Akula v. Phillips

DR. SHIVA AKULA, Plaintiff v. DR. COURTNEY N. PHILLIPS, Defendant

CIVIL DOCKET No. 22-1070

United States District Court, E.D. Louisiana

December 23, 2022

SECTION “E” (3)

ORDER AND REASONS

SUSIE MORGAN UNITED STATES DISTRICT JUDGE

Before the Court is a Motion to Dismiss (“Motion”) filed by Courtney N. Phillips in her official capacity as the Secretary of the Louisiana Department of Health (“Defendant”).^[1] The Motion seeks to dismiss Dr. Shiva Akula's (“Plaintiff”) amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6). Plaintiff opposes the Motion.^[2]

BACKGROUND

The following facts are taken from Plaintiff's amended complaint.^[3] Plaintiff is a licensed medical doctor who specializes in infectious diseases.^[4] Plaintiff engages in private medical practice, and, separately, he owns three hospice facilities in Louisiana: (1) Canon Healthcare, LLC; (2) Canon Hospice; and (3) Canon Hospice-Northshore, LLC.^[5]Dr. Akula and physicians at the Canon Facilities provide end-of-life care to approximately 243,600 patients in the State of Louisiana.^[6] Dr. Akula and the Canon Facilities were previously contracted with the State of Louisiana under Medicaid Provider Agreements.^[7]

On August 6, 2021, a federal grand jury issued a criminal indictment against Plaintiff for health care fraud.^[8] Shortly thereafter, the State of Louisiana notified Dr. Akula that it had terminated his Medicaid Provider Agreements pursuant to La. R.S 46:437.11(D)(2).^[9] That statute allows the Secretary of the Louisiana Department of Health to “terminate a provider agreement immediately and without written notice if a health care provider is the subject of a sanction or of a criminal civil, or departmental proceeding.”^[10] Following the termination of his Medicaid Provider Agreements, Plaintiff filed suit in this Court.

Plaintiff brings four counts in his amended complaint. For clarity, the Court summarizes the counts as follows. In Count I, through a § 1983 claim, Plaintiff alleges his substantive due process rights, guaranteed by the U.S. Constitution's Fourteenth Amendment, were violated.^[11] Specifically, Plaintiff contends the Defendant's termination of his Medicaid Provider Agreement under Louisiana law-Agreements he argues he has a property interest in^[12]-is at is at odds with the Fourteenth Amendment because the termination was “based solely on an unproven indictment,” where he was denied “either a pre or post termination hearing.”^[13] Plaintiff also alleges he has a liberty interest in his reputation and the presumption of innocence, and that these rights were infringed upon in violation of the Fourteenth Amendment when Defendant terminated Plaintiff's Medicaid Provider Agreements.

In Count II, through a § 1983 claim, Plaintiff alleges Defendant violated his procedural due process rights when she terminated his Medicaid Provider Agreements under La. R.S. 46:437.11(D)(2).^[14] In support thereof, Plaintiff alleges he “has a property interest in his qualification to accept Medicaid beneficiaries,” “a property interest in his [P]rovider [A]greements,”^[15] a liberty interest in his reputation, and a liberty interest in the presumption of innocence. When Defendant took away his property rights and infringed upon his liberty interests by terminating his Medicaid Provider Agreements, Plaintiff alleges the procedural due process provided to him fell short of the Fourteenth Amendment's requirements in the following ways: (1) Defendant did not provide Plaintiff a means to defend against unproven accusations, view evidence substantiating accusations contained in the indictment, or cross-examine adverse witnesses; (2) Defendant did not give Plaintiff written notice of the charges and an explanation of Defendant's evidence so that he could provide a meaningful response and an opportunity to correct factual mistakes in an investigation; (3) Defendant did not provide Plaintiff a “name clearing hearing;” and (4) Defendant did not provide a means for reinstatement upon Dr. Akula's “acquittal or other determination of innocence or not guilty” in the criminal case in which he is a defendant.^[16] In Count III, through a § 1983 claim, Defendant alleges La. R.S. 46:437.11(D)(2) is preempted by 42 U.S.C. § 1396a(a)(23) and 42 C.F.R. § 431.51 by operation of the U.S. Constitution's Supremacy Clause.^[17]

