New Orleans Home for Incurables, Inc. v. Greenstein
New Orleans Home for Incurables, Inc. v. Greenstein
Opinion of the Court
ORDER AND REASONS
Before the Court, among other matters, is New Orleans Home for Incurables, Inc.’s, doing business as John J. Hainkel, Jr., Home and Rehabilitation Center’s (hereinafter “Hainkel Home”) Motion for Preliminary Injunction,
(1) from terminating the Hainkel Home Medicaid provider agreement, prior to a final decision from the Secretary following an Administrative Hearing on the merits of such a termination and exhaustion of all administrative and judicial proceedings;
*389 (2) from terminating the Hainkel Home Medicaid provider agreement prior to a final decision from the Secretary following an Administrative Hearing on the merits of whether Hainkel Home’s nursing home, license should be revoked and exhaustion of all administrative and judicial proceedings (since the termination of the provider agreement is based on the license revocation proceeding);
(3) from seeking to terminate Hainkel Home’s Medicaid provider agreement under the Medicaid Integrity Law, La. R.S. 46:437.10, because the Secretary has offered no grounds thereunder; and (4) from ordering Hainkel Home to notify its residents in a meeting or otherwise of the termination of the provider agreement and/or the revocation of the license prior to a filial decision from the Secretary following an Administrative Hearing on the merits of such termination/revocation and exhaustion of all administrative and judicial proceedings.2
Before the Court addresses the Preliminary Injunction, it first confirms its earlier conclusion made in deciding a Motion to Dismiss by Secretary Greenstein when it decided that this Court has subject matter jurisdiction to hear this matter; although Hainkel Home has not exhausted its administrative remedies, the evidence supports this Court’s prior ruling that Hainkel Home’s claims meet the requirements of the “entirely collateral”' exception to exhaustion of administrative remedies prerequisite to federal court jurisdiction.
However, regarding whether Hainkel home has a protectable property right in
Accordingly, after considering the motion, the memorandum in support, the opposition to the motion, the parties’ prehearing briefs, the evidence at trial, the parties’ post-hearing briefs, and the applicable law, the Court finds that Hainkel Home’s claims trigger subject matter jurisdiction of this Court; Hainkel Home has stated a claim upon which relief can be granted, and the Court will grant Hainkel Home’s Motion for a Preliminary Injunction, for the reasons explained below, and enjoin Secretary Greenstein from terminating Hainkel Home’s Medicaid provider agreement based upon the suspended nursing home license revocation and further enjoins the Secretary from requiring Hainkel Home to notify its residents in a meeting or otherwise of the termination of its Medicaid provider agreement and/or revocation of the nursing home license while the revocation of the nursing home license is suspended pending review and judicial appeal.
I. Background
A. History of Hainkel Home
The New Orleans Home for the Incurables (“NOHI”) was founded in 1891. It operates as a Louisiana nonprofit corporation, providing services to those with serious illnesses and its “primary areas of service are comprehensive medical and nursing services for long term care residents, and treatment and rehabilitation for the injured and ill.” In 1892, it purchased the property that is now 612 Henry Clay Avenue and constructed a building. Initially the facility housed only women, but by 1906 a children’s wing was constructed, followed by a ward for men in 1913. From its inception until 1979, the NOHI board was directly responsible for the ownership and operation of the home, including employing licensed professionals as staff.
In 1979, the State of Louisiana took over the facility and its operation. However, in the 2010 Legislative Session, the Louisiana Legislature passed Revised Statute 40:16.3 which allows NOHI, now known as Hainkel Home (named on behalf of famed Louisiana state legislator John J. Hainkel, Jr.), to operate the facility, while the state retains ownership of the land, building, and appurtenances. The statute further requires that Hainkel Home remain “a long-term care facility that provides nursing home level services and adult day health services,” and “that the facility shall be operated by New Orleans Home for the Incurables.”
B. Louisiana Medicaid Program
“Medicaid is a cooperative federal-state program through which the federal government provides financial assistance to states so that they may furnish medical care to needy individuals. Although participation in the program is voluntary, participating states must comply with certain requirements imposed by the Medicaid Act, and regulations promulgated by the Secretary of Health and Human Services. To qualify for federal assistance, a state must submit to the Secretary [of Health and Human Services] and have approved a plan for medical assistance, 42 U.S.C. § 1396a(a), that contains a comprehensive statement describing the nature and scope of the state’s Medicaid program. 42 C.F.R. § 430.10 (2007).”
Federal and state agencies monitor facilities’ compliance with regulations through surveys. In Louisiana, “DHH is designated as the administering agency of the Louisiana Medicaid program along with all fiscal components, and its Health Standards Section (“HSS”) performs the surveys for CMS [Centers for Medicare and Medicaid Services].”
“Complaint survey protocol customarily consists of HSS surveyors going on site to investigate [a] complaint, after which the complaint will be either unsubstantiated, meaning no deficiencies were found, or substantiated, in which HSS determined deficiencies.”
After the state receives the POC, “HSS will conduct a follow-up survey or conduct an evidence review.”
It should be noted that follow-up surveys are abbreviated surveys. An abbreviated survey is a survey other than a standard survey that is focused on certain areas of the regulatory language and evaluation for compliance. This type of survey can result from complaints received or it can be a survey to return to the facility in order to followup on corrections of cited deficient practices. After the follow up survey, DHH notifies the facility whether it is in sub*392 stantial compliance with the federal regulations previously identified and cited in either the CMS Form 2567 and/or State Form. Notwithstanding federal compliance, the same notice informs that if the facility is not in compliance with state requirements, it will receive notification of this in a separate letter. Notice to a facility that it is in substantial compliance with federal participation requirements neither precludes CMS from issuing a Civil Money Penalty (CMP), nor does it preclude the state from taking action pursuant to state minimum licensing standards.14
Hainkel Home and its Administrator, Robert Rodrigue, contend that 98% of Hainkel Home’s residents pay for their care through the state Medicaid program, but elsewhere Hainkel Home stated that 73 of its 82 residents rely on Medicaid to fund their care.
