Comprehensive Community Development Corp. et al v. Sibelius et al
Filing
19
OPINION AND ORDER: For the foregoing reasons, plaintiffs' request for a preliminary injunction and restraining order is denied. In light of the public importance and time-sensitivity of plaintiffs' claims, the Court wishes to expedite this litigation. Therefore, within three days of the issuance of this Order, plaintiffs shall advise the Court and opposing counsel, in writing, whether they seek as a remedy a finding of unlawful agency action and a remand to HRSA to conduct proper proce edings to select the 2012-2017 grant recipient. Assuming plaintiffs seek such relief, they are directed, within 10 days of this Order, to file an amended complaint so stating, and setting out the basis on which this relief is sought. The Court will thereupon schedule a conference with counsel to set an appropriate schedule for the remainder of this litigation. The federal government defendants are directed to compile the complete administrative record of the proceedings below and to file this record with the Court immediately upon the filing of any amended complaint. (Signed by Judge Paul A. Engelmayer on 3/7/2012) (mro)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
COMPREHENSIVE COMMUNITY DEVELOPMENT :
CORP., d/b/a SOUNDVIEW HEALTHCARE NETWORK :
et al.,
:
:
Plaintiffs,
:
:
-v:
:
1
KATHLEEN SEBELIUS, both individually and as
:
Secretary of the U.S. DEPARTMENT OF HEALTH AND :
HUMAN SERVICES (DHHS) et al.,
:
:
Defendants.
:
:
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12 Civ. 0776 (PAE)
OPINION AND ORDER
PAUL A. ENGELMAYER, District Judge:
Plaintiff Comprehensive Community Development Corp., d/b/a Soundview Health Care
Network (“Soundview”), and its fellow plaintiffs2 seek a preliminary injunction and temporary
restraining order (“TRO”) against defendants United States Department of Health and Human
Services (“HHS”), the Health Resources and Services Administration (“HRSA”), an operating
division of HHS, and their fellow defendants.3 As preliminary relief, plaintiffs ask the Court to
1
The Clerk of Court is directed to amend the caption of the case to reflect the correct spelling of
Secretary Sebelius’s last name.
2
These are, as listed in the Complaint caption, the Board of Directors of Soundview, Charlotte
McDuffie, Constance Bruno, and Dr. Michael Osborne. For purposes of simplicity, the Court
refers herein to the plaintiffs collectively as “plaintiffs” or “Soundview.”
3
Like defendants, the Court construes plaintiffs, in suing executives at HHS and HRSA, to have
sued those entities as well. See Defs.’ Mem. 1 n.1. The individual defendants who are federal
employees are: Kathleen Sebelius, Secretary of HHS; James MacRae, associate administrator of
HRSA Bureau of Primary Care; Suganthi Walter, public health analyst for HRSA; Brian
Feldman, grant management specialist for HRSA; Gina Capra, director of the Eastern Division
1
issue an order mandating that the Government redirect funds from a federal grant awarded
effective February 1, 2012 to Urban Health Plan, Inc. (“Urban Health”) to Soundview, which had
unsuccessfully applied for the grant. Because the relief plaintiffs seek is unavailable as a matter
of law, the Court denies plaintiffs’ application for preliminary relief.
I.
Background4
A. Federal Grants Under the Health Center Program
HRSA administers the Health Center Program (“the Program”). The Program is designed
to promote the development of community-based health centers, which provide primary care
services in medically underserved areas or for medically underserved populations. The Program
is authorized by § 330 of the Public Health Service Act (“the Act”), as amended. See 42 U.S.C.
§ 254b. Through the Program, HRSA provides grant funding to an eligible health center in each
of approximately 1,125 service areas throughout the United States. Grants are awarded for
project periods of up to five years. However, funds are distributed annually, and grantees must
submit budget applications every year to receive the funds for the year ahead. Important here, as
the grant-making process has been described by HHS to the Court, grants are awarded for each
new project through publicly announced Service Area Competitions (“SAC”). See Decl. of
Tonya Bowers, Director of HHS’s Office of Policy and Program Development (“Bowers Decl.”)
