Bon-ing Inc et al v. Hodges et al
Filing
26
OPINION AND ORDER finding as moot 6 Motion to Dismiss for Failure to State a Claim; granting 17 Motion to Dismiss for Failure to State a Claim; finding as moot 21 Objection to Magistrate Judge Order. Signed by Judge James L. Graham on 11/14/2016. (ds)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
Bon-Ing, Inc.,
et al.,
Plaintiffs,
v.
Case No. 2:16-cv-710
Richard Hodges, et al.,
Defendants.
OPINION AND ORDER
This is a civil rights action brought pursuant to 42 U.S.C.
§1983.
Plaintiff Bon-Ing, Inc. (“Bon-Ing”), an Ohio corporation,
formerly operated a skilled nursing facility in Gahanna, Ohio,
known
as
facility”).
the
Bon-Ing
Care
and
Rehabilitation
Center
(“the
Plaintiff Jennie Ingram Calloway is the president and
sole shareholder of Bon-Ing.
On June 21, 2016, plaintiffs filed a
complaint in the Franklin County Court of Common Pleas against
Richard Hodges in his official capacity as director of the Ohio
Department of Health (“ODH”), an agency of the State of Ohio, and
Lance D. Himes in his official capacity as interim director of ODH.
On July 21, 2016, defendants filed a notice of removal of the
action to this court.
On July 27, 2016, defendants filed a motion
pursuant to Fed. R. Civ. P. 12(b)(6) to dismiss the action for
failure to state a claim for which relief may be granted.
On
August 19, 2016, plaintiffs filed an amended complaint which
specified that defendants Hodges and Himes were being sued in their
individual/personal capacities.
In their amended complaint, plaintiffs alleged that from
March, 2014, through September, 2014, defendants and ODH issued a
series of citations against the facility which misrepresented facts
and exaggerated the seriousness and extent of the facility’s
reported violations.
Plaintiffs contended that defendants acted
with the purpose of terminating plaintiffs’ license to operate the
facility and convincing the Center for Medicare and Medicaid
Services (“CMS”), an agency of the United States Department of
Health and Human Services (“HHS”), to end plaintiffs’ participation
in
the
Medicare/Medicaid
Programs.
Plaintiffs
alleged
that
defendants did not want Mrs. Calloway to own and operate the
facility because she is an African American.
14.
Amended Complaint, ¶
Plaintiffs asserted that defendants evaluated the facility
differently than similarly-situated facilities owned and operated
by
Caucasians
deficiencies.
and
gave
the
facility
less
time
Amended Complaint, ¶¶ 15, 18, 21-22.
to
correct
Plaintiffs
alleged that Interim Director Himes improperly recommended to CMS
that the facility be placed on a Special Focus Facility (“SFF”)
list and that plaintiffs’ participation in the Medicare/Medicaid
Programs be terminated.
Amended Complaint, ¶¶ 17, 24.
Plaintiffs further alleged that license revocation notices
were sent by Interim Director Himes on July 30, 2014, and August 8,
2014, and by Director Hodges on September 26, 2014, which were
based on false and unfounded conclusions regarding the facility’s
noncompliance with applicable laws.
Plaintiffs
contended
that
in
Amended Complaint, ¶ 23.
August,
2014,
CMS
terminated
plaintiffs’ right to participate in the Medicare/Medicaid Programs
because of defendants’ racially motivated false statements and
recommendations.
Amended Complaint, ¶¶ 24-25.
Plaintiffs alleged
that the facility’s license was wrongfully revoked by Director
Hodges on March 24, 2016.
Amended
2
Complaint, ¶ 7.
This matter is before the court on defendants’ motion pursuant
to Rule 12(b)(6) to dismiss the amended complaint for failure to
state a claim for which relief may be granted.
I. Rule 12(b)(6) Standards
In ruling on a motion to dismiss under Rule 12(b)(6), the
court must construe the complaint in a light most favorable to the
plaintiffs, accept all well-pleaded allegations in the complaint as
true, and determine whether plaintiffs undoubtedly can prove no set
of facts in support of those allegations that would entitle them to
relief.
Erickson v. Pardus, 551 U.S. 89, 94 (2007); Bishop v.
