NATIONAL GERIMEDICAL HOSPITAL v. BLUE CROSS

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ORAL ARGUMENT OF ERWIN N. GRISWOLD, ESQ., ON BEHALF OF THE PETITIONER

Chief Justice Burger: We'll hear arguments next in National Gerimedical Hospital v. Blue Cross of Kansas City.

Mr. Griswold.

Mr. Griswold: May it please the Court:

This is an antitrust case in the health care area.

The issue turns on the construction of the National Health Planning and Resource Development Act of 1974.

No constitutional question is involved.

The statute is long and diffuse.

The respondents rely on 28 fairly general words in the statute as the basis for their contention that they have implied immunity from the antitrust laws.

We contend that there is no room for such a construction.

The district court accepted the implied immunity argument and granted summary judgment for the respondents.

That judgment was affirmed by the Court of Appeals for the 8th Circuit and this Court granted certiorari to review that decision.

The question arises on these facts.

National Gerimedical Hospital is a fully accredited general acute care community hospital which opened in October, 1978.

It has been continuously licensed by the Missouri Division of Health, that is, the state agency, since September, 1977, and has been fully certified for Medicare and Medicaid by the Department of Health and Human Services, as it now is, since its opening.

It did not receive a certificate of need from any Missouri state agency because Missouri had no certificate of need requirement, when it was built.

The respondents are Blue Cross of Kansas City and Blue Cross Association, both of which market and sell prepaid health reimbursement plans to the public and make contracts with health care providers to administer the plans.

Several other persons are also named as nondefendant coconspirators.

Prior to its opening the petitioner sought to make a participating agreement with Blue Cross.

A participating hospital receives direct reimbursement of 100 percent for covered services rendered to individual Blue Cross members.

If the hospital is not granted participation, then Blue Cross pays no more than 80 percent of the cost of the services and it makes the payment directly to the subscriber and not to the hospital.

A lack of participating hospital status discourages Blue Cross subscribers and their doctors from seeking service at National Gerimedical and places the hospital at a substantial competitive disadvantage.

Unidentified Justice: But in a sense it would place the consumer in the long run at an advantage, would it not, in that a lot of unneeded medical facilities would not be built?

Mr. Griswold: That may or may not be the case.

The question is whether there is any statutory authorization, state or federal, for restricting the construction of this hospital.

And it is, as I have said, Missouri had no certificate of need legislation at the relevant time here.

There was nothing illegal or inappropriate about the building of this hospital, and the question really is whether Congress by passing this statute has authorized private groups to enforce that approach to the question of the cost of medical care which you have suggested, and our position is that Congress has made no such authorization.

Unidentified Justice: Mr. Griswold, does the state even now have a statewide planning agency?

Mr. Griswold: Yes.

The state now has a statewide planning agency.

Unidentified Justice: When did that come into being?

Mr. Griswold: Effective October, 1980.

And under it National Gerimedical Hospital is deemed to be a covered hospital, and--

Unidentified Justice: Well, at the time it applied, at the time it sought an arrangement with Blue Cross, there was no state backing?

Mr. Griswold: --There was no Missouri statute restricting--

Unidentified Justice: And is this legislation enacted under the spending power, this?

Mr. Griswold: --I would guess it would be under the commerce power.

Unidentified Justice: Well, does it involve federal money going to the state?

Mr. Griswold: The states are encouraged by the statute to have a state health planning and development agency which would have power to grant certificates of need, but the states are not required to have that.

Unidentified Justice: If a state says, I don't want anything to do with this, I don't want to participate in this program at all, nevertheless, you think the statute is applicable in the state, in the sense that the regional planning agency should be formed?

Mr. Griswold: On the contrary, our position is that the statute is not applicable in the state unless the--

Unidentified Justice: Well, it would be if it was under the commerce power.

Mr. Griswold: --Unless the state... well, it would be that the power of Congress might be under the--

Unidentified Justice: But they didn't intend it to be?

Mr. Griswold: --But they didn't intend it to, and I didn't quite complete my answer, which is that there is a paragraph in the statute which says that if the state doesn't choose to have a state agency, then it will not get certain grants.

But there is no requirement that the state take those grants, and Missouri deliberately chose not to take those grants and chose not to have a state planning agency.

Unidentified Justice: Is it your position that this regional planning agency, one of the named coconspirators, what's... the initials are too complicated--

--M-A-H-S-A.

But is it your position that that agency had no authority to operate under the federal law at all because the state hadn't chosen to?

Mr. Griswold: It had authority to operate under the federal law for the purpose of making plans and recommendations.

Unidentified Justice: Even though the state didn't want anything to do with this at the time... with the statute?

Mr. Griswold: It seems to me it's a little like the American Law Institute which proposes a federal securities code.

The federal securities code has no significance, no meaning, no binding effect, unless Congress chooses to enact it.

Congress has not so far chosen to enact it.

There are two groups under the statute, health systems agencies, and in this case that is the lower group.

In this case the health systems agency was a purely private, nongovernmental organization.

The statute also provides that there can be, if the state wants, a state health planning and development agency, which is required to be an agency of state government and which is required to have governmental powers with provision for due process in the exercise of those powers, and with provision for court review of its decisions.

The state is not required to have such an agency and during the relevant period here Missouri had no such agency.

Unidentified Justice: Mr. Griswold, can I interrupt you to get something out of the way for me?

I'm not thoroughly... I don't thoroughly understand, under the statute, what the purpose of a certificate of need is.

On the one hand, is it something that is a condition to getting a federal grant, or is it something that the Federal Government says you've got to have you can even build a hospital with your own money?

What is a certificate of need?

Why does the statute talk about it?

Mr. Griswold: I'm not sure that I can answer that.

It is a... it turns very heavily on what the state wants to make it.

The state can provide that there can be no construction without a certificate of need, and then with proper due process and proper procedure for appellate review, that can be binding and can be enforced in the state, in the courts.

Unidentified Justice: Isn't one of the objectives, Mr. Griswold, to avoid the proliferation of unused beds?

Mr. Griswold: That is the reason for having a certificate of need statute, but Missouri didn't have one and chose not to have one.

Congress provided that there could be agencies in states which would have certificate of need power, that the Secretary could make contracts with them, and if the Secretary did make contracts with them, then the states would be eligible for certain federal funds.

Unidentified Justice: Do you suggest that the situation might be different now after the 1980 development?

Missouri now has a planning--

Mr. Griswold: Missouri now has a planning, but it also has a statute which says that National Gerimedical shall be deemed to have a certificate of need.

And yet Blue Cross still refuses to accept it as a participating hospital.

Now, the refusal of Blue Cross appears in record on page 169, the letter from Blue Cross to National Gerimedical,

"After deliberation the Board of Trustees voted unanimously at the Blue Cross Board meeting of March 21 to deny Blue Cross member hospital status to the National Gerimedical Hospital because your institution did not receive approval through the health planning process. "

And I repeat that that health planning process to which reference was made was that of a purely private agency, MAHSA, Mid-America Health Planning Association, acting in concert with the Blue Cross associations which are also purely private.

Neither had any governmental power.

And I think this appears most clearly on page 147 of the record, which is a brochure put out by Blue Cross in 1976 or 7, about two inches above the bottom of the page:

"Since the state planning agency no longer exists. "

"Blue Cross of Kansas City will look to the local health systems agency for approval of such capital projects. "

"That health systems agency in the Kansas City metropolitan area is the Mid-America Health Systems Agency. "

And then the next clause relates to the rest of the state.

"All projects not reviewed and approved by these health systems agencies will not be reimbursable by Blue Cross of Kansas City. "

And I repeat again, that MAHSA and Blue Cross are purely private agencies which do not exercise governmental power.

Now, the respondents here rely on a provision of the statute which is set out on page 2 of our blue brief, and at various other places in the brief, which provides that

"A health systems agency shall implement its. "

--and this is the statutory wording... HSP> ["]... which I put in brackets, means, health systems plan... AIP> ["]... which is annual implementation plan...