¶¶ 3-4.
bureau of HRSA Bureau of Primary Care; Lynn Van Pelt, deputy director for Northeastern
Division for HRSA; and Sherry Angwafo, financial analyst team leader for HRSA, OFAM and
DFI. Plaintiffs have also sued Charlene Fleszar, legal counsel for OMIG; Matthew Babcock,
assistant Medicaid inspector general for OMIG; Steven Auerbach, captain of National Health
Service Corps; and Paloma Hernandez.
4
The factual background set forth herein is derived from plaintiffs’ Complaint and declarations
the parties have submitted, as cited herein.
2
A health center that receives benefits under § 330 of the Act is thereby also eligible to
receive additional federal benefits. For example, such a center, and any officer, governing board
member, employee, or qualified contractor, may be deemed to be federal employees for the
purposes of medical malpractice liability protection under the Federal Tort Claims Act. See 42
U.S.C. § 233(g). As such, the center and such personnel are immune from suit for medical
malpractice claims based on conduct within the scope of their employment, and the federal
government assumes responsibility for the costs of litigating such claims and the payment of any
resulting settlements and judgments. To be eligible for such protection, the health center must
submit what defendants identify as a “deeming application” to HRSA on an annual basis, and
HRSA, acting on behalf of the Secretary of HHS, must approve the application. A health center
receiving funding under § 330 is also eligible, as a Federally Qualified Health Center, to
purchase outpatient prescription and non-prescription medication at reduced rates under the Act
and to receive enhanced reimbursement rates from the Medicare program and the applicable state
Medicaid programs. Bowers Decl. ¶¶ 5-6.
B. Soundview’s Unsuccessful Application for the 2012-2017 Grant
Since 1978, Soundview has been receiving federal funds through a series of grant awards
under § 330. See Decl. of Pls.’ Counsel Ezra B. Glaser, Esq. (“Glaser Decl.”) 3-4. Soundview is
situated in the Soundview section of the Bronx, an urban neighborhood containing nine lowincome public housing projects. Soundview has four locations within the service area. Id. The
three-year period covered by Soundview’s most recent grant began on February 1, 2009 and
ended on January 31, 2012. Bowers Decl. ¶ 8 & Ex. A.
According to HHS, on June 14, 2011, HRSA publicly announced the FY 2012 SAC
funding opportunity for areas serviced by Program grantees, including Soundview, whose project
3
periods would be ending in fiscal year 2012 (October 1, 2011 through September 30, 2012).
HRSA made that announcement by sending a listserve notification to all Program grantees and
other entities, and by activating links to information about the SAC on the HRSA website and on
the website “grants.gov.” The SAC application covering the Soundview service area was
available on those two websites between June 14, 2011 and September 19, 2011. Bowers Decl. ¶
10.
As described by HHS, the application process consisted of two phases. Phase I required
applicants to submit basic organizational information, including a brief budget overview and a
project abstract, to grants.gov. Phase II required applicants to submit the remaining application
materials, including a detailed budget, program narrative, required forms, and required
attachments (e.g., bylaws, an organization chart) to the Electronic Handbook (“EHB”) records
system maintained by HRSA. Bowers Decl. ¶ 11. For Soundview’s service area, the Phase I
deadline was September 19, 2011; the EHB deadline was October 3, 2011. Id. ¶ 12. The grant
competition for that service area was for a five-year period commencing on February 1, 2012,
and ending on January 31, 2017 (the “2012-2017 grant”); for FY 2012, the grant would provide
the recipient with $1,876,258 in federal funds. Id.
There were three applicants for Soundview’s service area: Soundview, Urban Health
Plan, Inc. (“Urban Health”), and Union Community Health Center (“Union”). Union requested a
waiver of the EHB deadline, citing difficulties uploading certain documents due to server errors;
HRSA approved a waiver that permitted Union to submit an application by 5:00 p.m. on October
5, 2011. Bowers Decl. ¶ 14.
The applications were forwarded to HRSA’s Division of Independent Review for review
by an “objective review committee” (“ORC”). The ORC consisted of three members, each of
4
whom had been screened for conflicts of interest. Bowers Decl. ¶ 15. According to HHS, each
ORC member reviewed each application; based on the review criteria set forth in the funding
opportunity announcement, each member noted strengths and weaknesses and assigned each
application a point score. The ORC then provided the program official responsible for the final
selection with the average point score for the application and a summary of its strengths and
weaknesses. According to HHS, Urban Health had the highest-scoring application. It was,
accordingly, selected by the program official to receive the 2012-2017 grant. Id.