Louisiana law prescribes that “[a]ll nursing homes are under the jurisdiction of the state Department of Health and Hospitals,” and no person shall open, conduct, manage or maintain a nursing home without a license or provisional license from the department.” In addition, the Louisiana Legislature charged that DHH “shall prescribe and publish minimum standards,” and may adopt new rules and regulations relating to the operation and conduct of nursing homes and the care, treatment and maintenance of the residents thereof.” Pursuant to the aforementioned legislative authority, DHH has . promulgated the Nursing Homes Minimum Licensing Standards which govern aspects of nursing home operations for licensed facilities. As a licensed nursing home in Louisiana, Hainkel Home is obligated to maintain compliance with all state laws and minimum standards, rules, and regulations promulgated by DHH; and, violation of or non-compliance with same may result in license revocation. Furthermore, pursuant to La. R.S. 40:2009.7, the Secretary of the Department of Health and Hospitals has the power to revoke a nursing facility’s license when an investigation determines the license is in nonconformance with or in violation of the provisions of La. R.S. 40:2009.6.18
According to the Secretary:
Since April 19, 2011, DHH has performed the following surveys at Hainkel*393 Home: two Life Safety Code (“LSC”), one LSC follow-up survey, two Certification and Licensing Survey, one Certification and Licensing follow-up survey, twelve complaint surveys, and eight complaint follow-up surveys. Since April 2011, DHH has received 17 complaints and 1 self-reported incident for Hainkel Home, resulting in numerous on-site complaint surveys from which 8 complaints were substantiated. Just as with any other nursing home complaint, HSS triaged each complaint upon receipt, and determined that the complaint warranted an on-site complaint investigation. For Hainkel Home alone, since April 19, 2011, DHH has spent over 1,504.5 total survey hours at Hainkel home costing the state of Louisiana over $62,846.48, excluding all travel costs.19
C. Actions Leading to the Current Dispute
1. Nursing Home License Revocation
On June 26, 2012, the Secretary sent a letter to Hainkel Home, informing Hainkel Home that its license to operate (“nursing home license”) in Louisiana was to be revoked because of numerous alleged “instances of deficiencies.”
On July 6, 2012, Hainkel Home sent a letter to the address designated for AR hearings and requested that “the following tags be identified for review by the IDR [Informal Dispute Resolution] committee.”
2. Medicaid Provider Agreement Termination
On September 7, 2012, DHH sent another letter to Hainkel Home to inform the facility that the Secretary, was exercising his right to terminate Hainkel Home’s Medicaid provider agreement, effective September 28, 2012. This letter, signed by Undersecretary Phillips, explains that the termination of the Medicaid provider agreement is based upon the earlier decision to terminate the nursing home license, and effected pursuant to Secretary Green-stein’s authority under La. R.S. 46:437.11(D)(2), which permits the Secretary to “terminate a provider agreement immediately and without written notice if a health care provider is the subject of a sanction or of a criminal, civil, or departmental proceeding.”
Hainkel Home alleges that the Secretary has violated its procedural due process rights in seeking to revoke Hainkel Home’s nursing home license because it is
D. Procedural History
1. Temporary Restraining Order and Preliminary Injunction
■ On September 18, 2012, Hainkel Home filed a verified complaint and motions for a temporary restraining order (“TRO”) and preliminary injunction, asserting violations of its procedural due process and substantive due process rights.
ment on the conclusion that Hainkel Home’s license has been revoked. Hainkel Home’s license has not been revoked, and will not be revoked unless and until it has exhausted all of its appeals.”
Hainkel Home’s immediate concern in its request for a temporary restraining order was a meeting the Secretary would require Hainkel Home to conduct on either September 17, 18, or 19, wherein, Hainkel Home would have to notify its residents that: “(a) the Medicaid Provider Agreement was terminated; (b) Hainkel Home’s funding would be cut off; and (c) the residents would be forced to relocate to other facilities.”
2. Stipulations of the Parties
During a telephone call with the parties on September 19, 2012, upon the motion for a TRO, the parties stipulated to a number of issues eliminating the need for a TRO. It was agreed that the resident meeting would be continued until after the Court issued a ruling on the preliminary injunction. Additionally, the Secretary agreed that Hainkel Home’s appeal of its nursing home license revocation was suspensive, and therefore would not be effective until after all administrative reviews and judicial appeals had been exhausted.
S. Motion to Dismiss
Before a hearing on the preliminary injunction could be had, the Secretary filed a Motion to Dismiss on October 4, 2012, which was initially set for hearing on October 24, 2012; however, the Court granted a motion to expedite hearing, and heard the motion on October 12, 2012, at 9:00 AM. In this motion, Secretary Greenstein challenged the Court’s subject matter jurisdiction over Hainkel Home’s claim relating to the license revocation action on the basis that “the allegation concerning the License Revocation Action contain[s] no allegation of federal law” and Hainkel Home must exhaust all state law administrative remedies before this Court has subject matter jurisdiction.