"and in implementing the plans it shall perform at least the following functions: (1) The agency shall seek, to the extent practicable, to implement its HSP and AIP with the assistance of individuals and public and private entities in its health service area. "

And the respondents say, look, that's all we did.

We just complied with that provision.

There was a plan and we undertook to help MAHSA implement it.

The significance of that section of the statute on which the respondents' case entirely turns becomes clearer when the entire context of the statute is examined.

It's a long statute, perhaps less intricate than the Internal Revenue Code, but more diffuse.

And in an effort to assist the Court in determining how the various parts of the statute mesh, we've included substantial excerpts from it in the Appendix to our reply brief, the yellow brief.

Actually, the statute itself is 55 pages long in the Statutes at Large.

It would be more that in this print, and I have included some 15 pages of it here.

These are, of course, excerpts.

I have tried to make them a fair representation but Mr. Greenberg may have other portions which he thinks are relevant.

Incidentally, I would like to point out an error.

We overdid things a little bit on page, the bottom part of page 8a of the Appendix, where we repeated a part of Section 300m.

It begins at the bottom of page 4a and continues to 8a, and then we started over again with 300m.

Unidentified Justice: Psychologically sound.

Mr. Griswold: And if the Court will cross out the bottom two thirds of page 8a and the top half of page 9a it will avoid a confusion for which I apologize.

Unidentified Justice: Now, let's see, that's strike out all of (b) and (1) at 8a, is it, Mr. Griswold?

Mr. Griswold: On 8a, you strike out everything below the black letter heading, 300m> ["].

Unidentified Justice: Is this a commitment not to charge this as a taxable cost if you prevail?

Mr. Griswold: We certainly cannot appropriately, except that briefs don't come within taxable costs, and so I'm afraid we'll have to pay for it.

Now, in the statute Congress set up a planning structure in several tiers.

At the very top there is a National Council on Health Planning and Development, and then there are statewide health coordinating councils.

They are to take care of a situation like Missouri where there's one group in St. Louis and another group in Kansas City, so there's a statewide one which coordinates them.

Neither of these is involved in this case, and I have not included in the Appendix the statutory provisions relating to them.

But when the statute is examined it becomes clear that the key distinction is between the next two tiers of agencies.

These are health system agencies, HSA, on the one hand, and state health planning and development agencies on the other.

I have found from my work on this case that it is very easy to confuse them, and I suggest to the Court that it is very important not to confuse them, that they are different agencies with different functions, and MAHSA... Mid-America Health Planning Agency... is a health systems agency and not a state health planning and development agency.

Now, the codifiers in the U.S. Code have helped out a little bit because the health systems agencies are all in the 300L sections.

Now "ell" becomes confusing when you put it in print because it looks like "one" so we've put it in italics.

But there are several sections printed in the Appendix through, near the bottom of page 4a, which are 300L's, and they all relate to health systems agencies.

But Congress knew that state health planning and development agencies were something very different, and in the codification they are in the 300m sections.

And they begin at the bottom of page 4a and continue to the page 15a in the Appendix.

Now, if you will look at Section 300L-1(b)(1) which is on the first page of the Appendix, you will see that a health systems agency for a health service area must be one of three types of entities.

It can be (a) a nonprofit private corporation, and that's what MAHSA is, Mid-American Health Planning Agency is a nonprofit private corporation.

It can also be a public regional planning body or it can be a single unit of general local government.

But MAHSA is not one of those.

Under subsequent provisions in the 300L sections, health systems agencies including MAHSA are given what I call grass roots responsibility.

Their basic function is to gather information and make recommendations.

This is shown by the passage in the Senate report which is printed on the bottom half of page four of our brief.

The report says that the responsibilities of the health systems agencies are the accumulation of data in order to assess the existing status of the health care delivery system in the area it serves, and developing short and long term recommendations in order to achieve the rational and equitable distribution of personal health care services throughout its planning agency area.

An important part in the legislative history is the Senate report which is printed on page five of our reply brief, where the Senate said that

"the establishment of priorities within the state. "

--the Senate committee said...

"the establishment of priorities within the state and the performance of regulatory functions are most appropriately carried out at the state level. "

"The latter function. "

--namely, regulatory functions...

"can appropriately be carried only by an agency of state government. "

And that was repeated in another Senate report and a House report at the same time said,

"The Committee feels that regulatory activities are appropriately vested in units of state government. "

Unidentified Justice: Well, Mr. Griswold, what if the Missouri Legislature had taken up a proposal for the formation of a state regulatory body and come to the conclusion that 95 percent of Missourians were Christian Scientists, and so they simply didn't want anything to do with this and they didn't want any hospital building in the state; and so they enacted a statute saying, there will be no hospitals constructed in the state for two years?

Mr. Griswold: Well, then they would have determined by legislative action the policy of the State of Missouri.

The only question would be the constitutionality of that statute, and subject to some qualifications about retroactivity and things of that kind, it would seem to me that it would be found to be constitutional.

But here Missouri made no enactment; it made no provision for certificate of need, for restricting the construction of hospitals.

That has been done solely by these private agencies here, which it is our contention are not authorized by any state or federal statute, and there is no basis for an implied immunity under the antitrust laws.

Unidentified Justice: You wouldn't think that, apparently, that Justice Rehnquist's hypothetical enactment was a valid zoning ordinance?

Mr. Griswold: Well, I think it would be very similar to enacting a valid zoning ordinance.

That's why I said I thought such a statute, except for conceivable things about retroactivity, the hospital was half built when the statute was passed, or something like that, bond issues had been put out, that it would be valid.

Now we come to the provision of the statute relating the state health planning and development agencies, and these are all in the 300m sections.

And the important thing to note here is that these are not agencies set up by Congress.

They are state agencies which the state can provide if it chooses to do so.

If the state does not provide such an agency the state loses certain grants.

Section 300m(d) on page 8a of the Appendix.

The significant fact in this case is that Missouri chose not to have a state health planning and development agency.

Under the statute now passed, National Gerimedical is fully qualified statewide, it receives payments under Medicaid and Medicare, it just doesn't receive payments under Blue Cross because of the private determination of Blue Cross.

Unidentified Justice: Mr. Griswold, you keep on saying Missouri chose not to.

Is that entirely correct, or is it just a situation of Missouri not getting around to making the choice at all?

Mr. Griswold: No, on the contrary, I think Missouri did have one for a while and repealed it, which would be a choosing not to.

Now, let me point out Section 300m(b)(1), which is on page 5a.

"A state health planning and development agency must be an agency of the government of that state, selected by the governor. "

--the statute itself says "state agency"...

"and it is to administer the state administrative program. "

It has to be an agency which has the authority and resources to administer the program, and has a budget.

Then, in Section 300m(1),

"A state administrative program is a program for the performance within the state by its state agency. "

which is the agency which did not exist at this time.

And, on page 10a of the Appendix, the state agency has to be designated by the state "as the sole agency" for the performance of such functions.

It has to be one which under state law has authority to carry out such functions.

Over on page 11a, in paragraph 6, are due process provisions.

It must hold public hearings, give notice, provide a record.

On page 12a, in paragraph (a) near the bottom of the page, there must be provision for court review of its decisions.

Now there is no such provision for Mid-America Health Systems Agency.

It just made a decision and that's it.

There is no way to review it.

Unidentified Justice: Mr. Griswold, I take it there's no provision or indication in the federal law that if Blue Cross had chosen to make a contract with this hospital, despite the refusal of a certificate of need from MAHSA, that there would have been no violation of federal law?

Mr. Griswold: Well, let me say, MAHSA never refused to issue a certificate of need.

Unidentified Justice: Well, assume it had, though.

Mr. Griswold: Assume it had?

That would be simply two private groups agreeing together that they would--

Unidentified Justice: Yes, but suppose MAHSA had refused to certify this, what did it do that led Blue Cross to refuse to make the contract?

