more stringent 
than that suggested in Jefferson v. Hackney. 406 U.S. 
535 (1972). There, the Supreme Court found that appli­
cation of a percentage reduction factor to determine re­
duced needs of welfare recipients was rationally related 
to the purpose of the separate welfare programs and. 
consequently, did not violate the equal protection clause. 
For similar reasons, the Court also concluded that the 
challenged system would not contravene Title VI. The 
relationship of the reduction factor to the purposes of the 
Stale’s welfare programs distinguished JeJferson from 
Griyys:

“In Griyys. the employment tests having racially 
discriminatory effects were found not to be 
job-related, and for that reason were impermissible 
under the specific language of Title Yll of the Civ il

NOT I-'. IT — (Conlimicrf)
plaint il l may slum tin* pretext, lit impact cases, where no intent 
Is aliened, the pretext may sometimes eonsist tit a tldeiulanl's 
assertion ot a Itona fide interest in order lo conceal another 
nondiscriminatory reason lor not adoption a less discriminaloix 
plan. In other situations, business justification may he the onh rea­
son lor the decision. It nevertheless remains open to the plait it ill to 
show that other devices exist which also serve the delendant's le­
gitimate interest hut w hich do not manilest a similarh prejudicial 
elici t. Indeed. '‘|s|iich a showing would he evidence that the |de- 
lend.mil was using its |device| merely . as a pretext' lor discrim­
ination." Albemarle Paper Co. v . Moodv. sn/mi at Ido. It mav also be 

( substantive evidence lo support plaint ill's case.

29
Rights Act. Since the Texas procedure challenged 
here is related to the purposes of the welfare pro­
grams, it is not proscribed by Title VI simply be­
cause of variances in the racial composition of the 
different categorical programs.”

JeJferson v. Hackney, supra at 550 n. 19. I a JeJferson, 
the state was not required to produce evidence that alter­
nate formulae for computing need would not have 
served the purposes of the program with less of a dispa­
rate impact.

In Bryan v. Koch, 627 F.2d 612 (2d Cir. 1980). the 
Court of Appeals for the Second Circuit was confronted 
with a Title VI challenge to the closing of a city hospital. 
The court said that Title VI did not require consideration 
of alternatives beyond “an assessment of all the munici­
pal hospitals in order to select one or more for closing." 
Id at 619. Since the appropriateness of the city’s choice 
had been sufficiently demonstrated, the court's role end­
ed. Expressing doubt about the feasibility of a more open 
ended judicial evaluation of alternativ e means of econo­
mizing. the opinion stated.

“Once a court is drawn into such a complex inquiry, 
it will inev itably be assessing the wisdom of compet­
ing political and economic alternatives. Moreover, 
such policy choices would be made without broad 
public participation and without sufficient assur­
ance that the alternative selected will ultimately 
prov ide more of a benefit to the minority popula­
tion.”

Id. The court added that its skepticism extended even lo 
requiring courts to consider “alternative locations I'oi 
placement . . . of facilities.” Id., citiny NAACP v. The 
Wilminyton Medical Center, Inc., 491 F.Supp 290 
(D.Del. 1980).

By contrast, the district court in the case at hand did 
evaluate the alternatives. It required WMC to go "for-



1

ward with evidence showing that it has chosen the least 
discriminatory alternative." 491 F.Supp. at 340. That is a 
stringent standard which more than adequately serves 
Title VI aims.10 The court discussed six possible, less 
discriminatory alternatives to the Omega Plan, including 
the plaintiffs' “Reverse Omega” proposal and found that 
none of the plans would serve WMC's needs. The court 
also said that WMC had “investigated approximately 50 
different plans, all of which it rejected for bona fide rea­
sons.” Id. at 340 n.314. Indeed, the court found that 
“Omega is the only plan which can adequately meet 
WMC's needs." Id. at 340.

On this record, we conclude that the district court 
did not err in concluding that the defendant had carried 
its burden of meeting the plaintiffs' prima facie case.1"

IV
The plaintiffs also argue that the district court erred 

in refusing to assess the financial feasibility of Plan 
Omega and in deferring.instead to the judgment of the 
bond market. But as noted earlier, the court did make 
specific findings with respect to WMC's financial ability 
to complete the renovation at Delaware and pay for 
whatever shuttle bus service is required. When the court 
referred to the sanction of the bond market for the finan­
cial consequences of Plan Omega, it apparently was re­
ferring • the question whether WMC was wise in un­
dertaking; such an extensive project.

As we read the district judge's opinion, whether 
funds could be obtained was not a matter which he

30

IH. .Indues 11iiCLciiitkiiIi.iin and Sloyilei' would adopt die stand­
ard used liy the district court that the disciiniinatorv impacts must 
lie "instilled hy Ixnm title needs which could not he accomplished h\ 
tiny less discriminatory plan." 101 I' Supp. at d Id

III The record contains ample evidence supportinn justifica­
tion lor such disparate eH'eets as may exist as well as demouslraliim 
that other impacts asserted hy plainlills will not take place.

31 i

could confidently predict, but was a circumstance sub 
ject to market forces. If the bonds were not sold. Onicgt 
could not proceed. Obviously an undertaking of tint 
magnitude involves some element of financial risk anc 
predicting the ultimate outcome is not a field in whict 
the courts have a special competence. The distric 
judge's hesitancy to wander into this area of uncertainty 
is understandable. On the record we do not find it to In 
reversible error.

In fact, it would have been pure speculation for ih< 
court to accept the plaintiffs’ argument Even if it coulc 
be demonstrated that WMC was overly optimistic, then 
is no way of knowing with any certainty what remedia 
measures would be taken. It is far from clear that WMC 
would take the path suggested by plaintiffs and reduci 
free care and renovations of the Delaware division. No 
only would this breach the HEW contractual obligation: 
but it would also place WMC in jeopardy of losing it: 
Medicare-Medicaid reimbursements. A facility ahead; 
in financial difficulty is not likely to risk forfeiting federal 
f unding that makes up 30 percent of its budget.

It must be remembered that the Omega Plan was 
submitted for administrative review to hospital planniiq 
organizations and to HEW. Alter some changes luu 
been made, the proposal was approved by HEW as beinj 
in compliance with Title VI. We are not called upon t> 
appraise the wisdom of Omega but are limited to review 
ing the decision of the district court by appropriate ap 
pellate guidelines. From that perspective, we do not lint 
legal error in the standards the district court utilized no 
can we say that the factual findings are clearly errone 
ous. Accordingly, the judgment of the district court wi| 
be affirmed. The mandate will issue forthwith.



32
ADAMS, Circuit Judge, concurring.

1 arrive at the result reached by the majority but, be­
cause I do so by a somewhat dill'erent route, I find it nec­
essary to write separately.

The record here reveals a problem confronting 
American hospitals with increasing frequency: an aging 
physical plant, escalation of health care costs and 
maldistribution of services combine to create a health 
care crisis.1 Deteriorating physical facilities threatened 
the Wilmington Medical Center with a loss of accredita­
tion. Such a loss would further erode the quality of the 
hospital s medical care and its financial foundation by 
triggering a loss of qualification for the Center’s teach­
ing program and a termination of Medicare and Medic­
aid funds. In addition, without the construction of new 
facilities, the community would suffer a shortage of 
acute care beds. See NAACP v. Wilmington Medical Cen­
ter, Inc., 491 F. Supp. at 290. 297-98 (D. Del. 1980).

Faced with these demographic and fiscal pressures, 
the Center concluded that rehabilitation of some of its 
facilities in downtown Wilmington and construction of 
new facilities in the suburban area, which would pre­
vent paying patients from gravitating to a potential com­
petitor. would most appropriately fulfill the hospital's 
needs. See -191 F. Supp. at 310. The Center considered 
approximately 50 proposals before arriving at a final plan 
that was denominated “Omega." Plan Omega was ap­
proved first by a state designated planning agency, 
which ensured that the project conformed to local needs 
for adequate health care, and then by the federal Depart­
ment of Health. Education and Welfare (now Health 
and Human Services). See Wilmington United Neigh­
borhoods v. United States Dept, of Health. Education 
and Weljare. 615 F.2d I 12. 12 1-25 (3d Cir. 1980). i.

i. I'or a history and critique ol health care planning. see 
Hosetihlall. Health Carr Hc/oriii amt Atliiiinislralire Lair: .1 Struc­
tural Approach. 88 Vale 2 13 (1978).

33
Under Plan Omega, the Center proposed to inves 

appioximately $18-24 million in the rehabilitation of cer 
tain of the inner city facilities, to make a substantial in 
vestment in facilities in the suburbs, and to providt 
transportation for center city residents in need of speci 
lied services located at the suburban installation Set 
491 F Supp. at 325-27. 343. 319. The plaintiffs main 
tain that the proposed program violates Title VI of tht 
Civil Rights Act of 1964. 42 U.S.C. §2000d the Age Dis 
crimination Act of 1975, 42 U.S.C. §6102. and Sectio. 
504 of the Rehabilitation Act of 1973. 29 U.S.C,§794 
because it adversely affects the quality of care and ac4 
cess to that care for the handicapped, the elderly and 
ceitain minority groups." The Center, however con­
tends that, as a whole, the physical rehabilitation, new 
construction and consolidation of services will result in 
improved care for all patients, and that the availability ol 
a shuttle service will minimize any transportation bar­
riers for the handicapped, elderly and minoritv groups.

Because I would affirm the district court on differ­
ent giounds than the majority. I find it unnecessary to 
decide whether Latt v. Nichols. 411 U S. 563 (1971). in! 
w Inch the Supreme Court construed Title VI to prohibit! 
dispaiate impacts, is still the relevant governing law. Al­
though the Supreme Court has recently suggested in 
Regents oj the Universiti/ oj'California v. Uahhe. 438 
U S. 130 (1979). and Board of Education of Neu-'York 
Citi, v. Harris. 4 11 U S. 130. 1 17 n 10(1979). that Title 
VI might incorporate the constitutional standard ol spe­
cific intent lo discriminate, it should be noted that, be­
cause ol the wide range ol activities and conduct that Ti­
tle VI covers, the concerns raised in those two cases do 
not parallel the issues here. As the majority explains. 
Bahhe focused on the intentional use of racial criteria in

!
-  I Ik- majority and I agree w ith the distric t court that the 

did not establish a pinna lade case with respect to the 
handicapped under sec tion .701 See inaj op. sup,;, at I!)



