Art & Drama Therapy Inst., Inc. v. Dist. of Columbia

• Decision Date: 23 June 2015
• Docket Number: Civil Action No. 13–cv–1604 (TSC)
• Citation: 110 F.Supp.3d 162
• Parties: Art & Drama Therapy Institute, Inc., et al., Plaintiffs, v. District of Columbia, et al., Defendants.
• Court: U.S. District Court — District of Columbia

110 F.Supp.3d 162

Art & Drama Therapy Institute, Inc., et al., Plaintiffs,

v.District of Columbia, et al., Defendants.

Civil Action No. 13–cv–1604 (TSC)

United States District Court, District of Columbia.

Signed June 23, 2015

Chad Wayne Copeland, Andrew J. Saindon, Office of the Attorney General for the District of Columbia, Washington, DC, for Defendants.

MEMORANDUM OPINION

TANYA S. CHUTKAN, JUDGE

Plaintiffs Art & Drama Therapy Institute, Inc. ("ADTI") and its owners, Margaret M. Dickerson and Sirkku Hiltunen, are suing Defendants the District of Columbia and two of its agencies (collectively the "District") for a variety of claims in connection with the District's termination of ADTI as a Medicaid waiver services provider. (ECF No. 25–1, Corrected Third Am. Compl.). The District has filed a motion to dismiss all counts for lack of subject-matter jurisdiction and for failure to state a claim upon which relief may be granted. (ECF No. 12, Def.'s Mot. to Dismiss; Minute Entry, May 11, 2015). For the following reasons, the court GRANTS the motion and dismisses the case. Plaintiffs' multiple requests for leave to file amended complaints are DENIED.¹

BACKGROUND

I. Factual Background

ADTI is a D.C. corporation providing healthcare services to individuals with intellectual and developmental disabilities. (Corrected Third Am. Compl. ¶ 7; see also ECF No. 12–2, Def.'s Ex. 2 ("Human Care Agreement")). Its owners, Margaret M. Dickerson and Sirkku Hiltunen, claim to be "employed" by the District of Columbia as Medicare providers. (Corrected Third Am. Compl. ¶ 10). Both are elderly, and claim to be members of a minority class. (Id. ¶¶ 2, 9 (identifying one individual as "Black Indian" and one of "Northern European dissent [sic]")). The Corrected Third Amended Complaint appears to allege that Defendants, the District of Columbia and two of its agencies—the Department of Disability Services ("DDS") and the Department of Health Care Finance ("DHCF")—engaged in a pattern of conduct designed to selectively and disproportionately regulate ADTI and its owners on the basis of their age, in violation of the Age Discrimination in Employment Act, and national origin, in violation of 42 U.S.C. § 1983 (and certain D.C. anti-discrimination laws). (Id. ¶ 2).

In particular, Plaintiffs allege that they were "arbitrarily"² selected for review under the DDS's formal Provider Certification Review ("PCR") process to begin on or around July 29, 2013. (Id. ¶¶ 2, 18). Prior to completion of that review, on or around August 12, 2013, Plaintiffs were allegedly placed on a "Do Not Refer List" and "Provider Watch List," along with other elderly and minority service providers. (Id. ¶¶ 2, 14–16).³ Defendants deny that allegation outright.⁴ (Def.'s Mot. to Dismiss at 6 n.7). According to Plaintiffs, however, that review went forward—over Plaintiffs' objections—on October 21–23, 2013. (Corrected Third Am. Compl. ¶ 9).

Plaintiffs also allege a parallel pattern of "harassment" in connection with that review. (Id. ¶ 23). In particular, they claim that they were required to undergo a payroll audit and defend against a variety of miscellaneous accusations including that the certificate of occupancy on their premises had expired, and that they submitted untimely incident reports and compliance documents. (Id. ¶¶ 3, 22–25). Again, Defendants deny these allegations outright, claiming that "[n]otwithstanding [their] clear authority to conduct such an audit, [they] ... cancelled the July audit, and ha[ve] not since audited [Plaintiffs]." (Def.'s Mot. to Dismiss at 6 n.8 (emphasis in original)). On October 19, 2012, the Defendants terminated fee-for-service treatment services with Plaintiffs, causing them "significant economic loss and financial hardship." (Corrected Third Am. Compl. ¶ 26).

II. Regulatory Background

1. Generally

Under the federal Medicaid program, the District of Columbia pays healthcare providers for a range of services to low-income individuals, and the federal government reimburses the District for a share of those expenditures. U.S. ex rel. Digital Healthcare, Inc. v. Affiliated Computer Servs., Inc., 778 F.Supp.2d 37, 40 (D.D.C.2011). "States have considerable flexibility in designing and operating their Medicaid programs, although they must comply with [certain] federal requirements." Id. (citing U.S. GOVERNMENT ACCOUNTABILITY OFFICE, GAO 06–862, MEDICAID THIRD–PARTY LIABILITY, FEDERAL GUIDANCE NEEDED TO HELP STATES ADDRESS CONTINUING PROBLEMS , at 2 (2006)) (quotation marks omitted). Among these requirements, the District, like all states, is required to have its Medicaid plan approved by the federal government. Dist. of Columbia Hosp. Ass'n v. District of Columbia, 224 F.3d 776, 777 (D.C.Cir.2000).