Mr. Griswold: --It did that thing which I read from the record in which it said that they... well, what MAHSA did was to put out an elaborate health planning thing which occupies hundreds of--

Unidentified Justice: And Blue Cross read it as saying, as meaning it wasn't needed.

Is that it?

Mr. Griswold: --Blue Cross read it as meaning--

Unidentified Justice: Well, what if it had read it as meaning that this facility wasn't needed, exactly the way it read it now, but had said, well, nevertheless, we're going to make a contract with the... that would not have violated any federal law?

Mr. Griswold: --No, it wouldn't have violated any--

Unidentified Justice: It might have made MAHSA mad but--

Mr. Griswold: --It would not have violated any federal or state law whatever.

Unidentified Justice: --Mr. Griswold, supposing, though, that Missouri had authorized the program and then the planning agency, whatever its proper name is, refused to designate the hospital, give it the certificate, and thereafter Blue Cross entered into the contract with them.

Then would it have violated federal law?

In other words, if you had a state program in place and the state program did not certify a new hospital, would the federal statute be violated if Blue Cross decided to insure the hospital?

Mr. Griswold: I don't recall, Mr. Justice, at this point, any provision of the federal statute which that would have violated.

Unidentified Justice: Well, it would have resulted in cutting off funds.

Mr. Griswold: No, not in my understanding.

Unidentified Justice: We're not talking about federal funds.

I'm just saying--

Mr. Griswold: Not in my understanding of what--

Unidentified Justice: --Would it violate the statute for Blue Cross to say, well, we'll go ahead and insure you anyway?

Mr. Griswold: --The federal funds are cut off from the state only if it doesn't have a state health planning and development agency.

In the case of--

Unidentified Justice: Well, then, the one that operates according to federal rules.

Mr. Griswold: --In the case put by Justice Stevens, the state has a state health plan, so the state funds would not be cut off.

The extent to which funds would be cut off from this hospital would turn on other federal laws.

It is my understanding that there were not federal funds in this hospital, that it was built by the nonprofit group which conducts the hospital.

I would suggest to the Court that the distinction between health systems agencies and state health planning and development agencies is crucial to this case.

Health systems agencies, which is what MAHSA, Mid-America Health Systems Agency, was, have no governmental powers.

The judgment below grants powers to private bodies, MAHSA and the Blue Cross Association, which cannot be found either in the federal or the state law, and the judgment below should be reversed.

Chief Justice Burger: Very well, Mr. Griswold.

Mr. Solicitor General.

ORAL ARGUMENT OF WADE H. McCREE, JR., ESQ., ON BEHALF OF THE UNITED STATES AS AMICUS CURIAE

Mr. McCree: Mr. Chief Justice, and may it please the Court:

The statutory scheme that Mr. Griswold described resulted in, of course, the 8th Circuit determining that there was an implied exemption created by this national health planning and resources development statute from the impact of the antitrust laws, because there was a repugnancy between the statute, which was enacted subsequent to the antitrust laws, which of course have been fundamental laws in this country since 1980, at least the Sherman Antitrust Act has.

We do not contend that there can never be implied exemption from the antitrust laws, but we are mindful that the teachings of this Court are that an implication from, an implied exemption from a regulatory statute is strongly disfavored and would be found only in cases of a plain repugnancy between the antitrust acts and the regulatory provisions.

Unidentified Justice: Do you think this disfavor of implied repeal is stronger in the case of antitrust laws than in the case of other regulatory laws?

Mr. McCree: I think it may well be, perhaps, just because of their age and their fundamental nature.

But I don't think we have to decide that here.

Unidentified Justice: How about the Logan Act, passed in 1796?

Mr. McCree: Well, I just don't think we have to decide that here.

I think the principles would be the same.

If the Congress has enacted a comprehensive scheme and then enacts subsequent legislation, if there is a conflict it's the duty of the Court to try to give meaning to both statutes.

And if the Court cannot give meaning to both statutes because of a plain repugnancy, then it will find that the later statute pro tanto, by implication, modified the earlier one.

And so I don't think it makes any difference for the problem of statutory construction whether we're talking about the Logan Act or the Sherman Act or Capper-Volstead, or whatever it is.

We contend here that there is no plain repugnancy, and that this Court's attention to this matter can really be concluded at that point.

The Joint Appendix contains, of course, the opinion of the 8th Circuit, which adopts, after making its own ascertainment of repugnancy, the findings of the district court.

I would like to direct the attention of the Court to page 187a of the Joint Appendix, in the sentence just before the paragraph break about a quarter of a page down, and with leave of the Court I'd like to read that sentence if I may.

The district judge wrote,

"If the court were to find that private business working in conjunction with a health systems agency established by the Act in their area to achieve the goals of the Act were liable or might be liable under the antitrust law for their actions, then the court believes that the accomplishment of the purpose of the goals of the Act would be effectively foreclosed. "

Now, that's as close as either of these courts gets to the finding of a plain repugnancy, and yet on several occasions this Court has held that activities which come clearly within the jurisdiction of a regulatory agency nevertheless may be subject to scrutiny under the antitrust laws.

As Mr. Griswold has pointed out, the National Health Planning and Resource Development Act of 1974, which is the basic piece of legislation here, created two types, at least two types of agencies; one, the health systems agency, of which MAHSA, the Mid-America Health Systems Agency... which was, incidentally, a multistate agency... is one; and it created the state agency, or authorized the creation of a state agency which, as he pointed out, didn't exist at this time.

All the first type of agency, the health systems agency, could do is plan and recommend.

It could do nothing more than plan and recommend.

And the district court, and subsequently the Court of Appeals for the 8th Circuit, found that respondent here, who is accused of having conspired with MAHSA and others to prevent the entry of petitioner into a hospital agreement, to prevent petitioner and Blue Cross from entering into an agreement, somehow violated a regulatory scheme with a clear and plain repugnancy.

And that just isn't so.

Because all the Act required was cooperation with the health systems agency, and if a private party like Blue Cross in this case is immune from the antitrust acts, just because it does what it thinks a health planning agency would like it to do, and at that point the approval of this Court, we've moved a long way from cases like United States v. RCA, California v. FPC, U.S. v. Borden Company, Silver v. New York Stock Exchange, where there was strict regulation by an agency, and yet the Court found a place for the application of the antitrust laws.

We contend that in the absence of a strict repugnancy the Court can conclude its consideration of this matter here, because there isn't any repugnancy between the activities of the health systems agency and the antitrust laws.

Unidentified Justice: General McCree, was there any finding in the district court or court of appeals that the actions of the Blue Cross in effect violated the antitrust acts here, or was it just the whole thing turned on whether they were exempt from the antitrust acts?

Mr. McCree: The latter, Mr. Justice Rehnquist.

The posture of the case as it went to the 8th Circuit was on summary judgment and the court assumed it to be true that this was a wrongful refusal to deal in violation of Sections 1 and 2.

And the case would have to go back if this Court agrees that there is no implied exemption from the antitrust laws to see whether petitioner can actually establish it.

But we have to accept it for the purposes of this litigation.

Unidentified Justice: Mr. Solicitor General, may I ask the same question I asked Mr. Griswold, what is your understanding of the statutory purpose of a certificate of need?

Does it relate merely to eligibility for federal funding or is it a condition, a federal prohibition against the building of new hospitals without such a certificate?

Mr. McCree: Well, first let me say that I'm not altogether clear either in my understanding of it, but it is not, it is not a compulsion of the Federal Government, which was part of Mr. Justice Stevens' inquiry, because it can only be accomplished by a state agency which was not in place at the relevant time of the refusal, alleged refusal to deal here, but it has since come into being.

It would be a refusal by the state, and I suppose it would be possibly to accredit it, to permit it to perform.

Unidentified Justice: Well, let me rephrase the question.

Supposing you had a state agency and it granted one hospital a certificate of need and another one it did not.

And I assume the first one could get federal funding and all sorts of things.

The second one, I assume, would not be eligible for federal funds but would it violate any federal law if it nevertheless went ahead and offered its hospital services available to the general public?

