Dr. COLEMAN. Well, it is our opinion that it does not override the Moses Cone decision.

Mr. DINGELL. Well, I will put into the record, then, appropriate sections of the Moses Cone decision to make it abundantly plain that this does override and plainly seeks on the part of your organization to override the Moses Cone decision, because that was bottomed on the fact that acceptance of grants and participation in a State program constituted governmental action within the prescribed action of the 14th amendment. If that be so, then it is very plain that this is an attempt to override the Moses Cone decision, is it not?

Dr. COLEMAN. Congressman, this is not our interpretation, and this is not our purpose in suggesting this amendment. We have no desire to override the decision in the Moses Cone case.

Mr. DINGELL. Thank you, Mr. Chairman.

Mr. HEMPHILL. Is there objection to Mr. Dingell inserting in the record such remarks as he feels desirable?

Without objection, it is so ordered.
(The statement to be furnished follows:)

In the Supreme Court of the United States

No. 776. MOSES H. CONE MEMORIAL HOSPITAL et al., Petitioners, v. G. C. SIMKINS et al.

March 2, 1964. Petition for writ of certiorari to the United States Court of Appeals for the Fourth Circuit denied.

In the Court of Appeals for the Fourth Circuit

G. C. SIMKINS, Jr., A. W. Blount, Jr., et al., Plaintiffs, and United States of America, Intervenor, Appellants,

V.

The MOSES H. CONE MEMORIAL HOSPITAL, a Corporation, Harold Bettis, Director of The Moses H. Cone Memorial Hospital, and Wesley Long Community Hospital, a Corporation, and A. O. Smith, Administrator of the Wesley Long Community Hospital, Appellees.

No. 8908.

United States Court of Appeals, Fourth Circuit.

Argued April 1, 1963.

Decided Nov. 1, 1963.

Action by Negro physicians, dentists and patients suing on behalf of themselves and other Negro citizens for declaratory and injunctive relief against defendant hospitals and their administrators and directors for discrimination because of their race. The United States District Court for the Middle District of North Carolina, at Greensboro, Edwin M. Stanley, Chief Judge, entered judgment adverse to plaintiffs and they appealed. The Court of Appeals, Sobeloff, Chief Judge, held that portion of Hill-Burton Hospital Survey and Construction Act tolerating "separate-but-equal" facilities for separate population groups and relevant regulations implementing that passage in statute are unconstitutional under the due process clause of the Fifth Amendment and the equal protection clause of the Fourteenth Amendment and that plaintiffs were entitled to relief.

Reversed and remanded.

Haynsworth and Boreman, Circuit Judges, dissented.

1. Constitutional Law 215

Private hospitals which participated in Hill-Burton joint federal and state program for allocating aid to hospital facilities were sufficiently involved with state, including federal, action to be within Fifth and Fourteenth Amendment prohibitions against racial discrimination. U.S.C.A. Const. Amends. 5, 14; Hospital Survey and Construction Act, § 622(f), 42 U.S.C.A. § 291e(f).

2. Constitutional Law 213

When state function or responsibilty is being exercised, it matters not for Fourteenth Amendment purposes that institution actually chosen would otherwise be private: the equal protection guarantee applies. U.S.C.A.Const. Amend. 14.

3. Constitutional Law 213

Governmental sanction need not reach level of compulsion to clothe what is otherwise private discrimination with state action. U.S.C.A.Const. Amend. 14. 4. Constitutional Law 215, 253

Hospitals 1

Portion of Hill-Burton Hospital Survey and Construction Act tolerating “separate-but-equal" facilities for separate population groups and relevant regulations implementing that passage in statute are unconstitutional under the due process clause of the Fifth Amendment and the equal protection clause of the Fourteenth Amendment. U.S.C.A.Const. Amends. 5, 14; Hospital Survey and Construction Act, § 622(f), 42 U.S.C.A. § 291e (f).

Jack Greenberg, New York City (James M. Nabrit, III, New York City, Michael Meltsner, New York City, and Conrad O. Pearson, Durham, N.C., on brief), for appellants other than the United States.

Harold H. Greene, Dept. of Justice (Burke Marshall, Asst. Atty. Gen. William H. Murdock, U.S. Atty., St. John Barrett and Howard A. Glickstein, Attys., Dept. of Justice, on brief), for the United States, intervenor, appellant.

