Beechwood Restorative Care Center v. Laura E. LeedsBeechwood Restorative Care Center v. Laura E. Leeds
Shaifali Puri, Assistant Solicitor General, State of New York (Eliot Spitzer, Attorney General of the State of New York, of counsel Michelle Arnowitz, Deputy Solicitor General, on the brief), for Appellees.
Before: JACOBS and B.D. PARKER, Circuit Judges, and HURD, District Judge.*
JACOBS, Circuit Judge.
Beechwood Restorative Care Center, a partnership owned by Olive Chambery and (her son) Brook Chambery, operated a nursing home in Rochester, New York. Following a series of escalating disputes between Brook Chambery and regulatory authorities—disputes in which Brook Chambery sometimes at first prevailed—the Beechwood facility lost its operating certificate and closed in 1999. The Chamberys and the partnership appeal from a judgment entered on May 4, 2004 by the United States District Court for the Western District of New York (Larimer, J.), dismissing on summary judgment their complaint alleging under
A
Until it closed its doors in July 1999, Beechwood Restorative Care Center was a skilled nursing facility operated by a partnership between Olive Chambery and her son Brook. Like all New York nursing homes, Beechwood was regulated jointly by DOH and HCFA.
In 1994, Brook Chambery and DOH began clashing over regulatory matters. When DOH denied Beechwood‘s application to add two short-term beds in 1994, Chambery challenged the denial in an Article 78 petition; DOH backed down and requested that the proceedings be dismissed. When DOH identified two D-level1 deficiencies in the course of federally-mandated surveys of the Beechwood premises in 1995, Chambery challenged the deficiencies in an informal dispute resolution process afforded by federal regulation; DOH backed down and the deficiencies were withdrawn. Beechwood Restorative Care Center v. Leeds, 317 F.Supp.2d 248, 256 (W.D.N.Y.2004). In November 1996, three more D-level deficiencies were alleged by DOH, one of which was withdrawn after Chambery lodged a challenge. Id. In 1996, Chambery commenced an Article 78 proceeding challenging DOH‘s procedures for the transfer and discharge of residents from nursing homes; the proceeding was ultimately resolved by a consent order in March 1997. Id. at 256. According to the Chamberys, this pattern of challenged deficiencies continued through 1999, escalating in frequency and seriousness. Id. at 257.
Beginning in 1996, Chambery opened a new front. As the district court characterized it, Chambery “began sending . . . a ‘voluminous’ series of letters and other papers to DOH and other state officials protesting various aspects of DOH‘s policies and practices, and advocating a number of changes.” Id. at 256. Thus, from 1997 through 1999, Chambery engaged in a “campaign with DOH to either enforce or eliminate” a requirement that nursing home operators sign Medicaid Access Agreements in order to make major changes to their facilities. Id. at 257 (internal quotation omitted). Chambery contended that this requirement was onerous and unnecessary, and that it conferred competitive advantage on operators who signed the Agreements without intending to comply. Id. at 256.
In early 1999, surveys of Beechwood conducted by DOH identified new deficiencies, classified at the more serious K-level—i.e., a pattern of violations constituting immediate jeopardy to residents. DOH recommended to HCFA that Beechwood be terminated as a Medicare and Medicaid provider unless those deficiencies were removed within eighteen days. New surveys, conducted by DOH on May 12, 1999 and again on June 14, 1999, identified no K-level deficiency, but charged deficiencies at the G-level—i.e., actual harm with potential for more than minimal harm, though no immediate jeopardy. DOH later notified the partnership that HCFA was prepared to terminate Beechwood as a processor of Medicare and Medicaid—and HCFA ultimately did. For its part, DOH commenced an administrative hearing on June 23, 1999 to consider whether to revoke the facility‘s operating certificate—a document required to operate a nursing home under New York law. See Spiegel v. Whalen, 44 N.Y.2d 745, 405 N.Y.S.2d 679, 376 N.E.2d 1323, 1324 (1978).
