Bon-ing Inc., et al v. Richard Hodges, et al

Filing

OPINION filed : Because the district court did not err in dismissing plaintiffs claims against Himes and Hodges on the grounds of absolute immunity, the judgment is AFFIRMED, decision not for publication. Ralph B. Guy , Jr. (AUTHORING), John M. Rogers and Raymond M. Kethledge, Circuit Judges.

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NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 17a0388n.06

FILED

No. 16-4704
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

BON-ING, INC.; JENNIE INGRAM
CALLOWAY,
Plaintiffs- Appellants,
v.
RICHARD HODGES; LANCE HIMES,
Defendants-Appellees.

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Jun 30, 2017
DEBORAH S. HUNT, Clerk

On Appeal from the United States
District Court for the Southern
District of Ohio

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Before: GUY, ROGERS, and KETHLEDGE, Circuit Judges.
RALPH B. GUY, JR., Circuit Judge. Plaintiffs Bon-Ing, Inc., and its sole shareholder
Mrs. Jennie Ingram Calloway, alleged they were denied equal protection in violation of
42 U.S.C. § 1983 through actions taken against plaintiffs’ skilled nursing facility by the Ohio
Department of Health’s Interim Director Lance Himes and his successor Director Richard
Hodges. The district court granted the defendants’ motion to dismiss, finding that Himes and
Hodges were entitled to absolute immunity. Agreeing with the district court, we affirm.1

1

Plaintiffs initially sued the defendants in their official capacities, but plaintiffs’ amended complaint
asserted the claims against them individually.

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I.
Plaintiffs were long-time owners and operators of the Bon-Ing Care and Rehabilitation
Center, a skilled nursing facility located in Ohio.

The facility was licensed by the Ohio

Department of Health (ODH), which was responsible for enforcement of state laws and was an
agent of the Centers for Medicare and Medicaid Services (CMS). Himes was Interim Director of
ODH from February 21, 2014, until Hodges took over as Director of ODH on August 11, 2014.
The amended complaint asserted that, from March 2014 through September 2014, ODH
personnel conducted survey inspections of plaintiffs’ facility and issued citations that
misrepresented facts and exaggerated the seriousness and extent of the violations being reported.
Then, based on those citations, Himes and Hodges allegedly treated plaintiffs’ facility less
favorably than similarly situated white-owned facilities because Mrs. Calloway is an African
American.

The amended complaint asserted that Himes and Hodges did so by subjecting

plaintiffs’ facility to greater scrutiny and giving it less time to correct deficiencies in order to:
(1) revoke its license and (2) cause CMS to terminate the facility’s participation in the
Medicare/Medicaid Programs. Plaintiffs sought $2.65 million in damages from the defendants,
personally, arising from the closure of the facility and the inability to transfer the facility’s
operating rights due to the license revocation proceedings.
In evaluating the defendants’ motion to dismiss, the district court considered the factual
allegations in the amended complaint together with the documents that the defendants attached to
their motion. Those documents included: three notices of proposed license revocation sent by
either Himes or Hodges; the ODH Hearing Officer’s Report and Recommendation (R&R); and
the order signed by Hodges adopting the R&R and revoking the facility’s license. Defendants
also attached two notices sent to plaintiffs’ facility by CMS, imposing immediate remedies and

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ultimately ending the facility’s participation in the Medicare/Medicaid Programs. There is no
dispute on appeal that the district court properly considered those documents, which were
referred to in the amended complaint, were central to plaintiffs’ claims, and are public records of
state and federal administrative agencies. See Yeary v. Goodwill Indus.-Knoxville, Inc., 107 F.3d
443, 445 (6th Cir. 1997). Like the district court, we only consider the documents in assessing
“the nature of the administrative proceedings described in the complaint and the defendants’
function in those proceedings.” Bon-Ing, Inc. v. Hodges, No. 2:16-cv-710, 2016 WL 6680813, at
*3 (S.D. Ohio Nov. 14, 2016).
Briefly, it is apparent that the surveys were conducted by ODH personnel other than the
defendants and began with a complaint investigation survey conducted on March 14, 2014. That
survey identified multiple violations and made a finding of “real and present danger” to residents
(in the nature of unabated resident-on-resident physical abuse).

