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Uptown People's Community Health Services Board of Directors v. Board of Commissioners of

decided: April 21, 1981.


Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 80-C-32 -- Stanley J. Roszkowski, Judge .

Before Pell and Wood, Circuit Judges, and Bonsal, Senior District Judge.*fn**

Author: Wood

This case involves the appeal of Cook County, Illinois and the Board of Commissioners of Cook County (referred to collectively as "Commissioners" or "County defendants") from the district court's adverse ruling on several contract claims that are part of a suit brought by the Uptown People's Community Health Services Board of Directors ("Board"). The suit presses federal and state pendent claims against the County defendants, and also names Patricia Harris in her capacity as Secretary of the U. S. Department of Health, Education and Welfare ("HEW") as a defendant in certain claims.*fn1 The district court decided only pendent claims. The County defendants contend as a threshold matter that the district court lacked pendent jurisdiction over the contract claims, and thus should not have ruled on them. We agree and therefore reverse and remand with instructions to dismiss the case.


This case centers on an agreement between the Commissioners and the Board that helped establish a community out-patient health clinic in the Uptown area of Chicago. The idea for the clinic began in 1977, when a group of Uptown residents determined that the health care needs of the community required locally available out-patient care, which at the time was not obtainable. The residents consulted with the Commissioners,*fn2 who oversaw the delivery of health care services in Cook County hospitals and out-patient facilities. The Commission was not receptive to the idea of bearing the full burden of financial assistance to the clinic, although it indicated a willingness to help. It appeared that grant money and other assistance to operate the clinic might be forthcoming from the National Health Service Corps ("NHSC") and HEW. NHSC is a federal program that provides medical personnel and equipment to clinics such as the one involved here. Under NHSC regulations, the salaries of NHSC personnel provided to the clinic need not be reimbursed to the government if a community group rather than a state agency applies for the grant money. Hence, the interested residents of Uptown formed the Board.

An HEW official informed the Commissioners and the Board that in order for the Board to qualify for a grant the two Illinois parties would need to sign a cooperation agreement, which they did. HEW is not a signatory to that agreement. The agreement is the center of this litigation.

The portion of the agreement relevant to this appeal states that the Commission is to provide "start-up monies" and "its counsel in management and administration of the clinic until the point in time that the clinic has reached economic self-sufficiency and the (Board) requests complete independence from the Commission."*fn3 When "the ultimate goal" of economic self-sufficiency is reached "the Commission shall have the right to relinquish its authority in the operation of the clinic" to the Board. In addition, the agreement established a liaison committee to channel interaction between the Commission and the Board on matters of clinic policy.

The Board contends that the agreement grants it a property right: present participation in and future control of the clinic upon the attainment of economic self-sufficiency. The Board says that certain actions by HEW and the Commission constitute a breach either of that agreement or of general fiduciary obligations, damaging the Board's present right to participate in the clinic's operation and its expectancy interest in gaining control of the clinic. This litigation focuses not on the quality of health care at the clinic, but rather on who will be in charge of the clinic if it can survive its internal turmoil.

The relationship between the Commission and the Board began to falter soon after the clinic opened. During informal and formal meetings, the NHSC- and Commission-provided staff charged that the clinic was being used to further the campaign for alderperson conducted by a Board member, Helen Schiller. In particular, the staff alleged that non-medical support staff began to miss a great deal of worktime as election day neared. Election canvassing allegedly was going on at the clinic. The clinic's medical director testified that one of the Board members, Walter "Slim" Coleman, indicated that he was pleased that the clinic had conducted a mobile hypertension screening program in the community, since it gave Coleman the opportunity to leave campaign material in a building that otherwise was off limits because it was run by Schiller's opponent. And during the campaign, the clinic receptionists increasingly found that patients were demanding free medical care or instant attention without an appointment, all on the basis of statements allegedly made to them by Board members.

Other staff complaints centered around Board-appointed "patient-advocates" who allegedly manipulated the information on patient intake forms so that some patients would qualify for lower rates or free medical care under the clinic's sliding fee scale, when in fact the patients earned sufficient income to pay for medical services at a higher rate. The staff also complained that the patient-advocates questioned the physicians' medical judgment within hearing of the patients. There was a general complaint that the patient-advocates acted as spies for a community political action group.

The staff expressed special concern over a Family Health Plan proposed by the Board. No one opposed the idea in the abstract, but the proposal set forth by the Board would entail extensive funding for expansion into new areas, which the staff felt was unwise given the shortage of staff and equipment in existing areas of clinic operation. Perhaps most disturbing to some was that the document setting forth the Plan appeared to be more a political polemic than a proposal for effective medical care. The document asserted that the Board represented "a community that is under attack" and "fighting for its survival." This required "an organized consumer base," a term that seemed ill-defined and not directly related to health care.

Tensions simmered, and eventually the executive director of the Commission announced the Commission's intention to "divorce" the Board and run the clinic on its own until a new community Board could be created or the present one reconstituted. The Board responded by charging that the Commission had failed to inform the Board of the depth of staff dissatisfaction. The Board concluded that the medical director had not handled staff complaints in the best way, and had actually exacerbated problems to put the Board in a bad light. Especially galling to the Board was the Commission's alleged failure to utilize the liaison committee provided for in the agreement as a way to foster co-operation. There also was concern that the medical director had undermined the Board's relationship with the clinic's grantors by presenting the Board in an unfavorable light to HEW and others.

As a result of the friction generated between the Board and the Commission, one potential grantor withdrew its approval of funds to implement the Family Health Plan described earlier. The NHSC personnel eventually wrote to HEW stating that they would no longer continue with the clinic unless the Board was reconstituted. The Commission received a communication from HEW saying that HEW would support the Commission's attempts to create a new Board. HEW then held up payment of a grant to the Board, since it no longer recognized the Board as a grantee. The present litigation commenced.


The Board filed a six-count complaint. Count One alleges in general terms that HEW violated statutes creating the NHSC program, unspecified regulations governing the administration of NHSC, and the terms of the NHSC grant. Count Two alleges that the Commissioners acted with HEW to deprive the Board "of its property without due process of law" in violation of the Fifth and Fourteenth Amendments to the federal Constitution and of the Civil Rights laws, namely 42 U.S.C. §§ 1983 and 1985(3).

Count Three alleges in general terms that the Commissioners breached their agreement with the Board, and is wholly a state claim. This is the Count on which the district court focused. Count Four alleges that the Commissioners have breached "their obligations of trust" to the Board, and that HEW participated in that breach.

Counts Five and Six allege breaches of Article I, § 10 of the United States Constitution (the Contract Clause) and Article I, § 2 of the Illinois Constitution.

The Complaint asks that the district court "(declare) that the agreement between the (Board) and the (Commissioners) is binding against all agencies like HEW and that these agencies must honor their commitments to the (Board) and deal only with the (Board) with regard to the (clinic)." The Complaint also seeks unspecified monetary ...

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