Willamette Family, Inc. v. Allen

643 F.Supp.3d 1180

WILLAMETTE FAMILY, INC., Plaintiff, v. Patrick ALLEN; David Baden; and Fritz Jenkins in their official capacities, Defendants.

Civ. No. 6:22-cv-00978-AA

United States District Court, D. Oregon, Eugene Division

Signed November 30, 2022

Stephen F. English, Thomas R. Johnson, Perkins Coie, LLP, Portland, OR, Jill Gibson, Lynch Murphy McLane LLP, Portland, OR, Gregory P. Lynch, Lynch Murphy McLane LLP, Bend, OR, Heath Hyatt, Pro Hac Vice, Matthew P. Gordon, Pro Hac Vice, Steven Beale, Pro Hac Vice, Perkins Coie, LLP, Seattle, WA, for Plaintiff.

Anit K. Jindal, David B. Markowitz, Lauren F. Blaesing, Markowitz Herbold PC, Portland, OR, for Defendants.

OPINION AND ORDER

AIKEN, District Judge:

Willamette Family Inc. ("Plaintiff") brings this action under 42 U.S.C. § 1983 seeking declaratory judgment and injunctive relief, claiming deprivation of civil rights in contravention of the Due Process Clause of the Fourteenth Amendment. Plaintiff alleges that Oregon Health Authority ("OHA") audits violate its right to be meaningfully heard and that the audits are conducted according to Oregon Administrative Rules ("OAR[s]s") that are constitutionally void for vagueness. Before the Court is Defendants' Motion to Dismiss, Defendants' Motion for Stay of Discovery, and Plaintiff's Motion for Preliminary Injunction or in the alternative, for Expedited Discovery. For the reasons explained, Defendants' Motion to Dismiss, ECF No. 19, is GRANTED. Defendants' Motion to Stay Discovery, ECF No. 24, is DENIED as moot. Plaintiff's Motion for Preliminary Injunction, ECF No. 26, is DENIED.

BACKGROUND

I. Parties

Plaintiff is an Oregon non-profit corporation providing last-resort services for critical substance abuse and mental health treatment in Eugene and Lane County for over 55 years. First Am. Compl. ("FAC") ¶ 6. The majority of Plaintiff's clients participate in public health programs the State of Oregon operates through OHA. Id. Depending on the client and the services provided, Plaintiff is reimbursed either directly by OHA through its Division of Medical Assistance Programs ("DMAP") or by the Coordinated Care Organization ("CCO") of which Plaintiff is a member. Id.

OHA is an agency of the State of Oregon responsible for administering Oregon's public health programs, including Medicaid, and reimbursing providers like Plaintiff for health services to its participants. Id. ¶ 7. Defendant Patrick Allen is the current director of OHA and is sued in his official capacity. Id. Defendant David Baden is OHA's Chief Financial Officer and oversees the Fiscal and Operations Division within OHA. FAC ¶ 8. Baden is sued in his official capacity as Chief Financial Officer of OHA. Defendant Fritz Jenkins is the Administrator of Program Integrity in the Fiscal and Operations Division at OHA. FAC ¶ 9. Plaintiff alleges that Jenkins oversaw the persons auditing Plaintiff and served as the primary point of contact at OHA for Plaintiff's appeals of the audits. Plaintiff contends that Jenkins has appeared on many occasions as OHA's representative during the administrative proceedings and played a key role making decisions for OHA on both the procedural and substantive issues in dispute in this case. Id. The Court refers to those individually named collectively as "Defendants" and to "OHA" when referring generally to the agency action challenged in this lawsuit.

II. Mental Health Crisis in Oregon

Plaintiff alleges that the United States is experiencing an unprecedented behavioral health and substance abuse crisis which has been exacerbated by the Covid-19 pandemic. Id. ¶ 11. Between 1991 and 2011, the number of opioid prescriptions issued in the United States tripled, and as prescriptions increased, so did abuse and diversion. Id. ¶ 12.

In its FAC, Plaintiff maintains that a study by the National Institutes of Health found that between 2002 and 2012, the rates of nonmedical use of prescription opioids more than doubled from 1.8 percent to 4.1 percent of the United States adult population. As abuse and diversion of prescription opioids skyrocketed, so did heroin use. Id. Over that same period, 2002 and 2012, the number of people in the United States abusing heroin doubled—from 240,000 in 2002 to over 480,000 in 2012. Id. Four years later in 2016, more than two million Americans qualified for an opioid use disorder diagnosis. Id. In 2013, synthetic opioids such as fentanyl became much more common and largely replaced prescription drug abuse. In 2017, the age-adjusted rate of all drug overdose deaths in the United States was nearly 22 per 100,000. The following year, in 2018, deaths due to drug overdose were four times higher than in 1999, driven largely by the opioid crisis. Id. ¶ 14. By 2019, just before the COVID-19 pandemic, more than 20 million Americans over the age of 12 reported having a substance use disorder, but only ten percent of those individuals reported receiving care. Id. ¶ 13.