Hainkel Home filed an opposition on October 10, 2012,
The Court determined, for the reasons stated on the record on October 12, 2012, that it had jurisdiction over Hainkel Home’s claim because the procedure utilized by the Secretary to effectuate a termination of Hainkel Home’s Medicaid provider agreement would be constitutionally inadequate (at least from the allegations made in Hainkel Home’s complaint) because the termination would force Hainkel Home to incur a devastating loss before the nursing home can access the appeals
Regarding the Secretary’s claim that Hainkel Home’s allegations as to the termination of the Medicaid provider agreement action failed to state a claim upon which relief can be granted and thus should be summarily dismissed with prejudice, the Court deferred ruling and requested additional briefing considering there appears to be no controlling precedent to guide this Court on the issue of whether a Medicaid provider has a protectable property interest in a Medicaid provider agreement to implicate a color-able claim for procedural due process.
II. Subject Matter Jurisdiction and Failure to State a Claim A. Subject Matter Jurisdiction
Before proceeding to the substantive issue of the preliminary injunction, the Court will revisit the question of subject matter jurisdiction with regard to the claims relating to the termination of the Medicaid provider agreement. The Court finds sufficient evidence was offered to support and affirm the Court’s prior ruling, made on the record, that Hainkel Home’s claims meet the requirement of the “entirely collateral” exception to the exhaustion of administrative remedies prerequisite to confer subject matter jurisdiction upon this Court. However, regarding whether there is a protectable property right in the Medicaid provider agreement, a question of first impression for this Court, for the reasons explained below, the Court need not resolve that issue in this case.
B. Failure To State a Claim
1. Property Interest at Issue
Concerning Hainkel Home’s procedural due process claim, Secretary Greenstein argues that Hainkel Home does not have “a property interest in its Medicaid Provider Agreement that gives rise to a right to procedural due process.”
*397 The combination of rights reserved by the State with regard to Medicaid providers, allowing DSS to terminate without cause on the 30 days’ notice or to terminate or suspend immediately in certain circumstances, casts doubt on whether the provider’s interest in continuing as a provider, either indefinitely or for any period without interruption, is a property right that is protected by due process.52
In opposition, Hainkel Home disregards most of the cases cited by Greenstein on the basis that they “have no precedential value, are dated and/or outside the jurisdiction of the U.S. Fifth Circuit.”
Hainkel Home distinguishes Plaza Health Laboratories, claiming that it is “based on New York law.”
Hainkel Home rejects Greenstein’s contention that it has failed to state a claim for which relief may be granted. It points to the Ridgeview Manor of the Midlands, L.P. v. Leavitt,
Hainkel Home argues that DHH and the Secretary are depriving it of its due
Hainkel Home further points out that MAPIL defines “substandard care” in relation to medical malpractice, proof of which must be substantiated by an expert witness who can “establish the standard of care, a breach in the standard of care and damages to the patient that would not have occurred in the absence of the medical negligence.”
Hainkel Home argues that it “has never been notified of a sanction or proceeding,” and “never been apprised by DHH of a violation or potential violation of the Medicaid Integrity Act.”
Hainkel Home references the Secretary’s own testimony, where he conceded that Hainkel Home’s pending termination is not premised on fraud or abuse
In opposition, the Secretary emphasizes that under MAPIL the Secretary may terminate a provider agreement “immediately and without written notice if a health care provider is the subject of a sanction of a criminal,. civil, or departmental proceeding.”
2. Analysis of Property Interest' at Issue
Throughout these proceedings, Green-stein has maintained that Hainkel Home does not have a protectable property interest in the Medicaid provider agreement, and therefore has failed to state a claim upon which relief can be granted for procedural due process. While both parties cite authority to support their positions, neither party points to controlling precedent directly on this issue. However, Supreme Court precedent outlining the requirements to establish a protectable property interest to support a claim for procedural due process lends the Court guidance on this issue for this circuit. Moreover, other circuits that have squarely addressed this specific issue provide persuasive authority.
In Perry v. Sindermann,
In Roth, an assistant professor of a state university, who had no tenure rights to continued employment, sought redress after he was informed he would not be rehired for the next academic year, claiming that his Fourteenth Amendment rights were violated. In analyzing whether the plaintiff had a protectable property interest,, the United States Supreme Court recognized that it previously found a protecta
In finding that the assistant professor did not have a property interest, the Supreme Court noted:
[The] terms [of the plaintiffs employment] secured his interest in employment up to June 30, 1969. But the important fact in this case is that they specifically provided that [the plaintiffs] employment was to terminate on June 30. They did not provide for contract renewal absent “sufficient case.” [ ] Thus, the terms of [the plaintiffs] appointment secured absolutely no interest in re-employment for the next year.85
In Plaza Health Laboratories v. Perales,
On review, the United States Court of Appeals for the Second Circuit made clear that it only reviewed the denial of a preliminary injunction for abuse of discretion.
However, citing Supreme Court precedent, the Second Circuit stated that “where state provisions bestow a right that cannot properly be eliminated except for cause, that right constitutes property protected by procedural due process, [but where] the existence of provisions that retain for the state significant discretionary authority over the bestowal or continuation of a government benefit suggests that the recipients of such benefits have no entitlement to them”
As outlined previously, Louisiana Revised Statute § 46:437.11(D)(1), or MA-PIL, states, “Unless the provider agreement is terminated by the Secretary for cause as provided in Paragraph (2) of this Subsection, a health care provider agreement shall be effective for a stipulated period of time, shall be terminable by either party thirty days after receipt of written notice, and shall be renewable by mutual agreement.” While the Plaza Health Laboratories court analyzed this issue with regard to New York’s Medicaid law, it was these same aspects, termination without cause and no entitlement to continue as a provider, that led the Second Circuit to believe no property right existed in the Medicaid provider agreement.
