New Vision Photography Program, Inc. v. District of Columbia, 54 F. Supp. 3d 12

Background

New Vision Photography Program (a Medicaid HCBS waiver provider) and its CEO Albert Price challenged D.C. agencies after New Vision failed Provider Certification Reviews (PCRs), was placed on a Do-Not-Refer list, and DHCF moved to terminate its Provider Agreement (termination stayed during administrative appeal).
Plaintiffs sued in federal court asserting ADEA, 42 U.S.C. § 1983 (due process) and various D.C. law claims; administrative proceedings before the D.C. Office of Administrative Hearings (OAH) were ongoing and an OAH decision exists on the record.
Plaintiffs sought a TRO/ preliminary relief; TROs were denied and Defendants moved to dismiss; Plaintiffs sought leave to file a Second Amended Complaint which Defendants opposed as futile.
The Court treated concessions by Plaintiffs as forfeitures: Price lacks individual standing for the claims and Plaintiffs did not oppose defendants’ qualified-immunity argument for individual defendants, leading to dismissal of claims by Price and § 1983 claims against the individuals.
The court found the Second Amended Complaint insufficient to state any federal claim: ADEA fails because New Vision is an independent contractor (not an employee) and a corporation cannot bring an ADEA employment claim; § 1983 procedural- and substantive-due-process claims fail because (a) New Vision did not allege a protected property or liberty interest as to the challenged harms except possibly in the event of an actual termination, and (b) New Vision received adequate process and did not plead conscience-shocking conduct.
All federal claims were dismissed; the court declined supplemental jurisdiction over remaining D.C. law claims and dismissed them without prejudice (diversity jurisdiction also unavailable as D.C. is not a state for § 1332 purposes).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
ADEA coverage	New Vision contends it was treated as a District employee and suffered age discrimination	D.C.: New Vision is an independent contractor (and corporation cannot assert ADEA employment claim); no employee-employer relationship	Dismissed: New Vision is not an employee; corporate plaintiff lacks standing under ADEA
§ 1983 – Procedural due process	New Vision asserts deprivation of property/liberty (loss of services, loss of clients, threat of termination) without due process	D.C.: Providers received extensive procedures, OAH appeal available; plaintiffs have not alleged a cognizable protected interest	Dismissed: Plaintiff had adequate process; allegations fail to show protected interest or lack of process
§ 1983 – Substantive due process / municipal liability	New Vision alleges arbitrary, policy-violating conduct and manufactured evidence by DDS employees, causing economic and reputational harm	D.C.: Actions were regulatory, not conscience-shocking; internal policy claims are not constitutional violations; no predicate constitutional wrong for municipal liability	Dismissed: conduct not sufficiently egregious; policy violations inapplicable or internal; municipal liability moot without predicate violation
State-law claims & jurisdiction	New Vision prefers federal forum for its D.C. law claims and seeks damages and injunctive relief	D.C.: Federal court should dismiss federal claims; supplemental jurisdiction discretionary; diversity jurisdiction inapplicable because defendant is D.C.	Dismissed without prejudice: Court declines supplemental jurisdiction over state claims; diversity jurisdiction unavailable

Key Cases Cited

Wilder v. Va. Hosp. Assn., 496 U.S. 498 (U.S. 1990) (describing Medicaid as a federal–state assistance program)
Patchogue Nursing Center v. Bowen, 797 F.2d 1137 (2d Cir. 1986) (Medicaid providers can possess a protected property interest in program participation)
Clackamas Gastroenterology Assocs. v. Wells, 538 U.S. 440 (U.S. 2003) (use common-law agency factors to determine employee status under discrimination statutes)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility standard for pleadings)
Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (legal conclusions not entitled to factual assumption; pleading standard)
Monell v. Dep’t of Soc. Servs. of City of New York, 436 U.S. 658 (U.S. 1978) (municipal liability requires a policy or custom causing constitutional violation)
Trifax Corp. v. District of Columbia, 314 F.3d 641 (D.C. Cir. 2003) (liberty-interest "reputation-plus" test and limits on contractor claims under due process)
Collins v. City of Harker Heights, 503 U.S. 115 (U.S. 1992) (two-step § 1983 analysis and limits on substantive due process claims)