Mr. McCree: I'm not aware of any federal law that it would violate.

My answer is no; I'm not aware of any.

Unidentified Justice: Nor would it violate a federal law if Blue Cross made a contract with it?

Mr. McCree: I would agree with that too.

I know of no federal law that would violate.

But we're in an area here where it's necessary to determine whether Congress intended by implication to exempt certain private activity which is to be totally unregulated from the impact of the antitrust laws.

And we submit that this Court has never done that.

I can't think of a single instance where this Court by implication has found that the Congress by implication meant to enable a private party to do the things forbidden by the antitrust acts when there was no other regulatory scheme imposed to promote competitive activity.

And we say it's particularly, the error is particularly egregious here because in this National Health Planning Act the Congress made express exemptions from the antitrust laws and did not exempt the behavior condemned here.

It expressly in 1974 exempted, or immunized, and in a qualified way, too, because it was for good faith and nonnegligent activity, individuals who would participate in a health systems planning activity from money damages only, and not from injunctive relief.

Subsequently, in 1979, it extended the immunity, again just for money damages, to the health systems agencies and specifically rejected an effort on the part of the Senate to immunize persons who might cooperate with them, which would have been, possibly, Blue Cross in this instance.

And we set these matters out on pages 25 through 27 in the Government's brief, and we say that where there is an express exemption this Court should be reluctant to find an implied blanket exemption which would be broader than the qualified exemption expressly made by the Congress.

We think that the Congress was certainly concerned with delivering quality health services at reasonable cost to the American people, but that it did not intend it to be done in disregard of the antitrust laws, that it intended the antitrust laws to coexist except to the extent that it made express exceptions with its planning system, which is set out in the statute that Mr. Griswold described in his argument to the Court.

If there are no further questions, we will rest on our brief.

Thank you.

Chief Justice Burger: Mr. Greenberg.

ORAL ARGUMENT OF JOSHUA F. GREENBERG, ESQ., ON BEHALF OF THE RESPONDENTS

Mr. Greenberg: Mr. Chief Justice, and may it please the Court:

The intent of Congress in the Health Planning Act of 1974 was deliberately anticompetitive.

What Congress did in the statute itself was fashion health systems agencies throughout the nation and it directed that each one draft a plan, a plan which would blueprint the future development and structure of health systems in the various communities.

Congress directed in the statutory words that the agencies reduce documented inefficiencies.

It was the statutory test... these are words in the statute... to prevent unnecessary duplication of health resources.

Unidentified Justice: Mr. Greenberg, under what authority did Congress take that action?

Mr. Greenberg: I think that the authority was generally under the spending authority.

There were grants made to the states, rather substantial grants are made to the states.

It also--

Unidentified Justice: It simply provided that if the states didn't comply they would not get the funding?

Mr. Greenberg: --That is correct; that is correct.

Lest there be any doubt, there is no claim here that there will be a violation of federal law if Blue Cross does not go along.

That is not our point.

Our point is one of cooperation, and cooperation within the statutory scheme established by Congress in order to effectuate a particular result.

Now, these statutory words are very clear: planning, reduce documented inefficiencies, prevent unnecessary duplication.

Unidentified Justice: Where are those words?

Mr. Greenberg: These are words in various sections of the statute.

I'm going to have the same--

Unidentified Justice: It's an awfully long statute.

Mr. Greenberg: --I'm going to have the same problem Mr. Justice Rehnquist had earlier.

In 300L-(b)(2)(A), 300L-2(a), and 300L-2(a)(4).

Unidentified Justice: But the one, I'm particularly interested in the one about reducing the amount of hospital services or whatever it was.

Mr. Greenberg: It says,

"prevent unnecessary duplication of health resources. "

Unidentified Justice: And, in particular, where is that?

Mr. Greenberg: 300L-2(a)(4).

Unidentified Justice: 300L-2(a)(4).

Thank you.

Mr. Greenberg: These statutory words, planning--

Unidentified Justice: Where do we put our finger on that correctly here?

Mr. Greenberg: --In our brief it's at page 15.

Unidentified Justice: You can't tell the players without a program.

Sixteen, did you say?

Mr. Greenberg: Fifteen.

Unidentified Justice: Fifteen.

Now we'll try to track with you.

Mr. Greenberg: These are short words.

Mr. Griswold seems concerned that there are only 28 words on which we rely.

Having been trained in the antitrust laws I am used to short statutes.

There are 28 words.

These statutory words, words like planning, reduce documented inefficiencies, prevent unnecessary duplication, are plainly antithetical to all of antitrust.

There could be nothing that could be more antithetical.

Solicitor General talks about a promotion of competitive activity.

There was no talk of any kind, none whatsoever, in the 1974 act, which is the only act before this Court, about competitive activity.

There's not a whisper of it, not in the legislative history, not in the statute.

Everything that Congress wanted to do in 1974 was deliberately anticompetitive.

Now, petitioner's reply brief, at page 4, note 1, relies on a House report on the 1974 act and petitioner argues that there is no indication that Congress understood, as they put it,

"planning to be synonymous with cartel regulation. "

However, that same 1974 House report at pages 60 and 61 discusses the key provision here with respect to implementation.

Words that were in the House bill at the time that finally became incorporated in those very same words in the final act.

This is what the House report said.

With your permission, I would like to quote.

"The planning done by HSAs is to include as an integral part of the planning process the implementation of plans. "

These are not two separate activities, for the definition of planning includes implementation, not just recommending; not just the American Law Institute, with respect.

Petitioner sees a difference between planning and implementation.

The 1974 House report on which petitioner relied did not.

Now, lest there be any doubt here I would like to quote further from that House report.

It puts it this way and it makes very clear the two track system which Congress had to adopt in 1974, makes its point this way.

"The apparently modest initial means of implementing health plans seeking the assistance of individuals and entities in the health service area to do so is in fact the most important method available. "

"Without credibility in the community and close working relationships. "

--close working relationships...

"with those who operate the health system guided change will be impossible. "

Then the House report goes on, putting away any lingering doubt: "The governing body"... they're talking now about the governing body of the health systems agency...

"should include representation of third party payers. "

--third party payers like Blue Cross...

"who once the plans are drawn can assist the agency in implementing them. "

These are the words of the Congress.

"Without close working relationships with those who operate the health system guided change will be impossible. "

Those are the words of the Congress that wanted to repeal the antitrust laws.

It didn't say anything about it, it didn't say anything about it because in 1974, if we take that slice of time, nobody thought that the antitrust laws applied in this business.

It was before Rex Hospital, it was before Royal Drug, it was before Goldfarb.

Antitrust was the furthest thing in anyone's mind.

We've had the petitioner, we've had the Solicitor General, we have an amicus, we have our particular group.

No one has found a word in the 1974 legislative history suggesting that anyone wanted any kind of antitrust or competition.

All of the legislative history says, there are too many beds, it's adding to cost.

If you build a bed it gets filled up, and we don't want it.

The the House report talks about third party payers who once the plans are drawn can assist the agency in implementing them.

Those are the facts of this case, and those are facts which, with respect, are glossed over by the petitioner, and are also glossed over by the Solicitor General.

We are not asking for a blanket exemption here.

What we're asking for is an implied repeal with respect to the very specific facts of this very case.

Unidentified Justice: What is the scope, Mr. Greenberg, of the implied repeal.

In other words, would it cover a group, say, a group of contractors who refuse to enter into a contract with a new hospital unless it first got a certificate of need?

Mr. Greenberg: With respect, sir, the certificate of need is only a matter of state law, and I think it points up what was going on here.

Again--

Unidentified Justice: There was no provision at the time of the operative facts here for a state certificate of need.

Am I correct?

Mr. Greenberg: --That's absolutely correct.

And, indeed, there were no certificates--

Unidentified Justice: So there was none, but there couldn't have been any?

Mr. Greenberg: --Pardon me?

Unidentified Justice: There was no certificate of need, but there couldn't have been any?

