text:
    EGYPT FARMS, INC. et al. v. LORRAINE S. LEPLEY
    [No. 1505,
    September Term, 1980.]

      Decided June 8, 1981.

    The cause was argued before Lowe, Liss and Wilner, JJ.

      R. Roger Drechsler, with whom were Lord, Whip & Green, P.A. on the brief, for appellants.

      Peter V. Gar gano for appellee.
   Wilner, J.,

delivered the opinion of the Court.

The precise question before us in this appeal is whether the Circuit Court for Baltimore County erred in affirming a decision of the Workmen’s Compensation Commission by means of summary judgment. At issue is not only the substantive correctness of the court’s findings — that Maurice Lepley’s death by asphyxiation arose out of and in the course of his employment and was not the product of willful misconduct on his part — but also whether those findings could properly be made by means of summary judgment.

We have no particular difficulty with the first issue; following an evidentiary proceeding of the type provided for by Md. Ann. Code art. 101, § 56, the court could properly have reached the conclusions noted. We think, however, that it erred in reaching one of those conclusions on summary judgment, for there was evidence in the record (and permissible inferences from that evidence) that could have led to a conclusion that Mr. Lepley’s death did not arise out of and in the course of his employment.

The record upon which the court granted summary judgment was that made before the Commission. No additional evidence was considered.

Mr. Lepley was employed by Egypt Farms, Inc. as a mechanic. His "main work,” according to his widow, the claimant-appellee, was "cooking topsoil,” although it was undisputed that "[h]e worked every kind of work there was to do. He did everything. He did mechanic work.” He started up the employer’s trucks in the morning, and kept them in repair. He occasionally worked on his "boss’s” car, the boss’s daughter’s car, and the secretary’s car, all at the employer’s garage.

Mr. Lepley had an old pick-up truck that he used regularly to commute to and from work. Indeed, it was this truck, and his manner of using it, that forms the heart of this controversy.

It was conceded that Lepley occasionally used his truck in the direct service of his employer. He was not required so to use it, but he did so in a number of ways with his employer’s knowledge and consent. On one occasion, shortly before his death, he used his truck on a business trip to Virginia. More frequently, he used it either to reach the scene of one of his employer’s vehicles that had broken down on the road or simply to travel around the "yard,” although there were company vehicles he could have used for either purpose. Because of his periodic use of the truck at work, he kept his tools — those that he used in his work — in his truck. According to Mrs. Lepley, the employer supplied him with some gasoline and some parts for the truck.

Mr. Lepley used his employer’s garage to work on — i.e., repair — his truck. Mrs. Lepley said that it was "the only place he had to work on it,” but, in any event, there was no dispute that the employer knew and acquiesced in Lepley’s use of its garage for that purpose.

Lepley’s work schedule was somewhat erratic. According to his widow, "[h]e worked from 6:00 in the morning sometimes until 11:00 or 12:00 at night depending on how busy they were at the particular time.” It was a seasonal business, she said, and he was then in the busy season. She stated that "l.h]e was on call all the time. Anytime they needed him they could call him, Saturday, Sunday, nights, anytime at all he would go.” Because of that, Mr. Lepley had a key to the employer’s property.

The facts related so far were essentially undisputed. The problem arises from the circumstances surrounding Mr. Lepley’s death.

He died sometime between the evening of Saturday, May 12,1979, and the next morning. Mr. Lepley had worked that Saturday. According to Mr. Strickland, the president and owner of Egypt Farms, he and Lepley had been working since 6:00 or 6:30 a.m. He last saw Lepley "in the back of the shop” at about 5:00 or 6:00 p.m. The work day was over, he said, and they were "discussing what we were going to do next week and it was a hot sunny afternoon we all had a beer.” Strickland emphasized the beer drinking in the context of his assertion that the work day had ended:

"A That was one of the ... of the very important things that we stressed there was that we knew when quitting time was because you could hear Maurice [Lepley] popping a beer.

Q Was any drinking allowed on the premises during work hours?

A Absolutely not.

Q Why was that, sir?

A Well, you don’t mess around with equipment when you’re drinking and you can’t work properly when you’re drinking.”

Where the beer came from is not entirely clear. There was testimony from a barmaid at a nearby tavern that Mr. Lepley had been there earlier that afternoon — about 4:30 p.m. — that he drank two bottles of beer and bought a "six pack” to go. It was argued that her testimony, particularly as to the time of Mr. Lepley’s visit, was inconsistent with other testimony that Lepley was at work until 5:00 or 6:00 p.m. Inferences could be drawn either way, of course — that she was mistaken as to the time and that Lepley was there later, or that Lepley simply left work temporarily and returned prior to his last conversation with Mr. Strickland. There was a refrigerator at the shop in which the men kept beer. Occasionally, Mr. Strickland would buy some beer for the men.

It is apparent that Mr. Lepley remained at or returned to the shop after Strickland and the others left, but different inferences could be drawn as to why. He was found the next morning by a co-worker lying on a "creeper” behind his truck, dead. The garage door was closed; his entire box of tools was beside him. According to the autopsy report, he had died of carbon monoxide intoxication. One clearly permissible inference, of course, was that Mr. Lepley had died while working on his truck; and that is what the medical examiner assumed. Mr. Strickland, however, found it "a little unusual that ILepley] would crawl under a truck with an entire box of tools. Maurice was such a good mechanic he would generally know about what he needed. And to go under .. . he’d take just a few tools with him, exactly what he needed.” Strickland believed (and testified) that Lepley had "c[o]me in there to sleep off a drunk....”

On these facts, the Commission found that Lepley’s death had arisen out of and in the course of his employment and that it was not the product of willful misconduct on his part. On appeal, the court concluded that there was no dispute of fact and the record permitted "only one permissible inference” — that the Commission reached the only possible conclusion. On that basis, it granted appellee’s motion for summary judgment.

In Montgomery Ward & Co., Inc. v. Bell, 46 Md. App. 37 (1980), we discussed the role of a court when reviewing a decision of the Workmen’s Compensation Commission. At p. 42, we noted that where, as here, the case involves an accidental injury, "the court must determine three things: (i) did the Commission justly consider all the facts concerning the injury; (ii) did the Commission exceed its statutory authority; and (iii) did the Commission misconstrue the facts or the law applicable to the case?” We also observed, however (p. 41), that in making those determinations, the reviewing court has very broad authority, notwithstanding the prima facie correctness of the administrative decision. This review, said the Court in Maryland Bureau of Mines v. Powers, 258 Md. 379, 382 (1970), "extends both to findings of fact and applicable law” and "provides for a trial which is essentially de novo.” The court (or jury), in other words, is not so bound by the Commission’s fact findings as is normally the case in administrative appeals, but is free to weigh the evidence (and the inferences from it) and reach entirely opposite conclusions. Thus, the normal rules governing summary judgment apply with equal force to Workmen’s Compensation appeals. Those rules were recently summarized in Peck v. Baltimore County, 286 Md. 368, 381 (1979) (citations omitted):

"We have said many times that the function of a summary judgment proceeding is not to try the case or to attempt to resolve factual issues, but to ascertain whether there is a dispute as to a material fact sufficient to provide an issue to be tried. . .. Moreover, all inferences must be resolved against the moving party when a determination is made as to whether a factual dispute exists, even if the underlying facts are undisputed.. . . Also, [citing Fenwick Motor Co. v. Fenwick, 258 Md. 134, 138, 265 A.2d 256 (1970)], '[EJven where the underlying facts are undisputed, if those facts are susceptible of more than one permissible inference, the choice between those inferences should not be made as a matter of law, but should be submitted to the trier of fact.’ ” (Emphasis supplied.)