On January 12, 2012, HRSA sent a letter to Soundview notifying it that its application
received a score of 78 (out of 100) in the competitive process. The letter further stated that that
score had not been “sufficiently high” to prevail in the competitive process and that another
applicant (whom it did not name and whose score it did not reveal) had won the 2012-2017
grant. The letter stated: “Please be assured that your application received full and fair
consideration.” Bowers Decl. Ex. D (“ORC Letter to Soundview”).
The ORC Letter to Soundview attached a three-page “Objective Review Committee Final
Summary Statement” which summarized, in bullet-point format, the strengths and weaknesses in
its application, as identified by the ORC. These strengths and weaknesses were sorted under
seven criteria: (1) need, (2) response, (3) collaboration, (4) evaluative measures, (5) resources/
capabilities, (6) governance, and (7) support requested. See id. In total, the letter identified
seven strengths and 19 weaknesses of Soundview’s. Many weaknesses identified by HRSA
related to missing data, inadequate or missing explanations, and deficient internal controls. See
id. at Criteria 1, 2, 4, 5, and 7.
Soundview’s most recent grant expired by its own terms of January 31, 2012. The 20122017 grant to Urban Health became effective on February 1, 2012. Bowers Decl. ¶ 17.
5
C. Soundview’s Complaint
On January 31, 2012, hours before Soundview’s most recent grant expired, Soundview
filed its Complaint with this Court, purporting to bring claims against the defendants under: (1)
the Administrative Procedure Act (“APA”), 5 U.S.C. § 500 et seq.; (2) the federal question
statute, 28 U.S.C. § 1331; (3) Bivens v. Six Unknown Federal Narcotics Agents, 403 U.S. 388
(1971); (4) the free speech and free association clauses of the First Amendment; (5) the Due
Process Clauses of the Fifth and Fourteenth Amendments; (6) the Equal Protection Clause of the
Fourteenth Amendment; (7) 42 U.S.C. § 1983; and (8) New York state law, for tortious
interference with contract. As relief, the Complaint sought a preliminary injunction and a
temporary restraining order preventing the defendants from terminating Soundview’s existing
grant. Compl. ¶ 1. The Complaint also sought $15 million in monetary damages. This figure,
the Complaint alleged, reflected the monetary impact to Soundview of losing the grant. Id. ¶ 2.
In general, the Complaint alleged that HRSA’s “objective review process” had been a
“sham,” was procedurally flawed, and had been “purposely designed to deny Soundview a grant
opportunity it had been receiving for over 30 years.” It broadly alleged that HRSA and the other
defendants had passed over Soundview as a result of Soundview’s “associations with its founder
and previous Chief Executive Office[r], Pedro Espada.” Id. ¶ 3.
The Complaint traced an escalating series of regulatory inquiries into, or adverse actions
directed towards, Soundview, all of which, it alleged or implied, were substantively baseless, and
derived from the organization’s association with Espada. Specifically, the Complaint alleged, in
2009, after Espada led a “coup” in the New York State Senate by aligning himself with
Republican rather than Democratic leadership, New York State’s Medicaid Inspector General
initiated an investigation into Soundview’s finances. Id. ¶ 28. In 2010, HRSA demanded
6
detailed financial information from Soundview, indicating it was examining “the recent negative
media attention [Soundview] had experienced and how those issues might impact Soundview’s
financial management of HRSA funds.” Id. ¶ 30. Also in 2010, the New York Attorney General
sued Espada, Soundview’s chief financial officer Kenneth Brennan, and Soundview’s thenBoard of Directors. Id. ¶ 31. In 2011, HRSA requested that New York State health authorities
look into grant expenditures to Soundview, and into the organization’s “financial viability.” Id.
Finally, in 2011, New York State Medicaid officials issued a press release announcing their
intention to exclude Soundview from the Medicaid program for three years for lacking a
compliance program. Id. ¶ 34.
