United States District Court, E.D. Michigan, Southern Division
OPINION & ORDER DENYING PLAINTIFF'S MOTION
FOR PRELIMINARY INJUNCTION
SEAN
F. COX UNITED STATES DISTRICT JUDGE.
The
plaintiff in this case, Total Toxicology Labs, LLC d/b/a TT
Labs, LLC (“TT Labs”), provides clinical
laboratory services to patients nationwide and is a
participant in the Medicare Payment Process within the
Medicare reimbursement system. As a participant in that
system, TT Labs is subject to audits of its billings. In
2017, TT Labs learned that government auditors found that it
had overcharged for services provided to Medicare
beneficiaries. TT Labs challenged the auditors' decisions
at two levels of the Medicare administrative appeals process
but, after those appeals, TT Labs was still found to have
been overpaid for its services. TT Labs pursued an appeal at
the third level of review, but has not yet been given a
hearing date because the system is backlogged such that
instead of receiving a hearing in 90 days, it could take
three years or more for that administrative appeal to take
place. Meanwhile, the Government has begun to start recouping
the money that the audits showed were overpaid to TT Labs, as
the regulatory scheme allows. The government recovers the
amount due from the money that it would otherwise pay for new
reimbursement claims until the service provider's debt is
paid in full.
The
Government contends that TT Labs currently owes it a
significant balance for overpayments, that it intends to
recoup going forward. Not wanting to wait three years for the
third-level administrative appeal, and not having sought a
hardship exception or pursuing other options under the
regulatory scheme, such as escalation procedures, TT Labs
filed this action asserting a due process claim and seeking a
preliminary injunction. It asks this Court to enjoin the
Government from any further recoupment until such time as it
gets a third-level administrative appeal heard and decided.
At an
early status conference, counsel advised the Court that a
federal district court in Tennessee had issued a preliminary
injunction in a similar case with another Medicare service
provider, A1 Diabetes, and that a decision on the appeal in
that case would likely decide several of the issues in play
here. The United States Court of Appeals for the Sixth
Circuit, however, did not rule on the issues and, instead,
issued a decision wherein it identified a host of questions
and concerns that need to be addressed before a decision on
an preliminary injunction in this kind of case could be made.
Thus, the Sixth Circuit vacated the district court's
preliminary injunction and remanded so that the parties and
district court could address the various issues and questions
it identified.
The
motion in this case has been fully briefed and TT Labs has
not requested an evidentiary hearing. This Court heard oral
argument on December 17, 2019. As explained below, TT Labs
has not answered all of the various questions raised in
A1 Diabetes as to the factors to be considered
relating to the likelihood of success on the merits of its
due process claim. And, even if it had, and the
answers weighed in its favor such that it established a
substantial likelihood of success on the merits of its due
process claim, then this Court would still have to evaluate
the other preliminary injunction factors. That includes the
critical factor of the risk of irreparable harm to the
plaintiff absent the requested injunctive relief. Although TT
Labs has a theoretically plausible claim of serious financial
injury absent the requested injunction, it has failed to make
the requisite evidentiary showing of certain and immediate
irreparable financial harm needed to obtain a preliminary
injunction. As such, the Court shall DENY the motion.
BACKGROUND
Plaintiff
TT Labs filed this action against Defendant Alex M. Azar, II,
Secretary of the United States Department of Health and Human
Services and Seema Verma, Administrator for the Centers for
Medicare and Medicaid Services (“the Government”)
asserting the following three counts: 1) “Denial Of
Procedural Due Process” (Count I); 2) “Ultra
Vires” (Count II); and 3) “Violation Of The
Administrative Procedures Act” (Count III). TT
Labs's complaint alleges that the Government's
“recoupment of the alleged overpayment has already
caused Plaintiff devastating financial harm its continuance
will cause continued financial harm, and possibly force
Plaintiff out of business well before any ALJ could hear and
decide the case pursuant to statutory administrative review.
Without the temporary relief requested herein, Plaintiff is
likely to suffer the fatal consequence of permanent
closure.” (Compl. at ¶ 41).
Pending
before the Court is a motion filed by TT Labs seeking a
preliminary injunction. TT Labs asks this Court to enjoin the
Government “from any further recoupment or collection
of alleged Medicare overpayments, including referral to the
U.S. Treasury Department for collection, until such time as
an administrative law judge assigned to the Office of
Medicare Hearings and Appeals (‘OMHA') hears
Plaintiff's pending appeal and renders a decision
thereon.” (ECF No. 3 at PageID.156).
TT
Labs's motion does not request an evidentiary hearing.
Rather, TT Labs states that its “Motion is based on the
facts sworn in the Verified Complaint filed in this
action and the exhibits attached thereto, and the Brief in
Support filed herewith, and applicable law.” (ECF No. 3
at PageID.156) (emphasis added). There are no declarations or
affidavits attached as exhibits to the motion.
