COLUMBUS REGIONAL HOSPITAL v. FEDERAL EMERGENCY MANAGEMENT ADMINISTRATION
Filing
58
ORDER denying CRH's 43 Motion for a Continuance to Allow Discovery under Fed. R. Civ. P.56(d); denying CHR's 13 Motion to Enter Plaintiff's Case Management Plan ("CMP"); granting FEMA's 15 Motion Regarding CMP and to Stay Discovery pending resolution of its Motion to Dismiss or in the Alternative Motion for Summary Judgment. Discovery in this matter is hereby stayed pending resolution of FEMA's pending motion.[Dkt. 15]. The Court, sua sponte, hereby enlarges the time for CRH to respond to FEMA's Second Motion to Dismiss, or in the Alternative Motion for Summary Judgment to and including September 9, 2011 (see Order). Signed by Magistrate Judge Mark J. Dinsmore on 8/9/2011. (SWM)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
COLUMBUS REGIONAL HOSPITAL,
)
)
)
) NO. 1:10-cv-01168-SEB-MJD
)
)
)
)
)
Plaintiff,
vs.
FEDERAL EMERGENCY MANAGEMENT
ADMINISTRATION,
Defendant.
Order on Motions
This matter is before the Court on three different Motions:
Plaintiff Community Regional Hospital’s (“CRH”) Motion to Enter
Plaintiff’s Case Management Plan (“CMP”) [Dkt. 13], CRH’s Motion
for a Continuance to Allow Discovery under Fed. R. Civ. P. 56(d)
[Dkt. 43], and Defendant Federal Emergency Management Agency’s
(“FEMA”) Motion Regarding CMP and to Stay Discovery [Dkt. 15].
On June 29, 2011, a hearing was held on CRH’s Motion for a
Continuance to Allow Discovery.
The Court, being duly advised,
now DENIES CRH’s Motion to Allow Discovery [Dkt. 43] and CRH’s
Motion to Enter its CMP [Dkt. 13].
The Court GRANTS FEMA’s
Motion Regarding the CMP and Motion to Stay Discovery [Dkt. 15].
I. Background
In 2008, a flood occurred in Indiana that affected much of
the south central region of the state, including Columbus
Regional Hospital.
The government declared the area a major
1
disaster area and FEMA provided assistance to those that
qualified.
CRH was awarded $70 million from FEMA to help with
its loss.
CRH subsequently filed a Complaint on September 15, 2010
alleging that FEMA had committed numerous violations of the
governing statutes and regulations in determining the amount of
assistance CRH would receive.
CRH brings claims under the
Stafford Act, the Administrative Procedures Act (“APA”), the
Federal Tort Claims Act (“FTCA”), and the Due Process Clause of
the Fifth Amendment.1
Specifically, CRH challenges FEMA’s policy of apportioning
insurance proceeds that cover both FEMA eligible damages and FEMA
ineligible damages.
CRH’s insurance policy covered both property
loss, which is eligible for FEMA assistance, and business
interruption loss, which is ineligible for FEMA assistance.
Under FEMA’s policy, CRH would not be able to receive assistance
for the amount of insurance proceeds that FEMA allocated as
property loss because it would duplicate benefits available to
CRH through its insurance policy.
CRH contends that it has not
received duplicate benefits because it allocated the insurance
proceeds to other expenses and was not asking FEMA to reimburse
1
The Court makes no determination on the substantive arguments of
either party. Any discussion of the parties’ arguments is limited to
determining whether discovery should be allowed.
2
for those expenses.
CRH also challenges FEMA’s determination of
the value of equipment damaged in the flood.
II. Discussion
CRH is seeking written discovery, as well as the opportunity
to conduct depositions of FEMA representatives, in order to
assist CRH in opposing FEMA’s Motion to Dismiss, or in the
Alternative Motion for Summary Judgment.
In response, FEMA
asserts that the requested discovery is inappropriate because it
is not limited to the threshold issues raised in FEMA’s Motion,
and because CRH has not shown the type of extraordinary and rare
circumstances necessary to potentially allow for the
administrative record to be further developed.
CRH contends that, under Federal Rule of Civil Procedure
56(d), discovery should be allowed before it responds to FEMA’s
Dispositive Motion.
