Gruter Foundation, Inc. v. Bowen

• Decision Date: 22 December 1986
• Docket Number: No. C86-4862-A.,C86-4862-A.
• Citation: 652 F. Supp. 245
• Parties: GRUTER FOUNDATION, INC., et al., Plaintiffs, v. Otis R. BOWEN, Secretary, Department of Health and Human Services, et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

652 F. Supp. 245

GRUTER FOUNDATION, INC., et al., Plaintiffs, v. Otis R. BOWEN, Secretary, Department of Health and Human Services, et al., Defendants.

No. C86-4862-A.

United States District Court, N.D. Ohio, E.D.

December 22, 1986.

COPYRIGHT MATERIAL OMITTED

David D. Noble, Roth, Noble, & Rolf, Cleveland, Ohio, for plaintiffs.

Kathleen A. Sutula, Asst. U.S. Atty., U.S. Attorney's Office, Cleveland, Ohio, Carolyn Cozad Hughes, Asst. Regional Counsel, Dept. of Health and Human Services, Washington, D.C., for defendants.

ORDER

BELL, District Judge.

Plaintiffs Gruter Foundation, Inc. (Gruter) and Mrs. Delores Kratzer filed this action on November 12, 1986. A temporary restraining order sought at that time was granted ex parte; it enjoined the defendant Otis R. Bowen (the Secretary), Secretary, United States Department of Health and Human Services (HHS) from terminating Gruter's provider agreement and Medicaid certification until November 22, 1986. On November 21, 1986, plaintiffs filed a withdrawal of their request for preliminary injunction based upon their belief that the threat of Gruter's immediate decertification was no longer present.

On December 2, 1986, plaintiffs filed a first amended complaint. This pleading adds Ruth Griffenhagan as a plaintiff. (Both of the individual plaintiffs are suing on behalf of their children who reside at Gruter.) On December 7, 1986, a supplemental complaint was filed up-dating the events documented in the December 2, 1986 amended complaint. In addition, a second motion for temporary restraining order was submitted and heard on December 17, 1986. The Secretary at that time offered his motion to dismiss and his opposition to plaintiffs' motion for preliminary injunction. Supplemental briefs were thereafter submitted by both parties on December 19, 1986. With this procedural history explained, discussion of the plaintiffs' allegations and the issues presently before the court follows.

I. Plaintiffs' Complaint-First Amended and Supplemental

Gruter is an Ohio corporation operating a long-term residential facility in New Pittsburg, Ohio, for persons having mental retardation or other developmental disabilities. It has been licensed by the State of Ohio as a long-term facility and certified by the Ohio Department of Health as a Medicaid provider of such services for fifteen years. Gruter also has had a provider agreement with the Ohio Department of Human Services during this time which agreement is a prerequisite to reimbursement for Medicaid services. In fact, ninety-seven percent of its 238 residents are supported by Medicaid funds.

The Secretary is in charge of HHS which oversees and partially funds Ohio's Medicaid program. Defendants Edward Zawislak, Jerry Sandlin and Jennie Harnell are HHS surveyors of long-term facilities. Their duties include ascertaining whether the facility meets federal standards for Medicaid participation. In furtherance of those duties, they surveyed Gruter in October and November, 1986. Defendant Chester C. Stroyny is the Associate Regional Administrator of HHS who notified Gruter by letter dated December 15, 1986 that its Medicaid providers' agreement would be terminated effective December 18, 1986. Supplemental Complaint, Exhibit B. It is this action that plaintiffs now seek to enjoin.

II. Survey History and Administrative Background

HHS conducted several recent surveys of Gruter. The first was in April, 1986, and resulted in a July 2, 1986 letter which noted deficiencies and advised Gruter that its Medicaid participation would be canceled if corrective action was not taken. This notification did not indicate that there was an immediate threat to the health or safety of Gruter residents, and informed Gruter that they could request a hearing.

Gruter responded to this notice with a plan of correction which addressed the deficiencies and which included a request for resurvey so that improvements could be measured. A hearing was also requested and scheduled before an administrative law judge. This hearing was subsequently rescheduled, however, pending resurvey which was scheduled for November or December, 1986.

On October 28-31, 1986, surveyors returned unannounced to Gruter to take what plaintiff alleges to be a new survey rather than a resurvey. First Amended Complaint at ¶ 20. This survey resulted in notification that conditions at Gruter posed an immediate and serious threat to the health and safety of residents. First Amended Complaint, Exhibit A. Gruter was advised that its participation in the Medicaid program would be terminated effective November 14, 1986, if the conditions were not corrected by that date. On November 10, 1986, Gruter notified defendant Stroyny at HHS by letter of the actions taken to correct deficiencies. HHS did not respond and on November 12, 1986, this court entered an order temporarily restraining HHS from terminating Gruter's Medicaid funding.

