Bunting v. N.J. Office of State Comptroller
| Decision Date | 20 September 2019 |
| Docket Number | Civil No. 19-00026 (RBK/JS) |
| Parties | MICHELLE BUNTING, CHARLES BUNTING, AND BEVERLYN GRISSOM, Plaintiffs, v. NEW JERSEY OFFICE OF THE STATE COMPTROLLER, et al., Defendants. |
| Court | U.S. District Court — District of New Jersey |
NOT FOR PUBLICATION
This matter comes before the Court on Defendants' Motion to Dismiss (Doc. No. 5) Plaintiffs' Complaint, in which Michelle Bunting, Charles Bunting, and Beverlyn Grissom allege that state agencies and officials violated their Sixth and Fourteenth Amendment rights under 42 U.S.C. § 1983 and committed similar violations of New Jersey state law. For the reasons below, Defendants' motion is GRANTED, and Plaintiffs' Complaint is DISMISSED.
This case involves a dispute between the operators of a pediatric medical daycare and those involved in state administrative proceedings against the daycare. Plaintiffs formerly operated a pediatric medical daycare ("PMDC") known as Mercer County Children's Medical Daycare, LLC ("Mercer"). (Doc. No. 1-2 ("Compl.") at ¶ 4.) Mercer served young children with special health care needs in Trenton, New Jersey. (Compl. at ¶ 36.) The New Jersey Division of Medical Assistance and Health Services ("DMAHS") approved Mercer as a Medicaid provider. (Id. at ¶ 38.) As an approved Medicaid provider, Mercer received an initial license in June 2003 from the New Jersey Department of Health and Senior Services ("DHSS," now known as the Department of Health). (Id. at ¶ 37.) That license authorized Mercer to care for up to 70 children. (Id.)
As alleged in the Complaint, Mercer's license permitted care for up to 70 children. (Id. at ¶ 42). However, in November 2003, DHSS notified all PMDC providers that it would enforce a cap of 27 patients. (Id. at ¶ 42.) Wishing to protest the 27-child cap, Mercer requested a hearing before the Office of Administrative Law ("OAL"). (Id. at ¶¶ 44-47.) The presiding ALJ ultimately allowed Mercer to continue providing services for to up to 70 children as its initial license permitted. (Id.)
In November 2009, the state adopted new PMDC regulations that again included a 27-child cap. (Id. at ¶ 48.) In March 2011, DHSS conducted a survey and found that Mercer exceeded the 27-child cap. (Compl. at ¶ 54.) As such, DHSS issued a correction plan that: (1) included a curtailment order forbidding Mercer from admitting new children to the facility and (2) required Mercer to engage a Consultant Administrator. (Id. at ¶¶ 55-56, 61.) DHSS also fined Mercer $1.5 million for violating the 27-child cap and other PMDC regulations. (Id.)1
Mercer also filed a complaint in the District of New Jersey against DHSS, the New Jersey Medicaid Fraud Division ("MFD"), the New Jersey Department of Human Services ("DHS"), the New Jersey Office of the State Comptroller ("OSC"), the New Jersey Office of the Attorney General ("OAG"), Carlisle & Associates2, and several state officials. (See Doc. No. 5-7.) On May16, 2013, Mercer filed an amended complaint ("2013 Amended Complaint"), which included claims for violation of due process and equal protection rights, as well as 42 U.S.C. § 1983 claims against both state agency and state official defendants. Id. In four separate opinions, Judge Anne Thompson of the District of New Jersey granted defendants' Rule 12(b)(6), Rule 12(c), and Rule 56 motions to dismiss all of Mercer's claims.3
Following dismissal of its federal case, Mercer continued to challenge DHSS's actions through OAL. (Compl. at ¶ 118.) Over time, DHSS withdrew the fines and penalties it had assessed on Mercer, withdrawing the final fines and penalties two days before the OAL hearings were to commence in October 2018. (Id. at ¶¶ 120-21, 124.) As a result of the withdrawal of all the penalties and fines, the OAL hearing was cancelled. (Id. at ¶ 122-23.)
In parallel to the actions taken by DHSS, on March 28, 2011, MFD issued a Notice of Claim and Certificate of Debt seeking to recover nearly $12.5 million from Mercer for improper Medicaid billing. (Id. at ¶¶ 130-31.) The $12.5 million represented the amount of Medicaid disbursements for the children allegedly admitted in violation of state regulation and the associated civil penalties for Mercer's violations. (Id. at ¶¶ 130-31.) The MFD also ordered withholding of Mercer's Medicaid reimbursements. (Id. at ¶ 129.) In February 2012, Mercer challenged the March 2011 Notice of Claim before an ALJ. (Id. at ¶¶ 126-29, 135-36.) Due to financial difficulties, Mercer ceased operations in July 2012. (Id. at ¶ 138.)