Rule 56(d) states:
If a nonmovant shows by affidavit or declaration that,
for
specified
reasons,
it
cannot
present
facts
essential to justify its opposition, the court may:
(1) defer considering the motion or deny it;
(2) allow time to obtain affidavits or declarations
or to take discovery; or
(3) issue any other appropriate order.
Fed. R. Civ. P. 56(d).
In order to show that it cannot present
facts essential to justify its opposition, the non-moving party’s
3
affidavit should provide: (1) what facts are sought and how they
are to be obtained; (2) how these facts are reasonably expected
to create a genuine issue of material fact; (3) what efforts the
affiant has made to obtain those facts; and (4) why these efforts
were unsuccessful. See Coward v. Town and Village of Harrison,
665 F. Supp. 2d 281, 301 (S.D.N.Y. 2009); see also Deere & Co. v.
Ohio Gear, 462 F.3d 701, 706 (7th Cir. 2006); Reed v. Lawrence
Chevrolet, Inc., 14 F. App’x. 679, 685 (7th Cir. 2001).
A. Stafford Act Claims
In challenging CRH’s Stafford Act claims, FEMA contends that
this Court lacks subject matter jurisdiction, because the United
States has not waived its sovereign immunity.
Specifically, FEMA
argues that the Stafford Act precludes judicial review of
discretionary government functions; therefore, CRH cannot bring
claims based solely on the Stafford Act.
In its Rule 56(d) affidavit, CRH contends that FEMA “delayed
and denied [its] reimbursement, not based on any ‘discretionary
act,’ but rather because certain FEMA decision makers had already
decided that CRH was a large, financially strong hospital that,
in their view, ‘did not need’ financial assistance.”
Ex. 1 at 2.]
[Dkt. 43
CRH contends that to be a discretionary function,
and thus immune to suit, the conduct must involve an element of
judgment or choice that is based on considerations of public
policy. While CRH is accurate in what discretionary functions
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entail, CRH fails to connect this in any meaningful way to a need
for discovery.
It is unclear whether CRH is arguing that FEMA
lacked discretion entirely, had discretion but failed to base its
decisions on public policy, or whether FEMA abused its
discretion.
If FEMA lacked discretion, CRH should be able to point to a
statute, regulation, or policy that dictated FEMA’s conduct.2
Determining whether FEMA’s conduct deviated from what was
required of it by a statute, regulation, or policy requires an
interpretation of the relevant statute, regulation, or policy.
CRH has not established that additional discovery is needed to
establish that FEMA lacked discretion.
With regard to the public policy consideration prong of the
discretionary function analysis, CRH fails to show that it cannot
present facts essential to justify its opposition to FEMA’s
Motion.
CRH does not explain how FEMA’s decisions are not based
on public policy or involve an impermissible exercise of policy
judgment.
Presumably, CRH is arguing that FEMA made an
2
CRH’s argument appears inconsistent as to whether FEMA should or
should not enforce its policies. In its Brief in Support, CRH argues
that FEMA failed to follow its procedures for Hermann Hospital and
allowed Hermann to violate FEMA procedures for allocating insurance
proceeds to business interruption losses; thus, “unlike CRH, the
Hermann Hospital was allowed to violate FEMA’s so-called ‘policies.’”
[Dkt. 44 at 12]. According to CRH, this is evidence of unequal
treatment and a bias against CRH. In its Reply Brief, CRH argues that
FEMA failed to abide by its own policies pertaining to the
reimbursement of damaged medical equipment at costs for new comparable
equipment, which again is evidence of bias and unequal treatment.
[Dkt. 52 at 6-7].
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impermissible exercise of policy judgment in determining that CRH
did not need FEMA funds.
CRH, however, already has the necessary
evidence and facts to make this argument in response to FEMA’s
Motion and therefore discovery is not needed.
With regard to CRH’s argument that FEMA abused its
discretion, CRH again fails to show that it cannot present facts
essential to justify its opposition to FEMA’s Motion.
Indeed,
CRH has presented evidence of possible bias and what it describes
as an abuse of discretion on FEMA’s part.
In light of the
evidence CRH already possesses, CRH has failed to demonstrate the
need for this discovery.
B. APA Claims
In challenging CRH’s claims under the APA, FEMA argues that
its decisions were reasonable and that discovery is improper.
Generally, a court should presume that “agency actions are valid
as long as the decision is supported by a rational basis,” White
Eagle Co-op. Ass’n v. Conner, 553 F.3d 467, 474 (7th Cir. 2009).
