Waskul et al v. Washtenaw County Community Mental Health et al
Filing
55
ORDER denying 8 Motion for Preliminary Injunction. Signed by District Judge Arthur J. Tarnow. (MLan)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
DEREK WASKUL, ET. AL.,
Case No. 16-10936
Plaintiffs,
SENIOR U.S. DISTRICT JUDGE
ARTHUR J. TARNOW
v.
WASHTENAW COUNTY COMMUNITY
MENTAL HEALTH, ET. AL.,
U.S. MAGISTRATE JUDGE
ANTHONY P. PATTI
Defendants.
/
ORDER DENYING PLAINTIFFS’ MOTION FOR A PRELIMINARY INJUNCTION [8]
Plaintiffs filed a Motion for a Temporary Restraining Order and Preliminary
Injunction on March 30, 2016 [8]. This motion sought to enjoin Defendants from
refusing to reinstate the pre-May 2015 levels of funding and services to Plaintiffs, and
to all other Community Living Support (CLS) service recipients, until lawful
individual plan of service meetings were conducted, and CLS service recipients were
provided adequate notice of proposed cuts with a meaningful opportunity to be heard.
They further seek to preliminarily and permanently enjoin Defendant Washtenaw
County Community Mental Health (WCCMH) from imposing a rate reduction, new
budget calculation, and unilateral hours reductions; and to further preliminarily and
permanently enjoin Defendant WCCMH from denying participants their right to
procedural due process. Defendants Cortes and WCCMH responded on April 18,
2016 [20], and Plaintiffs replied on April 26, 2016 [27]. Defendant Lyon responded
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on April 20, 2016 [21], and Plaintiffs replied on April 26, 2016 [25]. Defendants
Terwilliger and Community Mental Health Partnership (CMHP) responded on April
20, 2016 [22], and Plaintiffs replied on April 26, 2016 [26].
For the reasons stated below, Plaintiffs’ Motion for a Preliminary Injunction
[8] is DENIED.
PROCEDURAL HISTORY
A hearing was held on May 19, 2016. At this hearing, the Court ordered the
parties to produce a consent order that applied to all CLS participants, allowed for
outside monitoring, and that, if additional services are requested, they would go
through the IPOS process to determine their medically necessary, and if so, the total
budget would increase. Neither side was able to reach an agreement regarding the
terms of a proposed consent order. The Court held an evidentiary hearing on the
Motion on August 1, 2016 and September 20, 2016. Plaintiffs and Defendants filed
supplemental briefs on October 10, 2016. [50]; [51]; [52]; [53].
FACTUAL BACKGROUND
The named Plaintiffs include four individuals suffering from various forms of
developmental disabilities. Their guardians are suing on their behalf. Washtenaw
Association for Community Advocacy (WACA) is also a Plaintiff, bringing this
action on its own behalf, as well as on behalf of its members that have been affected
directly by Defendants’ alleged unlawful policies and practices. Defendants include
Washtenaw County Community Mental Health (WCCMH), Community Mental
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Health Partnership of Southeast Michigan (CMHP), and employees of County and
State Health Departments who are being sued in their official capacity.
Michigan’s state Medicaid plan provides for home and community-based
services for approved beneficiaries under a waiver, referred to as a Habilitation
Supports Waiver (HSW), for those who would otherwise require treatment in a
facility. This Community Living Support (CLS) program is predicated upon the
participant’s right to self-determination, to structure his or her own plan of service
according to medical need. Washtenaw County Health Organization (WCHO) was
the Prepaid Inpatient Health Plan (PIHP) that provided Plaintiffs’ Medicaid-funded
mental health specialty service and support. WCHO contracted with Community
Support and Treatment Services (CSTS) to provide these services in the Washtenaw
area. WCHO subsequently was dissolved around October 1, 2015. At that time, CSTS
changed its name to Washtenaw County Community Mental Health (WCCMH),
became the county mental health agency, and assumed the responsibilities of WCHO,
including providing notices of fee reductions and defending appeals of these
reductions before an ALJ. Additionally, Defendant Community Mental Health
Partnership (CMHP) became Washtenaw County’s PIHP in January 2014.
