Gos Operator, LLC v. Sebelius

843 F. Supp. 2d 1218, 2012 WL 426735, 2012 U.S. Dist. LEXIS 16817
CourtDistrict Court, S.D. Alabama
DecidedFebruary 10, 2012
DocketCivil Action No. 12-0035-WS-N
StatusPublished
Cited by5 cases

This text of 843 F. Supp. 2d 1218 (Gos Operator, LLC v. Sebelius) is published on Counsel Stack Legal Research, covering District Court, S.D. Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gos Operator, LLC v. Sebelius, 843 F. Supp. 2d 1218, 2012 WL 426735, 2012 U.S. Dist. LEXIS 16817 (S.D. Ala. 2012).

Opinion

ORDER

WILLIAM H. STEELE, Chief Judge.

This matter comes before the Court on plaintiffs construed Motion for Preliminary Injunction (doc. 4). The parties have submitted extensive briefing on the Motion (including supplemental briefing as directed by the Court). The Motion is now ripe.1 Plaintiffs Motion for Leave to Exceed Page Limit for Reply Brief (doc. 33) is granted for cause shown, and its Reply (doc. 34) will be accepted and considered in its present form.2

1. Relevant Background.

Plaintiff, GOS Operator, LLC (“GOS”), is the operator of Gordon Oaks Healthcare Center (“Gordon Oaks”), a skilled nursing facility located in Mobile, Alabama. At present, Gordon Oaks participates in the Medicare program pursuant to a provider agreement (the “Provider Agreement”) with defendant Secretary of the United States Department of Health and Human [1220]*1220Services (the “Secretary”). The Secretary has announced its intention to terminate the Provider Agreement, based on a series of on-site inspections (called “surveys”) conducted at Gordon Oaks over a six-month period from July 21, 2011 through January 18, 2012. According to the Secretary, those surveys reveal that Gordon Oaks is not in substantial compliance with federal health and safety requirements for Medicare residents, as necessary for continued participation in the Medicare program.

On January 19, 2012, the Secretary (by and through the Centers for Medicare & Medicaid Services (“CMS”), an agency within the Department of Health and Human Services) issued a written notice of involuntary termination to Gordon Oaks. (Doc. 26, Exh. 1.) The notice referenced surveys performed on January 8, 2012 and January 18, 2012, and set forth CMS’s conclusion that Gordon Oaks “remains out of substantial compliance with the Medicare/Medicaid participation requirements.” (Id. at 1.)3 On that basis, CMS indicated in the January 19 letter that “[y]our Medicare provider agreement will be terminated at midnight on January 21, 2012.... Medicare and Medicaid payments for services rendered to those residents admitted to Gordon Oaks Healthcare Center before January 21, 2012, will continue to be made up to a 30-day period, in order to facilitate the orderly transfer/relocation of residents.” (Id. at 2 (emphasis omitted).) The January 19 letter further notified Gordon Oaks that “[i]f you disagree with CMS determinations that are based on the January 8, 2012 and January 18, 2012 surveys ..., you or your legal representative may request a hearing before an administrative law judge of the Department of Health and Human Services, Departmental Appeals Board.” (Id. at 4.)

It is undisputed that GOS has invoked the administrative appeals process as to each survey conducted between July 21, 2011 and January 18, 2012 that has found Gordon Oaks not to be in substantial compliance with program requirements. (Doc. 1, ¶¶ 69, 71 & Exh. T; McAuliffe Deck (doc. 34-1), at Att. 2.) Most recently, in a January 30, 2012 letter sent to CMS and the Departmental Appeals Board, GOS requested “an expedited hearing on its appeals,” on the grounds that “[a]n expedited hearing is warranted in order to ensure that the administrative proceeding is resolved as expeditiously as possible.” (McAuliffe Deck, at Att. 2.) To date, GOS has not received an administrative hearing on any of its appeals from deficiencies identified in surveys conducted at Gordon Oaks between July 2011 and January 2012.4 The record is devoid of information [1221]*1221that such a hearing is imminent, and there is no indication as to how soon an expedited administrative hearing can or will occur in this case. Nonetheless, the Secretary’s conduct clearly evinces its intention to proceed with the termination of Gordon Oaks’ Provider Agreement at this time, and to allow the administrative appeals process to play out on a post-termination basis, notwithstanding GOS’s presentation of pretermination requests for administrative hearing that remain pending today.

The trouble with this arrangement from GOS’s perspective is that, according to its evidence, termination of the Provider Agreement would inflict devastating harm on Gordon Oaks, inasmuch as: (i) it would necessitate transfer all Medicaid and Medicare residents to other facilities; (ii) the loss of Provider Agreements would constitute a catastrophic event of default under GOS’s lease, resulting in termination of the lease and closure of the entire Gordon Oaks campus; and (iii) the ultimate effect of termination of the Provider Agreements would be that GOS would cease operations and go out of business. (Feuer Deck (doc. 1, Exh. B), ¶¶ 3-5.) In GOS’s view, a post-termination administrative hearing would be useless and ineffectual because “Plaintiff will not survive long enough to contest the termination through the appropriate administrative process.” (Doc. 34, at 1.)5

In light of these circumstances, GOS filed its Complaint and Motion for Temporary Restraining Order on January 19, 2011, the same day that CMS issued the termination notice and a bare two days before the Secretary intended to terminate Gordon Oaks’ Provider Agreements. The Complaint does not seek review of the underlying administrative determinations. GOS is not asking this Court to make any findings as to whether Gordon Oaks was or was not in substantial compliance with program requirements at any time. Nor does the Complaint request that judicial review supplant the administrative appeals process. Rather, the Complaint by its terms “seeks only to preserve the status quo pending the outcome of the administrative hearing” by enjoining defendants from terminating Gordon Oaks’ provider agreements “until its challenges to the Defendants’ actions have been heard and decided by an administrative law judge of the Departmental Appeals Board of Defendant HHS.” (Doc. 1, ¶ 6.) As grounds for the requested injunction, the Complaint alleges causes of action for violation of plaintiffs procedural due process rights (failure to provide pre-termination administrative hearing), violation of substantive due process (arbitrary and capricious termination of provider agreements), and ultra vires (Secretary exceeding statutory authority by terminating provider agreement despite no “immediate jeopardy” deficiencies and during pendency of administrative hearing process). Plaintiff has joined neither the constitutional claims nor the ultra vires claim to its pending administrative appeals before the HHS Departmental Appeals Board.6

[1222]*1222On January 20, 2012, the undersigned issued a series of Orders (docs. 13, 2012 WL 175056, 17, 18) that granted GOS’s Motion for Temporary Restraining Order and considered and rejected the Government’s arguments for reconsideration or vacatur of same. The resulting TRO enjoins and restrains defendants “from terminating Gordon Oaks’ Medicare and Medicaid provider agreements, pending a pretermination administrative hearing.” (Doc. 13, at 11.) The TRO was to expire at the close of business on February 3, 2012; however, on that date, the undersigned extended the TRO through February 10, 2012 for good cause under Rule 65(b)(2) to facilitate supplemental briefing of a substantial merits issue that the Government had not previously addressed. The parties have now had a full and fair opportunity to brief the question of whether the TRO should be converted into a Preliminary Injunction.

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Cite This Page — Counsel Stack

Bluebook (online)
843 F. Supp. 2d 1218, 2012 WL 426735, 2012 U.S. Dist. LEXIS 16817, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gos-operator-llc-v-sebelius-alsd-2012.