178 F. Supp. 3d 703
N.D. Ind.2016Background
- Dr. Patricia Bader is a board‑certified physician-geneticist who founded and led Northeast Indiana Genetic Counseling Center (NIGCC), which treats many Medicaid patients in northeastern Indiana.
- In Oct. 2013 NIGCC was placed on payment suspension and on FSSA’s prepayment review program following allegations of billing irregularities; the suspension was lifted in Nov. 2014 but prepayment review continued.
- FSSA issued a 60‑day "without cause" termination of Dr. Bader’s individual Medicaid provider agreement effective Sept. 8, 2015; the termination was administratively appealed and remains pending. NIGCC’s provider agreement remained active (subject to prepayment review).
- Plaintiffs: (1) Providers (Dr. Bader and NIGCC) assert procedural due process violations from FSSA’s prepayment review and payment practices; (2) Patients challenge Dr. Bader’s without‑cause termination (and related prepayment impact) as violating Medicaid’s freedom‑of‑choice requirement, 42 U.S.C. § 1396a(a)(23).
- After a five‑day evidentiary hearing, the district court granted a preliminary injunction restoring Dr. Bader’s Medicaid provider agreement (enjoining FSSA from terminating her without cause) but denied injunctive relief on all prepayment‑review and other claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FSSA’s without‑cause termination of Dr. Bader violates Medicaid beneficiaries’ § 1396a(a)(23) freedom‑of‑choice right | Patients: termination effectively excludes their chosen, "qualified" provider and is an impermissible way to deny choice (analogous to Planned Parenthood precedent) | FSSA: a state may terminate provider contracts without cause; termination removes provider status so no § 1396a(a)(23) violation | Court: Likelihood of success for Patients; enjoined FSSA from terminating Dr. Bader without cause and ordered reinstatement pending final decision |
| Whether prepayment review as applied deprived Providers of due process by withholding payments and denying opportunity to be heard | Providers: prepayment review has functioned like an indefinite payment suspension, denying notice/hearing and causing imminent financial harm | FSSA: prepayment review is a monitoring tool (not an appealable suspension), individual claims are reviewed, many claims approved, and state administrative appeals exist | Court: Providers unlikely to succeed; post‑deprivation state remedies (resubmission, administrative appeal, judicial review) are adequate; preliminary injunction denied |
| Whether Patients may use § 1396a(a)(23) to challenge FSSA’s application of prepayment review (alleged economic squeeze on provider) | Patients: prepayment review has deprived NIGCC of substantial Medicaid revenue, thereby depriving patients of choice | FSSA: prepayment review is a permissible program integrity measure; patients cannot invoke freedom‑of‑choice to nullify legitimate claims‑review procedures | Court: Claim not adequately developed or supported; unlikely to succeed; injunctive relief denied |
| Whether bond should be required for preliminary injunction reinstating Dr. Bader | Plaintiffs: did not propose a bond; asked for waiver | FSSA: did not quantify damages from reinstatement | Court: bond waived — no evidence of likely damages to FSSA from injunction |
Key Cases Cited
- Planned Parenthood of Ind., Inc. v. Comm’r of Ind. State Dep’t of Health, 699 F.3d 962 (7th Cir. 2012) (Medicaid freedom‑of‑choice protects beneficiaries from state exclusions of otherwise qualified providers; state cannot disguise exclusions as qualifications)
- Planned Parenthood Ariz., Inc. v. Betlach, 727 F.3d 960 (9th Cir. 2013) (similar holding applying freedom‑of‑choice protection against statutory/provider exclusions)
- Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976) (doctrine governing abstention where parallel state proceedings exist)
- Mazurek v. Armstrong, 520 U.S. 968 (1997) (standard for extraordinary nature of preliminary injunctions)
- Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7 (2008) (movant must show likelihood of success, irreparable harm, and balance of equities for preliminary injunctive relief)
- Ex parte Young, 209 U.S. 123 (1908) (permits suits for prospective injunctive relief against state officials to enjoin ongoing violations of federal law)
- Mathews v. Eldridge, 424 U.S. 319 (1976) (framework for what process is due under the Fourteenth Amendment)
- Zinermon v. Burch, 494 U.S. 113 (1990) (procedural due process protects against deprivation of property without meaningful opportunity to be heard)
- Kelly Kare, Ltd. v. O’Rourke, 930 F.2d 170 (2d Cir. 1991) (upholding an at‑will termination of a Medicaid contract in a non‑abortion context; discussed but distinguished)