Jefferson Cmty. Health Care Ctrs., Inc. v. Jefferson Parish Gov't

• Decision Date: 24 February 2017
• Docket Number: No. 16-30875,16-30875
• Parties: JEFFERSON COMMUNITY HEALTH CARE CENTERS, INCORPORATED, Plaintiff–Appellee v. JEFFERSON PARISH GOVERNMENT ; Jefferson Parish Council ; Ricky J. Templet, personally and in his official capacity as District 1 Parish Council member; Paul D. Johnston, personally and in his official capacity as District 2 Parish Council member; Mark D. Spears, personally and in his official capacity as District 3 Parish Council member; E. Ben Zahn, III, personally and in his official capacity as District 4 Parish Council member; Jennifer Van Vrancken, personally and in her official capacity as District 5 Parish Council member; Christopher L. Roberts, personally and in his official capacity as At–Large Division A Parish Council member; Cynthia Lee–Sheng, personally and in her official capacity as Chairwoman and Councilwoman-at-Large Division B Parish Council, Defendants–Appellants
• Court: U.S. Court of Appeals — Fifth Circuit

849 F.3d 615

JEFFERSON COMMUNITY HEALTH CARE CENTERS, INCORPORATED, Plaintiff–Appellee

v.JEFFERSON PARISH GOVERNMENT ; Jefferson Parish Council ; Ricky J. Templet, personally and in his official capacity as District 1 Parish Council member; Paul D. Johnston, personally and in his official capacity as District 2 Parish Council member; Mark D. Spears, personally and in his official capacity as District 3 Parish Council member; E. Ben Zahn, III, personally and in his official capacity as District 4 Parish Council member; Jennifer Van Vrancken, personally and in her official capacity as District 5 Parish Council member; Christopher L. Roberts, personally and in his official capacity as At–Large Division A Parish Council member; Cynthia Lee–Sheng, personally and in her official capacity as Chairwoman and Councilwoman-at-Large Division B Parish Council, Defendants–Appellants

No. 16-30875

United States Court of Appeals, Fifth Circuit.

Filed February 24, 2017

Matthew Sidney Freedus, Esq., David Alan Bender, Jonay Foster Holkins, Feldesman Tucker Leifer Fidell, L.L.P., Washington, DC, Robert T. Garrity, Jr., Law Office of Robert T. Garrity, Jr., Harahan, LA, for Plaintiff–Appellee.

James M. Garner, Esq., Thomas Paul Anzelmo, Jr., Joshua Paul Clayton, Debra Jean Fischman, Esq., Sher Garner Cahill Richter Klein & Hilbert, L.L.C., New Orleans, LA, for Defendants–Appellants.

Before STEWART, Chief Judge, and SMITH and DENNIS, Circuit Judges.

JAMES L. DENNIS, Circuit Judge:

This appeal concerns a preliminary injunction in Jefferson Community Health Care Centers, Inc.'s (JCHCC) action against the Parish of Jefferson, Louisiana, the parish council, and its councilmembers in their official and individual capacities (collectively referred to as the "Parish" unless otherwise noted). In the underlying action, JCHCC seeks to permanently enjoin the Parish from evicting it from two Parish-owned facilities in which JCHCC currently provides medical services to medically underserved populations. JCHCC claims that the Parish wishes to evict it solely because JCHCC did not allow one of the councilmembers to unlawfully influence JCHCC's affairs. The district court granted JCHCC's motion for a preliminary injunction, enjoining the Parish from evicting JCHCC but allowing it to terminate the injunction by establishing that the medical needs of the population currently served by the relevant JCHCC facilities would be met if JCHCC were evicted. The Parish appeals, challenging both the issuance of the injunction and, alternatively, its contents and scope. For the reasons that follow, we conclude that JCHCC has not established a substantial likelihood of success on the merits of the only claim that is properly before us. Accordingly, we reverse the district court's grant of the injunction.

I. FACTUAL AND PROCEDURAL BACKGROUND¹

JCHCC is a non-profit entity that receives federal funding under section 330 of the Public Health Service Act, 42 U.S.C. § 254b, to serve residents in medically underserved communities, regardless of their ability to pay. In the aftermath of Hurricanes Katrina and Rita, the Parish decided to allow JCHCC to use facilities owned by the Parish to restore basic health services to an underserved area of the Parish. Thus, in August 2006, JCHCC and the Parish entered into a "Cooperative Endeavor Agreement" (CEA) that would provide rent-free facilities to JCHCC in Marrero, Louisiana, for purposes of serving the medically underserved population there for a ten-year period ending on July 31, 2016. The CEA also stated that the "Lease shall be renewed under the same terms and conditions for an additional five year term, unless any of the parties notify the other parties in writing of its intent not to renew at least 60 days prior to the expiration of the term then in effect." In exchange for its occupancy of the Marrero facility, JCHCC pledged to provide a full range of primary care and clinical preventive services throughout Jefferson Parish.

JCHCC took possession of the Marrero facility on August 1, 2006, and renovated it for clinical purposes, investing nearly $1.5 million in federal grant funds. Subsequently, JCHCC and the Parish entered into a separate CEA that provided for JCHCC's free occupancy of a Parish-owned facility in River Ridge, Louisiana, on a month-by-month basis.