Further, that review is subject to a highly deferential standard
of review.
Int’l Fabricare Inst. v. U.S. EPA, 972 F.2d 384, 389
(D.C. Cir. 1992).
Review of an agency’s decision is generally limited to the
administrative record.
Sokaogon Chippewa Cmty. (Mole Lake Band
of Lake Superior Chippewa) v. Babbitt, 929 F. Supp. 1165, 1172
(W.D. Wis. 1996).
Accordingly, in order to gain discovery, CRH
6
must show (1) evidence suggesting bad faith or improprieties may
have influenced the decision maker; (2) that the agency has
relied on substantial records and materials not included in the
record; or (3) the procedures utilized and factors considered by
the decision maker require further explanation for effective
review.
Id.
Stated differently, an APA claim may go beyond the
administrative record when there is a strong showing that the
agency engaged in improper behavior or acted in bad faith,
Bethlehem Steel Corp. v. U.S. EPA, 638 F.2d 994, 1000 (7th Cir.
1980), the record is incomplete, Texas Steel Co. v. Donovan, 93
F.R.D. 619, 621 (N.D. Tex. 1982), judicial review is frustrated
because the record fails to explain the agency’s action, Camp v.
Pitts, 411 U.S. 138, 142-43 (1973), or the agency fails to
consider all relevant factors.
Florida Power & Light Co. v.
Lorion, 470 U.S. 729, 744 (1985).
A party must make a “strong showing” that one of these
exceptions applies before a court will allow extra-record
inquiry.
Citizens to Preserve Overton Park, Inc. v. Volpe, 401
U.S. 402, 420 (1971), overruled on unrelated grounds by Califano
v. Sanders, 430 U.S. 99, 105 (1977).
Further, “a court must
scrutinize each matter carefully and individually while holding
plaintiffs to their significant evidentiary burden.” Sokaogon
Chippewa Cmty., 929 F. Supp. at 1178.
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CRH argues that there was bad faith or bias in the decision
and that the record is incomplete.
In making a claim of bad
faith, “[m]ere assertions that there was bad faith on the part of
a decision-maker will not suffice.” McGoldrick v. Koch, 110
F.R.D. 153, 156 (S.D.N.Y. 1986).
CRH states that FEMA exhibited
“prejudicial bias as to CRH’s requests for assistance because CRH
had reserved some monies for upcoming capital projects.” [Dkt. 44
at 19.]
CRH claims that support for this assertion rests in
statements by FEMA’s representatives to the effect that “CRH was
so well heeled financially that it ‘did not need’ FEMA’s
assistance.” [Id.]
CRH further asserts that repeated and
unreasonable delays in processing CRH’s requests, demands from
FEMA that CRH obtain new or additional insurance coverage before
relief was provided, and unequal treatment of CRH as compared to
other hospitals who had previously sought similar relief all
demonstrate bad faith.
At this point, the Court finds CRH can
present facts essential to justify its opposition to FEMA’s
Motion and has not made a strong enough showing of bias to
require inquiry beyond the administrative record.
As to CRH’s claims of an incomplete record that fails to
explain FEMA’s actions with respect to the APA claim, CRH alleges
that FEMA did not provide sufficient information on a number of
different issues.
Generally, an agency’s administrative record
is presumed complete and accurate.
8
Woodhill Corp. v. FEMA, No.
97 C 677, 1997 WL 548559, at *2 (N.D. Ill. Sept. 3, 1997).
“Nevertheless, the presumption disappears and the record is
supplemented if the plaintiff affirmatively demonstrates that the
agency relied on materials not included in the record submitted
to the court.”
Id.
Like the bad faith claim, the assertion of an incomplete
record, as part of the “extraordinary and rare circumstances”
standard, requires CRH to make a “strong showing” that the
exception applies before a court will allow extra-record inquiry.
Citizens to Preserve Overton Park, 401 U.S. at 420.
While
“federal defendants are required to produce the administrative
record on which the agency relied, either directly or indirectly,
in reaching [its decision], …
speculation that certain documents
should or may exist is insufficient to overcome the presumption
that the agency has properly designated and certified the
administrative record.” South Yuba River Citizens League v. Nat’l
Marine Fisheries Serv., No. CIV S-06-2845 LKK JFM, 2008 WL
3932358, at *4 (E.D. Cal. Aug. 26, 2008).
