Concord Hospital, Inc. v. P NH Department of Health and Human Services, et al

2025 DNH 035

• Court: District Court, D. New Hampshire
• Decided: March 12, 2025
• Docket: 23-cv-486-LM
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Concord Hospital, Inc.

v. Civil No. 23-cv-486-LM Opinion No. 2025 DNH 035 P NH Department of Health and Human Services, et al

ORDER

Plaintiff Concord Hospital, Inc. (“Concord Hospital”) brings this action for

declaratory and injunctive relief against the Secretary for the United States

Department of Health and Human Services, the Administrator for the Centers for

Medicare & Medicaid Services, and the Centers for Medicare & Medicaid Services

(collectively, “the Federal Defendants”), as well as the Commissioner of the New

Hampshire Department of Health and Human Services (“the Commissioner”).

Concord Hospital asserts one claim (Count V) against the Federal Defendants,

contending that they violated the Administrative Procedures Act (“APA”) by

improperly approving New Hampshire’s Medicaid state plan for fiscal years 2011

through 2017.1

1 The complaint originally contained a total of 5 counts: Counts I-IV against

the Commissioner and Count V against the Federal Defendants. The court has issued a previous order in this case. Concord Hospital, Inc. v. N.H. Dep’t of Health and Hum. Servs., 743 F. Supp. 3d 325 (D.N.H. 2024). In its previous order, the court granted the Commissioner’s motion to dismiss Counts I and III but denied it as to Counts II and IV. Id. In that same order, the court granted Concord Hospital’s motion for a preliminary injunction. Id. at 365. Presently before the court is the Federal Defendants’ motion to dismiss. Doc.

no. 44. The Federal Defendants move to dismiss for lack of standing under FED. R.

CIV. P. 12(b)(1). Alternatively, the Federal Defendants ask for dismissal pursuant

to FED. R. CIV. P. 12(b)(6) on grounds that Concord Hospital’s claim is time-barred

and fails to state a legal claim for relief. For the following reasons, the Federal

Defendants’ motion to dismiss (doc. no. 44) is granted.

BACKGROUND2

The facts of the case are thoroughly summarized in this court’s order of

August 5, 2024. Concord Hospital, 743 F. Supp. at 336-41. The court summarizes

here only the facts relevant to the present motion to dismiss.

This suit arises from the Commissioner’s attempt to recoup $8 million in

“disproportionate share hospital” (“DSH”) payments made to Concord Hospital from

2011 through 2017. Concord Hospital subsequently filed this lawsuit against the

Commissioner (Counts I-IV) and the Federal Defendants (Count V).

Count V alleges that the Federal Defendants violated the APA, 5 U.S.C. §

706(2)(A), because they approved New Hampshire’s Medicaid plan in effect from

2011 through 2017 despite the fact that they did not meet the requirements of the

Medicaid Act found in 42 U.S.C. §§ 1396a(a)(13)(A) [hereinafter “Section (13)(A)”]

and 1396r-4(a)(2)(D) [hereinafter “Section (2)(D)”]. The Federal Defendants now

move to dismiss Count V.

2 The background facts are taken from Concord Hospital’s complaint. They are

not in dispute.

2 DISCUSSION

I. Concord Hospital Plausibly Alleges Standing

Because the Federal Defendants assert that Concord Hospital lacks Article

III standing, the court must address standing before reaching the merits. E.g., Steel

Co. v. Citizens for a Better Env’t, 523 U.S. 83, 93-94 (1998). Where a defendant’s

12(b)(1) motion, as here, challenges the sufficiency (rather than the accuracy) of the

complaint's jurisdictional facts, the standard of review is the same as the Rule

12(b)(6) standard. Concord Hospital, Inc., 743 F. Supp. 3d at 335.

Under the familiar Rule 12(b)(6) standard, the court must accept the factual

allegations in the complaint as true, construe reasonable inferences in the plaintiff’s

favor, and “determine whether the factual allegations in the plaintiff’s complaint set

forth a plausible claim upon which relief may be granted.” Foley v. Wells Fargo

Bank, N.A., 772 F.3d 63, 68, 71 (1st Cir. 2014) (quotation omitted). A claim is

facially plausible “when the plaintiff pleads factual content that allows the court to

draw the reasonable inference that the defendant is liable for the misconduct

alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Analyzing plausibility is “a

context-specific task” in which the court relies on its “judicial experience and

common sense.” Id. at 679.