34
the context of voluntary remedial actions. The Supreme 
Court did not deal with the type question present in this 
case, namely whether Title VI may impose requirements 
on recipients of federal funds that are broader than the 
Constitution demands when faced with disparate im­
pacts resulting from facially neutral actions. Moreover, 
the concern voiced in Harris — that because a violation 
of Title VI may result in a cutoff of funds, it is likely that 
Congress desired this drastic sanction only when dis­
crimination is intentional — would also appear to be in­
applicable here. The plaintiffs private cause of action 
against the Center, seeking an injunction to prevent fu­
ture discrimination, involves no immediate prospect of a 
fund cutoff. In fact, it is attempting to ensure against 
such a possibility. * *

Nonetheless, whether hospital relocations and ren­
ovations such as the present one should be subjected to 
judicial scrutiny aimed not only at preventing intention­
al discrimination but also at forestalling any relocation 
which may occasion unintentional, adverse effects on 
protected groups is. from my perspective, a troublesome 
question. Courts may not be the most competent forums 
for determining the effects of hospital relocations on ra­
cial minorities. Admittedly, we earlier acknowledged the

3. The broad spectrum ol federally funded programs in which 
Title VI challenges occur may account for the divergent resolutions 
of the intent vs. Impact question among and within the circuits. Sir 
Cannon v. University ol Chicago. No. 80-1 ili3 (till (_ir. May 0. 
1081) (based on belief that a violation of Title VI requires an inten­
tional discriminatory act. the court adopted the intent standard for 
Title IX): Guardians Association of the New York City Police Dept.. 
Inc., etc v. Civil Service Commission of the City of New York. G33
*V2d 232 (2d Cir. 1080) (intent required for Title VI); llryan v. 
Koch. <>27 K.2d G12 (2d Cir. 1080) (unnecessary to decide whether 
intent or effects standard applies to Title VI); board of I'.ducation v 
Calilano. 581 12d  570. 580 ( 2d Cir. 1978) t effects test for Title VI). 
oil'll on other iiroiiiuls. d l l U S. 130 (1070); Guadalupe Organiza­
tion. Inc v. Tempo Klementary School Disc No 3. 58, I .2d 1022. 
1020 n (i (0th Cir 1078) (impact is proper standard for Title VII

35
desirability ol judicial review by finding a private cause 
of action under Title VI. See NAACP i . \Vihniiujton 
Medical Center, Inc., 599 F.2d 1247. 12o4 (3d Cir. 
1979). And courts are often well-situated to address the 
concerns of relatively unorganized, politically weak con­
sumer groups whose interests may be insufficiently rec­
ognized in administrative proceedings. But I would defer 
deciding until a later day. the level of scrutiny, and the 
extent to which courts might intrude upon a perhaps 
better-informed regulatory process.

As the district court held, and the majority here 
agrees, the record is devoid of proof ol intentional dis­
crimination. But, even assuming that a disparate impact 
test is an appropriate one under Title VI. I believ e that a 
fair reading of the ev idence in this case, and especially ol 
the extensive findings made by the trial court, indicates 
that the plaintiffs failed to make out a prima facie case 
under anv of the statutes inv olv ed. A plethora of findings 
underlies the trial judge's ultimate conclusion that the 
plaintiffs have shown only a slight disparate increase in 
travel time, a modest decrease in the ability ol inner city 
residents to visit patients at the suburban site, and con­
sequently a minimal negative effect which the decrease 
in visitors may have upon the quality ol care for the el­
derly. -191 F. Supp. at 333 The district court also deter­
mined that the possibility of a lew minority high risk pa­
tients missing an appointment at the specially clinics, 
and the extremely rare chance ol an obstetrical emer­
gency patient receiving inadequate treatment in the in­
ner city division constituted such unlikely effects that 
thev failed to establish a prima facie case under l itle \ I 
491 F. Supp. at 337. I cannot find that the trial court 
dearly erred in holding that plaintiffs "failed to meet 
their initial burden of proving disparate impact under 
the civil rights statutes invoked. See 491 1 Supp at 
339.

Moreover, these specific findings are part ol a larger 
mosaic: the trial court's overarching finding that the lev -



1. . .

36

el ol care for all population groups will improve on ac­
count of the benefits that greater consolidation, 
better-trained residents and upgraded facilities will con­
fer. Measured against HEW regulations which define 
Title VI violations as actions which have “the effect of 
defeating or substantially impairing accomplishment of 
the objective of the program as respect [sic] individuals 
oi a particular race, color, or national origin,” 45 C.F.R 
§80.3(b)(2) (emphasis added), these de minimis im­
pacts simply do not pass muster. Unless a threshold is 
created for prima facie cases under Title VI, questions 
legaiding hospital relocations and similar, complex so­
cioeconomic decisions will be open to protracted court 
challenge, for each significant community undertaking 
affects slightly differently the various protected popula­
tion subgroups in our country’s localities.

Because I am unable to find that the plaintiffs estab­
lished a prima facie case, it is unnecessary for me to re­
solve whether the defendants carried a burden of pro­
duction or burden of proof in rebutting an initial 
showing ol disparate impact with evidence of legitimate 
medical needs.

Gibbons. Circuit Judge, concurring and dissenting.
I join in Part 1 of the opinion of the court, which 

holds, contrary to the position advanced bv the Wilming­
ton Medical Center (WMC). that Title VI of the Civil 
Rights Act of 1964. 42 U.S.C. §2000d et set,. (1976). 
Section 504 of the Rehabilitation Act of 1975 29 U S C 
§791(Supp. II 1978) and the Age Discrimination Act. 42 
U.S.C. §§6101 et seq. (1976 & Supp. II >. prohibit not in­
tentional discrimination alone, but also disparate impact 
upon the classes those acts protect. Only an effects 
standard will encourage decision makers to consider

37
possible discriminatory consequences of a proposal be­
fore its implementation. I also join in Part II A of the 
opinion of the court, holding that the plaintiffs did not 
establish a prima facie case of violation of Section 504 of 
the Rehabilitation Act. I do not join in Part II B of the 
opinion, which assumes arguendo that the plaintiffs es­
tablished a prima facie case of disparate impact against 
the aged and minorities. My view is that the plaintiffs 
quite clearly proved a prima facie case of disparate im­
pact against both classes in significant respects. I dis­
sent from Part III of the opinion of the court, which is 
entirely inconsistent with the intention which the court 
correctly attributes to Congress in its discussion of the 
federal funding statutes in Part I.

I.
In describing the requirements for a prima facie 

case the majority opinion states:
To establish a prima facie case under Title VI in 
these circumstances, some definite, measurable im­
pact is required, otherwise needed and worthwhile 
efforts at improvement will be paralyzed. Reason­
able accommodations must be made, but when they 
have been reached, new programs must be allowed 
to proceed.

Typescript p. 20 (emphasis supplied). If the court ended 
its discussion with the italicized language. I would agree 
with its test. But the addition of the following sentences 
shows that the court is confusing the requirements of a 
prima facie case—definite, measurable impact on the 
protected class—with justification for the imposition of 
such an impact. Medical and financial necessities may 
justify the adverse effects, but do not make them any 
less substantial. The distinction is critical. It is illogical 
to proceed, as the majority does, to the issue of justifica­
tion. without first identifying the specific impacts which

I



38
will occur, since what amount of accommodation is rea­
sonable depends on the size of the impact.

On this record there is no question but that, con­
trary to the district court’s alternative holding, a definite, 
measurable impact on the protected classes has been 
shown. It need not be assumed arguendo. It is plain. The 
district court’s contrary conclusion is the result of sever­
al fundamental legal errors, which the majority opinion 
ignores.
A. Factual Background

Before reviewing the lower court’s ultimate find­
ings, I summarize the background facts about Plan 
Omega which are common ground. The plan was the 
culmination of a long period of planning bv WMC for the 
improvement of its ability to offer quality medical care. 
WMC is a private nonsectarian hospital which evolved 
from the merger in 1965 of three acute care general hos­
pitals in the City of Wilmington, which alter the merger 
maintained three separate physical facilities containing 
approximately 5d percent of the available acute care 
beds in the State of Delaware. Although the three sepa­
rate facilities are located in different areas of the city, 
they are all well served by bus routes which run 
throughout heavily populated areas of New Castle Coun­
ty. as would be true of any new consolidated facility if it 
was located in Wilmington. The primary reasons lor the 
meigei vveic ieduction of duplicate facilities and im­
provement of clinical experience for a resident program 
in order to attract residents who would serve the Dela­
ware community. Thwarting this purpose is the fact that 
WMCs physical facilities are aging and in v arious states 
of disrepair; their inadequacies have resulted in onlv 
probalional accreditation by the Joint Commission on 
Accicditaiion ol Hospitals.- Loss ol accreditation would 
mean ineligibility for participation in residency pro­
grams approved by the American Medical Association. 
Thus plant improvement is essential.

39
It has always been the judgment of the WMC medi­

cal staff that achievement of the hospital’s objectives 
could best be served by placing all medical and surgical 
services under one roof. However by the time planning 
for a new facility commenced, Delaware, like other 
states, was experiencing a substantial shift in population 
growth from older urban to newer suburban locations.
In New Castle County that shift in the growth pattern 
produced a rapid increase in its southwestern portion, 
around Newark. Delaware. That area is now serv ed only 
by an emergency room, and the need for some hospital 
beds in the vicinity of Newark is widely recognized. The 
Delaware Health Planning Council, a state agency, has 
recommended that such beds be provided. If an institu­
tion other than WMC were to do so. the latter would be 
adversely affected. WMC is the largest prov ider of free 
care in the County to those unable to pay for care them­
selves and unable to qualify for government assistance. 
Partly as a result of subsidization of this lice care, j 
WMC's hospital rates are the highest in the State of 
Delaware. Since the population in the southwestern j 
suburbs is generally more affluent than that in the ur- 1 
ban northern part of the County, diversion of patients 
from WMC to a new suburban institution would have 
the effect of increasing the percentage of free care pa­
tients in WMC's patient mix. and thus of adversely af­
fecting its financial stability.

The combination of undisputed facts outlined in the 
proceeding paragraph limited the choices available to 
WMC. It could build a new hospital under a single roof 
in the suburbs, closing the Wilmington units, or it could 
build a new hospital in Wilmington, running the risk 
that another institution would build in the suburbs, or it 
could attempt, with separate facilities, to serve both 
areas. When the third course was decided upon it be- [ 
came necessary to determine the mix of facilities in the 
two locations. In Plan Omega WMC opted for the crec-



40
tion of a new 780-bed hospital, the Southwest Division, 
in a rural location at Stanton, the closing of two of the 
three Wilmington divisions, and the reduction in bed ca­
pacity of the third, Delaware Division, from 480 to 250 
beds. The Stanton location is not now and will not be in 
the foreseeable future served by public transportation, 
although it is on an interstate highway. The Plan in­
volves more than allocating beds, however, for some ma­
jor hospital services will be located exclusively at thp 
larger Southwest Division, others exclusively in the 
smaller Delaware Division, and some in both places.1

1. Placement of inpatient services under Plan Omega would be
as follows:
Department Section Location
Medical: Allergy Roth

Cardiology Both
Dermatology > Both
Endocrinology Both
Gastroenterology Southwest
Internal Medicine Both
Nephrology Southwest
Rheumatology Both
Physical Medicine Both
Chest Diseases Both
Infectious Disease Both
Neurology Southwest
Oncology Southwest

Psychiatry Delaware
Radiation Therapy Southwest
Family Practice Delaware
Surgical: General Both

Neurosurgery Southwest
Orthopedic Surgery Southwest
Plastic Southwest
Proctology Both
Thoracic Southwest
Otology Both
Rhinolaryngology Delaware
Vascular Both

Dentistry Delaware
Ophthalmology Delaw are

|

1

As a result of the order of the district court that the 
Department of Health. Education and Welfare perform 
an investigation of Plan Omega’s compliance with Title 
VI,2 proceedings took place before that agency which re­
sulted in a finding that, as originally conceived. Plan 
Omega would violate Title VI. A Supplemental Agree­
ment between the agency and WMG was then made lot 
the purpose of assuring that the plan would not violate 
the statute. ‘ The fact, though not the legal significance, 
of the Supplemental Agreement is undisputed.

