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Columbus Park Nursing & Rehab. Ctr. v. Sebelius

United States District Court, N.D. Illinois, Eastern Division

April 12, 2013

KATHLEEN SEBELIUS in her official capacity as Secretary of the United States Department of Health and Human Services, Defendant

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For Columbus Park Nursing and Rehabilitation Center, Plaintiff: Mark J. Silberman, Howard M. Hoffmann, Duane Morris LLP, Chicago, IL.

For Kathleen Sebelius, in her official capacity as Secretary of the United States Department of Health and Human Services, Defendant: AUSA, Katherine Ellen Beaumont, United States Attorney's Office (NDIL), Chicago, IL.


Gary Feinerman, United States District Judge.

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Memorandum Opinion and Order

Columbus Park Nursing and Rehabilitation Center, which participates as a healthcare provider in the Medicare and Medicaid programs, filed this suit against the Secretary of the Department of Health and Human Services ("HHS") in her official

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capacity. Doc. 1. The suit alleges that the Secretary violated Columbus Park's Fifth Amendment due process rights by affording it insufficient process to challenge a determination that it was not in " substantial compliance" with the requirements of the Medicare and Medicaid programs. The Secretary filed a motion to dismiss the case for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) or, in the alternative, for summary judgment under Rule 56. Doc. 18. The court directed the parties to brief only the threshold jurisdictional issue, Doc. 22, and they did so, Docs. 23, 24. After reviewing the jurisdictional briefs, the court stated that it was " inclined to believe that jurisdiction lies over" this suit, Doc. 25, and so it allowed the parties to engage in discovery and ordered them to brief the summary judgment component of the Secretary's motion, Docs. 25-27, and they did so, Docs. 28, 32. While the Secretary's motion was pending, Columbus Park filed its own cross-motion for summary judgment. Doc. 62. Upon further consideration, the court has concluded that it lacks subject matter jurisdiction over this suit. Accordingly, the Secretary's motion to dismiss for lack of jurisdiction is granted and the parties' cross-motions for summary judgment are denied as moot.


In urging dismissal for lack of jurisdiction, the Secretary does not dispute the complaint's factual allegations or seek to introduce her own evidence. Accordingly, in considering the motion to dismiss, the court will assume the truth of the complaint's factual allegations, though not its legal conclusions. See Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 444 (7th Cir. 2009) (" In the context of facial challenges [to the court's subject matter jurisdiction], ... the court does not look beyond the allegations in the complaint, which are taken as true for purposes of the motion." ). The court may also consider " documents attached to the complaint, documents that are critical to the complaint and referred to in it, and information that is subject to proper judicial notice," along with additional facts set forth in Columbus Park's brief opposing dismissal, so long as those facts are " consistent with the pleadings." Geinosky v. City of Chicago, 675 F.3d 743, 745 n.1 (7th Cir. 2012). The following facts are set forth as favorably to Columbus Park as the complaint and the other materials to be considered on a Rule 12(b)(1) motion allow.

Columbus Park is a skilled nursing facility located in Chicago. Doc. 1 at ¶ 18. At all relevant times, it held a license from the Illinois Department of Public Health (" IDPH" ) to provide skilled nursing care and has been certified to participate in the Medicare and Medicaid programs. Ibid. HHS is charged with overseeing the federal Medicare and Medicaid programs, and has delegated that responsibility to an HHS division called the Centers for Medicare and Medicaid Services (" CMS" ). Id. at ¶ 19. CMS has in turn contracted with IDPH to act as its agent and survey Illinois long-term care facilities to ensure that they comply with federal requirements for participation in Medicare and Medicaid. Ibid.

Acting pursuant to that duty, IDPH conducted a survey of Columbus Park on July 20, 2009. Id. at ¶ ¶ 2, 28. Finding that Columbus Park was not in " substantial compliance" with Medicare and Medicaid requirements, IDPH cited Columbus Park for a " G" level deficiency, indicating that it had uncovered an isolated incident of actual harm to a resident that did not create immediate jeopardy. Id. at ¶ ¶ 28-29. IDPH informed Columbus Park that it was proposing--but not yet actually implementing--remedies for the deficiency: directed in-service training for Columbus Park staff, and a $200 daily fine until the

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deficiency was remedied. Id. at ¶ 30. Columbus Park denied and continues to deny IDPH's finding, which it attributes to a deficient investigation on IDPH's part. Id. at ¶ ¶ 31-32.

On August 3, Columbus Park requested informal dispute resolution ("IDR" ) through the Michigan Peer Review Organization (" MPRO" ). Id. at ¶ 6. The IDR process " is not an evidentiary hearing; it is an informal exchange of information between the facility and the Department or designated outside entity to determine whether or not a deficiency existed at the time of the survey." Id. at ¶ 7; see Doc. 1-3 (Notice of Availability of Informal Dispute Resolution). MPRO declined to recommend that the deficiency finding be modified. Doc. 1 at ¶ 6.

Columbus Park at some point submitted a " Plan of Correction" as required by 42 C.F.R. § 488.408(f), which provides that " each facility that has a deficiency with regard to a requirement for long term care facilities must submit a plan of correction for approval by CMS or the State, regardless of--(i) which remedies are imposed; or (ii) the seriousness of the deficiencies." Doc. 23 at 3. On September 21, Columbus Park requested a hearing with CMS to challenge the deficiency finding. Doc. 1 at ¶ 8. The case was assigned to an administrative law judge (" ALJ" ). Id. at ¶ 9. On October 5, CMS notified Columbus Park that a subsequent survey of the facility conducted in early August had found it to be in substantial compliance and that the proposed remedies would therefore not be implemented. Id. at ¶ 10.

Although CMS did not seek to fine Columbus Park or to suspend it from participating in Medicare or Medicaid, the July 2009 adverse finding was not nullified. Id. at ¶ 11. In other words, although CMS declined to impose any " enforcement remedies" on Columbus Park, the " G" level deficiency finding continued to exist and to affect Columbus Park. Id. at ¶ 33. The deficiency finding became part of a public record and was posted to an online database maintained by the federal government to allow the public to compare Medicare certified facilities. Id. at ¶ ¶ 34-35. The website does not reflect Columbus Park's position that the deficiency finding was groundless from the start. Id. at ¶ 36. The deficiency finding makes Columbus Park less attractive to current and potential patients and their families than it otherwise would be, and the resultant reduction in demand has had a negative financial effect on Columbus Park. Id. at ¶ ¶ 37-38. Also as a result of the deficiency finding, the Medicare " rating" for Columbus Park is only one star out of a possible five, which has a further detrimental effect on Columbus Park's ability to attract patients. Id. at ¶ ¶ 40-42.

Moreover, CMS policy provides that " [f]acilities having deficiencies of actual harm (level 'G' or above) on the current survey as well as having deficiencies of actual harm or above on the previous standard survey" shall have no opportunity to correct alleged violations if another deficiency finding is made. Id. at ¶ 47. Accordingly, although absent the July 2009 deficiency finding Columbus Park would have been afforded the opportunity to correct any newly alleged deficiency before any enforcement remedies would be imposed, the July 2009 finding meant that Columbus Park would not receive that opportunity with respect to future deficiency findings--even though CMS had ultimately declined to impose any formal enforcement remedies on Columbus Park for the July 2009 deficiency. Id. at ¶ ¶ 45, 48-49. ...

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