United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
I. SHADUR, SENIOR UNITED STATES DISTRICT JUDGE
operators of long-term care facilities ("nursing
homes" in every-day parlance) in Illinois (collectively
"Operators") brought this action against Felicia F.
Norwood ("Norwood") in her capacity as Director of
the Illinois Department of Healthcare and Family Services
("Department"), seeking injunctive and declaratory
relief pursuant to 42 U.S.C. § 1983 ("Section
1983"). Operators contend that Norwood and Department
failed to comply with various state and federal statutes,
including 42 U.S.C. § 1396a(a)(13)(A),  applicable to
those nursing homes when Operators acquired their ownership.
responded to Operators' Complaint with a Fed.R.Civ.P.
("Rule") 12(b)(6) motion to dismiss, which has now
been fully briefed. For the reasons stated in this opinion,
this Court denies Norwood's motion (Dkt. No. 16).
Rule 12(b)(6) a party may move for dismissal for the
"failure to state a claim upon which relief can be
granted." Familiar Rule 12(b)(6) principles require the
District Court to accept as true all of Operators'
well-pleaded factual allegations and to view those
allegations in the light most reasonably favorable to them as
the nonmovants (Lavalais v. Vill. of Melrose Park,
734 F.3d 629, 632 (7th Cir. 2013)). But "legal
conclusions or conclusory allegations that merely recite a
claim's elements" are not entitled to any
presumption of truth (Munson v. Gaetz, 673 F.3d 630,
632 (7th Cir. 2012)).
past decade the Supreme Court made an important change in the
evaluation of Rule 12(b)(6) motions with what this Court
regularly refers to as the "Twombly-Iqbal
canon, " a usage drawn from Bell Atl. Corp. v.
Twombly, 550 U.S. 544 (2007) as more finely tuned in
Erickson v. Pardus, 551 U.S. 89 (2007) (per curiam)
and Ashcroft v. Iqbal, 556 U.S. 662 (2009). That
canon has introduced the concept of "plausibility"
into the analysis, and in that respect our Court of Appeals
has "interpreted Twombly and Iqbal to
require the plaintiff to provide some specific facts to
support the legal claims asserted in the complaint"
(McCauley v. City of Chicago, 671 F.3d 611, 616 (7th
Cir. 2011) (internal quotation marks and brackets omitted)).
As McCauley, id. (internal quotation marks
again omitted) went on to reconfirm, claimants "must
give enough details about the subject-matter of the case to
present a story that holds together."
the focus of Rule 12(b)(6) motions is on the pleadings, they
"can be based only on the complaint itself, 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" (Geinosky v. City
of Chicago, 675 F.3d 743, 745 n.1 (7th Cir. 2012)). But
a nonmovant has more flexibility, for it "may elaborate
on [its] factual allegations so long as the new elaborations
are consistent with the pleadings" (id.). This
opinion evaluates Norwood's motion in accordance with
27, 2012 each of the Operators took ownership of a separate
nursing home immediately following the purchase of those
nursing homes by ten real estate companies (Complaint
¶¶ 28-37, 44-53). Each sale involved a complete
turnover of control at a market value price (Complaint ¶
42). On acquiring the nursing homes Operators obtained new
operating licenses from the Illinois State Board of Health,
with new Medicare numbers and providers (Complaint
¶¶ 59-62). Operators filed reports with the
Department from July 1 through December 31, 2012 (Complaint
the guidance of Illinois statutes, the Department distributes
facility-specific per diem reimbursements for
Medicaid-related costs (Complaint ¶¶ 69-93).
Operators allege that despite their complete change in
ownership, the Department and Norwood have refused to
re-examine the per diem, reimbursing Operators at the prior
rates that were set in 2004 (Complaint ¶ 98). Operators
aver that the Department never provided a "public
process" where it explained why it kept the rates the
same despite that change in ownership (Complaint ¶ 100).
are asking for declaratory and injunctive relief under
Section 1983 for violations of Section 1396a(a)(13)(A), the
federal law that dictates the need for a public process
involving opportunities to review and comment on the
determination of rates of Medicaid payments (Complaint
¶¶ 105-06). What follows in the text treats in the
first instance with the availability of Section 1983 to
address that claim for relief, then follows with a brief
treatment of Norwood's other unpersuasive contentions.
To Invoke Section 1983
main argument is that Section 1396a(a)(13)(A) does not
violate any federal rights of Operators, who therefore cannot
bring a case under Section 1983. Analysis of that contention
properly begins with a look at some history of the
relationship between Sections 1396a(a) and 1983.
1983 is in place to protect individuals from the deprivation
of any legal or constitutional rights "under color of
law" -- that is, by governmental action. As for Section
1396a(a), it was significantly expanded in 1973, and then in
1980 Congress passed the Boren Amendment, which requires a
reasonably calculated reimbursement to Medicaid providers.
Those two statutes were linked in 1990 when Wilder v.
Virginia Hosp. Ass'n, 496 U.S. 498 (1990) held that