As to the federal grant at issue here, the Complaint alleged that in September 2011,
HRSA issued a notice of its intention to discontinue program funding of Soundview as a result of
Soundview’s “history of non-compliance with statutory and regulatory” requirements, and that it
planned a competition to identify an organization that could receive a “new grant” and “carry out
a service delivery program consistent with” federal regulatory requirements. Id. ¶ 36. This
notice was soon rescinded based on a supplemental notice from an HRSA internal appellate
board, which clarified that Soundview’s existing grant would remain in force until its expiration
date (January 31, 2012). HRSA announced, however, that future funding for the period
beginning February 1, 2012 would be decided by a competitive application process. Id. ¶ 38.
Around this time, the Complaint alleges, a federal official, defendant Steven Auerbach of the
National Health Service Corps, disclosed in an “off the record” conversation that for Soundview
to “regain its status,” Espada needed to step down. Id. ¶ 39. The Complaint is silent as to
whether Espada did so.
7
As to HRSA’s conclusions regarding Soundview’s weaknesses (set forth in the
attachment to the ORC Letter to Soundview), the Complaint alleges that these were “palpably
incorrect.” Among other things, the Complaint alleges, HRSA was wrong to state that
Soundview did not maintain state Medicaid funding or malpractice coverage for its patients. Id.
¶ 40. The Complaint also stated that, in grading Soundview, HRSA appeared not to have
analyzed existing doctor-patient relationships. Id. ¶ 41. Additionally, the Complaint faulted
HRSA for addressing the ORC Letter to Soundview to Espada. Id. ¶ 40. The Complaint alleged
that HRSA had improperly rebuffed Soundview’s attempts to initiate discussions with HRSA
about the company’s financial integrity and about HRSA’s concerns relating to Espada’s role at
the facility. Finally, the Complaint faulted HRSA for its alleged refusal to consider Soundview’s
request to extend its existing grant, correct errors Soundview had identified in the agency’s
grading of Soundview, or respond to Soundview’s questions about the grant process. Id. ¶¶ 4243.
Finally, the Complaint alleges, on January 25, 2012, a conference call was held between
HRSA officials and representatives of Soundview. Id. ¶ 45. HRSA allegedly represented that
“there was no process” in place to correct mistakes in its grading of Soundview and that HRSA’s
process for selecting the grant recipient was unappealable. Id. The Complaint alleges that, on
the same call, HRSA disclosed that the winning applicant was Urban Health, but that HRSA
refused to answer Soundview’s inquiries into whether any facility associated with Urban Health
was presently within the service area, although an HRSA staffer stated that by February 1, 2012,
the start date of the grant, Urban Health would be able to provide services within the area. Id.
HRSA confirmed on the call that Soundview’s funding would cease upon the expiration of its
existing grant, on January 31, 2012. Id. ¶ 47.
8
The Complaint also alleges that the winning applicant, Urban Health, which had not
previously competed for a service area grant in Soundview’s service area, id. ¶ 22, improperly
“used lobbyists and political connections” to secure the grant, id. ¶ 27. The Complaint also
disputes Urban Health’s ability to deliver services effectively, arguing that the facilities owned
by Urban Health are inconvenient for Soundview’s low income patients to access. Id. ¶¶ 46, 48.
It alleges that HRSA’s decision to pass over Soundview will impair “quality care for over 20,000
low income patients.” Id. ¶ 11; see also Pls.’ Mem. of Law Addressing Issues Raised by the Ct.
7.
D. Proceedings Before This Court
On January 31, 2012, the emergency part of this Court granted limited preliminary relief
to plaintiffs: it enjoined the defendants from terminating the existing grant before its expiration at
the end of that day. However, the Court did not grant relief as to the 2012-2017 grant, due to
take effect the following day. Dkt. 3.
On February 1, 2012, the Court held an on-the-record conference with counsel, to discuss
the proposed TRO as it related to the 2012-2017 grant. At the close of the conference, the Court
directed counsel to brief whether the temporary relief plaintiffs seek—redirecting funds from the
2012-2017 grant from Urban Health to Soundview—is available as a matter of law.5 The Court
expressed the preliminary view that under the APA, even if plaintiffs could establish that
HRSA’s process leading to the selection of Urban Health over Soundview was deficient, the
5
The Court also directed the parties to address whether the Court had jurisdiction over plaintiffs’
claim, whether venue in this District was proper, and whether HRSA’s decision constituted final
agency action suitable for judicial review. The parties’ submissions on these points are in
agreement, and the Court agrees that jurisdiction and venue are proper, that the agency’s decision
was final, and that plaintiffs were not required to exhaust additional administrative remedies
before filing suit.