In 2008, CLS service recipients received a single, all-inclusive rate that
included payment for budget items including, inter alia, staff salary, transportation,
equipment, supply material, community activities, and staff training. [20-5]. In 2012,
WCHO altered the budget process for CLS participants and included, alongside the
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previous 2008 all-inclusive budget method, additional funding for staff training,
transportation, goods and activity costs, in addition to amount of community living
support hours that participants had previously received. [20-7]. In effect, this
duplicated funding for the line items, as their cost was also included in the allinclusive CLS budget rate set in the 2008 method.
In April 2015, CLS participants were provided a letter explaining that the
budget would be cut, commencing in May. Participants were informed that the CLS
rate would be set at $13.88; their level of services would remain the same, but the
amount participants could pay their staff might be affected. [20-8]. Participants were
not notified of any hearing rights in this letter, which Defendants admit was an error.
[See 20-7; 48 at 97, ¶¶12-14]. On May 15, 2015, because of a budgetary crisis, CLS
funding was in fact cut. This reduction set CLS participants back to a single, allinclusive rate, identical to the method employed in 2008.
On June 4, 2015, the Michigan Department of Health and Human Services,
(MDHHS), sent notice to WCCMH that its decision reducing CLS participants’
provider rate did not conform to the approved budget authority in the HSW
application, and requested that WCCMH retroactively restore the CLS rate to the
level of May 15, 2015 for all those affected by this action. Starting in late June 2015,
Defendant WCCMH began incorporating the budget reductions into CLS participant
individual plans of service (IPOS). When participants were given these new IPOS,
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they were provided notice of their right to a hearing under a notice of “adequate
action.” [8, Exhibit F].
Named Plaintiffs appealed and while Defendant WCCMH did restore the rate
to the May 15, 2015 amount, it did not restore the prior method of calculating this
rate, leaving the actual total of the Plaintiffs’ CLS budgets capped, resulting in a
budget inadequate to cover medically necessary transportation and community living
service, per named Plaintiffs’ affidavits. [27, Pg ID 511-517; Pg ID 542-544; Pg ID
546-552]. As of August 1, 2016, the CLS rate for all participants was increased by
6%, resulting in the current Medicaid rate being of $14.72. [48 at 102 ¶¶19-25; 103
¶¶1-12].
Plaintiffs present the following claims: failure to provide procedural due
process rights under 42 U.S.C. § 1983; violation of the statutory right to be heard
under the Medicare Act; violation of the Social Security Act, through the failure to
authorize services in the amount, scope, or duration required to reasonably achieve its
purpose; violation of the Social Security Act’s right to receive services with
reasonable promptness; and violation of Michigan Mental Health Code 330.1722(1),
which provides that no recipient of mental health services shall be subject to abuse or
neglect.
Plaintiffs seek to enjoin Defendants from refusing to reinstate the pre-May
2015 levels of their funding and services, and to all other Community Living Support
(CLS) service recipients, until lawful individual plan of service meetings are
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conducted, and CLS service recipients are provided adequate notice of proposed cuts
and an opportunity to be heard. They further seek to preliminarily and permanently
enjoin Defendant Washtenaw County Community Mental Health (WCCMH) from
imposing the rate reduction, new budget calculation, and unilateral hours reductions;
and to further preliminarily and permanently enjoin Defendant WCCMH from
denying participants their right to procedural due process.
ANALYSIS
When evaluating a motion for preliminary injunction, the Court must consider
four factors: “(1) whether the movant has a strong likelihood of success on the merits;
(2) whether the movant would suffer irreparable injury without the injunction; (3)
whether issuance of the injunction would cause substantial harm to others; and (4)
whether the public interest would be served by issuance of the injunction.” Bonnell v.
Lorenzo, 241 F.3d 800, 809 (6th Cir. 2001) (quoting Rock & Roll Hall of Fame v.
Gentile Prods., 134 F.3d 749, 753 (6th Cir. 1998)). While no single factor is
controlling of the outcome, if “there is simply no likelihood of success on the merits,”
that is usually “fatal.” Gonzales v. Nat'l Bd. of Med. Exam'rs, 225 F.3d 620, 625 (6th
Cir. 2000).
