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Blossom South, LLC v. Sebelius

United States District Court, Second Circuit

January 17, 2014

BLOSSOM SOUTH, LLC, Plaintiff,
v.
KATHLEEN SEBELIUS, as Secretary of the United States Department of Health and Human Services, MARILYN TAVENNER, as Administrator of the Centers for Medicare and Medicaid Services, NIRAV SHAH, M.D., as Commissioner of Health of the State of New York, Defendants.

DECISION AND ORDER

DAVID G. LARIMER, District Judge.

This is an action by a Rochester, New York nursing home, Blossom South, LLC ("Blossom South"), against federal and state defendants, alleging claims that defendants have violated plaintiff's federal constitutional due process rights in connection with the termination of its Medicare and Medicaid provider agreement ("provider agreement"). On December 17, 2013, this Court issued a Decision and Order, familiarity with which is assumed, granting defendants' motion to dismiss the complaint ("dismissal order"). Dkt. #35; 2013 WL 6622906.

Plaintiff has now moved for an order "restoring the preliminary injunction" that this Court granted on August 30, 2013, which enjoined defendants from terminating plaintiff's provider agreement pending further order of the Court. Dkt. #17. Plaintiff also seeks an order enjoining defendants from taking steps to terminate Blossom South's provider agreement, pending the outcome of plaintiff's appeal of this Court's dismissal order to the Court of Appeals for the Second Circuit.[1]

BACKGROUND

The relevant background of this case is set forth in this Court's dismissal order, 2013 WL 6622906, at *1-*3, and will be recited here only briefly. Blossom South operates a skilled nursing facility in Rochester, New York. Blossom South participates in Medicare and Medicaid ("the programs"), which are federally-funded programs that compensate participating providers for health care services provided to qualifying patients.

To receive payments under these programs, a facility must meet certain requirements, including requirements relating to the quality of health care provided to residents. Facilities that do not meet those requirements are subject to various remedies and penalties, up to and including termination from the programs. See 42 C.F.R. ยง 488.408; Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1, 6-7 (2000).

In August 2013, the federal Centers for Medicare & Medicaid Services ("CMS"), which oversees the programs, informed Blossom South that Blossom South's Medicare provider agreement would be terminated as of September 14, 2013, due to Blossom South's history of deficiencies. This followed a period of over two years during which Blossom South had been monitored under CMS's "special focus facility" ("SFF") program, which subjects to particular scrutiny facilities that have a track record of noncompliance with program requirements.

After receiving this notice, Blossom South requested an administrative hearing before an administrative law judge ("ALJ"). Blossom South also commenced this action against CMS and the New York State Department of Health (which has some responsibility for monitoring facilities' compliance with the programs), asserting due process and other federal claims. Blossom South also filed a motion for a preliminary injunction, seeking to preserve the status quo at least until Blossom South's administrative appeal could be heard.

This Court granted the preliminary injunction motion on August 30, 2013 ("injunction decision"), and directed that defendants take no steps to terminate plaintiff's provider agreement pending further order of the Court. 2013 WL 4679275. At that point, no administrative or other hearing had been held, and the Court's main concern in issuing the injunction was, as stated, simply to preserve the status quo pending an administrative hearing.

Defendants then moved to dismiss the complaint on various grounds. On November 27, 2013, while those motions to dismiss were pending, the ALJ hearing plaintiff's administrative appeal issued a decision sustaining CMS's termination of Blossom South's provider agreement. Dkt. # 34.

On December 17, this Court granted defendants' motions to dismiss the complaint. The Court found, for various reasons, that plaintiff's claims were meritless. Plaintiff has filed a notice of appeal of that decision to the Court of Appeals for the Second Circuit.

Plaintiff now seeks an order restoring the preliminary injunction and enjoining defendants from terminating Blossom South's provider agreement, pending the outcome of plaintiff's appeal of this Court's dismissal order to the Court of Appeals. In effect, then, plaintiff seeks what amounts to a stay of this Court's dismissal order, pending the outcome of plaintiff's appeal. See Dkt. #38-10 at 8-9.[2]

DISCUSSION

A district court considering whether to grant a stay pending appeal under Rule 62 of the Federal Rules of Civil Procedure should consider four factors: "the likelihood of success on the merits, irreparable injury if a stay is denied, substantial injury to the party opposing a stay if one is issued, and the public interest." Mohammed v. Reno, 309 F.3d 95, 100 (2d Cir. 2002); accord S.E.C. v. Citigroup Global Markets Inc., 673 F.3d 158, 162 (2d Cir. 2012) (citing Hilton v. Braunskill, 481 U.S. 770, 776 (1987)). "A stay is not a matter of right, even if irreparable injury might otherwise result. It is instead an exercise of judicial discretion, and the ...


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