Citizens Health Corporation v. Kathleen Sebelius
725 F.3d 687
7th Cir.2013Background
- Health and Hospital Corp. of Marion County operates a major hospital and health facilities.
- Citizens Health Corp. partnered with Health and Hospital to operate a federally funded health center serving Indianapolis’ medically underserved population.
- HRSA funded the center under a section 330 grant; Health and Hospital was the grantee and Citizens served as co-applicant.
- In 2012 Health and Hospital decided not to renew the co-applicant agreement and to relinquish the grant, with notice to HRSA.
- Citizens sued to enjoin relinquishment, asserting contractual, statutory, and constitutional rights to the grant.
- The district court granted summary judgment against Citizens; we affirm the grant of summary judgment to HRSA and Health and Hospital.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Citizens was the section 330 grant recipient | Citizens contends it was the grantee. | HRSA/Health and Hospital treated Health and Hospital as the sole grantee. | No; Health and Hospital was the sole grantee. |
| HRSA's compliance with relinquishment regulations | Citizens argues HRSA erred by not protecting its interests as a potential beneficiary. | HRSA correctly applied § 92.44(b) permitting relinquishment by the grantee. | HRSA acted lawfully in accepting relinquishment. |
| Constitutional due process in grant termination | Citizens claims deprivation of property/right to process. | Citizens had no protectable entitlement or liberty interest as it was not the grantee. | No due process violation; no protectable entitlement. |
| Breach of contract by Health and Hospital | Health and Hospital breached by relinquishing grant before renewal. | Contract allowed relinquishment when the agreement expired; no renewal obligation. | No breach; contract terminated with the grant. |
| Effect of co-applicant agreement on rights | Co-applicant agreement bound Health and Hospital to protect the grant and renewal. | Agreement designated Health and Hospital as administrator; no renewal obligation. | Agreement unambiguously permitted relinquishment at contract end. |
Key Cases Cited
- American Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40 (U.S. 1999) (required standard for constitutional due process protections; entitlement analysis)
- Board of Regents of State Colleges v. Roth, 408 U.S. 564 (U.S. 1972) (establishes entitlement as prerequisite to a property interest in benefits)
- Khan v. Bland, 630 F.3d 519 (7th Cir. 2010) (constructs entitlement from contract/regulation for nondiscretionary benefits)
- Omosegbon v. Wells, 335 F.3d 668 (7th Cir. 2003) (reputational interests and due process considerations)
- Southern Mutual Help Ass’n, Inc. v. Califano, 574 F.2d 518 (D.C. Cir. 1977) (discusses hearing obligation in grant terminations; distinguishes when not controlling)
- Edgewater Hosp., Inc. v. Bowen, 857 F.2d 1123 (7th Cir. 1988) (deferential APA review for agency actions)
- Louis & Karen Metro Family, LLC v. Lawrenceburg Conservancy Dist., 616 F.3d 618 (7th Cir. 2010) (extrinsic evidence not admissible when contract is unambiguous)