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Somerset Place, LLC v. Sebelius

February 5, 2010


The opinion of the court was delivered by: Robert M. Dow, Jr. United States District Judge

Judge Robert M. Dow, Jr. Emergency Judge for Judge Samuel Der-Yeghiayan Assigned Judge


Yesterday, February 4, 2010, Plaintiff Somerset Place, LLC ("Somerset"), filed this lawsuit. The complaint [1] names three defendants in their official capacities: Kathleen Sebelius (the "Secretary"), the Secretary of the United States Department of Health and Human Services; Charlene Frizzera ("Frizzera"), the Acting Administrator for the Centers for Medicare and Medicaid Services ("CMS"); and John Hammarlund ("Hammarlund"), the Regional Administrator for CMS. Because all of the defendants are sued in their official capacities and Somerset seeks to enjoin all of them from taking actions in their official capacities, the Court for the sake of simplicity will refer to the defendants simply as "the Secretary" in this Order.

This matter is before the Court in its capacity as Emergency Judge, sitting in the place of Judge Der-Yeghiayan, the assigned judge. Before the Court is Somerset's motion for a temporary restraining order [6], which Somerset filed contemporaneously with its complaint. Somerset currently is certified by the Centers for Medicaid and Medicare Services ("CMS"). Somerset's certification allows it toreceive Medicaid reimbursements and requires it to remain in "substantial compliance" with specified standards. According to Somerset, the Secretary is days away from terminating that certification, which will have immediate and irreparable consequences.

The termination, which would be the result of a conclusion by the Secretary that Somerset's patients are in "immediate jeopardy," is set to take place this Sunday, February 7. Somerset alleges that a termination would trigger the process of transferring patients from Somerset to other mental health facilities. The body of Somerset's complaint and motion for a temporary restraining remains largely silent on the deficiencies that led to the Secretary's decision. Somerset, however, has included with its complaint exhibits that speak to the question. Specifically, Somerset attached as exhibits correspondence from CMS indicating that residents of Somerset were under threat of abuse by both staff and residents [see 1-2], had inadequate security [see 1-4], and a were at risk of violence from other residents [see id.]. The federal survey of the facility indicates that the problems at Somerset were systemic. [See 1-5, at 7].

In addition to responding to Somerset's contentions regarding the appropriateness of a TRO, the Secretary this morning filed a motion to dismiss the action from this court for want of subject-matter jurisdiction [12]. For the reasons set forth below, Somerset's motion for a temporary restraining order [6] is denied. The Secretary's motion to dismiss for lack of subject matter jurisdiction [12] is taken under advisement. The Court either will set an in initial briefing schedule on that motion by separate minute order after consultation with the assigned judge or will defer briefing on the issue until the parties may appear before the assigned judge.

I. The Statutory Scheme

Medicaid services are part of a complex statutory scheme. See 42 U.S.C. § 1396, et seq. (the "Act"). A discrete part of that scheme forms the backbone of the Department's actions against Somerset. Under the Act, a "nursing facility must provide services and activities to attain or maintain the highest practicable physical, mental, and psychosocial well-being of each resident in accordance with a written plan of care." 42 U.S.C. § 1396r(b)(2). At oral argument, counsel agreed that Somerset is a "nursing facility" as defined in the Act. Section 1396r provides considerable guidance on how to meet the statutory standards while protecting numerous "residents' rights," including, for example, the "right to voice grievances with respect to treatment or care that is (or fails to be) furnished, without discrimination or reprisal for voicing the grievance." Id. § 1396r(C)(1)(A)(vi). Upon voicing grievances, patients have the "right to prompt efforts by the facility to resolve grievances the resident may have, including those with respect to the behavior of other residents." Id.

Section 1396r also includes enforcement provisions. Notably, "[i]f [the Secretary] finds, on the basis of" surveys conducted in accordance with the act, "that a nursing facility no longer meets [specified statutory requirements], and further finds that the facility's deficiencies immediately jeopardize the health and safety of its residents, the [Secretary] shall take immediate action to remove the jeopardy * * *." 42 U.S.C. §§ 1396r(h)(1) (state authority and duties), 1396(h)(3) (according the Secretary the same authority and duties as States). The Secretary may do this through a variety of overlapping remedies, including terminating the facility's participation in Medicaid, appointing temporary management to run the facility, and imposing monetary fines. Id. §§ 1396r(h)(1),(3). The statute gives the Secretary authority to issue regulations that implement her authority. Id. § 1396r(h)(3).

Several agency regulations speak to immediate jeopardy and the amount (and timing) of process that is available to a nursing facility when the Secretary is contemplating decertification of a nursing facility. The regulatory trigger for action upon a finding of immediate jeopardy is found at 42 C.F.R. § 488.410. In pertinent part, the provision provides: "If there is immediate jeopardy to resident health or safety, the State must (and CMS does) either terminate the provider agreement within 23 calendar days of the last date of the survey or appoint a temporary manager to remove the immediate jeopardy." The regulations allow the Secretary to develop a plan to address problems at facilities. See, e.g., id. § 488.424. The regulations direct the Secretary to consider numerous factors before it selects a remedy. Id. § 488.404.

Finally, at least for present purposes, the Act sets out appeal rights for nursing facilities. Here, too, the regime is complex and requires some description. First for purposes of Part 498 of the Code of Federal Regulations, a nursing facility is considered a "provider." 42 C.F.R. § 498.4 ("NFs subject to appeals process in part 498."). The regulations provide that the appeals procedures relate to "initial determinations" made by CMS regarding providers with respect to certain matters. Id. § 498.3(a). Among those initial determinations is CMS's decision to terminate a nursing facility's provider agreement with Medicaid. Id. § 498.3(a)(2)(i). When it comes to appeals by nursing facilities, the regulations provide that "[u]nder the circumstances specified in § 431.153(g) and (h) of this chapter, an NF has a right to a hearing before an ALJ, to request Board review of the hearing decision, and to seek judicial review of the Board's determination." Id. § 498.5(k). Section 431.153(g) does not appear to be implicated in this case. Section 431.153(h) states that if CMS determines that a nursing facility is not in substantial compliance with its statutory and regulatory requirements, then the nursing facility is entitled only "to the appeals procedures set forth in part 498." Thus, neither the statute which directs the Secretary to act immediately (42 U.S.C. § 1396r(h)(1)) nor its implementing regulations require a pre-termination hearing.

II. Legal Standard on Temporary Restraining Orders

Like all forms of injunctive relief, a temporary restraining order is "an extraordinary remedy that should not be granted unless the movant, by a clear showing, carries the burden of persuasion." Mazurek v. Armstrong, 520 U.S. 968, 972 (1997) (emphasis in original). A party seeking a temporary restraining order must demonstrate as a threshold matter that (1) its case has some likelihood of succeeding on the merits; (2) no adequate remedy at law exists; and (3) it will suffer irreparable harm if preliminary relief is denied. Abbott Labs. v. Mead Johnson & Co., 971 F.2d 6, 11 (7th Cir. 1992). If the moving party meets this burden, then the court must consider the irreparable harm that the nonmoving party will suffer if preliminary relief is granted, balancing such harm against the irreparable harm the moving party will suffer if relief is denied. Storck USA, L.P. v. Farley Candy Co., 14 F.3d 311, 314 (7th Cir. 1994). Finally, the court considers the public interest served by granting or denying the relief, including the effects of the relief on non-parties. Id.; see also Credit Suisse First Boston, LLC v. Vender, 2004 WL 2806191, at *1 (N.D. Ill. Dec. 3, 2004). The court then weighs all of these factors, ...

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