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United States v. Mercy Regional Health Systems

March 13, 2008


The opinion of the court was delivered by: Reagan, District Judge


This matter comes before the Court on consideration of the Verified Complaint for Temporary Restraining Order, Preliminary and Permanent Injunction, and Damages under the False Claims Act by the United States. On March 11, 2008, the Court held an ex parte hearing regarding the United States's request for a temporary restraining order (See Doc. 3). No testimony was taken. Having considered the matter and being duly advised in the premises, the Court now finds that a temporary restraining order should and hereby does ISSUE pursuant to 18 U.S.C. § 1345 and FEDERAL RULE OF CIVIL PROCEDURE 65(b), though not to the full extent requested by the United States.

Title 18, Section 1345 of the United States Code authorizes the Attorney General to commence a civil action seeking a restraining order against any person who "is alienating or disposing of property, or intends to alienate or dispose of property obtained as a result of . . . a Federal health care offense." The restraining order may "(i) prohibit any person from withdrawing, transferring, removing, dissipating, or disposing of any such property or property of equivalent value; and (ii) appoint a temporary receiver to administer such restraining order." Additionally, any such restraining order "shall be granted without bond." 18 U.S.C. § 1345(a)(3). 18 U.S.C. § 1345(b) provides that the Federal Rules of Civil Procedure govern proceedings under this statute.

FEDERAL RULE OF CIVIL PROCEDURE 65(b) authorizes the issuance of a temporary restraining order (TRO). The Seventh Circuit has emphasized that, although Rule 65(b) expressly contemplates the issuance of ex parte TROs, the circumstances under which an ex parte TRO should be granted are extremely limited.

The "stringent restrictions" imposed "on the availability of ex parte temporary restraining orders reflect the fact that our entire jurisprudence runs counter to the notion of court action taken before reasonable notice and an opportunity to be heard has been granted both sides of a dispute. Ex parte temporary restraining orders are no doubt necessary in certain circumstances, . . . but under federal law they should be restricted to serving their underlying purpose of preserving the status quo and preventing irreparable harm just so long as is necessary to hold a hearing, and no longer." Ex parte temporary restraining orders are most familiar to courts where notice to the adversary party is impossible either because the identity of the adverse party is unknown or because a known party cannot be located in time for a hearing.

American Can Co. v. Mansukhani, 742 F.2d 314, 321--22 (7th Cir. 1984) (quoting Granny Goose Foods, 415 U.S. 423, 438--39 (1974)).

District Courts within this Circuit hold that the standard for granting a TRO and the standard for granting a preliminary injunction are identical. See, e.g., Charter Nat'l Bank and Trust v. Charter One Financial, Inc., 2001 WL 527404 (N.D. Ill. May 15, 2001) (unreported).

However, the notice provisions governing TROs are unique. Rule 65(b)(1) permits a federal court to grant a TRO without notice to the adverse party only if:

(A) specific facts in an affidavit or a verified complaint clearly show that immediate and irreparable injury, loss, or damage will result to the movant before the adverse party can be heard in opposition; and

(B) the movant's attorney certifies in writing any efforts made to give notice and the reasons why it should not be required.

Additionally, under Rule 65(b), a temporary restraining order granted without notice may last no longer than ten days unless an extension, supported by a statement of reasons, is granted. Rothner v. City of Chicago, 879 F.2d 1402, 1419 (7th Cir. 1989). Rule 65(b) further provides that a TRO cannot remain in effect for more than 20 days total (the original ten plus one ten-day extension), without the consent of the parties. If it is extended further, it becomes a preliminary injunction, immediately appealable to the Circuit Court. See United States v. Board of Education of City of Chicago, 11 F.3d 668, 671-72 (7th Cir. 1993); see also FED.R.CIV.P. 65 (b)(2).*fn1

With respect to Rule 65(b)(1)(A)--(B), the movant's attorney has now provided the Court with a certified writing in the form of an affidavit explaining specific facts which show immediate and irreparable injury if the TRO is not granted ex parte (Doc. 5). Additionally, the affidavit provides reasons why the TRO should be issued without notice. Therein, Gerald Burke, Assistant United States Attorney, states that Defendant Hobbs is the principle of Mercy Regional Health Systems and has been recently indicted by a federal grand jury (See Case No. 08-30042-MJR). According to the United States, Hobbs is currently in federal custody and scheduled for an initial appearance in the United States District Court for the Northern District of Oklahoma. Consequently, he is unable to run the business and is unavailable to appear before the Court at this time. Additionally, Mercy Regional has a history of issuing paychecks to its employees that have been returned for insufficient funds. As such, it is not clear as to whether Mercy Regional will be able to continue its operations. Mercy Regional operates the largest ambulance service in the area in and around Benton, Illinois. Calls made to 911 in the Benton area are currently directed to Mercy Regional, but alternative arrangements have been made in the event that Mercy Regional's business assets are restrained. Therefore, the United States explains that it fears sporadic and unpredictable ambulance services if Mercy Regional's business assets are not restrained.

While these fears may be justified, the government provides no authority for the extraordinary request to shut down defendant's business nor does 18 U.S.C. § 1345 authorize it. The Court does not find these specific allegations of irreparable harm persuasive in support of Plaintiff's motion since, as stated later, it will decline the invitation to restrain the business assets and shut down its operation, which is a request made by Plaintiff at oral argument but not in its pleadings.

However, 18 U.S.C. § 1345(a)(2) specifically indicates the presence of irreparable harm in cases such as this, as the statute contemplates the issuance of a TRO where the defendant is "alienating or disposing of property, or intends to alienate or dispose of property, obtained as a result of . . . a Federal health care offense." Additionally, in this case, the irreparable harm is serious enough to warrant the issuance of a TRO prior to a hearing during which the movant can be heard, due to the harm federal health care offenses, which are alleged to be ongoing, may do the federal Medicare and Medicaid programs. Thus, the United States has made a sufficient showing of an immediate and irreparable injury, as required by Rule 65(b)(1)(A).

With respect to Rule 65(b)(1)(B), the Court similarly finds that Assistant United States Attorney Burke's certification provides a sufficient reason as to why notice should not be required. Hobbs is the principal of Mercy Regional and was taken into custody in Oklahoma yesterday. Therefore, his appearance cannot be made in this case. Further, it is not clear that Mercy Regional or Hobbs are currently represented by legal counsel. Consequently, time is a pressing factor in light of the irreparable harm present here, and the Defendants are unable to appear in time to hold ...

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