Defendants challenge Plaintiffs’ motion on the basis that Plaintiff is unlikely to
prevail on its claim, that Plaintiff cannot show harm, that Plaintiff Washtenaw
Association for Community Advocacy (WACA) does not have standing, and that
Defendants have Eleventh Amendment immunity.
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1. STANDING OF PLAINTIFF WASHTENAW ASSOCIATION FOR COMMUNITY
ADVOCACY (WACA)
Plaintiff WACA is a non-profit organization whose mission and purpose
includes, inter alia, advocating for persons with developmental disabilities and their
families. WACA claims that “[a]ll 169 HSW CLS services recipients in Washtenaw
County, including the named individual Plaintiffs in this case, qualify for WACA
services, and have been directly harmed by Defendants’ practices.” [8 at 22].
WACA claims to have associational standing to bring suit on behalf of its
members. To successfully assert associational standing, the association must show:
(1) “the organization’s members would otherwise have standing to sue in their own
right;” (2) “the interests it seeks to protect are germane to the organization’s
purpose;” and (3) “neither the claim asserts nor the requested relief requires the
participation of individual members in the lawsuit.” Friends of Tims Ford v. Tenn.
Valley Authority, 585 F. 3d 955, 967.
WACA claims that, under the reasoning of Hunt v. Washington Apple
Advertising Commission, 432 U.S. 333 (1977), it has associational standing. WACA
fails to have associational standing because the 169 people for whom it claims
associational standing to bring the lawsuit have not been shown to be members of the
organization. In Hunt, the association in question was a state agency that did not have
the type of members typically connected to previous associational standing cases. Id.
The Court in Hunt found that, although the individuals that the agency was purporting
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to represent were not “‘members’…in the traditional trade association sense, they
possess all of the indicia of membership in an organization” because “[t]hey alone
elect the members of the Commission; they alone may serve on the Commission;
(and) they alone finance its activities, including the costs of this lawsuit.” Id at 34445. Given this pervasive role of the individuals, the agency thus was considered to
have associational standing, despite not representing “members” in the traditional
sense.
There is no viable argument that the 169 unnamed people that WACA purports
to represent are members of the organization. At the August 1, 2016 hearing,
WACA’s Chief Executive Officer Kathleen Homan testified that, to become a
member of WACA, an individual must pay a membership fee. [44 at 55, ¶17-21].
Homan went on to testify that out of the 169 individuals WACA is purporting to
represent in the lawsuit, only 30 are in any way associated with WACA in that they
had contacted her, and she did not have the names of all of those who had been in
contact with her. [44 at 56, ¶16-22]. Additionally, she revealed that she could not
state how many of those 30 people were actual members of WACA, and could only
state with certainty that the three named Plaintiffs were dues paying members. [44 at
55-57]. Homan did not present any evidence that any of these 169 HSW CLS services
recipients had any role in WACA, similar to the individuals in Hunt, which would
make them equivalent to a member and provide WACA associational standing.
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Therefore, WACA does not have associational standing to represent the individuals
whose interests they seek to represent.
While an association may have standing independently, it must still establish
the constitutional requirements of standing: (1) injury in fact; (2) causation; and (3)
redressability. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, (1992). WACA has
not shown that it will likely satisfy the requirements of individual standing in this
case.
At the evidentiary hearing on August 1, 2016, Homan testified that the
damages incurred by WACA were economic in nature, stating that the increased
number of advocacy requests from individuals receiving self-determination CLS
services from MCCMH in 2015 and 2016 caused increased staffing costs. [44 at 46; ¶
5-20]. However, Homan was unable to provide any evidence of concrete harm
suffered by WACA. There was no evidence of how many additional advocacy
requests were received by the organization, or details presented about what type of
staffing changes were required, causing the expenditure of additional funds. Instead,
the only evidence provided was the conclusory statement that approximately thirty
CLS recipients contacted Homan, or spoke with her at town meetings about the CLS
budget reductions. [44 at 39-57].