This is the framework within which we must review the court’s action. Within that framework, it is clear that the court could properly conclude, on summary judgment, that Lepley’s death was not the result of his own willful misconduct. At best, applying every inference in favor of the employer, the record supports nothing more than negligence on Lepley’s part. He should have known better than to run the motor in a closed garage without proper ventilation, or, (if that is what he was doing) to work on the vehicle after drinking. But, as we said in Williams Construction Co., Inc. v. Garrison, 42 Md. App. 340, 345 (1979), "the right to compensation exists without reference to the care of the employee, and compensation is not denied by reason of contributory negligence on his part.” See also Dayton v. Davis, 218 Md. 614 (1959); Harris v. R. P. Dobson & Co., 150 Md. 71 (1926); Red Star Motor Coaches, Inc. v. Chatham, 163 Md. 412 (1933).

The problem, as we have noted, is with the court’s other conclusion — that the death arose out of and in the course of Lepley’s employment.

Long ago, the Court of Appeals stated that "an injury to an employee arises out of his employment if it results from the nature, conditions, obligations, or incidents of the employment. Whether an accident is so related or incident to the employment depends upon the circumstances of each particular case. No exact formula can be laid down which will automatically solve every case.” Spencer v. Chesapeake Paperboard Co., 186 Md. 522, 525 (1946), and cases cited therein; see also Saylor v. Black & Decker Manufacturing Co., 258 Md. 605, 611 (1970).

This is particularly true with respect to the matter now before us. There have been several dozen cases around the country involving the question of whether an injury sustained by an employee while repairing his own vehicle used, in whole or in part, in the course of his employment, is compensable — whether the injury may be regarded as arising out of and in the course of his employment. There is no uniform pattern; the cases, at least on the surface, appear to be in conflict. What emerges from these cases is fairly summarized in 99 C.J.S. Workmen’s Compensation, § 221b (pp. 735-36):

"There is much conflict and confusion in the cases as to whether or not an injury suffered by an employee while repairing a motor vehicle which he owns and uses in his employer’s business is compensable. Some authorities regard the repair of the vehicle as a matter purely personal to the employee so that an injury in the course thereof is not compensable, at least where the employee is not at the time on an errand for his employer. Even where the vehicle breaks down on the job, an injury suffered in connection with its removal and repair has been held not to be compensable.
On the other hand, where the employee is required to use his vehicle on the job, the repair of the vehicle has been regarded as an incident of the employment, so that the employee is entitled to compensation for an injury in the course thereof. Accordingly, an injury to an employee putting his own vehicle into condition for use in the employer’s business during the employee’s usual hours of labor has been held to arise out of and in the course of the employment; but, where the vehicle is being prepared for general use, the injury does not arise in the course of employment.
Where the employee was not required to use his own truck, his injury suffered while repairing it outside his regular hours of work and off the premises of the employer was held not compensable. An injury suffered by an employee repairing his own vehicle was denied compensation where he was required to supply his own transportation, but was permitted to garage his motor vehicle on the employer’s premises. Where the employee’s duties require him to use his own vehicle part of the time and another at other times, an injury sustained while he is putting his own away preparatory to using the other was held to arise out of and in the course of the employment.” (Footnotes omitted.)

None of the cases cited in support of those statements, and indeed no other case referred to or found by us is precisely like the one before us. Many of the cases holding the injury to be non-compensable have involved situations where the injured party was a driver who owned his truck which he leased to and drove for the employer, and who was responsible under the lease agreement for keeping the vehicle in good repair. Injuries sustained while repairing the truck (or having it towed for repairs) at some place other than the employer’s facility were held not to arise out of or in the course of employment, but rather were in pursuance of the claimant’s lease obligations. See, for example, McKay v. Crowell & Spencer Lumber Co., 189 So. 508, (La. App. 1939); McDonald v. Denison, 185 P.2d 508 (N.M. 1946); Deaton Truck Line, Inc. v. Acker, 74 So. 2d 717 (Ala. 1954), reaff. after remand, 98 So. 2d 429 (Ala. 1957); Jarman v. Trucking, Inc., 282 N.W. 218 (Mich. 1938); Rector v. Ragnar-Benson, Inc., 21 N.W.2d 129 (Mich. 1946); Stuhr v. State Industrial Accident Commission, 208 P.2d 450 (Ore. 1949); Continental Turpentine & Rosin Corp. v. Palmer, 129 So. 2d 409 (Fla. 1961). Compare, however, Lloyd v. Administrator, Bureau of Workmen’s Compensation, 201 N.E.2d 804 (Ohio App. 1963), in which the court affirmed a jury verdict reaching an opposite result in a similar type of case.

A more analogous case, in which the injury was also held to be non-compensable was Superior Insurance Company v. Jackson, 291 S.W.2d 689 (Tex. 1956). The claimant there was a mechanic employed by a contractor to keep its trucks in repair. He used his own truck (in which he transported his and his employer’s tools) in the performance of his duties. The employer furnished gas and oil for the truck. The claimant normally worked a 5Vz day workweek, eight hours a day. He was injured while repairing his truck at home on a Sunday (a non-work day). On these facts, the Court said (pp. 691-92):

"In this case repairs were being made by the respondent on his own truck without the knowledge of or approval or supervision by his employer, without any contract to receive pay for making the repairs on Sunday and without expectation of receiving any. We think under the circumstances the work was of no accommodation to the employer nor in the furtherance of the employer’s business, but rather was for the benefit of the employee-respondent to enable him to pursue his own preferred plan of using his own truck in the performance of his work rather than to use the equipment of his employer. The evidence reveals, and by respondent’s own testimony, that he was not being paid anything for the use of his truck; that the company had trucks available and that respondent used his own truck because it was more convenient for him to do so.. . .”

See also Stevens v. C. B. Parker Co., Inc., 165 A. 665 (Pa. Super. 1933); Owens v. McCallum & Forber, 97 P.2d 754 (Okla. 1939); Pettet v. Monroe County Emergency Work Bureau, 289 N.Y.S. 29 (App. Div. 1936); Freedman v. M. Shottenfeld & Sons, Inc., 9 N.Y.S.2d 88 (App. Div. 1939).

Other courts, in different circumstances, have held injuries received 'while repairing vehicles used both for personal and business use to be compensable. See, for example, Waters v. Service Oil Co., 44 A.2d 709 (Conn. 1945). The claimant there was a mechanic employed to make emergency repairs on oil burners. He was on call all the time, twenty-four hours a day, seven days a week. He used his own car to go to and from his jobs and kept his tools in it; the employer furnished gas and oil. The injury occurred while the claimant was repairing his car at home on a Sunday. On those facts, the Court concluded (pp. 710-11):

"The injury occurred at a place where the plaintiff could reasonably be and at a time when he was reasonably fulfilling the duties of his employment or doing something incidental to it. The contract of employment contemplated that when at home on Sundays he would be ready to go out on emergency calls. He was making necessary repairs to the automobile so as to be able to go on a call when it came in. This was necessarily contemplated by his contract of employment and the employer knew that the plaintiff made such repairs in order that the car might be available for use on emergency calls. He was doing work for his employer’s benefit, not for his own. The conclusion of the commissioner that the plaintiffs injury arose in the course of his employment is one that he could reasonably reach.”