Lucent Technologies, Inc., 520 F.3d 516, 519 (6th Cir. 2008);
Harbin-Bey v. Rutter, 420 F.3d 571, 575 (6th Cir. 2005).
In
addition, “a motion for dismissal pursuant to Rule 12(b)(6) will be
granted if ... the claim shows on its face that relief is barred by
an affirmative defense.” Riverview Health Institute LLC v. Medical
Mutual of Ohio, 601 F.3d 505, 512 (6th Cir. 2010). Where the
complaint contains matters of avoidance that effectively vitiate
the pleader’s ability to recover on the claim, “‘the complaint is
said
to
have
defeating.’”
a
built-in
defense
and
is
essentially
self-
Id. (quoting 5B Wright & Miller, Federal Practice &
Procedure §1357 (3d ed.2004)).
The defense of absolute immunity
presents a legal question which can be raised by a motion to
dismiss under Rule 12(b)(6).
Bright v. Gallia County, Ohio, 753
F.3d 639, 648 (6th Cir. 2014).
II. Consideration of Exhibits Attached to Motion to Dismiss
Defendants have attached several documents to their motion to
dismiss, including: (1) a July 30, 2014, notice letter from Interim
Director Himes to Bon-Ing, Calloway and Timothy Johnson, the
3
facility administrator, proposing to revoke the facility’s license
based on statutory and regulatory violations (Doc. 17-1); (2) an
August 8, 2014, notice letter from Interim Director Himes to BonIng, Calloway, and Johnson identifying additional violations (Doc.
17-2); (3) a September 26, 2014, notice letter from Director Hodges
notifying Bon-Ing, Calloway, and Facility Administrator Kenneth
Daily, of the proposed revocation of Bon-Ing’s license based on new
and uncorrected violations (Doc. 17-3); (4) the February 8, 2016,
report and recommendation of ODH Hearing Officer Linda F. Mosbacher
(Doc. 17-4); (5) the March 24, 2016, adjudication order of Director
Hodges adopting the report and recommendation (with one exception)
and revoking Bon-Ing’s license (Doc. 17-5); (6) the April 15, 2014,
CMS notice of immediate imposition of remedies sent to Johnson and
signed by Gregg Brandush, Branch Manager of the CMS Long Term Care
Certification and Enforcement Branch (Doc. 17-6); and (7) the July
15,
2014,
remedies,
CMS
notice
of
continuation
of
previously
imposed
imposition of additional remedies, and termination of
plaintiffs’ participation in the Medicare and Medicaid Programs
effective August 14, 2014, which was sent to Johnson and signed by
Brandush.
Plaintiffs
argue
that
these
documents
cannot
be
considered by the court in ruling on the motion to dismiss.
In evaluating a motion to dismiss, a court generally is
limited to the complaint and exhibits attached thereto.
Amini v.
Oberlin College, 259 F.3d 493, 502 (6th Cir. 2001).
However,
courts may consider matters of public record.
Jackson v. City of
Columbus, 194 F.3d 737, 745 (6th Cir. 1999), abrogated on other
grounds, Swierkiewicz v. Sorema N.A., 534 U.S. 506 (2002)(a court
ruling on a motion to dismiss may consider public records, matters
4
of which a court may take judicial notice, and letter decisions of
governmental agencies).
The court may consider a document or
instrument which is referred to in the complaint and is central to
the plaintiff’s claim.
Bassett v. National Collegiate Athletic
Ass’n 528 F.3d 426, 430 (6th Cir. 2008); Weiner v. Klais & Co.,
Inc., 108 F.3d 86, 89 (6th Cir. 1997).
If extrinsic materials
merely “fill in the contours and details” of a complaint, such
materials may be considered without converting the motion to one
for summary judgment. Yeary v. Goodwill Indus-Knoxville, Inc., 107
F.3d 443, 445 (6th Cir. 1997).
However, the court can only take
judicial notice of facts not reasonably in dispute.
Passa v. City
of Columbus, 123 F. App’x 694, 697 (6th Cir. 2005).
The amended complaint specifically refers to the notices
issued
by
defendants
on
July
30,
2014,
August
8,
2014,
and
September 26, 2014, see Amended Complaint, ¶ 23, which are attached
to the motion to dismiss as Documents 17-1 to 17-3.