The plaintiffs contend that the effect of Plan Omega 
is to impose on protected classes in New Castle County a 
disproportionate burden of decreased availability of 
medical services and of employment opportunities when 
compared to the rest of the population. That dispaiate 
impact, they contend, will result because the housing 
patterns in New Castle County concentrate greater 
numbers ol the protected classes in those paits of the 
County nearer to the present WMC divisions, which un-

41

U eulogy
Obstetrics'
Gynecology:

„ Pediatrics:

Obstetrics
Gynecology
Pediatrics
Newborn
Premature

Southwest

Southwest
Southwest
Southwest
Southwest
Southwest

In addition, some clinic, outpatient, and support services will 
also be located exclusively at the Southwest Division, including the 
high risk prenatal and specialty pediatric and gynecological clinics 
and the specialty cardiac, radiation therapy, and hemodialysis sup­
port services. The Delaw are Div ision will exclusively house the psy­
chiatry. ear. eye. and nose, and dentistry specialties. I he primary 
care clinics will be consolidated and located exclusively at the Dela­
ware Division.

-i See NAACP v. Wilmington Medical Center. Inc.. TV! I 
Supp. 280 tl) Del IfCKV

The Supplemental Agreement is in the record as P.Y2.



34
the context of voluntary remedial actions. The Supreme 
Court did not deal with the type question present in this 
case, namely whether Title VI may impose requirements 
on recipients of federal lunds that are broader than the 
Constitution demands when faced with disparate im­
pacts resulting from facially neutral actions. Moreover, 
the concern voiced in Harris — that because a violation 
of Title VI may result in a cutoff of funds, it is likely that 
Congress desired this drastic sanction only when dis­
crimination is intentional — would also appear to be in­
applicable here. The plaintiff's private cause ot action 
against the Center, seeking an injunction to prevent fu­
ture discrimination, involves no immediate prospect ol a 
fund cutoff. In fact, it is attempting to ensure against 
such a possibility.•*

Nonetheless, whether hospital relocations and ren­
ovations such as the present one should be subjected to 
judicial scrutiny aimed not only at preventing intention­
al discrimination but also at forestalling any relocation 
which may occasion unintentional, adverse ellects on 
protected groups is. from my perspective, a troublesome 
question. Courts may not be the most competent forums 
for determining the effects of hospital ielocutions on ra­
cial minorities. Admittedly, we earlier acknowledged the

3. The broad spectrum ol federally funded programs in which 
Title VI challenges occur may account for the divergent resolutions 
of the intent vs. impact question among and within the circuits. See 
Cannon v. Universitv ol Chicago. No. 80-1i03 l jth Lit. May ii. 
1981) (based on belief that a violation of Title VI requires an inten­
tional discriminatory act. the court adopted the intent standard for 
Title IX); Guardians Association of the New York City Police Dept.. 
Inc., etc. v. Civil Service Commission of die City of New York. 933 
I'.2d 232 (2d Cir. 1980) (intent required for Title VI); Bryan v. 
Koch. 027 I'.2d 012 (2d Cir. 1980) (unnecessary to decide whether 
intent or effects standard applies to Title VI); Board of education 
Calilano. 581 I .2d 570. 589 (2d Cir. 1978) (effects lest for fide VI). 
„H,l on other (iron nils. -I Id US. 130 (1979); Guadalupe Organiza- 
tion. Inc. v. Tempt* Klementary School Dist. No 3. 587 I 2d 1022. 
1029 n.0 (9th Cir. 1978) (impact is proper standard for l itle VI).

35
desirabilitv of judicial review by finding n private cause 
of action under Title VI. See NAACP v. Wilmiiuitun 
Medical Center, Inc., 599 F.2d 124/, 12d4 (3d Cit 
1979). And courts are often well-situated to address the 
concerns ol relatively unorganized, politically weak con­
sumer groups whose interests may be insulliciently tec- 
ognized in administrative proceedings. But I would defer 
deciding until a later day. the level ol scrutiny, anti the 
extent to which courts might intrude upon a perhaps 
better-informed regulatory process.

As the district court held, and the majority here 
agrees, the record is devoid ol prool of intentional dis­
crimination. But. even assuming that a dispaiate impact 
test is an appropriate one under Title VI. I believe that a 
fair reading of the evidence in this case, and especially ol 
the extensive findings made by the trial court, indicates 
that the plaintiffs failed to make out a prima facie case 
under any of the statutes involved. A plethora of findings 
underlies the trial judge s ultimate conclusion that the 
plaintiffs have shown only a slight disparate inciease in 
travel time, a modest decrease in the ability ol inner city 
residents to visit patients at the suburban site, and con­
sequently a minimal negative effect which the decrease 
in visitors mav have upon the quality ol cute loi the el­
derly. 491 F. Supp. at 333. The district court also deter­
mined that the possibility of a few minority high risk pa­
tients missing an appointment at the specialty clinics, 
and the extremely rare chance ol an obstetrical emer­
gency patient receiving inadequate treatment in the in­
ner city division constituted such unlikely ellects that 
thev failed to establish a prima facie case under Title \ I 
491 F. Supp. at 337. I cannot find that the trial court 
clearly erred in holding that plaintiffs "failed to meet 
their initial burden ol proving disparate impact undo 
the civil lights statutes invoked." See 491 F. Supp. at 
339.

Moreover, these specific findings are part ol a largci 
mosaic: the trial court's overarching finding that the lev -



36
el of care for all population groups will improve on ac­
count of the benefits that greater consolidation, 
better-trained residents and upgraded facilities will con­
fer. Measured against HEW regulations which define 
Title VI violations as actions which have “the effect of 
defeating or substantially impairing accomplishment of 
the objective of the program as respect |sicj individuals 
of a particular race, color, or national origin," 45 C.F.R. 
§80.3(b)(2) (emphasis added), these de minimis im­
pacts simply do not pass muster. Unless a threshold is 
created for prima facie cases under Title VI. questions 
regarding hospital relocations and similar, complex so­
cioeconomic decisions will be open to protracted court 
challenge, for each significant community undertaking 
affects slightly differently the various protected popula­
tion subgroups in our country's localities.

Because I am unable to find that the plaintiffs estab­
lished a prima facie case, it is unnecessary for me to re­
solve whether the defendants carried a burden of pro­
duction or burden of proof in rebutting an initial 
showing of disparate impact with evidence of legitimate 
medical needs.

CmiiONS, Circuit Judge. concurring and dissenting.
I join in Part 1 of the opinion of the court, which 

holds, contrary to the position advanced by the Wilming­
ton Medical Center (WMC), that Title VI of the Civil 
Rights Act of 1961. 42 U.S.C. §2000d ct scg. (1976). 
Section 501 oflhe Rehabilitation Act of 1975, 29 U.S.C. 
§791 (Supp. II 1978) and the Age Discrimination Act, 12 
U.S.C. §§6101 ct seg. (1976 & Supp. II). prohibit not in­
tentional discrimination alone, but also disparate impact 
upon the classes those acts protect. Only an effects 
standard will encourage decision makers to consider

37
possible discriminatory consequences of a proposal be­
fore its implementation. I also join in Part II A ol the 
opinion of the court, holding that the plaintiffs did not 
establish a prima facie case of violation of Section oO-l ol 
the Rehabilitation Act. I do not join in Part 11 B ol the 
opinion, which assumes arguendo that the plaintills es­
tablished a prima facie case ol disparate impact against 
the aged and minorities. My view is that the plaintills 
quite clearly proved a prima facie case ol disparate im­
pact against both classes in significant respects. I dis­
sent from Part III of the opinion of the court, which is 
entirely inconsistent with the intention which the court 
correctly attributes to Congress in its discussion ol the 
federal funding statutes in Part I.

I.
In describing the requirements for a prima lacie 

case the majority opinion states:
To establish a prima facie case under Title \  I in 
these circumstances, some definite, measurable im­
pact is required, otherwise needed and worthwhile 
efforts at improvement will be paralyzed. Reason­
able accommodations must be made, but when they 
have been reached, new programs must be allowed 
to proceed.

Typescript p. 20 (emphasis supplied). II the court ended 
its discussion with the italicized language. I would agree 
with its test. But the addition oflhe following sentences 
shows that the court is confusing the requirements ol a 
prima facie case—definite, measurable impact on the 
protected class—with justification for the imposition ol 
such an impact. Medical and financial necessities may 
juslilv the adverse effects, but do not make them any 
less substantial. The distinction is critical. It is illogical 
to proceed, as the majority does, to the issue ol justifica­
tion, without first identifying the specific impacts which



38
will occur, since what amount of accommodation is rea­
sonable depends on the size of the impact.

On this record there is no question but that, con­
trary to the district court’s alternative holding, a definite, 
measurable impact on the protected classes has been 
shown. It need not be assumed arguendo. It is plain. The 
district court’s contrary conclusion is the result of sever­
al fundamental legal errors, which the majority opinion 
ignores.
A. Factual Background

Before reviewing the lower court’s ultimate find­
ings, I summarize the background facts about Plan 
Omega which are common ground. The plan was the 
culmination of a long period of planning by WMC for the 
improvement of its ability to offer quality medical care. 
WMC is a private nonsectarian hospital which evolved 
from the merger in 1965 of three acute care general hos­
pitals in the City of Wilmington, which alter the merger 
maintained three separate physical facilities containing 
approximately 55 percent of the available acute care 
beds in the State of Delaware. Although the three sepa­
rate facilities are located in different areas of the city, 
they are all well served by bus routes which run 
throughout heavily populated areas of New Castle Coun­
tv, as would be true of any new consolidated facility if it 
was located in Wilmington. The primary reasons for the 
merger were reduction of duplicate facilities and im­
provement of clinical experience for a resident program 
in order to attract residents who would serve the Dela­
ware community. Thwarting this purpose is the fact that 
WMC’s physical facilities are aging and in various states 
of disrepair: their inadequacies have resulted in only 
probational accreditation by the Joint Commission on 
Accreditation of Hospitals. Loss of accreditation would 
mean ineligibility for participation in resiliency pro­
grams approved by the American Medical Association. 
Thus plant improvement is essential.