Mr. Greenberg: There could have been a certificate of need in Missouri.

There could have been a certificate of need law in Missouri.

Missouri did not have one.

Unidentified Justice: Absolutely; did not have one.

So what is the scope of the exemption that you contend existed in Missouri in the year in question here?

Mr. Greenberg: The scope of the exemption should be related to the facts of our particular case, and the facts of our case can be ascertained not from statements of it being certified by the State of Missouri--

Unidentified Justice: Well, I mean, let's say, instead of Blue Cross, say it's a group of contractors?

Mr. Greenberg: --We have specific facts here, and the specific facts here are, according to the complaint, according to the very complaint--

Unidentified Justice: But, no, the thrust of my question is, what is the exemption that you contend Congress created?

I don't think you're suggesting Congress had in mind this particular hospital or this particular--

Mr. Greenberg: --I think they had in mind this situation, this kind of situation, where the health systems--

Unidentified Justice: --What I want to know is, what is the scope of the situation they had in mind to grant an exemption?

Mr. Greenberg: --I understand.

And the health--

Unidentified Justice: What is it?

Just an exemption for Blue Cross?

Mr. Greenberg: --Oh, no; oh, no.

Unidentified Justice: Would it cover then, say, a group of contractors who refuse to build a hospital or a group of doctors who refuse to offer their services unless they get... would it cover all kinds of collusive activity or cooperative activity designed to prevent the construction of a new hospital?

Mr. Greenberg: Provided that... the answer is yes, provided that, key, provided that, that the health systems agency, the federally created, the federally funded agency... 34 this isn't some private interloper; it's supervised by the Secretary of Health and Human Services.

Provided that the health systems agency had made the prior determination, and the complaint here states that what Blue Cross did is it delegated to the health systems agency the determination of need.

We don't have Blue Cross making the decision.

The decision here is made by the health systems agency.

Unidentified Justice: But it had no power to require Blue Cross--

Mr. Greenberg: That is absolutely correct.

Unidentified Justice: --And if it talked the pharmaceutical people into refusing to sell a new hospital drugs, I suppose you would say the same thing?

Mr. Greenberg: Yes, sir.

Unidentified Justice: Anything that MAHSA could talk anybody into doing, whether they were required to do it or not, is exempt.

Mr. Greenberg: Is exempt because that's what Congress wanted to have done.

Unidentified Justice: Yes, your answer is yes.

Mr. Greenberg: The answer is yes.

Unidentified Justice: Could they have turned it over to a subsidiary?

Mr. Greenberg: A subsidiary of whom?

Unidentified Justice: Blue Cross turn it over to a subsidiary called the Hospital Opportunists Association?

Mr. Greenberg: I don't have to reach that question on these particular facts.

Unidentified Justice: Would you mind, would you mind meeting it?

Mr. Greenberg: I think that that would surely be a broader exemption than is being called for here and might not be covered.

Unidentified Justice: But this is a purely private organization, isn't it?

Mr. Greenberg: Are we talking about MAHSA or Blue Cross?

Unidentified Justice: MAHSA.

Mr. Greenberg: MAHSA is not a "purely private organization".

It was created by a federal statute, it is funded up to 90 percent with federal funds, and it is specifically regulated by the Secretary of Health and Human Services on an ongoing basis.

Unidentified Justice: Is it a public or private organization?

Mr. Greenberg: It's a state incorporated organization.

Unidentified Justice: I thought it was a private organization.

Mr. Greenberg: It is private but federally funded.

Unidentified Justice: American Tel and Tel is a state incorporated organization too, you know, but is it a private corporation or a public corporation?

Mr. Greenberg: It's a private corporation.

However, it is a unique private corporation in that it is federally funded and created by federal statute and is supervised in its entirely by the Secretary of Health and Human Services.

In fact, it is--

Unidentified Justice: Well, is it entirely accurate to say it's created by federal authority?

It's authorized.

Mr. Greenberg: --It's authorized, established.

I'm sorry, Your Honor.

It is not created.

It is actually incorporated by a state.

Unidentified Justice: It isn't even told very specifically what to do.

For example, if MAHSA appeared at the statewide meeting of the druggists, the wholesale druggists in Missouri, and said, we recommend that you all agree not to sell this hospital any drugs, and they thought that was a good idea since they wanted to... so they passed a resolution, and everybody agreed that they wouldn't sell any.

Do you say that that would be exempt because MAHSA had recommend it, because they were authorized to seek the cooperation of private parties?

They sought the cooperation and they got it.

That's the end of it.

Mr. Greenberg: It would be authorized only in the event, only in the event that it was authorized by the statute and in the supervision by the Secretary of Health and Human Services was determined--

Unidentified Justice: Well, is that any... that certainly isn't any farther outside the scope of its authority than going to Blue Cross, is it?

Mr. Greenberg: --No, it would not be here.

If MAHSA had determined, as it did here, that the number one priority in the community was to stop the proliferation of hospital beds and the statute says, that it was an unnecessary duplication of health resources, so this statement was clearly within the statutory authority.

If in terms of Mr. Justice White's hypothetical example, rather than going to Blue Cross it went to a group of pharmaceutical suppliers and it said, don't supply them, Congress intended that that be impliedly exempt from the antitrust laws.

That's what at stake here.

Congress is deliberately anticompetitive.

There is no doubt about that.

That must be faced up to.

Unidentified Justice: Is it true that Blue Cross could not have done this without MAHSA, whatever this thing is?

Mr. Greenberg: Pardon me?

Unidentified Justice: Could Blue Cross have acted without MAHSA and you still have your same position?

Mr. Greenberg: No.

Unidentified Justice: So, is it not true that MAHSA is giving antitrust exemptions?

Mr. Greenberg: That is correct.

Congress has--

Unidentified Justice: No, no, that wasn't my question.

MAHSA did.

Mr. Greenberg: --I understand.

That's correct.

It's a participation of MAHSA in this scheme that provides the antitrust exemption as derived from the statutory scheme which is deliberately anticompetitive and says, we want to achieve the reduction of hospital beds in different ways.

One of the ways is the cooperative--

Unidentified Justice: But Mr. Greenberg, there's a difference between saying you don't want a duplication and saying, we want a reduction.

The statute doesn't ever say you need a reduction, does it?

Mr. Greenberg: --No, it doesn't.

It talks about--

Unidentified Justice: Is there anything in the statute that says there are too many hospital beds?

Mr. Greenberg: --reducing... it talks about reducing documented inefficiency and it talks about the unnecessary duplication of health resources.

Unidentified Justice: There's no statutory finding that I've been able to find that says there are too many hospital beds; nothing in the statute.

In fact, the statute's somewhat inconsistent with your whole concept because as I understand it it's authorizing federal subsidies, which presumably would enlarge the total supply of hospital services available to being with.

Mr. Greenberg: There are various things at stake.

There is not a determination by the Congress that we need absolutely no more hospital beds anywhere in the nation.

Unidentified Justice: Or in any specific place.

Mr. Greenberg: Or in any specific place.

Because there may be... and Congress recognizes this... you may have sunbelt growth, which will require more hospital beds.

The key point here is that in Kansas City, in Kansas City MAHSA said, we're not in the sunbelt, unfortunately, we have too many beds.

Unidentified Justice: But Congress didn't say that.

But Congress didn't say--

Mr. Greenberg: But Congress said--

Unidentified Justice: --And Congress didn't say that nowhere shall there be any more hospitals unless they're approved, did it?

Mr. Greenberg: --No, but what Congress did say is, we are going to create 205 health systems agencies and they're going to determine within each standard metropolitan area... as the Solicitor General points out, MAHSA covers Kansas City, Kansas and Missouri.

They wanted a true economic group.

Within that economic area MAHSA determines if you need beds.

Now, the petitioner complains; they said, well, they wouldn't allow any more beds.

But the point is, they didn't ask, and the mere fact that one doesn't ask or would get a turn down doesn't mean there's no due process.