The thrust of the complaint in this action is that all these measures were taken by DOH to humiliate the Chamberys and ruin their business as punishment for Chambery‘s exercise of his First Amendment right to stand up to the regulators, challenge them in proceedings, and criticize their requirements and procedures.
An administrative law judge (“ALJ“) conducted an evidentiary hearing on DOH‘s claim that the partnership‘s operating certificate should be revoked, and issued a 97-page report upholding most of the charges, finding that:
- Beechwood neglected some residents “in several significant aspects of care,” such as failing to notify a resident‘s physician of significant changes in the resident‘s condition.
- Beechwood had failed to timely notify a resident‘s physician regarding a “potentially serious or life threatening illness. . . .”
- Beechwood failed to fulfill its obligation to provide appropriate care and monitoring for a particular resident, and that “the record [wa]s devoid of documentation as to the last 5 hours of the resident‘s life . . . .”
- Beechwood failed to take adequate measures to prevent or treat some residents’ pressure sores.
- One Beechwood resident was “subjected, without any reasonable explanation, to an indwelling catheter in place for almost 9 days instead of Beechwood following a physician order of 3 to 4 days.”
- Beechwood took insufficient steps to safeguard residents who were at risk of falling.
- “[A] number of Beechwood residents were not provided adequate pain control,” and in several instances physicians’ orders were not carried out.
The ALJ rejected Beechwood‘s allegations of improper motive, finding that (1) DOH “took numerous steps in its attempt to keep Beechwood open;” (2) Beechwood failed to take advantage of the opportunities afforded by DOH to rectify the problems with the facility; and (3) the “plans of correction” submitted by Beechwood to DOH consisted in large part of “denials of events that were found, attacks on the messengers (surveyors) and a barrage of information not relevant or consequential to the cited deficiencies,” while in fact “no correction was taking place.” The ALJ emphatically rejected Beechwood‘s allegations of regulatory “bias or ill will.”
Consistent with the recommendation of the ALJ, DOH issued an order revoking Chambery‘s operating certificate and imposing a $54,000 penalty.
The Chamberys inquired of DOH as to how Beechwood could be transferred as a nursing home to a third party, a transaction which would require transfer of the “establishment approval” that “gives the medical facility the right to exist.” Spiegel, 405 N.Y.S.2d 679, 376 N.E.2d at 1324. DOH‘s general counsel (appellee Henry M. Greenberg) responded in a February 2, 2000 letter to Beechwood‘s lawyer, advising that “since the operating certificate of Beechwood has been revoked and the facility closed,” there was no “establishment approval to be transferred,” and noting that any potential buyer who wished to use the premises as a nursing home would be required to go through the normal authorization procedures for such facilities, but advising that such authorization was unlikely at that time. Id. at 258, 405 N.Y.S.2d 679, 376 N.E.2d at 1324. The Beechwood property found no buyer, entered foreclosure, and was sold at public auction in March 2002.
C
The complaint in this action, served thereafter, named seventeen DOH defendants and two federal HCFA defendants, and alleged, inter alia: [i] section 1983 claims for First Amendment retaliation and denial of equal protection, based on the revocation of Beechwood‘s operating certificate; [ii] a section 1983 claim for denial of procedural due process, asserting that DOH annulled Beechwood‘s establishment approval without the required notice and opportunity for hearing; and [iii] a Bivens claim against the HCFA defendants. Id. at 261, 405 N.Y.S.2d 679, 376 N.E.2d at 1323. The district court dismissed all claims on summary judgment. Id. at 286, 405 N.Y.S.2d 679, 376 N.E.2d at 1323. Appellants appeal the grant of summary judgment as to the First Amendment, Equal Protection, and Due Process claims.2
We review the district court‘s grant of summary judgment de novo, reviewing the evidence in the light most favorable to Appellants. See Anthony v. City of New York, 339 F.3d 129, 134 (2d Cir.2003). Summary judgment is proper if “there is no genuine issue as to any material fact” and Appellees are “entitled to a judgment as a matter of law.”