I

It has always been the judgment of the WMC medi­
cal staff that achievement of the hospital's objectives 
could best be served by placing all medical and surgical 
services under one roof. However by the time planning 
for a new facility commenced, Delaware, like other 
states, was experiencing a substantial shift in population 
growth from older urban to newer suburban locations. 
In New Castle County that shift in the growth pattern 
produced a rapid increase in its southwestern portion, 
around Newark. Delaware. That area is now served only 
by an emergency room, and the need for some hospital 
beds in the vicinity of Newark is widely recognized. The 
Delaware Health Planning Council, a state agency, has 
recommended that such beds be provided. If an institu­
tion other than WMC were to do so. the latter would be 
adversely affected. WMC is the largest provider of free 
care in the County to those unable to pay lot caie them­
selves and unable to qualify for government assistance. 
Partly as a result of subsidization of this free care, 
WMC’s hospital rates are the highest in the State of 
Delaware. Since the population in the southwestern 
suburbs is generally more affluent than that in the ui- 
ban northern part of the County, diversion of patients 
from WMC to a new suburban institution would have 
the effect of increasing the percentage of free care pa­
tients in WMC’s patient mix. and thus of adversely af­
fecting its financial stability.

The combination of undisputed facts outlined in the 
proceeding paragraph limited the choices available to 
WMC. It could build a new hospital under a single tool 
in the suburbs, closing the Wilmington units, or it could 
build a new hospital in Wilmington, running the risk 
that another institution would build in the suburbs, or it 
could attempt, with separate facilities, to serve both 
areas. When the third course was decided upon it be­
came necessarv to determine the mix ol facilities in the 
two locations. In Plan Omega WMC opted for the erec-

39



40
lion of a new 780-bed hospital, the Southwest Division, 
in a rural location at Stanton, the closing of two of the 
three Wilmington divisions, and the reduction in bed ca­
pacity of the third. Delaware Division, from 480 to 250 
beds. The Stanton location is not now and will not be in 
the foreseeable future served bv public transportation, 
although it is on an interstate highway. The Plan in­
volves more than allocating beds, however, lor some ma­
jor hospital services will be located exclusively at the 
larger Southwest Division, others exclusively in the 
smaller Delaware Division, and some in both places.*

1 Placement of inpatient services under Plan Omega would be
as follows: 
Department Section Location
Medical. Allergy Roth

Cardiology Both
Dermatology Both
Endocrinology Both
Gastroenterology Southwest
Internal Medicine Both
Nephrology Southwest
Rheumatology Both
Physical Medicine Both
Chest Diseases Both
infectious Disease Both
Neurology Southwest
Oncology Southwest

Psychiatry Delaware
Itadialion Therapy Southwest
family Practice Delaware
Surgical: General Both

Neurosurgery Southwest
Orthopedic Surgery Southwest
Plastic Southwest
Proctology Both
Thoracic Southwest
Otology Both
Rhinolaryngology Delaw are
Vascular Both

Dentistry Delaware
Ophthalmology Delaware

41
As a result of the order of the distiict court that the 

Department of Health. Education and Welfare perform 
an investigation of Plan Omega’s compliance with Title 
VI.- proceedings took place before that agency which re­
sulted in a finding that, as originally conceived. Plan 
Omega would violate Title VI. A Supplemental Agree­
ment between the agency and WMC was then made loi 
the purpose of assuring that the plan would not violate 
the statute.3 The fact, though not the legal significance, 
of the Supplemental Agreement is undisputed.

The plaintiffs contend that the effect of Plan Omega 
is to impose on protected classes in New Castle Count) a 
disproportionate burden of decreased availability of 
medical services and of employment opportunities when 
compared to the rest of the population. That disparate 
impact, they contend, will result because the housing 
patterns in New Castle County concentrate greater 
numbers of the protected classes in those parts oi the 
County nearer to the present WMC divisions, which un-

Urology
Obstetrics/
('.yi tocology:

Pediatrics:

Obstetrics
Gynecology
Pediatrics
Newborn
Premature

Southwest

Southwest
Southwest
Southwest
Southwest
Southwest

In addition, some clinic, outpatient, and support services will 
also be located exclusively at the Southwest Division, including the 
high risk prenatal and specialty pediatric and gynecological clinics, 
and the specialty cardiac, radiation therapy, and hemodialysis sup­
port services. The Delaware Division will exclusively house the psv- 
chiatrv. ear. eye. and nose, and dentistry specialties 1 he primary 
care clinics will be consolidated and located exclusively at the Dela­
ware Division. .

a see NAACP v. Wilmington Medical Center. Inc.. Tvt I
Supp. -HOtD. Del. IhiSV

A .The Supplemental Agreement is in the record as I \ ~



42
der Plan Omega would be scaled down considerably. 
The travel burden imposed by the proposed Southwest 
Division would allegedly be exacerbated by the lact that 
the new facilitv would not be served by public transpor­
tation. The burden would, therelore, tali disproportion­
ately on minorities, the handicapped, and the elderly, 
who. plaintiffs urge, have far less access to private trans­
portation than does the rest of the population. Moreover, 
they predict that because the more significant in-patient 
medical services will be at the Southwest Division, the 
quality of care at the Delaware Division will in many re­
spects be inferior, and that division will ultimately be­
come raciallv identified. These impacts would violate Ti­
tle V!

Before addressing the evidence supporting these 
contentions, it is worthwhile noting certain provisions of 
the Supplemental Agreement reached by WMC and the 
Department of Health. Education and Welfare. The 
agreement recites the Secretary's desire to receiv e assur­
ance that the operation of WMC under Plan Omega as 
implemented will be in compliance with Title VI and the 
Rehabilitation Act. The agreement covers main areas of 
future WMC operation. First, it obliges WMC to operate 
its own transportation system between the Delaware and 
Southwest Divisions. Second, it requires the adoption of 
a system of inpatient utilization control aimed at pre­
venting one or the other division from becoming racially 
identifiable. Third, it requires that both divisions be op­
erated on a unitary basis, with a single Board ol Direc­
tors and Executive Committee, a single medical staff, 
consolidated leaching programs, and consolidated ac­
counting. Fourth, it requires improvements in the plant 
of the Delaware Div ision and approval by the Regional 
Civil Rights Director of (he Department of Health. Edu­
cation and Welfare before aqv reductions in serv ices at 
that div ision or material expansion of the Southwest Di­
vision occur. The agreement is. however, “subject to

43
amendment from lime to time by written instrument ex­
ecuted by the parties, to reflect such changes in systems 
for delivery of hospital care and of changing community 
needs."1

In determining that the plaintif fs had failed to prove 
a case of disparate impact, the trial court canv assed the . 
ev idence on each of the ways Plan Omega could be ex­
pected to impact upon the three protected classes. Since ! 
I agree with the majority's disposition ol the claim ol dis­
parate impact on the handicapped. 1 address the remain­
ing claims of the aged and minorities.

B. llie Disparate Impacts Identified
The plaintiffs' evidence suggests that minorities 

and the elderly are concentrated in or near the City of 
Wilmington, that of households lacking access to auto­
mobiles 73.8rr were in that part of the County, and that 
such public transportation as is av ailable in the County 
other than taxicabs is concentrated in that pail ol the 
County as well. Moreover, a round trip taxicab fare from 
the Delaware Div ision to the Stanton site costs approxi­
mately SI5.00. 491 F. Supp. at 304-05. That evidence t 
also suggested that minorities and the elderly have a dis­
proportionately high incidence of need for those inpa- j 
tient services which will be located exclusively at the 
Southwest Division. ’ 491 F. Supp. at 30G. The plaintiffs 
evidence identified three classes ol services falling in 
this category. First, services relating to childbearing and j 
infant health are more likely to be needed by minorities.
191 F. Supp. at 300-07. Second, minorities are more | 
likely than whites to need serv ices for cerebral v ascular 
diseases and for cancer. 491 F. Supp. at 30/. Third, the t

-t. Supplemental Agreement. Paragraph i l-f >•
5. Services to be exclusively at Southwest include gasirocnier- ! 

ologv. nephrology, neurology, oncology, radiation ihcrapv. i 
neurosurgerv. orthopedic surgery, plastic surgery, thoracic sumeiv. 
urology, obstetrics, gynecology, pediatrics, newborn, and pi etna - 
ture. j

5
i f I

f



44
elderly are more likely than the general population to 
need services relating to cerebral vascular and cardio­
vascular diseases, gastroenterology, thoracic surgery, 
and radiation therapy. 491 F. Supp. at 308.1 he evidence 
is clear, and virtually undisputed, therefore, that certain 
services will, under Plan Omega, be moved over nine 
miles further from the population that needs them most; 
a population that has least access to private trans­
portation.

The evidence also discloses important differences 
between the Southwest and Delaware Divisions, 
differences which plaintiffs predict will result in 
unequal quality of care. Almost all clinic (outpatient) 
care will be concentrated at the Delaware Division, and 
that a majority of clinic patients are members of minority 
groups. Moreover, of 33 inpatiept departments, only 5. 
psychiatry, family practice, rhinolaryngological surgery, 
dentistry and ophthalmology, will be exclusively at Dela­
ware Division, while 15 will be exclusively at Southwest 
and only 13 at both facilities. There is ev idence that the 
Delaware Division will be housed in a renovated lacility. 
presently dilapidated, while the Southwest Div ision will 
be brand new. Plaintiffs also offered ev idence lending to 
show that estimates of revenue on which Plan Omega 
was based, and upon which the proposed renovation of 
Delaware Div ision was dependent, were questionable, 
and thus that even a renovated Delaware Div ision may 
not materialize. 191 F. Supp. at 327. Plaintiffs contend 
that Delaware Division is destined to become a 
second-rate lacilitv. racially identifiable, anti lendeiing 
to the minorities and the elderly in its service aiea sei- 
vices inferior to those rendered at the Southwest Divi­
sion. The inferior serv ice will result, they contend, from 
unavailability of board-certified specialists for consulta­
tion at the Delaware Div ision in those important speciali­
ties exclusively at Southwest.

For various reasons the trial court rejected the sig­
nificance of most of the evidence referred to. and con-

45
eluded that no violation of either Title VI or the Age Dis­
crimination Act was shown. 1 lie court analyzed the 
evidence under three categories: effects on accessibility, 
effects on quality of care, and racial identifiabilitv. I w ill 
do likewise.

1. Accessibility
Patently the removal of a number of medical spe­

cialties from Wilmington to the suburbs will impose a 
disproportionate travel burden on minorities and the el­
derly who are concentrated in the inner city and have 
less access to private transportation. But as amended by 
the Supplemental Agreement. Plan Omega includes a 
shuttle bus component intended to satisfy transportation 
demand. Plaintiffs produced the testimony■ of Dr. Marvin 
Manheim. a transportation expert, to the effect that the 
level of shuttle bus serv ice specified in the Supplemental 
Agreement will be far less than the demand and will cre­
ate for passengers prohibitively long waiting periods. 
The court discounted the relevance of Dr. Manheim s 
testimony, however, construing the Supplemental 
Agreement as a categorical undertaking by WMC to pro­
vide adequate free transportation for patients, visitors 
and employees. 1 he court concluded, moreover, that 
even in the worst case hypothesized by the transporta­
tion expert, the additional cost of providing needed free 
transportation would be minimal in comparison with 
WMC's annual budget. -191 F. Supp. at 319.

