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From Health Law Daily, July 27, 2016

‘Petty’ parish can’t close FQHC unless it proves care availability

By Kathryn S. Beard, J.D.

A local government cannot evict a health care provider from government facilities until it shows that the health care needs of the area’s underserved citizens will continue to be addressed after the eviction. Although the federally qualified health center (FQHC) did not show that it is entitled to be the provider for the underserved population, the court entered a limited preliminary injunction after determining that Medicaid beneficiaries in the area are entitled to some level of health care services that will not be met if the facilities are vacant (Jefferson Community Health Care Centers, Inc. v. Jefferson Parish Government, July 26, 2016, Brown, N.).

Jefferson Parish. The Jefferson Parish, Louisiana, metropolitan area faced a public health crisis in the aftermath of Hurricanes Katrina and Rita. To address that crisis, Jefferson Parish enabled Jefferson Community Health Care Centers (JCHCC), a local non-profit organization, to use the Parish’s facilities to restore basic health services to an underserved area. JCHCC and Jefferson Parish entered a contract providing JCHCC rent-free access to a facility for a 10-year period and an additional five-year term unless terminated in writing. In exchange, JCHCC provided or coordinated primary care and clinical preventive services throughout the Parish using funding from the Health Resources and Service Administration (HRSA) as an FQHC. Its main site serves approximately 8,000 patients annually.

After a change in JCHCC’s leadership caused by misspent funding and a HRSA corrective action plan, the new CEO implemented the corrective action plan and sent demand letters to individuals who received payments to which they were not entitled. According to the CEO, a member of the Jefferson Parish Council began threatening to terminate the Parish’s agreement with JCHCC; the councilmember allegedly requested that individuals of his choosing be given positions of authority within JCHCC and as outside vendors. The councilmember allegedly sought to have the CEO removed and began proceedings to alter the terms of the lease. At a council meeting on the matter, multiple community members and JCHCC representatives spoke out against removing JCHCC or altering its lease terms. The Parish Council later unanimously voted to terminate the agreements allowing JCHCC to use Parish facilities and advertised for statements of qualifications from prospective providers to offer care at those facilities. The only statement of qualification submitted was by JCHCC’s partner, Ochsner Health System, which planned to use JCHCC as a subcontractor. The deadline for submissions has twice been extended with no additional statements of qualification submitted. JCHCC filed a lawsuit against the Parish, the Council, and multiple individual councilmembers seeking a preliminary injunction against its eviction.

Medicaid Act allegations. In its lawsuit, JCHCC alleged that the Parish Council’s actions violate the Medicaid Act and entitle it to relief under 42 U.S.C. §1983. It argued that Medicaid beneficiaries have a right to obtain certain services, including FQHC services, as enrollees of the Medicaid program. The §1983 claim was on behalf of JCHCC, its consumer-based board, and its Medicaid beneficiary patients, and states that the Parish’s decisions unlawfully deprive JCHCC’s Medicaid beneficiaries of their statutory rights to receive FQHC services. Although the facts are not fully developed yet, the court found that it was likely that if JCHCC was evicted from Parish facilities, Medicaid beneficiaries would experience a gap in services and may not have the same access to services as they currently have. Citing Fifth Circuit precedent, the court found that possible violations of the Medicaid Act can be enforceable via a §1983 action by either requiring or prohibiting a range of actions by states and/or the agencies tasked with enacting and complying with the Medicaid Act.

Because the Parish Council’s actions are likely to lead to a gap in Medicaid services, the court determined that—although it is not sure that local government is required to fill the services gap—there is a chance that JCHCC will prevail on the merits. It noted, however, that although the beneficiaries of Jefferson Parish have a right to receive Medicaid services from FQHCs in general, JCHCC does not necessarily have a right to specifically occupy the facilities in question, nor does JCHCC have a right to be the provider of Medicaid services to Jefferson Parish beneficiaries. Accepting JCHCC’s allegations could lead to a finding—albeit an extreme one—that the Medicaid Act requires local governments to create new contracts providing federally funded medical services to beneficiaries.

Injunction. The court determined that a limited, tailored preliminary injunction was appropriate because although JCHCC’s argument that the Parish’s actions violate the Medicaid Act was not particularly strong, the threat of irreparable harm to JCHCC’s patients is substantial and outweighs potential harm to the Parish, while the injunction is in the public interest. The strength of these elements shown by JCHCC is enough to compensate for the weaker likelihood of JCHCC’s success on the merits.

The court further considered JCHCC’s uncontroverted allegations of the councilmember’s intimidation and improper influence on JCHCC’s operations and the fact that the Parish would be choosing to leave buildings vacant and beneficiaries’ needs unmet. The court noted that it was disturbed by the councilmember’s "pattern of pettiness and bullying," which potentially led to the Council’s decision "to deprive communities that are already starved for resources of access to health care." Therefore, the court enjoined Jefferson Parish from evicting JCHCC until (1) the Parish secures new medical providers for the facilities; or (2) the Parish provides evidence that the medical needs of the communities served by JCHCC can otherwise be met.

Other arguments. In its ruling, the court also considered JCHCC’s arguments that the Council’s resolutions are preempted by Section 330 of the Public Health Service (PHS) Act (42 U.S.C. §254b) and for breach of contract. Based on the Supreme Court’s 2015 decision in Armstrong v. Exceptional Child Center, Inc., which held that Medicaid providers cannot sue to enforce a section of the Medicaid Act pursuant to an implied private right of action under the Supremacy Clause, the court reasoned that the Supreme Court’s analysis is equally applicable to the PHS Act. Lastly, the court found that although the Parish’s reasoning for terminating the lease agreements with JCHCC might be suspect, the method by which it terminated was proper by the agreements’ terms.

The case is No. 16-12910.

Attorneys: Robert T. Garrity, Jr. (Law Office of Robert T. Garrity, Jr.) and David Alan Bender (Feldesman Tucker Leifer Fidell LLP) for Jefferson Community Health Care Centers, Inc. Michael Joseph Power (Michael J. Power, PLC) and Debra J. Fischman (Sher Garner Cahill Richter Klein & Hilbert, LLC) for Jefferson Parish Government and Jefferson Parish Council.

Companies: Jefferson Community Health Care Centers, Inc.; Jefferson Parish Government; Jefferson Parish Council

MainStory: TopStory CaseDecisions CMSNews MedicaidNews LouisianaNews

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