As noted above, the Medical Assistance Programs Integrity Law,
Section 437.2, entitled “Legislative intent and purpose,” outlines the scope of MAPIL and sheds light on the types of violations the “for cause” provision of Section 437.11 is meant to safeguard against. MAPIL was “enacted to combat and prevent fraud and abuse committed by some health care providers” and gives the state the “ability, authority, and resources to pursue civil monetary penalties, liquidated damages, or other remedies to protect the fiscal and programmatic integrity of the medical assistance programs from health care providers and other persons who engage in fraud, misrepresentation, abuse, or other ill practices, as set forth in this Part, to obtain payments to which these health care providers or persons are not entitled.”
MAPIL also allows for termination of a Medicaid provider agreement without cause. Section (D)(1) states that “a health care provider agreement shall be effective for a stipulated period of time, shall be terminable by either party thirty days after receipt of written notice, and shall be renewable by mutual agreement.” Therefore, under this provision, the Secretary
The Court takes note that Hainkel Home maintains that based upon the expressly articulated purpose of Section 437, and its focus on “fraud, misrepresentation, abuse, or other ill practices,” the alleged violations of Hainkel Home fall outside the purview of allowable “for cause” terminations of provider agreements. However, this theory is undercut by Section 437.14(A)(10), which states that a violation of nursing home license certification conditions is grounds for revocation of enrollment in the medical assistance program.
Nevertheless, it is this Court’s finding that the Secretary’s reliance on the suspended license revocation as a basis for the termination of the provider agreement is improper. The Secretary has continually asserted the license revocation as the basis for the Medicaid provider agreement termination.
The Court further finds that using the suspended license revocation as the basis for terminating the Medicaid provider agreement, the Secretary violated Hainkel Home’s right to maintain the “status quo” during the period of its appeal, and violated Hainkel Home’s substantive due process rights. Although Hainkel Home may not have a property interest in the Medicaid provider agreement, it is undisputed that it does have a property interest in the nursing home license, which is implicated in the for cause termination under MAPIL.
Even though the Secretary has stated that DHH terminated the Medicaid provider agreement for cause, all. acknowledge that MAPIL also allows the termination of a provider agreement without cause, however a party must give thirty days’ notice. While DHH expressly stated that the termination of Hainkel Home’s Medicaid provider agreement was premised on “cause,” the Court also notes that DHH nonetheless would have failed to meet the statutory requirements of a without-cause termination as well. The Secretary sent notice dated September 7, 2012, notifying Hainkel Home of its intention to terminate its
The Court’s findings here do not depend on whether this Court concludes that Hainkel Home has a protectable property interest in the Medicaid provider agreement. In this instance, to terminate the provider agreement based upon the revocation of. a nursing home license — the effect of which is suspended according to the Secretary’s own stipulations — would render the suspensive appeal on the licensing revocation action meaningless because Hainkel Home would be out of business before it could fully challenge the nursing home license- revocation and therefore would deny Hainkel Home its procedural due process rights of review of the nursing home license revocation. The Secretary has never argued that Hainkel Home does not have a property interest in the nursing home license. Due process ensures “the opportunity to be heard ‘at a meaningful time and in a meaningful manner.’ ”
Moreover, Hainkel Home has identified a clear property right in the lease agreement of the facility, which would terminate upon the cessation of the facility’s operation as a nursing home. Yet the lease, by its express terms, grants a party an opportunity to cure any defects within thirty days to avoid early termination.
The Secretary’s only response to this alleged property right in the lease and its connection to the Medicaid provider agreement and nursing home license revocation is that it was not initially pled in the complaint. However, Federal Rule of Civil Procedure 15(b) states that, “A party may move — at any time, even after judgment — to amend the pleadings to conform them to the evidence and to raise an un
Secretary Greenstein’s testimony evidences that the Secretary felt that Hainkel Home, as a provider, was forced on the department by the legislature.
However, as stipulated by the Secretary, the nursing home license revocation is suspended pending review. Therefore, it was improper for the Secretary to use the nursing home license revocation as a “departmental proceeding” under which it could terminate Hainkel Home’s Medicaid provider agreement under MAPIL.- Accordingly, although appearing to be separate actions taken by the Secretary on its face, all of-the actions were necessary for the Secretary to end its business relationship with Hainkel Home and are tied to its initial decision to revoke Hainkel Home’s nursing home license. And so, if Hainkel Home is not provided the full effect of suspension of the nursing home license revocation action, it loses all other rights and privileges connected to its status as a nursing home operator before that decision becomes final or effective. The Secretary’s proposed actions regarding the Medicaid provider agreement would render Hainkel Home’s suspensive appeal of
For all the reasons stated above, Hainkel Home has stated a claim upon which relief can be granted in that all of the Secretary’s actions are tied to the initial revocation of Hainkel Home’s nursing home license' — a property interest not in dispute.
III. Preliminary Injunction
Federal Rule of Civil Procedure 65 allows a district court to issue a preliminary injunction upon notice to the adverse party. A plaintiff must establish four elements to secure a preliminary injunction: (1) a substantial likelihood of success on the merits; (2) a substantial threat of irreparable injury if the injunction is not issued; (3) that the threatened injury if the injunction is denied .outweighs any harm that will result if the injunction is granted; and (4) that the grant of an injunction will not disserve the public interest.
A. Substantial Likelihood of Success on the Merits
1. Parties’Arguments
Hainkel Home argues that it has demonstrated a likelihood of success on the merits of its procedural due process claim because “the loss of the lease, the loss of its business, and the loss of the Medicaid provider agreement constitute a grievous loss prior to the opportunity to be heard at a meaningful time and in a meaningful way,” as a result of the Secretary using its nursing home license revocation, while that decision was suspended, as the basis for the termination of its Medicaid provider agreement.