Charles E. Roth, Greensboro, N.C. (Herbert S. Falk, Greensboro, N.C., on brief), for The Moses H. Cone Memorial Hospital and Harold Bettis, its Director, appellees.

Thornton H. Brooks, Greensboro, N.C. (Thomas O. More, Jr., and McLendon, Brim, Holderness & Brooks, Greensboro, N.C., on brief), for Wesley Long Community Hospital, Inc., and A. O. Smith, appellees.

Before SOBELOFF, Chief Judge, and HAYNSWORTH, BOREMAN, BRYAN and J. SPENCER BELL, Circuit Judges, sitting en banc.

SOBELOFF, Chief Judge.

The threshold question in this appeal is whether the activities of the two defendants, Moses H. Cone Memorial Hospital and Wesley Long Community Hospital, of Greensboro, North Carolina, which participated in the Hill-Burton program, are sufficiently imbued with "state action" to bring them within the Fifth and Fourteenth Amendment prohibitions against racial discrimination. Beyond this initial inquiry lies the question of the constitutionality of a portion of the Hill-Burton Act (Hospital Survey and Construction Act), 60 Stat. 1041 (1946), as amended, 42 U.S.C.A. § 291e (f),' and a regulation pursuant thereto,

142 U.S.C.A. § 291e(f) provides:

"291e. General regulations. Within six months after August 13, 1946 [the enactment of this title], the Surgeon General, with the approval of the Federal Hospital Council and the Secretary [of Health, Education, and Welfare], shall by general regulation prescribe

"(f) That the State plan shall provide for adequate hospital facilities for the people residing in a State, without discrimination on account of race, creed, or color, and shall provide for adequate hospital facilities for persons unable to pay therefor. Such regulation may require that before approval of any application for a hospital or addition to a hospital is recommended by a State agency, assurance shall be received by the State from the applicant that (1) such hospital or addition to a hospital will be made available to allpersons residing in the territorial area of the applicant, without discrimination on account of race, creed, or color, but an exception shall be made in cases where separate hospital facilities are provided for separate population groups, if the plan makes equitable provision on the basis of need for facilities and services of like quality for each such group; and (2) there will be made available in each such hospital or addition to a hospital a reasonable volume of hospital services to persons unable to pay therefor, but an exception shall be made if such a requirement is not feasible from a financial standpoint."

42 C.F.R. § 53.112, 21 Fed. Reg. 9841 (December 12, 1956). Because of the importance of these questions the court, on its own motion, has heard the appeal en banc.

The plaintiffs are Negro physicians, dentists and patients suing on behalf of themselves and other Negro citizens similarly situated. Their complaint seeks declaratory and injunctive relief against the defendant hospitals and their respective administrators and directors. The basis of their complaint is that the defendants have discriminated and continue to discriminate, against them because of their race in violation of the Fifth and Fourteenth Amendments to the United States Constitution. The plaintiffs seek an injunction restraining the defendants from continuing to deny Negro physicians and dentists the use of staff facilities on the ground of race; an injunction restraining the defendants from continuing to deny and abridge admission of patients on the basis of race, and refusing on that basis to permit patients to be treated by their own physicians and dentists at the defendant hospitals; and a judgment declaring unconstitutional 42 U.S.C.A. § 291e (f) and 42 C.F.R. § 53.112, which authorize the construction of hospital facilities and the promotion of hospital services with funds of the United States on a "separate-but-equal" basis.

Since this proceeding is one in which "the constitutionality of *** [an] Act of Congress affecting the public interest *** [has been] drawn in question, "the United States, pursuant to 28 U.S.C.A. § 2403 and Rule 24(a), Fed. R. Civ. P., moved to intervene. Its motion for intervention was granted and throughout the proceedings the Government, unusually enough, has joined the plaintiffs in this attack on the Congressional Act and the regulation made pursuant thereto.

The present appeal is from a final order of the District Court, entered December 17, 1962, granting the defendants' Motion to Dismiss for lack of jurisdiction on the ground that no "state action" was proved and denying the motions by the plaintiffs and the United States for summary judgment.3 The plaintiffs and the United States appealed.

As the District Court concluded, there is no material issue of fact. Moreover, extensive and well-supported findings of fact were made by that court." We will not undertake to repeat these findings which are to be deemed incorporated in our opinion by reference. We set forth only such facts as are necessary for the development of the discussion.