Interim Director Himes

recommended to CMS that it impose immediate remedies based on those survey results, which
CMS did in a notice dated April 15, 2014. After two more complaint surveys and an annual
survey revealed new and uncorrected prior violations, CMS sent a second notice on July 15,
2014, imposing additional penalties and advising that plaintiffs’ facility would be terminated
from the Medicare/Medicaid Programs. Plaintiffs did not request a hearing, and alleged that the
loss of those reimbursements forced the facility to close on or about September 14, 2014.
Interim Director Himes initiated the license revocation proceedings by way of the first
notice dated July 30, 2014. He rescinded that notice and issued a new notice of proposed
revocation on August 8, 2014, which supplemented the grounds with the results of another
complaint investigation survey that included a second finding of “real and present danger.”
Director Hodges subsequently rescinded that notice and issued a new notice of proposed license

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revocation on September 26, 2014, which added further reliance on an August 13 follow-up
survey that included a third finding of “real and present danger.” Plaintiffs requested a hearing,
and a hearing officer conducted an evidentiary hearing over several days during April and May
2015. A written Report and Recommendation setting forth factual findings and conclusions of
law was issued on February 8, 2016.

On March 24, 2016, Director Hodges signed the

Adjudication Order adopting the recommendation of the hearing officer, revoking the facility’s
license and advising plaintiffs of their right to appeal. Plaintiffs did not appeal, but commenced
this § 1983 action in August 2016.
Defendants moved to dismiss plaintiffs’ claims on a number of grounds—including
absolute immunity, qualified immunity, statute of limitations, and failure to state a claim.
Addressing only the defense of absolute immunity, the district court granted defendants’ motion
for reasons fully and ably set forth in its opinion and order entered on November 14, 2016. This
appeal followed.
II.
We review de novo the district court’s dismissal of the plaintiffs’ claims under Rule
12(b)(6). Moody v. Mich. Gaming Control Bd., 847 F.3d 399, 402 (6th Cir. 2017). We must
accept the plaintiffs’ factual allegations as true and construe the complaint in the light most
favorable to plaintiffs, but we are “not required to accept legal conclusions or unwarranted
factual inferences as true.” Id. A motion to dismiss will be granted “if the claim shows on its
face that relief is barred by an affirmative defense.” Riverview Health Inst., LLC v. Med. Mut. of
Ohio, 601 F.3d 505, 512 (6th Cir. 2010). It is the defendants who bear the burden of establishing
entitlement to the defense of absolute immunity. See Antoine v. Byers & Anderson, Inc., 508
U.S. 429, 432 (1993).

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As the district court explained, the protections of absolute quasi-judicial and quasiprosecutorial immunity extend to administrative agency officials. See Butz v. Economou, 438
U.S. 478, 513-16 (1978). The Supreme Court has held that persons “performing adjudicatory
functions within a federal agency are entitled to absolute immunity from damages liability for
their judicial acts.” Id. at 514. In addition, agency officials “who are responsible for the
decision to initiate or continue a proceeding subject to agency adjudication are entitled to
absolute immunity from damages liability for their parts in that decision.”

Id. at 516.

Significantly, it is not the identity of the actor, but the nature of the function performed that
determines whether an official is entitled to absolute immunity. See Forrester v. White, 484 U.S.
219, 229 (1998).
In Watts v. Burkhart, this court found quasi-judicial immunity barred the claims brought
by an African-American physician against members of the Tennessee Board of Medical
Examiners alleging a denial of equal protection in connection with the revocation of his medical
license. 978 F.2d 269, 271-72 (6th Cir. 1992) (en banc) (alleging that he was treated differently
than similarly situated non-minority physicians). Following the lead of Watts, the district court
recognized that it must determine whether the agency official: (1) performed a traditional
prosecutorial or adjudicatory function; (2) initiated or decided cases sufficiently controversial
that, in the absence of immunity, he would be subject to numerous damages actions; and (3)
prosecuted or adjudicated disputes against a backdrop of safeguards designed to protect the
plaintiffs’ constitutional rights. Bon-Ing, 2016 WL 6680813, at *4 (citing Williams v. Michigan
Bd. of Dentistry, 39 F. App’x 147, 148-49 (6th Cir. 2002), and Quatkemeyer v. Kentucky Bd. of
Med. Licensure, 506 F App’x 342, 346-49 (6th Cir. 2012)). The district court found all three
factors were met here.

