Somerset House, Inc. v. Turnock

• Decision Date: 16 April 1990
• Docket Number: 89-1956,Nos. 89-1854,s. 89-1854
• Citation: 900 F.2d 1012
• Parties: SOMERSET HOUSE, INC., Plaintiff-Appellee, Cross-Appellant, v. Bernard J. TURNOCK, as Director of the Illinois Department of Public Health, and John R. Lumpkin, as Associate Director of the Illinois Department of Public Health, Defendants-Appellants, Cross-Appellees, and Susan S. Suter, as Director of the Illinois Department of Public Aid, Defendant, Cross-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1012

900 F.2d 1012

SOMERSET HOUSE, INC., Plaintiff-Appellee, Cross-Appellant, v. Bernard J. TURNOCK, as Director of the Illinois Department of Public Health, and John R. Lumpkin, as Associate Director of the Illinois Department of Public Health Defendants-Appellants, Cross-Appellees and Susan S. Suter, as Director of the Illinois Department of Public Aid, Defendant, Cross-Appellee.

Nos. 89-1854, 89-1956.

United States Court of Appeals Seventh Circuit.

Argued Jan. 24, 1990.

Decided April 16, 1990.

Jeanne M. Sylvester, Robert K. Neiman, Howard M. Hoffmann, Holleb & Coff, Chicago, Ill., for plaintiff-appellee, cross-appellant.

Valerie J. Peiler, Edward T. McAuliff, Sean Mulroney, Deputy Attys. Gen., Jill Deutsch, James C. O'Connell, Asst. Attys. Gen., Office of the Atty. Gen., Welfare Litigation Div., Chicago, Ill., for defendants-appellants, cross-appellees.

Before FLAUM and EASTERBROOK, Circuit Judges, and GRANT, Senior District Judge. ^*

FLAUM, Circuit Judge.

Plaintiff Somerset House, a nursing home located in Chicago, Illinois, brought this Sec. 1983 action to enjoin Turnock and Lumpkin, the Director and Associate Director of the Illinois Department of Public Health (the "Department"), respectively, and Suter, the Director of the Department of Public Aid (the "IDPA"), from implementing statutory remedies created by the Nursing Home Care Reform Act, ILL.REV.STAT. ch. 111 1/2, p 4151-101, et seq. (1988) (the "Act"), on the basis that the actions deprived Somerset of property without due process of law. The district court entered a preliminary injunction, enjoining Turnock and Lumpkin from implementing two of the proposed sanctions prior to a hearing: the imposition of a conditional license on the facility and the placement of the facility on a Quarterly List of Violators. The district court, however, refused to preliminarily enjoin Suter from imposing a third proposed sanction: the withholding of supplementary patient care funds. Turnock and Lumpkin now appeal from the preliminary injunction with respect to the license and the placement on the list of violators and Somerset House cross-appeals from the denial of the preliminary injunction with respect to the withholding of supplementary funds.

I.

On August 9, 1988, Turnock and Lumpkin, through their authority under the Act, ordered an investigation of an alleged suicide at Somerset House. At the conclusion of the investigation, the surveyor completed an "exit report" setting out her findings and provided a copy of that report to Somerset, as required by Sec. 3-212(c) of the Act. Pursuant to Sec. 3-702(d), the surveyor also provided Somerset with an "exit conference" and Somerset was free to give a written response to the charges within ten days of receipt of the copy of the report under Sec. 3-212(c). The Department concluded from the investigation that Somerset had committed a Type "A" violation of the Act, which is a violation resulting in serious harm or death.

The Department then issued a Notice of Type "A" Violation, a Conditional License, a Notice of Fine Assessment and an Imposed Plan of Correction and also placed Somerset on the Quarterly List of Violators. The Notice itself carried no sanctions. The Fine and the Imposed Plan of Correction were what they appeared to be: a fine and a plan to correct the problems that caused the violations. The Conditional License, which was in place from November 1, 1988, through April 30, 1989, had several effects. It could be revoked if Somerset were to fail to complete the Plan of Correction. In addition, because the Conditional License had to be posted in a conspicuous place, it could have damaged Somerset's reputation. The Conditional License also caused the IDPA to automatically withdraw funding under the Quality Incentive Program ("QUIP"), ILL.ADMIN.CODE tit. 89 Sec. 140.565, et seq. (1985), from the date of the license to the end of the six-month QUIP-funding cycle in which the Conditional License expires. The Quarterly List of Violators is a publically distributed list of facilities violating the Act designed to inform patients and their doctors which nursing homes were not in compliance with state standards.

Somerset was informed of its right to request a hearing to challenge the sanctions. Under the Act, a request for a hearing does not stay the imposition of the sanctions except the fine assessment, nor does it stay the withholding of QUIP funds. Somerset requested an administrative hearing, but no action has been taken on the request.