9
appropriate remedy would be remand to the agency for further administrative proceedings
consistent with the Court’s opinion.
II.
Discussion
A. Legal Standard for Issuance of a Temporary Restraining Order or Preliminary
Injunction
A temporary restraining order, like a preliminary injunction,
is an extraordinary remedy never awarded as of right. In each case, courts must
balance the competing claims of injury and must consider the effect on each party
of the granting or withholding of the requested relief. In exercising their sound
discretion, courts of equity should pay particular regard for the public
consequences in employing the extraordinary remedy of injunction.
Salinger v. Colting, 607 F.3d 68, 79 (2d Cir. 2010) (quoting Winter v. Natural Res. Def. Council,
555 U.S. 7, 24 (2008)). Thus, a plaintiff seeking a temporary restraining order “must establish
that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the
absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction
is in the public interest.” Psihoyos v. John Wiley & Sons, Inc., No. 11-cv-1416, 2011 U.S. Dist
LEXIS 115835, at *3 (S.D.N.Y. Oct. 4, 2011) (citing Winter, 555 U.S. at 20). Here, plaintiffs
seek not to preserve the status quo, as is the aim of prohibitive injunctions, but rather to have the
Court issue a mandatory injunction, directing that the grant be reallocated. A party seeking a
mandatory injunction has an even higher hurdle: “he must show a clear or substantial likelihood
of success on the merits.” Fox v. Anthony, No. 6:10-cv-839, 2010 U.S. Dist. LEXIS 86275, at *4
(N.D.N.Y. July 15, 2010) (citing Tucker Anthony Realty Corp v. Schlesinger, 888 F.2d 969, 975
(2d Cir. 1989)) (internal quotation marks omitted). The party seeking the injunction carries the
burden of persuasion to demonstrate, “by a clear showing,” that the necessary elements are
satisfied. See Mazurek v. Armstrong, 520 U.S. 968, 972 (1997). Finally, apposite here, a court
may not order, as temporary relief, relief that would be unavailable after a final decision on the
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merits. See, e.g., De Beers Consol. Mines, Ltd. v. United States, 325 U.S. 212, 220 (1945)
(finding injunction beyond power of the district court because it was not “of the same character
as that which may be granted finally”); Mason Tenders Dist. Council Pension Fund v. Messera,
No. 95-cv-9341, 1997 U.S. Dist. LEXIS 5931, at *15-16 (S.D.N.Y. May 1, 1997) (finding
preliminary equitable relief appropriate because such equitable relief would likewise be
appropriate upon a final adjudication on the merits).
B. Analysis of the Available Remedies
Before analyzing whether plaintiffs meet the standard for a temporary restraining order,
the Court must first determine whether the relief sought is of a nature the Court is empowered to
grant. In their request, plaintiffs ask the Court to order HRSA to redirect the 2012-2017 grant
from Urban Health to Soundview. The Court directed counsel to identify any authority
indicating that it has the power to grant such relief. Having carefully reviewed the parties’
submissions, the Court concludes that the APA is the sole source of any remedies available to
plaintiffs, and that the Court does not, under the APA, have the power to grant the requested
relief, nor to halt the distribution of grant money to Urban Health. Rather, assuming plaintiffs
were to prevail on the merits of their claim that HRSA’s process for selecting a grant recipient in
Soundview’s service area was flawed and hence unlawful, the sole remedy under the APA would
be an order setting aside the agency’s decision and remanding to the agency to conduct the
process again, this time in compliance with the law and consistent with the Court’s decision.
Accordingly, because the relief plaintiffs seek is unavailable, the Court must deny plaintiffs’
request for preliminary mandatory injunctive relief.
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i.