I. First Amendment Retaliation
Appellants principally claim that DOH, in retaliation for Brook Chambery‘s many complaints, protests, and lawsuits, conducted repeated nit-picking surveys of Beechwood, trumped up allegations of deficiencies, and enlisted the help of HCFA officials, all culminating in the revocation of the Chamberys’ operating certificate; and that this violated Appellants’ right against retaliation for speech protected by the First and Fourteenth Amendments.
To survive summary judgment on a
a. Issue Preclusion
In a
The ALJ‘s finding that DOH was unbiased was made as part of an evaluation of DOH‘s credibility. That ruling—if decided necessarily by the ALJ—would be decisive of the present case, which requires a showing of bias.
Appellants concede that the ALJ “necessarily decided” the sufficiency of the State‘s evidence of violations. Sufficiency on that score, however, does not defeat Beechwood‘s present claim, because a plaintiff can prove First Amendment retaliation even if the measures taken by the state were otherwise justified. See, e.g., Leather v. Eyck, 180 F.3d 420, 426 (2d Cir.1999) (denying summary judgment on First Amendment selective prosecution claim where plaintiff was convicted of underlying offense); see also Waters v. Churchill, 511 U.S. 661, 681 (1994) (plurality op.) (denying summary judgment where defendants “would have been justified in firing [plaintiff] for [certain] statements” but there remained a question as to defendants’ “actual motivation“); Gorman-Bakos v. Cornell Coop. Extension, 252 F.3d 545, 557 (2d Cir.2001) (denying summary judgment where employer could have terminated plaintiffs on account of disruptiveness of speech but there was a material issue as to whether, “even if such disruption occurred, plaintiffs were in fact not dismissed because of the disruption, but because of the content of their speech“).
This is a showing that the State, as proponent of collateral estoppel, has the burden to make, Jeffreys v. Griffin, 1 N.Y.3d 34, 39 (2003), and must clearly establish, Colon v. Coughlin, 58 F.3d 865, 869 (2d Cir.1995).
An issue that is “necessarily decided” must have been both “actually decided” (as it was here) and “necessary to support a valid and final judgment on the merits” (which is not so clear at all). See Leather, 180 F.3d at 426; Wilder v. Thomas, 854 F.2d 605, 620 (2d Cir.1988). We are not persuaded that the ALJ‘s discussion and rejection of the partnership‘s allegations of improper DOH motives was “necessary” in that sense. The decisive issue before the ALJ was whether “Beechwood has demonstrated a pattern of poor resident care, as well as a failure . . . to take corrective action.” The ALJ‘s conscientious discussion of motive concerns the credibility of evidence presented by DOH; and while that may have impacted the ALJ‘s findings of violations, the State has not shown to us that the ALJ‘s credibility findings were so influential as to be actually decisive of the ultimate question concerning the quality of resident care: The charges against the partnership might have been sustainable even if they were animated by bias and retaliation. The State, which shoulders the burden on this point, has made no showing as to the scope of the ALJ‘s jurisdiction, or as to whether a finding of improper motive or adverse credibility would have made a difference—necessarily—in the ALJ‘s ultimate determination. We therefore conclude that issue preclusion does not bar litigation of the First Amendment retaliation claim.
Relying on Scott v. Coughlin, 344 F.3d 282, 287-88 (2d Cir.2003)—which held that an agency is entitled to summary judgment on a First Amendment retaliation claim if it can show that “it would have taken exactly the same action absent the improper motive“—DOH argues that the surveys undertaken, the deficiencies found, and the resulting revocation of the operating certificate, were statutorily required. However, even if the pre-revocation surveys were mandated, and even if the State must commence revocation proceedings once it has determined that certain classes of deficiencies exist,
b. Merits: DOH Officials
Beechwood produced sufficient evidence of retaliatory motive to survive summary judgment. Suspect chronology—the close sequence of protest and scrutiny—constitutes circumstantial evidence, along with evidence that the 1999 “Offensive” was pre-planned. But much of this circumstantial evidence is likewise consistent with a zealous adversarial posture arising from the regulatory mission. See Blue v. Koren, 72 F.3d 1075, 1084 (2d Cir.1995) (granting summary judgment where plaintiff produced no direct evidence of retaliatory motive). Among the other evidence cited by the partnership is the e-mail reaction of two DOH administrators to the news that the federal government would revoke Beechwood‘s Medicare/Medicaid provider agreement; they rejoiced with exclamations of “AMEN & HALLELUJAH” and “HOT DIGGITY DAWG” (followed by 50 exclamation marks). A sense of triumph and satisfaction could, however, be as consistent with a job well done as with an improper motive.