Additionally, redressability has not been established by the testimony offered
at the evidentiary hearing or in any accompanying briefs. Standing is much more
difficult to establish when:
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a plaintiff's asserted injury arises from the government's allegedly
unlawful regulation (or lack of regulation) of someone else ... causation
and redressability ordinarily hinge on the response of the regulated (or
regulable) third party to the government action or inaction.
Barry v. Corrigan, 79 F. Supp. 3d 712, 724–25 (E.D. Mich. 2015), reconsideration
denied sub nom. Barry v. Lyon, No. 13-CV-13185, 2015 WL 1322728 (E.D. Mich.
Mar. 24, 2015), and aff'd sub nom. Barry v. Lyon, No. 15-1390, 2016 WL 4473233
(6th Cir. Aug. 25, 2016), citing Lujan, 504 U.S. at 562.
In this case, WACA has not shown that the issuing of an injunction would
address their alleged economic harm; in fact, issuance of injunctive relief is as likely
to create more questions and inquiries from CLS services participants, as it is to
decrease those requests. Therefore, since the number of advocacy requests, and thus
the economic harm alleged by WACA, depends on the actions of third parties not
before the Court, and beyond the Court’s control, WACA lacks independent standing.
Lastly, WACA cannot establish the irreparable harm required in a preliminary
injunction. It alleges economic damages only. However, “a plaintiff’s harm from the
denial of a preliminary injunction is irreparable if it is not fully compensable by
money damages.” Overstreet v. Lexington-Fayette Urban Cnty. Gov’t, 305 F. 3d 566,
573 (6th Cir. 2002). Therefore, even if WACA had shown evidence of an economic
harm that could be traced to the actions of Defendants, the harm itself would be fully
compensable by monetary damages.
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Because there is not a likely of success for finding associational standing, the
remainder of this order will address the Motion as applicable to the named Plaintiffs.
2. PLAINTIFFS HAVE NOT SHOWN A STRONG LIKELIHOOD OF SUCCESS ON THE
MERITS UNDER THEIR SOCIAL SECURITY ACT AND MICHIGAN MENTAL
HEALTH CODE CLAIMS
Plaintiffs bring claims against Defendants Cortes, Terrwilliger and Lyon for:
(1) violation of the Social Security Act, failure to authorize services in the amount,
scope or duration to reasonably achieve their purpose; (2) violation of Social Security
Act, right to receive services with reasonable promptness; and (3) violation of
Michigan Mental Health Code, MCL 330.1722(1), which provides that no “recipient
of mental health services shall…be subjected to abuse or neglect.” Plaintiffs base
their claims on the fact that, while the CLS rate has been restored to the pre-May 15,
2015 rate, the prior method of calculating this rate has not been restored, leaving the
actual total of the Plaintiffs’ CLS budgets capped, allegedly leaving named Plaintiffs
without a budget adequate to cover medically necessary transportation and
community living service, per named Plaintiffs’ affidavits. [27, Pg ID 511-517; Pg ID
542-544; Pg ID 546-552].
However, Plaintiffs have not shown a high likelihood of success on the merits
of these claims. At the September 20, 2016 hearing, Ms. O’Neal, Director of
Customer Service at WCCMH, testified that the May 15, 2015 rate resulted in illegal
double billing. [48 at 92 ¶¶6-11]. Exhibit C, produced at the hearing and there entered
into the record, a notice dated October 15, 2008 from Linda Brown, Chief Financial
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Officer of the WCHO, directed to all providers of Community Living Services in
Independent Settings, clarified the CLS rate, detailing what was included. The CLS
rate, which was determined by Medicaid, was all-inclusive, including direct costs
associated with services such as meal preparation, laundry, household care and
maintenance, bathing, eating, dressing, shopping, money management, socialization
and relationship building, transportation to and from community activities and
attendance at medical appointments. [48 at 91 ¶¶18-24]. Development of the rate also
included cost drivers, such as staff salary and fringes, staff and consumer
transportation, equipment, supplies and materials, community activities and indirect
costs such as staff training, administration, payroll expenses, and vehicle costs. Id.
