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ABA, Inc. v. District of Columbia

United States District Court, D. Columbia.

May 9, 2014

ABA, Inc., et al., Plaintiffs,
v.
District of Columbia, Defendant

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[Copyrighted Material Omitted]

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For ABA, INC., NURSING UNLIMITED SERVICES, INC., IMMACULATE HEALTH CARE SERVICES, INC., T& N RELIABLE NURSING CARE, LLC, Plaintiffs: Reginald J. Richter, LEAD ATTORNEY, RICHTER LAW GROUP, Washington, DC.

For PREMIER HEALTH SERVICES, INC., Plaintiff: Erika Rae Greene, LEAD ATTORNEY, Bradford Paul Johnson, JOHNSON LAW GROUP, INTERNATIONAL, PLLC, Washington, DC; Reginald J. Richter, LEAD ATTORNEY, RICHTER LAW GROUP, Washington, DC.

For CHINENYE ARUNGWA, Plaintiff: Erika Rae Greene, LEAD ATTORNEY, JOHNSON LAW GROUP, INTERNATIONAL, PLLC, Washington, DC; Reginald J. Richter, LEAD ATTORNEY, RICHTER LAW GROUP, Washington, DC.

For HEALTH MANAGEMENT, INC., Intervenor Plaintiff: Alan Scott Bolden, Daniel Z. Herbst, Lawrence S. Sher, LEAD ATTORNEYS, REED SMITH LLP, Washington, DC.

For DISTRICT OF COLUMBIA, Defendant: Keith David Parsons, LEAD ATTORNEY, Melissa Lael Baker, OFFICE OF THE ATTORNEY GENERAL FOR THE DISTRICT OF COLUMBIA, Washington, DC.

For NURSING ENTERPRISES, INC., Movant: Reginald J. Richter, LEAD ATTORNEY, RICHTER LAW GROUP, Washington, DC.

For VIZION ONE, INC., Movant: Donald M. Temple, LEAD ATTORNEY, DONALD M. TEMPLE, P.C., Washington, DC.

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OPINION ON MOTION FOR PRELIMINARY INJUNCTION

ROSEMARY M. COLLYER, United States District Judge.

What happens when the District of Columbia abruptly stops payments for

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hundreds of home health care aides to Medicaid beneficiaries? When the D.C. Department of Health Care Finance ceased payments, without prior warning, to fifty-two percent of the providers who care for seventy-nine percent of the city's needy beneficiaries, chaos ensued. And, thus, this litigation.

Under the applicable federal regulation, Department of Health Care Finance (DHCF) determined that it was required to suspend Medicaid payments for home health care providers because there is a " credible allegation of fraud" against each of the Plaintiffs, " for which an investigation is pending under the Medicaid Program." See 42 C.F.R. § 455.23. Nonetheless, Plaintiffs were required to continue to perform all services until their patients were transferred to a new provider. After four weeks of providing services without compensation, Plaintiffs sued to require DHCF to resume payments before each Plaintiff literally ran out of money and was run out of business. After hearing testimony and arguments, the Court determined that DHCF intended to terminate Plaintiffs' contracts and to substitute itself and other providers in their places, not merely to suspend payments temporarily. Thus, the Court concluded that Plaintiffs had shown a likelihood of success on the merits of their due process claim, i.e., because Plaintiffs had a viable property interest, protected by due process, that DHCF could not terminate without prior notice and hearing. The Court issued a TRO requiring the agency to pay Plaintiffs for Medicaid services rendered on and after the dates of their terminations. See TRO [Dkt. 12]; Order Modifying TRO [Dkt. 16].

Plaintiffs then sought a preliminary injunction and the matter went to hearing on April 17, 2014. See PI Hrg. Tr. [Dkt. 40-1]. To accommodate the District's request for time to brief the issues, the Court extended the TRO to May 9, 2014. See id. at 215-20. Having now heard substantially more evidence, the Court holds that Plaintiffs have not demonstrated a likelihood of success on the merits because they have not presented evidence sufficient to demonstrate a property interest that is protected by due process, as they have not shown that DHCF intended to terminate them from the Medicaid program. As explained below, the motion for preliminary injunction will be denied.

