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October 16, 1984

SHEEPSHEAD NURSING HOME, VIOLA ELLNER, and ANN SALERNO, individually, as President and Vice-President of the Residents Council of Sheepshead Nursing Home and as representatives of all the patients at Sheepshead Nursing Home, Plaintiffs, against MARGARET M. HECKLER, as Secretary of the United States Department of Health and Human Services, CESAR PERALES, as Commissioner of the Department of Social Services of the State of New York, DAVID AXELROD, M.D., as Commissioner of the Department of Health of the State of New York, and GEORGE VERNEZ, as Acting Commissioner/Administrator of the New York City Human Resources Administration, Defendants.

The opinion of the court was delivered by: KRAM



This is an action for a preliminary injuction. The action was originally brought by three plaintiffs: Sheepshead Nursing Home, Viola Ellner, and Ann Salerno. The latter two plaintiffs are currently patients in Sheepshead Nursing Home (hereinafter referred to as "Sheepshead"). The plaintiffs seek to enjoin the four named defendants from terminating Sheepshead's provider agreement and from terminating, as of October 17, 1984, medicare and medicaid payments to Sheepshead for the care and treatment of patients eligible for participation in these two programs.

 Procedural History

 The plaintiffs originally sought a temporary restraining order (hereinafter referred to as "TRO") in Part I from Judge Stewart on September 17, 1984. Judge Stewart denied the application for a TRO and scheduled a hearing for the preliminary injunction for October 2. At the request of all of the parties the hearing was postponed twice, and commenced on October 4. The hearing continued on October 9 and 10.

 Counsel for plaintiffs informed the Court for the first time late in the afternoon of October 9 that they would be unable to proceed with the hearing on October 11 and 12 because of the religious holiday of Succoth. Counsel further informed the Court by letter late in the afternoon of October 15 that plaintiffs would conclude the presentation of their case with the submission of one affidavit. At this time plaintiffs also reinstated their application for a TRO, which is herely denied.

 On October 15 two of the plaintiffs, Viola Ellner and Ann Salerno, submitted notices of dismissal as to the actions brought by them. As there are currently summary judgment motions pending before the Court any dismissal must be based on the consent of all parties or Fed. R. Civ. P. 41(a)(2). I have decided to order the dismissal of the actions brought by Salerno and Ellner. Pursuant to Fed. R. Civ. P. 41(a)(2) these actions are hereby dismissed without prejudice. That leaves Sheepshead as the sole plaintiff in this action.

 Sheepshead Nursing Home

 Sheepshead is a 200-bed skilled nursing facility. Based upon three days of hearings and the voluminous affidavits submitted by the parties, it is undisputed that Sheepshead has a long history of providing inadequate and unacceptable care and treatment to its resident-patients.

 As far back as March 23, 1983 Sheepshead was surveyed by the New York State Department of Health (hereinafter referred to as "DOH"). At this time Sheepshead was found to have excessive deficiencies in the level of care it was providing to its patients. Sheepshead was clearly advised of this on April 27, 1983, and to this day, has not contested the accuracy of the findings of the DOH survey team. Sheepshead was resurveyed on June 13, 1983. Of the twelve conditions (out of a total of eighteen conditions which must be met under federal law) previously found to be out of compliance, five remained out of compliance as of June 15 and 30, 1983. In view of this, Sheepshead was advised on June 15 and 30, 1983 that a ban on medicare admissions was being imposed on this facility. This had the effect of barring Sheepshead from accepting any new patients whose medical bills were paid for by Medicare or Medicaid.

 On June 28, 1983, Sheepshead was provided with a meeting, which involved its representatives and representatives from the United States Department of Health and Human Services (hereinafter referred to as "HHS"), the Health Care Financing Administration (hereinafter referred to as "HCFA"), and New York State officials. Sheepshead's inability to comply with required conditions and to provide adequate care were discussed at this meeting.

 In view of its poor record, Sheepshead was advised as early as June 30, 1983 that, not only would the ban on medicare admissions take effect, but also the termination of its provider agreement would be considered by the Secretary of Health and Human Services (hereinafter referred to as "the Secretary") if Sheepshead's level of compliance with federal requirements did not improve.

 The ban on admissions lasted until December 29, 1983, and was lifted as of that day. Between July 15 and December 15, 1983 Sheepshead was resurveyed twice. On March 30, 1984 Sheepshead was issued a provider agreement by the Secretary. The duration of this agreement, however, was only for six months and covered the period from January 1 until June 30, 1984. Normally provider agreements issued by the Secretary are for a period of one year. Because of Sheepshead's dismal record, it was issued this agreement for a shorter period of time, and was also clearly advised that it would be carefully monitored during the period of the agreement.

 Sheepshead was resurveyed yet another time on March 15 and 16, 1984. Once again Sheepshead was found to be providing deficient care. Sheepshead did not contest the validity of these findings, and merely submitted a Plan of Correction, as it had done on several prior occasions.

 On June 25, 26 and 27, 1984 a team of HCFA surveyors conducted another survey of Sheepshead. In addition, at the end of this survey, the representatives of Sheepshead were provided with an exit conference. At this conference the surveyors once again clearly outlined several areas of ...

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