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Plaintiffs’ appeal focuses primarily on the first factor. The district court analyzed the
defendants’ actions relating to the license revocation separately from the recommendations to
CMS. With respect to the license revocation, there is no dispute that the director of ODH has the
authority to enforce state laws governing skilled nursing facilities. That discretionary authority
includes deciding whether a violation warrants issuance of a revocation notice and making the
final administrative decision. See Bon-Ing, 2016 WL 6680813, at *5 (citing Ohio Rev Code
§§ 3721.03(B) and 119.09).
Accepting plaintiffs’ allegations as true, Himes and Hodges exercised their discretion in
deciding to issue the successive notices of proposed license revocation without giving plaintiffs
additional time to correct the deficiencies. In addition, once plaintiffs requested a hearing,
Hodges reviewed the hearing officer’s findings and issued the order revoking the license for
plaintiffs’ facility. Notwithstanding plaintiffs’ assertions, it is immaterial that the defendants
were neither the hearing officer nor the attorney representing the agency during those
proceedings.

We agree with the district court’s careful analysis and conclude that the

defendants’ challenged actions leading to the revocation of plaintiffs’ license were prosecutorial
or adjudicatory in nature.
As for the recommendations made to CMS, the district court properly recognized that this
claim could only pertain to Himes since CMS acted to terminate plaintiffs’ participation in the
Medicare/Medicaid Programs before Hodges became the Director of ODH. Plaintiffs alleged
that Himes made recommendations that caused CMS to place the facility on the Special Focus
Facility list (SFF), impose substantial civil money penalties, and terminate plaintiffs’ facility
from the Medicare/Medicaid Programs. Those recommendations were allegedly “made in bad
faith with improper (racial) motives and [] were based on unfounded, false and misleading so

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called conclusions regarding Plaintiffs’ alleged non-compliance with the applicable laws, rules
and regulations.” The district court concluded that “Himes performed a prosecutorial function
by considering the survey results to determine if there had been a violation of statutory and
regulatory standards before making a recommendation to CMS.” Bon-Ing, 2016 WL 6680813, at
* 7. We agree.
Addressing the second factor, the district court aptly observed that both the licensing of
skilled nursing facilities and their eligibility to receive Medicare/Medicaid payments are areas
that have the potential to subject a director of the ODH to numerous actions for damages. Id. at
*5 and *7. The district court observed that the financial stakes in this area are illustrated by
plaintiffs’ own suit, which sought $2.65 million in damages and alleged that the facility was
forced to close by the loss of Medicare/Medicaid reimbursements and that plaintiffs were unable
to sell the facility’s operating rights due to the license revocation. Because plaintiffs do not
challenge the district court’s determination with respect to this factor, we do not discuss it further
except to say that the possibility of damages suits in the absence of immunity is obvious.
Finally, absolute immunity would not be available if the defendants’ actions “were not
subject to restraints and safeguards comparable to those built into the archetypal judicial
process.” Watts, 978 F.2d at 275. As outlined by the district court, the director of ODH may
issue an order revoking a facility’s license only after providing a hearing or an opportunity to be
heard pursuant to Chapter 119 of the Ohio Revised Code, which confers procedural protections
and the right to judicial review in the court of common pleas. Bon-Ing, 2016 WL 6680813, at
*6; see also Wilde v. Ohio Veterinary Med. Licensing, 31 F. App’x 164, 165 (6th Cir. 2002)
(noting that Ohio Rev. Code § 119.12 permits the state court to consider constitutional claims).
Similarly, there is no dispute that CMS provided plaintiffs with an opportunity for a hearing

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before an administrative law judge with procedural safeguards subject to administrative appeal to
the Department Appeals Board and judicial review of the Board’s decision. See 42 C.F.R.
§§ 498.3(a)(2)(i), 498.4, 498.40; Claiborne-Hughes Health Ctr. v. Sebelius, 609 F.3d 839, 84344 (6th Cir. 2010). Plaintiffs offer no authority or developed argument challenging the district
court’s conclusions with respect to this factor.
Because the district court did not err in dismissing plaintiffs’ claims against Himes and
Hodges on the grounds of absolute immunity, the judgment is AFFIRMED.