FACTUAL BACKGROUND

Six of the plaintiffs are physicians and three are dentists, and all of them are duly licensed and practice their professions in Greensboro. Before filing the complaint they sought staff privileges at the defendant hospitals which were denied them because of racial exclusionary policies. Two of the plaintiffs are persons in need of medical treatment who desire to enter either of the defendant hospitals which, they contend, possess the most complete medical equipment and the best facilities available in the Greensboro area. They also desire to be treated by their personal physicians who are Negroes. The Long Hospital, however, completely excludes Negro patients and professionals. The Cone Hospital, on the other hand, excludes all but a select few Negro patients, who are admitted on special conditions not applied to whites; and, when the complaint was filed, this hospital did not admit Negro doctors and dentists to staff privileges."

242 C.F.R. § 53.112 provides:

"53.112 Nondiscrimination. Before a construction application is recommended by a State agency for approval, the State agency shall obtain assurance from the applicant that the facilities to be built with aid under the Act will be made available without disI crimination on account of race, creed, or color, to all persons residing in the area to be served by that facility. However, in any area where separate hospital, diagnostic or treatment center, rehabilitation or nursing home facilities, are provided for separate population groups, the State agency may waive the requirement of assurance from the construction applicant if (a) it finds that the plan otherwise makes equitable provision on the basis of need for facilities and services of like quality for each such population group in the area, and (b) such finding is subsequently approved by the Surgeon General. Facilities provided under the Federal Act will be considered as making equitable provision for separate population groups when the facilities to be built for the group less well provided for heretofore are equal to the proportion of such group in the total population of the area, except that the State plan shall not program facilities for a separate population group for construction beyond the level of adequacy for such group."

3 Simkins v. Moses H. Cone Memorial Hospital, 211 F. Supp. 628 (M.D.N.C. 1962). 4 Id. 211 F. Supp. at 630-634.

5 On the day following the order dismissing the case, Cone Hospital advised the plaintiffs, and publicly announced, that it would consider staff applications from Negroes. The policy with respect to Negro patients, however, was not changed.

The claims of racial discrimination were, as the District Court found, “clearly established." In fact the hospitals' applications for Federal grants for construction projects openly stated, as was permitted by statute, 42 U.S.C. § 291e (f), and regulations, 42 C.F.R. § 53.112, that "certain persons in the area will be denied admission to the proposed facilities as patients because of race, creed or color." These applications were approved by the North Carolina Medical Care Commission, a state agency, and the Surgeon General of the United States under his statutory authorization.

Both Cone and Long are nonprofit hospitals owned and governed by boards of trustees, and under state law they are duly constituted charitable corporations. The Long Hospital is governed by a self-perpetuating board of twelve trustees. The Cone Hospital, however, is governed by fifteen trustees, five of whom are selected by various state agencies, and one is appointed by a "public agency" as the District Court assumed for the purpose of its decision. Neither hospital's charter contains any explicit or implicit authorization or requirement for the exclusion of Negro professionals or patients.

By far the most significant governmental contact of these two hospitals is their participation in the federally assisted Hill-Burton hospital system. As a result of their involvement in the Hill-Burton hospital construction program both hospitals have received large amounts of public funds, paid by the United States to the State of North Carolina and in turn by North Carolina, through its Treasurer, to the hospitals. They received these funds as part of a "state plan" for hospital construction, which allocates available resources for hospitals within the state and contemplates and authorizes the defendants to exclude Negroes.

When this action was commenced, the United States had appropriated $1.269,950.00 to the Cone Hospital and $1,948,800.00 to the Long Hospital. Cone had already received these funds which amounted to about 15% of the total construction expenses involved in its two projects. Long had received most of the funds appropriated to it (over $1,500,000.00 already paid) which constitute about 50% of the total cost of its three projects. These appropriations for the most part were after the Supreme Court's landmark decisions in Brown v. Board of Education, 347 U.S. 483, 74 S. Ct. 686, 98 L. Ed. 873 (1954) and 349 U.S. 294, 75 S. Ct. 753, 99 L. Ed. 1083 (1955).

The Hill-Burton program requires that states wishing to participate must inventory existing facilities to determine hospital construction needs and to develop construction priorities under federal standards. State agencies are designated to perform this function and to adopt state-wide plans to be submitted for the approval of the Surgeon General of the United States. The designated North Carolina agency is the North Carolina Medical Care Commission. The Act pro

*The court found "approximately" 15 percent for Cone and "approximately" 50 percent for long.

vides for grants of federal funds for construction of new or additional facilities for governmentally owned hospitals and voluntary nonprofit hospitals.'