On October 3, 2013, MFD issued an Amended Notice of Claim and Amended Certificate of Debt for $6.2 million in damages. (Id. at ¶ 139.) The ALJ issued an initial decision on Plaintiffs'claim on January 5, 2017, and DMAHS issued a final decision dismissing most of Plaintiffs' claims on March 10, 2017. (Id. at ¶ 142.)
After DMAHS' final decision, MFD issued a second amended Certificate of Debt in September 2018. (Id. at ¶¶ 148.) MFD's amendment limited the amount of recovery sought to $638,807 and named only Mercer and Plaintiff Michelle Bunting (Id. at ¶ 148.) Michelle Bunting appealed the final DMAHS decision to the New Jersey Appellate Division (id. at ¶¶ 143-44), which affirmed DMAHS' decision in August 2019. Mercer Cty. Children's Med. Daycare, LLC v. Div. of Med. Assistance & Health Servs., Docket No. A-3804-16T3, 2019 WL 3729797 (N.J. Super. Ct. App. Div. Aug. 8, 2019).
In November 2018, Plaintiffs filed the instant Complaint in New Jersey Superior Court. (Compl. at 2.) Defendants then removed the matter to this Court in January 2019. (Doc. No. 1.)
Plaintiffs' Complaint has twenty-two claims, many of which are vague and seem to overlap. Some claims concern DHSS' imposition of fines and penalties for alleged violations of the 27-child cap, while others concern the Certificate of Debt issued by MFD, and still others relate to both. Despite this confusion, this Court finds it best to organize Plaintiffs' claims into four categories.
First, in Counts I, II, VI, VII, XII, and XIII, Plaintiffs allege that Defendants violated Plaintiffs' Fourteenth Amendment substantive and procedural due process rights. Second, in Counts III, VIII, and XXI, Plaintiffs request relief under 42 U.S.C. § 1983 for alleged violations of Medicaid regulations and Fourteenth Amendment procedural and substantive due process and equal protection rights. Third, in Count XI, Plaintiffs contend that by filing a certificate of debtagainst Plaintiffs Michelle Bunting and Charles Bunting, Defendants assessed criminal penalties against the Buntings without benefit of a jury trial in violation of the Sixth Amendment.
Finally, in Counts IV, V, IX, X, XIV, XV, XVI, XVII, XVIII, XIX, XX, and XXII, Plaintiffs advance claims under three New Jersey laws: N.J.S.A. 10:6-1 et seq. (the New Jersey Civil Rights Act or NJCRA), N.J.S.A. 59:1-1 et seq. (the New Jersey Tort Claims Act or NJTCA), and N.J.S.A. 59:13-1 et seq. (the New Jersey Contractual Liability Act or NJCLA). The substance of Plaintiffs' NJCRA claims parallels that of the federal claims under 42 U.S.C. § 1983. The common law tort and contract claims include assertions of malice, abuse of process, breach of contract, and breach of covenant of good faith and fair dealing.4 Plaintiffs request declaratory relief, injunctive relief, reinstatement of Mercer's original 70-slot license, and damages.
Federal Rule of Civil Procedure 12(b)(6) allows a court to dismiss an action for failure to state a claim upon which relief can be granted. When evaluating a motion to dismiss, "courts accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief." Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (quoting Phillips v. Cty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)). In other words, a complaint survives a motion to dismiss if it contains enough factual matter, accepted as true, to "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
To make this determination, courts conduct a three-part analysis. Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010). First, the Court must "tak[e] note of the elements a plaintiffmust plead to state a claim." Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 675 (2009)). Second, the Court should identify allegations that, "because they are no more than conclusions, are not entitled to the assumption of truth." Id. (quoting Iqbal, 556 U.S. at 680). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. (quoting Iqbal, 556 U.S. at 678). Finally, "when there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief." Id. (quoting Iqbal, 556 U.S. at 679). A complaint cannot survive a motion to dismiss where a court can only infer that a claim is merely possible rather than plausible. Id.
Defendants argue that Plaintiffs' claims fail under an array of legal theories. The Court agrees that under some or all of these theories, Plaintiffs' claims must fail. Because the Court finds that all of Plaintiffs' federal claims cannot go forward, the Court declines to exercise supplemental jurisdiction over Plaintiffs' state law claims, and thus does not examine their merits.
The Court begins its analysis of Plaintiffs' federal law claims by examining how the doctrine of res judicata applies in light of Judge Thompson's dismissal of Plaintiffs' prior action in the District of New Jersey. The Court then turns to Plaintiffs' remaining claims in categories one through three—namely, Plaintiffs' direct Fourteenth Amendment claims, their ...
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