See also Struve v. Fremont, 250 N.W. 663 (Neb. 1933), where, applying similar reasoning, the Court held compensable the death by asphyxiation of a local fire chief, on duty all the time, while repairing his car that he regularly used in his employment; Derleth v. Roach & Seeber Co., 198 N.W. 948 (Mich. 1924); Chrisman v. Farmers Cooperative Association of Bradshaw, 140 N.W.2d 809 (Neb. 1966); Hanchett v. Brezner Tanning Company, 221 A.2d 246 (N.H. 1966); Welch v. North Dakota Workmen's Compensation Bureau, 31 N.W.2d 498 (N.D. 1948); Mackay v. Department of Labor and Industries, 44 P.2d 793 (Wash. 1935); Blatt v. Metropolitan Life Insurance Co., 413 S.W.2d 533 (Mo. App. 1967); Shell Oil Co. v. Industrial Accident Commission, 199 Cal. App. 2d 426 (Cal. App. 1962); Fels v. Industrial Commission, 69 N.W.2d 225 (Wis. 1955); Pressed Steel Car Co. v. Industrial Commission, 172 N.E. 52 (Ill. 1930).

None of these cases, whether holding the injury compensable or non-compensable, purported to set down any broad principle of law that would be generally applicable in all cases involving injuries arising from the repair by a claimant of his own vehicle. They did no more than affirm or reverse awards based on the particular fact situations before them. They looked at and based their ultimate conclusions on such factors as whether the claimant was actually on duty at the time, whether the use of his personal vehicle in the course of his employment was required or expected or was merely for the claimant’s convenience, whether the repairs were authorized by the employer, and whether they were made at the employer’s facility or elsewhere; and these were different from case to case.

Upon this authority and the more general principles announced by the Maryland appellate courts, had the court discounted Mr. Strickland’s testimony, it could reasonably have found that Mr. Lepley had remained (or returned) to work on his truck, that the repair of his truck was for the benefit of the employer, that he was thus engaged in his employment when making those repairs, and that his death therefore arose out of and in the course of his employment. But if Strickland’s testimony is credited, a fair and reasonable inference could be drawn that, by reason of Lepley’s drinking, his work day was over, and that any work he did on his truck thereafter was not only for his own benefit and not in pursuance of his employment, but was actually unauthorized and forbidden. Unlike the oil burner mechanic in Waters, supra, or the fire chief in Struve, supra, Lepley was not, according to Strickland, actually on duty all the time, and definitely was not on duty that Saturday evening. Under that circumstance, the case is more akin to Superior Insurance Company v. Jackson, supra. The court’s error was in resolving the disparate inferences in the claimant’s favor on summary judgment. In doing so, it acted as a trier of fact, which was not its function at that point.

As we have noted, the summary judgment on the issue of willful misconduct may stand, but as to the issue of whether the death arose out of and in the course of Lepley’s employment, it must be reversed.

Judgment afñrmed in part and reversed in part; case remanded for trial on issue of whether injury arose out of and in course of employment; costs to be divided equally between the parties.

      . Actually, the truck was owned by a George Fox, but Lepley had the free and unrestricted use of it. For purposes of this case, we may properly treat the truck as though it belonged to Lepley. Mr. Fox’s interest in it (or, conversely, Lepley’s less than ownership interest in it) has no bearing on the issues before us.

      . There was nothing directly in the record to indicate what happened to the beer purchased by Lepley. There was no evidence of empty bottles, for example. The autopsy report noted a blood alcohol content of 0.18tt, which would indicate that Lepley had a good bit to drink before he died. As the employer did not contend that Lepley’s death arose from voluntary intoxication, that issue is not before us. We note the apparent alcohol consumption only in connection with Strickland’s testimony about drinking during work hours.

      . Other issues were also raised by the employer before the Commission. They too were decided adversely to the employer, who did not pursue them on appeal. We are therefore not concerned with them.


source: Caselaw Access Project

author: Wilner, J.

license: Public Domain

text:
    ANGELA C. DARK v. PRINCE GEORGE’S COUNTY, MARYLAND
    [No. 1535,
    September Term, 1980.]

      Decided June 8, 1981.

    The cause was argued before Gilbert, C. J., and Thompson and Wilner, JJ.

      Stephanie Edelstein and Timothy J. Paulus for appellant.

      John T. Beamer, II, and Michael P. DeGeorge, Associate County Attorneys for Prince George’s County, with whom were Robert B. Ostrom, County Attorney, and Michael O. Connaughton, Deputy County Attorney, on the brief, for appellee.
   Wilner, J.

delivered the opinion of the Court.

On November 20, 1978, appellant was admitted to the psychiatric ward of Prince George’s General Hospital (appellee) as a voluntary emergency admission. The precise nature of her illness is not reflected in the record; but, aside from the fact that she was an emergency psychiatric admission, there is nothing to suggest that she was legally incompetent. Nor does she claim to have been incompetent, illiterate, or blind. Appellant remained in the hospital until her discharge on December 15, 1978. Five days later, on December 20, the hospital sent her an itemized bill in the amount of $3,792.63 for the services that it had rendered.

Appellant never complained about the quality of the care that she received, or that the charges were unreasonable; indeed, she made no protest at all about the bill. But neither did she pay it or any part of it, or offer to pay it or any part of it.

Eventually, on May 29, 1980, the hospital filed suit against appellant in the Circuit Court for Prince George’s County to collect the overdue debt. Accompanying the Declaration was a motion for summary judgment supported by an affidavit of the manager of delinquent accounts. Attached as a single exhibit to the affidavit, and attested as being true and correct, were: (1) a copy of the itemized bill sent to appellant on December 20, and (2) an "admitting record” purportedly signed by appellant upon her admission.

The "admitting record” stated that appellant was employed as a typist for Rapp, Inc. in Washington, D. C., that she had been so employed for two years, and that she earned $200 biweekly. The form further indicated that appellant was then twenty years old, that she lived with her mother, who was employed as a "clerk supervisor” for the Library of Congress, and that the family received no income from social services. Just above appellant’s signature was a statement certifying the truth of the information on the form and guaranteeing payment of all charges incurred. Appellant has never denied signing or understanding that form.

Appellant’s multiple response to the hospital’s action came on July 22, 1980. The thrust of her defense was that (contrary to the statements on the admission form, which she omitted to mention) she was indigent at the time of her admission and that, by reason of the Federal Hospital Survey and Construction Act of 1946 (hereafter the "Hill-Burton Act”), she was entitled to free or below-cost care. In furtherance of that defense, appellant:

(1) Wrote to the hospital by letter dated July 23, 1980, requesting "uncompensated services” pursuant to CFR 124.502 (one of the many Federal regulations adopted in 1979 to implement the Hill-Burton Act);

(2) Purportedly filed a complaint on July 21, 1980, with the Federal Department of Health and Human Services (HHS) claiming that the hospital violated the "uncompensated service requirements” of the Act and its implementing regulations and asking that the Department "find her eligible for free or below-cost care, and.. . order the hospital to provide below-cost care to her.” This letter, addressed to a Dr. H. McDonald Rimple, Assistant Surgeon General, Regional Health Administrator, Department of Health and Human Services, Region III, Philadelphia, was never received by Dr. Rimple (or apparently anyone else at HHS).