The amended
complaint also alleges that plaintiffs’ license was wrongfully
revoked by Director Hodges on March 24, 2016.
This allegation
implicitly refers to the March 24, 2016, agency adjudication order
of Director Hodges, attached as Document 17-5, which adopted the
February 8, 2016, report and recommendation of the hearing officer
(attached as Document 17-4) and revoked Bon-Ing’s license.
The
amended complaint also includes allegations regarding defendants’
recommendations to CMS regarding the designation of plaintiffs’
facility as an SFF facility and CMS’s termination of the facility’s
participation in Medicare and Medicaid.
24-26.
Amended Complaint, ¶¶ 17,
The CMS correspondence attached as Documents 17-6 and 17-7
relate to these allegations. In particular, plaintiffs allege that
5
CMS terminated plaintiffs’ right to participate in the Medicare
Program in August, 2014, see Amended Complaint, ¶25, an action
which is documented in the CMS termination notice filed as Document
17-7.
The court finds that the attached documents are central to
plaintiffs’ claims, and “fill in the contours and details” of the
amended complaint.
also
the
public
Yeary, 107 F.3d at 445.
records
of
state
and
agencies, and include agency decisions.
that the documents are genuine.
These documents are
federal
administrative
Plaintiffs do not dispute
The court finds that these
documents may be considered without converting the motion to
dismiss to one for summary judgment.
However, the court will only
consider these documents in determining defendants’ entitlement to
absolute
immunity,
insofar
as
they
may
assist
the
court
by
clarifying the nature of the administrative proceedings described
in the complaint and defendants’ function in those proceedings.
III. Defense of Absolute Immunity
A. Doctrine of Absolute Immunity
Defendants
argue
that
the
claims
against
them
must
be
dismissed because they are protected from suit under the doctrine
of absolute quasi-judicial or quasi-prosecutorial immunity.
“It is well established that judges and other court officers
enjoy absolute immunity from suit on claims arising out of the
performance of judicial or quasi-judicial functions.”
Foster v.
Walsh, 864 F.2d 416, 417 (6th Cir. 1988); see also Mireles v. Waco,
502 U.S. 9, 9-10 (1991).
“[J]udges of courts of superior or
general jurisdiction are not liable to civil actions for their
judicial
acts,
even
when
such
6
acts
are
in
excess
of
their
jurisdiction, and are alleged to have been done maliciously or
corruptly.” Bradley v. Fisher, 80 U.S. (13 Wall.) 335, 351 (1872);
see
also
Bright, 753 F.3d at 648-552 (holding that judicial
immunity barred §1983 action for money damages even though the
judge’s actions were “petty, unethical, and unworthy of his office”
and Ohio Supreme Court sanctioned the judge for his behavior).
“This immunity ... is not for the protection or benefit of a
malicious or corrupt judge, but for the benefit of the public,
whose interest it is that the judges should be at liberty to
exercise their functions with independence and without fear of
consequences.”
(1967)(applying
actions).
Pierson
the
v.
doctrine
Ray,
of
386
judicial
U.S.
547,
immunity
554-55
to
§1983
Litigants can protect themselves from judicial errors
through the appellate process or other judicial proceedings without
resort to suits for personal liability.
U.S. 219, 226-27 (1988).
Forrester v. White, 484
The Supreme Court has also held that a
prosecutor is entitled to absolute immunity from money damages in
§1983 actions for any acts associated with his professional role in
deciding which suits to bring and in conducting them in court.
Imbler v. Pachtman, 424 U.S. 409, 423-28 (1976).
In Butz v. Economou, 438 U.S. 478 (1978), the Supreme Court
extended the protection of absolute immunity to administrative
agency officials.
The Court noted that “adjudication within a
federal administrative agency shares enough of the characteristics
of
the
judicial
process
that
those
who
participate
in
such
adjudication should also be immune from suits for damages.” Id. at
512-13.
The Court observed that the role of a federal hearing
examiner or administrative law judge is functionally comparable to
7
that of a judge, and held that persons “performing adjudicatory
functions within a federal agency are entitled to absolute immunity
from damages liability for their judicial acts.”
