A ruling that a state law requiring hospitals to provide free health care services to individuals with income below 150 percent of the federal poverty guideline does not violate the Fourteenth Amendment's Due Process Clause was upheld by the US Court of Appeals for the First Circuit. The provider, which abided by the law's requirements and even provided free health care in excess of the requirements, argued that this law amounted to a taking of private property for public benefit requiring just compensation to be provided.
The claim was found not to be a regulatory or per se taking, because the owners of the hospital were not forced to use their property for hospital service, which required the provision of free care. To avoid the requirement to provide free care they could have used their property for something other than a hospital. There is no taking when participation is voluntary.
An ad hoc analysis guided by: (1) the extent to which the regulation interferes with investment-backed expectations; (2) the economic impact of the regulation on the hospital; and (3) the character of the government action, determined that no taking occurred because the provider was economically viable, the provider's property was being used in a highly government regulated industry which should temper investment-backed expectation, and that while the government adjusted the benefits and burdens of the economic life of the provider, it left the core rights of the property ownership intact by allowing the provider to otherwise set the terms on which it provided access to its facilities and services. In addition, the statute requiring the providing of free care did provide relief to hospitals that would experience ruinous financial consequence resulting from providing the care.
In addition the provider argued that the reimbursement it received for providing care to Medicaid recipients was not sufficient. It showed how the reimbursements from the state's Medicaid program fell short of the actual cost of treating patients, with inpatient rates being worse than outpatient and argued that they were being forced to give away real property, hospital rooms, for free in these circumstance. Because the provider is not required to serve low income patients and can choose to stop using its property as a hospital, this is not considered a taking as well.
Franklin Memorial Hospital v. Harvey, 1st Cir.., Aug. 5, 2009, ¶302,946
For more information on this and related topics, consult the CCH® Medicare and Medicaid Guide.
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