Hospitality Hse Inc v. Gilbert

CourtCourt of Appeals for the Fifth Circuit
DecidedAugust 28, 2002
Docket01-50759
StatusPublished

This text of Hospitality Hse Inc v. Gilbert (Hospitality Hse Inc v. Gilbert) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hospitality Hse Inc v. Gilbert, (5th Cir. 2002).

Opinion

REVISED AUGUST 27, 2002

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_____________________

No. 01-50759 _____________________

HOSPITALITY HOUSE, INC; STONEBRIDGE HEALTH CENTER, INC; REGENCY VILLAGE CARE CENTER, LTD; MEDICAL HOSPITAL OF BUNA, INC; RIDGECREST RETIREMENT CENTER, LTD; TEXAS ALLIANCE FOR FAIR NURSING HOME REIMBURSEMENT

Plaintiffs - Appellees

v.

DON A GILBERT, Commissioner of the Texas Health and Human Services Commission; ERIC M BOST, Commissioner of the Texas Department of Human Services; DAVID HERNDON, Chairman of the Board, Texas Department of Human Services; ELIZABETH SEALE, Member of the Board of the Texas Department of Human Services; JOHN A CUELLAR, Member of the Board of the Texas Department of Human Services; TERRY DURKIN WILKINSON, Member of the Board of the Texas Department of Human Services; CAROLE WOODARD, Member of the Board of the Texas Department of Human Services

Defendants - Appellants

_________________________________________________________________

Appeal from the United States District Court for the Western District of Texas _________________________________________________________________ July 16, 2002

Before KING, Chief Judge, and GARWOOD and HIGGINBOTHAM, Circuit Judges.

KING, Chief Judge:

The Defendants-Appellants, officials of the Texas Health and

Human Services Commission and the Texas Department of Human Services, appeal the district court’s denial of their motion to

dismiss in which they asserted Eleventh Amendment immunity from

the district court’s exercise of jurisdiction over an action

brought by operators of nursing homes in Texas to enforce a

settlement agreement. Because the district court does not have

subject matter jurisdiction over the enforcement action, we do

not reach the issue of Eleventh Amendment immunity. Instead, we

vacate the district court’s order denying the state health

officials’ motion to dismiss and remand this case to the district

court with instructions to dismiss the nursing home operators’

enforcement action against the state health officials for lack of

subject matter jurisdiction.

I. BACKGROUND

The Defendants-Appellants in this case are various officials

of the Texas Health and Human Services Commission and the Texas

Department of Human Services (collectively the “state health

officials”). The Plaintiffs-Appellees are five businesses that

operate nursing homes in Texas and one non-profit corporation

that advocates adequate and fair Medicaid reimbursement rates for

nursing homes in Texas (collectively the “nursing home

operators”). The nursing home operators initiated the instant

case on February 28, 2001, when they filed suit in the district

court to enforce a settlement agreement (the “Agreement”) that

was negotiated pursuant to a prior lawsuit brought by the Texas

Health Care Association (“THCA”) against the state health

2 officials.1 Alleging that the state health officials had failed

to comply with the Agreement, the nursing home operators sought

declaratory and injunctive relief as intended beneficiaries of

the Agreement (or as representatives of intended beneficiaries).

The Agreement arose from a lawsuit filed by the THCA in

November 1996 to compel the state health officials to satisfy

their obligations under the Boren Amendment, 42 U.S.C.

§ 1396a(a)(13)(A) (1994) (repealed 1997).2 The Boren Amendment

required that the medical assistance plans submitted by states

participating in the Medicaid program provide for reimbursement

for “hospital services, nursing facility services, and services

in an intermediate care facility for the mentally retarded” at

rates “reasonable and adequate to meet the costs which must be

incurred by efficiently and economically operated facilities.”

42 U.S.C. § 1396a(a)(13)(A); see also Wilder v. Vir. Hosp. Ass’n,

496 U.S. 498, 524 (1990) (holding that “[t]he Boren Amendment to

the [Medicaid] Act creates a right, enforceable in a private

cause of action pursuant to § 1983, to have the State adopt rates

that it finds are reasonable and adequate rates to meet the costs

of an efficient and economical health care provider”).3 After

1 The Texas Health Care Association is a private non-profit organization whose members own nursing home facilities in Texas. 2 Congress repealed the Boren Amendment in August 1997. See Balanced Budget Act of 1997, Pub. L. No. 105-33, § 4711(a), 111 Stat. 251, 507-08 (1997). 3 Congress replaced the Boren Amendment’s “reasonable and adequate rate” requirement with the requirement that states

3 negotiations, the THCA and the state health officials entered

into the Agreement on January 27, 1997.

Under the Agreement, the state health officials were

obligated, inter alia, (1) to adopt specified reimbursement rates

for 1997, (2) “to evaluate the overall adequacy of

[reimbursement] rates and . . . the methodology [for rate

determination]” with the goal of “achiev[ing] a rate that is

reasonable and adequate to meet the costs that efficiently and

economically operated providers must incur in order to provide

care and services in conformity with applicable State and Federal

laws, regulations and quality and safety standards,” (3) to

negotiate in good faith with the nursing home operators in an

attempt to reach agreements on various issues related to Medicaid

reimbursement rates, and (4) to submit recommended changes in the

reimbursement procedure to the state legislature. In exchange,

the THCA agreed “not to bring a Boren Amendment challenge to the

1997 rates adopted pursuant to this agreement,” with the caveat

that “[t]his covenant not to sue shall not preclude THCA from

bringing any subsequent action to enforce the terms and covenants

of this agreement.” The Agreement further provided that the

parties would move for dismissal of the case without prejudice

participating in the Medicaid Program “provide . . . for a public process for determination of rates of payment . . . for hospital services, nursing facility services, and services of intermediate care facilities for the mentally retarded.” Balanced Budget Act of 1997, Pub. L. No. 105-33, § 4711(a), 111 Stat. 251, 507 (1997) (codified at 42 U.S.C. § 1396a(a)(13)(A) (Supp. III 1997)).

4 “within three working days” after the Board of the Texas

Department of Human Services adopted the 1997 rates specified in

the Agreement.

Pursuant to the Agreement, the THCA and the state health

officials filed an agreed motion to dismiss the case without

prejudice on January 30, 1997. In this motion, the parties

incorporated by reference the Agreement, which was attached as an

exhibit. The district court granted the motion to dismiss,

entering the following order:

Before the Court is the parties’ Agreed Motion to Dismiss. Following consideration, the Court finds the Motion should be granted. IT IS THEREFORE ORDERED that Civil Action No. A-96- CA-744-SS be and said action is hereby DISMISSED WITHOUT PREJUDICE.

Approximately four years after the district court dismissed

the THCA’s case against the state health officials, the nursing

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