MT. SINAI MED. CTR. OF GREATER MIAMI, INC. v. Mathews

• Decision Date: 30 December 1976
• Docket Number: No. 73-804-Civ-JLK.,73-804-Civ-JLK.
• Parties: MOUNT SINAI MEDICAL CENTER OF GREATER MIAMI, INC., Plaintiff, v. F. David MATHEWS et al., Defendants.
• Court: U.S. District Court — Southern District of Florida

425 F. Supp. 5

MOUNT SINAI MEDICAL CENTER OF GREATER MIAMI, INC., Plaintiff, v. F. David MATHEWS et al., Defendants.

No. 73-804-Civ-JLK.

United States District Court, S. D. Florida, Miami Division.

December 30, 1976.

Lewis I. Horwitz, Broad & Cassel, Bay Harbor Island, Fla., Burton A. Schwalb, Arent, Fox, Kintner, Plotkin & Kahn, Washington, D. C., for plaintiff.

Asst. U. S. Atty. William R. Northcutt, Miami, Fla., for defendants.

ORDER GRANTING TEMPORARY INJUNCTION

JAMES LAWRENCE KING, District Judge.

Plaintiff Mount Sinai Hospital of Greater Miami brought this action against the Secretary of Health, Education and Welfare ("HEW") and Blue Cross of Florida, Inc. to enjoin HEW from recouping alleged Medicare overpayments by withholding future payments by 15%. On February 6, 1974, this court issued a permanent injunction against HEW, holding inter alia that the District Court had federal question jurisdiction over the action, that the claim was not barred by sovereign immunity, and that nonstatutory review of the government's action was proper under the Administrative Procedure Act, 5 U.S.C. § 701 et seq. In addition, the court held that the comprehensive Medicare statutory scheme, 42 U.S.C. § 1395 et seq., proscribed common law recoupment for overpayments resulting from a hospital's providing services not covered by Medicare. Mount Sinai Hospital of Greater Miami, Inc. v. Weinberger, 376 F.Supp. 1099 (S.D.Fla.1974). On appeal, the Fifth Circuit Court of Appeals reversed and remanded for further proceedings holding that HEW under the common law could setoff future payments to recoup amounts owed to it, notwithstanding statutory and regulatory provisions of the Medicare program. Mount Sinai Hospital of Greater Miami, Inc. v. Weinberger, 517 F.2d 329, reh. den'd en banc with opinion 522 F.2d 179 (5th Cir. 1975), cert. den'd 425 U.S. 935, 96 S.Ct. 1665, 48 L.Ed.2d 176 (1976). Now, on remand, Mount Sinai moves this court to re-institute a temporary injunction against HEW until the conclusion of this trial and final adjudication of the controversy. For reasons discussed below, this court grants the injunction.

A temporary injunction is an extraordinary equitable remedy available at the sound discretion of the District Court, Dairy Queen, Inc. v. Wood, 369 U.S. 469, 82 S.Ct. 894, 8 L.Ed.2d 44 (1962), when the record shows that irreparable injury to the movant during the pendency of the action will likely impair the court's ability to render a meaningful decision on the merits. Meis v. Sanitas Service Corp., 511 F.2d 655 (5th Cir. 1975). In evaluating the propriety of a temporary injunction, the following factors are properly considered: (1) the plaintiff's likelihood of sustaining irreparable injury; (2) whether issuance of the injunction is in the public interest; (3) whether the harm to the defendant from the injunction would substantially outweigh the harm to plaintiff were the injunction not issued; (4) whether plaintiff is likely to succeed in trial on the merits. Allison v. Froehike, 470 F.2d 1123 (5th Cir. 1972).

I. IRREPARABLE INJURY, PUBLIC INTEREST AND RELATIVE HARM

Mount Sinai Hospital is a large (700 bed) acute care, non-profit institution located on Miami Beach. Because of the advanced age of the hospital's census, the majority of the hospital's use in recent years has been for Medicare patients. Recent figures indicate that almost 70% of the total hospital operating expenses of over $1 million per week are obtained from Medicare revenues. In addition it is claimed that in terms of the amount of services rendered, Mount Sinai is the largest provider of Medicare services on the Atlantic seaboard. The record reveals that in addition to providing hospital care for the elderly, Mount Sinai furnishes various health care facilities that are unique in the community. Outpatient and dental clinics, as well as a complete 24-hour emergency facility, are provided. These and other programs more integral to the hospital, including departments of pediatrics and obstetrics, a program of free community medical services, and a thorough medical training program, are maintained as services to the community, sometimes at a substantial monetary loss. In addition, the hospital undertakes considerable research in various medical specialities and maintains a position on the threshold of technological development in nuclear medicine, having the only cyclotron in the area (and one of the four in the nation) in neurology, having developed a "brain pacemaker" for the treatment of certain neurological conditions, and in cardiology, having pioneered several surgical developments in that field. Services from these tremendously expensive technologies are available to patients in need, regardless of their abilities to pay.