Since the court did not discredit Dr. Manheim s tes­
timony on the likely inadequacy of the minimum trans­
portation requirements set forth in the Supplemental 
Agreement, they must for purposes of rev iew be accept­
ed in determining whether plaintiffs proved a prima 
facie case. Rebuttal of this case hinged on the testimony 
of James Tvler. a defense witness, assuring that \\ Mk 
would have the financial ability to meet this projected 
need. However, it was plaintiffs' contention throughout 
trial that, regardless of WMC's good intentions, its In-



46
ture revenue projections were seriously flawed and that 
as a consequence, it would be unable to satisfy the an­
ticipated need lor shuttle service. Elsewhere in its opin­
ion the court conceded that plaintiffs had presented 
strong evidence" that revenues were overestimated. 

.I91 f  SuPP 4at 328 "-230. But it deemed such evidence 
irrelevant lor purposes of weighing the prima facie 

case. As will be discussed in more detail later '* this at­
tack on the credibility of WMC's revenue projections 
was, to the contrary, highly relevant, and the court's ac­
ceptance of Tyler s assurances, with no consideration 
E ” t0 1 \e!r ‘eiiahilliy. tainted its conclusion that 
. ,n"°uld be able to upgrade its planned shuttle ser­

vice. For purposes of plaintiffs' prima facie case, we are 
e t "*«•» undisputed evidence of a lack of public trans­

portation horn minority and residential areas to the 
Southwest Division, and of a planned private shuttle
bus system which, as presently projected, will be 

I inadequate.
Plaintiffs also produced evidence, and the trial court 

found, that even assuming adequate free shuttle serv ice 
connecting the Delaware and Southwest Divisions mi­
nority inpatients and v isitors will still suffer a dispropor-

"V he anWH,,U ol lime sP<m‘ leveling lo leach NM Cs facilities. -191 F. Supp. at 320. The same 
would appear, from the ev idence, to be true of the elder­
ly. 1 his time the burden would fall particularly heavily 
on the poor lor w hom it might mean lost wages and on 
minority mothers of small children. There is also ev i­
dence that because of the nature of the populations 
affected—the elderly and minorities—an increase in 
lavel time may translate into some decrease in the use 

ol healtl. care. -191 F. Supp. at 322. The court discount­
ed the significance of this evidence.

ti SVr I '.m lill m2 Hi) in I'm.

47
Relying on section 603 of Title VI.7 it declined to 

consider any transportation impact on employees. This 
omission was improper, for while it is true that medicaid 
and medicare funds are not appropriated to provide em­
ployment, and thus may fall within section 603, the irn 
pact on employees still was relevant to the claim, ad­
vanced on behalf of hospital patients, that the Southwest 
and Delaware Divisions will become racially identifiable. 
In measuring the plaintiffs' prima facie case, therefore, 
evidence about access to the Southwest Division bv mi­
nority employees was highly relevant. The failure to con­
sider it was error.

As to ev idence of possible decrease in use of health 
care facilities, the court rejected it. noting that

jojbv iously, they will not be deterred from seeking 
care at any of the serv ices located at the Delaware 
Division. Any deterrent . . . will only occur with 
services located exclusively at the Southwest Divi­
sion. Moreover, increases in time and distance w ill j 
usually only deter those seeking primary care and 
will have no effect upon those who will be inpa- 1 
items, those who arc terminally ill. or those w ho are ! 
referred by their doctor to a facility to receive spe- 
cializcd care. Since only doctor referred specialty 
clinics, inpatient facilities, and doctor referred spe- 
cialiv outpatient treatment facilities will be located 
at the Southwest Division, this deterrent factor 
should, for the most part, not apply.

491 F. Supp. at 322. While there was evidence from 
which another inference might have been drawn about * 12

< Noiliim; conta ined  in this sulicliapici d u l l  In- coiiMiucd u> 1 
au ilio ri/c  aclion u n d e r  this su Ih l iapicr l>\ a m  dcparimciil  or auen- f 
i \  wiili respect m a m  c-ni|>lo\mem |iraeiiee ol a m  employer 
e \aop t  w here  a primary ol>|eeii\e ol d ie  le d e ra l  Iiii.iik ial a ss is tan te  
i* to pro\ ide cuiplox m em
12 l '  S t '  $20l)0d-.1.



48
the deterrent effect of distance upon minorities and the 
elderly seeking inpatient care at the Southwest Division, 
the above finding cannot be described as clearly 
erroneous.

The court went on to find, however, that in two re­
spects which were treated as de minimus the added dis­
tance and trav el time would have a deterrent el feet on 
the statutorily protected classes. F|rst. the location of all 
specialty obstetrical care at the Southwest Division, in­
cluding specialty clinics and high-risk prenatal care, 
may deter a few minority women to skip appointments. 
Second, there will be a disproportionate decrease in the 
number of minority and elderly visitors to the Southwest 
Div ision. 191 F. Supp. at 322. The significance of these 
disparate impacts upon the protected classes is dis­
cussed in connection with quality ol care.

2. Quality of Cure
(i) Physical Facilities

Plaintiffs presented expert testimony that the cost of 
the features of Plan Omega which called for the renova­
tion of the Delaware Division to make it physically and 
aestheticallv equal to the Southwest Division was seri- 
ouslv underestimated by the defendants. Under the 
Supplemental Agreement WMC agrees to use its best ef­
forts to take S2.800.000 from the financing of Plan Ome­
ga and place it in escrow, to be expended on renov ating 
the Delaware Div ision. However, plaintiffs’ expert pre­
dicted the cost of renovations would be S2-I.T00.000. 
Plaintiffs also offered what the court described as 
"strong ev idence" tending to show that the revenue pro­
jections upon which Plan Omega is predicated were 
overestimated, and thus that the improvements in the 
Delaware Division would not be carried out. 491 F. 
Supp. at 328. The court did not discredit this testimony, 
rather it disregarded the evidence as irrelevant, thus pre­
senting us with a legal issue.

The evidence of underestimation of the cost of ren­
ovating the Delaware Division was held to be irrelevant

49
because of the categorical requirements of the Supple­
mental Agreement. 491 F. Supp. at 325. Even leaving 
the Agreement aside, the court found that the needed 
renov ations were of the type that could be met by use ol 
money from the operating budget and unrestricted 
funds. 491 F. Supp. at 327. If. however, the rev enue pro­
jections are underestimated as plaintiiis alleged, the op­
erating budget will not be achieved and unrestricted 
funds will be invaded to meet opening deficits. Although 
it noted the "seriousness of the consequences." the court 
refused to “take a hard second look at the plan." holding 
instead that plaintiffs' evidence of overestimaiion of 
revenues—indeed the whole question ol Plan Omega s 
financial feasibility—-was irrelevant.

because this question is better left for determination 
bv the commercial market. The |bond| market will 
be able to apply sanctions as swiftly, surely and with 
greater accuracy than this court could apply.

491 F. Supp. at 328.
Such reliance on the Supplemental Agreement or 

the bond market as a basis for declining to consider 
plaintiffs' evidence on cost underestimation and rev enue 
ovcrcstiminalion cannot withstand analysis If Delaware 
Division were not to be renovated substantially, after 
erection of Southwest Division went forward, the case 
for disparate impact upon the protected classes would be 
overwhelming. It is no answer to say that substantial evi­
dence of financial infeasibility is irrelevant because 
WMC has made a promise to HEW. In the first place the 
Supplemental Agreement does not appear to me as cate­
gorical as the trial court believed it to b e* * Moreover, the

S Paragraph Igul> provides:
• WMC agrees to complete renovation of the Delaware Divi­

sion regardless of cost, within i.D years of the date on which 
construction of the Southwest Division is completed, failure to



50
agreement is subject to amendment at any time.0 But 
more fundamentally, the court’s deference to HEW en­
forcement of an agreement, in place of a decision on the 
merits of the plaintiffs’ claims, is inconsistent with the 
mandate of this court in the prior appeal. When the case 
was last before us we considered both the ruling that the 
federal statutes relied on did not permit a private cause 
of action, and the ruling that HEW did not have to afford 
a trial-type hearing. We did not pass upon the merits of 
the appeal from the latter ruling, because we held that it 
was to the court that plaintiffs could look for relief. Reli­
ance upon the Supplemental Agreement worked out be­
tween WMC and HEW. an agreement which antedated 
both of the orders we reviewed in our earlier decision, is 
inconsistent with the clear purpose of our remand for a 
trial in the district court.* 9 10 * *

NOTE 8 — (Continued)
complete said renovation within said period shall he deemed to 
he a violation of Title VI of the Civil Rights Act of 196-1.

The Supplemental Agreement does not. however, describe the na­
ture or scope of the renov ations, as the court itself conceded. -101 F. 
Supp at AO I a.89.

9. Paragraph i Id) provides:
This agreement shall he subject to amendment from time 

to time by written instrument executed by the parties, to reflect 
such changes in systems lor delivery of hospital care and of 
changing community needs.
10. See NAACP v Wilmington Medical Center. Inc.. -15A F. 

Supp. 280 -I5A F. Supp. AAO i D Del. 1978). ra il. 599 F.2d I2J7 
(Ad Cir 1979). The plaintiffs' contentions, which the panel remand­
ed for consideration, included inter itlm that the modified plan was 
based on erroneous and inadequate findings. . . ." 599 F.2d at 
1250

in their brief on this appeal, plaintiffs point to inadequacies in 
the IIF.W investigation which, (hey claim, undermine the credihil- 
iiv of its acceptance ol the Supplemental Ameemenl. lil'AVs chief 
investigator admitted, lor instance, that the agency had not consid­
ered total patient days in accepting the patient assignment plan and 
thus did not consider the over-occupancv consequence prior lo its

51
Even less defensible from a legal standpoint is a re­

jection of the relevancy of plaintiffs’ financial feasibility 
evidence on the ground that they could rely upon the 
certain wisdom of the bond market. That market may. 
for all we know, be perfectly confident that the balance 
between the interest rate it seeks and the security of­
fered by WMC, even if a default occurs, is an acceptable 
risk. The one thing that is fairly predictable is that if 
three years after Southwest Division is completed WMC 
cannot afford lo complete the renovations of Delaware 
Division, the bondholders will be far more interested in 
keeping the former rather than the latter in operation. 
Thus it was error to reject the relevancy of plaintiffs' ev i­
dence on financial feasibility as a part of their prima 
facie case. That evidence, if credited, casts serious doubt 
upon the likelihood of Delaware Div ision being a hospi­
tal plant equivalent to Southwest Div ision, since the ren­
ovation depends on the availability of an operating sur­
plus. The district court did not discredit it. and we mav 
not. If one projects the possibility that Delaware Div ision 
may not be renovated, the case for disparate impact 
upon the minorities and the elderly who are likely to be 
its patients is strong.11

(ii) Qiuilit a of Mt'ilteal Scn icc 
Aside from their general prediction that lor financial 

reasons Delaware Division would be an inferior facility.

acceptance of I’lan Omega. It was also conceded tli.it no health ex­
perts were consulted or involved in the dialling or revision ol the 
letter of findings or the negotiations leading to the Supplemental 
Agreement (Joint Appendix (JA> I2-IA-0. 1230).