On April 17, 2012, WCHO/CSTS sent self-determination individuals a letter
explaining that:
[y]our new budget still has the same amount of community living supports
hours you currently have, but with this budget you will have additional funding
for staff training, transportation, goods and activity costs at your disposal.
[Defendant’s Exhibit D; 48 at 92, ¶¶ 6-25; 93, ¶¶1-7]. Per Ms. O’Neal’s testimony,
and from the plain text of both letters, this illustrates that, while the CLS base rate did
not change, i.e. funds for staff training, transportation, goods and activities were
included already in the all-inclusive rate, these costs additionally would be funded
with line items, resulting in double payment of these costs in this calculation. [48 at
93, ¶¶ 3-7]. This calculation, which Plaintiffs seek to reinstate in this Motion, is
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inappropriate, since these participants were being paid twice for the same service
under this previous computation method. Id.
This double billing resulted in a budget crisis in the WCHO, which, according
to Ms. O’Neal led to significant reductions in the administrative budget, reducing the
workforce of the organization by seventy-two employees to continue servicing
recipients. When these budgetary problems were examined, the inappropriate budget
calculation method was discovered, and remedied in part with the actions in the letter
from May 2015. [48 at 96, ¶¶1-24].
The Self-Determination Policy and Practice Guidelines issued by the Michigan
Department of Health and Human Services, part of WCCMH’s contract with the
state, and which it must follow to retain certification as a mental health provider in
Washtenaw County, were also entered into evidence. In pertinent part, this contract
provides:
Self-determination arrangements must be developed and operated within
the requirements of the respective contracts between the PIHP's and
CMHSP's and the Michigan Department of Health and Human Services
in accordance with federal and state law.
[Exhibit G; 48 at 99-102, ¶¶24-1]. Ms. O’Neal testified that the changes instituted by
WCCMH in 2015 represented an attempt to bring WCCMH in line with this
requirement.
Plaintiffs’ counsel did not object to admission of these documents into the
record at the hearing, nor to any of Ms. O’Neal’s testimony regarding these
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documents, or her conclusion that they establish that the previous calculation method
resulted in double billing, an inappropriate practice. Additionally, during crossexamination, Plaintiffs did not challenge Ms. O’Neal’s testimony concerning the
double billing. It was not until their post-hearing supplemental brief that Plaintiffs
began attempts to refute the testimony of Ms. O’Neal regarding the double billing
issue. [50, 23-26]. This all-inclusive argument has been present in Defendants’ filings
in response to the Motion for Preliminary Injunction, and both documents were
exhibits to the response filed by Defendants Cortes and WCCMH on April 18, 2016.
[20-5; 20-6]. If Plaintiffs wished to challenge this argument at this stage, the proper
place would have been during the hearing where Defendants and Ms. O’Neal would
have opportunity to respond. Therefore, the Court does not find the argument against
the double billing evidence provided by Ms. O’Neal to be persuasive, especially as it
is unsupported by evidence.
Furthermore, it is undisputed that named Plaintiffs currently receive either the
same or higher rates than they received prior to May 2015. Plaintiffs have not shown
that they are entitled to the reinstatement of a calculation method that violates
Medicaid regulations and existing contracts between WCCMH and the State and
PIHP. Therefore there is not a high likelihood of success to claims under the Social
Security Act or the Michigan Mental Health Code.
Guidelines addressing methodology to develop and implement individual
budgets for self-determination participants, part of the contract with the state and
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their PIHP, provide that self-determination participants have a right to services and
support. They do not provide a right “that they obtain those services and supports at a
certain cost.” [Exhibit I; 48 at 134-137]. Rather, the budget must “provide sufficient
resources to enable the individuals to find qualified and capable providers.” Id. In this
case, Plaintiffs Waskul and Kafaian testified that their budgets were not adequate to
meet their IPOS and fulfill their medically necessary requirements, and pointed to the
changed budget calculation method as the source of these on-going problems.
However, testimony at the hearing does not support a finding that harm is irreparable
or that it is due to the budget calculation change.
