Ariz. Recovery Hous. Ass'n v. Ariz. Dep't of Health Servs.

• Decision Date: 27 May 2020
• Docket Number: No. CV-20-00893-PHX-JAT,CV-20-00893-PHX-JAT
• Citation: 462 F.Supp.3d 990
• Parties: ARIZONA RECOVERY HOUSING ASSOCIATION, Plaintiff, v. ARIZONA DEPARTMENT OF HEALTH SERVICES, et al., Defendants.
• Court: U.S. District Court — District of Arizona

462 F.Supp.3d 990

ARIZONA RECOVERY HOUSING ASSOCIATION, Plaintiff,

v.ARIZONA DEPARTMENT OF HEALTH SERVICES, et al., Defendants.

No. CV-20-00893-PHX-JAT

United States District Court, D. Arizona.

Signed May 27, 2020

Colin Patrick Ahler, Eric Harmon Spencer, Heather Dukes, Ryan James Regula, Snell & Wilmer LLP, Phoenix, AZ, Steven G. Polin, Pro Hac Vice, Law Office of Steven G. Polin, Washington, DC, for Plaintiff.

Aubrey Joy Corcoran, Patricia Cracchiolo LaMagna, Office of the Attorney General, Phoenix, AZ, for Defendants.

ORDER

James A. Teilborg, Senior United States District Judge

Pending before the Court is Plaintiff Arizona Recovery Housing Association's ("Plaintiff") Motion for a Temporary Restraining Order ("TRO"). (Doc. 11). Defendants Arizona Department of Health Services ("DHS") and Director Cara Christ ("the Director"; collectively, "Defendants") have responded, (Doc. 16), and Plaintiff has replied, (Doc. 18). The Court now rules on the motion.

I. BACKGROUND

In 2018, the Arizona Legislature passed a series of statutes regulating the operation of "sober living homes" in the state. (Doc. 11 at 5). Under that legislation, a sober living home refers to

any premises, place or building that provides alcohol-free or drug-free housing and that:

(a) Promotes independent living and life skills development.

(b) May provide activities that are directed primarily toward recovery from substance use disorders.

(c) Provides a supervised setting to a group of unrelated individuals who are recovering from substance use disorders.

(d) Does not provide any medical or clinical services or medication administration on-site, except for verification of abstinence.

A.R.S. § 36-2061(3). Before the enactment of this legislation, such homes could operate with a certification from an organization, like Plaintiff's, that inspects and certifies the homes meet national standards for health and safety. (Docs. 11 at 4; 16 at 17). Now, however, a certification is inadequate—all sober living homes must obtain a license from DHS to operate in the state. A.R.S. §§ 36-2062(E), -2064(A).

In addition to instructing DHS to "adopt rules to establish minimum standards and requirements for the licensure of sober living homes in this state necessary to ensure the public health, safety and welfare," the statute also establishes baseline requirements that those standards "shall include." A.R.S. § 30-2062(A). These requirements are:

1. A requirement that each sober living home to develop policies and procedures to allow individuals who are on medication-assisted treatment to continue to receive this treatment while living in the sober living home.

2. Consistent and fair practices for drug and alcohol testing, including frequency, that promote the residents’ recovery.

3. Policies and procedures for the residence to maintain an environment that promotes the safety of the surrounding neighborhood and the community at large.

4. Policies and procedures for discharge planning of persons living in the residence that do not negatively impact the surrounding community.

5. A good neighbor policy to address neighborhood concerns and complaints.

6. A requirement that the operator of each sober living home have available for emergency personnel an up-to-date list of current medications and medical conditions of each person living in the home.

7. A policy that ensures residents are informed of all sober living home rules, residency requirements and resident agreements.

8. Policies and procedures for the management of all monies received and spent by the sober living home in accordance with standard accounting practices, including monies received from residents of the sober living home.

9. A requirement that each sober living home post a statement of resident rights that includes the right to file a complaint about the residence or provider and information about how to file a complaint.

10. Policies that promote recovery by requiring residents to participate in treatment, self-help groups or other recovery supports.

11. Policies requiring abstinence from alcohol and illicit drugs.

12. Procedures regarding the appropriate use and security of medication by a resident.

A.R.S. § 30-2062(A)(1)–(12). DHS must also set the fees that prospective licensees must pay for the initial license, subsequent renewals, and as a penalty for tardy payment. A.R.S. § 36-2063(A). Ninety percent of the fees go to the state's "health services licensing fund," with the remainder deposited in the state's general fund. Id. ; see also A.R.S. § 36-414.