Id. at 513-14.
The Court further stated:
We also believe that agency officials performing certain
functions analogous to those of a prosecutor should be
able to claim absolute immunity with respect to such
acts.
The decision to initiate administrative
proceedings against an individual or corporation is very
much like the prosecutor’s decision to initiate or move
forward with a criminal prosecution.... The discretion
which executive officials exercise with respect to the
initiation of administrative proceedings might be
distorted if their immunity from damages arising from
that decision was less than complete.
Id. at 515.
The Court noted that an administrator’s decision to
proceed with a case is subject to scrutiny by an independent
hearing officer, and that any claims that the proceeding is
unconstitutional may also be heard on judicial review by the
courts.
are
Id. at 515-16.
responsible
for
The Court held that agency officials “who
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.
The Sixth Circuit considered the applicability of the doctrine
of quasi-judicial immunity to state administrative officials in
Watts, M.D. v. Burkhart, M.D., 978 F.2d 269 (6th Cir. 1992)(en
banc). In that case, an African-American physician brought a §1983
action against members of the Tennessee Board of Medical Examiners,
alleging that he was treated differently from similarly-situated
non-minority physicians in regard to the surrender of his medical
license.
The Sixth Circuit concluded that the public policy
8
embodied
in
the
doctrine
of
absolute
immunity
warranted
the
application of that doctrine, even in the face of plaintiff’s
allegations of racial prejudice, where the board members were
performing quasi-prosecutorial or quasi-judicial functions, the
potential for vexatious lawsuits was great, and protections for
physicians’
rights
like
those
provided
by
the
federal
Administrative Procedures Act were in place under Tennessee law.
Id. at 274-78.
In deciding whether an official is entitled to absolute
immunity, the court looks to the nature of the function performed,
not the identity of the actor who performed it.
Darling, 98 F.3d 211, 221 (6th Cir. 1996).
Collyer v.
The court must
determine: (1) whether the agency official performs a traditional
prosecutorial or adjudicatory function, i.e., does he decide facts,
apply law, and otherwise resolve disputes on the merits; (2)
whether
the
official
initiates
or
decides
cases
sufficiently
controversial that, in the absence of immunity, he would be subject
to
numerous
damages
actions;
and
(3)
whether
the
official
prosecutes or adjudicates disputes against a backdrop of safeguards
designed
to
protect
the
individual’s
constitutional
rights.
Williams, D.D.S. v. Michigan Board of Dentistry, 39 F. App’x 147,
148-49 (6th Cir. 2002); see also Quatkemeyer v. Kentucky Board of
Medical Licensure, 506 F. App’x 342, 346-349 (6th Cir. 2012).
In
Williams, the Sixth Circuit concluded that the defendant board
members
were
entitled
to
absolute
immunity
on
plaintiff’s
disability discrimination claims where: (1) they were responsible
for determining whether there had been a violation of statutory
standards of conduct and what appropriate sanctions may be imposed,
9
and thus performed an adjudicatory function; (2) the members
decided cases which were sufficiently controversial that, in the
absence of immunity, they would be subject to damages actions; and
(3)
the
members
adjudicated
disputes
against
a
backdrop
of
safeguards designed to protect an individual’s constitutional
rights.
Williams, 39 F. App’x at 149.
B. Immunity Doctrine Analysis - Revocation of License
1. First Factor - Nature of Function
The defendants are the director and previous interim director
of
the
Ohio
Department
of
Health.
Under
Ohio
Rev.
Code
§3721.03(B), the director of health has the authority to enforce
the provisions of Chapter 3721, which govern skilled nursing
facilities.
secure
Under that section, the director may issue orders to
compliance
with
Chapter
3721,
hold
hearings,
subpoenas, compel testimony, and make adjudications.
issue
§3721.03(B).
The director may also issue an order revoking a skilled nursing
facility’s license if he finds that the facility has violated any
of
the
provisions
revocation
§3721.03(B).
of
specified
Chapter
in
3721,
or
§3721.03(B)
if
have
other
grounds
been
for
satisfied.
Thus, the director decides in the first instance
whether there has been a violation of Chapter 3721 warranting the
issuance of a revocation notice, and makes the final decision at
the administrative level on issues of fact and law.
