John E. Andrus Memorial, Inc. v. Daines

• Decision Date: 04 March 2009
• Docket Number: No. 07-CV-3432 (CS).,07-CV-3432 (CS).
• Citation: 600 F.Supp.2d 563
• Parties: JOHN E. ANDRUS MEMORIAL, INC. (d/b/a Andrus on Hudson), Plaintiff, v. Richard F. DAINES, as Commissioner of the New York State Department of Health, Defendant.
• Court: U.S. District Court — Southern District of New York

600 F.Supp.2d 563

JOHN E. ANDRUS MEMORIAL, INC. (d/b/a Andrus on Hudson), Plaintiff, v. Richard F. DAINES, as Commissioner of the New York State Department of Health, Defendant.

No. 07-CV-3432 (CS).

United States District Court, S.D. New York.

March 4, 2009.

Peter G. Bergmann, Esq., Brian T. Mc-Govern, Esq., Ariel V. Gordon, Esq., Cadwalader, Wickersham & Taft LLP, New York, NY, for Plaintiff.

John P. Gasior, Esq., Barbara K. Hathaway, Esq., Office of the Attorney General, New York State, New York, NY, for Defendant.

ORDER ADOPTING IN PART AND MODIFYING REPORT AND RECOMMENDATION

SEIBEL, District Judge.

Before the Court are the Objections of Defendant Richard F. Daines, Commissioner of the New York State Department of Health ("DOH"), to a Report and Recommendation of the Honorable Mark D. Fox, United States Magistrate Judge, issued on July 17, 2008, 2008 WL 5705732, (the "R & R"). (Doc. 51.) Judge Fox recommended that the Motion for Preliminary Injunction (Doc. 25) filed by Plaintiff John E. Andrus Memorial, Inc., a nursing home in the Village of Hastings-on-Hudson, New York, doing business as Andruson-Hudson (the "Andrus"), be granted, thereby prohibiting Defendant from implementing the recommendation of the New York State Commission on Healthcare Facilities in the 21st Century (the "Commission"), which would require the Andrus to cease operating as a nursing home or to operate as an assisted living facility.

A preliminary injunction hearing was held before Judge Fox on June 25 and 26, 2008. He heard testimony from six witnesses: (1) Dr. Jeffrey Nichols, a geriatrician and Plaintiff's medical expert on dementia and transfer trauma among nursing home residents; (2) Sharon Carlo, a consultant to nursing homes in New York State and former DOH employee and nursing home administrator; (3) Mark Kissinger, a member of the Commission; (4) Neil Benjamin, New York State DOH Director of the Division of Health Facility Planning; (5) Betsy Biddle, Executive Director of the Andrus; and (6) David Sandman, the Executive Director of the Commission. At the hearing, portions of the depositions of Mr. Kissinger, Mr. Benjamin and Mr. Sandman were admitted into evidence pursuant to Rule 32 of the Federal Rules of Civil Procedure. (Hr'g Tr. 282:4-20, June 25-26, 2008.) Defendants submitted additional portions of these depositions to the Court on June 30, 2008. Judge Fox issued the R & R on July 17, 2008, recommending that Plaintiff's Motion for a Preliminary Injunction be granted. Defendant filed timely Objections to the R & R on July 29, 2008 ("Def.'s Objs.") (Doc. 54), and Plaintiff filed a Response to Defendant's Objections on August 12, 2008 ("Pl.'s Resp.") (Doc. 56).

After carefully reviewing Defendant's Objections, the Response thereto, the affidavits submitted by the parties, the transcripts of the preliminary injunction hearing, the deposition excerpts, and the memoranda of law filed by the parties both before and after the preliminary injunction hearing,¹ the Court adopts the R & R to the extent that is consistent with this Order and grants Plaintiff's Motion for a Preliminary Injunction. Familiarity with the procedural history and facts as set forth in detail in the R & R is presumed. To the extent that Defendant objects to Judge Fox's findings of fact and conclusions of law stated therein, this Opinion sets forth the. Court's independent findings of fact and conclusions of law in accordance with Rule 52(a) of the Federal Rules of Civil Procedure.

I. BACKGROUND

In April 2005, the New York State Legislature passed, and then-Governor George E. Pataki signed, legislation creating the Commission. See Part K of Chapter 58 of the Laws of 2003, as added by Section 31 of Part E of Chapter 63 of the Laws of 2005, 2005 N.Y. Sess. Laws Ch. 63, § 31 (McKinney) (the "Enabling Legislation").² The Commission was created for the purpose of conducting:

[A] rational, independent review of health care capacity and resources in the state to ensure that the regional and local supply of general hospital and nursing home facilities is best configured to appropriately respond to community needs for quality, affordable and accessible care, with meaningful efficiencies in delivery and financing that promote infrastructure stability.

Enabling Legislation § 1. The Commission itself consisted of eighteen statewide members and regional members from six regions in New York State, id. § 7(a), one of which was the Hudson Valley region in which the Andrus is located, id. § (7)(b)(iii).

