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Kenmore Mercy Hospital v. Richard F. Daines

September 18, 2011

KENMORE MERCY HOSPITAL, PLAINTIFF,
v.
RICHARD F. DAINES, M.D., AS COMMISSIONER OF HEALTH OF THE STATE OF NEW YORK, DEFENDANT.



The opinion of the court was delivered by: William M. Skretny Chief Judge United States District Court

DECISION AND ORDER

I. INTRODUCTION

In this action, Plaintiff Kenmore Mercy Hospital, doing business as the McAuley Residence, asserts claims pursuant to the Equal Protection Clause of the Fourteenth Amendment, as well as the Supremacy clause of Article VI of the United States Constitution, 28 U.S.C. § 2201, and 42 U.S.C. § 1983. Plaintiff's claims arise from Defendant's decision to classify Plaintiff as a free-standing facility for purposes of the New York State Medicaid program and Defendant's application of that program's regulations to similarly situated nursing facilities with disparate results. Plaintiff seeks an invalidation of Defendant's designation of Plaintiff as a free-standing facility, a declaration that Plaintiff is a hospital-based facility for purposes of Medicaid program reimbursement, and such other relief as this Court deems appropriate under 42 U.S.C. § 1983. Presently before this Court is Defendant's motion to dismiss Plaintiff's complaint in its entirety. For the reasons discussed below, Defendant's motion to dismiss is granted.*fn1

II. BACKGROUND

A. Facts

In adjudicating Defendant's motion to dismiss, this Court assumes the truth of the following factual allegations contained in the complaint. See Hosp. Bldg. Co. v. Trs. of Rex Hosp., 425 U.S. 738, 740, 96 S. Ct. 1848, 1850, 48 L. Ed. 2d 338 (1976); see also Hamilton Chapter of Alpha Delta Phi, Inc. v. Hamilton Coll., 128 F.3d 59, 63 (2d Cir. 1997).

Plaintiff, the McAuley Residence ("McAuley"), is a licensed 160-bed residential health care facility, with its offices and principal place of business in the State of New York, Erie County. (Complaint ("Comp."), ¶ 2.) McAuley is located on the campus of, and physically adjacent to, the Kenmore Mercy Hospital. (Id. at ¶ 23.) Defendant, the late Richard F. Daines, M.D., was, at all relevant times, the Commissioner of the Department of Health of the State of New York. (Id. at ¶ 3.)*fn2

Prior to 1993, Plaintiff consisted of two distinct entities. The Catherine McAuley Residence, a 79-bed nursing home operated by a New York not-for-profit corporation, was located across the street from the Kenmore Mercy Hospital. (Id. at ¶ 21.) The Kenmore Mercy Hospital itself owned and operated an 80-bed nursing home known as the Kenmore Mercy Home. (Id. at ¶ 20.) In 1993 these two residences merged to form the McAuley Residence. (Id. at ¶ 22.) As part of this merger, a Certificate of Need Application ("CoN") was filed for approval with the previous Commissioner of Health, the New York State Department of Health, and the New York State Public Health Council. (Id.)

The CoN submitted by Plaintiff requested a designation as a hospital-based nursing home. (Id. at ¶ 24.) Designation as "hospital-based" results in preferential reimbursement rates under New York's Department of Health, through the Department's participation in the federal Medicaid program. (Id. at ¶¶ 13-14.) Upon review of Plaintiff's CoN, the Department of Health and the previous commissioner demanded that Plaintiff withdraw the requested designation, and instead request a designation as a free-standing nursing home. (Id. at ¶ 25.) A designation as "free-standing" yields significantly less favorable reimbursement rates than a hospital-based designation. (Id. at ¶ 14.) Plaintiff initially accepted the Department of Health's demand. (Id. at ¶ 26.) However, in May 2007 Plaintiff filed a rate appeal challenging its designation. (Plaintiff's Memorandum of Law in Opposition to Defendant's Motion to Dismiss ("Pl.'s Resp."), Docket No. 11, 7.) Plaintiff's appeal was denied in February 2008. (Id.) Plaintiff now seeks to invalidate Defendant's designation of Plaintiff as a free-standing facility, and a declaration that Plaintiff is a hospital-based facility for purposes of Medicaid reimbursement.

B. Procedural History

Plaintiff commenced this action on February 20, 2009, by filing a complaint in the United States District Court for the Western District of New York. Defendant filed the instant motion to dismiss Plaintiff's complaint in its entirety on April 6, 2009.

III. DISCUSSION

A. Legal Standard

Rule 12(b)(6) allows dismissal of a complaint for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12 (b)(6). Federal pleading standards are generally not stringent: Rule 8 requires only a short and plain statement of the claim. Fed. R. Civ. P. 8(a)(2). But the plain statement must "possess enough heft to show that the pleader is entitled to ...


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