Unidentified Justice: Well, no, it's not a due process claim, but I'm still puzzled as to what, even if everything were in place, what is the legal effect of one of these determinations?

Is it anything more than a recommendation for good sound future planning?

Mr. Greenberg: It is positively a recommendation.

It is not binding on anyone.

Unidentified Justice: If it's just a recommendation, how can it possibly give an exemption from some legal?

Mr. Greenberg: Because Congress went further.

Congress said, they shall implement it.

They shall seek to implement the plans to the extent practicable in the area.

Unidentified Justice: Only by recommending them.

Mr. Greenberg: No, it says, shall seek to the extent--

Unidentified Justice: Oh, I know, but they didn't have any authority to bind anybody.

Mr. Greenberg: --That is correct.

Unidentified Justice: They could only recommend.

Mr. Greenberg: That is correct.

They had no... but the congressional determination here was that they wanted... there were two tracks, as we've said.

One of the tracks has to do with planning and implementation, not a requirement to be sure, planning and implementation in the very route that we've taken here.

Unidentified Justice: Suppose, Mr. Greenberg, that a state law set up a state health planning agency and authorized it to make some plans about hospitals and avoid having too many hospital beds and authorized it to seek the cooperation of private interests in effecting its recommendations.

And this state agency went around to a group of pharmaceutical people and recommended that they refuse to sell to a new hospital.

Now, certainly, that wouldn't be within the Parker v. Brown exemption, would it?

Mr. Greenberg: I think not.

The point, though, is--

Unidentified Justice: But you say that precisely the same thing is an implied exemption under this federal law?

Mr. Greenberg: --That's correct, Your Honor.

The reason I'm saying that, taking the Parker v. Brown determination... I think the scope of Parker v. Brown at this point is in enough difficulty... in terms of implied--

Unidentified Justice: Well, it's rather difficult for you, I would think.

Mr. Greenberg: --I understand.

Unidentified Justice: I have not understood your argument as a Parker v. Brown immunity.

Mr. Greenberg: It isn't, it isn't.

It is positively not a Parker v. Brown--

Unidentified Justice: But as an implied exception or pro tanto repealer, which I in my limited knowledge of antitrust law have thought of as two two different things.

One is that if the state authorizes raisin proration it's exempt from the antitrust laws, not by virtue of anything Congress has done but by virtue of the fact that the state is behind it; and other federal statutes, such as NASD and the Gordon v. New York Stock Exchange, where the Congress has authorized regulation of a particular industry that's inconsistent with the antitrust laws, there will be implied a pro tanto repealer.

And those are two different doctrines, are they not?

Mr. Greenberg: --We agree.

The point that we make is, the issue before the Court, with respect, is to take the slice of time in 1974 and say, what did that Congress that passed the National Health Planning Act of 1974 intend with respect to the antitrust laws?

And we think that by reading the entire statute and not just what is here irrelevant, Section "m", a different section from what's involved, but rather if one reads the statutory purposes in the "L" sections that have to do with our case, the health systems agency and the implementation, that Congress said, we want to do it two ways.

Why did they say they wanted to do it two ways?

The reason was, again, taking the slice of time in 1974, the states didn't have certificate of need statutes yet.

Unidentified Justice: This was two alternative ways?

Mr. Greenberg: That's correct.

Two... and that's what the House report makes very explicit and I think is very clear from the statute, and is also clear from the Senate report.

In 1974 Congress said, let's get on with it, let's stop this proliferation of hospital beds, but we can't force states to go enact certificate of need laws, and they gave them four years to do so.

Unidentified Justice: Can I back up a minute to my MAHSA point?

You said a minute ago that it wasn't binding on anybody.

Mr. Greenberg: That's correct.

Unidentified Justice: But aren't you trying to make it binding on us?

Why pick us out?

Mr. Greenberg: With respect--

Unidentified Justice: You say it wasn't binding on Blue Cross or on anybody else, but we have to take it.

Isn't that what you said?

Mr. Greenberg: --That's correct, but I say that that's what Congress said in the 1974 act in the 28 words.

Unidentified Justice: Oh, you're back to the 28 words?

Mr. Greenberg: Oh, yes; oh, yes.

There's no doubt about those 28 words being the basis of our position.

Unidentified Justice: If you lose one of them, do you lose?

Mr. Greenberg: Pardon me?

Unidentified Justice: Suppose you've only got 26 of them?

Mr. Greenberg: It depends... well, let me do something.

One of the words that the petitioner is very interested in is "to the extent practicable".

To the extent practicable.

And what petitioner does in its brief is it incorporates a lot of baggage on top of "to the extent practicable".

It says, what "to the extent practicable" Congress meant was, except insofar as the antitrust laws are concerned.

Well, let me read from another section of the law, the 1974 law now, 42 U.S. Code 300-1(a)(2), which is not in any of the briefs at this point.

But it says that,

"to the extent practicable the area shall include at least one center for the provision of highly specialized health services. "

What Congress is talking about there is how big the health systems agency can be.

It couldn't be clearer if one reads the entire Act that "to the extent practicable" means what it means to everyone: if you can do it, and not insofar as the antitrust laws are violated.

Unidentified Justice: Mr. Greenberg, suppose that MAHSA instead of being what it was, was Blue Cross.

I suppose, can't an HSA, it can be any private group... can't it?

or a public agency?

Mr. Greenberg: It can be any particular entity.

Unidentified Justice: So, what if Blue Cross had volunteered to be the HLS or the... whatever it is... HSA?

Suppose that... it could have been, couldn't it?

Mr. Greenberg: No, it could not.

Unidentified Justice: Why not?

Mr. Greenberg: Because the HSA had to have as its governing body--

Unidentified Justice: I see.

And only 49 percent, I think, could be--

Mr. Greenberg: --Providers.

Unidentified Justice: --I see.

Mr. Greenberg: And it had to have a majority of consumers.

And the staff had to be funded by... all the staff was funded, at least 90 percent were, by the Federal Government.

The problem the petitioner has is that MAHSA doesn't look exactly like the SEC.

It isn't composed only of federal employees.

But what it had on it was volunteers, all volunteers... in this case 30 volunteers, 16 of them consumers coming out of the plain old people, 16 being consumers and 14 being providers, hospitals, Blue Cross, doctors, nurses, professors, what have you.

Unidentified Justice: So you're saying this is no different than if the statute had authorized the secretary of one of the departments to go out in the field and try to talk people, private parties into preventing excess hospital beds, and the Secretary of Health went out to the pharmaceutical convention and persuaded them not to sell to the new hospital?

Mr. Greenberg: That is what Congress wanted.

That's what it said.

Unidentified Justice: And so you think, then, that the pharmaceutical people, although they weren't required to do that at all, by the federal law, and couldn't have been told to do it by the Secretary, they're nevertheless exempt?

Mr. Greenberg: That's correct, Your Honor.

Unidentified Justice: Mr. Greenberg, suppose... I'll try a hypothetical... that the Federal Government, the Congress, developed the idea erroneously or otherwise, that the country needed more lawyers, and provided for $500 million for matching grants to the states to build additional law schools but required that no grant would be made to a state unless the bar association of that state certified that there was a need for a law school and specified the size and capacity of that law school.

Would you think there'd be some analogy with what you've got here?

Mr. Greenberg: With respect, no.

Because wholly apart from the problem of hospitals and too many lawyers... I'd rather not get into that... the point here is that your analogy relates to the certificate of need arrangement insofar as the states are concerned.

What's going on here was that there already were a number of certificate of need programs in essay.

Not in Missouri, to be sure, and Congress in 1974 didn't want to foul up that arrangement in the various states.

It was very sensitive to those certificate of need arrangements that have been adopted in a number of states.

What it wanted to do was to get all the other states to adopt certificate of need legislation and in fact that's what happened.

Unidentified Justice: Well, is there any analogy with respect to a bar association being a private entity as against a governmental entity, and yet having in mind that the bar association would probably be about as qualified to determine need for a new law school as anyone could possibly be?