(3) Answered the Declaration and the motion for summary judgment and moved for a stay of the judicial proceeding pending the administrative determination by the Department of Health and Human Services.

Appellant’s argument, as laid out in her initial pleadings, was that (1) the hospital had received Federal construction loans or grants under the Hill-Burton Act; (2) it was therefore required by that Act to provide free or below-cost care to low income patients and to establish procedures for identifying individuals eligible for such care; (3) the hospital had established such procedures (a copy of which was appended as an exhibit to the motion for stay) but had failed to follow them in processing appellant’s account; and (4) appellant believed herself to be eligible for such care. In effect, appellant was seeking to interpose an alleged violation of the hospital’s obligation under the Hill-Burton Act to provide free or below-cost care to indigent patients as a defense to its collection action against her.

The hospital’s motion for summary judgment and appellant’s motion for stay were heard on October 2, 1980. The court denied the motion for stay on the ground that it had no authority to grant it, and it granted the motion for summary judgment on the theory that if the Federal agency found the hospital to be in violation of the Hill-Burton Act, it would take some action to annul the judgment.

The ultimate questions raised by appellant are not easy ones to answer. Reasonable arguments can be made both to support and to deny the right of an allegedly indigent patient to translate a hospital’s obligations under the Hill-Burton Act into an individual right of free or below-cost care, and then to raise that right in defense to a collection action. It is a matter of first impression in Maryland; we have no precedential authority. Of the few State courts that have so far considered the question, all but one have rejected the position espoused by appellant. See Yale-New Haven Hospital v. Matthews, 343 A.2d 661 (Conn. App. Div. 1974), cert. denied, 423 U.S. 1024 (1975); Falmouth Hospital v. Lopes, 382 N.E.2d 1042 (Mass. Sup. 1978); Valley Credit Service, Inc. v. Mair, 582 P.2d 47 (Ore. App. 1978); John T. Mather Memorial Hospital, Inc. v. Marco, 413 N.Y.S.2d 88 (Dist. Ct. 1979); but compare Hospital Center at Orange v. Cook, 426 A.2d 526 (N.J. Super. 1981) permitting such a defense to be raised.

We need not answer those ultimate questions in this case. For the reasons shortly to be explained, we conclude that even if the Federal Act and the regulations promulgated under it permit such a defense, as determined by the New Jersey court, supra, this appellant has no right to raise it in this case.

Even to address that limited issue, however, it is necessary for us to consider some of the complex history of Hill-Burton and the regulations adopted under it. For a more detailed chronology, see Note, The Hill-Burton Act, 1946-1980: Asynchrony In The Delivery Of Health Care To The Poor, 39 Md. L. Rev. 316 (1979); also Rose, Federal Regulation Of Services To The Poor Under The Hill-Burton Act: Realities And Pitfalls, 70 Northwestern U.L. Rev. 168 (1975).

Hill-Burton was first enacted in 1946 as P.L. 79-725. Its declared purpose (§ 601) was to assist the States in constructing public and other nonprofit hospitals in order to "afford the necessary physical facilities for furnishing adequate hospital, clinic, and similar services to all their people.. . .” (Emphasis supplied.) It proposed to achieve that end by allocating substantial Federal funds to the States, pursuant to State plans approved by the Surgeon General, to be used as grants in aid of approved hospital construction projects.

Congress sought to assure that the Federal largesse would be of service to all the people in three principal ways: (1) by requiring, through regulations to be promulgated by the Surgeon General, that the State plans contain certain assurances in that regard; (2) by requiring the individual project applications to assure compliance with those State plan provisions; and (3) by authorizing the Surgeon General to terminate further grants to a State upon a finding of substantial noncompliance with the obligations in the State plan. The key provision dealing with the State plan was § 622 (f). It directed:

"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 all persons 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.” (Emphasis supplied.)

As is evident from the aforequoted statutory language, the obligation was a dual one — avoiding both racial-religious and economic discrimination; and, although there is undoubtedly an overlap in the affected populations, the obligations are distinct. The former, with which we are not concerned here, has been termed the "community service” obligation; the latter, which is at issue, is known as the "uncompensated care” requirement.

Neither the statute nor the initial regulations adopted by the Surgeon General defined with particularity what was meant by the phrase in § 622 (f) (2) — "a reasonable volume of hospital services to persons unable to pay therefor.” The term "reasonable volume of hospital services” was not defined at all; the 1947 regulations defined "persons unable to pay therefor” as "both the legally indigent and persons who are otherwise selfsupporting but are unable to pay the full cost of needed services.” Equally lax was any effective enforcement of the obligation — whatever it was — either by the Federal Government or by the States, who, under their plans, had the primary responsibility for enforcement.

Frustrated at the Executive level, advocates for the poor eventually began to seek redress through class action suits in the courts; and in at least three cases, they were successful in establishing an implied right of private action to enforce a hospital’s obligation to provide "uncompensated care.” See Cook v. Ochsner Foundation Hospital, 319 F. Supp. 603 (E.D. La. 1970); Organized Migrants in Community Action, Inc. v. James Archer Smith Hospital, 325 F. Supp. 268 (S.D. Fla. 1971); Euresti v. Stenner, 458 F.2d 1115 (10th Cir. 1972), rev’g 327 F. Supp. 111 (D. Col. 1971). As a result of these decisions, HEW quickly began to develop more particular standards concerning hospital compliance with the "uncompensated care” obligation. These new standards became effective as interim binding regulations in July, 1972, and, with minor changes, were continued as final regulations in June, 1973.

The new regulations, which remained in effect until 1979, and thus were operative during appellant’s stay at Prince George’s General Hospital, made a number of significant changes, in terms of both defining and enforcing the "uncompensated care” obligation. Of particular significance were:

(1) 42 CFR § 53.111 (b) (7), which defined the term "reasonable volume of services to persons unable to pay therefor” as "a level of uncompensated services which meets a need for such services in the area served by an applicant and which is within the financial ability of such applicant to provide.”

(2) 42 CFR § 53.111 (d), which provided a "presumptive compliance guideline.” A hospital was deemed to be in presumptive compliance with its "uncompensated care” obligation if, in a fiscal year, it either (a) budgeted and, on request, made available uncompensated services at a level not less than the lesser of 3% of operating costs or 10% of the Federal assistance it received under the Act, or (b) certified that it would "not exclude any person from admission on the ground that such person is unable to pay for needed services and that it will make available to each person so admitted services provided by the facility without charge or at a charge below reasonable cost which does not exceed any such person’s ability to pay therefor. .. .”

This guideline left the hospital with the choice of setting aside each year a certain amount of money for "charity” care (and actually providing that much care) or adopting what has since become known as an "open door” policy — turning no one away because of inability to pay.

(3) 42 CFR § 53.111 (g), which required the State plan to establish "criteria for identifying persons unable to pay for services, which shall include persons who are otherwise self-supporting but unable to pay the full charge for needed services.”