Although the First Circuit holds that the Rule 12(b)(6) plausibility standard

ordinarily “does not apply to a complaint for judicial review of final agency action,”

3 Atieh v. Riordan, 727 F.3d 73, 76 (1st Cir. 2013),3 the Circuit recognizes an

exception where the government alleges that the plaintiff’s claim is legally flawed,

id. at 76 n. 4. The Federal Defendants here argue that Count V is legally flawed. As

such, the court applies the 12(b)(6) standard to decide the standing question.

Article III of the Constitution limits the jurisdiction of federal courts to

“Cases” and “Controversies.” U.S. Const. art III § 2. “The doctrine of standing

emanates from the case-or-controversy requirement; it ‘developed . . . to ensure that

federal courts do not exceed their authority as it has been traditionally

understood.’” Freeman v. City of Keene, 561 F. Supp. 3d 22, 30 (D.N.H. 2021)

(quoting Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016)) (alteration in Freeman).

To establish Article III standing, “a plaintiff must show (1) it has suffered an ‘injury

in fact’ that is (a) concrete and particularized and (b) actual or imminent, not

conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action

of the defendant; and (3) it is likely, as opposed to merely speculative, that the

injury will be redressed by a favorable decision.” Friends of the Earth, Inc. v.

Laidlaw Env’t Servs. (TOC), Inc., 528 U.S. 167, 180-81 (2000).

In cases where a plaintiff’s asserted injury arises from allegedly unlawful

government regulation, causation and redressability are normally established by

the regulated third-party’s response to the government action. Lujan v. Defs. of

Wildlife, 504 U.S. 555, 561-62 (1992). The plaintiff bears the burden of showing that

3 This is in contrast with courts elsewhere. In the D.C. Circuit for example,

courts “regularly review motions to dismiss APA actions under the plausibility standard.” Asante v. Azar, 436 F. Supp. 3d 215, 222 n. 2 (D.D.C. 2020).

4 the regulated party’s decisions have been or will be made “in such manner as to

produce causation and permit redressability of injury.” Id. at 562. Standing may be

established in such cases “where the record presents substantial evidence of a

causal relationship between the government policy and the third-party conduct,

leaving little doubt as to causation and likelihood of redress.” Const. Party of Penn.

v. Aichele, 757 F.3d 347, 366 (3d Cir. 2014) (citation and alteration omitted).

Importantly, “standing in no way depends on the merits of the plaintiff's

contention that particular conduct is illegal.” Hochendoner v. Genzyme Corp., 823

F.3d 724, 734 (1st Cir. 2016) (quoting Warth v. Seldin, 422 U.S. 490, 500 (1975)).

“For standing purposes, we accept as valid the merits of [plaintiff's] legal

claims . . . .” Fed. Election Comm'n v. Cruz, 596 U.S. 289, 298 (2022). The “only

question is, putting the merits aside, whether [plaintiff] plausibly alleges [he] was

injured under [his] theory of the underlying legal claim.” Laufer v. Acheson Hotels,

LLC, 50 F.4th 259, 267 (1st Cir. 2022), vacated and remanded on other grounds, 601

U.S. 1 (2023).

The Federal Defendants argue that Concord Hospital lacks standing because

(1) any alleged injury-in-fact is not fairly traceable to CMS’s approval of New

Hampshire’s state Medicaid plan, and (2) it is unlikely that the court could remedy

the harm. Both arguments fail.

First, with respect to traceability, the Federal Defendants argue CMS was

not involved in the development or implementation of New Hampshire’s DSH

methodology contained in the relevant Medicaid plans. Rather, they contend that

5 CMS’ only role is to ensure the Medicaid Act requirements, including Section

(13)(A) and Section (2)(D), are met. According to the Federal Defendants, it is left to

the state to determine and distribute individual DSH payments.