To effectuate that plan, DDS—an agency housed within the larger Developmental Disabilities Administration ("DDA")—has been charged with leading and coordinating the collaborative efforts of District agencies to reform and regulate the system for care and habilitation services provided to residents with intellectual and other developmental disabilities. See D.C. OFFICIAL CODE §§ 7–761.03, .04(b). Specifically, it is required to "monitor the provision of all services and supports and investigate, remediate, and enforce quality standards for all services and supports, including Medicaid-funded services[.]" Id. § 7–761.05(5). To that end, it may "[e]stablish rules, quality standards, and policies for ... [M]edicaid-funded services[,]" id. § 7–761.05(3), as well as issue regulations and execute contracts to meet its responsibilities under the law. Id. § 7–761.09.

2. Qualified Waiver Services

While healthcare services are typically provided in medical institutions, states can request a "waiver" in their Medicaid plans, under Section 1915(c) of the Social Security Act, to allow for "payment for part or all of the cost of home or community-based services[.]" 42 U.S.C. § 1396n(c). Under the waiver program, the District furnishes an array of services to assist Medicaid beneficiaries to live in the community and avoid institutionalization. Plaintiff ADTI is one such provider of waiver services.

Under municipal regulations, waiver providers must meet an extensive list of qualifications, including requirements that they "[c]omply with all applicable District of Columbia licensure requirements" and "[e]nsure compliance with the provider agency's policies and procedures and DDS policies[.]" 29 DCMR §§ 1904.4(d), (k). "Each Waiver provider shall allow appropriate personnel of DHCF, DDS and other authorized agents of the District of Columbia government ... full access to all records during announced and unannounced audits and review." Id. § 1909.1.

There are also extensive regulations governing how DDS may sanction waiver providers who fail to comply with the applicable regulations, including a mandated process for DDS to provide notice of proposed exclusion or termination from the waiver program. 29 DCMR § 1303.1. Waiver providers aggrieved by DDS's determinations may request a hearing, and appeal adverse decisions.See id. §§ 1311, 1313, 1316.

JURISDICTION

Plaintiffs here assert federal question jurisdiction under 28 U.S.C. § 1331. Plaintiffs also assert jurisdiction under 28 U.S.C. § 1343, which grants jurisdiction to federal District Courts to hear, among other things, any civil action "[t]o redress the deprivation, under color of any State law, statute, ordinance, regulation, custom or usage, of any right, privilege or immunity secured by the Constitution of the United States or by any Act of Congress providing for equal rights of citizens or of all persons within the jurisdiction of the United States," id. § 1343(a)(3), or "[t]o recover damages or to secure equitable or other relief under any Act of Congress providing for the protection of civil rights, including the right to vote." Id. § 1343(a)(4). The District of Columbia is deemed a "state" for purposes of the statute. Id. § 1343(b)(1). Accordingly, courts in this Circuit have construed this provision as providing an alternative or supplemental route to jurisdiction for plaintiffs' Section 1983 claims. See, e.g., Earle v. District of Columbia, 707 F.3d 299, 303–04 (D.C.Cir.2012).

Finally, Plaintiffs invoke the court's supplemental jurisdiction over the remaining state-law claims pursuant to 28 U.S.C. § 1367.

PROCEDURAL HISTORY

Plaintiffs filed suit on or about October 20, 2013 alleging three counts. (ECF No. 2, Compl.). Plaintiffs subsequently filed a First Amended Complaint on October 26, 2013. (ECF No. 11, First Am. Compl.). Count I alleges a violation of the Age Discrimination in Employment Act ("ADEA") on the basis of age and national origin, 29 U.S.C. § 623(a)(1), and a constitutional tort under 42 U.S.C. § 1983. Count II alleges a violation of the District of Columbia Human Rights Act ("DCHRA") for discrimination on the basis of age and national origin under D.C.Code §§ 1–2515, –2532.⁵ Count III alleges a separate violation of the DCHRA for retaliation. Id. § 1–2525.⁶ Although Plaintiffs allude to it in previous filings, an additional Count IV appears for the first time in the Second and Third Amended Complaints. (ECF No. 16–1, Second Am. Compl. ¶¶ 39–47; ECF No. 25–1, Third Am. Compl. ¶¶ 39–49). Count IV alleges a violation of 48 U.S.C. § 1983 for, among other things, the infringement of Plaintiffs' due process rights under the Fifth Amendment as a result of "inaccurate or improper unreliable evidence manufacture [sic ] by District employees who were improperly overseen, trained, and controlled in specifically how they carry out their functions." (Id. ¶ 40).

Thereafter, Plaintiffs filed a motion for a Temporary Restraining Order ("TRO") in an attempt to enjoin the Defendant's PCR. Judge Rudolph Contreras, to whom this case was previously assigned, denied that motion on October 22, 2013. In particular, he noted that:

1. Plaintiff has not shown that it is likely to succeed on the merits. It has presented insufficient

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