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November 27, 1996

DONNA E. SHALALA, et al., Defendants.

The opinion of the court was delivered by: FRIEDMAN

Plaintiff, who operates a long term skilled nursing facility in Menlo Park, California, seeks to prevent the Health Care Financing Administration ("HCFA") of the Department of Health and Human Services from terminating its participation in the Medicare program. Plaintiff has moved for a temporary restraining order and a preliminary injunction and defendants have moved to dismiss the complaint.

 On July 18, 1996, the California Department of Health Services surveyed the Peninsula Plaza Health Care Center and found that the facility was not in substantial compliance with Medicare regulations. The survey consisted of 159 pages and identified 53 deficiencies. On August 9, HHS informed plaintiff that it would be terminated from the Medicare program on August 24, 1996. Termination from Medicaid is automatic upon termination from Medicare. On or about August 22, plaintiff submitted a "plan of correction," and on August 23, it filed a motion for a TRO to prevent its termination from Medicare. On August 28, HHS modified its determination and advised plaintiff that it would be denied Medicare payments only for new admissions. It also authorized a revisit to Peninsula Plaza based on plaintiff's plan of correction. See Def.'s Mot., Ex. D.

 A revisit and follow-up survey were conducted on October 9, 1996. The survey team concluded that plaintiff was still not in compliance although progress had been made. This survey, which was 57 pages long, found 24 deficiencies. Def.'s Mot., Ex. E. The State agency forwarded its recommendation to HHS. On October 29, 1996, HHS informed plaintiff that it would be terminated from Medicare on November 16, 1996, that the daily civil penalties imposed back in August would continue until termination, that payment would continue to be denied for new admissions, and that payment for admissions prior to August 23, 1996, would continue for 30 days from November 16. Plaintiff filed the instant motions on Friday, November 15, 1996. An expedited administrative hearing is scheduled to begin on December 17, 1996, the day after the payments are scheduled to stop, before Administrative Law Judge Steven T. Kessel. See Peninsula Plaza Health Care Center, Docket No. C-97-063, Order and Notice of Hearing (HHS Nov. 20, 1996) ("ALJ Order"), Pl.'s Reply, Ex. 1.

 Plaintiff alleges that it is now in full compliance but that the State agency and HHS refuse to grant a resurvey. Plaintiff argues that it should be given another survey to allow it to demonstrate its full compliance, that the prior surveys were biased, and that HHS has failed to follow its own rules and regulations. Plaintiff proposes a wide variety of remedies and asks the Court variously to rescind the termination or the effective date of the termination, to order HHS or the State agency to immediately revisit the facility and conduct a resurvey, and/or to enjoin the termination of plaintiff's Medicare payments permanently or at least until it has obtained a decision from the ALJ.

 Defendants respond that this is a dispute over Medicare benefits that is governed exclusively by the review provisions of 42 U.S.C. § 405(g), that this Court lacks jurisdiction because plaintiff has failed to exhaust its administrative remedies, and that in any case plaintiff is not entitled to preliminary injunctive relief. *fn1"


 In deciding whether to grant emergency injunctive relief, the Court must consider (1) whether there is a substantial likelihood that plaintiff will succeed on the merits of the case, (2) whether plaintiff will suffer irreparable harm absent an injunction, (3) the harm to defendants or other interested parties, and (4) whether an injunction would be in the public interest or at least not be adverse to the public interest. Sea Containers Ltd. v. Stena AB, 281 U.S. App. D.C. 400, 890 F.2d 1205, 1208 (D.C. Cir. 1989); Washington Metro. Area Transit Comm'n v. Holiday Tours, Inc., 182 U.S. App. D.C. 220, 559 F.2d 841, 843 (D.C. Cir. 1977).