TT
Labs's complaint is titled, “Verified
Complaint For Temporary Restraining Order And Preliminary
Injunction.” (ECF No. 1) (emphasis added). A verified
complaint has the same force and effect as a signed and
notarized affidavit. Williams v. Browman, 981 F.2d
901, 905 (6th Cir. 1992). Its title notwithstanding, TT
Labs's complaint was neither accompanied by a sworn
statement nor attested to under oath, and thus it is
not a verified complaint. See El Bey v.
Roop, 530 F.3d 407, 414 (6th Cir. 2008) (noting that a
“verified complaint” is one that is signed under
the penalty of perjury pursuant to 28 U.S.C. § 1746);
see also Williams, supra; 28 U.S.C. § 1746.
TT Labs
has not submitted any affidavits or declarations in support
of its motion, such as an affidavit attesting to its
financial condition or the impact of the recoupment on same.
Soon
after this case was filed, this Court held a status
conference with counsel. Counsel advised the Court that a
district court in Tennessee had granted a preliminary
injunction in a similar case against the Government, without
holding an evidentiary hearing[1], and in favor of another Medicare
service provider, A1 Diabetes & Medical Supply. They
further advised that an appeal before the Sixth Circuit in
that case would very likely answer many of the same issues in
this case, such as whether subject matter jurisdiction
exists, whether a Medicare service provider has a protected
interest for purposes of a due process claim, and whether the
issuance of a preliminary injunction is appropriate. The
parties agreed to a briefing schedule as to the motion in
this case.
The
Government filed a brief in opposition to the preliminary
injunction motion. It argues that TT Labs is unlikely to
succeed on the merits of its due process claim because, among
other things, TT Labs has not asserted a protected property
interest for purposes of a due process claim, and available
procedures amply protect against the risk of an erroneous
deprivation here.
The
Government further argues that TT Labs has not shown it is
likely to suffer irreparable harm in the absence of a
preliminary injunction and noted that TT Labs had not
presented any evidence as to its alleged financial
harm:
A showing of probable irreparable harm is the single most
important prerequisite for the issuance of a preliminary
injunction. Lucero v. Detroit Pub. Schs., 160
F.Supp.2d 767, 901 (E.D. Mich. 2001). Without such a showing,
the Court simply cannot issue a preliminary injunction.
Id. Thus, in this matter, the Court need not assess
whether Plaintiff's financial condition is as bad as
alleged, or whether the entity's financial condition is
sufficient proof of irreparable harm, because Plaintiff has
failed to set forth any evidence to support its claim of
financial hardship. Because Plaintiff offered no evidence,
this critical element has not been met, and the motion must
be denied. DPLSA at *10 (DPLSA has not provided any
evidence, besides mere speculation, that any arbitration
award or MERC award in its favor would be so great as to
force the City of Detroit into great financial hardship).
(ECF No. 10 at PageID.280).
On
August 22, 2019, the Sixth Circuit issued a published opinion
in A1 Diabetes, vacating the district court's
preliminary injunction and remanding for proceedings
consistent with the opinion. A1 Diabetes & Med.
Supply v. Azar, 937 F.3d 613 (6th Cir. 2019). In it, the
appellate court vacated the preliminary injunction issued by
the district court, and spelled out a number of issues that
were unclear and required answers.
On
September 6, 2019 - and with the benefit of the Sixth
Circuit's published opinion in A1 Diabetes - TT
Labs filed a Reply Brief in support of its motion. Mindful
that the Sixth Circuit has issued its decision in A1
Diabetes prior to the filing of it, this Court granted
TT Labs's request to exceed the page limitation under the
local rule and allowed it to file a reply brief of 18 pages.
A good portion of it is devoted to the issue of whether TT
Labs has a protected property interest, something the Sixth
Circuit assumed without deciding in A1 Diabetes. TT
Labs's reply brief does not identify any evidence to
substantiate its allegations regarding its alleged financial
injuries, nor does it address various questions posed by the
Sixth Circuit in A1 Diabetes.
ANALYSIS
“A
preliminary injunction is an extraordinary measure that has
been characterized as ‘one of the most drastic tools in
the arsenal of judicial remedies.'” Bonnell v.
Lorenzo, 241 F.3d 800, 808 (6th Cir. 2001) (citation
omitted).
In
reviewing a request for a preliminary judgment, a district
court looks at four factors: 1) the plaintiff's
likelihood of success on the merits; 2) the risk of
irreparable harm to plaintiffs absent injunctive relief; 3)
the risk of harm to others resulting from an injunction; and
4) the broader public interest. A1 Diabetes, 937
F.3d at 618 (citing Mich. State AFL-CIO v. Schuette,
847 F.3d 800, 803 (6th Cir. 2017)).
The
movant bears the burden of demonstrating its entitlement to
the preliminary injunction sought, and its burden is a heavy
one. A preliminary injunction is an extraordinary remedy
which should be granted only if the movant carries his or her
burden of proving that the ...