See Ohio Rev.
Code §119.09 (report and recommendation of hearing officer not
final until approved by the agency).
The authority vested in the
director to find statutory and regulatory violations, to propose
the revocation of plaintiffs’ license based on his consideration of
10
information from ODH investigations, to initiate administrative
proceedings, and to make adjudications demonstrates the type of
independent,
discretionary
authority
prosecutorial and judicial action.
that
characterizes
See Quatkemeyer, 506 F. App’x
at 347.
The notice letters in this case constituted an exercise of the
director’s statutory authority.
In the July 30, 2014, and August
8, 2014, notice letters, Interim Director Himes notified plaintiffs
that he proposed to issue an order revoking plaintiffs’ license to
operate the facility in light of violations allegedly discovered
during ODH investigations.
Doc. 17-1, p. 1; Doc. 17-2, p. 1.
The
letters advised plaintiffs of their right to request a hearing, and
stated that if a hearing was not requested, an order would be
issued revoking plaintiffs’ license.
p. 2.
Doc. 17-1, p. 2; Doc. 17-2,
A similar notice dated September 26, 2014, was sent to
plaintiffs by Director Hodges.
After plaintiffs requested a
hearing, the matter was referred by Director Hodges to a hearing
officer, who heard testimony and received evidence.
The hearing
officer issued a report and recommendation on February 8, 2016,
recommending that the director issue an order revoking plaintiffs’
license. See Doc. 17-4. On March 24, 2016, Director Hodges issued
an adjudication order adopting the report and recommendation and
revoking plaintiffs’ licence.
See Doc. 17-5.
The court concludes
that defendants’ function was prosecutorial and/or adjudicatory in
nature, and that the first criteria for absolute immunity is
satisfied in this case.
2. Risk of Exposure to Damages Actions
The court concludes that the second factor has also been
11
satisfied in this case, as the licensing of skilled nursing
facilities is an area which has the potential of subjecting the
director to numerous actions for damages.
The instant case, in
which plaintiffs seek money damages of no less than $2.65 million,
provides an example of the type of financial stake involved in the
ownership and operation of a skilled nursing facility.
Damage
suits could also be brought by clients of a skilled nursing
facility who are displaced as the result of a license revocation,
or who suffer injury as the result of a statutory violation
committed by the facility after a decision was made not to revoke
the facility’s license.
Qualified immunity is warranted to ensure
that the director can make important decisions concerning the
licensing of a facility and the safety of its residents without
fear of litigation.
3. Existence of Adequate Procedural Safeguards
Under §3721.03, the director may issue an order revoking a
facility’s license only after affording the facility a hearing or
opportunity to be heard pursuant to Ohio Rev. Code Chapter 119.
Ohio Rev. Code §3721.03(B).
After the issuance of a revocation
order under §3721.03(B), the licensee has the right to appeal in
accordance with Chapter 119.
Ohio Rev. Code §3721.03(B).
Chapter
119 requires that the party be given notice of the right to a
hearing.
Ohio Rev. Code §119.07.
The agency can designate a
hearing examiner, who must be a licensed attorney.
Testimony and
evidence may be presented at the hearing. The hearing officer must
issue a report and recommendation, to which the parties may object.
Ohio
Rev.
Code
§119.09.
represented by an attorney.
At
the
hearing,
the
party
Ohio Rev. Code §119.13.
12
may
be
An appeal
from an adverse agency decision may be taken to the court of common
pleas, and the judgment of the court of common pleas may be
appealed
to
the
court
of
appeals.
Ohio
Rev.
Code
§119.12.
Constitutional issues may be raised on appeal from Chapter 119
proceedings.
See Clayton v. Ohio Board of Nursing, 2016-Ohio-643,
2016 WL 744394 at *7 (2016)(ruling on plaintiff’s due process
argument while reviewing agency action); Erie Care Center, Inc. v.
Ackerman,
5
Ohio
App.3d
102,
104
(1982)(rejecting
the
constitutional argument made by facility in appeal from revocation
of license by ODH director).
The Sixth Circuit has held that the
procedures mandated by Ohio Chapter 119 satisfy the absolute
immunity requirement for adequate procedural safeguards.
