St. Paul Ramsey County Medical Center, a Minnesota Hospital v. Pennington County, South Dakota, and Moody County, South Dakota, St. Paul Ramsey County Medical Center, a Minnesota Hospital v. Pennington County, South Dakota, and Moody County, South Dakota, St. Paul Ramsey County Medical Center, a Minnesota Hospital v. Pennington County, South Dakota, and Moody County, South Dakota
Docket: 87-5421
Court: Court of Appeals for the Eighth Circuit; September 22, 1988; Federal Appellate Court
St. Paul Ramsey Medical Center (St. Paul Ramsey) appealed the dismissal of its lawsuit against Pennington County and Moody County, South Dakota, seeking reimbursement for $52,384.35 in medical services provided to Carolyn Levitt, a South Dakota resident. Levitt was initially treated for severe burns at a hospital in Flandreau before being transferred to St. Paul Ramsey. The hospital notified the Counties of her admittance and subsequently demanded payment under South Dakota's County Poor Relief Statute, which obligates counties to support their indigent residents.
The Counties contended that they were protected by eleventh amendment immunity and argued that St. Paul Ramsey had failed to state a valid claim since it did not comply with the statute’s requirement to file a detailed statement of costs prior to Levitt's hospitalization. They also claimed that St. Paul Ramsey failed to join necessary parties under Federal Rule of Civil Procedure 19. The district court ultimately dismissed the case and certified the issue of St. Paul Ramsey's compliance with the cost-filing requirement to the South Dakota Supreme Court. The appellate court affirmed the district court's dismissal.
The district court identified, on its own initiative, that St. Paul Ramsey did not qualify as a 'hospital' under South Dakota law, as it is an out-of-state facility. Consequently, the court certified a legal question to the South Dakota Supreme Court regarding whether out-of-state hospitals could recover costs from a county for emergency services rendered to indigent individuals, given their non-compliance with the statutory definition and failure to file required cost statements. The South Dakota Supreme Court ruled that St. Paul Ramsey's lack of a filed cost statement barred recovery, and its status as an out-of-state hospital further supported this ruling.
St. Paul Ramsey subsequently filed a motion for partial summary judgment, arguing that the statute's definition violated various constitutional provisions, including equal protection and commerce clauses. They also claimed that the Counties' inaction on notices should prevent them from contesting liability. The district court, while presuming counties are protected under the Eleventh Amendment, concluded that the state had waived this immunity, allowing jurisdiction. However, it determined that St. Paul Ramsey failed to state a claim since it did not allege compliance with the filing requirement, leading to the dismissal of the case.
On appeal, St. Paul Ramsey reiterated its constitutional claims and introduced a new argument regarding due process violations concerning the filing requirement. The Counties contested the district court's finding of immunity waiver. The court noted that the Counties' motion to dismiss was treated as a motion for judgment on the pleadings and confirmed that a complaint should not be dismissed unless it is evident that no facts could warrant relief. The court also emphasized that it would assess the complaint's allegations favorably to the plaintiff.
St. Paul Ramsey conceded that its complaint was inadequate due to the South Dakota Supreme Court's response to a certified question but argued that additional allegations in its brief supported its claim for relief. The court disagreed, first addressing St. Paul Ramsey's constitutional challenge to section 28-13-28, which requires hospitals to file a statement of actual costs 30 days prior to a patient's admission. Initially, St. Paul Ramsey connected this requirement to another statute but later claimed it violated due process independently. The court, adhering to the principle of not considering new arguments on appeal, nonetheless found the due process argument unpersuasive.
The court emphasized that the filing requirement serves a legitimate purpose: to prevent counties from being overcharged for indigent services. It noted that the requirement is part of a comprehensive system for ensuring the accuracy and transparency of hospital costs prior to billing. St. Paul Ramsey's suggestions for alternative measures were deemed irrelevant, as the legislature's rationale sufficed. Consequently, the court ruled that the filing requirement was not irrational and thus did not violate due process.
Due to St. Paul Ramsey's failure to timely file the statement of costs and its inability to prove the requirement unconstitutional, it was barred from recovery under the statute. The court found it unnecessary to evaluate St. Paul Ramsey's other constitutional challenges regarding the definition of 'hospital,' as even if those were found unconstitutional, St. Paul Ramsey would still be ineligible for reimbursement.
St. Paul Ramsey contends that the Counties should be estopped from denying liability for Ms. Levitt's hospitalization due to their silence in response to St. Paul Ramsey's notices, which allegedly led the hospital to believe the Counties accepted responsibility. This reliance resulted in St. Paul Ramsey providing extended treatment and incurring additional costs. However, under South Dakota law, the remedy for repayment of costs is strictly statutory, as established by case law indicating that liability must be found within the statutes. The South Dakota Supreme Court has emphasized that estoppels against public entities are disfavored and require some affirmative action by the entity, not mere acquiescence. In a relevant case, the hospital's failure to notify the proper county in a timely manner negated its estoppel claim, underscoring that affirmative reliance is necessary. St. Paul Ramsey's argument that past payments by Pennington County constituted affirmative action was dismissed, as the only cited payment occurred in January 1985, long after Ms. Levitt's hospitalization in March 1983. Furthermore, the court rejected the notion that additional discovery could enhance St. Paul Ramsey's position, asserting that the necessary evidence for an estoppel claim must be within the plaintiff's knowledge. Consequently, St. Paul Ramsey's estoppel allegations were deemed insufficient under South Dakota law.
