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R&B Receivables Management, Corp. v. United States Department of Health and Human Services

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

July 18, 2017

R&B RECEIVABLES MANAGEMENT, CORP., d/b/a R&B SOLUTIONS, Plaintiff,
v.
UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, GIAN JOHNSON, Acting Director of The Assister Programs Division of the Consumer Support Group, JULIA DREIER, as an individual, and JOHN DOES 1-5, Defendants.

          MEMORANDUM OPINION AND ORDER

          MATTHEW F. KENNELLY United States District Judge

         R&B Receivables Management Corp. (R&B) alleges that former Department of Health and Human Services (HHS) employee Julia Dreier wrongfully denied R&B grant funds as part of the Navigator Program under the Affordable Care Act (ACA). R&B sued HHS and Dreier. HHS moved to dismiss R&B's claims on multiple grounds.[1] The Court granted the motion in part but declined to dismiss R&B's claims against Julia Dreier in her individual capacity. R&B Receivables Mgmt. Corp. v. U.S. Dep't of Health and Human Servs., No. 15 C 8109, 2016 WL 5341811 (N.D. Ill. Sept. 23, 2016).

         Dreier has now moved to dismiss R&B's claims against her under Fed R. Civ. P. 12(b)(2) and Fed R. Civ. P. 12(b)(6), arguing that this Court lacks personal jurisdiction over her and that R&B has failed to state a claim. The Court dismisses the claims against Dreier because it lacks personal jurisdiction over her.

         Background

         The Court takes the facts from R&B's complaint, Dreier's reply, and an affidavit by Dreier. On a motion to dismiss for lack of personal jurisdiction, the Court takes the allegations and factual disputes in the light most favorable to plaintiff. Sprint Spectrum L.P. v. City of Carmel, 361 F.3d 998, 1001 (7th Cir. 2004)

         R&B applied for a healthcare navigator grant as part of a program offered under the ACA through the HHS Center for Medicare and Medicaid Services (CMS). R&B received a grant for the years 2013-2014 to operate as a navigator in Wisconsin. The navigator program in Wisconsin requires businesses to disclose whether they have declared bankruptcy. R&B filed for Chapter 11 bankruptcy reorganization in 2012, due to changes in the law that negatively affected its business in student loans. R&B states that it disclosed its bankruptcy status to the necessary parties in Wisconsin and also notified HHS/CMS. R&B contends that CMS responded that it had no issue with R&B's bankruptcy status as long as it could still be licensed as a navigator in Wisconsin.

         R&B states that it successfully fulfilled its role as a navigator in Wisconsin. It applied for another grant for the years 2014-2015. R&B states that it was still in Chapter 11 bankruptcy reorganization at the time it applied but that the ACA navigator grant application did not ask any questions related to bankruptcy. CMS awarded R&B grants to conduct navigator duties in four states: Illinois, Iowa, Indiana, and North Carolina.

         R&B contends that an article published in North Carolina reported that R&B's bankruptcy was pending and criticized CMS for awarding R&B a grant instead of a prior grant recipient based in North Carolina. After this article was published, CMS and Dreier contacted R&B to ask about its bankruptcy status. R&B states that it supplied Dreier with documents for its court-approved bankruptcy reorganization and proof that it was no longer under court supervision after successfully completing the reorganization. R&B contends that Dreier responded with a letter stating that R&B violated conditions of its grant award when it failed to report its bankruptcy status. R&B responded to Dreier's letter, advising that she was mistaken about the timing of the bankruptcy and that the company had already successfully completed the reorganization by the time it applied for a grant. R&B contends that Dreier responded that any further correspondence should be sent to a general email address. This was her last communication with R&B.

         Dreier currently resides in Minnesota and no longer works for the federal government. At the time of R&B's grant revocation, she lived in Washington, D.C. and was working in CMS's Maryland office. Dreier states that she never visited Illinois in connection with work. As the director for the navigator grant program, she oversaw 104 entities in 34 states.

         R&B alleges that by improperly revoking its navigator grant Dreier violated R&B's constitutional right to due process. It has sued suing her in her individual capacity under Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S.

         388 (1971). Dreier argues that this Court lacks personal jurisdiction over her and in the alternative that R&B has failed to state a claim upon which relief can be granted.

         Discussion

         When considering a motion to dismiss under Fed. R. Civ. P 12(b)(2), the plaintiff has the burden to show that personal jurisdiction over the defendant is proper. Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir. 2010). When the Court rules on a motion to dismiss for lack of personal jurisdiction based on written materials, the plaintiff needs only to make out a prima facie case. N. Grain Mktg., LLC v. Greving, 743 F.3d 487, 491 (7th Cir. 2014). Factual disputes are resolved in the plaintiff's favor. Id. (citing Purdue Res. Found v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003)).

         A district court may exercise jurisdiction over a defendant as long as she is subject to jurisdiction in the state in which the district court is located. Fed.R.Civ.P. 4(k)(1)(A). A court in Illinois may exercise personal jurisdiction over a defendant on any basis allowed under the Illinois Constitution and the Constitution of the United States. N. Grain Mktg., LLC, 743 F.3d at 492 (citing 735 Ill. Comp. Stat. 5/2-209(c)). Illinois' long arm statute extends to the constitutional limits; therefore, the due process clause of the Fourteenth Amendment ...


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