11. In a related context, the Court of Appeals in Hryan v. Kor h 
627 F.2d 612 (2d Cir. 1980). implied that plaintiffs challenging the 
shutdown of a municipal hospital had established a prima facie case 
of disparate impact where the City's estimates for alternative care 
"rest on projections made without sufficient assurance. . . ." (>27 
F.2d at 617. Accordingly.'the panel found it "appropriate" to com­
plete an assessment ol' the plaintiffs' Title VI claim by examining 
the justification advanced by the City for closing tin1 hospital



52
the plaintiffs also offered evidence attempting to prove 
that the quality of care received by minorities and the el­
derly under Plan Omega will be poorer than that re­
ceived by the general population.

Plaintiffs’ first contention is that although both Divi­
sions will offer some services in medicine and in sur­
gery,12 the services delivered at Delaware Division will 
be inferior, (1) because of the unavailability of 
board-certified specialists in some specialties for consul­
tation at that division, and (2) because of the likelihood 
that, even when a specialty service is offered at both, a 
shortage of board-certified physicians at the Delaware 
Division will result from their abandonment of it out of 
preference for Southwest. The impact in either event 
upon minorities and the elderly would be considerably 
greater than upon the general population. The court dis­
credited the evidence suggesting that this scenario will 
occur; it reasoned that under Plan Omega specialists at 
Southwest would be required to be on call for consulta­
tion at Delaware, that Delaware would be a fully 
equipped hospital in which such subspecialists could 
practice,13 and that under the Plan doctors w ould be pro­
hibited from limiting their practices to one division. In 
this instance, more than any other, the court w as called 
upon to exercise intuition and judgment about human 
behavior in the future. While the district court's descrip­
tion of plaintiffs' evidence on this point as having “abso­
lutely no merit" is hyperbolic. -191 F. Supp. at 330. one 
cannot say that the court erred in discrediting it. Its re­
jection is reinforced by the conclusion that in most cases 
patients in need of subspecially services will be admitted 
directly to Southwest, and others can be transferred 
there. 191 F. Supp. at 329-30. But still, all depends on 
the assumption of financial lcasibility.

12. See note t siiprn.
13 rite court assumed, of course, that this would lie liuancial 

ty feasible See Part l.(liH2KD s«/mi.

53
I

Plaintiffs also attempted to prove that the quality of 
the resident staff at Delaw are would be inferior in num­
bers and quality. The court concluded otherwise, be­
cause Plan Omega contemplates operating the resident 
program on a unified basis, with residents being rotated 
among floors in both facilities. They also challenged the 
quality of Emergency Room services, although the Plan 
calls for duplicate Class 1 emergency rooms with similar 
backup specialists, in both of these instances, as well 
one is unable to say that the court erred in finding no 
disparate impact on the protected class, assuming finan­
cial feasibility of the entire program.

However, all of these findings favorable to W'MC are 
tainted bv the court's treatment of evidence of financial 
feasibility as irrelevant. All would probably have been de­
termined otherw ise if it were found that W'MC could not 
afford to upgrade Delaw are Division after the completion 
of Southwest Division. In that event, plaintiffs' case ol 
disparate impact would be overw helming.

In two respects the court found that plaintills had 
proved disparate impact in quality of care: access to a 
high risk prenatal clinic, and impact on visitors to 
inpatients.

As to prenatal care the evidence is clear that the in 
cidence of high risk pregnancy is greater among minor 
ity women than in the female population at large. Ob 
stetrical service will be concentrated at Southwest. 
Because of the distance to that div ision, the court found 
that persons in need of prenatal outpatient care, espe 
ciallv teenagers, will be more likely than others to miss 
appointments and be deterred Irom seeking care. -191 l 
Supp. at 335. In considering plaintiffs' pritna facie case, 
this finding was discounted because, the court conclud 
ed.

(t|he fact is. however, that the special clinics which 
W'MC maintains for teenagers and ilispanics are 
not called high risk clinics” and will be located at 
the Delaware Division under Omega.



54
491 F. Supp. at 335. 11 the quoted language was intend­
ed as a finding that there would be equivalent obstetrical 
clinic care at Southwest and Delaware, there is no sup­
port lor it in the record. The evidence is that the only 
clinic at which an attending physician is present is the 
“obstetrical high risk clinic" (JA 525-6, 529), and that 
clinic will be at Southwest (JA 1002). Thus the finding 
of disparate impact on minority women with high risk 
pregnancies is unrebutted.

As to visitors, the court acknowledged that in­
creased travel time will have a deterrent effect on minor­
ities and the elderly. 491 F. Supp. at 332. Specialty ser­
vices for which the elderly are particularly in need are 
concentrated at Southwest, for example, and the court 
acknowledged that a lack of visitors can have both psv- 
chic and physical deleterious effects on them. 491 F. 
Supp. at 332. All pediatrics inpatient services will like­
wise be at Southwest and the court conceded that visits 
from family members are extremely important for sick 
children. 491 F. Supp. at 338. Obstetrical inpatient ser­
vices will be at Southwest, and OB inpatients were also 
lound to have a great need for visitors. 491 F. Supp. at 
331. But while conceding that elderly inpatients and mi­
nority users oi WiMC s pediatric and obstetrical services 
w ill be disproportionately impacted by the inhibiting ef­
fect ol time and distance on visitors, the court 
disregarded those disparate impacts as insufficiently 
substantial to be taken into account in determining 
whether a prima facie case had been made out. The 
question of substantiality for purposes of Title VI and the 
Age Discrimination Act is a question of law. At least in 
the area of hospital care, w here the marketplace typical­
ly affords few alternative facilities and impaired access 
may gravely all'ect health. I am reluctant to impose a 
very strict a standard of substantiality. Therefore. I can­
not agree with the court's conclusion that these dispa­
rate impacts are insubstantial.

55
3. Racial Identifiability
Finally, plaintiffs attack the Supplemental Agree­

ment provision for inpatient utilization control, whereby 
patients needing services offered by both the Southwest 
and Delaware Divisions would be assigned to one or the 
other according to zip code. Expert testimony was pre­
sented suggesting that this method of allocation will fail 
to prevent the Delaware Division from becoming racially 
identifiableM and will, in fact, cause overcrowding that 
can be alleviated only in such a way as to make the mi­
nority presence at the Delaware Division even more 
dominant. Noting that the assignment plan merely re­
quired the hospitals to offer beds to certain assigned pa­
tients. but did not compel the patients to take them, 
plaintiffs’ experts testified that a multitude of factors 
would influence the choice of the more affluent, more 
mobile white population to go to the Southwest Division, 
w hile the poorer, less mobile minority population would 
await a bed at the Delaw are Division. Further exacerbat­
ing the racial identifiability of the inner-city hospital, i 
plaintiffs urge, would be the tendency for WMC's minor­
ity sen ice employees to prefer w orking there because of ! 
the greater travel time required for them to reach the 
Southwest Division.

In tlte face of such evidence and an admission by | 
HEW that it had not considered the overcrowding con­
sequence. the court again chose to disregard it as “sim­
ply irrelev ant" because of the Supplemental Agreement 
which requires WMC to remedy any ensuing racial 
identifiability "by whatever means ncccssarv." 491 F. 
Supp. at 300. In response to plaintiffs' concerns that 
WMC might somehow avoid this contractual obligation, 
the court noted that "MEW can monitor WMC’s activi­
ties. thus assuring that, if WMC does not meet its i I

I I Lmli'i Paiamaph iti' ol (In- Amooment. a division will he 
divined r.u'Killy idcniiliahlc il it shows "in excess ol J.V< niinoriiv 
in|)aiiem uiili/aiinn" based upon patient davs.



56
obligations, sanctions will be applied." 491 F. Supp. at 
300.15 1 have already indicated that such reliance on the 
terms of the Supplemental Agreement cannot substitute 
for a decision on the merits of plaintilis’ concerns. Since 
no weight was given to their evidence, the court’s find­
ing that the threatened overcrowding or racial 
identifiability can be remedied by simply transferring 
four inpatients per dav from the Delaware to the South­
west Division. 491 F. Supp. at 339. cannot be upheld, es­
pecially when the transfer of minority and elderly inpa­
tients risks reducing the quality of their care because ol 
the impact it would have on their access to visitors.

In summarv. after looking at the entire record, in­
cluding the evidence which the court erroneously 
disregarded, and considering the disparate impacts 
which were actually found. I conclude that the judg­
ment appealed from cannot be affirmed on the basis oi a 
failure bv the plaintiffs to prove a prima facie case ol dis­
parate impact of Plan Omega on minorities and the
elderly.

II.
As the opinion ol the court correctly indicates, 

when plaintiffs in a Title VI or Age Discrimination Act 
case hav e produced ev idence of disparate impact, the de­
fendants must at least come forward with ev idence in re­
buttal or justification to "meet" the plaintiffs' prima facie 
case. Unfortunately, however, the court never gets more 
specific and. hence, there is a large gap in its analysis. 
Bv assuming that the plaintiffs unrebulted evidence es­
tablished a prima facie case ol disparate impact, without 
discussing that evidence in detail, the opinion fails to I'o- * 17

1 5  However, relianee on ilie numiioriiiu and enlorcement ea- 
paluliiv oi IIKW. now III IS. max lie unrealistic See \\ ini>. I Mr M 
anil Ihallh Imilil irx.  10 Hast. I I i t. > !».«•

10. Sir Pari lilt m2 Mill
17. Typescript p|> 22. 20.

57
cus upon the nature and extent of the several different 
impacts on which evidence was offered. It then passes 
on to the quite separate issue of burden of persuasion, 
without first pausing to inform just what it is the 
factfinder must be persuaded of. The content of the re­
buttal or justification evidence cannot be determined in 
the abstract. It must be related to the precise impacts J 
suggested bv the plaintiff s evidence.

If we were dealing with an effort to prove intention­
al race or age discrimination by inference from the cir­
cumstantial ev idence of disparate impact upon minor­
ities or elderly persons, the content of the rebuttal 
ev idence would be sufficiently self-evident that an opin­
ion writer might safely assume it need not be referred to 
explicitly; evidence of a nondiscriminatorv business put- 
pose for the challenged actions supports an inference j 
that accomplishing that purpose was the true motive. 
Notwithstanding the inference of improper motive , 
which arguably arises from disparate impact, the exist­
ence of a proper business purpose places the evidence 
on motive at best in equipoise, such that the party with j 
the burden of persuasion on that issue loses. 1 he plain­
tiff can still cam- this burden by demonstrating that the 
business purpose was a pretext, feigned in order to hide 
the actual discriminatory animus. If such a pretext is es- ' 
tablished. the defendant loses, for he cannot ever justify 
action taken, regardless of pretext, lor the purpose ol j
discriminating. [

In a case such as this one. however, where the 
plaintiffs do not relv upon an intent to discriminate, the 
legal standards for rebuttal or justification are much 
more complex. Part I of the opinion of the court is a wel-i 
come clarification of the analytical distinction between 
intent cases and disparate impact cases, and a proper 
recognition that spending power statutes such as Title 
Vi and the Age Discrimination Act address both prob 
lems. Unfortunately, however, by ignoring the critica 
differences between the legal standards lor rebuttal and



58
justification in the two types of cases, the court leaves 
the law almost as confused as it was found.