Mr. Greenberg: If what Congress did, as I said, we will establish you and we want you to go this route, bar associations, and we're going to supervise you... which were the facts here... by the Attorney General of the United States, then you would have an analogy to what we have here.

Unidentified Justice: Mr. Greenberg, am I oversimplifying your position?

You're saying in effect, the statute says that an agency like MAHSA shall be created with federal funds money, and unless that agency approves the construction of new hospitals within the area subject to its jurisdiction, no new hospital shall be constructed.

That's basically what the statute was intended to say.

Mr. Greenberg: Yes.

Unidentified Justice: It surely could have said it more simply.

Mr. Greenberg: Pardon me?

Unidentified Justice: They surely could have said that more simply than they did.

Well, no, no.

It directs the agency to get input from providers such as Blue Cross?

Mr. Greenberg: Oh, yes.

That's another factor here.

In other words, what Mr. Justice Stewart is emphasizing--

Unidentified Justice: But once they say, in effect--

Mr. Greenberg: --here, is all of the other baggage around it.

Unidentified Justice: --They are to be kind of a licensing authority, really, for the area over which they have special planning interests and the like?

Mr. Greenberg: This was what Congress said.

And what Congress--

Unidentified Justice: It didn't say it in so many words, but you say that's a fair reading of the entire conglomerate of--

Mr. Greenberg: --I think it does say it in those words, because it says, they shall have planning, they shall have documents, and they shall seek to implement it.

Unidentified Justice: --And not only shall they seek to implement, but no one shall build in contravention of any of their plans.

That's what you're saying the statute means.

Mr. Greenberg: No, Congress does not say that, because what--

Unidentified Justice: Yes, it does, if you are right.

Mr. Greenberg: --No, because what Congress wanted here was cooperation.

Unidentified Justice: Well, I mean... or there is open season on other hospitals can get together and take whatever anticompetitive measures are necessary to prevent any building that is not approved in advance by the agency.

But you're saying that's--

Mr. Greenberg: Well, what Congress is saying is, that in the particular circumstances of the hospital industry... which is the wrong word; remember that back in 1974, virtually all hospitals were nonprofit hospitals, they were nonprofit hospitals with boards of governors composed of distinguished members of the community, and what was intended here, the whole theory was, we need cooperation from people like this.

And the way to get cooperation from them was not, in Mr. Justice White's words, to say, you've got to do it, but to get them into the act.

Congress says in the findings, it's imperative that providers be involved in this.

It's imperative that providers be on the boards.

Whoever heard of a Congress interested in antitrust laws saying a bunch of competitors have to get together and make plans?

This was a field of hospitals, which has nothing to do with any of the prior fact situations which have been before this Court.

They don't resemble industry, they don't resemble regulated industries.

It's just a different sort of thing.

Unidentified Justice: --Well, there would be no antitrust risk if they merely made plans.

That's why you wouldn't need an exemption if you so read the statute?

Mr. Greenberg: Well, what was Blue Cross supposed to do in this situation?

Here they had been part of the MAHSA as Congress said they should be, they helped to create the plan, the plan says the number one priority in the area is the elimination of excess capacity, the number one priority.

Blue Cross then delegates, according to the complaint, Blue Cross has delegated its certificate of need position to MAHSA.

Blue Cross then said to MAHSA... or says to the petitioner, the sole exclusive reason we're turning you down... that's what the complaint says, the sole and exclusive reason we're turning you down is because MAHSA has not said you need it.

What was Blue Cross supposed to do in that situation, then?

Say, okay, petitioner, we'll go along with you?

Now, I should point out that--

Unidentified Justice: Well, all I'd suggest is you're confusing two different problems.

One is whether there's a violation of the antitrust laws, which we don't have to decide, and secondly whether, assuming there was a violation.

I mean, it may well be that they could have done exactly what they did without violating the antitrust laws.

Mr. Greenberg: --That's correct.

I'd rather not get into that but for present purposes, obviously, we're assuming a violation of the antitrust laws.

Otherwise we don't have to reach this point.

In its reply brief petitioner states that all involved in 1979 would have been quite surprised to hear that Congress had already impliedly repealed the antitrust laws.

Nevertheless, the Solicitor General in his amicus brief states unequivocally at page 16, note 11... I'd like to quote:

"To be sure, there are some activities that must. "

--must...

"by implication be immune from antitrust attack, if HSAs and state agencies are to exercise their authorized powers. "

So the Solicitor General concedes that there would be repeal of antitrust by implication when private parties assist the HSAs in developing plans.

But that's not all.

The Solicitor General goes on:

"There may be occasions in implementing. "

--note, he uses the word "implementing" and not just "recommending"...

"in implementing health systems plans when an implied exemption might be necessary in order to effectuate the statutory scheme as required by Congress. "

In a word, what the Solicitor is conceding here is that there's room for a narrow, implied exemption from antitrust.

We say that the limited facts on the record before this Court, not a blanket exemption, not somebody who's interested in goals and goes along and does things on their own, but on the limited facts here, we have the agency making a determination to avoid excess capacity, which it calls the number one priority for implementation; where according to the complaint Blue Cross designated the health systems agency as the agency to conduct need review; and the hearing of the agency, the Solicitor General says at page 16, note 11, was public and open and carefully supervised.

Not some private interloper; public and open and carefully supervised, and the Solicitor General is correct.

Now, it should also be emphasized that once the Solicitor General concedes that there is repeal of antitrust by implication in some cases, this demolishes the rationale of the expressio unius argument.

Expressio unius means that if we said one thing, then everything else is out.

Now, this--

Unidentified Justice: If you accept that, you're in a little trouble too.

Mr. Greenberg: --Pardon me?

Unidentified Justice: If you accept that, you're in a little trouble too, because you said there was no antitrust involved.

Mr. Greenberg: I said there was no antitrust involved on the specific facts of this case.

Unidentified Justice: No, no.

I mean, when you're talking about in 1974, when the statute was passed, they had no idea of antitrust.

Mr. Greenberg: That's correct.

Unidentified Justice: But you now say that you agree with the Solicitor General, there were some, didn't you?

Mr. Greenberg: No, no, no.

Excuse me?

Unidentified Justice: Oh, I misunderstood you.

Mr. Greenberg: What the Solicitor General is saying, the Solicitor General is acknowledging that there was some implied repeal.

What we're saying is, we obviously disagree with the Solicitor General as to where on the line that should be cut, but once the Solicitor General acknowledges that there's some implied repeal, it's the end of the expressio unius argument.

Unidentified Justice: Well, is your suggestion that after Blue Cross had sat on the board of MAHSA and the MAHSA as a unit had said, the number one priority is oversupply of beds, it would have been in effect reneging on its role in MAHSA if it had gone ahead and paid the plaintiff in this case?

Mr. Greenberg: It would have been encouraging another 120 unnecessary beds in the community, which would add to costs, which would add to possible morbidity, mortality, and all of the other things that MAHSA and most particularly that the Congress of the United States found in the statute in 1974 and throughout the legislative history.

Unidentified Justice: But it would have been no violation of federal law if it had done that?

Mr. Greenberg: That's correct.

The petitioner has pointed out that at this time there is a certificate of need legislation in Missouri.

Missouri for present purposes is the 49th state to have certificate of need legislation.

Only Louisiana has held out, having before it the carrots of substantial federal funds.

The four years are up.

So what happens now is, the certificate of need legislation takes over, and the other course, what the House report, House Report 1382 said, in 1974, the apparently modest initial means of implementing now is no longer so important because now we have certificate of needs in the 49 states and just can't get to build a hospital.

Once--

Unidentified Justice: Now what happens if there's a--

Mr. Greenberg: --It varies.

Each state is a little different and--

Unidentified Justice: --I see.

Mr. Greenberg: --it's hard enough going through the '74 and '79 acts.

Each state is a little different, but as a practical matter, what's happened today is that the building of hospital beds is now a state deal, except in Louisiana; as it is in Missouri.

