FLORIDA NURSING HOME ASS'N, INC. v. Paige, 77-559-CIV-WMH.
| Decision Date | 01 August 1984 |
| Docket Number | No. 77-559-CIV-WMH.,77-559-CIV-WMH. |
| Citation | 596 F. Supp. 1152 |
| Parties | FLORIDA NURSING HOME ASSOCIATION, INC., a non-profit corporation, University Park Convalescent Center, Inc., Ambrosia Home, Inc., Louise Russ, Theresa Hicks, Juliie Mae van Blount, Edward Anderson, Jimmy Lee Watson and Marilyn Morton as representatives of a class, Julia Mansell, in her own right and as representative of a class, Plaintiffs, v. William J. PAIGE, Jr., Secretary of the Department of Health and Rehabilitative Services of the State of Florida, Frank Groschelle, Regional Director of the Department of Health, Education and Welfare and Joseph A. Califano, Secretary of the Department of Health, Education and Welfare, Defendants. |
| Court | U.S. District Court — Southern District of Florida |
Bernard H. Dempsey, Jr., Karen L. Goldsmith, Dempsey & Goldsmith, P.A., Orlando, Fla., for plaintiffs.
Alicia S. Jacobs, State of Fla., Dept. of Health and Rehabilitative Services, M. Stephen Turner, Culpepper, Turner & Mannheimer, Tallahasse, Fla., for state defendants.
Richard K. Willard, Acting Asst. Atty. Gen., Washington, D.C., Stanley Marcus, U.S. Atty., Marc Fagelson, Asst. U.S. Atty., Miami, Fla., Lewis K. Wise, Elisa B. Vela, Loretta R. Pitt, Dept. of Justice, Civ. Div., Washington, D.C., for federal defendants; Jeffrey Golland, Dept. of Health and Human Services, Washington, D.C., of counsel.
THIS CAUSE came before the Court on Defendants' motions to dismiss for lack of jurisdiction. Defendants contend that the relief sought by plaintiffs is barred by the Eleventh Amendment.
Plaintiffs are nursing homes and a nursing home association. They brought suit against the State of Florida and the United States alleging that the plan under which Florida reimbursed them for services to Medicaid patients did not meet the standards set by the federal Medicaid law, and that as a result they were underpaid. At the time this action was brought, the Social Security Act, at 42 U.S.C. § 1396a(a)(13)(E), required that nursing homes be reimbursed "on a reasonable cost related basis" effective July 1, 1976. Florida was reimbursing the plaintiffs under a plan employing fixed maximum reimbursement rates. The State was relying on a regulation of the U.S. Department of Health, Education and Welfare which did not require states to begin reimbursing on a cost-related basis until January 1, 1978.
On October 18, 1977, this Court issued an order in the related case of Golden Isles Convalescent Center, Inc. v. Califano holding that the plaintiff nursing homes in that case were entitled to Medicaid reimbursements on a "reasonable cost related basis," effective July 1, 1976, as required by statute, and that HEW regulations were invalid insofar as they set any other effective date. Golden Isles Convalescent Center, Inc. v. Califano, 442 F.Supp. 201 (S.D. Fla.1977). By that Order (hereinafter the "October 18th Order"), the Court also directed HEW to determine whether Florida's reimbursement plan (hereinafter the "original plan") complied with that federal standard, and ordered that, if HEW found that the plan did not comply, the state must submit a new plan to HEW for approval. It was further held that any plan submitted must "make provision for the reimbursement to plaintiffs on a reasonable cost related basis for services rendered from the date of this Order prospectively." On January 5, 1978, the October 18th Order order was adopted in the case at bar.
On July 7, 1978, the Court held that plaintiffs were barred by the Eleventh Amendment from recovering retroactive damages for reimbursement deficiencies occurring prior to the October 18, 1977, Order. That ruling was affirmed by the United States Supreme Court. Florida Dept. of Health and Rehabilitative Services v. Florida Nursing Home Ass'n., 450 U.S. 147, 101 S.Ct. 1032, 67 L.Ed.2d 132 (1981).
Pursuant to the October 18th Order, the State submitted for HEW approval a new reimbursement plan, called "Plan 77-13". That Plan was approved by HEW, and, on September 16, 1978, the Court ordered the State to reimburse plaintiffs according to Plan 77-13 retroactively from October 18, 1977, the date the original plan was ruled inadequate. The Court reserved for trial the review of HEW's finding that Plan 77-13 complied with the federal statutory standard.
