United States District Court, E.D. North Carolina, Western Division
WESTMINISTER NURSING CENTER, d/b/a VALLEY NURSING CENTER, as Authorized Representative of MARY SHOOK, CATHERINE GLASCO, DARRYL BROWN, BOYD MCKAY, ELIJAH MORTON, GLORIA PATTERSON, Plaintiff,
MANDY K. COHEN, in her official capacity as the Secretary of the North Carolina Department of Health and Human Services, Defendant.
W. FLANAGAN, UNITED STATES DISTRICT JUDGE.
matter is before the court on defendant's motion to
dismiss pursuant to Federal Rules of Civil Procedure
12(b)(1), (2) and (6). (DE 18). The motion has been fully
briefed, and the issues presented are ripe for ruling. For
the reasons that follow, the motion is granted in part and
denied in part.
the Medicaid Act and implementing regulations, Medicaid
recipients who require long-term care in a nursing home
facility are required to use some of their income to pay for
the cost of care. The parties refer to this payment as
“patient monthly liability.” Regulations
promulgated by the Centers for Medicare & Medicaid
Services (“CMS”) include instructions directed to
state Medicaid authorities specifying how the state must
calculate patient monthly liability.
initiated this action February 17, 2017, seeking relief based
upon defendant's alleged miscalculation of the
residents' patient monthly liability and refusal to
adjust the same. In counts one and seven, plaintiff seeks
declaratory judgment and injunctive relief hinged on
violations of substantive law described in counts two through
six. In count two, plaintiff alleges violations of the
Medicaid Act's medical assistance and nursing facility
services mandate. 42 U.S.C. §§ 1396a(a)(10)(A),
1396d(a)(4)(A). In count three, plaintiff alleges violations
of the Medicaid Act's reasonable promptness requirement.
42 U.S.C. § 1396a(a)(8). In count four, plaintiff
alleges violations of the Americans with Disabilities Act
(“ADA”). 42 U.S.C. § 12132 et seq. In count
five, plaintiff alleges violations of the Rehabilitation Act
of 1973 (“Rehabilitation Act”). 29 U.S.C. §
794 et seq. In count six, plaintiff alleges violations of the
Due Process and Equal Protection Clauses of the Fourteenth
Amendment to the Constitution. U.S. Const. amend. XIV.
Plaintiff asserts counts two, three, and six through the
vehicle of 42 U.S.C. § 1983. The parties dispute whether
the relief plaintiff seeks properly may be characterized as
monetary or injunctive.
filed the instant motion June 19, 2017, seeking dismissal for
lack of standing, failure to exhaust administrative remedies,
failure to state a claim, and under principles of Eleventh
Amendment immunity. Plaintiff responded in opposition, and
OF THE FACTS
facts alleged in the complaint may be summarized as follows.
Plaintiff is engaged in the business of providing long-term
nursing home care at various locations within North Carolina.
(DE 20 ¶ 1). The residents are Medicaid recipients who
live at plaintiff's facilities. (Id.
¶¶ 3-8). Defendant is Secretary of the North
Carolina Department of Health and Human Services
(“NCDHS”), which agency is charged with
administration of North Carolina's Medicaid program.
(Id. ¶ 2).
point while receiving care at plaintiff's facilities,
each resident was assigned a patient monthly liability.
(Id. ¶¶ 3-8). However, in each case, there
was a gap in time between assignment of patient monthly
liability and plaintiff's receipt of any payment.
(See id.). The complaint does not explain why any of
the residents failed to tender certain patient monthly
liability payments, but documents submitted by defendant
suggest that at least some of the residents are victims of
fraud whereby a third party intercepted social security
payments that a resident could have used to discharge patient
monthly liability. (See DE 19-2 at 2). During
periods in which the residents failed to pay their patient
monthly liability, each resident incurred a negative account
balance with plaintiff. (DE 20 ¶¶ 3-8).
address any negative balance, each resident applied to
defendant for a deviation in patient monthly liability.
(Id.). However, applying section MA-2270 VIII(A)(7)
of the NCDHS Aged, Blind and Disabled Medicaid Manual, Long
Term Care Need and Budgeting (“section MA-2270”),
under which provision defendant will not cover an arrearage
in patient monthly liability, defendant denied each
application. (DE 20 ¶ 20). Section MA-2270 was never
submitted to CMS for approval as part of North Carolina's
Medicaid state plan. (DE 20 ¶ 26).
in some cases, defendant's inaction on the residents'
claims and, in other cases, denial of the same, plaintiff
initiated this action.
Standard of Review
motion to dismiss under Rule 12(b)(1) challenges the
court's subject matter jurisdiction. Under Rule 12(b)(1),
the plaintiff bears the burden of showing that subject matter
jurisdiction is appropriate. See McNutt v. Gen. Motors
Acceptance Corp., 298 U.S. 178 (1936); Adams v.
Bain, 697 F.2d 1213, 1219 (4th Cir. 1982). Such motion
may either 1) assert the complaint fails to state facts upon
which subject matter jurisdiction may be based, or 2) attack
the existence of subject matter jurisdiction in fact, apart
from the complaint. Adams, 697 F.2d at 1219. When
the defendant challenges the factual predicate of subject
matter jurisdiction, a court “is to regard the
pleadings' allegations as mere evidence on the issue, and
may consider evidence outside the pleadings without
converting the proceeding to one for summary judgment.”