First, Ms. Waskul testified that she has been unable to fully staff Derek’s
increased hours of CLS service because she has not been able to find a person that he
approves of. She further testified that, if the rate had not been reduced originally, then
she would not be in this position because it caused her to lose the former staffer who
was “the best person that [Derek] has had so far.” [44 at 30, ¶¶17-24]. However, that
decision was appealed, and Waskul prevailed, resulting in reinstitution of the prior
amount. She testified that the rate has been kept the same for the one staff remaining,
but that she has been unable to hire a replacement for the empty staffer position
because she has not found anyone who will be approved by her son, because they are
“particular about who we are going to hire.” [Id at 29, ¶14-30, ¶16]. Per testimony,
the cause for the failure to hire a new staffer is not attributable to a lack of staffers
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willing to work for the CLS rate, but rather a desire to hire someone who meets the
unique needs of her son, and this is denying Derek all the services that he requires.
Ms. Kafafian also testified concerning harm that her son, Plaintiff Kevin
Wiesner, is suffering, allegedly as a result of the pre-2015 budget rate calculation.
However, this testimony does not support a high likelihood of success on the merits.
Kevin’s budget has been increased by 6% following a re-opening of his
individualized plan of service, increasing his individual rate from $13.88 to $14.72.
[48 at 58, ¶25- 60, ¶17]. The harm testified to by Ms. Kafafian was caused by the
denial of additional funds for transportation and community activities. These denials
are currently under appeal and are not properly before the Court at this time. [48 at
45, ¶3-46 ¶14; 48 at 55, ¶14-56, ¶2].
Because Plaintiffs have not shown that they are entitled to a budget calculation
rate that violates state contract and would constitute double billing, and since they
have individual CLS rates that are currently above what they were previously
receiving and have pending appeals of denials of increased funds, there has not been
a showing of irreparable harm.
3. PLAINTIFFS CANNOT ESTABLISH IRREPARABLE HARM WITH RESPECT TO
THEIR CONSTITUTIONAL AND STATUTORY NOTICE CLAIMS
Plaintiffs bring constitutional and statutory notice claims against Defendants
Cortes, Terwilliger and Lyon. There is no dispute that the April 2015 letter notifying
CLS service recipients in Washtenaw County was not an adequate notice, because
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parties were not advised of their right to appeal. [48 at 97, ¶¶8-14]. However, after
being notified by the Michigan Department of Health and Human Services that this
letter violated the Budget Authority Process in the Habilitation Supports Waiver
application because of its failure to inform recipients how to request a Medicaid Fair
hearing or to work with the PCP process if they had concerns about the reduction. [87]. Following this notification, CLS service recipients were given a notice of their
right to appeal, which all named Plaintiffs in fact received. [1 at ¶105]. Plaintiffs
allege in their post-hearing supplemental brief that this notice was inadequate under
42 C.F.R § 431.210 because, inter alia, these notices did not cite any policy
authorizing the reduction in services and did not state what was reduced or why. [50
at 19].
However, it is undisputed that all named Plaintiffs did in fact appeal the
reduction and received a favorable decision from the administrative law judge.
Therefore, there can be no irreparable harm suffered by the named Plaintiffs as a
result of the inadequate notice provided in June 2015.
4.
SUBSTANTIAL HARM TO OTHERS AND WHETHER THE PUBLIC
INTEREST WOULD BE SERVED BY ISSUING THE INJUNCTION
Defendants showed evidence that, under the previous budget calculation
method, Washtenaw County was in violation of Medicaid regulations and of contracts
with the state, causing the previous organization that provided mental health services
to face severe budgetary difficulties. Therefore, granting the requested injunction may
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in fact cause possible harm to others, against the public interest, as damage could be
suffered by other Medicaid recipients in the area and this also weighs against an
injunction.
5. CONCLUSION
In conclusion, consideration of the four factors governing issuance of the
preliminary injunction weighs against granting the requested relief for any of the
Plaintiffs. Accordingly,
IT IS ORDERED that Plaintiffs’ Motion for Preliminary Injunction [8] is
DENIED.
SO ORDERED.
Dated: November 22, 2016
s/Arthur J. Tarnow
Arthur J. Tarnow
Senior United States District Judge
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