Somerset then filed this Sec. 1983 suit against Turnock, Lumpkin and Suter complaining of a deprivation of property in violation of the due process clause of the fourteenth amendment. It asked for preliminary and permanent injunctive relief to enjoin the imposition of the sanctions prior to a hearing. The district court granted Somerset a temporary restraining order. After the issuance of the TRO, the Department imposed another set of identical sanctions against Somerset resulting from the investigation of another suicide. Somerset then filed an emergency motion for a second TRO, which was granted by the district court. By this time, Somerset had agreed to comply with the Imposed Plan of Correction and withdrew its request for an injunction with respect to the Plan.

The district court then entered the order which is before us on appeal. The court found that Somerset established a likelihood of success on the merits with respect to the issuance of a Conditional License and the placement on the Quarterly List of Violators. To support this holding, the court held that Somerset had a constitutionally protected property interest in its unconditional license because the conditional license caused reputational damage and resulted in a change in legal status, namely, the inehgibility for QUIP funding. In addition, the court found no exigent circumstances to warrant prompt action by the Department, that the administrative remedy was inadequate, and that Somerset had demonstrated irreparable harm. The court concluded that the harm to Somerset outweighed the public's interest in imposing the sanctions prior to a hearing, and the Department, therefore, was preliminary enjoined from issuing the conditional license.

With respect to the fine, the court found no likelihood that Somerset would prevail on the merits because the Department provides an administrative hearing prior to imposition of the fine. The court also refused to enjoin the withholding of QUIP funds because it found that such a temporary loss of funds did not constitute irreparable harm. The withholding of QUIP funds, however, was based on the imposition of the conditional license, so it is unclear whether the preliminary injunction actually reinstated the QUIP funds. The district court did not prevent Turnock and Lumpkin from taking other actions which would result in the withholding of QUIP funds, and Somerset appeals the denial of this portion of the requested injunction. Turnock and Lumpkin appeal the imposition of a preliminary injunction.

II.

Our standard of review for the issuance of a preliminary injunction varies with the assorted functions performed by the district court. For factual determinations and weighing and balancing of the equities of the case, we review the district court for abuse of discretion. Darryl H. v. Coler, 801 F.2d 893, 897 (7th Cir.1986). See also Lawson Products, Inc. v. Avnet, Inc., 782 F.2d 1429, 1437 (7th Cir.1986) ("The district judge's weighing and balancing of the equities should be disturbed on appeal only in the rarest of cases."). However, we review conclusions of law decided during the application of these factors de novo. Thornton v. Barnes, 890 F.2d 1380, 1385 (7th Cir.1989).

The district court properly recounted the elements of a preliminary injunction: the plaintiff must show that

1) no adequate remedy at law exists;

2) the moving party will suffer irreparable harm absent injunctive relief; 3) the irreparable harm suffered absent injunctive relief outweighs the irreparable harm the respondent will suffer if the injunction is granted;

4) the moving party has a reasonable likelihood of prevailing on the merits; and

5) the injunction will not harm the public interest.

See Baja Contractors, Inc. v. City of Chicago, 830 F.2d 667, 675 (7th Cir.1987), cert. denied, 485 U.S. 993, 108 S.Ct. 1301, 99 L.Ed.2d 511 (1988). The plaintiff must satisfy each of these elements to prevail. Roland Machinery Co. v. Dresser Industries, 749 F.2d 380, 386-87 (7th Cir.1984). In particular, the moving party must show some likelihood of success. "Equity jurisdiction exists only to remedy legal wrongs; without some showing of a probable right there is no basis for invoking it." Id. The standard is not high: the plaintiff need only show that their "chances are better than negligible." Ping v. National Educ. Assoc., 870 F.2d 1369 (7th Cir.1989) (citations omitted). In this case, with respect to the Conditional License and the placement on the Quarterly List of Violators, we believe that, as a matter of law, Somerset has no likelihood of prevailing and, as a result, a preliminary injunction was not appropriate.

Somerset's legal claim is based on the requirement of the due process clause of the fourteenth amendment that a person be given notice and an opportunity to be heard at a meaningful time and in a meaningful manner before being deprived of a significant protected property interest. See Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 105 S.Ct. 1487, 84 L.Ed.2d 494 (1985). We have described procedural due process as a duty owed, comprised of "timely and adequate notice of impending deprivation and a reasonable opportunity for a hearing ..." Hudson v. Chicago Teachers Union Local No. 1, 743 F.2d 1187, 1192-93 (7th Cir.1984), aff'd 475 U.S. 292, 106 S.Ct. 1066, 89 L.Ed.2d 232 (1986).

The district court found that Somerset had a significant protected property interest...