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Patchogue Nursing Center v. Bowen

decided: July 25, 1986.

PATCHOGUE NURSING CENTER, PLAINTIFF-APPELLANT,
v.
OTIS R. BOWEN, M.D., AS SECRETARY OF THE UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, AND DAVID AXELROD, AS COMMISSIONER OF THE NEW YORK STATE DEPARTMENT OF HEALTH, DEFENDANTS-APPELLEES



Appeal under 28 U.S.C. § 1292(a)(1) from an order of the United States District Court for the Eastern District of New York, Jack B. Weinstein, Chief Judge, denying, in pertinent part, plaintiff Patchogue Nursing Center's motion for a preliminary injunction.

Cardamone, Pierce, And Altimari, Circuit Judges.

Author: Altimari

ALTIMARI, Circuit Judge:

Appellant Patchogue Nursing Center ("Patchogue") appeals from an order of the United States District Court for the Eastern District of New York, (Weinstein, Ch. J.), denying in pertinent part its motion for a preliminary injunction. Appellant sought injunctive relief barring appellees, Otis R. Bowen, M.D., as Secretary of the United States Department of Health and Human Services (the "Secretary" or "HHS"), and David Axelrod, as Commissioner of the New York State Department of Health ("DOH"), from imposing the intermediate sanctions established by section 916 of the Omnibus Reconciliation Act of 1980, 42 U.S.C. § 1359cc(f), banning Medicaid and Medicare reimbursement for new admissions to skilled nursing facilities. Appellant contends that it is entitled to preliminary injunctive relief because (1) section 1395cc(f) cannot be utilized until the Secretary promulgates implementing regulations; (2) the Secretary has violated section 1395cc(f) by failing properly to follow the statutory due process procedures before adjudging appellant noncompliant with the requirements for participation as a provider of services in the Medicare program, see 42 U.S.C. § 1395x(j); 42 C.F.R. § 405.1101 et seq. ; and (3) the Secretary deprived appellant of a constitutionally protected property interest in violation of constitutional due process standards.

For the reasons stated below, we affirm.

BACKGROUND

Patchogue is a "skilled nursing facility," 42 U.S.C. § 1395x(j), authorized to provide services to at most 120 Medicare or Medicaid beneficiaries. Patchogue originally was accepted as a provider of services in the Medicare program effective January 1, 1977, and was issued its most recent provider agreement effective December 11, 1984.

On January 22, 1985, DOH, in accordance with 42 U.S.C. § 1395aa, conducted the first of several onsite surveys at Patchogue to determine compliance with the eighteen conditions of participation set forth at 42 U.S.C. § 1395x(j) and 42 C.F.R. § 1101 et seq. The state surveyors found Patchogue to be out of compliance with two conditions of participation: Governing Body and Management, 42 C.F.R. § 405.1121, and Dietetic Services, 42 C.F.R. § 405.1125.

The DOH surveyors held an exit conference with Paul Maggio, Administrator and owner of Patchogue, on February 8, 1985, to advise him of the survey findings. On February 13, 1985, DOH sent Patchogue a Statement of Deficiencies detailing the areas of noncompliance and providing citations to applicable regulations. In a letter accompanying the Statement, DOH requested a plan of correction from Patchogue and informed Patchogue of the possible sanctions for continued noncompliance.

DOH conducted an unannounced revisit survey of Patchogue on March 8, 1985. The surveyors apprised Mr. Maggio of their findings at an exit conference and, in a written statement, enumerated eleven deficiencies relating to the standard of "sanitary conditions," 42 C.F.R. § 405.1125(g).

Patchogue submitted a Plan of Correction dated March 18, 1985 to DOH. By letter dated May 13, 1985, DOH rejected the Plan of Correction as "unacceptable" and requested a revised Plan of Correction. DOH attached a statement to this letter explaining why the Plan was adjudged inadequate.

By letter dated June 6, 1985, DOH advised HHS that Patchogue was not in compliance with two conditions of participation and recommended that the intermediate sanction banning reimbursement for new Medicare and Medicaid admissions be imposed, 42 U.S.C. § 1395cc(f). Patchogue was notified of the possible ban by letter dated June 14, 1985. Patchogue also was informed that it could request an informal hearing in order to present evidence contradicting the finding of noncompliance.

On July 22, 1985, an informal hearing was held at which Patchogue denied that it was ever out of compliance with the conditions of participation and accused DOH of incompetence and prejudice. Patchogue requested that another revisit survey be conducted and that a neutral federal surveyor accompany the state survey team. At the hearing DOH furnished Patchogue with a copy of an interim survey report regarding the March 8, 1985 resurvey which it had previously failed to provide.

A revisit survey was conducted on July 31 and August 1, 1985 by DOH surveyors accompanied by a neutral Federal Nutrition Consultant and DOH officials from Albany. The survey disclosed that the conditions of Governing Body and Management and Dietetic Services remained out of compliance. An exit conference was held on August 1, 1985 at which DOH officials advised Mr. Maggio and his staff of their findings. DOH sent a copy of its interim survey report as well as a Statement of Deficiencies to Patchogue. The Federal Nutrition Consultant sent a copy of her report which concurred with DOH's findings to Mr. Maggio's attorney.

On September 24, 1985, HHS notified Patchogue of its intent to institute a ban on reimbursement and offered Patchogue an opportunity to address the results of the July 31/August 1 survey in an informal hearing.

A second informal hearing was held at Patchogue's request on October 11, 1985. On January 2, 1986, HHS issued a decision concluding that Patchogue had not complied with federal regulations and that a ban on reimbursements should issue pursuant to 42 U.S.C. § 1395cc(f) with public notice scheduled for January 8, 1986.

On January 14, 1986, United States District Court Judge Leonard D. Wexler issued an order to show cause and a temporary restraining order. Chief Judge Weinstein denied the request for a ...


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