To give teeth to these requirements, the statutory scheme empowers DHS to investigate sober living homes to determine if they are adhering to licensing requirements and impose civil sanctions for noncompliance. See A.R.S. § 36-2063(B) (authorizing the Director to investigate, on reasonable cause and at a reasonable time, compliance with statutory and regulatory requirements). "A person operating a sober living home in this state that has failed to attain or maintain licensure of the sober living home shall pay a civil penalty of up to one thousand dollars for each violation." A.R.S. § 36-2062(B). If DHS determines a home is operating in violation of statutory and regulatory requirements, it may impose an additional penalty assessment of "not more than five hundred dollars for each violation," with "[e]ach day that a violation occurs constitut[ing] a separate violation." A.R.S. § 36-2063(C). Any person fined under this section may request a hearing, however, and DHS cannot take any further act to collect the assessment until the hearing process is complete. Id.

DHS exercised its authority to promulgate rules establishing the "fee structure for licensure, license renewal, and late payments." (Doc. 11 at 7). Those rules impose "[a] licensing fee of $500 plus $100 times the maximum number of residents of the proposed sober living home" for both the initial license and subsequent renewal. A.A.C R9-12-103(A)(6), - 104(A)(3). In addition, the rules call for a $250 late fee if a licensee fails to timely renew the license. A.A.C. R9-12-104(B).

Plaintiff maintains that DHS has overzealously enforced these requirements in a way that harms the homes that Plaintiff has previously certified, largely because the cost of the licensing fees is apparently too much to bear. (Doc. 11 at 9). For example, it claims that DHS responded to various homes’ "reasonable accommodation request[s] for a waiver of the per home and per bed fee" by informing those homes that their applications were incomplete for failure to pay the required fee. (Id. ). In response to a follow-up letter demanding an answer to the reasonable accommodation requests, DHS stated that waiving the fee "would, at the very least, impose a substantial and undue financial burden" because such fees "enable [DHS] to meet its statutory mandate of administering the licensure and regulation of the program." (Id. ). DHS did not respond to subsequent requests to reconsider whether to waive the licensing fees. (Id. at 9–10).

At this stage in the litigation, the precise contours of what happened next remains somewhat unclear. What is clear, however, is that six of the homes Plaintiff had certified elected to close and certain others continued to operate without paying licensing fees. (Id. at 10–11). That situation continued until DHS "threatened ... fines of $1,000 per day with a retroactive date of October 2019 if" those homes did not pay by March 18, 2020. (Id. at 10). At April's end and May's beginning, DHS "issued cease and desist orders and notices of civil money penalty assessments" to two of the unlicensed homes Plaintiff has certified: Carla Vista Sober Living and Spero House. (Docs. 11 at 10–11; 16 at 4). It has also issued "letters of deficiency that indicate [its] intent to deny the applications [of two others]—J&J [Sober Living] and Navarro [House]." (Doc. 16 at 4).

Seeking to halt DHS's efforts to collect these fees from the homes it certifies, Plaintiff filed a complaint in this Court on May 7, 2020 alleging that the statutes and rules governing sober living homes violate the Fair Housing Act ("FHA"), the Americans with Disabilities Act ("ADA"), and the Federal Rehabilitation Act ("FRA"). (Doc. 1). Six days later, Plaintiff filed an amended complaint and a motion requesting both a TRO and a preliminary injunction. (Docs. 7 & 8). The Court denied the motion without prejudice, however, because Plaintiff failed to adequately specify the relief it sought from the Court at that time. (Doc. 9 at 2). That same day, Plaintiff re-filed to specify that it sought a TRO only at this stage. (Doc. 11).

II. DISCUSSION

Although courts employ identical standards to evaluate whether to issue a TRO or a preliminary injunction, the two forms of relief serve different purposes. Johnson v. Macy , No. CV 15-7165 FMO, 2015 WL 9692930, at *3 (C.D. Cal. Oct. 23, 2015). "The purpose of a preliminary injunction is to preserve the status quo and the rights of the parties until a final judgment on the merits can be rendered, while the purpose of a [TRO] is to preserve the status quo before a preliminary injunction hearing may be held." Id. (citations omitted).

Such preliminary relief "is an extraordinary remedy never awarded as of right." Winter v. NRDC, Inc. , 555 U.S. 7, 24, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008). A party is entitled to this extraordinary form of relief if it can show "[it] is likely to succeed on the merits, that [it] is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in [its] favor, and that [the TRO] is in the public interest." Id. at 20, 129 S.Ct. 365. If the party is not quite able to show a likelihood of success on the merits, but is able to raise at least "serious questions going to the merits" it may still be entitled to preliminary relief provided it can show that "the balance of hardships ... tips sharply" in its favor, that the TRO will do more good than harm, and is in...