Hainkel Home further argues that there are insufficient grounds to revoke the license and provider agreement, based on the testimony of DHH survéyor Matthew Thibodeaux and Dr. Lutz. Moreover, Hainkel Home avers that LAC tit. 40:1:9737 provides that the Secretary shall only impose a penalty that would bring a home into compliance, and that therefore revocation of the license and termination of the provider agreement is arbitrary and capricious.
In opposition to the preliminary injunction, the Secretary claims that Hainkel Home has failed to demonstrate a likelihood of success on the merits because it cannot demonstrate that it has been denied due process.
Further, the Secretary rejects the charge that the Secretary’s actions were arbitrary and capricious, but rather based
2. Analysis
In determining that this Court has subject matter jurisdiction and that Hainkel Home has stated a claim upon which relief may be granted, the Court has already addressed many of the arguments made in relation to this factor.
B. Irreparable Injury
1. Parties’Arguments
Hainkel Home argues it be deprived of its constitutional rights and irreparably harmed without a preliminary injunction because it will be forced out of business before it can exhaust its review and appeal of the nursing home license revocation.
In opposition, the Secretary argues that Hainkel Home’s evidence demonstrates that termination of the provider agreement will effect its cash flow, but that irreparable harm is defined as that which cannot be undone through monetary remedies.
Regarding transfer trauma, which could be suffered by Hainkel Home’s residents, the Secretary argues that this should not be considered because Hainkel Home is the plaintiff, not the patients.
The Secretary cites O’Bannon v. Town Court Nursing Center,
2. Analysis
The crux of Hainkel Home’s argument is that if the Secretary terminates its Medicaid provider agreement it will go out of business because a substantial percentage of its patients pay for their care through Medicaid reimbursement. In Atwood, cited by Hainkel Home, the Fifth Circuit affirmed a district court’s grant of a preliminary injunction. In that matter, defendant Petrobras furnished a letter of credit to Atwood as security for services Atwood was to perform. Petrobras then refused to pay Atwood, and in response, Atwood applied for a TRO because the letter of credit was set to expire and would not be redeemable. The district court granted a TRO extending the letter of credit for a brief time in order to leave Atwood’s security intact.
On appeal, Petrobras challenged the district court’s finding, as a matter of law,
This Court finds the facts here analogous to Atwood. As explained above, the Fifth Circuit directly addressed the validity of the type of irreparable harm pled by Hainkel Home, and has held that in the context of a preliminary injunction, economic harm that would result in the destruction or termination of one’s business will constitute irreparable harm. The Court finds that based upon the evidence presented ■ at the preliminary injunction hearing, namely the testimony of Hainkel Home Administrator Robert Rodrigue, Hainkel Home has demonstrated that the termination of its Medicaid provider agreement would destroy its business before its appeal on the license revocation can be heard and the nursing home license revocation was the basis of the Medicaid provider • agreement termination.
Regarding the Secretary’s argument that potential transfer trauma to patients should not be considered under the irreparable harm prong, other courts have squarely addressed this issue as well in the same context. In JoKn E. Andrus Memorial, Inc. v. Daines,
O’Bannon establishes that nursing home residents do not have standing to assert a due process cause of action*410 based on the risk of transfer trauma caused by the federal or state government requiring a facility to close involuntarily; it does not prevent a Court from considering transfer trauma in evaluating irreparable harm for the purposes of determining whether to grant a nursing facility’s motion for a preliminary injunction.139
The court further acknowledged that a nursing facility has an interest in protecting its .residents, and that transfer trauma was also a relevant factor in assessing the public interest implications of issuing a preliminary injunction.
At the hearing in this case, Dr. Brobson Lutz testified about the recognized effects of transfer trauma and the likely harm that could result to the residents physical and mental well-being. The Court finds his testimony persuasive. Accordingly, this Court finds that Hainkel Home has presented evidence to establish that it and its patients would suffer irreparable harm in the absence of a preliminary injunction.
C. Threatened Injury Outweighs Any Harm that Will Result if Injunction is Granted
1. Parties’Arguments
Hainkel Home maintains that while significant harm will result to the home and its patients if the injunction is not granted, “little or no harm will result to the Secretary if the injunction is issued.”
The Secretary argues that the department will, in fact, be harmed by issuance of an injunction because such action would prevent it from “upholding its duty to regulate healthcare in the Louisiana [sic] and to govern the Louisiana Medicaid Program.”
2. Analysis
Despite the Secretary’s arguments, other courts that have considered the potential harm to the government or administrative agencies, have found that injunctive relief to enjoin the termination of a provider agreement would not harm those public institutions.
The only harm proffered by defendants is the theoretical disruption caused by a court interfering with the administrative process and the Secretary’s interest in expeditious provider termination procedures ... The Court does not perceive any harm to the government in permitting the AL J to reach promptly the merits of a live controversy rather than*411 forcing him to wait until after plaintiff is financially dysfunctional and the residents have already been moved. Indeed, an injunction will further the significant public interest both in the smooth functioning of the administrative process and in protecting the residents’ interests.146
The Court finds this reasoning persuasive. The Secretary has provided no evidence that residents in Hainkel Home are currently in immediate jeopardy.
D. Public Interest
1. Parties’ Arguments
Hainkel Home emphasizes that all deficiencies noted by the Secretary have been corrected, and no deficiencies now remain. Moreover, Hainkel Home stresses that there have not been any deficiencies cited in the last three complaint surveys.
