Evergreen Presbyterian Ministries v. Hood
| Decision Date | 11 December 2000 |
| Docket Number | No. 00-30498,00-30498 |
| Citation | 235 F.3d 908 |
| Parties | (5th Cir. 2000) EVERGREEN PRESBYTERIAN MINISTRIES INC; HEALTH SERVICE DISTRICT 1 POINTE COUPEE, doing business as Pointe Coupee General Hospital; HOSPITAL SERVICE DISTRICT NO 1 AVOYELLES PARISH, doing business as Bunkie General Hospital; FARLEY WAYNE LUTTRELL; ROBERT FORD; ET AL; IBERIA COMPREHENSIVE COMMUNITY HEALTH CENTER INC; NEW ORLEANS PRIMARY HEALTH CARE HEALTH DEPARTMENT/HEALTH CARE FOR THE HOMELESS INC; DESOTO COMPREHENSIVE HEALTH CENTER INC; ST HELENA COMMUNITY HEALTH CENTER INC; DAVID RAINES COMMUNITY HEALTH CENTER INC; BAYOU COMPREHENSIVE HEALTH FOUNDATION INC; CATAHOULA PARISH HOSPITAL DISTRICT NO 2 INC; CAPITOL CITY FAMILY HEALTH CENTER INC; SOUTHWEST LOUISIANA PRIMARY HEALTH CARE CENTER INC; DELTA RURAL HEALTH SERVICES INC; LEESVILLE RURAL HEALTH SERVICES INC; NATCHITOCHES OUTPATIENT MEDICAL CENTER INC; ST GABRIEL HEALTH CLINIC INC; TECHE ACTION BOARD INC, doing business as Tech Action Clinic; EXCEL INC, Plaintiffs - Appellees, v. DAVID W HOOD, Secretary Louisiana Department of Health & Hospitals, Defendant - Appellant. LOUISIANA NURSING HOME ASSOCIATION; I H S LULING; I H S SHREVEPORT; I H S GONZALES; I H S LAFAYETTE; ET AL, Plaintiffs - Appellees, v. DAVID W HOOD, Individually and in his official capacity as Secretary of the Department of Health & Hospitals for the State of Louisiana, Defendant - Appellant. CALCASIEU ASSOCIATION OF RETARDED CITIZENS INC; EVANGELINE ASSOCIATION OF RETARDED CITIZENS INC; SOUTHERN COMFORT COMMUNITY HOMES; PREFERRED LIVING INC; IBERIA ASSOCIATION OF RETARDED CITIZENS INC; MULTI CARE INC; IBERIA COMPREHENSIVE COMMUNITY HEALTH CENTER INC; NEW ORLEANS PRIMARY HEALTH CARE HEALTH DEPARTMENT/HEALTH CARE FOR THE HOMELESS INC; DESOTO COMPREHENSIVE HEALTH CENTER INC; ST HELENA COMMUNITY HEALTH CENTER INC; DAVID RAINES COMMUNITY HEALTH CENTER INC; BAYOU COMPREHENSIVE HEALTH FOUNDATION INC; CATAHOULA PARISH HOSPITAL DISTRICT NO 2 INC; CAPITOL CITY FAMILY HEALTH CENTER INC; SOUTHWEST LOUISIANA PRIMARY HEALTH CARE CENTER INC; DELTA R |
| Court | U.S. Court of Appeals — Fifth Circuit |
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[Copyrighted Material Omitted] Appeals from the United States District Court for the Western District of Louisiana.
Before KING, Chief Judge, and REYNALDO G. GARZA and PARKER, Circuit Judges.
Defendant-Appellant David W. Hood, Secretary of the Louisiana Department of Health and Hospitals, appeals from the district court's grant of a preliminary injunction in favor of Plaintiffs-Appellees Evergreen Presbyterian Ministries, Inc., et al. For the following reasons, we VACATE the preliminary injunction and REMAND to the district court for further proceedings.
The Secretary of the Louisiana Department of Health and Hospitals is before this court seeking relief from the district court's preliminary injunction. Due to a budgetary shortfall in Louisiana's Medicaid program and an Executive Order by Louisiana's Governor to achieve a savings in the state's general fund, the Louisiana Department of Health and Hospitals ("LDHH") proposed a seven-percent (7%) across-the-board reduction of Medicaid reimbursement rates paid to private health care providers and certain targeted cuts1 in Louisiana's Medicaid program. This proposal precipitated a series of suits against the Secretary of LDHH, brought by intermediate care facilities for the mentally retarded, rural hospitals, nursing homes, home health agencies, community homes, hospitals, and Medicaid recipients, in which the plaintiffs are seeking to prevent the reimbursement rate reduction from becoming effective.
