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Trinity Behavioral Health Care System, Inc. v. Arkansas Department of Human Services

United States District Court, E.D. Arkansas, Western Division

November 7, 2014

TRINITY BEHAVIORAL HEALTH CARE SYSTEM, INC. and MAXUS, INC., Plaintiffs
v.
ARKANSAS DEPARTMENT OF HUMAN SERVICES, et al.

TEMPORARY RESTRAINING ORDER

KRISTINE G. BAKER, District Judge.

Before the Court is plaintiffs Trinity Behavioral Health Care System, Inc. ("Trinity") and Maxus, Inc.'s motion for temporary restraining order and preliminary injunction (Dkt. No. 2).

In its initial consideration of this motion, the Court determined that Trinity and Maxus did not meet the requirements for this Court to consider issuing an ex parte temporary restraining order because Trinity and Maxus had not complied with Federal Rule of Civil Procedure 65(b)(1)(B). In their moving papers, Trinity and Maxus's counsel did not certify in writing any efforts made to give notice and the reasons why notice should not be required. Accordingly, the Court notified defendants of this action and scheduled a hearing on the motion for temporary restraining order for Friday, November 7, 2014.

The Court held this hearing, and defendants were present through their counsel. Defendants also filed prior to the hearing a preliminary response in opposition to the motion for temporary restraining order (Dkt. No. 7). Despite this, the Court concludes that the hearing did not allow defendants a sufficient opportunity to challenge the basis for plaintiffs' requested relief. Therefore, the Court only considers the motion for temporary restraining order at this time. See, e.g., Piraino v. JL Hein Serv. Inc., No. 4:14-CV-00267-KGB (E.D. Ark. May 16, 2014) (citing McLeodUSA Telecomms. Servs. v. Qwest Corp., 361 F.Supp.2d 912, 918 n.1 (N.D. Iowa 2005)).

I. Background

Trinity is licensed to provide psychiatric services to children in Arkansas through inpatient and residential treatment. Maxus provides outpatient mental health counseling to juvenile and adult patients. Trinity and Maxus allege that defendants, Arkansas Department of Human Services ("ADHS"); the Director of ADHS, John Selig; and the Director of the Division of Medical Services of ADHS, Dawn Stehle, (collectively "ADHS"), have wrongfully suspended Medicaid payments to Trinity and Maxus.

Trinity and Maxus claim that, on October 7, 2014, DHS issued letters to Trinity and Maxus purportedly pursuant to 42 C.F.R. §455.23(a) notifying the providers of the suspension of their Medicaid payments effective November 6, 2014, because the agency determined there were credible allegations of fraud against the providers for which an investigation is ongoing. More specifically, that letter from ADHS states:

Because of the large number of beneficiaries impacted by this action, [A]DHS finds that good cause exists to immediately suspend payment only in part. Effective with the date of this letter, [A]DHS will immediately suspend Medicaid payments for any new inpatient admission and for any new outpatient beneficiaries. All remaining payments will be suspended thirty (30) days from the date of this letter, to allow for existing beneficiaries to transition to new providers. [A]DHS finds that this delay is in the best interests of the Medicaid program, so as to ensure continuity of care and to avoid the duplicative or unnecessary expense that could be caused by an immediate transition.

(Dkt. No. 3, Exhibit E, at 150-151).

In this action, Trinity and Maxus claim that defendants lacked authority to suspend Medicaid payments under Ark. Code Ann. §§ 20-77-2505, -2506, -2508; that defendants' suspension of payments violates 42 C.F.R. § 455.23 and Trinity and Maxus's due process rights under the Fourteenth Amendment to the United States Constitution; that the suspension of payments violates the due process rights of Trinity and Maxus's patients; and that the suspension of payments violates certain provisions of the Medicaid statutory and regulatory scheme set out in 42 U.S.C. § 1396. In their instant motion, Trinity and Maxus ask this Court to enter a temporary restraining order that prevents defendants from suspending these Medicaid payments. Specifically, in their motion, Trinity and Maxus

request that this Court grant their Motion for a Temporary Restraining Order and Preliminary Injunctive Relief and stay enforcement of the suspension and preserve the status quo as it existed before October 7, 2014, until such time as Plaintiffs are afforded a full and fair administrative review of DHS' decision to issue the suspension and Plaintiffs receive a ruling following the hearing. Plaintiffs further request that in the event the suspension is not overturned at the administrative hearing level, this Court order the suspension stayed until such time as the patients currently receiving treatment at the Providers' facilities secure alternative care.

(Dkt. No. 2, at 5).

II. Discussion

When determining whether to grant a motion for a temporary restraining order, this Court considers: (1) the threat of irreparable harm to the movant; (2) the balance between the harm to the movant and the injury that granting an injunction would cause other interested parties; (3) the public interest; and (4) the movant's likelihood of success on the merits. Kroupa v. Nielsen, 731 F.3d 813, 818 (8th Cir. 2013) (quoting Dataphase Sys. Inc. v. CL Sys., 640 F.2d 109, 114 (8th Cir.1981)). Preliminary injunctive relief is an extraordinary remedy, and the party seeking such relief bears the burden of establishing the four Dataphase factors. Watkins Inc. v. Lewis, 346 F.3d 841, 844 (8th Cir. 2003). The focus is on "whether the balance of the equities so favors the movant that justice requires the court to intervene to preserve the status quo until the merits are determined." Id . "Although no single factor is determinative when balancing the equities, " a lack of irreparable harm is sufficient ground for denying a ...


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