(4) 42 CFR § 53.111 (i), which required the hospital to post a notice "within the facility (admissions, office, emergency department and business office) for the purpose of informing patients or potential patients that criteria for eligibility and applications are available upon request.” (Emphasis supplied.) The required notice was to contain substantially the following language (in relevant part):

"NOTICE OF HILL-BURTON OBLIGATION
"This hospital (or other facility) is required by law to give a a [sic] reasonable amount of service at no cost or less than full cost to people who cannot pay. If you think that you are eligible for these services, please contact our business office (give office location) and ask for assistance. If you are not satisfied with the results, you may contact (the State Hill-Burton agency with address).”

(5) 42 CFR § 53.111 (j), which required the State plan to provide for evaluation and enforcement of the "uncompensated care” obligation. The State enforcement agency was required to audit compliance at least annually and to establish procedures for investigating complaints. In addition, the State plan had to provide "adequate methods of enforcement of the assurance, including effective sanctions to be applied against any facility which fails to comply with such assurance. Such sanctions may include, but need not be limited to, license revocation, termination of State assistance, and court action.”

The thrust of these new regulations was to place upon the State the direct and primal responsibility for enforcing the "uncompensated care” obligation.

Pursuant to these regulations, Maryland adopted a new State plan. The 1974 version of it, which has not been revised, required each hospital subject to the Act to notify the Department of Health and Mental Hygiene (DHMH — the State enforcement agency) of whether it opted for the 3%/10% or the "open door” method of compliance. It also required that:

"Persons who are unable to pay must be identified by institutional procedures for the evaluation of income and resources in relation to the reasonable costs of needed services. Each case shall be examined individually, considering such factors as health and medical care insurance coverage, personal or family income, the size of the patient’s family, and the financial obligations and resources of the patient or family.
The latest revision of the Office of Economic Opportunity (OEO) Poverty Guidelines may be used as a standard of need for low income families.”

The next development came from Congress with the enactment of P.L. 93-641 in 1974. Known officially as the National Health Planning and Resources Act of 1974, the law, among other things, enacted a new title XVI to the Public Health Service Act (title 42 U.S.C. §§ 300q — 300t), and, though not repealing the original Hill-Burton Act (title VI), allowed it more or less to die on the vine by terminating all funding under it and channeling future hospital construction funding through the new title XVI.

The new Act did two important things from the perspective of this case: (1) it transferred primal enforcement responsibility of the "uncompensated care” obligation from the States back to the Secretary of HEW; and (2) it provided an express, but conditional, right of private enforcement. The relevant section is § 300p-2 (c) (of title 42), which provides:

"The Secretary shall investigate and ascertain, on a periodic basis, with respect to each entity which is receiving financial assistance under this title or which has received financial assistance under title VI or this title, the extent of compliance by such entity with the assurances required to be made at the time such assistance was received. If the Secretary finds that such an entity has failed to comply with any such assurance, the Secretary shall take the action authorized by subsection (b) or take any other action authorized by law (including an action for specific performance brought by the Attorney General upon request of the Secretary) which will effect compliance by the entity with such assurances. An appropriate action to effectuate compliance with any such assurance may be brought by a person other than the Secretary only if a complaint has been Sled by such person with the Secretary and the Secretary has dismissed such complaint or the Attorney General has not brought a civil action for compliance with such assurance within 6 months after the date on which the complaint was filed with the Secretary.” (Emphasis supplied.)

This — the 1973 regulations, the 1974 State plan, and the provisions of § 1612 (c) — was the state of the law and the nature of appellee’s obligation during the period of appellant’s admission. We shall return to it shortly; but first it is necessary to jump ahead.

In May, 1979, HHS (by then the successor to HEW) adopted a new set of regulations which, among other things:

(1) Eliminated the "open door” compliance option, thus requiring an annual allotment of 3% of operating costs or 10% of Federal assistance received (as adjusted according to the national Consumer Price Index) (42 CFR § 124.503).

(2) Redefined the class of persons "unable to pay for health services.” Under the new definition (42 CFR § 124.506), a person whose individual or family income for the twelve months preceding eligibility determination did not exceed the "current poverty income guideline of the Community Services Administration” had to be treated "without charge.” If the person’s income, so calculated, exceeded the "current poverty income guideline,” but not by more than double, he had to be treated either without charge or in accordance with a "schedule of charges” specified in an allocation plan.

(3) Completely rewrote the "notice” requirement (42 CFR § 124.505). In addition to bilingual "posted” notice, the new regulation required "individual written notice of the availability of uncompensated services to each person who seeks services in the facility on behalf of himself or another.” This individual notice, among other things, had to state that the facility "will make a written determination of whether the person will receive uncompensated services, within two working days of a request for uncompensated services.”

(4) Stated that a request for uncompensated services "may be made at any time, including following institution of a collection action against the individual.”

(5) Established new and more particularized procedures for investigation of complaints by the Secretary. In that regard, § 124.511 (a) (2) (i) stated that "[a] complaint is considered to be filed with the Secretary on the date the [information required by the regulation] is received in the Office of the Regional Health Administrator for the Region of HHS in which the facility is located.. ..” (Emphasis supplied.) Section 124.511 (b) (1) authorized the Secretary, upon finding a violation, to "take any action authorized by law to secure compliance, including but not limited to voluntary agreement or a request to the Attorney General to bring an action against the facility for specific performance.”

Finally, § 124.511 (a) (4) provides:

"Section 1612 (c) of the. Act provides that if the Secretary dismisses a complaint or the Attorney General has not brought an action for compliance within six months from the date on which the complaint is filed, the person filing it may bring a private action to effectuate compliance with the assurance. If the Secretary determines that he will be unable to issue a decision on a complaint or otherwise take appropriate action within the six month period, he may, based on priorities for the disposition of complaints that are established to promote the most effective use of enforcement resources, or on the request of the applicant, dismiss the complaint without a finding as to compliance prior to the end of the six month period, but no earlier than 45 days after the complaint is filed.”

We have alluded to these new regulations, adopted six months after appellant’s discharge from the hospital, because in pressing her defensive claim she relies on those of them that would seem to benefit her.

At the time of appellant’s admission, the appellee hospital had elected the "open door” method of compliance. Pursuant to that policy, appellant was, of course, admitted and treated. The question, then, is not whether she is entitled to treatment in view of her recently alleged indigency — she already received that — but only whether she should have to pay for it.

The thrust of appellant’s complaint, as stated in her opposition to the motion for summary judgment, was that the hospital had failed to inform her "of the availability of charity care or determine her eligibility therefor.” In support of that charge, her affidavit states only that "7 do not recall any time during my admission, hospitalization or discharge, that the hospital informed me of the availability of free or below cost charity care at Prince George’s General Hospital.” (Emphasis supplied.)

Our difficulty with appellant’s defense, as revealed in this record, is two-fold.

(1) Under the law in effect at the time of appellant’s admission and stay, appellee was not required to give individual notice of potential eligibility for "uncompensated care.” That, as noted, was first imposed by the 1979 regulations. Appellee’s only obligations with respect to informing appellant of the charity care program were to post throughout its facility the notice specified by then 42 CFR § 53.111 (i) and to establish procedures for identifying eligible patients.

Appellant did not aver a failure to post the required notice. She conceded that appellee had adopted procedures designed to identify eligible patients, and indeed attached a copy of appellee’s written policy in that regard to her pleadings; and, although she alleged that the hospital failed to comply with those procedures, she did not indicate in what way it failed to comply. Appellee’s policy on charity care, relied upon by appellant, states explicitly that "[i]t shall be the responsibility of the patient, or the responsible party, to request charity care” and that such request may be made at any time ”up to 90 days after service is rendered. ” (Emphasis supplied.)

