Illinois Council on Long Term Care v. Bradley

• Citation: 957 F.2d 305
• Decision Date: 18 February 1992
• Docket Number: No. 91-1701,91-1701
• Parties: , 36 Soc.Sec.Rep.Ser. 384, Medicare & Medicaid Guide P 40,022 ILLINOIS COUNCIL ON LONG TERM CARE, Gilman Nursing Center, an Illinois limited partnership, Spring Valley Nursing Center, an Illinois limited partnership, et al., Plaintiffs-Appellants, v. Phillip BRADLEY, in his official capacity as Director of the Illinois Department of Public Aid, Dawn C. Netsch, in her official capacity as Comptroller of the State of Illinois and Patrick J. Quinn, in his official capacity as Treasurer of the State of Illinois, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 305

957 F.2d 305

60 USLW 2552, 36 Soc.Sec.Rep.Ser. 384,

Medicare & Medicaid Guide P 40,022

ILLINOIS COUNCIL ON LONG TERM CARE, Gilman Nursing Center an Illinois limited partnership, Spring Valley Nursing Center, an Illinois limited partnership, et al Plaintiffs-Appellants, v. Phillip BRADLEY, in his official capacity as Director of the Illinois Department of Public Aid, Dawn C. Netsch, in her official capacity as Comptroller of the State of Illinois and Patrick J. Quinn, in his official capacity as Treasurer of the State of Illinois, Defendants-Appellees.

No. 91-1701.

United States Court of Appeals Seventh Circuit.

Argued June 14, 1991.

Decided Feb. 18, 1992.

Richard F. Zehnle (argued), Neal A. Crowley, Ann C. McKenzie, Vedder, Price, Kaufman & Kammholz, Chicago, Ill., for plaintiffs-appellants.

James C. O'Connell, Asst. Atty. Gen. (argued), Owen M. Field, Welfare Litigation Div., Chicago, Ill., for defendants-appellees.

Before POSNER, MANION and KANNE, Circuit Judges.

MANION, Circuit Judge.

The Illinois Council on Long Term Health Care, an organization representing the interests of nursing homes in Illinois, and two of its member nursing homes sued various Illinois state officials for allegedly violating the Medicaid Act, 79 Stat. 343, as amended, 42 U.S.C. § 1396 et seq., by delaying payments to nursing homes for services provided to poor residents. The plaintiffs moved in the district court for a preliminary injunction that would have ordered the defendants to reimburse the nursing homes more quickly. The district court denied the injunction. 759 F.Supp. 1309. Because we find that the plaintiffs have no chance of success on the merits, we affirm and remand to the district court with instructions to dismiss the case.

I.

Congress enacted the Medicaid program to allow the federal government to provide financial assistance to states so that the states may provide medical assistance to poor people. State participation in the Medicaid program is voluntary. If a state does choose to participate and qualify for financial assistance it must, among other things, submit a "plan for medical assistance," describing the state Medicaid program's nature and scope, for the Secretary of Health and Human Services' approval. Among other things, the plan must establish a scheme to reimburse health care providers for the cost of medical services they provide to poor people. See generally Wilder v. Virginia Hosp. Ass'n, 496 U.S. 498, 110 S.Ct. 2510, 2513-14, 110 L.Ed.2d 455 (1990) (citing relevant statutory and regulatory provisions).

Illinois participates in the Medicaid program under a plan approved by the Secretary of HHS. In 1979, Illinois submitted, and the Secretary approved, a plan amendment stating that Illinois would meet "all requirements of 42 C.F.R. § 447.45 for timely payment of claims." Section 447.45(d) sets explicit time limits for paying claims to providers:

(d) Timely processing of claims. (1) The Medicaid agency must require providers to submit all claims no later than 12 months from the date of service.

(2) The agency must pay 90 percent of all clean claims from practitioners ... within 30 days of the date of receipt.

(3) The agency must pay 99 percent of all clean claims from practitioners ... within 90 days of the date of receipt.

(4) The agency must pay all other claims [including those of nursing home operators] within 12 months of the date of receipt.

42 C.F.R. § 447.45(d) (emphasis added). Subsections (d)(2) and (3) implement 42 U.S.C. § 1396a(a)(37)(A). That provision, enacted in 1977, sets forth in the statute the 30-day/90-day payment requirement for practitioners.

Billing for nursing home services under the Illinois Medicaid plan is accomplished by means of documents known as "Turnaround Invoices." Generally, after the last day of each month of services Illinois calculates the amount due a nursing home based on a per diem rate established for the fiscal year. Illinois then sends the nursing home a Turnaround Invoice reflecting this amount. The nursing home then makes what it considers to be appropriate adjustments on the Turnaround Invoice and returns it to the state. Illinois considers the nursing home's bill for services to be received when the nursing home returns the Turnaround Invoice.