In spite of the size and development of the hospital, its financial history has been one of continued cash deficits and continuous borrowing. Within the past year the hospital instituted severe cutbacks in employment and equipment in order to improve its fiscal posture. Nonetheless the hospital continues to borrow against future depreciation reserves in order to meet day-to-day expenses and seems to possess less than a million dollars cash-on-hand (or less than one week's operating expenses) that is not "earmarked" for special purposes.

To recover previous Medicare overpayments alleged to total some $6.3 million, HEW indicated its intention to withhold future payments by 15% until repayment is complete. Under recent estimates, this would reduce Mount Sinai's income by some $375,000 per month or $4.5 million per year. Whereas this court does not necessarily agree that such a withholding would be, in the words of plaintiff's witness "catastrophic" to the hospital, nonetheless the court is satisfied as a matter of fact that irreparable injury to the hospital would ensue were the injunction not granted. Evidence has been presented that because of the hospital's shortage of cash-on-hand, this withholding would render the hospital incapable of continuing operations in a normal manner. Apparently Mount Sinai would be forced seriously to curtail services, especially the "loss" services mentioned above, and as well, to meet liquidity needs, to engage in substantial borrowing from financial institutions, perhaps at disadvantageous rates. Furthermore, the hospital would be forced to lay off staff and to delay purchase of new or replacement equipment, all of which would jeopardize the hospital's position of leadership in various medical specialities.

In addition, the court is of the opinion that the public, at least in the greater Miami area, has a considerable interest in, and derives substantial benefit from, the operation of the hospital, both as a provider of medical care and as a facility for research and training in the medical arts. For this reason, the court concludes that the public interest would best be served through enjoining HEW from any withholding of Medicare funds that might tend to jeopardize or curtail the hospital's operation.

Lastly, HEW's fiscal posture, while certainly unenviable due to stupendous overruns in various social welfare programs, seems less precarious than that of the hospital, at least in the short run. For this reason the court concludes that the injury to HEW, were an injunction granted, would not be as severe as that to the hospital, were an injunction denied. In evaluating the propriety of an injunction, there remains to be considered, therefore, only Mount Sinai's likelihood of prevailing at trial on the merits.

II. LIKELIHOOD OF SUCCESS ON THE MERITS

The Medicare Act, enacted as Subchapter XVIII of the Social Security Act, 42 U.S.C. §§ 1395 et seq., provides a federal health insurance for the aged and other qualified individuals. Under part A of the Act, 42 U.S.C. §§ 1395c-1395i-2 (Supp. III), eligible beneficiaries are provided with hospital and related post-hospital services free of charge. Hospitals, or "providers of services", 42 U.S.C. § 1395x(u), are compensated for the "reasonable cost" of services that qualify under the Act. See §§ 1395x(v), f(b); 20 C.F.R. § 405.401 et seq. Sections 1395d and 1395y define services qualified under the Act, but in no case are services qualified, and in no case will a provider of services be reimbursed for services "which are not reasonable and necessary for the diagnosis or treatment of illness or injury . . .." 42 U.S.C. § 1395y(a)(1).

For a thorough discussion of the Medicare statutory scheme see Mount Sinai Hospital of Greater Miami, Inc. v. Weinberger, 517 F.2d 329, 336-40 (5th Cir. 1975).

On May 10, 1973, Blue Cross of Florida, Inc. who was functioning as a "fiscal intermediary" under the Act, serving as Hew's agent for day-by-day administration of the program, 42 U.S.C. § 1395h, informed Mount Sinai that as a result of an investigation conducted on a sample of cases from the hospital's records, Mount Sinai had performed and collected Medicare payments for, in numerous instances, services that were medically unnecessary. Blue Cross thereupon informed Mount Sinai that that institution had been overpayed some $6.3 million from 1966 to 1971, and that HEW intended to recoup these overpayments through a 15 per cent reduction in future Medicare payments. The hospital then brought this action seeking to enjoin HEW from this withholding.

This court's decision and the Fifth Circuit's appellate ruling are described above in this opinion.

The parties disagree, however, on the issues to be decided by this court on remand. Mount Sinai argues that the Fifth Circuit decided only that common law recoupment could coexist with the Medicare Act, not that common law recoupment was proper in this particular case. Rather, Mount Sinai asserts, it had not had the opportunity through discovery to frame the case with particularity at the time of the earlier proceedings before this court and before the Fifth Circuit. In fact, the hospital...