Alice Peck Day Mem'l Hosp. v. Samuelson

678 F.Supp.3d 542

ALICE PECK DAY MEMORIAL HOSPITAL; The Chesire Medical Center; Valley Regional Hospital, Inc.;and Littleton Hospital Association, Inc. d/b/a Littleton Regional Healthcare, Plaintiffs, v. Jenney SAMUELSON, in their official Capacity as the Secretary of the Vermont Agency of Human Services;Green Mountain Care Board, Defendants.

Case No. 2:21-cv-102

United States District Court, D. Vermont

Signed June 23, 2023

Kierstan E. Schultz, Esq., Pro Hac Vice, Nixon Peabody LLP, Manchester, NH, Morgan C. Nighan, Esq., Nixon Peabody LLP, Boston, MA, W. Scott O'Connell, Esq., Holland & Knight LLP, Boston, MA, for Plaintiffs.

David R. McLean, Esq., Office of the Vermont Attorney General, Montpelier, VT, for Defendant State of Vermont Agency of Human Services.

Briana T. Hauser, Esq., David A. Boyd, Esq., David R. McLean, Esq., Office of the Vermont Attorney General, Montpelier, VT, for Defendant Jenney Samuelson.

OPINION AND ORDER GRANTING GREEN MOUNTAIN CARE BOARD'S MOTION FOR SUMMARY JUDGMENT

Christina Reiss, District Judge

On July 20, 2021, Plaintiffs Alice Peck Day Memorial Hospital ("APD"), The Cheshire Medical Center ("Cheshire"), Valley Regional Hospital, Inc. ("VRH"), and Littleton Hospital Association, Inc. d/b/a Littleton Regional Healthcare ("LRH") (collectively, "Plaintiffs") filed their First Amended Complaint ("FAC") (Doc. 34) seeking declaratory and injunctive relief against Defendants Michael Smith, in his official capacity as the Secretary of the State of Vermont Agency of Human Services ("AHS"), and AHS (collectively, the "State Defendants"); the Green Mountain Care Board ("GMCB"); and Xavier Becerra, in his official capacity as Secretary of the United States Department of Health and Human Services ("HHS"), Chiquita Brooks-LaSure, in her official capacity as Administrator of the Centers for Medicare & Medicaid Services ("CMS"), and CMS (collectively, the "Federal Defendants").

Plaintiffs contend that under the Vermont State Medical Plan and Vermont law, and with GMCB's consent, Plaintiffs are reimbursed at lower rates than in-state hospitals, causing Plaintiffs financial harm and threatening a core objective of Medicaid to provide medical coverage to the needy. The FAC asserts two claims against the GMCB: violation of the Equal Protection Clause of the Fourteenth Amendment pursuant to 42 U.S.C. § 1983 (Count I) and violation of the Dormant Commerce Clause pursuant to 42 U.S.C. § 1983 (Count II).

Plaintiffs are represented by Kierstan E. Schultz, Esq., Morgan C. Nighan, Esq., and W. Scott O'Connell, Esq. The GMCB is represented by Assistant Attorneys General David R. McLean and Briana T. Hauser.

I. Procedural History.

On August 31, 2020, Plaintiffs filed their original Complaint in the District of New Hampshire. On October 13, 2020, the State Defendants moved to transfer venue to the District of Vermont. Their motion was granted on February 25, 2021. On April 9, 2021, the Federal Defendants moved to dismiss Counts III, IV, and V of the Complaint pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6) (Doc. 22), and the State Defendants moved to dismiss Counts I and II of the Complaint pursuant to Fed. R. Civ. P. 12(b)(6) (Doc. 23).

While the motions to dismiss were pending, Plaintiffs moved to amend their Complaint on May 28, 2021 (Doc. 32). This court granted Plaintiffs' motion on July 19, 2021, stating that it would consider the pending motions to dismiss in light of Plaintiffs' FAC (Doc. 33).

The court held oral arguments on the three motions to dismiss on January 7, 2022. On March 22, 2022, the court granted HHS's motion to dismiss Counts III, IV, and V for lack of subject matter jurisdiction and failure to state a claim, see Alice Peck Day Mem'l Hosp. v. Smith, 2022 WL 844075, at *8 (D. Vt. Mar. 22, 2022), granted in part and denied in part the State Defendants' motion to dismiss for failure to state a claim, see Alice Peck Day Mem'l Hosp. v. Smith, 2022 WL 850745, at * 13 (D. Vt. Mar. 22, 2022), and denied the GMCB's motion to dismiss Counts I and II. Id. The court concluded that "determination of GMCB's sovereign immunity must await a factual record." Id. at *9.

On August 12, 2022, the GMCB moved for summary judgment (Doc. 85) and filed a statement of undisputed facts (Doc. 86). On September 6, 2022, Plaintiffs moved to defer consideration of the GMCB's motion for summary judgment and for leave to take discovery limited to the deposition of Jean Stetter, Administrative Services Director of the GMCB, regarding the contents of her affidavit supporting the GMCB's motion (Doc. 91). The court granted the motion on September 21, 2022 (Doc. 93). Plaintiffs opposed the GMCB's motion for summary judgment on January 18, 2023 (Doc. 112) and filed a statement of disputed facts (Doc. 113).¹ The GMCB replied on February 17, 2023 (Doc. 118). The court held oral argument on March 20, 2023, at which point it took the GMCB's motion for summary judgment under advisement.