The allocation of federal funds among the states is determined by a mathematical formula based on population and per capita income. 42 U.S.C.A. § 291g. The "federal share" of costs of particular projects within a state is governed by federally approved state plans. 42 U.S.C.A. § 291e (f). North Carolina's current plan programs general hospital facilities based on a "federal share" of 55%. Through January 31, 1963, a total of 350 Hill-Burton projects was approved by the State of North Carolina. This involved 10,210 inpatient beds and 106 health units. The total cost of these projects was approximately $180,866,000.00 and the "federal share" amounted to approximately $77,854,000.00. Of these projects 325 were already in operation. They included 8496 inpatient beds and 100 health units. The total cost of these facilities was $139,650,000.00 and the "federal share" was $58,621,000.00.

Participation in the Hill-Burton program subjects hospitals to an elaborate and intricate pattern of governmental regulations, both state and federal, of which the following categories are most significant for present purposes:

(1) The Act provides that if within 20 years after completion of a project a hospital is sold to anyone who is not qualified to file an application thereunder or is not approved by the state agency, or if the hospital ceases to be "nonprofit," the United States can recover a proportionate share of its grant to the hospital. 42 U.S.C.A. § 291h (e). The state agency is required to give notice of any such changes of status. 42 C.F.R. § 53.130.

(2) On its fact the Act indicates that participating institutions, correlative to their right to receive monetary assistance, are obligated to render hospital services pursuant to specified "minimum standards (to be fixed in the discretion of the State) for the maintenance and operation of hospitals which receive Federal aid ***" 42 U.S.C.A. § 291f (a) (7). And no federal grants are to be allocated to any state which does not enact legislation requiring compliance with the minimum standards. 42 U.S. C. A. § 291f (d). Within a year after the passage of the Hill-Burton Act, North Carolina, to meet its requirements, enacted a "Hospital Licensing Act" in 1947, N.C.Gen. Stat. § 131-126.1 et seq (1958), authorizing the adoption of detailed regulations governing hospital maintenance and operation. The federal authorities prescribed and North Carolina adopted "Rules and Regulations for Hospital Licensure." These provide in detail for the management of hospitals under general headings such as administration, clinical services, auxiliary services, nursing service, and food service.

(3) The Act provides for federal decision as to the number of general hospital beds and other facilities required to provide “adequate service" in a state, for general methods of distribution in areas of a state, and for the general manner in which a state agency shall determine priorities of projects based on relative need. 42 U.S.C.A. § 291e (a), (b) (c), (d). State allowances in terms of number of beds per thousand population have been fixed by regulation. 42 C.F.R. § 53.11, as have the methods to be used by state agencies in distributing hospitals in a state. 42 C.F.R. §§ 53.12, 53.13. In addition the "separate-but-equal" provisions stipulate that facilities for separate population groups shall not be programmed for construction "beyond the level of adequacy for such group." 42 C.F.R. § 53.112. And federal standards governing the state agencies' determination of the priority of projects are set out in 42 C.F.R. §§ 53.71 to 53.80. See also 42 C.F.R. § 53.127 (b) and 42 C.F.R. § 53.127(d) (6).

(4) A state, to participate in the Hill-Burton program, is required to submit for approval by the Surgeon General a state plan setting forth a "hospital construction program" which, among other things, "meets the requirements as to lack of discrimination on account of race, creed, or color, and for furnishing needed hospital services to persons unable to pay therefor, required by regulations prescribed under section 291e (f). * * *" 42 U.S.C.A. § 291f (a) (4).

In the first fifteen years of the program (1947-1961) approximately $1.55 billion of federal funds were approved for such projects. Slightly more than half of the total went to voluntary nonprofit hospital projects. In the same period state and local funds (governmental and nongovernmental) totaled about $3.38 billion; thus, the federal share of Hill-Burton projects was slightly more than 30% of their total cost. See "Hill-Burton Program-Progress Report, July 1, 1947-June 30, 1961." United States Department of Health, Education, and Welfare, Public Health Service Publication No. 880 (1961).

See "Hill-Burton Project Register: Hospital and Medical Facility Projects Approved During January, 1963." United States Department of Health, Education, and Welfare, Public Health Service-Division of Hospital and Medical Facilities (1963).