 Plaintiff is not required to prevail on each of these factors. Rather, under Holiday Tours, the factors must be viewed as a continuum -- more of one factor compensating for less of another. The necessary level or degree of likelihood of success will vary according to the court's assessment of the other factors; when the other three factors strongly favor interim relief, a court may grant-injunctive relief when the moving party has merely made out a "substantial" case on the merits. Washington Metro. Area Transit Comm'n v. Holiday Tours, Inc., 559 F.2d at 843; see CityFed Financial Corp. v. Office of Thrift Supervision, 313 U.S. App. D.C. 178, 58 F.3d 738, 747 (D.C. Cir. 1995) ("If the arguments for one factor are particularly strong, an injunction may issue even if the arguments in other areas are rather weak."); Cuomo v. United States Nuclear Regulatory Comm'n, 772 F.2d 972, 974 (D.C. Cir. 1985) ("A stay may be granted with either a high probability of success and some injury, or vice versa.").


 The Health Insurance for the Aged and Disabled program, popularly known as Medicare, was established by Title XVIII of the Social Security Act. 42 U.S.C. § 1395 et seq. This comprehensive statutory and regulatory scheme provides health care benefits for millions of elderly and disabled Americans. For many individuals it is their central resource in the battle against illness and economic hardship that may accompany old age. An important part of the Medicare scheme provides for reimbursement to skilled nursing home facilities that provide long term care for Medicare beneficiaries. The statute establishes elaborate requirements for these skilled nursing facilities and creates a survey and certification process that endeavors to enforce a high level of quality care. 42 U.S.C. § 1395i-3; see also 42 C.F.R. pt. 483 (governing health care provider eligibility); 42 C.F.R. pt. 488 (governing survey, certification and enforcement procedures). Of particular relevance to this litigation is 42 C.F.R. § 488.456(b), which states that a health care provider agreement may be terminated "if a facility is not in substantial compliance with the requirements of participation . . . ."

 Judicial review of Medicare benefits decisions is governed by 42 U.S.C. § 405(g), which provides for judicial review of a "final decision" of the Secretary of HHS. See 42 U.S.C. § 1395cc(h). Section 405(g) generally precludes judicial review of benefits determinations until plaintiffs have exhausted their administrative remedies. Heckler v. Ringer, 466 U.S. 602, 613-14, 80 L. Ed. 2d 622, 104 S. Ct. 2013 (1984); National Kidney Patients Association v. Sullivan, 294 U.S. App. D.C. 269, 958 F.2d 1127, 1130-31 (D.C. Cir. 1992), cert. denied, 506 U.S. 1049, 122 L. Ed. 2d 122, 113 S. Ct. 966 (1993); Americana Healthcare Corp. v. Schweiker, 688 F.2d 1072, 1082 (7th Cir. 1982). HHS argues that Section 405(g) completely precludes review in this case because ALJ Kessel has not yet completed his review and has rendered no final decision, and the complaint therefore should be dismissed for failure to exhaust.

 This is an unusual case. After the State agency conducted its second survey on October 9, 1996 and found some lingering and some newly identified deficiencies, plaintiff submitted a second plan of correction on October 25, explaining, according to plaintiff, that it had remedied all the deficiencies and was in full compliance. HHS did not officially respond to plaintiff's plan of correction, although it indicated in the papers it filed in this Court that in fact the agency has rejected the plan. See Declaration of Julie Sadovich P 16 (Nov. 4, 1996), Def.'s Mot., Ex. B. Nevertheless, plaintiff urged HHS to perform yet another survey that it insists will confirm its claim that it is now in full compliance. See 42 C.F.R. § 488.110(1) ("Revisits are almost always necessary to ascertain whether the deficiencies have indeed been corrected."). Plaintiff also sought prompt administrative review of the termination decision. See 42 C.F.R. §§ 498.5, 498.40. And on November 20, ALJ Kessel took the unusual step of scheduling an expedited hearing to begin on December 17, 1996 and to last no more than three days. ALJ Order at 2. *fn2"

 ALJ Kessel made clear in his Order that he felt obliged to schedule a hearing expeditiously "in view of the fact that [plaintiff's] participation in Medicare would be terminated on November 16, 1996." ALJ Order at 2. He went on to say:

I continue to find that it is imperative to give [plaintiff] a hearing expeditiously given the nature of the remedy that is being imposed by HCFA. [Plaintiff] persuasively argues that its federal funding will expire on or about December 16, 1996, and that it may be difficult or impossible for it to do business thereafter. The potential for damage to [plaintiff], should HCFA's determination to terminate [plaintiff's] participation be shown to be incorrect, is extraordinary, and outweighs any ...

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