Between 2009 and 2012, a series of federal and state audits found widespread misconduct in JCHCC's management, including commingling and misappropriation of funds, improper lending to employees, and overpayments to contractors. In the wake of the audits, JCHCC's then-CEO resigned, and the former CFO pleaded guilty to embezzlement. JCHCC nearly lost its federal funding, and the Health Resources and Service Administration (HRSA) of the Department of Health and Human Services imposed a corrective action plan that, among other things, required JCHCC to seek recoupment of the previously misspent funds.

In September 2012, Dr. Shondra Williams began serving as JCHCC's CEO. Williams spearheaded JCHCC's effort to implement a corrective action plan, as required by HRSA as a condition for its continued receipt of federal funding. Williams sent demand letters to individuals identified in audit reports as having received payments to which they were not entitled, including JCHCC's former CEO and its former attorney. Soon after sending the demand letters, Williams received a fax message from the office of Parish Councilman Spears with a proposed resolution to terminate the Marrero CEA. Williams perceived the message as a threat precipitated by JCHCC's corrective action plan.

Williams subsequently met with Spears, at which meeting the councilman expressed to Williams that no one from JCHCC had reached out to him in the eleven months since he took office and commented that several entities were interested in occupying the Marrero space. Williams alleges that Spears then requested that she appoint an acquaintance of his to the governing board and terminate the CFO, who had participated in an audit that resulted in negative findings. On another occasion, Spears suggested that JCHCC should hire an attorney of his recommendation. Spears then told Williams that he would be interested in modifying JCHCC's CEAs to allow continued use of the Marrero facility only if JCHCC satisfied his requests.

In April 2015, Williams became aware that Councilman Spears attempted to persuade several JCHCC board members to terminate her employment as JCHCC's CEO without providing a reason. One year later, on April 5, 2016, JCHCC's former CEO sent Williams a demand letter requesting $184,000 in severance pay, but JCHCC denied this demand after reviewing it. Shortly afterward, JCHCC received a letter dated April 14, 2016 from the Office of the Parish Attorney, indicating that the Parish desired alternative lease terms and attaching two resolutions that would, respectively, terminate the Marrero CEA and replace it with a month-to-month arrangement.² The proposed resolutions were included on the Jefferson Parish Council's agenda for April 20, 2016, but the vote was eventually deferred until May 11, 2016.

On May 11, without having previously provided any notice that such a resolution would be considered and without any discussion, the Parish Council voted unanimously to terminate the CEA for JCHCC's River Ridge facility. The council then also unanimously voted to terminate the Marrero Agreement as of July 31, 2016. The Parish subsequently adopted a resolution to authorize the Parish Clerk to advertise for submissions of Statements of Qualifications from prospective healthcare providers to offer full-time comprehensive medical care to uninsured individuals at the River Ridge and Marrero locations. JCHCC partnered with Ochsner Health System, which submitted a Statement of Qualification, with JCHCC as its subcontractor. No other submissions were received by the notice's June 30 submission deadline, and thus Councilman Spears unilaterally extended the deadline until July 14, 2016, and again to August 4.

On July 18, 2016, JCHCC filed this suit and a motion for a preliminary injunction against the Parish, the Parish Council, and the councilmembers in their official and individual capacities. JCHCC asserted claims under 42 U.S.C. § 1983 for violations of the Medicaid Act, 42 U.S.C. § 1396a(a)(10), and under section 330 of the Public Health Service Act, § 254b. In its response to JCHCC's motion for a preliminary injunction, the Parish did not address or even mention JCHCC's allegations under §§ 1983 or 254b and instead treated the matter as a simple breach of contract claim.

The district court held a hearing on the motion and, on July 26, granted a preliminary injunction enjoining the Parish from evicting JCHCC from the Marrero and River Ridge facilities but allowing the Parish to terminate the injunction upon a showing that the medical needs of JCHCC's Medicaid patients would be met if JCHCC were evicted. The Parish filed a timely notice of appeal on the next day. Ultimately, after it filed its notice of appeal, JCHCC filed a first amended complaint, adding two Medicaid-beneficiary patients as plaintiffs and adding multiple causes of action.

II. DISCUSSION

A. Subject Matter Jurisdiction

As an initial matter, the Parish argues that JCHCC's federal claims are "so completely devoid of merit" that the district court did not have subject matter jurisdiction to allow it to grant a preliminary injunction. While JCHCC points out that the Parish did not make this contention below, "we must satisfy ourselves that that the district court had jurisdiction to decide the case," regardless of whether the issue was raised below. See Passmore v. Baylor Health Care Sys. , 823 F.3d 292, 295 (5th Cir. 2016) (citing Union Planters Bank Nat'l Ass'n v. Salih , 369 F.3d 457, 460 (5th Cir. 2004) ).

"Questions of subject-matter jurisdiction are reviewed de novo." Houston Ref., L.P. v. United Steel, Paper & Forestry, Rubber, Mfg. , 765 F.3d 396, 400 (...