Count IV reflects the relief Plaintiff seeks should he prevail under Counts I, II, and III. That is (1) declaratory judgment that La. R.S. 46:437.111(D)(2) runs afoul of the substantive due process doctrine enshrined in the Fourteenth Amendment; (2) declaratory judgment that La. R.S. 46:437.111(D)(2) runs afoul of the procedural due process guarantees enshrined in the Fourteenth Amendment; (3) declaratory judgment that La. R.S. 46:437.111(D)(2) is inconsistent with 42 U.S.C. § 1396a(a)(23) and 42 C.F.R. § 431.51, and, thus, violates the Supremacy Clause; (4) injunctive relief to enjoin Defendant's termination of Plaintiff's Medicaid Provider Agreements;^[18] and (5) an award of attorneys' fees and costs.^[19]

LEGAL STANDARD

I. Rule 12(b)(1) standard.

“Federal courts are courts of limited jurisdiction; without jurisdiction conferred by statute, they lack the power to adjudicate claims.”^[20] A motion to dismiss under Federal Rules of Civil Procedure 12(b)(1) challenges a federal court's subject-matter jurisdiction.^[21]Under Rule 12(b)(1), “[a] case is properly dismissed for lack of subject matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate the case.”^[22] “Lack of subject-matter jurisdiction may be found in the complaint alone, the complaint supplemented by the undisputed facts as evidenced in the record, or the complaint supplemented by the undisputed facts plus the court's resolution of the disputed facts.”^[23]“When, as here, grounds for dismissal may exist under both Rule 12(b)(1) and Rule 12(b)(6), the Court should, if necessary, dismiss only under the former without reaching the question of failure to state a claim.”^[24]

II. Rule 12(b)(6) standard.

Pursuant to Federal Rule of Civil Procedure 12(b)(6), a district court may dismiss a complaint, or any part of it, for failure to state a claim upon which relief may be granted if the plaintiff has not set forth factual allegations in support of his claim that would entitle him to relief.^[25] “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'”^[26]“A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”^[27] However, the court does not accept as true legal conclusions or mere conclusory statements,^[28] and “conclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent a motion to dismiss.”^[29] “[T]hreadbare recitals of elements of a cause of action, supported by mere conclusory statements” or “naked assertion[s] devoid of further factual enhancement” are not sufficient.^[30]

In summary, “[f]actual allegations must be enough to raise a right to relief above the speculative level.”^[31] “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not ‘show[n]' - that the pleader is entitled to relief.”^[32] “Dismissal is appropriate when the complaint ‘on its face show[s] a bar to relief.'”^[33]

LAW AND ANALYSIS

I. Title 18, United States Code, Section 1983 provides an independent basis for this Court's subject matter jurisdiction over Plaintiff's claims.

Defendant argues the Court lacks subject matter jurisdiction to hear Plaintiff's 18 U.S.C. § 1983 claims because “federal Medicaid regulations delegate the authority to adjudicate appeals of a provider's termination in the Medicaid program to the states . . . [and] Plaintiff does not assert a purely constitutional or procedural claim; therefore, Plaintiff's claims do not fall under the ‘entirely collateral' exception to the requirement to exhaust administrative remedies.”^[34]

In this case, Defendant's argument that an administrative exhaustion requirement applies and that Plaintiff does not meet the “collateral attack exception” is misplaced because Plaintiff asserts constitutional claims under 18 U.S.C. § 1983. “[I]t is well- established that § 1983 claims do not require exhaustion of state administrative or judicial remedies.”^[35]

Almost by definition, a claim under § 1983 arises under federal law and will support federal question jurisdiction so long as it does not “clearly appear[] to be immaterial and made solely for the purpose of obtaining jurisdiction.”^[36] Of course, § 1983 does not itself confer substantive federal rights; it simply provides a remedy for their deprivation.^[37] As a result, Plaintiffs § 1983 claims will support jurisdiction in this case if he colorably asserts that Defendant deprived him of a specific “right [], privilege[], or immunit[y] secured by the Constitution and laws.”^[38] Plaintiff alleges his substantive and procedural due process rights were violated when Defendant terminated his Medicaid Provider Agreements. In support, Plaintiff alleges the existence of two specific property rights: (1) “a property interest in his qualification to accept Medicaid beneficiaries” and “a property interest in his [P]rovider [A]greements.”^[39] Plaintiff also alleges the existence of two specific liberty interests: (1) his liberty interest in his reputation; and (2) his liberty interest to be presumed innocent.^[40]

Plaintiff further alleges La. R.S. 46:437.11(D)(2) is preempted by ...