In short, aside from her present claim of indigency (which appears to be at least partially inconsistent with the information given the hospital at the time of admission) and her bald allegation of noncompliance, appellant presented no facts to the court showing how the hospital failed to comply with the obligation it then had. It has long been the law, however, that "general allegations which do not show the facts in detail and with precision are insufficient to prevent the entry of a summary judgment.” Shaffer v. Lohr, 264 Md. 397, 404 (1972); Frush v. Brooks, 204 Md. 315 (1954).

(2) Appellant’s right to raise the Hill-Burton obligation in defense to a collection action — if it exists — emanates solely from § 1612 (c) of the Federal Act. Assuming arguendo that such a defense constitutes "an appropriate action to effectuate compliance with [the hospital’s] assurance,” that section states without equivocation that such an action may be brought by appellant "only if a complaint has been filed by such person with the Secretary and the Secretary has dismissed such complaint or the Attorney General has not brought a civil action for compliance with such assurance within 6 months after the date on which the complaint was filed with the Secretary.” (Emphasis supplied.)

The record here establishes utter noncompliance with that clear statutory condition. The July 21 letter to Dr. Rimple, as noted, was never received, and thus, under the regulation in effect at the time it was sent (42 CFR § 124.511 (a) (2) (i)), had no effect whatever. Even if given effect, appellant would be precluded from prosecuting a private action until either the Secretary formally rejected the complaint or no action was taken on it for six months; and the record fails to indicate that either of those conditions was satisfied prior to the entry of summary judgment.

It is not necessary to "categorize” this deficiency as a lack of standing or a failure to exhaust available administrative remedies. The point is that appellant’s statutory right to raise the defense (if it exists at all) is clearly a conditional one; and, absent compliance with that condition, it does not exist. See Gordon v. Forsyth County Hospital Authority, Inc., 409 F. Supp. 708, 722 (M.D.N.C. 1976), aff'd in part, vac. in part, 544 F.2d 748 (4th Cir. 1976); John T. Mather Memorial Hospital, Inc. v. Marco, supra, 413 N.Y.S.2d 88.

For these reasons, we find no error in the granting of summary judgment.

Judgment affirmed; appellant to pay the costs.

      . One part of the form asked whether the patient was a "welfare recipient.” The "yes” box was checked with a double "x,” but the "x” marks were then scratched through. In the part asking "gross family income” was written "NONE FROM SOC SERVS JOB — $200 BI WK.”

      . The letter stated that "|a]t the time of her hospitalization, Miss Dark was unemployed and had no income. Miss Dark is willing to provide verification of her financial condition at your request. Miss Dark’s medical insurance with GHI, as a dependent of her father, paid nothing of the total bill, as her benefits and coverage had run out. Her mother applied for and was found ineligible for Medical Assistance.”

      . The Act added a now Title VI to the Public Health Service Act, adding to title 42 U.S.C. new sections 291, 291a-291c, 291d-291h and 291i-291m.

      . These are the terms used in the various regulations issued under the Act. See, for example, 42 CFR §§ 53.111 — 53.113 (1973), adopted 37 Fed. Reg. 182 (1/6/72); current 42 CFR §§ 124.501 — 124.607 (1979).

      . 12 Fed. Reg. 6176.

      . In 1966, by P.L. 89-749, regulatory authority was transferred from the Surgeon General to the Secretary of Health, Education and Welfare (HEW), and now is vested in the Secretary of Health and Human Services (HHS).

      . At the time, there was no express provision in the statute for private enforcement. The actions, which sought to compel the respondent hospitals to provide a "reasonable volume” of free or below-cost care to the class represented by the indigent plaintiffs, were based on a standing implied from their alleged status as one of the chief beneficiaries of the Act.

      . 37 Fed. Reg. 14,719 (7/22/72).

      . 38 Fed. Reg. 16,353 (6/22/73).

      . Subsection (b) (6) defined the term "uncompensated services” as "services which are made available to persons unable to pay therefor without charge or at a charge which is less than the reasonable cost of such services. The level of such services is measured by the difference between the amount charged such persons for such services and the reasonable cost thereof.”

      . Seo State of Maryland Medical Facilities Survey And Plan (1974), p.34

      . Id., p. 35.

      13. Subsection (b) authorizes the Secretary to withhold funds from projects found to be in violation.

      . The impulse for shifting direct enforcement back to HEW apparently was a report by the General Accounting Office highly critical of both HEW and the State enforcement agencies in monitoring compliance with the "uncompensated care” requirement. See Senate Report No. 93-1285, Senate Labor and Public Welfare Committee, November 12, 1974.

      . Notwithstanding the absence of any such provision in the 1973 regulations, appellant contends that the hospital had some additional obligation to advise her personally of her possible eligibility for "uncompensated care.” In support of that argument, she relies on an unsigned memorandum dated January 26, 1978, from one Kathy Warma, whose position is stated as "Attorney Advisor, Public Health Division,” to a Dr. Harry P. Cain, Director, Bureau of Health Planning and Resources Development. We are not persuaded.

      . Appellant did not contend that this policy contravened the law in effect at the time of her admission; nor did she offer any excuse for failing to comply with it. She relied instead on the 1979 regulation permitting a request for "uncompensated care” to be made at any time, even after collection proceedings have commenced. That reliance, we think, is misplaced. Even if, arguendo, the new regulation applies retrospectively to permit appellant to make a present request that the charges be erased, it could not serve to make the hospital’s refusal to grant that request a violation of the obligation it had at the time of appellant’s admission.

      . The record does not indicate what happened to the letter — only that it was not received by Dr. Rimple, or apparently by anyone else at HHS. We are advised by counsel (although for obvious reasons there is no reflection of it in the record) that in December, 1980 — two months after the entry of judgment — appellant refiled her complaint.

      . The District Court in Gordon concluded that
      "individuals who seek compliance with an adopted Hill-Burton plan by a medical facility must pursue the course provided by Congress and first exhaust the administrative remedy provided by the statute. Any other resolution of this action, which would require the federal court to inquire into the unscreened, specific factual background of every individual plaintiff to determine if that person were eligible for Hill-Burton care and were denied such care improperly, would place an intolerable burden on the court system and one for which it is ill-prepared. Federal courts cannot police the day-to-day administrative decisions of Hill-Burton hospital officials, and Congress has, by enacting the above-mentioned statute, implicitly recognized that judicial manpower is insufficient to have a federal judge in every Hill-Burton hospital.”
      On appeal, the parties stipulated that during the pendency of the appeal the plaintiffs had in fact satisfied the statutory condition, and, without objection by the hospital, those claims initially barred by the District Court were remanded. We see no justification for a remand in this case. Appellant’s first effective complaint to the Secretary pursuant to § 1612 (c) of the Act was not made until two months after the rendition of judgment. She has not diligently and fairly pursued her statutory remedy, even after obtaining the assistance of counsel; and we see no reason to reward that laxity by keeping open a claim that is already more than two years old.

      . Appellant makes no complaint in this appeal about the court’s rejection of her motion for stay, and we therefore do not address that issue.


author: Couch, J.,

text:
    CUPPETT & WEEKS NURSING HOME, INC. v. DEPARTMENT OF HEALTH AND MENTAL HYGIENE
    [No. 1564,
    September Term, 1980.]

