Community Men. Health v. Mental Health and Recov.

• Decision Date: 22 April 2004
• Docket Number: No. C2-03-581.,C2-03-581.
• Citation: 395 F.Supp.2d 644
• Parties: COMMUNITY MENTAL HEALTH SERVICES OF BELMONT, HARRISON AND MONROE COUNTIES, OHIO Plaintiff, v. MENTAL HEALTH AND RECOVERY BOARD OF BELMONT, HARRISON AND MONROE COUNTIES, et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

395 F.Supp.2d 644

COMMUNITY MENTAL HEALTH SERVICES OF BELMONT, HARRISON AND MONROE COUNTIES, OHIO Plaintiff, v. MENTAL HEALTH AND RECOVERY BOARD OF BELMONT, HARRISON AND MONROE COUNTIES, et al., Defendants.

No. C2-03-581.

United States District Court, S.D. Ohio, Eastern Division.

April 22, 2004.

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Harry Woodrow White, St. Clairsville, OH, for Plaintiff.

Franklin J. Hickman, Hickman & Lowder Co., L.P.A., Cleveland, OH, for Defendants.

OPINION AND ORDER

FROST, District Judge.

This matter is before the Court upon the Motion to Dismiss of Defendant Michael F. Hogan ("Hogan"), Director of the Ohio Department of Mental Health ("ODMH"), Both In His Official and Individual Capacities (Doc. # 70); Brief of Defendants MHR Board and Linda Pickenpaugh In Support of Motions to Dismiss and for Summary Judgment on Plaintiff's Second Amended Complaint (Doc. # 71); Plaintiff's Memorandum In Opposition to the Motions to Dismiss of Defendants Hayes and Hogan (Doc. # 75); Plaintiff's Memorandum In Opposition to the Motion to Dismiss or In The Alternative For Summary Judgment Of Defendants MHRB And Pickenpaugh (Doc. # 76); Reply Memorandum of Defendant Thomas Hayes In Support of Defendant's Motion to Dismiss (Doc. # 83); Reply Memorandum In Support of Defendant Hogan's Motion to Dismiss (Doc. # 84); Reply of MHR Board and Linda Pickenpaugh In Support of Defendants' Motion to Dismiss (Doc. # 85).

I. NATURE OF PROCEEDINGS

Plaintiff Community Mental Health Services of Belmont, Harrison and Monroe Counties, Ohio ("CMHS") Second Amended alleges four claims against defendants. All defendants have filed motions to dismiss plaintiff's claims for lack of subject matter jurisdiction and failure to state a claim for which relief may be granted. Additionally, Defendants Hogan and Hayes move the Court to dismiss plaintiff's claims against them in their individual capacity. Defendant MHRB argues that, as a political subdivision acting as an extension of the state, it is immune from liability pursuant to the 11th Amendment. Plaintiff opposes defendants' motions, arguing that plaintiff has set forth valid claims against defendants, individual defendants Hogan and Hayes are not entitled to qualified immunity, and that Defendants MHRB and Pickenpaugh are not entitled to 11th Amendment immunity.

II. FACTS

Plaintiff CMHS is a non-profit corporation organized in the State of Ohio whose principal purpose is to provide mental health services to the areas of Belmont, Harrison and Monroe counties. (Second Am. Compl. at 3, ¶ 6.) CMHS contracts with the Mental Health Recovery Board (the MHRB) to provide mental health services to both Medicaid and non-Medicaid recipients in the above counties. Id. at 5, ¶ 18. Pursuant to this contract, CMHS receives reimbursement for the mental health services that it has provided to Medicaid eligible individuals from the combination of federal, state and local matching funds. Id. ¶ 17.

Defendant MHRB is a political subdivision of the State of Ohio (defined in Ohio Revised Code § 340.01(B)). The MHRB receives Medicaid and other funds from the Ohio Department of Mental Health ("ODMH") for purpose of contracting with third parties to provide mental health services to individuals who are eligible for Medicaid as well as individuals who are not Medicaid-eligible in the counties of Belmont, Harrison and Monroe, Ohio (the "District"). The MHRB has been designated to administer the community mental health services Medicaid program ("Community Medicaid Program") by Defendants Hogan and Hayes. (Second Am. Compl. at 3, ¶ 7). Defendant Pickenpaugh is the Executive Director of MHRB. Id. ¶ 8.

Defendant Hayes is the Director of the Ohio Department of Job and Family Services ("ODJFS"), the agency of the State of Ohio designated as the single state agency to administer Ohio's Medicaid program. (Second Am. Compl. at 3-4, ¶ 9.) Defendant Hogan is the Director of ODMH, which has been designated by ODJFS to administer the Community Medicaid Program. Id. at 4, ¶ 10.

In the state fiscal year ("SFY") 1998, the MHRB and the CMHS had a Medicaid contract in place to provide mental health services to both Medicaid and non-Medicaid eligible individuals. (Second Am. Compl. at 5, ¶ 18.) In SFY 1998, the CMHS also contracted with the MHRB to provide non-Medicaid services. Id. Submitted with the non-Medicaid contract was a budget which identified the funds available to pay for mental health services that CMHS would provide to Medicaid and non-Medicaid eligible individuals alike. (Sec. Am. Compl. at 5, ¶ 19.) During SFY 1998, the CMHS also had a "Provider Agreement" with ODJFS in place. Id. at ¶ 18.