Scope of judicial review under the APA
Chapter Seven of the APA governs judicial review of agency action. A reviewing court’s
scope of review under the APA is outlined in 5 U.S.C. § 706, which reads:
To the extent necessary to decision and when presented, the reviewing court shall
decide all relevant questions of law, interpret constitutional and statutory
provisions, and determine the meaning or applicability of the terms of an agency
action. The reviewing court shall—
(1) compel agency action unlawfully withheld or unreasonably delayed; and
(2) hold unlawful and set aside agency action, findings, and conclusions found to
be—
(A) arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law;
(B) contrary to constitutional right, power, privilege, or immunity;
(C) in excess of statutory jurisdiction, authority, or limitations, or short of
statutory right;
(D) without observance of procedure required by law;
(E) unsupported by substantial evidence in a case subject to sections 556
and 557 of this title or otherwise reviewed on the record of an agency
hearing provided by statute; or
(F) unwarranted by the facts to the extent that the facts are subject to trial
de novo by the reviewing court.
In making the foregoing determinations, the court shall review the whole record
or those parts of it cited by a party, and due account shall be taken of the rule of
prejudicial error.
Also potentially relevant here, § 705 of the APA gives courts the further power to “issue all
necessary and appropriate process to postpone the effective date of an agency action or to
preserve status or rights pending conclusion of the review proceedings.” 5 U.S.C. § 705.
ii.
Compelling the agency to award the grant to Soundview
Plaintiffs argue that § 706(1) confers on this Court the power to direct that HRSA divest
Urban Health of the 2012-2017 grant, and award it instead to Soundview. The Court disagrees.
That section applies only where “an agency failed to take a discrete agency action that it is
required to take,” Norton v. S. Utah Wilderness Alliance, 542 U.S. 55, 64 (2004) (emphasis in
original); here, HRSA had no legal obligation under the Act to award a grant to Soundview. In
12
Norton, the Supreme Court explained that an agency action “unlawfully withheld” means an
action that the agency was legally compelled to take: a “precise, definite act . . . about which [an
official] had no discretion whatsoever.” Id. at 63. By contrast, the selection process at issue in
this case is not ministerial. Moreover, even if HRSA had no discretion to award the grant to a
lower-scoring applicant, here, the grant was awarded to the highest-scoring applicant, Urban
Health. Unless and until a review of the administrative record reveals an infirmity with the
process that yielded that result, that scoring outcome must stand. Section 706(1) does not
empower the Court to compel HRSA to award or rescind the grant, nor does any other section of
Chapter 7 suggest a reviewing court may compel an agency to redirect grant funding. Simply
put, the Court lacks power under the APA, at this stage and upon a final adjudication on the
merits, to compel the agency to award the 2012-2017 grant to any particular entity.
Bowen v. Massachusetts, 487 U.S. 879 (1988), on which plaintiffs rely, is not to the
contrary. In Bowen, the Court found it within a district court’s discretion, under the APA, to
reverse an HHS decision disallowing reimbursement to the state of Massachusetts for certain
Medicaid expenditures. The district court had reversed the agency’s decision that particular
expenditures were statutorily ineligible for reimbursement, finding that HHS had misinterpreted
the language of the governing statute. Id. at 888. The Supreme Court observed that, as a result
of the district court’s opinion reversing the agency decision, it was “likely that the Government
will abide by [the district court’s] declaration and reimburse Massachusetts the requested sum.”
Id. at 910. However, the district court did not order such relief. Bowen is an example of a
decision to “hold unlawful and set aside agency action,” see 5 U.S.C. §706(2), but it does not
support plaintiff’s request for an order affirmatively compelling HRSA to award money, let
alone money that the agency was not demonstrably obligated to award.
13
iii.
Postponing the distribution of grant money to Urban Health or preserving
pre-litigation status or rights
Nor does the Court have the power to order that the flow of FY 2012 grant money to
Urban Health be stanched pending a full decision on the merits in this case. To be sure, § 705 of
the APA empowers a reviewing court to order postponement of an agency action under review,
or to otherwise act to “preserve status or rights,” pending final judgment. But that remedy is of
no assistance to Soundview, and, in any event, is inapplicable here.