      Decided June 8, 1981.

      The cause was argued before Moylan, Lowe and Couch, JJ.

      Ransom J. Davis and Jack R. Turney, with whom was H. Russell Smouse on the brief, for appellant.

      Stephen J. Sfekas, Assistant Attorney General, with whom was Stephen H. Sachs, Attorney General of Maryland, on the brief, for appellee.

      Note: Certiorari denied, Court of Appeals of Maryland, September 9, 1981.

   Couch, J.,

delivered the opinion of the Court.

The appellant, Cuppett & Weeks Nursing Home, Inc., sought reimbursement for certain expenses it had incurred as a participant in Maryland’s Medicaid Program. In administrative proceedings the State Department of Health and Mental Hygiene (the Department) denied the requested reimbursement, which denial was subsequently affirmed by the Department’s Board of Review. An appeal was thereafter taken by Cuppett & Weeks to the Circuit Court for Garrett County, which sustained the decision of the Board of Review. This appeal ensued.

For the reasons set forth in this opinion, we hold that the circuit court was not in error in sustaining the decision of the Board of Review. Thus, we affirm the Order of the circuit court.

The Facts

By a deed dated September 18, 1959 certain real property in Garrett County was transferred to Graham Weeks, his wife, Mary Weeks, and his mother, Bessie Cuppett. These persons established the Cuppett & Weeks Nursing Home Partnership (the Partnership) in 1960, and operated the nursing home facility which improved the real property. At that time Bessie Cuppett had a fifty percent interest in the Partnership; Graham and Mary Weeks together shared the remaining fifty percent interest.

Based on the advice of their accountant, the partners in 1967 formed the Cuppett & Weeks Nursing Home, Inc. (the Corporation). The Corporation managed the nursing home, and leased that facility from the Partnership. The original incorporators owned stock in the following amounts:

Bessie Cuppett 19 shares

Graham Weeks 21 shares

Robert Weeks 19 shares

In 1969, Robert Weeks, another son of Bessie Cuppett and the brother of Graham Weeks, became a member of the Partnership. According to the terms of an agreement executed on April 11, 1969 the capital was divided in the following proportions:

Bessie Cuppett $255,849.34 45.62%

Graham Weeks $274,979.96 49.02%

Robert Weeks $30,074.37 5.36%

The agreement further specified that the partners had equal rights in the management of the Partnership business.

In 1971 Graham Weeks withdrew from the Corporation by selling his stock. These shares were bought by other members of the family. Stock was obtained by Thomas Cuppett, another son of Bessie Cuppett; Frances Birge, daughter of Bessie Cuppett; and Jerry Meyers, husband of Bessie Cuppett’s daughter, Carolyn Meyers. At this time Graham Weeks transferred to Robert Weeks the role of Corporation Administrator.

After the withdrawal of Graham Weeks, and following additional transactions, ownership of the corporate stock was divided among six persons, as follows:

Bessie F. Cuppett 19 shares 32%

Robert Weeks 8 shares 13.56%

Thom,as Cuppett 8 shares 13.56%

James Cuppett 8 shares 13.56%

Frances Birge 8 shares 13.56%

Jerry Meyers 8 shares 13.56%

The Corporation continued to lease the facility and equipment from the Partnership. In 1971 a written lease covering the period July 1,1971 through June 30,1976 was executed, specifying the rental at $10,155-43 per month for the 155 bed facility, or approximately $721 per bed annually. An expert appraiser engaged by the Corporation in November of 1971, appraised the fair rental value of the facility at $600 per bed annually.

Effective in March of 1974, the total rental payment was increased to $10,409.31 per month. Bessie Cuppett signed the appropriate addendum to the lease on behalf of the lessee Corporation. Graham Weeks signed the addendum on behalf of the lessor Partnership.

As a "provider of service,” certified to care for patients under the Medicaid program, the Corporation received interim reimbursement for the cost of providing care for Medicaid recipients. Among the expenses obtained by the Corporation as reimbursement were the following rental expenses paid to the Partnership for the years 1970 through 1975:

1970 $111,000.00

1971 $102,000.00

1972 $106,415.00

1973 $121,865.00

1974 $122,881.00

1975 $124,912.00

Based on audits conducted by a private contractor, the Hospital Cost Analysis Service, Inc. (HCAS), the Department determined that the Corporation was not entitled to the amounts sought. Specifically, the HCAS reviewed the lease agreement, the tax returns and the records of the Partnership and the Corporation, and then determined that the Partnership and the Corporation were "related organizations” within the meaning of the applicable Medicaid regulations.

By this determination, the Corporation was deemed entitled to reimbursement only for the ownership costs incurred by the Partnership, rather than for the rental expenses as submitted to the Department. These ownership costs included depreciation, amortization of interest incurred during construction, mortgage interest, interest on demand notes, property taxes, insurance and accounting expenses, repairs, and miscellaneous interests, amounting to:

1970 $60,875.00

1971 $57,893.00

1972 $66,847.00

1973 $67,782.00

1974 $65,226.00

1975 $62,239.00

The disallowance of the submitted rental expense meant that the Corporation owed the State the difference between the rent paid to the Partnership and the Partnership’s ownership costs. To arrange a final cost settlement the Department sought the amount of the alleged overpayment, and the Corporation sought full reimbursement of the submitted costs.

An administrative hearing on the controversy was held initially on May 20, 1977 before a hearing officer on behalf of the Department and then was resumed and concluded on July 8, 1977 before the same presiding officer. Based upon his proposed findings of fact and conclusions of law, the Secretary of Health and Mental Hygiene on January 27, 1978 entered an order which affirmed the determination of the Department’s Medical Care Programs unit that the Corporation and the Partnership were related organizations.

The Board of Review of the Department of Health and Mental Hygiene, after a hearing on June 1,1978, entered an order on August 10, 1978 which affirmed the decision of the Secretary.

By Petition and Order of Appeal filed in the Circuit Court for Garrett County, the Corporation sought judicial review of the ruling by the Department’s Board of Review. After submission of memoranda setting forth the respective positions of the parties, and oral argument of counsel, the circuit court on October 17, 1980 rendered an Opinion and Order which sustained the decision of the Board of Review.

From the Order of October 17, 1980, the Corporation appeals, asking:

I. Whether the Corporation and the Partnership are correctly considered as "related organizations” within the meaning of the applicable regulations of the Maryland Medicaid Program?
II. Whether the Medicaid regulations which prohibit reimbursement of any rental expense incurred by a provider to a related organization create an irrebuttable presumption in violation of constitutional due process of law and equal protection of the laws or are repugnant to the statutory purpose of reimbursing providers for their actual costs?
III. Whether the doctrine of equitable estoppel or the corollary doctrine of laches are applicable to preclude recovery by the State of monies paid to Appellant as reimbursement of rental expenses?

From our examination of the record and the applicable law we are persuaded that the Corporation and the Partnership were properly determined to be "related organizations,” that the Medicaid regulations are neither unconstitutional nor repugnant to any statutory purpose, and that the equitable doctrines do not apply to the present case.

The Law and its Application

The Department is authorized by statute to "establish rules and regulations for the reimbursement of providers under the Maryland Medical Assistance Program”, Md. Ann. Code art. 43, § 42 B. Pursuant to this grant of authority, the Department’s Medicaid regulations expressly adopt the reimbursement principles of the Medicare program:

Allowable costs shall be determined based upon Medicare publications, entitled Health Insurance Regulations (HIRM-1) and Provider Reimbursement Manual (HIM-15) unless otherwise specified by these regulations.
COMAR 10.09.10.09A (1) (a).