I. FACTS

Plaintiffs are ABA, Inc.; Premier Health Services, Inc. and its majority owner Chinenye Arungwa; Immaculate Health Care Services, Inc.; T& N Reliable Nursing Care, LLC; Nursing Unlimited Services, Inc.; and Health Management, Inc. (HMI).[1] See Am. Compl. [Dkt. 14]; HMI Compl. [Dkt. 31]. They are licensed home health care providers who are parties to Medicaid Provider Agreements with the District of Columbia.

" Medicaid is a cooperative federal-state program through which the Federal Government provides financial assistance to States [including the District of Columbia] so that they may furnish medical care to needy individuals." 42 U.S.C. § 1396; see also DHCF Supp. [Dkt. 33] (Majestic Decl.) ¶ 4. Although participation in the program is voluntary, participants must comply with federal requirements. Id. § 1396a; Wilder v. Virginia Hosp. Ass'n, 496 U.S. 498, 502, 110 S.Ct. 2510, 110 L.Ed.2d 455 (1990). The program is regulated

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by the Centers for Medicare & Medicaid Services (CMS), a constituent agency of the Department of Health and Human Services (HHS).

DHCF is the " State" Medicaid agency for the District of Columbia. DHCF is charged with funding " the Medicaid program's provider payments, administrative overhead, and vendor contracts through a combination of federal and local dollars . . . ." Pls. Exs. [Dkt. 8-1],[2] Ex. C (Testimony of DHCF Director Wayne Turnage before D.C. Council Committee on Health on March 6, 2014) (Turnage Testimony) at 3. Since 1998, the federal government has covered seventy percent of the District of Columbia's Medicaid program costs. See Majestic Decl. ¶ 6; see also Turnage Testimony at 3. However, the costs of the personal care program grew rapidly after 2008, without apparent reason. Id. at 6-8. " [B]y the end of FY 2013, there were more than 10,000 beneficiaries receiving personal care services, reflecting an annual growth rate of 28 percent." Id. at 7. The unprecedented growth in the program created serious budget challenges, forcing DHCF to determine how to " contain the growth in this benefit while protecting the care for those Medicaid recipients who really need it." Id. at 8. DHCF's Long-Term Care Administration and Division of Program Integrity conducted an investigation, uncovered credible allegations of fraud against many home health care aide providers, and referred these allegations to law enforcement.[3] Mr. Turnage told the D.C. Council Committee that as a result of these findings, DHCF was about to suspend Medicaid payments to fifty-two percent of home health care providers who provide service in the District. Id. at 8. DHCF Director Turnage noted that " [t]his action will potentially impact [seventy-nine] percent of the beneficiaries who receive personal care and will require DHCF to expeditiously develop another option for delivery of this benefit in FY2014 and beyond." Id. at 9. Mr. Turnage told the D.C. Council Committee that DHCF had developed a " temporary solution," approved by CMS, whereby DHCF had authority to act as its own provider and could contract directly with a staffing agency to provide personal care aides to " mitigate any shortage of providers" created by the suspensions. Id. at 9, 11.