The Secretary maintains that the public would be disproportionally and negatively affected by the issuance of a preliminary injunction because “these public funds are limited and must be spent wisely.”
2. Analysis
As stated above and unrefuted by the Secretary, there are no outstanding deficiencies at Hainkel Home, much less deficiencies that qualify as Immediate Jeopardy.
In addition, as acknowledged in Oak Park, “in today’s fragile economic climate, this Court is also cognizant of the effect the closure would have on [] employees.”
Moreover, the Court again acknowledges the recognized harm of “transfer trauma” and believes that this vulnerable population should only be uprooted if practically necessary and legally warranted. According to testimony presented at the hearing, many of Hainkel Home’s residents have resided at that facility for decades and would be susceptible to a significant risk of negative health effects if moved.
E. Security
Under Federal Rule of Civil Procedure 65(c), a district court may grant a preliminary injunction “only if the movant gives security in an amount that the court considers proper to pay the costs and damages sustained by any party found to have been wrongfully enjoined or restrained.” Hainkel Home contends that security is not necessary in this matter because “defendants will not incur any financial damages if the Court issues injunctive relief.”
IV. Conclusion
For the aforementioned reasons, the Court finds that Hainkel Home is entitled to injunctive relief enjoining the Secretary from terminating its Medicaid provider agreement during the suspended revocation of its nursing home license. The Court will also enjoin the Secretary from requiring Hainkel Home to notify its residents in a meeting or otherwise of the termination of the Medicaid provider agreement or nursing home license revocation, until all review and appeals in connection with the nursing home license revocation action have been exhausted, and only if the nursing home license revocation is ultimately sustained. Accordingly;
IT IS HEREBY ORDERED that for the reasons stated above, Hainkel Home’s Motion for Preliminary Injunction
IT IS FURTHER ORDERED that Secretary Greenstein is enjoined from terminating the Hainkel Home Medicaid provider agreement, prior to Hainkel Home’s exhaustion of all review and appeals regarding the nursing home license revocation and then only if supported by a final decision;
IT IS FURTHER ORDERED that Secretary Greenstein is enjoined from requiring Hainkel Home to notify its residents in a meeting or otherwise of the termination of the Medicaid provider agreement and/or of the revocation of the nursing home license unless and until all administrative and judicial review and appeals have been exhausted, and only if a final decision supports such action.
. Rec. Doc. 2.
.. Rec. Doc. 71 at pp. 1-2. Originally Hainkel Home requested that this court issue injunctive relief enjoining the Secretary from:
(1) from terminating the Hainkel Home Medicaid provider agreement, prior to a final decision from the Secretary following an Administrative Hearing on the merits of such a termination and exhaustion of all administrative and judicial proceedings, subject to a Court review, if warranted;
(2) from terminating the Hainkel Home Medicaid provider agreement, prior to a final decision from the Secretary following an Administrative Hearing on the merits of whether the Hainkel Home nursing home license should be revoked and exhaustion of all administrative and judicial proceedings, subject to á Court review, if warranted;
(3) ordering the Secretary to identify which administrative regulatory scheme is being followed in determining whether to terminate Hainkel Home's Medicaid provider agreement;
(4) from revoking Hainkel Home’s nursing home license, prior to a final decision from the Secretary following an Administrative Hearing on the merits of such a termination and exhaustion of all administrative and judicial proceedings, subject to a Court re1 view, if warranted;
(5) from engaging in the September 27, 2012 IDR hearing for the purpose of considering Hainkel Home's appeal of the license revocation as violative of Hainkel Home’s due process rights;
(6) from seeking to terminate Hainkel Home’s nursing home license under the Medicaid Integrity Law, La R.S. 46:437.10, because the Secretary has offered no grounds thereunder;
(7) from ordering Hainkel Home to notify its residents in a meeting or otherwise of the termination of the provider agreement and/or the revocation of the license prior to a final decision from the Secretary following an Administrative hearing on the merits of such termination/revocation and exhaustion of all administrative and judicial proceedings, subject to a Court review, if warranted; and
(8) ordering that Hainkel Home is entitled to a mandatory injunction requiring the Secretary to comply with La. R.S. 40:2009.7(B), LAC tit. 50:111:10167(I)(b), and LAC, tit. 48:1:9479 (i.e. appoint a three member board who will hold and evidentiary hearing on the license revocation issue).
See Rec. Doc. 2. However, after the parties entered into certain stipulations which will be discussed at length infra, several of the original demands became moot. See infra Part I.D.2.
. La. R.S. 40:16.3(C)(1), (C)(4).
. La. R.S. 40:16.3(0(8).
.Rec. Doc. 40-7. Amendments to the lease were signed by these parties in March 2011 as well. See id. at pp. 21-22.
.Id. at p. 3.
. Id. at p. 6.
. Id. at pp. 6-7
. Rec. Doc. 33 atp. 8.
. Id.
. Id.
. Id.
.Id. at p. 9.
. Id.
. Rec. Doc. 71 at p. 28; see also Tr. R. p. 185 (Q: Of those folks who are currently residents or patients, how many of them are on Medicaid? A: At least 98 percent)(testimony of Mr. Rodrigue). Elsewhere, Hainkel Home stated that "87% of Hainkel Home residents have their health care paid for by Medicaid." Rec. Doc. 60 atp. 1.
. Rec. Doc. 1. at ¶ 2.
. Id. at ¶ 3; Ex. 1.
. Rec. Doc. 33 at p. 8 (internal citations omitted).
. Id. at pp. 9-10.
. Rec. Doc. 1 at ¶ 17.
. Id.
. Rec. Doc. 1-2.
. See id. at pp. 6-7.
