Home Care Providers, Inc. v. Hemmelgarn

HOME CARE PROVIDERS, INC., NIGHTINGALE HOME HEALTHCARE,INC., NIGHTINGALE HOSPICE CARE, INC.,and DEV A. BRAR, Plaintiffs, v. KELLY HEMMELGARN, RANDALL SNYDER,JEROME M. ADAMS Commissioner of the Indiana State Department of Health,SYLVIA MATHEWS BURWELL Secretary of the United States Departmentof Health and Human Services, and INGRID MILLER, Defendants.

No. 1:16-cv-00303-LJM-TAB

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF INDIANA INDIANAPOLIS DIVISION

April 5, 2016

ORDER ON DEFENDANTS' MOTIONS TO DISMISS

Defendant Sylvia Mathews Burwell, Secretary of the United States Department of Health and Human Services (the "Secretary") has moved to dismiss the claims brought against it by Plaintiffs Home Care Providers, Inc., Nightingale Home Healthcare, Inc., Nightingale Hospice Care, Inc. (these three Defendants, collectively, "Nightingale") and Dev A. Brar ("Brar") (all plaintiffs, collectively, "Plaintiffs"). Dkt. No. 13. The Secretary argues that the Court lacks jurisdiction over Plaintiffs' claims for multiple reasons. Dkt. Nos. 14 & 33. Plaintiffs argue, among other reasons, that the Court has jurisdiction over their claim for injunctive relief pursuant to Ex Parte Young, 209 U.S. 123 (1908), and its progeny. Dkt. No. 26.

Further, Defendants Kelly Hemmelgarn ("Hemmelgarn"), Randall Snyder

("Snyder"), Jerome M. Adams ("Adams"), Commissioner of the Indiana State Department of Health ("ISDH"), and Ingrid Miller ("Miller") (these defendants, collectively, "State Defendants") have also moved to dismiss Plaintiffs' Complaint on similar grounds, namely that Plaintiffs lack standing and/or the Court lacks jurisdiction. Dkt. No. 29 & 30. Plaintiffs contend that the cases the State Defendants rely upon apply only to federal employees, officer and agencies, not state actors and that they have been directly harmed by the actions of the Defendants. Dkt. No. 38.

For the reasons stated herein, the Court GRANTS the Secretary's and the State Defendants' Motions to Dismiss.

I. FACTUAL ALLEGATIONS & STATUTORY SCHEME

The Medicare Act, 42 U.S.C. § 1395 et seq., established a national program of health coverage for the aged and disabled. Among other services, Medicare provides coverage for a certain defined "home health services," including "part-time or intermittent nursing care," which are furnished on a "visiting basis" by a home health agency to a Medicare beneficiary in his or her home. 42 U.S.C. § 1395x(m) (home health services). See also 42 U.S.C. §§ 1395x(o) (home health agency) & 1395bbb; 42 C.F.R. Part 484 (conditions for participation for home health agency). Among other responsibilities, the Secretary oversees the Centers for Medicare & Medicaid Services ("CMS"), which operates and administers the Medicare program.

Congress has authorized CMS to enter into agreements with state survey agencies, such as the ISDH, to conduct periodic surveys of home health agencies to determine compliance with the Medicare participation requirements. 42 U.S.C. § 1395aa(a). See also 42 C.F.R. §§ 488.10, 488.11, 488.20. CMS bases its determinationregarding continued participation in the Medicare program on the results of those surveys; CMS is legally entitled to rely on those surveys to ensure that providers meet certain standards. 42 C.F. R. §§ 488.11, 488.12. The Secretary, through CMS, has entered into an agreement with ISDH that designates ISDH as the state survey agency responsible for the performance of the certification functions created by the Act. Ind. Code § 16-28-12-1. See also Advantage Home Health Care, Inc. v. Ind. State Dep't of Health, 829 N.E.2d 499, 501 (Ind. 2005); Woodruff v. Wilson, 484 F. Supp. 2d 876, 880 (S.D. Ind. 2007). ISDH also ensures that providers comply with Indiana State regulations and conduct surveys on Indiana's behalf as well. See Advantage Home Health Care, 829 N.E.2d at 501 (explaining the process of ISDH's inspection and the two reports that are generated therefrom); see also Ind. Code § 16-27 et seq.

A home health agency may also voluntarily choose to participate in a CMS-approved accreditation program by a private accreditation organization. If the home health agency passes the organization's periodic accreditation surveys, then the Secretary may "deem" the home health agency to meet Medicare's conditions of participation, as opposed to being certified through a State or CMS survey. 42 U.S.C. § 1395bb; 42 C.F.R. § 488.6. However, the Secretary's relationship with a private organization is not the same as its relationship with a State survey agency. A state agency may still conduct "validation surveys" to validate the integrity of the private accreditation process, and complaint surveys. 42 U.S.C. § 1395aa(c); 42 C.F.R. § 488.7. If a state survey finds noncompliance with a condition of participation, the home health agency is placed under the survey jurisdiction of the state agency until it returns to substantial compliance or is terminated. 42 C.F.R. § 488.8(d) - (e).