When a member of a class protected by a funding 
statute’s nondiscriminatory clause has produced evi­
dence that a defendant’s actions will impose a disparate 
impact on that class, there are two analytically separate 
kinds of evidence which may be offered. First, the defen­
dant can rebut the evidence offered by plaintiffs, by evi­
dence that the impacts complained of will not occur. For 
example, a defendant can show that steps will be or have 
been taken to effectively prevent their occurrence. Alter­
natively. a defendant can justify those impacts by show­
ing that they must necessarily occur, if certain impor­
tant objectives are to be accomplished, even though a 
defendant has chosen what it believes to be the feasible 
alternative having the least discriminatory impact. This 
distinction between rebuttal and justification is critical. 
Rebuttal is in essence a factual matter. Justification, on 
the other hand, while it involves factual matters which 
may be in dispute, also involves a legal standard, which 
the opinion of the court never supplies. It never decides 
the legal question presented by this case: what must de­
fendants do before they may justify a redistribution of 
federal benefits away from a protected class. In my view, 
that a plan imposing such an impact can only be justi­
fied by a showing that defendant has v alid needs essen­
tial to its business or service, that the proposed plan will 
feasibly meet those needs, and that other plans with 
lesser impact on the protected classes will not.,H * ol

18 The distric t court assumed that this was the legal standard 
lor justification ol disparate impact. J9I T. Supp. at .110 A plurality
ol this court, relying on Jefferson v. Hackney. I0(> U S. 535 (1972), 
hint that any inquiry into alternatives at all may he inappropriate in 
Title VI cases. I lowevet. at the lime that case was decided, the eon- 
tours of Title M s obligations had not been Initialed. -Il)l> U.S at 577 
(Marshall. J.. concurriin; in (tail and dissenting in part), and the 
C ourt treated analysis under that statute and the fourteenth amend­
ment as being equivalent. -IOC* U.S. at 5 19-50 n 19. Subsequently, it

59
In the trial court WMC offered evidence both in re­

buttal and in justification. The trial court considered 
both, and decided in WMC’s favor. If the court had 
weighed all the relevant evidence regarding potential 
impacts and the steps taken to remove or mitigate them, 
and concluded that the alleged impacts would not occur, 
it might be proper to affirm on the basis that such a find­
ing was not clearly erroneous. Alternatively, if the court 
had identified specific impacts which will occur, but 
concluded after weighing all the relevant evidence that 
these impacts are inevitable. because Plan Omega is the 
only feasible method of meeting WMC’s compelling 
needs, that finding might likewise be affirmed as not 
clearly erroneous. But neither of these courses is proper­
ly open to this court on the present record because of the 
errors referred to in Pai l I above. The district court's en­
tire analysis is flawed by its interrelated holdings that 
ev idence of financial infeasibility was irrelev ant and that 
the Supplemental Agreement would overcome all de­
fects in Plan Omega bearing upon the vital issues of 
transportation, racial identifiability. and quality of ser­
vice. By assuming favorable revenue projections and 
complete compliance with the Agreement, the court re­
lieved WMC of the need to rebut those major impacts 
suggested by plaintiffs' experts.1" It also thereby nat- 19 *

Itanded down its landmark opinion in Lau v Nichols. -IN I S 3t>3 
tl9(-|). deciding that litlc \ I. Iw itscll. hatred disparate ellects 
Since the announcement in Uni that Title M can require allnma 
liv e action, the question olT/ott iinuh has remained open and is not 
controlled h\ JeJj'crson v. I/</< /.’/in/

19. 1'heelTect ol this was to short-circuit the process oT reason­
able accommodation w hich Title VI is designed to luster Kccogiu-
tion hy the trial court ol such specific, discrete impacts as the ab­
sence ol a high risk prenatal clinic .it the Delaware Division anil 
consideration ol plaimtlls' evidence ol litianri.il inleasibiliiv nttdii 
well have elicited Iroin \\ Ml' more reassuring revenue projection-, 
or prompted it to line-tune Man Omega in ways which would rc 
move or sulliciemlv mitigate the jtrohlems jdculilicd. without tie



60
rowed the number and severity of the impacts which 
had to be justified. Problems which would be major if 
WMC lacked the financial resources to make adjust­
ments were made de minimis by the simple stroke of ex­
cluding plaintiffs’ financial evidence. Thus although the 
district court sought to apply the correct legal standards, 
both with respect to rebuttal and with respect to justifi­
cation, it did so against a background of “meager’’ dispa­
rate impacts created by its own assumed factual matrix 
which cannot be relied upon. And because the majority 
opinion of this court addresses neither plaintiffs' impact 
evidence nor the appropriate legal standard for justifica­
tion, the errors below go uncorrected.

The majority does attempt to put the trial court's 
ruling on financial feasibility in a favorable light, but in 
vain.20 Evidence that Plan Omega is fiscally unsound 
goes to the heart of the case, for it not only raises the 
threat of a racially identifiable facility and other adverse 
impacts, but also indicates that this burden placed on 
minorities and the elderly is unjustified. It is one thing to 
demonstrate, as defendants have done, that Plan Omega 
is designed to serve compelling objectives: whether it 
will accomplish them, however, is another, equallv im­
portant question left open on this record. In light of the 
trial court's refusal to consider “strong evidence" that
NO I t. 19 — (Continued)
ccssitatlng (lie inquiry into justification and the merits ol Itevcrsc 
Omega or some alternative site. Indeed. WMC might have decided 
to rebut the prima facie case by ad justing the mix ol services at their 
preferred site, for example, or by replacing generalized promises of 
adequate shuttle transportation with specific allocations of funds for 
expanded service or a concrete contingency plan satisfying plain- 
tills' concerns.

2U. The opinion of the court contends that the district court did 
make findings with respect to the financial feasibility of the Dela­
ware Division renovations. That contention misses the point. It is 
clear that the district court refused to decide the broader question 
on which renovation depends: i.e.. whether Plan Omega taken as a 
whole is financially sound.

61
Plan Omega seriously overestimates future revenues 
and may therefore pose a drain on W'MC's resources. I 
cannot find the consolation others have in the district 
court's “overarching" finding that the lev el of care for all 
population groups will improve. As suggested above. I 
concede that a substantial burden on the access of mi­
norities and the elderly to federal benefits is nonetheless 
justified if the relocation is the only feasible alternative 
capable of meeting defendant's needs. Conv ersely, how ­
ever, an infeasible plan is insufficient justification as a 
matter of law. Thus, to dismiss the issue of financial fea­
sibility as completely irrelevant subverts the Congres­
sional policy in favor of nondiscriminatory funding.-’1 

The discussion so far has concerned the legal stand­
ards by which a defendant's actions should be meas­
ured. and not who bears the burden of persuasion. The 
point is that, regardless of where that burden is placed, 
the errors discussed in Part 1 above completely tainted 
the trial court's substantiv e analysis. That alone requires 
a rev ersal and remand.

Ill
Equallv troubling from a precedential standpoint, 

however, is the majority's decision equating the defen­
dant's burden in a case of disparate impact with that 
borne in a case of intentional discrimination. Today's 21

21 The ma jority suggest that any financial inquiry is too spec ­
ulative: yet they are willing to speculate, without any supporting 
evidence presented at trial, that the bond market will attest a Hawed 
project or that bondholders w ill abide by the terms ol the Supple­
mental Agreement in the event a shortage ol revenue Im.-I.iIIs the 
project and threatens their security interest. On the other hand ii 
such optimism should prove unlouuded. and a raciallv identifiable 
hospital ol'inlerior qualm ensues, the only sanction available to led- 
eral authorities at that point will be a cutoHol further holding I bis 
does not help matters when the hospital is already linanciallv 
strapjicd. Nor is there any assurance that the ellecis ol a cut-oil 
would be felt equally by the Stanton and Delaware Divisions



62
holding achieves an artificial symmetry, but at consider­
able cost to the prospects of eliminating all forms of dis­
crimination which, as the opinion of the court confirms, 
was the impetus behind Title VI and the Age Discrimi­
nation Act. I have no serious difficulty with leaving the 
burden of persuasion on the plaintiffs when what is 
brought forward by defendants is rebuttal—evidence 
that there will be no impact—rather than justification. 
However, since in many cases the means of proof of jus­
tification will not be within the reach of the protected 
class and allocation of the burden of persuasion will be 
dispositive, the only allocation consistent with the Con­
gressional intention to protect the disadvantaged class 
from actions having discriminatory effects is to assign 
the burden of justifying the impact to the defendant who 
receives federal funds. The policy decision was made by 
Congress, and in filling in the gaps in the statute we 
should allocate the burden consistent with that policy.

The majority reaches its result without considering 
the interest in evenhanded access to the federal benefits 
Congress provides and without acknowledging the prob­
lems of proof. Instead, it looks to the one line of discrimi­
nation cases where burdens hate been clearly spelled 
out. involving intentional employment discrimination, 
and argues that such rules must be uniformlv applied in 
all cases brought under nondiscrimination statutes. The 
plea for symmetry has only the attraction of relieving 
courts from analyzing the substantive differences be­
tween two quite distinct statutory prohibitions. The de­
fendant accused of discriminating intentionally stands 
in a very different position than one accused of actions 
which have unintended adverse effects. As noted before, 
the plaintiffs in this case are not asking that the 
factfinder draw from circumstantial evidence of dispa­
rate impact, an inference of discriminatory intent. Rath­
er, the gravamen of the complaint is that the benefits of 
a federal program are being redistributed away from pro­

tected classes unnecessarily, and that racially identifi­
able facilities are being spawned with the help of federal 
funds. The object of the litigation is not so much to pun- \ 
ish a wrongdoer, as to prevent indifference and correct f 
for inadvertance. The presumption in a case which has \ 
proceeded to the point in litigation where definite impact 
is established is that defendant is subjectively willing to | 
mitigate the impacts, but is constrained from further ac- [ 
commodation by other pressing needs and the lack of \ 
reasonable alternatives. Something akin to an affirma­
tive defense makes sense logically in such a context; on 
the other hand. 1 reject the majority’s proposition that \ 
“|o|ne could just as readily say in an intent case that the *' 
necessity to prove a nondiscriminatory reason is an af- I 
firmative defense. . . Typescript p. 22. To the con- f 
trary. such reasons are offered to disprove the existence 
of discriminatory intent. They can never justify it.