. Rec. Doc. 33 at p. 2. One of the IJ deficiencies entailed a resident receiving second degree burns from hot water. The other involved an employee of Hainkel Home extorting $800 from a resident. Tr. R. p. 22. All outstanding deficiencies, including the IJ deficiencies, were cleared by the time of the preliminary injunction hearing. Rec. Doc. 71 at pp. 32-33.
.Rec. Doc. 33 atpp. 10-11.
. Rec. Doc. 1-2 at p. 8.
. Id. at p. 9.
. Id.
. Rec. Doc. 1-4 atp. 1.
. Rec. Doc. 33.
. Rec. Doc. 37.
. Rec. Doc. 1 at ¶¶ 30-31; Rec. Doc. 33 at p. 2; Rec. Doc. 1-5 (termination letter).
. Rec. Doc. 62 at p. 4 ("The license revocation is a departmental proceeding under which the Secretary may move.”)(emphasis in original).
. Rec. Doc. 1 at ¶¶ 32-34.
. Rec. Doc. 33 at p. 3.
. Rec. Docs. 1, 2.
. Rec. Doc. 1 at ¶ 37; See also Rec. Doc. 2-1 atp. 10.
. Rec. Doc. 2-1 atp. 10.
. Rec. Doc. 1 at ¶ 38.
. See id. at ¶¶ 40-47.
. Rec. Doc. 7.
. Rec. Doc. 37.
. Rec. Doc. 17-1 at pp. 8, 20.
.Rec. Doc. 40.
. Id. atpp. 16-20.
. Id.
. See Taylor v. U.S. Treasury Dept., 127 F.3d 470, 477 (5th Cir. 1997) (recognizing an exception to the exhaustion requirement when "the unexhausted administrative remedy would be plainly inadequate”).
. See infra Part II.B.2.
. Rec. Doc. 17-1 atp. 13.
. Id. at pp. 13-14 (citing numerous cases from the Second, Eighth, and Tenth Circuits).
. 878 F.2d 577 (2d Cir. 1989).
.Id. at 582.
. Rec. Doc. 17-1 atp. 15.
. 640 F.2d 262 (10th Cir. 1981).
. Rec. Doc. 17-1 atp. 15.
. Id. atpp. 15-16.
. Rec. Doc. 40 atp. 1.
. Id. atp. 19.
. Id.
. No. 07-861, 2007 WL 1110915 (D.S.C. Apr. 9, 2007).
. No. 09-217, 2009 WL 331563 (W.D.La. Feb. 10, 2009).
. No. 10-316, 2011 WL 2552522 (M.D.La. Jun. 27, 2011).
. Rec Doc. 40 at p. 21.
. Rec. Doc. 71 atpp. 19-20.
.Id. at p. 20.
. Id. at p. 9.
. Id. at pp. 9-10.
. Id. atp. 11.
. Id. (citing Coleman v. Deno, 01-1517 (La.01/25/02); 813 So.2d 303, 315-16).
. Id. at p. 12 (emphasis in original).
. Rec. Doc. 2-1 atp. 11.
. Id. at pp. 12-13.
. Id. at p. 12.
. Id. at p. 13 (citing Tr. R. pp. 345-46, 362).
. Id.
. Rec. Doc. 62 al p. 4.
. Id. atpp. 4-5.
. Id. atp. 5.
. 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1972).
. Id. at 601, 92 S.Ct. 2694.
. 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972).
. Id. at 577, 92 S.Ct. 2701.
. Id.
. Id.
. Id. at 578, 92 S.Ct. 2701.
. 878 F.2d 577 (2d Cir. 1989).
. Id. at 578.
.Id. at 579.
. Mat 580.
. Id. at 581.
. Id. at 582.
. Id. at 581 (citing Perry, 408 U.S. at 600-01, 92 S.Ct. 2694).
. Id. at 582.
. 878 F.2d at 582.
.La. R.S. 46:437.11.
. La. R.S. 46:437.11(D)(2).
. La. R.S. 46:437.2(A)-(B).
. Rec. Doc. 33 at pp. 2-3 ("The termination, of the Medicaid Provider Agreement was based on the Secretary of DHH’s authority under La. R.S. 46:437.11(D)(2) ... [T]he Secretary utilized this authority to terminate Hainkel Home's Medicaid Provider Agreement, based on the underlying license revocation action.”).
. Rec. Doc. 37.
. Fontenot v. Dept. of Pub. Safety and Corrections, Office of Motor Vehicles, 625 So.2d 1122, 1124 (La.App. 1 Cir. 1993); La. C.C.P. art. 2123.
. Zahn v. Unknown Owners, 154 La. 776, 98 So. 184, 185 (1923).
. Rec. Doc. 1-5 at p. 2.
. Id.
. Mathews v. Eldridge, 424 U.S. 319, 333, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976) (quoting Armstrong v. Manzo, 380 U.S. 545, 552, 85 S.Ct. 1187, 14 L.Ed.2d 62 (1965)).
. Rec. Doc. 40-7 at p. 6.
. See Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 597 (Former 5th Cir. Nov. 5, 1981) ("Appellate review of the decision to grant or deny leave is generally described as limited to 'determining whether the trial court abused its discretion.' ”). This Court also notes that leave to amend "should be freely given when justice so requires,” and that there is “a bias in favor of granting leave to amend.” See id.
. Rec. Doc. 75.
. Tr. R. p. 337 (Greenstein: I mean, it’s not a regular privatization with a competitive RFP [request for proposals] and weighing the benefits of multiple private groups looking to provide that service. Instead, this was very directed from the legislature with one organization).
. Tr. R. p. 338.
