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Miracles House Inc. v. Junior Senior, Secretary of Agency for Health Care Administration

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

March 29, 2018

MIRACLES HOUSE, INC., et al., Plaintiffs,
v.
JUNIOR SENIOR, Secretary of Agency for Health Care Administration, and BARBARA PALMER, Director of Agency for Persons with Disabilities, Defendants.

          ORDER GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

          FEDERICO A. MORENO UNITED STATES DISTRICT JUDGE.

         This case concerns competing Medicaid rights-namely, a Medicaid recipient's right to choose a Medicaid provider without state interference, and a state's right to maintain quality medical treatment for some of its most vulnerable citizens. In July 2017, Defendants Justin Senior, Secretary of the Agency for Health Care Administration, and Barbara Palmer, Director of the Agency for Persons with Disabilities, took action against Miracles House ("Miracles") which terminated its ability to obtain reimbursement for certain healthcare services it provides to Medicaid recipients. Plaintiffs are Medicaid recipients who received healthcare services from Miracles until Defendants terminated its Medicaid reimbursement privileges.[1] They allege that Defendants deprived them of their right to seek Medicaid services from a provider of their choice, and in doing so, violated federal Medicaid statutes and the United States Constitution. Defendants moved for summary judgment, contending that they acted in accordance with the law and did not violate Plaintiffs' rights. For the reasons discussed below, the Court agrees with Defendants. Accordingly, Defendants motion for summary judgment is granted.

         I. Background

         Miracles operates two group homes that offer healthcare services to the permanently disabled. It previously owned the now-closed "Amazing Wonders" assisted living facility. Those two types of healthcare facilities involve subtle, yet important, distinctions. Specifically, "assisted living facilities" and "group homes" are regulated by different state agencies and require separate licenses. In Florida, the Agency for Health Care Administration regulates assisted living facility licenses and oversees the quality of care at those facilities. By contrast, Florida's Agency for Persons with Disabilities is responsible for monitoring group homes and issuing licenses to group-home operators. In this case, Miracles held an assisted living facility license to operate Amazing Wonders (the "Assisted Living License"), and a separate license to operate the two Miracles group homes (the "Group Home License").

         More importantly, Miracles is-or was-a Medicaid provider.[2] Qualified Medicaid providers must maintain a facility license and enter into a Medicaid Provider Agreement with Florida's Agency for Persons with Disabilities. These qualified providers have "Medicaid Provider Authorization, " which allows them to obtain a Medicaid provider number and receive Medicaid reimbursement for certain healthcare services. If a Medicaid provider loses its Medicaid Provider Authorization-by, e.g., suspension of its license or termination of its Medicaid Provider Agreement-the provider loses the right to furnish Medicaid services and receive payment from Medicaid. 42 C.F.R. § 431.51(b)(1).

         II. Summary of Facts

         On July 21, 2017, Florida's Agency for Health Care Administration suspended Miracles' Assisted Living License associated with its ownership and operation of the Amazing Wonders nursing home. Defendant Justin Senior-head of the Agency for Health Care Administration- contends that the Agency suspended Miracles' Assisted Living License because of the deficient patient care at Amazing Wonders evidencing Miracles' failure to maintain appropriate conditions and provide adequate medical services at the assisted living facility. The Agency for Healthcare Administration purportedly inspected Amazing Wonders three times during May and June 2017, and found that "the residents of this facility [were not] residing in a safe and decent living environment free from abuse and neglect." (D.E. 16 at 4.) The Agency's report added, "[n]o resident of an assisted living facility should be placed or maintained in such an environment." Id. Because of these deficiencies, the Agency for Healthcare Administration suspended Miracles' Assisted Living License and closed Amazing Wonders.

         But as noted above, Miracles held two licenses: the suspended Assisted Living License and the Group Home License. Thus, despite losing the Assisted Living License, Miracles retained its Group Home License permitting it to continue operating the two group homes. Plaintiffs emphasize the separateness of the group homes and Amazing Wonders, arguing that the problems at Amazing Wonders do not reflect the quality of care administered at Miracles' group homes. Plaintiffs note that whereas "Amazing Wonders [had] only been in existence and operating for less than 2 years, " the group homes have "been in existence for many years with no verified complaints." (D.E. 17 at 3.) Additionally, Plaintiffs claim that Miracles provided Medicaid services only at its group homes-not at Amazing Wonders. As such, Plaintiffs contend that the events at Amazing Wonders should not affect Miracles' status as a qualified Medicaid provider in its group homes.

         Defendants reject this argument. They effectively treat Amazing Wonders and Miracles' group homes as one in the same, arguing that Amazing Wonders' deficiencies reflect Miracles' medical competence and qualifications-or lack thereof. According to Defendant Senior, the problems at Amazing Wonders, and subsequent suspension of Miracles' Assisted Living License "led [the Agency for Health Care Administration] to conclude that Miracles was no longer fit to perform Medicaid services in a professionally competent, safe, legal and ethical manner under 42 C.F.R. § 431.51(b)(1)." (D.E. 16 at 4.) In other words, the state determined that Miracles' ownership of an assisted living facility with such extensive deficiencies undermined Miracles' fitness to provide Medicaid services even at separate entities. The Agency for Health Care Administration therefore terminated Miracles' Medicaid Provider Authorization and Medicaid number effective September 2, 2017. Without a Medicaid provider number, Miracles no longer qualified as a Medicaid Services Provider, prompting the Agency for Persons with Disabilities to terminate its Medicaid Provider Agreement with Miracles.

         Plaintiffs reject Defendants' claimed justifications for terminating Miracles' Medicaid Provider Authorization and Agreements. Plaintiffs argue that Miracles was "an excellent Medicaid provider" and note that the Delmarva Foundation-a non-profit organization that conducts annual audits of group homes in Miami-awarded Miracles a 94% on its December 2016 audit. Plaintiffs also contend that, one week before terminating Miracles' Medicaid Provider Authorization and Medicaid Provider Agreements, the Agency for Persons with Disabilities visited Miracles' group homes and reported no violations. Accordingly, Plaintiffs allege that the state terminated Miracles' Medicaid Provider Authorization and its Medicaid Provider Agreements for reasons unrelated to Miracles' fitness to provide medical services. Indeed, Plaintiffs suggest the state acted at the behest of a single Agency employee-Kirk Ryon-who allegedly has a personal vendetta against Miracles' owner.

         In short, Plaintiffs allege that Defendants "imposed a sanction of exclusion from Medicaid on Miracles House without a finding of a 'violation' by Miracles House and without providing Miracles House the opportunity for a pre-deprivation hearing as state law requires." (D.E. 7 at 8.) It asks the Court for a temporary restraining order and, after further proceedings, a preliminary injunction restraining Defendants, his employees, agents, and successors in office from terminating the Medicaid provider agreements of Plaintiff Miracles House.

         III. Discussion

         A. Arguments

         Plaintiffs contend that (i) the Agency for Health Care Administration wrongfully terminated Miracles' Medicaid Provider Authorization, and (ii) the Agency for Persons with Disabilities wrongfully terminated its Medicaid Provider Agreements with Miracles. Specifically, Plaintiffs suggest that the state terminated Miracles' Medicaid Provider Authorization and Provider Agreements for reasons unrelated to its fitness to perform safe, effective medical services-a violation of the free-choice-of-provider provision. See 42 U.S.C. ยง l396a(a)(23). Plaintiffs further ...


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