The logic of requiring recipients of federal aid to : 
justify the disparate impact caused by their actions was 
recognized by the Supreme Court in Board of Education 
v. Harris, -l-l-l U.S. 130 (19791. Statistical proof of dis­
criminatory effects in that case had established a prima 
facie violation of the Emergency School Aid Act. That in­
ference could be rebutted, said the Court, adding

»» L LUMLIIIUL,
party against whom the statistical case has been 
made. See Castaneda v. Partida. -130 U.S. -182. 
-197-98. and n. 19 (1977); Griggs r. Duke Power Co.. 
-101 U.S. -12-1. -13-1 (1971). That burden perhaps 
could be carried by proof of “educational necessitv." 
analogous to the “business necessity" justification 
applied under Title VII of the Civil Rights Act of 
196 1. 78 Stat. 253. -12 U.S.C. §2000e el seq.: see. 
eg.. Dot hard v. Rawlinson. -133 U.S. 321 329 
(L977); Fnrnco Construction Corp. v. Wafers. 138 
U.S. 567. 581-583 (1978) (dissenting opinion).



64
444 U S. at 151; cf, Southeastern Community College v. 
Davis, 442 U.S. 397. 407 (1979) (§504). However much 
ambiguity surrounds the nature ol the burden on a 
nonfederallv-t'unded employer in Title VII cases. Harris 
represents a clear signal that burden-shilting on justifi­
cation is called for where principles of nondiscrimination 
in funding are to be enforced.

Even within the context of Title VII. on which the 
majority focuses, appellate courts faced with having to 
clarify the nature of the employer's burden on the issue 
of business necessity have described it as “heavy" or 
labeled it as one of persuasion. See. e g.. Donnell v. Gen­
eral Motors Corp.. 576 F.2d 1292. 1298 (8th Cir. 1978); 
Smith v. Olin Chemical Corp.. 555 F.2d 1283. 1286 (5th 
Cir. 1977); Vulcan Society of N.Y. v. Civil Service 
Comm'n. 490 F.2d 387. 393 (2d Cir. 1973). The major­
ity's suggestion that the Supreme Court has since set- 
ded the issue of burden in such impact cases is belied by 
the Court's most recent pronouncement in Texas De­
partment of Community Affairs v. Burdine. 49 
U.S.LAV. 4214 (1981). That opinion implies that the al­
location of burdens in a disparate treatment case does 
not necessarily govern disparate impact cases. 49 
U.S. LAV. at 4215 n.5.-“

■22 In Burdine the question I'or decision was die nature of an 
employer's louden in an intent ease. The Court began its analvsis 
liv saying:

In MiDomiell Doniilii' Ctu/i. t. Cirnt. -Ill U.S. 9r2 
(1973). we set forth the basic allocations of loudens and order 
of presentation of prool in a I itle \ II ease alleging discrimina- 
tory treatment. ‘

5. We have recognized that die factual issues, and thcre- 
lore the character of the evidence presentetl. differ when 
the plaintiff claims that a fat iallv neutral emplovment poli­
cy lias a discriminaiorv imp.it i oil protected classes. |cita- 
lions omiiletl|.

65
Citing intent and impact cases indiscriminately and 

recommending they be approached in the same way 
threatens to confuse the litigation process and lead to 
unfortunate misunderstandings such as may have oc­
curred in the decision of the district court. It held that 
WMC had met its burden of producing some evidence, 
and that the plaintiffs failed to prove that the hospital’s 
justification for Plan Omega was pretextual. 491 F. 
Supp. at 345. This misconceives what it was the court 
had to decide. The contention was not that the reasons 
advanced were not genuine, but that there were feasible 
alternatives with less disparate impact. That was the

49 U.S.L.W. ai 4215. The footnote would seem superfluous were it 
not construed as a signal that the evidence and the issues in an im­
pact case may warrant a different burden of proof analysis.

Nor is a unitary burden for all Title VII cases established by the 
other Supreme Court precedents. The footnote in New York Transit 
Authority v. Heazer. 440 U.S. 508. 587 n.3l 1 1979). did no more 
than reaffirm the decision in Alhcrmarlc Paper Co. v. Moody. 422 
U.S. 405 t 1975). which in turn does not speak with the clarity at­
tributed to it by the majority. .UIhiiiuiiIc Paper Co. assigns plain­
tiffs. at most, the burden of proof on the existence of less discrimi­
natory alternatives, an inquiry which is relevant only to the extent 
that the defendant has lirst persuasively shown that it has compel­
ling needs and that its proposed plan will feasible meet those needs. 
Hut even that construction of .1 Ihcniuulc Pu/kt Co. would be loo 
broad. The opinion can be read as simply acknowledging that plain­
tiffs who failed to prove a Crifiys-type violation, could nonetheless 
still attempt to succeed on an intent theory if they were prepared to 
prove that less discriminatory alternatives existed and that, there­
fore. defendant's justification was merely pretextual. 422 U.S. at 
425. I bis use of alternativ es as circumstantial evidence of discrimi­
naiorv animus is standard in intentional discrimination cases. 
Turnco Construction Corp. v. Waters. 438 U.S. 5(i7. 378 t 1978* In 
contrast, the existence of alternatives to Plan Omega revealed in 
this litigation was not urged as ev idencc of pretext, but went direct­
ly to the question of whether the disparate impact of W.MC's pro­
posed relocation could be mitigated anil, therefore, federal benefit-' 
heller distributed. That is purelv an impact issue and. as such, 
should remain part of the defendant's burden of justification



66
heart of the issue: whether Plan Omega with its dispro­
portionately adverse effects was unnecessary.23

The majority's observation that a completed Title VI 
violation involves not disparate impacts per se, but only 
those that are unnecessary, may arguably make termi­
nology such as “alfirmative defense” unsuitable; but it 
does not answer the question of where the risk of 
non-persuasion on the issue of justification should be 
placed as a matter of public policy and from the 
viewpoint of who has the evidence. Indeed, the problems 
of developing ev idence and assembling it in admissible 

, form cannot be separated from the fulfillment of statu­
tory policy flowing from Congressional intent.2"1

Bringing such considerations to bear in this matter.
I am concerned that allocating the risk of non-per­
suasion on justification in an impact case bv reference to 
precedent established in cases of intentional discrimina­
tion ignores important distinction's between access to 
proof in the two types of cases. In intent cases, the 
plaintiff-victim is often in a better position than the de­
fendant to develop and uncover the particular acts upon 
which the charge of discrimination is based. In some in­
stances. such evidence is probably more accessible to 
the victim, particularly when the discriminatory acts are 
committed by subordinates, but must be defended by 
their superiors. Evidence of the presence or absence of 
impact may also be equally available. But assuming 
some impact, the prool ol justification is (ilu tu/s going to 
be in the possession of the defendant and rarely also in * 21

i.J Elsewhere, the court seemed to appreciate the distinction, 
lull the net el loci ol its ambiguous locus on pretext is to cast doubt 
on the court's treatment of the evidence. Hopefully. the opinion ol 
this court lias at least relegated the concept ol "pretext" to its proper 
place. See Typescript p. '27 n.17.

21. CJ Slnilt/ v W heaton Class Co.. 121 I .2d 259. 2(>7 (3d 
C ii. 19 1 0) ( Equal Pay Act) i In cases such as this, where the just ili- 
caiion lor the diUcrential rests on economic benefit, the company 
has peculiarly within its knowledge the means of proof. and the bur­
den therefore is one which cannot lie satisfied bv general or 
conclusory assertions.")

the possession of plaintiff members of the protected 
class, since the latter are unlikely to be privy to the 
decision-making process or the competing consider- j 
ations which ultimately form (he defense of justification.

One need look no further than the instant appeal to 
appreciate the crucial importance which the risk oi l 
non-persuasion .assumes in a case like this. All parlies j 
seem reconciled to the need for placing some facility in 
the Stanton area to foreclose competition from another 
institution, and all parties agree that WMC needs a new 
large hospital. The dispute has to a large extent been 
whether some variety of “Reverse Omega" could miti­
gate the disparate impacts of a relocation and still feasi­
bly accomplish the hospital's pressing needs. By relying 
on intent cases and placing the burden of demonstrating 
feasible alternatives on the plaintiffs, the court saddled 
them and their expert with the task of filling in the gaps 
in VVMC's own consideration of alternatives,2i> and re-

25. The difficulty of this task was at one point acknowledged 
by the district court. Although WMC submitted projections for He- ; 
verse Omega which showed it to be more costly than Omega, plain­
tiffs argued that the cost differential was due to the fact that the two ; 
plans did not contemplate equivalent facilities and services. In sup­
port of their contention, plaintiffs' key expert witness attempted to 
construct an estimate of what the Plan Omega hospitals would cost j 
if they were to match the hospitals Reverse Omega wotdd create. 
Indeed, the court found that WMC never had attempted to develop 
a plan for Reverse Omega using the same parameters that were 
used lor Omega. 491 f . Supp. at 343. Therefore, in order to propcrlv 
compare the two plans, plaintiffs' witness had to create an "(magi- f 
nary Omega." The court found the expert's projections unreliable, 
but acknowledged that this was because "in devising his estimates. ; 
|the expert| relied upon documents that were never designed for the 
purpose of making the comparison he was attempting. " 491 I'. 
Supp. at 344.

A comparison among alternate plans using equivalent param- I 
elers would seem critical to proper determination of whether delen- ! 
tlahts' chosen alternative was unavoidable despite its disproportion­
ate adverse effects. Assigning the burden of justilicalion to the f 
recipient ol federal lunds will help ensure that documents 
permitting such comparison are placed before the court.

67



lieved VVMC. which had far more ready access lo die in- 
lormation, of the need to persuade that the alternatives 
were not financially or medically feasible. Moreover, the 
risk of non-persuasion was made critical by the abun­
dance of conflicting evidence as to the pro jected cost dif­
ferential betweeh Omega and Reverse Omega, and it is 
noteworthy that the court did not accept at face value 
WMC's cost estimates, but made its own. 491 F. Supp. 
at 345. In short, the burden placed on plaintiffs was im­
practical and the error sev ere, hot harmless. Thus, ev en 
if the errors discussed in Parts I and II did not require 
reversal, the erroneous allocation of burden of persua­
sion does.

68

IV.
I do not minimize the complexity of the trial judge's 

task in this case, requiring as it does consideration of fu­
ture consequences. However, since the effective deliv­
ery of federally-supported health care is at stake, the led- 
eral interest in preventing creation of a racially 
identifiable facility and the possible curtailment of hospi­
tal serv ices is clear. The dockets olThis court and others 
bear testimony to the difficulties of desegregating insti­
tutions after they have become segregated. Regulations 
affecting site selection, designed to forestall segregation 
in health care delivery, intentional or otherwise, from oc­
curring in the first place, simply reflect the wisdom 
—acknowledged, ironically enough, in the medical 
profession—that an ounce of prevention is word: a 
pound of cure.

A True Copy:
Teste:

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Ju r  I In l l i i n l  l in  m l

( VO IT S. C 'omlv Tin' l.rii.il liiH'llimiui'i. I’lul.i I’.i '