Nightingale Home Healthcare v. United States

861 F.3d 615
CourtCourt of Appeals for the Seventh Circuit
DecidedJune 27, 2017
Docket16-2054, 16-3668, & 16-3669
StatusPublished
Cited by24 cases

This text of 861 F.3d 615 (Nightingale Home Healthcare v. United States) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Nightingale Home Healthcare v. United States, 861 F.3d 615 (7th Cir. 2017).

Opinion

FLAUM, Circuit Judge.

This consolidated appeal was prompted by the federal government’s termination of Nightingale Home Healthcare, Inc.’s Medicare provider agreement. Nightingale sought and received a preliminary injunction from the bankruptcy court that prevented the government from terminating Nightingale’s agreement. On appeal, the district court concluded that the bankruptcy court had lacked jurisdiction to issue an injunction and reversed the order. We conclude, however, that the issue of whether the bankruptcy court properly granted the injunction was moot, as the bankruptcy court had dissolved the underlying injunction prior to the district court’s ruling. Separately, Home Care Providers, Inc., Nightingale’s sole shareholder, and its *618 owner, .Dr. Dev A. Brar, filed a civil action in the district court, alleging that certain Indiana state surveyors had committed various constitutional violations leading up to Nightingale’s Medicare termination. 1 The district court dismissed those claims with prejudice. We conclude Nightingale’s and Dr. Brar’s constitutional claims were also jurisdictionally barred, pursuant to 42 U.S.C. § 405(g), and vacate and remand with instructions to dismiss without prejudice.

I. Background

Nightingale Home Healthcare, Inc. provides home health care services in a number of states, including Indiana. In the course of this business, Nightingale signed a provider agreement with the United States Secretary of Health and Human Services to receive Medicare reimbursements and agreed to conform to certain statutory and regulatory requirements.

In October and November 2015, the Indiana State Department of Health (“ISDH”) conducted a survey at one of Nightingale’s facilities and concluded that Nightingale had failed to comply with the applicable requirements. 2 The ISDH found that Nightingale’s deficiencies placed its patients in “immediate jeopardy,” 3 and recommended that the Centers for Medicare & Medicaid Services (“CMS”), which administers Medicare, terminate Nightingale’s Medicare agreement. On November 17, CMS notified' Nightingale that the agency would terminate Nightingale’s agreement on December 10, unless Nightingale corrected its irregularities. Later, on December 8 and 9, the ISDH conducted a revisit survey and concluded that Nightingale had failed to comply, and CMS informed Nightingale that its provider agreement would terminate as scheduled. Nightingale filed an administrative appeal and requested expedited review.

A. Bankruptcy Proceedings

On December 10, before CMS terminated the Medicare agreement, Nightingale filed a voluntary petition to reorganize in bankruptcy. Nightingale then commenced an adversary proceeding in the United States Bankruptcy Court for the Southern District of Indiana against federal and state officials administering the Medicare program, invoking the court’s subject-matter jurisdiction under 28 U.S.C. §§ 157(b)(1) & 1334. Nightingale filed a complaint and an emergency motion for a preliminary injunction, seeking (1) to enjoin CMS from terminating its provider agreement during the pendency of the reorganization and completion of administrative appeals, (2) to compel CMS to pay out Medicare receivables purportedly due for services already provided, and (3) to compel CMS to continue to reimburse Nightingale for services rendered after the *619 agreement’s termination. The federal government moved to dismiss Nightingale’s complaint for lack of jurisdiction.

On January 19, 2016, the bankruptcy court held an evidentiary hearing on Nightingale’s request for injunctive relief. It granted the motion on January 25, directing the federal government to abide by the Medicare provider agreement. The court cautioned Nightingale that it was still obligated to comply with the applicable Medicare requirements. Finally, the court concluded that 28 U.S.C. § 1334 provided a basis for exercising jurisdiction over Nightingale’s property, including, in relevant part, its provider agreement to participate in Medicare, and could thus preserve the status quo pending exhaustion of Nightingale’s administrative appeals. Thus, the court explained, the terms of the provider agreement would remain in place. The court later repeated this holding in denying the government’s motion to dismiss for lack of subject-matter jurisdiction. The federal government timely sought review of the bankruptcy court’s decisions in the district court.

On April 22, while the government’s appeal was pending, the ISDH investigated several complaints concerning Nightingale’s post-petition services. The agency again found that Nightingale was placing patients in “immediate jeopardy.” The federal government subsequently sought relief from the bankruptcy court’s preliminary injunction, and the court dissolved the injunction on July 15. CMS notified Nightingale that CMS would terminate the provider agreement on July 16.

On May 9, a Medicare Administrative Law Judge (“ALJ”) affirmed the termination of Nightingale’s provider agreement. The ALJ concluded that the evidence overwhelmingly proved that Nightingale had violated regulatory and statutory requirements, and that those deficiencies placed patients in “immediate jeopardy.” Nightingale appealed the ALJ’s decision to the Departmental Appeals Board in June. (Recently, on April 14, 2017, the Board affirmed the ALJ’s decision, constituting a final administrative decision on Nightingale’s claims).

On June 2, 2016, Nightingale sought the bankruptcy court’s authority to sell all of its assets. After failing to complete a sale by July, however, Nightingale began discharging its patients and winding down Indiana business operations. As of August 17, 2016, Nightingale had completely halted its business in Indiana.

Finally, on September 16, 2016, the district court addressed the federal government’s bankruptcy appeal. The court concluded that the bankruptcy court had lacked subject-matter jurisdiction to issue the preliminary injunction, pursuant to 42 U.S.C. § 405(h) of the Social Security Act. 4 Although the bankruptcy court had already dissolved the injunction, the court rejected Nightingale’s argument that the government’s appeal was moot, explaining that the government could still seek restitution for the nearly $5 million in reimbursements it had provided for Nightingale’s post-injunction services. After the district court issued its opinion, CMS filed a claim for restitution that is currently pending, 5 and Nightingale timely filed this appeal.

*620 B. Constitutional Claims

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Cite This Page — Counsel Stack

Bluebook (online)
861 F.3d 615, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nightingale-home-healthcare-v-united-states-ca7-2017.