To begin with, it is unclear how freezing the flow of grant money to Urban Health, even
if merited, would assist Soundview. It is undisputed that Soundview’s grant expired on January
31, 2012. Thus, even if the Court had the power under § 705 to effectively negate, or postpone
the start date of, Urban Health’s grant—which commenced on February 1, 2012—pending a
final decision in this case and a potential administrative remand, that would not result in any
money flowing to Soundview. Such an outcome would, therefore, do nothing to ameliorate
Soundview’s alleged injuries. It would serve only to create a vacuum in Soundview’s service
area, with no health center receiving federal funding under the Act during the pendency of this
litigation.
In any event, § 705 does not apply to the facts at hand. Like Federal Rule of Civil
Procedure 65, § 705 empowers courts to act to maintain the status quo. Compare Salt Pond
Assoc. v. U.S. Army Corp. of Eng’rs, 815 F. Supp. 766, 776 (D. Del. 1993) (§ 705 “does not
confer jurisdiction onto the Court to alter the status quo”) with Arthur Guinness & Sons, PLC v.
Sterling Pub. Co., 732 F.2d 1095, 1099 (2d Cir. 1984) (“the purpose of a [Rule 65] preliminary
injunction is to preserve the status quo pending the final determination of a dispute”). The status
quo at the commencement of this lawsuit was that Soundview’s grant was to terminate on
January 31, 2012. There is no credible claim that Soundview had any vested right to the 201214
2017 grant. Its right was instead to a fair process consistent with the APA, pursuant to which
HRSA would determine the most worthy recipient of the 2012-2017 grant. Further, as of the
start of this lawsuit, Urban Health had been awarded the 2012-2017 grant in Soundview’s service
area, effective February 1, 2012. To the extent § 705 may apply here to “preserve status or
rights” during ongoing litigation, it could be invoked only to preserve that status quo, in which
Urban Health received HRSA grant money. Thus, § 705 is, logically, no source of relief to
Soundview in the present posture of this case.
iv.
Review of the administrative record and, if appropriate, a setting aside and
remand of the agency action
Section 706(2) does empower courts to “hold unlawful and set aside agency action,
findings, or conclusions” if they are, inter alia, unlawful, unconstitutional, or arbitrary or
capricious. 5 U.S.C. § 706(2). That is the sole remedy available to plaintiffs under the APA.
Plaintiffs have not, explicitly, sought this relief in their Complaint as drafted, which seeks only
monetary relief, although at the February 1, 2012 hearing, plaintiffs appeared to seek such relief
should their request for an order directing the 2012-2017 grant money to Soundview be denied.
Were plaintiffs to seek relief under § 706(2), and were the Complaint to survive any facial
challenge, the Court’s charge would be to undertake careful review of the administrative record.
Should the Court, upon such review, determine that HRSA’s decision awarding the 2012-2017
grant to Urban Health should be set aside as unlawful, the proper remedy under § 706(2) would
be to remand to the agency for further administrative proceedings. See, e.g., Nat’l Ass’n of
Home Builders v. Defenders of Wildlife, 551 U.S. 644, 658 (2007). The Court, of course,
expresses no opinion at this stage as to whether or not HRSA’s decisionmaking process did, or
did not, comport with the APA.
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CONCLUSION
For the foregoing reasons, plaintiffs' request for a preliminary injunction and restraining
order is denied.
In light of the public importance and time-sensitivity of plaintiffs' claims, the Court
wishes to expedite this litigation. Therefore, within three days of the issuance of this Order,
plaintiffs shall advise the Court and opposing counsel, in writing, whether they seek as a remedy
a finding of unlawful agency action and a remand to HRSA to conduct proper proceedings to
select the 2012-2017 grant recipient. Assuming plaintiffs seek such relief, they are directed,
within 10 days of this Order, to file an amended complaint so stating, and setting out the basis on
which this relief is sought. 6 The Court will thereupon schedule a conference with counsel to set
an appropriate schedule for the remainder of this litigation. The federal government defendants
are directed to compile the complete administrative record of the proceedings below and to file
this record with the Court immediately upon the filing of any amended complaint.
SO ORDERED.
P~/1.~
Paul A. Engelmayer
United States District Judge
Dated: March 7,2012
New York, New York
Plaintiffs are directed to serve all defendants promptly with any such amended complaint, as
well as with a copy of this Opinion and Order. It appears to the Court that various defendants
have not been served with plaintiffs' original Complaint.
6
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