This is evidence from which a jury could reasonably find that the DOH was campaigning against the partnership as retaliation for the exercise of First Amendment rights. We therefore vacate and remand as to the First Amendment claim.3
Notes
c. Merits: HFCA Officials
As to defendants Kelly and Daniel, the federal (HCFA) appellees, there is insufficient evidence. A federal actor may be subject to
Cooperation between state and federal bureaucracies acting in their regulatory spheres supports no inference that the federal actors acted with an improper motive. See Hafner v. Brown, 983 F.2d 570, 577 (4th Cir.1992) (concluding that § 1983 civil conspiracy requires “a meeting of the minds to accomplish the unlawful act” (emphasis added)); cf. Strickland v. Shalala, 123 F.3d 863, 868 (6th Cir.1997) (worrying about rendering “the United States subject to § 1983 liability in every case arising out of a cooperative federalism scheme“). There is no evidence suggesting that the federal defendants acted based on an unconstitutional animus as opposed to a spirit of cooperation. Therefore we affirm the judgment of dismissal as to the federal defendants.
II. Equal Protection
For essentially the same reasons underlying the First Amendment retaliation claim, the partnership alleges a violation of its equal protection rights under the Fifth and Fourteenth Amendments. However, an equal protection claim requires (inter alia) evidence from which a jury could find that the plaintiff was selectively treated as “compared with others similarly situated.” Lisa‘s Party City, Inc. v. Town of Henrietta, 185 F.3d 12, 16 (2d Cir.1999); see also LaTrieste Restaurant and Cabaret, Inc. v. Village of Port Chester, 40 F.3d 587, 590 (2d Cir.1994). As the district court observed, Appellants have failed to produce evidence of any “similarly situated” individual or institution treated more favorably than Appellants. Beechwood, 317 F.Supp.2d at 276-78.
Finally, Appellants invite the comparison between their treatment at the hands of regulators before the Chamberys’ skirmishes with the DOH began and afterward. In LaTrieste Restaurant and Cabaret, Inc. v. Village of Port Chester, we held that the plaintiff satisfied the “similarly situated” requirement by producing evidence that the defendants did not enforce a zoning ordinance against the plaintiff until the plaintiff engaged in protected conduct—that conduct being the only change in plaintiff‘s circumstances. 40 F.3d 587, 590. Here, the revocation of the operating certificate followed protected conduct; but, as Appellants concede, the revocation also followed substantiated charges of new serious deficiencies. The partnership cannot establish differential treatment through a before-and-after approach.
III. Due Process
The Chamberys cite
An Article 78 proceeding therefore afforded a meaningful post-deprivation remedy for Appellants’ claimed violation. See id. at 881-82 (holding Article 78 provided a “perfectly adequate post deprivation remedy,” and citing cases); see also Gudema v. Nassau County, 163 F.3d 717, 724-25 (2d Cir.1998) (same). In an Article 78 proceeding, Beechwood could have argued that Greenberg‘s license suspension “determination was made in violation of lawful procedure, was affected by an error or law or was arbitrary and capricious or an abuse of discretion,”
We have considered the parties’ remaining arguments and find each of them to be without merit.
CONCLUSION
For the foregoing reasons, the judgment of the district court is affirmed as to Appellants’ due process claim, equal protection claim, and § 1983 claim against HCFA defendants, and vacated as to Appellant‘s First Amendment retaliation claim against DOH defendants and remanded for proceedings not inconsistent with this opinion.