Richmond, Fredericksburg & Potomac R. Co. v. United
States, 945 F.2d 765, 768 (4th Cir. 1991). The nonmoving
party “must set forth specific facts beyond the
pleadings to show that a genuine issue of material fact
motion to dismiss under Rule 12(b)(6) tests the legal
sufficiency of the complaint but “does not resolve
contests surrounding the facts, the merits of a claim, or the
applicability of defenses.” Republican Party v.
Martin, 980 F.2d 943, 952 (4th Cir. 1992). A complaint
states a claim if it contains “sufficient factual
matter, accepted as true, to ‘state a claim to relief
that is plausible on its face.'” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
“Asking for plausible grounds . . . does not impose a
probability requirement at the pleading stage; it simply
calls for enough fact to raise a reasonable expectation that
discovery will reveal [the] evidence” required to prove
the claim. Twombly, 550 U.S. at 556. In evaluating
the complaint, “[the] court accepts all well-pled facts
as true and construes these facts in the light most favorable
to the plaintiff, ” but does not consider “legal
conclusions, elements of a cause of action, . . . bare
assertions devoid of further factual enhancement[, ] . . .
unwarranted inferences, unreasonable conclusions, or
arguments.” Nemet Chevrolet, Ltd. v.
Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir.
jurisdiction the court cannot proceed at all in any cause.
Jurisdiction is the power to declare the law, and when it
ceases to exist, the only function remaining to the court is
that of announcing the fact and dismissing the cause.”
Stop Reckless Economic Instability Caused by Democrats v.
Fed. Election Com'n., 814 F.3d 221, 228 (4th Cir.
2016) (citations omitted). Accordingly, “federal courts
are not free to simply assume that they possess
subject-matter jurisdiction and then proceed to decide the
merits of the issue before them when their jurisdiction
remains in doubt.” Id. “Rather, federal
court must determine whether they have subject-matter
jurisdiction over a claim before proceeding to address its
III of the United States Constitution restricts federal court
jurisdiction to actual “cases” and
“controversies.” U.S. Const. art. III, § 2.
The requirement that a party invoking jurisdiction must have
standing “is an essential and unchanging part of the
case-or-controversy requirement of Article III.”
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560
(1992). To establish standing, “a plaintiff must show
(1) it has suffered an ‘injury in fact' that is (a)
concrete and particularized and (b) actual or imminent, not
conjectural or hypothetical, (2) the injury is fairly
traceable to the challenged action of the defendant; and (3)
it is likely, as opposed to merely speculative, that the
injury will be redressed by a favorable decision.”
Friends of the Earth, Inc., v. Laidlaw Envtl.
Servs., 528 U.S. 167, 180-81 (2000) (citing
Lujan, 504 U.S. at 560-61); see also Allen v.
Wright, 468 U.S. 737, 751 (1984) (“A plaintiff
must allege personal injury fairly traceable to the
defendant's allegedly unlawful conduct and likely to be
redressed by the requested relief.”). The court's
standing inquiry is “focused on whether the party
invoking jurisdiction had the requisite stake in the outcome
when the suit was filed.” Davis v. Fed. Election
Comm'n, 554 U.S. 724, 734 (2008).
association can allege standing based upon two distinct
theories.” Md. Hwys. Contractors Ass'n, Inc. v.
State of Md., 933 F.2d 1246, 1250 (4th Cir. 1991).
“First, the association may have standing in its own
right to seek judicial relief from injury to itself and to
vindicate whatever rights and immunities the association
itself may enjoy.” Id. “Second, the
association may have standing as the representative of its
has standing to sue in its own right for claims pertaining to
residents Morton, Patterson, and Shook, where those residents
assigned their right to receive Medicaid benefits to
plaintiff. See Sprint Commc'ns. Co., L.P. v. APCC
Servs., Inc., 554 U.S. 269, 285 (2008) (“Lawsuits
by assignees . . . are “cases and controversies of the
sort traditionally amenable to, and resolved by, the judicial
process.”); (DE 22-8 at 5 (Morton assignment
provision), 10 (Patterson assignment provision), 11 (Shook
assignment provision). Plaintiff does not dispute that it has
no standing to sue in its own right as to other residents
where entitlement to Medicaid benefits is the property of the
recipient, not of any healthcare provider, unless assigned.
See O'Bannon v. Town Court Nursing Ctr., 447
U.S. 773, 787 (1980) (holding that “direct
benefits” under Medicaid “give the
patients an opportunity to obtain medical services from
provides of their choice” and holding that such direct
benefits constitute the recipient's property).
organization has standing to seek redress for the injuries of
its members if it satisfies the three prong Hunt
test. Hunt v. Washington State Apple Advertising
Comm'n., 432 U.S. 333, 343 (1977); United Food
and Commercial Workers Union Local 751 v. Brown Grp,
Inc., 517 U.S. 544, 555 (1996). First, an
organization's membership must “include at least
one member with standing to present, in his or her own right,
the claim (or type of claim) pleaded by the
[organization.]” Local 751, 417 U.S. at 555;
see Sierra Club v. Morton, 405 U.S. 727, 735 (1972)
(plaintiff lacked standing where it failed to allege that
“it or its members would be affected in any of their
activities or pastimes by the [challenged]
development.”). Second, an organization must “be
organized for a purpose germane to the subject of its