Blossom South, LLC v. Sebelius

987 F. Supp. 2d 289, 2013 WL 6622906, 2013 U.S. Dist. LEXIS 176996
CourtDistrict Court, W.D. New York
DecidedDecember 17, 2013
DocketNo. 13-CV-6452L
StatusPublished
Cited by2 cases

This text of 987 F. Supp. 2d 289 (Blossom South, LLC v. Sebelius) is published on Counsel Stack Legal Research, covering District Court, W.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Blossom South, LLC v. Sebelius, 987 F. Supp. 2d 289, 2013 WL 6622906, 2013 U.S. Dist. LEXIS 176996 (W.D.N.Y. 2013).

Opinion

DECISION AND ORDER

DAVID G. LARIMER, District Judge.

Plaintiff Blossom South, LLC (“Blossom South”) commenced this action against Kathleen Sebelius, as Secretary of the United States Department of Health and Human Services (“Secretary”), Marilyn Tavenner, as Administrator of the Centers for Medicare & Medicaid Services (“CMS”), and Nirav Shah, M.D., as Commissioner of Health of the State of New York. Plaintiff asserts claims under the Social Security Act, 42 U.S.C. § 301 et seq., the Medicare Act, 42 U.S.C. § 1395 et seq., and other statutes, seeking to enjoin defendants from terminating Blossom South’s Medicare and Medicaid provider agreement without a pretermination hearing and other administrative review procedures.

On August 13, 2013, this Court issued a Decision and Order, 2013 WL 4679275, familiarity with which is assumed, granting plaintiffs motion for a preliminary injunction and enjoining defendants from terminating plaintiffs provider agreement or taking steps toward that end, pending further order of this Court. On November 4, 2013, the Court heard oral argument on defendants’ motions to dismiss the complaint (Dkt. #23, #24). The following constitutes the Court’s decision on those motions.1

INTRODUCTION

According to the complaint, the factual allegations of which are accepted as true, Blossom South is a limited liability company that operates a skilled nursing facility on Monroe Avenue in Rochester, New York. Blossom South participates in Medicare, which is a federally funded and administered health insurance program for the eligible elderly and disabled established by title XVIII of the Social Security Act. Under Medicare Part A, qualified providers of health services can receive reimbursement from the government for their provision of health services to Medicare-qualified patients. See Palomar Medical Center v. Sebelius, 693 F.3d 1151, 1155 (9th Cir.2012).2

[293]*293To qualify for payments under the program, a facility must meet certain requirements under federal law. See Golden Living Center-Frankfort v. Secretary Of Health And Human Services, 656 F.3d 421, 424 (6th Cir.2011). Compliance with those requirements is typically assessed by state agencies acting under contract with the federal government. Id. at 425.

Instances of noncompliance, or “deficiencies,” are ranked according to their severity, ranging from “[n]o actual harm with a potential for minimum harm,” to “immediate jeopardy to resident health or safety.” 42 C.F.R. § 488.404(b). Deficiencies are given letter ratings, which increase in severity from A through L.

Depending on the severity of the deficiencies, the Secretary may impose various penalties and remedies. 42 C.F.R. § 488.408. If the deficiencies are severe enough, the facility may be terminated from the Medicare program. See Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1, 6-7, 120 S.Ct. 1084, 146 L.Ed.2d 1 (2000); Fox Ins. Co., Inc. v. C.M.S., 715 F.3d 1211, 1214-15 (9th Cir.2013); Ridgeview Manor of Midlands, L.P. v. Leavitt, No. 07 CV 861, 2007 WL 1068224, at *2 (D.S.C. Mar. 30, 2007).

The New York State Department of Health (“DOH”) is the state agency responsible for surveying skilled nursing facilities in New York that participate in Medicare. In March 2011, DOH designated Blossom South as a “special focus facility” (“SFF”), indicating that Blossom South had a track record of substandard quality of care. SFFs are subject to closer scrutiny than non-SFFs, and in particular, more frequent surveys. See THI of Kansas at Highland Park, LLC v. Sebelius, No. 13-2360, 2013 WL 4047570, at *3 (D.Kan. Aug. 9, 2013). If problems persist at'the facility and are not corrected, the facility’s participation in the Medicare and Medicaid programs may be terminated. Id. If the problems are sufficiently addressed and abated, the facility may “graduate” from the program, i.e., its SFF designation will be removed.

DOH’s May 31, 2011 letter to Blossom South stated that its placement on SFF status was based on the prior three years of survey results. Dkt. # 24-4 at 27. Apparently this included some seventy-one citations between December 2009 and March 2011. Def. Ex. 6. Four of those citations included “immediate jeopardy” findings involving actual harm to residents. Id.3

DOH also stated- that as a result of the SFF designation, DOH would conduct two standard surveys at Blossom South each year, as well as periodic onsite monitoring visits. The letter advised Blossom South that it would be “expected to achieve significant improvement in compliance with federal and state regulations during the next 24 months,” and that “[ajfter 24 months and four standard surveys following designation, failure to achieve significant progress will result in notice of termi[294]*294nation from the Medicare and Medicaid Programs.” M4

Over the ensuing twenty-seven months, Blossom South received eighty-six citations.5 Def. Ex. 6. Plaintiff contends that a close examination of the record shows a pronounced trend toward significant improvement, with a particular drop in the number of more serious deficiencies. Nevertheless, on August 14, 2013, DOH issued a statement identifying eighteen deficiencies, of various levels of severity, and advising plaintiff that DOH was recommending to CMS that Blossom South’s Medicare provider agreement be terminated. CMS issued a notice of termination on August 15, 2013, stating that Blossom South’s provider agreement would be terminated on September 14, 2013, and directing Blossom South to submit a closure plan within seven days.6

On August 20, Blossom South requested an expedited hearing before an administrative law judge (“ALJ”) of the Department of Health and Human Services Departmental Appeals Board. According to plaintiff, such a hearing would generally not take place before Blossom South’s Medicare provider agreement was terminated.

Blossom South received a letter from CMS on August 27, stating that Blossom South would not be given an opportunity to correct the deficiencies identified in DOH’s August 8 survey, that Blossom South would not be allowed to pursue informal dispute resolution, and that Blossom South’s provider agreement would be terminated on September 15.

Blossom South commenced this action the same day that it received that letter, August 27, 2013. Plaintiff alleges that 98% of its gross revenue comes from participation in the Medicare and Medicaid programs, and that absent court intervention, it will be effectively shut down before its administrative appeal is heard.

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Bluebook (online)
987 F. Supp. 2d 289, 2013 WL 6622906, 2013 U.S. Dist. LEXIS 176996, Counsel Stack Legal Research, https://law.counselstack.com/opinion/blossom-south-llc-v-sebelius-nywd-2013.