The focus of these lawsuits is two sections of the Social Security Act, 42 U.S.C. §§ 1396a(a)(13)(A) and 1396a(a)(30)(A), which the plaintiffs claim were violated when LDHH attempted to implement the reimbursement rate reduction. In order for us to provide the proper background for the resolution of these issues, we must first undertake a review of the Medicaid program as it exists in Louisiana.
In the Social Security Amendments of 1965, Congress established Title XIX, commonly referred to as the "Medicaid Act." See Pub. L. No. 89-97, 79 Stat. 286 (1965) (). The Medicaid Act established a program that supplies federal funds to states that agree to maintain a medical assistance program for the benefit of aged, blind, or permanently disabled individuals and for the benefit of families with dependent children. See 42 U.S.C. § 1396 (1992). The Medicaid program is a cooperative program that is financed jointly by the federal and state governments. See 42 C.F.R. § 430.0 (1999). Once a state enters the program, it is charged with the program's administration within its borders. See id.
The program is voluntary; however, once a state chooses to join, it must follow the requirements set forth in the Medicaid Act and in its implementing regulations. See Wilder v. Va. Hosp. Ass'n, 496 U.S. 498, 502 (1990). One of these requirements is that in order for a state to qualify for federal funding, also known as federal financial participation ("FFP"), it must submit a state plan2 to the Health Care Financing Administration ("HCFA") for approval.3 See 42 C.F.R. § 430.10.
The state of Louisiana has chosen to participate in the Medicaid program. Under the joint federal-state funding arrangement for Louisiana's Medicaid program, Louisiana is required to pay, or "front," thirty percent of the funds necessary to reimburse Medicaid providers. The remaining seventy percent is provided by the federal government. In implementing the state program, Louisiana designated LDHH to administer the plan within the state. David Hood, the Defendant-Appellant, is the Secretary of LDHH.
As the Secretary of LDHH, Hood is charged with the responsibility of submitting the state plan and any amendments to HCFA. See 42 C.F.R. § 430.12. An amendment must be submitted to HCFA whenever there is a "[m]aterial change[] in State law, organization, or policy, or in the State's operation of the Medicaid program." Id. § 430.12(c). A proposed amendment to Louisiana's state plan is the subject of this suit.
In November 1999, Hood was informed of a $153 million projected budget deficit within LDHH's Medicaid program for the 1999-2000 fiscal year. On December 3, 1999, Hood reported this projected shortfall to the state's Joint Legislative Committee on the Budget. On December 7, this impending budgetary shortfall was compounded by an Executive Order from Louisiana's Governor directing all executive branches of the state government to achieve a savings of approximately $50 million in the state's general fund.4
Hood responded first to the Executive Order by devising an "Executive Order Reduction," which was designed to produce various savings within LDHH while attempting to minimize the impact on private providers. However, to respond to the $153 million shortfall5 within the Medicaid program, LDHH proposed, along with the targeted cuts, a 7% across-the-- board reduction of the reimbursements to private providers of services to Medicaid recipients.
To implement the 7% reimbursement reduction, Hood and Charles Castille, LDHH's Undersecretary, devised a Spending Reduction Plan, the contents of which make up the proposed amendment to Louisiana's state plan. The Spending Reduction Plan, if implemented, would reduce funding for the Medicaid program in Louisiana by a total of $180 million.6
On January 24, 2000, Hood presented the Spending Reduction Plan in a memorandum to the Joint Legislative Committee on the Budget. Hood decided that the proposed plan would be implemented by an assortment of emergency rules pursuant to the procedures in the then-approved state plan.7 On January 25, to inform the public about the proposed amendment to the state plan, Hood began publishing a series of public notices in eight newspapers circulated within Louisiana. Separate notices were published for each category of provider, including private nursing facilities, long-term hospitals, and intermediate care facilities for the mentally retarded ("ICF/MRs"). In addition to other information, the notices indicated that LDHH was making a 7% reduction in private provider reimbursement rates due to the budgetary shortfall. The emergency rules implementing the reductions were published in the February 20, 2000 edition of the Louisiana Register. The effective date for the cuts in certain optional programs was February 1, and the effective date for the across-the-board reduction was March 1, over thirty days after the publication of the notices in the newspapers.
In response to the proposed amendment to the state plan, the plaintiffs brought suit to enjoin Hood from implementing the 7% reimbursement rate reduction and to have the proposed state plan amendment declared invalid.8
In March 2000, the district court granted temporary restraining orders in favor of the plaintiffs, enjoining Hood from implementing the proposed...
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