The Counties contended that the district court mistakenly determined that their Eleventh Amendment immunity had been waived by the state. However, the appellate court affirmed the district court's dismissal based on a failure to state a claim, rendering the immunity issue unnecessary for consideration. The appellate court acknowledged the inequity of denying compensation to a hospital that provided specialized care to an indigent resident but noted that the South Dakota Supreme Court has consistently held that a county’s obligation to pay for such medical expenses is strictly statutory. St. Paul Ramsey's attempts to state a claim were reviewed and deemed inadequate due to noncompliance with the relevant statute. Consequently, the district court's judgment was upheld. Moody County raised several procedural arguments regarding the timeliness and specificity of St. Paul Ramsey’s motion for partial summary judgment, but these were deemed irrelevant as St. Paul Ramsey ultimately failed to present a viable claim. The district court assumed, for the purpose of the motion to dismiss, that the Counties had Eleventh Amendment protections but concluded that immunity had been waived by the state, allowing jurisdiction.
St. Paul Ramsey failed to state a claim for relief after not alleging compliance with the filing requirement of section 28-13-28, leading the court to grant the Counties' motion to dismiss. The district court deemed St. Paul Ramsey's motion for partial summary judgment unnecessary due to this ruling. On appeal, St. Paul Ramsey reiterated its constitutional challenges to section 28-13-271 and argued for the first time that section 28-13-28's filing requirement violates due process under both the U.S. and South Dakota constitutions. The Counties contended that the district court erred in waiving eleventh amendment immunity. The court treated the Counties' motion as one for judgment on the pleadings due to its timing post-pleadings closure. It applied the same standards as a motion under Rule 12(b)(6), emphasizing that a motion to dismiss is only granted when it is clear that no set of facts can entitle the plaintiff to relief. The court noted that St. Paul Ramsey conceded its complaint was inadequate based on the South Dakota Supreme Court's certified question answer but argued that additional allegations in its brief should suffice. The court disagreed, stating St. Paul Ramsey's shift in theory regarding the constitutionality of section 28-13-28 was not previously raised and typically would not be considered on appeal, although the court reviewed it and found it unpersuasive.
The filing-of-actual-costs requirement is a mandatory condition for hospitals to receive reimbursement, as outlined in Sec. 28-13-28. In assessing challenges to this requirement under due process, the legislature's decisions are given significant deference, with the court only needing to determine if the requirement has a rational basis. St. Paul Ramsey acknowledges that one valid purpose of this requirement is to prevent overcharging counties for services provided to indigent patients. Additional provisions in chapter 28-13 bind hospitals to their cost statements, authorize investigations for accuracy, and ensure public access to these statements. The court finds that the requirement to file a statement of actual costs thirty days before hospitalization is rational and does not violate due process.
St. Paul Ramsey's failure to timely file the statement of costs and to prove the requirement unconstitutional prevents it from recovering under the statute. Consequently, any constitutional challenges regarding the definition of "hospital" are moot since reimbursement eligibility is already denied. Lastly, St. Paul Ramsey claims that the Counties should be estopped from denying liability for Ms. Levitt's hospitalization due to their silence, which led St. Paul Ramsey to assume acceptance of responsibility. However, the South Dakota Supreme Court has consistently ruled that hospitals' rights to recover costs are entirely governed by statute, meaning that any remedy must be found within the applicable statutes.
In Strutz v. Perkins County, the South Dakota Supreme Court emphasized that a county's obligation to reimburse for medical expenses is strictly governed by statute, and no liability exists without such statutory authorization. The case of Sioux Valley Hosp. Ass'n v. Tripp County serves as a key reference, where the hospital's failure to notify the correct county within the mandated fifteen days resulted in the county denying liability. The hospital argued that the county should have informed them of the untimely notice, but the court ruled that estoppel against public entities is rarely applied and requires affirmative action that leads to reliance and a significant change in position by the other party.
In this instance, St. Paul Ramsey's claim for estoppel was rejected, as the only past payment cited occurred in January 1985, while the hospitalization in question was in March 1983, making it irrelevant for the estoppel claim. The court also noted that any evidence to support the estoppel claim must be within the plaintiff's possession, which St. Paul Ramsey failed to demonstrate. As a result, the Supreme Court affirmed the district court's dismissal of St. Paul Ramsey's claims without addressing the counties' immunity under the Eleventh Amendment. The court acknowledged the inequity of denying recovery but reiterated that a county's obligation to cover such expenses is purely statutory, and St. Paul Ramsey did not comply with the statute, leading to the conclusion that the claim failed. The judgment of the district court is affirmed.
Honorable John R. Brown, Senior United States Circuit Judge for the Fifth Circuit, and Honorable Andrew W. Bogue, Senior United States District Judge for the District of South Dakota, are presiding over this matter. The 1988 amendment to South Dakota law redefined "hospital" to include only those licensed by the state, effective March 1, 1988, without affecting the case's outcome. Under South Dakota Codified Laws, hospitals can only utilize the provisions of sections 28-13-27 to 28-13-36 for indigent hospitalization if they file a detailed cost statement with the secretary of health at least thirty days prior to the hospitalization. This statement must report the actual costs of services and be filed annually, though it may be submitted biannually.
Moody County argues that the motion for partial summary judgment by St. Paul Ramsey violated a stay order that allegedly remained in effect until the district court's dismissal. Moody County contends the motion lacked sufficient grounds for relief and that St. Paul Ramsey's estoppel claim was raised too late, thus waiving it. However, these issues need not be resolved, as the court finds that St. Paul Ramsey failed to state a claim, regardless of the arguments presented. St. Paul Ramsey did not provide any arguments or citations suggesting a different outcome under the South Dakota Constitution.
