D.C. Healthcare Systems, Inc. v. District of Columbia
270 F. Supp. 3d 72
D.D.C.2017Background
- D.C. Chartered Health Plan (Chartered) was a Medicaid/Alliance MCO under contract with the District; capitation rates set by DHCF allegedly were not adjusted after ACA-related enrollment changes, causing severe losses.
- In Oct. 2012 the D.C. Superior Court entered an Emergency Consent Order placing Chartered in rehabilitation and appointing the Commissioner of DISB as Rehabilitator with broad powers, including authority to seek court approval of settlements and a reorganization plan.
- The Rehabilitator (and his Special Deputy) proposed a rehabilitation plan, an asset purchase agreement transferring Chartered’s assets to AmeriHealth, and a settlement with the District resolving Chartered’s underpayment claims; the Superior Court approved the plan and settlement in 2013.
- D.C. Healthcare Systems, Inc. (DCHSI), Chartered’s sole shareholder, participated extensively in the Superior Court proceedings as a “party in interest,” objected to the plan and settlement, and filed (then voluntarily dismissed) appeals to the D.C. Court of Appeals.
- In Aug. 2016 DCHSI sued in federal court alleging a civil‑rights takings/due‑process scheme, statutory and common‑law claims against the District, Rehabilitator officials, Mercer, and AmeriHealth, seeking >$90M; defendants moved to dismiss for lack of subject‑matter jurisdiction.
- The district court held Rooker‑Feldman barred federal jurisdiction because DCHSI (1) was treated as a state‑court party/loser, (2) sought relief that would effectively overturn the Superior Court’s Rehabilitation, Reorganization, and Settlement Orders, and (3) filed after those judgments were entered.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether DCHSI was a "state‑court loser" for Rooker‑Feldman purposes | DCHSI says it never formally intervened and thus was not a party | Defendants point to extensive participation, the court treating DCHSI as a party in interest, and DCHSI's own notice of appeal | Held: DCHSI was treated as a party and thus a state‑court loser; Rooker‑Feldman first prong satisfied |
| Whether the federal suit "complains of injuries caused by state‑court judgments" (inextricable‑intertwinement) | DCHSI frames claims as independent abuses of official power and process, not direct attacks on orders | Defendants argue the alleged harms (loss of control, asset transfer, settlement) were authorized by the Superior Court orders | Held: Claims are inextricably intertwined with Superior Court orders; suit would require reviewing/rejecting those judgments, so Rooker‑Feldman bars jurisdiction |
| Whether plaintiff's claims challenge rules/statutes (permissible) versus judgments (impermissible) | DCHSI invokes constitutional/statutory/fraud and fiduciary theories—not a facial attack on D.C. statutes | Defendants say claims seek to undo specific rehabilitator actions authorized by statutory rehabilitation orders and court approvals | Held: This is an attempt to review state‑court judgments, not a permissible general challenge to statutes or rules; Rooker‑Feldman applies |
| Timeliness / final‑judgment requirement for Rooker‑Feldman | DCHSI argued some rehabilitation activity continued after filing | Defendants note the Rehabilitation, Reorganization, and Settlement Orders were entered years before the federal suit | Held: Relevant state‑court judgments were entered before federal filing; Rooker‑Feldman third prong satisfied |
Key Cases Cited
- Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923) (federal district courts lack jurisdiction to review final state court judgments)
- D.C. Court of Appeals v. Feldman, 460 U.S. 462 (1983) (limits on federal review of state court decisions and role of state supreme courts)
- Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280 (2005) (Rooker‑Feldman confined to cases where plaintiff is complaining of injury caused by state‑court judgment and seeks its reversal)
- Skinner v. Switzer, 562 U.S. 521 (2011) (distinguishing review of state court decisions from permissible facial challenges to statutes/rules)
- Stanton v. D.C. Court of Appeals, 127 F.3d 72 (D.C. Cir. 1997) (explaining Rooker‑Feldman and drawing line between general rule challenges and appeals in federal court)
- Lance v. Dennis, 546 U.S. 459 (2006) (party invoking Rooker‑Feldman must have been a party to the state proceeding)
- Karcher v. May, 484 U.S. 72 (1987) (one not a party or treated as party generally has no right to appeal)
- Campbell v. City of Spencer, 682 F.3d 1278 (10th Cir. 2012) (Rooker‑Feldman bars federal suit seeking to redress deprivations ordered by state court)