Included in these regulations governing allowable costs is the related organizations regulation at issue in this case. The regulation specifically recognizes that:

Individuals and organizations associate with others for various reasons and by various means. Some deem it appropriate to do so to assure a steady flow of supplies or services, to reduce competition, to gain a tax advantage, to extend influence, and for other reasons. These goals may be accomplished by means of ownership or control, by financial assistance, by management assistance, and other ways. 20 C.F.R. 405.427 (c) (1).

Thus, the regulation recognizes that individuals may have perfectly valid and legitimate business reasons for associating with an organization related by common ownership or control. It is not the motivation for the relationship which is determinative, but its practical effect:

Where the provider obtains items of services, facilities, or supplies from an organization, even though it is a separate legal entity, and the organization is owned or controlled by the owner(s) of the provider, in effect, the items are obtained from itself. An example would be a corporation building a hospital or a nursing home and then leasing it to another corporation controlled by the owner. Therefore, reimbursable cost should include the costs for these items at the cost to the supplying organization. 20 C.F.R. 405.427 (c) (2). (Emphasis added.)

The practical purpose of the regulation is "to prevent separate entities, which in fact function as a single entity, from each making a profit under the Medicaid program.” Schroeder Nursing Care, Inc. v. Mutual of Omaha Insurance Company, 311 F. Supp. 405, 410 (E.D. Wis. 1970); see also Medical Center of Independence v. Harris, 628 F.2d 1113 (8th Cir. 1980).

The regulation is needed to prevent "double-dipping” from the Medicaid program, even when the individuals have perfectly legitimate motives for functioning as separate entities and even when there is no proof of an actual exercise of control by one entity over another. Fairfax Hospital Association v. Matthews, 459 F. Supp. 429 (E.D. Va. 1977) aff'd sub. nom. Fairfax Hospital Association v. Califano, 585 F.2d 602 (4th Cir. 1978). See also Pasadena Hospital Association v. United States, 618 F.2d 728, 732-34 (Ct. Cl. 1980); Fallston General Hospital v. Harris, 481 F. Supp. 1066 (D. Md. 1979) (secondary purpose of regulation is to define costs). Judge Bryan in Fairfax Hospital Association stated:

"The Court can think of nothing better than the regulations in question as a means to guard against double profit on those services, or 'sweetheart’ contracts with suppliers, and the resulting increase of costs for those services beyond what is reasonable.” 459 F. Supp. 429 at 433.

In the present case, the hearing officer and the Department found that the Partnership and the Corporation were "related organizations” within the meaning of 20 C.F.R. 405.427. This regulation states, in pertinent part, that:

"Costs applicable to services, facilities, and supplies, furnished to the provider by organizations related to the provider by common ownership or control are includable in the allowable cost of the provider at the cost of the related organization. However, such cost must not exceed the price of comparable services, facilities, or supplies that could be purchased elsewhere.” (Emphasis added.)

The regulation establishes two independent tests for determining that two parties, in this case the owner of the facility and the lessee-provider, are related organizations. One test is common ownership and the other is common control. The Department found that, applying either the common ownership test or the control test, the Partnership and the Corporation were related organizations within the meaning of the regulation.

The Department’s opinion specifically states that:

".. . Bessie Cuppett has about 45% interest in the supplier and a 32% interest in the provider; Robert Weeks has a 5.36% interest in the supplier and a 13.56% interest in the provider. No one else involved has an interest in both. No one individual owns greater than 50% in either the partnership or the corporation. The owners of the partnership and the stockholders in the corporation are all related by blood.
The combination of common ownership and the relationships of the persons involved indicate to me that there are individuals who do possess significant ownership in the supplier and provider.”

On appeal, this Court will not substitute its judgment for that of the administrative agency, if the agency’s determination is supported by sufficient evidence on the record. Oxon Hill Recreation Club, Inc. v. Water Resources Administration, 281 Md. 110, 375 A.2d 567 (1977).

After examination of the record and law we hold that ample evidence was presented to the Department to warrant its finding, and to have that finding sustained by the courts.

The appellant also challenges the constitutionality of the "related organization” principle, contending that the application of this principle creates an irrebuttable presumption of wrongdoing on the part of related organizations. Federal courts have repeatedly upheld the Medicare and Medicaid regulations against this constitutional argument. See Chelsea Community Hospital, Inc. v. Michigan Blue Cross, 436 F. Supp. 1050 (E.D. Mich. 1977), and Fairfax v. Califano, supra, 585 F.2d 602.

Citing the reluctance of the U. S. Supreme Court in Weinberger v. Salfí, 422 U. S. 749 (1975), to sustain constitutional challenges under the "irrebuttable presumption rule,” the Fourth Circuit Court in Fairfax, supra, concluded that the Medicaid regulations legitimately controlled excessive health care costs. Speaking for the court, circuit judge Donald Russell addressed the constitutional challenge to 20 C.F.R. 405.427 and stated:

"Nor are we persuaded that the Regulation creates an unconstitutional irrebuttable presumption. The doctrine of impermissible irrebuttable or conclusive presumption has been justly criticized as of doubtful constitutional antecedents and of limited application. ... In Weinberger v. Salfí, the Court after reviewing the authorities in which the doctrine had been cited, . . . then proceeded to dismiss the irrebuttable or conclusive presumption doctrine as entirely inapposite in reviewing for constitutionality statutes or regulations involved in 'social welfare legislation’ and to reaffirm the rule in that area . .. [citations omitted] to wit: So long as a claimant for benefits or payments under a social welfare program is 'free to present evidence’ that he is not disqualified under the test established by the statute or regulations, his only constitutional claim is that the test [he] cannot meet is not so rationally related to a legitimate legislative objective that it can be used to deprive [him] of benefits available to those who do satisfy that test.” 585 F.2d at 609.

In the present case, sufficient evidence was presented to warrant application of the regulations, and to belie any claim that the regulation was being applied arbitrarily or capriciously.

Appellant’s final contention is that the Department’s delay in enforcing the regulations warrants application of the equitable estoppel doctrine to preclude such enforcement.

The general rule of estoppel as applied to the State is recited in Salisbury Beauty Schools v. State Board of Cosmetologists, 268 Md. 32, 63-67, 300 A.2d 367 (1973):

"Although it is recognized that estoppel may operate against the state by acts done in its proprietary capacity, the doctrine of estoppel will not be applied against the state in the performance of its governmental, public or sovereign capacity or in the enforcement of policy measures.” (Emphasis added).

The State’s Medicaid services, which provide for the welfare of the people and promote the public health, have been recognized as "a primary function of government.” Bayne v. Secretary of State, 283 Md. 560, 571, 392 A.2d 67 (1978). In our view the State is acting in its governmental capacity in providing Medicaid services. Accordingly, we hold that the doctrine of equitable estoppel does not apply in this case.

Judgment affirmed.

Costs to be paid by the appellant.

      . Md. Ann. Code art. 43, §§ 42-42N.

      . The record and both parties refer to these percentages, which by rounding total only 99.8%.

      . 20 C.F.R. 405.427; COMAR 10.19.10.07C (1) (a).