See
Lundeen v. State Medical Board of Ohio, Nos. 12-3090 and 12-2350,
2012 WL 10235344 at *3 (6th Cir. Oct. 17, 2012).
The third factor
for immunity is met in this case.
4. Allegations Concerning Recommendations to CMS
Plaintiffs
also
alleged
in
their
amended
complaint
that
defendants issued citations based on false information with the
goal of convincing CMS to terminate plaintiffs’ participation in
the Medicare and Medicaid programs.1
that
defendant
Himes
improperly
Plaintiffs further allege
recommended
to
CMS
that
the
facility be placed on the SFF list.
CMS has the authority to designate a facility as a SFF due to
1
Although these allegations refer to “the Defendants,” see
Amended Complaint, ¶ 14, they only apply to defendant Himes, who
was interim director until August 11, 2014. By letter dated July
15, 2014, CMS notified plaintiffs that their participation in the
Medicare/Medicaid program was being terminated effective August 14,
2014. See Doc. 17-7. Thus, CMS had already made its termination
decision prior to August 11, 2014, when defendant Hodges assumed
his position as director.
13
the facility’s poor compliance history.
Autumn Health Care of
Zanesville, Inc. v. U.S. Dept. of Health & Human Servs., 959
F.Supp.2d 1044, 1047 (S.D.Ohio 2013). When a facility is placed in
the SFF program, it receives two standard surveys (inspections) per
year instead of one.
Id.
CMS has delegated the task of inspecting
nursing homes for violations of applicable rules to state health
agencies, such as ODH, which employ nurses, nutritionists, and
other health professionals.
Park Manor, Ltd. v. U.S. Dept. of
Health & Human Servs., 495 F.3d 433, 435 (7th Cir. 2007).
If the
state agency reports to CMS that it has found violations, “CMS can
forthwith impose sanctions, such as civil penalties and denial to
the
nursing
home
of
reimbursement
for
the
expenses
of
new
residents.” Id. The facility can challenge the sanctions, and the
ruling of the first-level decider, an administrative law judge, is
reviewable by the HHS Departmental Appeals Board.
Id.
If the
facility is dissatisfied with the Board’s decision, it may seek
judicial review of that decision.
Perry County Nursing Center v.
U.S. Department of Health & Human Servs., 603 F. App’x 265, 267
(5th Cir. 2015).
The same absolute immunity analysis applies to defendant
Himes’ role in making recommendations to CMS.
The first factor is
satisfied, because, in making his recommendations to CMS, defendant
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.
See
Williams, 39 F. App’x at 149; see also Quatkemeyer, 506 F. App’x at
347 (the challenged acts, “such as relying upon wrong analyses and
false allegations, are prosecutorial in nature”).
14
The second
factor, the risk of vexatious damages actions, is also satisfied.
A facility’s financial ability to operate may well depend on its
eligibility to obtain Medicare and Medicaid reimbursement.
ODH
officials who make recommendations to CMS are likely to be sued by
nursing facilities for damages resulting from the revocation of
their
participation
Finally,
CMS’s
in
decision
the
is
Medicare
subject
and
to
Medicaid
review
Programs.
under
the
Administrative Procedures Act, and is also subject to judicial
review, thus satisfying the third requirement of the existence of
adequate safeguards to protect plaintiffs’ constitutional rights.
Defendant Himes is entitled to absolute immunity for acts performed
in his capacity as a state agency advisor to CMS.
5. Immunity Determination
The pleadings establish that defendants are entitled to the
defense of absolute immunity.
Plaintiffs’ amended complaint fails
to state a claim for which relief may be granted.
In light of this
ruling, the court need not address the remaining arguments made by
defendants in support of their motion to dismiss.
IV. Conclusion
In
accordance
with
the
foregoing,
defendants’
dismiss the amended complaint (Doc. 17) is granted.
motion
to
Defendant’s
motion to dismiss the original complaint (Doc. 6) and defendants’
objection (Doc. 21) to the magistrate judge’s September 14, 2016,
order staying discovery are moot.
The clerk shall enter judgment
dismissing this case.
Date: November 14, 2016
s/James L. Graham
James L. Graham
United States District Judge
15
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