Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

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

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

April 16, 2018




         R&B Receivables Management Corp. (R&B), which operates under the name R&B Solutions, has sued the U.S. Department of Health and Human Services (HHS), alleging that it violated the Administrative Procedure Act (APA) in declining to award R&B a 2014-2015 health insurance marketplace Navigator grant after issuing a press release naming R&B as an awardee. R&B alleges that HHS's last-minute decision not to award it a 2014-2015 grant was improperly influenced by negative press coverage and that the decision was arbitrary and capricious, contrary to law, and in excess of the agency's statutory authority. Both parties have moved for summary judgment. For the reasons stated below, the Court denies R&B's motion for summary judgment and grants HHS's motion.


         All health insurance marketplaces (also known as exchanges) set up under the Affordable Care Act are required to establish a "Navigator program." 42 U.S.C. § 18031(d)(4)(K). Under this program, entities that have "existing relationships, or could readily establish relationships, with employers and employees, consumers (including uninsured and underinsured consumers), or self-employed individuals likely to be qualified to enroll in a qualified health plan" may apply for a grant to help people enroll in health plans offered on the exchanges and carry out a number of related outreach activities. Id. § 18031(i)(2)(A); Id. § 18031(i)(3). For federally-facilitated-as opposed to state-run-exchanges, HHS's Centers for Medicare and Medicaid Services (CMS) is tasked with awarding Navigator program grants.

         As explained in CMS's 2014 Funding Opportunity Announcement (FOA), eligible grant applications are reviewed by a panel and assigned a raw score out of 200 points according to an evaluation rubric designed to measure applicants' ability to address the requirements of the FOA. Applications are ranked by score and selected by HHS program officials based on the following factors:

the regulatory requirement that there be at least two types of Navigators in each Marketplace and that one of these Navigators be a community and consumer-focused nonprofit; populations the applicant expects to serve; ranking of the applicant based upon recommendations of the review panel; reviews for programmatic and grants management compliance, to include performance under a current Navigator award; pre-award business review; the reasonableness of the estimated cost to the government and anticipated results; and the likelihood the proposed cost will result in the benefits expected.

         Admin. R. 42. An applicant's performance under an award includes its compliance with the terms and conditions of the award. The pre-award business review involves a determination of "the adequacy of the applicant's financial and business management capabilities that will support the expenditure of and accountability for CMS funds." Id. at 19. The FOA further states that successful applicants will receive a Notice of Award signed and dated by the HHS Grants Management Officer; the Notice of Award "is the document authorizing the grant award"; and "[a]ny communication between HHS and applicants prior to issuance of the [Notice of Award] is not an authorization to begin performance of a project." Id. at 42.

         R&B is an Illinois corporation that was formed in 1994 to assist uninsured and underinsured individuals with the Medicaid enrollment process. R&B filed for Chapter 11 bankruptcy in 2012. In 2013, R&B applied for-and was awarded-a grant to operate as a Navigator in Wisconsin for the 2013-2014 award year. The grant application did not request information about bankruptcy, and R&B did not volunteer any information about its bankruptcy status. R&B contends that it disclosed its bankruptcy status to CMS after being awarded the 2013-2014 grant and that CMS "had no issue with it." Am. Compl. ¶ 24. An October 2013 article about Navigator program delays in Wisconsin reported that R&B had filed for bankruptcy and was in the process of reorganization. The article also quoted a CMS spokesperson, who said that R&B was "a grantee in good standing" that was working to get state certification to begin its operations as a Navigator. Am. Compl., Ex. 7, at 3.

         In 2014, R&B applied for a larger Navigator grant; in addition to continuing to serve as a Navigator in Wisconsin, R&B proposed to expand to Illinois, Iowa, Indiana, and North Carolina for the 2014-2015 grant period. Once again, the grant application did not request, and R&B did not provide, information about bankruptcy. R&B's 2014-2015 award application received a score of 176.67 out of 200. On September 8, 2014, before sending out the official Notices of Awards, HHS issued a press release announcing the award of $60 million in 2014-2015 Navigator grants. State-specific press releases issued the same day announced that R&B had been awarded 2014-2015 Navigator grants for Illinois, Indiana, Iowa, and North Carolina.

         CMS learned shortly thereafter that a reporter from The News & Observer, a Raleigh, North Carolina-based publication, was pursuing a story about CMS awarding R&B a 2014-2015 Navigator grant for North Carolina despite the fact that R&B was in bankruptcy proceedings. The article, which was published online on September 8 or 9, 2014, criticized CMS's decision to award a Navigator grant to R&B, which it noted was not only an out-of-state company, but also in the middle of a bankruptcy reorganization. Upon learning of the story, Julia Dreier-who was the director of the Navigator Program at CMS at the time-notified Michelle Feagins, the Deputy Director of the Division of Grants Management in CMS's Office of Acquisition and Grants Management. Dreier stated the following in her e-mail to Feagins:

There is evidently a pending news story about R&B Solutions being in the middle of a bankruptcy proceeding. One, I'd appreciate any feedback you might have in terms of responding to a potential story on this. Two, I wanted to make sure you were aware as you go into budget conversations with them. I'm not sure what sorts of protections federal grant funds may have if an organization files for bankruptcy or if we should consider pulling this grantee from the list (assuming this allegation is true).

         Admin. R. at 562. On September 11, 2014, Dreier e-mailed Feagins again to confirm that R&B had, in fact, filed for bankruptcy. Feagins responded, "[b]ased on our findings, R&B does not have the organizational and financial stability to receive an award. Please proceed with replacing [the] grantee with the next qualified applicant(s)." Id. at 582.

         On September 12, 2014, Dreier contacted R&B's president, Dennis Brebner, for additional information regarding R&B's bankruptcy before finalizing the 2014-2015 Navigator grant awards. Brebner provided CMS with a copy of a May 2014 bankruptcy court order confirming R&B's ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.