. Tr. R. p. 366 (Greenstein: One piece is the regulatory scheme of that allows an organization to do business with multiple business partners, with private individuals, community organizers, with Medicare. The other decision is whom we do business with. We have identified [Hainkel Home] as not being a good business partner.).
. Janvey v. Alguire, 647 F.3d 585, 595 (5th Cir. 2011).
. Id. at 591-92.
. The Court summarizes the arguments that have already been outlined and analyzed in detail above.
. Rec. Doc. 71 at p. 15.
. Id. atpp. 26-28.
. Rec. Doc. 62 at p. 3.
. Id. at p. 4.
. Tr. R. pp. 334-35 (A: It was not a sense that the gravity of the situation or the seriousness of the issues were seen from the home's perspective the same way that DHH saw them. We were moving down a road again that we refer to as cyclical noncompliance: multiple termination tracks from the federal government, repeated IJs, repeated surveys, repeated complaints.) (testimony of Secretary Greenstein).
. Rec. Doc. 62 atp. 15.
. See supra Part II.
. Rec. Doc. 71 at p. 28.
. Id., at p. 29 (quoting Henderson v. Stalder, 265 F.Supp.2d 699 (E.D.La. 2003) (Duval, J.)).
. Tr. R. p. 187 (Q: If the last date Hainkel receives [Medicaid] funding is October 28, 2012, what happens to the Hainkel Home — if it receives its last funding on October 28, what happens to Hainkel Home on October 29, 2012? A: We are essentially out of business.).
. 875 F.2d 1174, 1179 (5th Cir. 1989).
. Rec. Doc. 71 at p. 31.
. Tr. R. p. 182 (Q: What impact, if any, would the termination of the Medicaid provider agreement have on Hainkel Home’s ability to be a viable business and pay its 135 employees? A: We are primarily a Medicaid operation, and it would shut us down.) (testimony of Robert Rodrigue).
. Rec. Doc. 62 at p. 15 (citing Deerfield Medical Ctr. v. City of Deerfield Beach, 661 F.2d 328 (5th Cir. Unit B Nov. 13, 1981)).
. Id. at p. 16.
. Id. atp. 18.
. 447 U.S. 773, 100 S.Ct. 2467, 65 L.Ed.2d 506 (1980).
.Atwood, 875 F.2d at 1175.
. Id. at 1178.
. Id. at 1178-79.
. Id. at 1179 (citing Doran v. Salem Inn, Inc., 422 U.S. 922, 95 S.Ct. 2561, 45 L.Ed.2d 648 (1975) (threat of bankruptcy constitutes irreparable harm); National Screen Serv. Corp. v. Poster Exchange, Inc., 305 F.2d 647 (5th Cir. 1962) (no abuse of discretion where denial of injunctive relief would result in destruction of movant's business)).
. Id.
. See Tr. R. p. 187 (Q: If the last day Hainkel receives [Medicaid] funding is October 28, 2012, what happens to Hainkel Home — if it receives its last funding on October 28, what happens to Hainkel Home on October 29, 2012? A: We are essentially out of business.) (testimony of Hainkel Home Administrator, Robert Rodrigue).
. 600 F.Supp.2d 563 (S.D.N.Y. 2009).
. Id. at 572.
. Id.
. Id. at 572-73; See infra Part III.D.2 (discussing the effects of transfer trauma in relation to the public interest).
. Rec. Doc. 71 at p. 32.
. Id.
. Rec. Doc. 62 at pp. 20t21.
. See Oak Park, 2009 WL 33-1563, at *3.
. 947 F.Supp. 15 (D.D.C. 1996).
. Id. at 20.
. Tr. R. pp. 380-81 (Q: As we sit here today in this courtroom, Mr. Secretary, is there a single deficiency assessed against the Hainkel Home relating to patient safety or care that exists on the records of the Department of health & Hospitals, a single one? A: I don't have an answer for that ... Q: Would it surprise you to find out that it's zero? A: It would not surprise me.)(testimony of Secretary Greenstein).
. Rec. Doc. 71 atpp. 32-33.
. Id. at p. 33.
. Rec. Doc. 62 at p. 22.
. Id.
. Tr. R. pp. 380-81 (Q: As we sit here today in this courtroom, Mr. Secretary, is there a single deficiency assessed against the Hainkel Home relating to patient safety or care that exists on the records of the Department of health & Hospitals, a single one? A: I don't have an answer for that ... Q: Would it surprise you to find out that it’s zero? A: It would not surprise me.)(testimony of Secretary Greenstein).
. 2009 WL 331563, at *3.
. Tr. R. pp. 406-08.
. Tr. R. pp. 99-104 (testimony of Dr. Lutz).
. Tr. R. pp. 338-39 (Q: Mr. Secretary, do you as secretary — I don't know any other way to ask it except to ask it. Do you want the Hainkel Home back as a state-run, department-run facility? A: We haven’t thought through the future whether we want it back, don’t want it back, what we would do.) (testimony of Secretary Greenstein).
.Rec. Doc. 78 at p. 24.
. City of Atlanta v. Metropolitan Atlanta Rapid Transit Authority, 636 F.2d 1084, 1094 (5th Cir. Unit B Feb. 13, 1981) (citing Corrigan Dispatch Co. v. Casa Guzman, S.A., 569 F.2d 300, 303 (5th Cir. 1978)).
. Rec. Doc. 2.
Reference
- Full Case Name
- NEW ORLEANS HOME FOR INCURABLES, INC. v. Bruce D. GREENSTEIN, Secretary of Louisiana Department of Health and Hospitals
- Cited By
- 4 cases
- Status
- Published