Plaintiff further contends that alcohol abuse has also increased, alleging that between 2000 and 2016, alcohol-induced deaths claimed the lives of nearly half a million people in the United States. Id. ¶ 16. Moreover, before the COVID-19 pandemic, nearly 20 percent of U.S. adults (around 47 million people) reported having a mental illness. Id. Ten percent of adults reported symptoms of anxiety and/or depressive disorder. After the pandemic, more than one in ten adults reported starting or increasing the use of alcohol or drugs to cope with the pandemic and nearly one-third of people in the in the U.S. who drink alcohol have increased their consumption since the pandemic began. Id. ¶ 18. According to the Centers for Disease Control, more than 93,000 people died from drug overdoses in 2020, the highest number on record and a 29 percent increase from 2019. Id.

In Oregon, in 2017, Plaintiff states that "one in ten Oregonians suffered from a substance use disorder; seven percent suffered from alcohol use disorder; four percent suffered from illegal drug use disorder; and one percent suffered from pain reliever use disorder." Id. ¶ 20. In 2016 and 2017, an estimated 329,000 Oregonians needed treatment for substance use disorder. Id. ¶ 21. On March 27, 2018, Oregon Governor Kate Brown issued an Executive Order declaring alcohol and substance abuse addiction as a public health crisis in Oregon, stating that "addiction treatment and recovery support services are unfortunately beyond reach for many Oregonians in need[.]" Id. ¶ 22.

Plaintiff states that the 2020 National Survey of Drug Use and Health, conducted by the Substance Abuse and Mental Health Services Administration under the United States Department of Health and Human Services, found that Oregon ranked as the worst state for addiction, down from fourth worst the year before. Id. ¶ 25. Oregon ranked first for methamphetamine use, first for prescription drug abuse, second for marijuana use, seventh for cocaine use, and eleventh for heroin use. Id.

Plaintiff asserts that the 2020 National Survey of Drug Use and Health found that Oregon ranked as the worst state in the nation for access to substance abuse treatment, down from 47th in 2019. Id. ¶ 26. By some estimates, since the beginning of the COVID-19 pandemic, Oregon has lost 40 percent of its addiction treatment beds for adults and 60 percent of its beds for adolescents. Id. ¶ 27.

Plaintiff maintains that it is a recognized leader in the field of alcoholism and drug addiction treatment. Id. ¶ 30. In recent years, Plaintiff has served tens of thousands of people who struggle with mental health and substance abuse. Id. ¶ 31. In 2021, Plaintiff served over 7,000 people with alcohol and/or drug addiction. Id. Plaintiff offers seven different facilities with 106 residential and detox beds and 20 Recovery Living and Transitional Housing units that provide clean, safe, drug-free living environments for clients and their families. Id. ¶ 32.

III. OHA Audit Process

The State contracts with providers such as Plaintiff to deliver healthcare services to Oregonians in certain public health programs. Id. ¶¶ 6-7, 58 (alleging that Plaintiff is a "provider" subject to OAR chapter 407, division 120); see also OAR 407-120-0100(31) (defining "provider" as an "individual, facility, institution corporate entity, or other organization which supplies or provides" services "pursuant to a contract."). OHA reimburses providers for the services delivered to covered individuals. FAC ¶¶ 6-7. Because it participates in these programs, and receives public funding, Plaintiff is subject to regulations administered by OHA. Defs. Mot. to Dismiss ("MTD") at 3; see generally OAR Chapter 309, OAR Chapter 407, OAR Chapter 410.

The OARs set forth requirements for providers to document the healthcare services delivered to Oregonians and for which providers received reimbursement from OHA. See, e.g., OAR 309-019-0135(3) (requiring providers to conduct an entry assessment to ensure that an individual receives certain services and that those services are documented). Among other things, a provider's documentation must support the reimbursements that the provider obtained from OHA, must describe the relationship of the services to the treatment objective described in the service plan, and must include periodic updates regarding the patient's progress. OAR 410-120-1360(2) (stating that documentation must "support[s] the specific care, items, or services for which payment has been requested."); OAR 309-019-0140(3)(d) (stating that documentation must include "relationship of the services provided to the treatment objective described in the service plan"); OAR 309-019-0140(3)(g) (stating that documentation must include "[p]eriodic updates describing the individual's progress").

The regulatory scheme also subjects providers such as Plaintiff to potential audits from OHA to ensure compliance with rules governing reimbursement from state public health programs. OAR 410-120-1396(1). OHA can recover an "overp...