Now, the petitioner says, well, Missouri has approved my hospital, they've approved my hospital.

They've done no such thing.

What they've done is they grandfathered it.

They've grandfathered it in Missouri Statute 197.345, having in mind the problems of retroactivity.

The petitioner goes outside the record in pointing out that whether or not there is a contract at the present time with Blue Cross or not is not in the record.

What is also not in the record is whether or not petitioner has asked Blue Cross for a contract.

It is very dangerous, as this Court well knows, to go outside records.

I don't know the answer, and I don't know if petitioner does at this point.

And in any event, it's not in this record, which cuts off in 1978, before the 1979 act and before the Missouri certificate of need legislation.

The petitioner's counsel talks about judicial review.

And the Solicitor General has made an argument in its brief at various points, stating that the Health Planning Act specifically provides for judicial review of state certificate of need determinations in state court, and that there is no similar statutory provision for judicial review of health systems agency determinations.

The premise of the Solicitor General is wrong.

The citations at pages 9, 15, and 24 of the brief are all to the 1979 act, not to the 1974 act, which is the only act involved here.

There was no provision in the 1974 act with respect to judicial review of state certificate of need provisions, so that particular foundation falls apart.

Also overlooked here is the fact that the health systems agencies are directly answerable to the Secretary of Health and Human Services, and their health systems plans are subject to review by the Secretary to assure that they conform to national guidelines on such things as hospital beds per capita and very relevant provision.

If the Secretary's review is unsatisfactory to any affected person, that person may then seek judicial review under the Administrative Procedure Act.

Now, throughout here, the problem that petitioner has is it never asked anyone to do anything.

It never went to MAHSA, it never said, do you know, we have not an acute care hospital, we just take care of the elderly?

And maybe your determination with respect to acute care hospitals is wrong.

In its complaint it says it was very special.

It was going to be a national hospital for the elderly.

They also possibly could have gone to MAHSA and said, well, this little suburb of Lee's Summit, where we're going to build our hospital, they really need a hospital there, they really do.

And therefore you ought to give us, you ought to say, there's enough beds, but we need another 120-bed hospital up there in Lee's Summit.

It didn't do any of those things.

The fact that petitioner doesn't ask doesn't eliminate the capacity to ask, it doesn't eliminate the fact that there was complete due process in terms of the promulgation of the plan and it doesn't eliminate the fact this is not like Silver, it bears no resemblance to Silver.

In this situation the petitioner could have gone to MAHSA, it could have asked... it might have been turned down, but that doesn't eliminate the due process... and then it could have gone up through the Secretary and then into court.

Particularly here, petitioner has pointed out that there was only a conditional designation of the health systems agency, a conditional designation meant there was a 90-day contract.

There were contracts between the Secretary, Mr. Law, between the Secretary of Health and Human Services and the MAHSA.

And a contract meant money followed after you signed your contract.

That contract was cancellable in 90 days.

Petitioner could have gone to the Secretary and said, along the lines of, cancel that contract, give them 90 days notice, cancel them, because there's a desperate need for a hospital here.

There isn't any need for the hospital; there's no such thing.

Now, the petitioner in his reply brief quotes very extensively at page 10 from Undersecretary Hale Champion.

If one reads what is said there, it is quite clear that Mr. Champion in that slice of time said, there is indeed implied repeal from antitrust laws in some situations; this is what he says.

The concern is misplaced.

If the agency itself considers the questions and makes the decisions based on an institutions's specific kind of data, then we don't think, we don't think there are any antitrust questions involved.

Then he goes on... I'll come back to the next paragraph in a moment... then he says,

"I think in some cases there has been an effort to make people more worried about that subject than they ought to be. "

"That's our present view. "

The place where Mr. Champion has a problem is that the agency delegates the responsibility.

That turns the facts in our case topsy turvy.

The agency didn't delegate the responsibility to Blue Cross.

Blue Cross, according to the complaint here, delegated to the health systems agency.

Now, we're told by petitioner, that the agency administering the planning act had a specific interpretation and had it obviously escaped their attention that there was any implied repeal?

With respect, petitioner has a very short memory.

In the brief of respondent, Blue Cross of Kansas City, in reply to the brief of amicus curiae, there's a letter from Secretary Harris to Attorney General Civiletti, and at page 5 Secretary Harris says,

"Both the district court and the 8th Circuit held that the Act provides an implied exemption from the antitrust laws for Blue Cross conduct and accordingly dismissed the complaint. "

"This is consistent with this Department's legal interpretation of the Act and our policy for the implementation of the Act. "

Just as does the petitioner, we turn to the agency administering the planning act for guidance as of that period of time.

To conclude, the plain repugnancy of the Health Planning Act of 1974 and the antitrust laws is illuminated by the very discrete facts of this case.

We submit that in 1974... in 1974, now... Congress did not intend to visit possible antitrust liability on Blue Cross for cooperating with the local health systems agency to implement that agency's plan, which found that excess hospital beds were leading to high financial cost for the community, not to speak of increased morbidity and mortality.

No rational Congress would direct a health systems agency to seek to implement a plan with the assistance of providers, providers like Blue Cross... stated to be a provider in the statute... and then to intend to leave those providers exposed to possible antitrust treble damages because it furnished the assistance to the health systems agency.

Thank you.

Chief Justice Burger: Mr. Griswold, I think you have three minutes remaining.

ORAL ARGUMENT OF ERWIN N. GRISWOLD, ESQ., ON BEHALF OF THE PETITIONER -- REBUTTAL

Mr. Griswold: In the brief time remaining I would like to cover a couple of points.

Mr. Greenberg said that antitrust was simply ignored in 1974.

This was before Rex Hospital and other cases and everybody assumed there wasn't any antitrust problem.

That, of course, is quite inconsistent with the statute which Congress passed, because it did include in Section 3 JUL-1(4) 15 lines dealing with exemption from liability.

"Except as provided in subparagraph (b)(1) a health system agency shall not by reason of the performance of any duty, function, or activity, required of or authorized to be undertaken by the agency, be liable for the payment of damages under any law of the United States. "

And it goes on that the exemption extends only to health system agencies.

The next paragraph applies to...

"No individual member of the governing body of the health systems agency or employee shall be liable under any law of the United States. "

but there is nothing there that is broad enough to cover Blue Cross.

Unidentified Justice: There was no mention of the antitrust laws, but one--

Mr. Griswold: "Under any law of the United States. "

and I think it is reasonable to assume that--

Unidentified Justice: --One can argue whether or not health--

Mr. Griswold: --that was what was involved.

It does not say specifically the antitrust law.

Now, this is covered specifically at the bottom of page 25 of the Solicitor General's brief, and in our reply brief we have relied further on the 1979 act where that exemption was broadened, and there wouldn't have been any need to broaden it if Congress had assumed, well, we've already granted them implied exemption from the antitrust acts.

Now, reference was made to the footnote in the Solicitor General's brief, which indicates that there might be some implied immunity from the antitrust laws.

The plans include recommendations about centralizing certain specialized services in particular hospitals for the purpose of improving care.

For example, there might be two hospitals two blocks apart duplicating services and they might agree that the obstetrical work would be done in one hospital and the cardiac work be done in another.

I don't think that that is really a question of implied immunity.

I think that is really a question of rule of reason.

It is a question related to what this Court has before it now in the Maricopa County case coming from Arizona.

It may well be that such agreements under these circumstances in the health care area do not violate the antitrust law, not because they're exempt but because the proper construction of the antitrust laws is that they were not intended to be covered.

In this case Congress made it plain both in the statute and in the committee reports that regulatory functions could be exercised only by state health planning and development agencies.

MAHSA had no such powers.

There's nothing under which Blue Cross Association can find umbrage.

Their effort to do so not only finds no support in the statute but is a clear infringement on the sovereign choice made by the state of Missouri.

Chief Justice Burger: Thank you, gentlemen.

The case is submitted.

Unidentified Justice: The Honorable Court will now be adjourned until Monday next at ten o'clock [= 10:00].