The Enabling Legislation required the Commission to "develop recommendations for reconfiguring the state's general hospital and nursing home bed supply to align bed supply to regional needs," and specifically to "make recommendations relating to facilities to be closed and facilities to be resized, consolidated, converted or restructured" and to transmit such recommendations to the Governor and Legislature by December 1, 2006. Id. § 8(a)-(b), (e). In making these recommendations, the Commission was required to consider a detailed set of factors, id. § (5)(a), and to analyze these factors in light of information provided to the Commission by the DOH, id. § 5(b). In order to further the Commission's information-gathering capabilities and access to regional input, the Enabling Legislation also established regional advisory committees ("RACs") for each of the six regions. Id. § (7)(c). The RACs were charged with the task of "develop[ing] recommendations for reconfiguring its region's general hospital and nursing home bed supply to align bed supply with regional and local needs." Id. § (7)(d). In carrying out this task, the Enabling Legislation provided that the RACs "shall foster discussions among, and conduct formal public hearings with requisite public notice to solicit input from, local stakeholder interests, including but not limited to community-based organizations, health care providers, labor unions, payers, businesses and consumers." Id. The Commission was directed to "collaborate with the [RACs] insofar as practicable to foster discussions among, and conduct formal public hearings with requisite public notice to solicit input from, statewide and regional stakeholder interests, including but not limited to community-based organizations, health care providers, labor unions, payers, businesses and consumers." Id. § 8(a).

The Commission and RACs conducted nineteen public hearings statewide, including three in the Hudson Valley Region on February 15, 2006, February 22, 2006, and March 1, 2006, respectively (the "Public Hearings"). (Hr'g Tr. 293:1-294:17.) Prior to each of these public hearings, the Hudson Valley RAC circulated a document entitled "Opportunity to Comment—Notice of Public Hearings" to various interested stakeholders, including healthcare facilities within the Hudson Valley Region (the "Public Notices"). (Hr'g Tr. 294:7-296:14; Def.'s Exs. F, G.) The Public Notices provided general information regarding the Commission's purpose and structure and invited oral testimony regarding (1) "[t]he misalignment between the supply of services and the needs of the community"; (2) "[s]pecific local changes regarding regional nursing home and hospital bed supply in order to better align the supply of services with local needs"; (3) "[n]eccessary investments to carry out such alignments"; and (4) "[t]imeline in which the aforementioned steps should be taken." (Def.'s Exs. F, G.) The Public Notices provided a list of speakers who had registered in advance, but they did not identify the specific subject matter of the speakers' testimony or whether any particular facilities would be discussed. (Hr'g Tr. 302:3-9.) As was the general practice across all regions (Hr'g Tr. 319:1-5), the Hudson Valley RAC explicitly provided in the Public Notices that only one representative per organization would be permitted to testify for a maximum of ten minutes at the Public Hearings. (Def.'s Exs. F, G.)

Betsy Biddle, the Executive Director of the Andrus, did not recall ever receiving the Public Notices (Hr'g Tr. 256:11-258:22), and no specific notice was given to the Andrus in advance of the Public Hearings that the Andrus would be discussed or that the Andrus was being considered for closure. (Id. 201:2-8, 209:19-210:6.) Such notice may not have been possible because neither the Hudson Valley RAC nor the Commission was necessarily aware, at the time of the Public Hearings, of which facilities were preliminarily targeted for closure. (Hr'g Tr. 303:18-304:1.) The Andrus did not participate in any of the Public Hearings. (Sandman Aff. ¶ 18.)

Ms. Biddle had her first interaction with the Commission in May 2006, when she received a phone call from Mark Ustin, the Deputy Director and General Counsel of the Commission. (Hr'g Tr. 201:2-11, 255:6-8; Sandman Dep. 85:8.) During their telephone conversation, Mr. Ustin asked Ms. Biddle "about how Andrus was doing," and Ms. Biddle informed him that the resident census at the Andrus "had gone from 72 to ... 160 something people" and that the facility "had been financially viable for the first time [in 2005] and [was] continuing to have good results [in 2006]." (Hr'g Tr. 201:12-20.) Mr. Ustin then asked Ms. Biddle "to come to the [Hudson Valley] RAC ... and tell [her] good story." (Id. 201:21-22, 203:11-13.) Mr. Ustin told Ms. Biddle that she had "such a good story to tell about [the Andrus's] occupancy and about [its] financial situation, that [she] should come and tell the [Hudson Valley] RAC about what's going on." (Id. 249:17-24.)

Members of the Hudson Valley RAC and Commission staff met with Ms. Biddle on June 19, 2006. (Id. 202:1-3.) None of the staff of the Hudson Valley RAC or the Commission participating in the meeting told the Andrus that it was being considered for closure. (Id. 202:24-203:10.) Instead, Ms. Biddle and the members of the Hudson Valley RAC discussed the "whole history" of the Andrus, including (1) a failed...