If a health care provider is failing to meet Medicare requirements, then the Secretary, through CMS may terminate the providers' participation in the Medicare program. 42 U.S.C. § 1395cc(b)(2). See also 42 C.F.R. § 489.53(a). Providers may then appeal CMS's determination through the administrative appeal procedure set forth in 42 C.F.R. Part 498. See 42 C.F.R. § 498.3(b)(8). Under this administrative scheme, the provider may seek review before an Administrative Law Judge, 42 C.F.R. § 498.40 et seq., and then, if unsuccessful, the provider may appeal to the Departmental Appeals Board, 42 C.F.R. § 498.80 et seq. The Departmental Appeals Board decision constitutes the Secretary's "final decision." 42 C.F.R. § 498.90.

A dissatisfied provider is entitled to "judicial review of the Secretary's final decision after such hearing as is provided in section 405(g)." 42 U.S.C. § 1395cc(h)(1); 42 U.S.C. § 405(g) ("Any individual, after any final decision of the Secretary made after a hearing to which [it] was a party . . . may obtain a review of such decision by a civil action commenced within 60 days after the mailing to [it] of notice of such decision.").

As noted above, ISDH also issues a state survey report. Based on those findings, ISDH has the authority to, among other penalties, revoke a provider's license or impose civil money penalties. Ind. Code. § 16-27-1-12 (for a home health agency); Ind. Code § 16-25-5-3 (for a hospice). If ISDH revokes a provider's license or imposes one of the other penalties under Indiana Code § 16-27-1-12 or Indiana Code § 16-25-5-3, the action is reviewable under Indiana's Administrative Orders and Procedures Act ("IAOPA"), Indiana Code § 4-21.5 et seq. See Ind. Code § 16-25-5-6.

Nightingale is a "home health agency" that has been in operation for twenty years. Compl. ¶¶ 7, 9, 26. As a "home health agency," Nightingale is classified as a "provider"of services under the Medicare program and has participated in the Medicare program. See, generally, Compl.; 42 U.S.C. § 1395x(u); 42 C.F.R. § 498.2. Nightingale is owned by Brar. Compl. ¶¶ 5,6.

In the Fall of 2015, surveyors from the ISDH conducted complaint surveys at a Nightingale facility and made findings regarding patient health and safety. Compl. ¶¶ 48-50. See also 42 C.F.R. § 484.10 et seq. Based on these findings, CMS notified Nightingale that it was terminating Nightingale's participation in the Medicare program. Compl. ¶¶ 54, 56. Nightingale has initiated an administrative appeal of that determination under 42 C.F.R. Part 498, which is pending. Compl. ¶¶ 55-56.

One of the Nightingale entities has also filed for bankruptcy and is challenging the Medicare reimbursement termination through an adversary bankruptcy action ("Bankruptcy Action"). See In re Nightingale Home Healthcare, Inc., Case No. 1-15-10099-JMC-11 (Bankr. S.D. Ind.); Nightingale Home Healthcare, Inc. v. Burwell, Case No. 1-15-50340-JMC-11 (Bankr. S.D. Ind.). In the Bankruptcy Action, Nightingale sought "a temporary restraining order or preliminary injunction and final injunctive relief enjoining the Defendants from terminating Nightingale's participation in the Medicare and Medicaid programs until its challenges to the Defendants' actions have been heard and decided by an administrative law judge . . . ." In re Nightingale Home Healthcare, Inc., Case No. 1-15-10099-JMc-11, Dkt. No. 1, Compl. ¶ 62. The Bankruptcy Court issued a preliminary injunction pending an administrative appeal of Nightingale's termination. See Nightingale Home Healthcare, Inc. v. Burwell, Case No. 1-15-50340-JMC-11; United States v. Nightingale Home Healthcare, Inc., Case No. 1:16-cv-00317-LJM-TAB, Dkt. No. 5.

Plaintiffs have sued the Secretary in her "official capacity" for injunctive,prospective relief. Compl. ¶ 14. Plaintiffs claim that the Secretary violated the Due Process Clause of the Fifth Amendment, the Equal Protection component of the Due Process Clause of the Fifth Amendment, and the First Amendment of the United States Constitution "[b]y ratifying the other Defendants' actions . . . ." Compl., Counts I - V. Plaintiffs asks the Court to enjoin CMS "from using the Indiana State Department of Health to conduct further surveys," and make it mandatory for the Secretary to use the services of other surveyors "independent from the Indiana State Department of Health and CMS." Compl. at 18, ¶¶ 1(b) & 1(c).

Plaintiffs allege that Defendants Hemmelgarn and Snyder abused the survey process in that they have harassed, discriminated against, intimidated and retaliated against Brar on the basis of race, Plaintiffs' exercise of First Amendment rights and personal dislike of Brar and/or his companies. Compl. ¶¶ 30-53. Plaintiffs assert the State Defendants "under color of State law, subjected and continue to subject Dr. Brar [and Nightingale] to a deprivation of rights secured by the Constitution and laws of the United States," Compl. ¶ 61, and that Plaintiffs have suffered and continue to suffer grievous and irreparable...