In the fall of 1998, MHRB's auditors audited CMHS for SFY 1998. (Second Am. Compl. at 6, ¶ 22.) As part of the audit, the MHRB performed a "reconciliation," which determines whether a contractor, like CMHS, has provided more units of service than budgeted to Medicaid-eligible individuals and/or others, and whether the contractor's expenses for those services were less than those projected. Id. at ¶ 23. Upon the audit and reconciliation, MHRB's auditors determined that the CMHS should refund Medicaid Federal Financial Participation funds to the MHRB. CMHS repaid these funds. The MHRB audit was subsequently finalized and closed. Id. ¶ 24.

After the audit was closed the MHRB demanded that the CMHS re-pay Medicaid matching funds in the amount of $73,166.76 for SFY 1998. (Second Am. Compl. at 6, ¶ 26.) In May and June of 2003, the MHRB unilaterally withheld $10,000.00 each month from payments due CMHS from its SFY 2003 contract to repay the alleged Medicaid match overpayment until it received $73,166.67. Id. at 7, ¶ 27.

Thereafter, Defendant Hogan directed the MHRB to stop withholding payments from CMHS in accordance with ODJFS's request. (Second Am. Compl. at 7, ¶ 33.) The MHRB returned $20,000.00 to CMHS. Plaintiff submits that Defendant Hayes has threatened to take future action to recover funds paid to CMHS based upon its SFT 1998 audit. Id. at 35.

Plaintiff claims that on June 3, 2003, ODMH told CMHS that Hogan withheld approval of the MHRB's Mutual System Performance Agreement ("MSPA") because of the number of client grievances against CMHS. (Second Am. Compl. at 10, ¶ 48.) Additionally, plaintiff submits that on July 8, 2003, not less than six ODMH officials arrived at CMHS and attempted to conduct a search and seizure. Id. at ¶¶ 50-52. Plaintiff further states that ODMH contacted CMHS clients who had not requested such contact. Id. at ¶ 53.

First, Plaintiff claims that Defendants MHRB, ODMH and ODJFS deprived plaintiff of its rights within the meaning of the Due Process Clause of the Fourteenth Amendment of the United States Constitution (the "Constitution") when defendants "unilaterally and intentionally misappropriated funds due and owing to plaintiff" for Medicaid services CMHS provided to the District. (Second Am. Compl. Count 1.) Plaintiff's Second Count sets forth a claim against MHRB and ODMH for the violation of plaintiff's due process rights by subjecting plaintiff to "continued harassment and interference with purported client rights investigations." Id. Count 2. Count Three of Plaintiff's Second Amended Complaint alleges that ODMH has violated plaintiff's right to be free from unreasonable searches and seizures as guaranteed by the Fourth Amendment of the Constitution when ODMH arrived at plaintiff's facility and demanded access to its premises. Finally, Plaintiff claims that Defendants MHRB violated plaintiff's rights pursuant to the Fourth and Fourteenth Amendments by failing to train Defendant Pickenpaugh.

As stated infra, all defendants move the Court to dismiss all plaintiff's claims against defendants.

III. STANDARD OF REVIEW

Under Federal Rule of Civil Procedure 12(b)(6), a Complaint should be dismissed if it is clear that no relief could be granted under any set of facts that might be proved consistent with the pleadings. Morgan v. Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir.1987). The rule permits courts to dismiss meritless cases which would otherwise waste judicial resources and result in unnecessary discovery. See Neitzke v. Williams, 490 U.S. 319, 326-27, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989). When considering a motion to dismiss pursuant to Rule 12(b)(6), a court must construe the complaint in a light most favorable to the plaintiff and accept all well-pleaded material allegations as true. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974); Mayer v. Mylod, 988 F.2d 635, 638 (6th Cir.1993).

A complaint need not set down in detail all the particularities of a plaintiff's claim against a defendant. Rule 8(a)(2) of the Federal Rules of Civil Procedure requires only a "short and plain statement of the claim showing that the pleader is entitled to relief." The function of a complaint is to afford the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests. See Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Dunn v. Tennessee, 697 F.2d 121, 125 (6th Cir.1982), cert. denied, 460 U.S. 1086, 103 S.Ct. 1778, 76 L.Ed.2d 349 (1983). However, the complaint "must contain either direct or inferential allegations respecting all the material elements to sustain a recovery under some viable legal theory." Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 436 (6th Cir.1988). Bare assertions of legal conclusions are insufficient. See id.; Allard v. Weitzman (In re DeLorean Motor Co.), 991 F.2d 1236, 1240 (6th Cir.1993).

That said, the Court will grant a motion for dismissal under Rule 12(b)(6) only if there is an absence of law to support a claim of the type made, or of facts sufficient to make a valid claim, or if on the face of the complaint there is an insurmountable bar to relief indicating that the plaintiff does not have a claim.

IV. DISCUSSION

Alleged Violation of Due...