A third survey of Gruter was then conducted on November 13-14, 1986. Mr. Stroyny wrote to Gruter on November 18, 1986, and stated that, based on this inspection, conditions at Gruter no longer constituted an immediate threat to the health and safety of its residents. It was found, however, that Gruter was still out of compliance with many federal requirements. Because of this continued non-compliance, Gruter was further advised that HHS would proceed with the hearing previously scheduled unless it was determined that conditions had deteriorated. First Amended Complaint, Exhibit E.

On December 11-12, 1986, yet another survey was taken of the conditions at Gruter. This survey prompted HHS to notify Gruter that its agents had found conditions which pose an immediate threat to the health and safety of its residents. Thus, Gruter was advised first that its Medicaid participation would therefore be terminated as of December 18, 1986, and second, that a hearing could be sought after the effective date of termination. Supplemental Complaint, Exhibit B.

Plaintiffs contend that measures taken pursuant to its plan of correction have in fact led to improved conditions at Gruter since early November. See Affidavits attached to Supplemental Complaint. Thus, they argue, continuation of its Medicaid participation does not pose any immediate threat to the health and safety of its residents and the threatened decertification does not comport with this statutory requirement. Supplemental Complaint at ¶ 6, 7. Plaintiffs claim is multi-faceted. They contend that HHS has not complied with its own regulations in regard to this series of surveys and that it has no regulations to guide it in making a determination that an immediate threat to the residents' health and safety exists. They further contend that the lack of regulation in this area also serves to deprive Medicaid participants of any definition of what constitutes an `immediate threat to the health and safety' of residents as well as the procedures to be followed in taking corrective action and notifying HHS. Plaintiffs seek this court's order permanently enjoining defendants from proceeding further with its improperly conducted decertification procedures and a declaratory judgment defining both the meaning of certain terms used in 42 U.S.C. § 1396i(c)(1) and (2), and the procedures which HHS must follow in the decertification process. Finally, plaintiffs ask this court to declare that the actions taken by the defendants in this case are void because they are in violation of 42 U.S.C. § 1396i(c) and indeed violate defendant's own guidelines. Thus, it is argued, HHS has breached the due process rights of plaintiffs which rights are secured to them by the fifth amendment to the Constitution.

III. Legal Issues Presented

Under the applicable precedent from the Sixth Circuit, four factors must be considered in determining whether a preliminary injunction should be granted. These four factors are:

1. Whether the plaintiff has shown a strong or substantial likelihood or probability of success on the merits;

2. Whether the plaintiff has shown irreparable injury;

3. Whether the issuance of a preliminary injunction would cause substantial harm to others; and

4. Whether the public interest would be served by issuing a preliminary injunction.

Mason County Medical Association v. Knebel, 563 F.2d 256, 261 (6th Cir.1977); accord, Christian Schmidt Brewing v. G. Heileman Brewing, 753 F.2d 1354, 1356 (6th Cir.1985); Tate v. Frey, 735 F.2d 986, 990 (6th Cir.1984); Friendship Materials, Inc. v. Michigan Brick, 679 F.2d 100, 102 (6th Cir.1982).

In relation to the first factor and also in his motion to dismiss, the Secretary has raised the threshold issue of whether this court has jurisdiction in this case given the fact that plaintiffs have not exhausted the available administrative review procedures which in the Secretary's opinion satisfy due process requirements. Plaintiffs contend that there are no remedies available to exhaust prior to its decertification. Plaintiffs further contend they have raised a constitutional issue which is collateral to the substantive issues to be raised in the administrative proceeding. Exhaustion requirements under these circumstances, it is argued, can thus be waived.

Subject matter jurisdiction must be pled and established by the party invoking it. McGovern v. American Airlines, Inc., 511 F.2d 653, 654 (5th Cir.1975). Plaintiffs' first amended complaint contains a statement that jurisdiction is based on 28 U.S.C. §§ 1332 and 1346, on section 1910(c) of the Social Security Act, 42 U.S.C. § 1396i(c), and on the due process clause of the fifth amendment to the Constitution. A declaratory judgment as to the meaning of § 1396i(c) is also sought pursuant to 28 U.S.C. § 2201. In their brief, plaintiffs claim that jurisdiction is based on federal question jurisdiction as provided by 28 U.S.C. § 1331 and the All Writs Act, 28 U.S.C. § 1651.

Clearly, it has been decided that federal question jurisdiction as...