On May 7, 1980, the Fifth Circuit held in Alabama Nursing Home Ass'n. v. Harris, 617 F.2d 388 (5th Cir.1980), that HEW procedures for reviewing and approving state Medicaid reimbursement plans were inadequate. The Fifth Circuit directed HEW, which by then had been renamed the Department of Health and Human Services, to devise new review procedures. On July 28, 1980, this Court ordered HHS to review Plan 77-13 under the new procedures created pursuant to the Fifth Circuit's decision in Harris, and to issue monthly status reports on its progress. The parties dispute whether Plan 77-13 was ever approved by HHS under the new procedures. This issue need not be addressed in order to decide the motion now before the Court. The parties do agree that the Court never passed on the adequacy of Plan 77-13 or reviewed any approval by HHS under the new procedures, if there was such an approval.
Effective October 1980, the federal Medicaid statute was changed. Under the Boren Amendment, the federal standard for state Medicaid reimbursement plans was revised to provide that reimbursement rates must be "reasonable and adequate to meet the costs which must be incurred by efficiently and economically operated facilities ... ." The parties disagree as to whether this new language changed the substance of the standard and whether, assuming Plan 77-13 violated the old standard, Plaintiffs could recover damages for any deficiency that occurred after new standard took effect and before the Plan was found by the Court to violate the new standard. Even if the Court were to hold that Plaintiffs could not obtain damages for deficiencies occurring after the Amendment took effect, the issue presented in the present motion would remain alive, because plaintiffs might still be entitled to damages for the period prior to the statutory change.
In April, 1983, a third plan, called the Gainesville Plan took effect pursuant to the agreement of the parties. Thereafter, the Golden Isles plaintiffs settled all claims against the defendants. The Florida Nursing Home plaintiffs did not settle completely. They reserved the right to litigate their claim that the state did not adequately reimburse them under Plan 77-13 from October 18, 1977, to April, 1983, because Plan 77-13 did not meet the federal statutory standard. They do not claim that Plan 77-13 was not related to costs. Rather, they complain of certain technical defects in the plan which rendered payments thereunder not "reasonably" cost related and thus not in compliance with the federal standard and the Court's October 18th Order. They seek damages in an amount equal to the difference between what they would have received during that period under a fully complying plan, and what they actually received under Plan 77-13.
Defendants moved to dismiss, contending that, even if Plan 77-13 did not fully comply with the federal statute, plaintiffs may not recover for alleged inadequacies in Plan 77-13 because that plan has never been found by the Court to be invalid, and the Eleventh Amendment bars an award of damages for injuries incurred prior to such a finding. Put another way, plaintiffs may recover only for reimbursement deficiencies occurring after Plan 77-13 is ruled illegal by the Court. Since Plan 77-13 is no longer in use, there will be no such deficiencies.
Plaintiffs respond that the Eleventh Amendment does not bar the Court from awarding damages here because such damages are merely the costs of complying with the prospective injunctive Order of October 18th. Their argument runs as follows: On October 18, 1977, the court ordered the state to institute a plan that would reimburse plaintiffs on a "reasonably cost related basis," as provided by federal statute, and that plaintiffs were entitled to be reimbursed under such a plan from the date of the October 18th Order forward. Defendants submitted Plan 77-13, which was the first attempt to comply with the Court's Order. The Plan was implemented on an interim basis from October 18, 1977 forward, but, plaintiffs assert, it did not comply with the October 18th Order because, although it was cost related, it had certain technical defects and was therefore not "reasonably" cost related.
The Eleventh Amendment, plaintiffs argue, does not prevent the Court from enforcing its original prospective order by requiring the state to pay according to a fully complying plan from the date of the original order. Such damages are merely the cost of compliance with the original prospective order. The funds spent would be the same funds that the state would have to spend to comply with the original order. If the Court could not award such damages, the defendants could disregard the Court's orders at will. They could implement one non-complying plan after another and never be held liable for the deficiencies of those plans. Plaintiffs rely heavily on Hutto v. Finney, 437 U.S. 678, 98 S.Ct. 2565, 57 L.Ed.2d 522 (1978), discussed below.
Defendants argue that Plan 77-13 was the product of a good faith effort to comply with an order which did not direct a specific solution. Under those circumstances, they contend, the Court may not award damages which accrued before the plan is found to be non-complying by the Court. It may be true that the Court can order a state to pay damages which represent the cost of complying with a previously issued prospective injunction, but only when the injunction directs the state to take a reasonably specific action. Here the injunction was unspecific and indefinite about the amounts to be paid. In such a case, damages may be assessed only...
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