CRH has failed to affirmatively demonstrate, for the
purposes of responding to FEMA’s Motion, that the record is
insufficient so as to preclude the formation of a response.
FEMA
is not required to produce “every scrap of relevant paper.”
Id.
Speculation that there are documents necessary to complete the
record that currently exists will not be enough to compel the
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Court to grant discovery for the purposes of responding to FEMA’s
Motion. CRH can provide facts essential to justify its opposition
based on the current record.
As a result, CRH possesses the
necessary information to respond.
C. FTCA Claims
Looking to whether CRH submitted its FTCA claim to the
agency before filing its lawsuit and, as such, whether all
administrative remedies were exhausted, the Court finds no
discovery is necessary to respond.
Until the federal agency
denies the claim, or six months have passed after the claimant
presented the claim to the agency, a claimant may not institute a
claim in federal court.
28 U.S.C. § 2675.
As FEMA had not
issued its final decision before CRH filed suit in this Court,3
CRH needed to wait six months after presenting its claim with
FEMA before filing suit.
This issue can be resolved simply by looking at the date CRH
filed its FTCA claim with FEMA and the date CRH filed suit in
this Court.
CRH filed in this Court on September 15, 2010.
FEMA
contends that CRH did not file its FTCA claim with the agency
until at the earliest, October 26, 2010.
Noticeably absent from
CRH’s argument is the date in which it alleges it filed its FTCA
claim with FEMA.
Instead, CRH argues that it needs discovery to
3
CRH has now received the final denial from FEMA. At the hearing, the parties disputed whether CRH
must refile the claims in a new lawsuit or whether CRH may amend its Complaint.
10
determine “the first date FEMA’s Office of Chief Counsel received
notice of CRH’s FTCA claims and whether FEMA has intentionally
withheld its decision on CRH’s FTCA claim.”
4].
[Dkt. 43 Ex. 1 at
CRH’s theory that FEMA intentionally withheld its decision,
however, is purely speculative.
Discovery on this issue is
completely unnecessary for CRH to present essential facts to
justify its opposition to FEMA’s Motion.
D. Due Process Claims
CRH contends that it needs the same discovery contemplated
in its Stafford Act, APA, and FTCA claims because it is
reasonably calculated to lead to the discovery of admissible
evidence regarding CRH’s Due Process claim.
4].
[Dkt. 43 Ex. 1 at
According to CRH, this information “should create a genuine
issue of material fact regarding whether FEMA employed procedures
designed to prevent arbitrary or erroneous determinations with
respect to CRH’s claims for FEMA assistance.”
[Id.].
FEMA
asserts that CRH does not have the necessary property interest to
bring a Due Process claim.
Discovery is not necessary for CRH to
respond to the fundamental issue of whether it has a protectable
property interest.
According to FEMA, even if CRH has a
protected property interest, CRH is entitled to APA review, at
best.
For the same reasons discussed above, the Court finds that
CRH can properly respond to FEMA’s Motion without the requested
discovery.
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I. Conclusion
For the above stated reasons, the Court hereby DENIES CRH’s
Motion for a Continuance to Allow Discovery under Fed. R. Civ. P.
56(d).[Dkt. 43].
As such, CRH’s Motion to Enter Plaintiff’s Case
Management Plan (“CMP”) is also DENIED.[Dkt. 13].
FEMA’s Motion
Regarding CMP and to Stay Discovery pending resolution of its
Motion to Dismiss or in the Alternative Motion for Summary
Judgment is GRANTED and discovery in this matter is hereby stayed
pending resolution of FEMA’s pending motion.[Dkt. 15].
Finally,
the Court, sua sponte, hereby enlarges the time for CRH to
respond to FEMA’s Second Motion to Dismiss, or in the Alternative
Motion for Summary Judgment
to and including September 9, 2011.
Dated: 08/09/2011
Distribution List:
Mark J. Dinsmore
United States Magistrate Judge
Southern District of Indiana
Brent W. Huber
ICE MILLER LLP
brent.huber@icemiller.com
Debra G. Richards
UNITED STATES ATTORNEY'S OFFICE
debra.richards@usdoj.gov
Freedom S. N. Smith
ICE MILLER LLP
freedom.smith@icemiller.com
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