The problem with this argument is that Concord Hospital’s APA claim is

premised upon the allegation that New Hampshire’s Medicaid plans violate the

Medicaid Act’s statutory requirements such that CMS should never have approved

them. Had CMS declined to approve the plans, the plans would not have taken

effect, and the Commissioner would therefore be unable to seek to disgorge the DSH

payments that are at issue in this case. At the standing stage, the court must accept

these contentions as true. See Fed. Election Comm’n, 596 U.S. at 298. These

allegations are sufficient, for purposes of standing, to satisfy the traceability

requirement.

Second, with respect to redressability, the Federal Defendants rely on their

argument on the merits (i.e., that CMS’s approval of the state’s Medicaid plan was

lawful). The problem with that argument is the inverse of the problem with

traceability. That is, once again, for standing purposes, “the court accept[s] as valid

the merits of [plaintiff's] legal claims . . . .” Id. Concord Hospital’s allegation is that,

because the state’s Medicaid plan did not contain a sufficiently detailed description

of the methodology for calculating and distributing DSH payments, it was unlawful

under the Medicaid Act for CMS to approve it. If Concord Hospital’s allegation is

true (which the court must presume for purposes of standing), the court’s ruling

would vindicate the Hospital’s claim with respect to the DSH payments, because the

6 state plans under which the Commissioner seeks to recoup DSH payments from

Concord Hospital would be declared unlawful. For this reason, the Federal

Defendants’ redressability argument also fails.

As Concord Hospital has plausibly alleged Article III standing, the court

moves to the motion to dismiss under Rule 12(b)(6).

II. Count V Fails to State a Legal Claim for Relief.

An agency decision must be set aside under the APA when it is “arbitrary,

capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C.

§ 706(2)(A). In the First Circuit a 12(b)(6) motion may be appropriate and dismissal

of an APA claim warranted where the “underlying premise of the complaint is

legally flawed.” Atieh, 727 F.3d at 76 n.4. Such a circumstance may arise where the

plaintiff is unable to identify any regulatory or statutory authority the government

action has not complied with. Roe v. Mayorkas, No. 22-CV-10808-ADB, 2023 WL

3466327, at *11 (D. Mass. May 12, 2023).

Concord Hospital argues that CMS’s approval of New Hampshire’s Medicaid

state plan in effect from 2011 through 2017 was arbitrary and capricious because

the plans did not include a “legally sufficient” and “clear” description of the

methodology “to calculate or audit uncompensated care costs” as required by

Sections (13)(A) and (2)(D) of the Medicaid Act. Doc no. 1 ¶ 88. These arguments are

identical to those advanced against the Commissioner in Count I.4

4 Count I alleged, generally, that the Commissioner violated the Medicaid Act

by failing to explain with sufficient specificity how “uncompensated care costs” would

7 Concord’s arguments with respect to the requirements of Section (13)(A) and

Section (2)(D) were previously addressed and rejected in this court’s order granting

the Commissioner’s motion to dismiss as to Count I. Concord Hospital, 743 F. Supp.

3d at 346-50. As this court explained, neither Section (13)(A) nor Section (2)(D)

imposes substantive requirements on the description of the methodology a state

uses to calculate DSH payments. Id. In other words, Concord Hospital’s claims do

not identify any provisions of the Medicaid Act that the state plans violate.

Accordingly, Concord Hospital’s arguments are rejected for the same reasons

identified in Section III(A) of this court’s order of August 5, 2024. Id.5 Concord

Hospital therefore fails to state a claim against the Federal Defendants upon which

relief may be granted.

be calculated under New Hampshire’s Medicaid plan. As noted, the court previously granted the Commissioner’s motion to dismiss Count I. Concord Hospital, Inc., 743 F. Supp. 3d at 346-50. Although Concord Hospital brought Count V under the APA, the two counts share significant overlap. In Count V, the Hospital sues the Federal Defendants for approving the allegedly illegal state Medicaid plan. And the Hospital’s argument in Count V—that the plan violated the Medicaid Act and therefore should not have been approved—is identical to that asserted in Count I.

5 The Federal Defendants also argue that Count V should be dismissed because

the claim is time-barred by the APA’s statute of limitations. Because the court finds that Count V fails to state a claim, the court need not address the timeliness argument.

8 CONCLUSION

The Federal Defendants’ motion to dismiss (doc. no. 44) is granted.

SO ORDERED.

__________________________ Landya McCafferty United States District Judge

March 12, 2025

cc: Counsel of Record