II. The Undisputed Facts.

The GMCB was created by 18 V.S.A. § 9372, which states that the Vermont Legislature's intent was to "to create an independent board to promote the general good of the State[.]" Id. It was conceived as part of the General Assembly's attempt to "reform[ ] health care in Vermont.[.]" 18 V.S.A. § 9371(1). It is not a part of the State's Agency of Human Services. See 3 V.S.A. § 3002. Pursuant to 18 V.S.A. § 9372, the GMCB has five purposes related to Vermont's healthcare system:

(1) improving the health of the population;

(2) reducing the per-capita rate of growth in expenditures for health services in Vermont across all payers while ensuring that access to care and quality of care are not compromised;

(3) enhancing the patient and health care professional experience of care;

(4) recruiting and retaining high-quality health care professionals; and

(5) achieving administrative simplification in health care financing and delivery.

The GMCB "consist[s] of a chair and four members" who are appointed for six year terms. See 18 V.S.A. § 9374(a)(1), (b)(1). The GMCB Nominating Committee (the "Nominating Committee") consists of nine members and nominates the GMCB's members. See 18 V.S.A. § 9390. The governor appoints two of the Nominating Committee's members, and the Committee on Committees appoints two members of the Senate who must not be of the same political party. The Speaker of the House appoints two members of the House, who also must not be of the same political party. The Governor, President Pro Tempore of the Senate, and Speaker of the House each appoint one of the remaining three members. See id. at § 9390(b)(1)(A)-(D).

Members of the Nominating Committee serve for two-year terms and may not serve for more than three consecutive terms. Id. at § 9390(b)(2). They receive "per diem compensation and reimbursement of expenses" paid out of the GMCB's budget and are "authorized to use the staff and services of appropriate State agencies and departments as necessary to conduct investigations of applicants." Id. at § 9390(c), (f). When a vacancy occurs on the GMCB, the Nominating Committee submits "to the Governor the names of the persons it deems qualified to be appointed to fill the position[,]" and the Governor makes an appointment from the list of qualified candidates with consent of the Senate. 18 V.S.A. § 9391. Members may be removed for cause. 18 V.S.A. § 9374(b).

The GMCB has regulatory, oversight, and planning duties which include but are not limited to: developing, implementing, and evaluating health care payment and delivery system reforms, 18 V.S.A. § 9375(b)(1); approving health insurance rates, 18 V.S.A. § 9375(b)(6); reviewing and establishing hospital budgets, 18 V.S.A. § 9375(b)(7); reviewing and approving certificate of need applications, 18 V.S.A. § 9375(b)(8); see also In re ACTD LLC, 2020 VT 89, ¶ 4, 213 Vt. 276, 250 A.3d 590, 593 ("The Board has broad authority to administer the [certificate of need] program."); certifying accountable care organizations, 18 V.S.A. § 9382(a); and reviewing and approving accountable care organization budgets, 18 V.S.A. § 9382(b).

The GMCB is classified as a "[p]ublic agency" under Vermont's Public Records Act, 1 V.S.A. § 317(a)(2) (defining "[p]ublic agency" to include state boards), and is treated as a "[p]ublic body" for purposes of Vermont's Open Meeting Law. 1 V.S.A. § 310(4). It is empowered to "issue subpoenas, examine persons, administer oaths, and require production of papers and records." 18 V.S.A. § 9374(i). "A person who fails or refuses to appear, to testify, or to produce papers or records for examination before the Chair upon properly being ordered to do so may be assessed an administrative penalty by the Chair of not more than $2,000.00 for each day of noncompliance[.]" 18 V.S.A. § 9374(j). "Any person aggrieved by a final action, order, or other determination of the [GMCB] may, upon exhaustion of all administrative appeals available[,] . . . appeal to the Supreme Court[.]" 18 V.S.A. § 9381(b).

Similar to state agencies, the GMCB must "provide a process for soliciting public input" which "may include receiving written comments on proposed new or amended rules or holding public hearings, or both." 18 V.S.A. § 9378. It must also "ha[ve] access to data and analysis held by any [Vermont] Executive Branch agency which is necessary to carry out" its duties. 18 V.S.A. § 9379.

The GMCB is funded as follows:

In addition to the assessment and collection of actual costs pursuant to subdivision (1) of this subsection and except as otherwise provided in subdivisions (2)(C) and (3) of this subsection, all other expenses of the Board shall be borne as follows:

(i) 40 percent by the State from State monies;

(ii) 30 percent by the hospitals;

(iii) 24 percent by nonprofit hospital and medical service corporations licensed under 8 V.S.A. chapter 123 or 125, health insurance companies licensed under 8 V.S.A. chapter 101, and health maintenance organizations licensed under 8 V.S.A. chapter

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