Historically, Illinois has paid claims for nursing home services within 30 to 45 days after the last date of services, with a few slightly longer delays toward the end of several fiscal years. But because of budgetary problems in fiscal year 1991 (July 1, 1990 to June 30, 1991), the state consistently began to delay payments. For example, the state did not make payments for November 1990 services until between 94 and 104 days after the last day of services.

Nursing home operators say they were able to live with payments 30 to 45 days from the last day of services. However, they insist that the recent delays in payments from Illinois have caused them to fall behind in paying their own bills. Faced with a situation that they allege jeopardizes their very existence (an allegation the defendants dispute), the plaintiffs in this case (two nursing homes and an umbrella organization representing nursing homes) sought an injunction from the district court that would require Illinois' officials to pay claims for nursing home services within 45 days of the last date of services included in the claim. The district court denied the plaintiffs' request for a preliminary injunction, holding that the plaintiffs' likelihood of success on the merits was negligible. The plaintiffs filed a timely interlocutory appeal under 28 U.S.C. § 1292(b) from the district court's decision.

II.

To be entitled to a preliminary injunction, a plaintiff must demonstrate some likelihood of success on the merits. If a plaintiff seeking a preliminary injunction cannot show that his chance of prevailing on the merits is "better than negligible," a court must deny the injunction regardless of how heavily any other equities may weigh in the plaintiff's favor. Centurion Reinsurance Co., Ltd. v. Singer, 810 F.2d 140, 145 (7th Cir.1987); see also Curtis v. Thompson, 840 F.2d 1291, 1296 (7th Cir.1988). The district court properly decided to deny the plaintiffs' request for a preliminary injunction because the plaintiffs have failed to demonstrate a chance of success on the merits.

The plaintiffs argue that the recent delay in payments by Illinois violates both the Medicaid Act and the Secretary's regulations. The plaintiffs first argue that the delayed payments violate the Boren Amendment to the Medicaid Act, Pub.L. 96-499, § 962(a), 94 Stat. 2650, codified as amended at 42 U.S.C. § 1396a(a)(13)(A). The Boren Amendment provides that

a State plan for medical assistance must

provide ... for payment ... of [health care services] provided under the plan through the use of rates (determined in accordance with methods and standards developed by the State ...) which the State finds, and makes assurances satisfactory to the Secretary, are reasonable and adequate to meet the costs which must be incurred by efficiently and economically operated facilities in order to provide health care services in conformity with applicable State and Federal laws....

(Emphasis added.) The Boren Amendment does not on its face impose any time limits on states for paying claims but the plaintiffs insist that it requires states to make timely payments. Stripped of embellishments, their argument proceeds like this: The Boren Amendment requires that payments be adequate to enable providers to meet the costs required to render sufficient health care services. Untimely payments can be inadequate payments since providers need the money in time to meet their own expenses, such as payroll, mortgages, and utilities. If the financial pressure caused by the late payments becomes severe (as sources of credit dry up and creditors insist on payment), care to residents may suffer to the point that it becomes inadequate (or, in the worst case, less accessible as providers go out of business). The plaintiffs insist that since late payment can be inadequate payment, resulting in inadequate care, untimely payment of claims can violate the Boren Amendment and a court must order state officials to speed up their payments to cure the violation.

As a practical matter, it does make sense to consider the timeliness of payments as an element of their adequacy. A dollar one or two months from today is not the same as a dollar today. Money has a time value, and businesses need money to pay their bills when due, not one or two months later. But the question is not what reimbursement scheme might make sense but whether the Boren Amendment requires timely payment--in other words, whether the Boren Amendment imposes time limits on the states for paying Medicaid claims. Based on the amendment's language and the context of the statutory and regulatory scheme in which it appears, we conclude it does not.

Although timeliness of payments could logically be an element of their adequacy, the Boren Amendment's language and context demonstrates that is not the approach Congress took. As we have noted, the Boren Amendment does not on its face impose any time limits or refer directly to timeliness in any way. Moreover, the Boren Amendment's language requires rates, not actual payments, to be reasonable and adequate. The words "reasonable and adequate" modify the noun "rates," not "payment." See 42 U.S.C. § 1396a(a)(13)(A) (state plan must provide "for payment ... through the use of rates ... which the state finds ... are reasonable and adequate ..."). It may be true that the reason for requiring adequate rates is to assure adequate payment for services. But "rate" means an amount, not the time at which that amount must be paid. The logical conclusion from this is that the Boren Amendment focuses on the amount of a state's payments, not the time in which the state makes those payments.

The...