DHCF's suspension of payments to Plaintiffs is the subject of this lawsuit. On March 7, 2014, the day after Mr. Turnage testified to the Committee of the D.C. Council, DHCF apparently sent notice to all Plaintiffs that it was withholding payments for all claims submitted for Personal Care Aid (PCA) services to the District's Medicaid beneficiaries. Am. Compl. ¶ 21; Pls. Exs., Ex. A (March 7, 21, and 31 Letters to Premier) & Pls. Exs., Ex. B (March 7, 21, and 31 Letters to ABA).[4] The March 7 letter explained that DHCF was suspending Medicaid payments to Plaintiffs [5] pursuant to 42 C.F.R. § 455.23,

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which requires a State Medicaid agency to suspend payment temporarily if the agency has determined (1) there is a " credible allegation of fraud for which an investigation is pending under the Medicaid program" and (2) there is no " good cause" to continue payments.[6] DHCF stated that it had determined that there was a credible allegation of fraud against each Plaintiff because each had " repeatedly billed and [were] reimbursed for PCA services that were not supported by the documentation." See Pls. Exs., Ex. A (Letters to Premier) & Ex. B (Letters to ABA).

Plaintiffs allege that the March 7 letters were supposedly sent by certified mail, but that Plaintiffs never received them. Am. Compl. ¶ 21. The March 7 letter was sent to Premier at the wrong address. Id. ¶ 23. After complaints from various home health care agencies about not having received any notice, DHCF sent a copy of the March 7 letter to each of the Plaintiffs by email. Id. ¶ 24. On March 21, 2014, DHCF also sent an identical letter to each Plaintiff by regular mail. Id. ¶ 25. The March 7 and 21 letters stated:

The payment suspension is for a temporary period. However, DHCF will continue to withhold payments until:
1. The agency or the prosecuting authorities determine that there is insufficient evidence of fraud by the provider;
2. Legal proceedings related to provider's alleged fraud are completed;

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3. You, as the provider, have submitted written evidence justifying the termination of the suspension of payments and DHCF has accepted the evidence and arguments; or
4. An Administrative Law Judge with the Office of Administrative Hearings has ordered the resumption of payments.
You have the right to request an administrative review in response to this notice by DHCF. Please send your written evidence to DHCF to review within five (5) days of receipt of this notice. . . .
In addition to your right to request an administrative review by DHCF, you have the right to appeal this decision by filing a written request with the District of Columbia Office of Administrative Hearings [OAH]. You must file a written request for a hearing before an administrative law judge within fifteen (15) calendar days of receipt of this notice.

Pls. Exs., Ex. A (Letters to Premier) & Ex. B (Letters to ABA). On March 31, 2014, DHCF also sent each Plaintiff a notice of suspension of payments for personal care assistance provided under the Elderly & Persons with Physical Disabilities (EPD) Waiver Program.[7] Id., Ex. A (Letters to Premier) & Ex. B (Letters to ABA).

On March 26, 2014, DHCF and the D.C. Department of Health (DOH) met with the immediate Plaintiffs and other suspended providers of home health care services. DOH told Plaintiffs that they are legally obligated to continue to provide Personal Care Aid to all patients, despite payment suspension, until all Medicaid beneficiaries are transferred to alternative providers. Am. Comp. ¶ ¶ 43, 62. DOH separately made it clear that failure to continue to provide services, without payment, could subject each provider to loss of its license as a Medicaid service provider as well as to civil penalties and other liability.[8] Id. ¶ 45. Plaintiffs assert that they are required to give thirty days' notice to Medicaid beneficiaries before transferring them to another provider. Id. ¶ 44. At the March 26 meeting, DHCF presented a proposed process for transferring patients to non-suspended providers. Id. ¶ 58. Plaintiffs allege that the non-suspended providers did not have the capacity to accept all of Plaintiffs' beneficiaries, id. ¶ 64, a point that DHCF does not dispute. On March 31, 2014, DHCF notified Plaintiffs by email that it would release its plan for the patient transfer process the next day. DHCF had not released any such plan before Plaintiffs filed this suit on April 2, 2014. Id. ¶ 60.

On March 20, 2014, DOH converted Plaintiffs' home care licenses to provisional status under D.C. Code § 44-506(a)(1). Pls. Exs., Ex. E (Mar. 20, 2014 DOH Letters). Code § 44-506(a)(1) provides that a provisional license may be issued to a facility that has numerous deficiencies, or a single serious deficiency, with respect ...


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