United States District Court, S.D. Texas, Houston Division
MEMORANDUM OPINION AND ORDER
LAKE SENIOR UNITED STATES DISTRICT JUDGE.
Confident Care Home Health Services, Inc.
("Plaintiff") filed this action against Alex M.
Azar, Secretary of the United States Department of Health and
Human Services ("Defendant"), seeking relief based
on the Fifth Circuit's decision in Family
Rehabilitation, Inc. v. Azar, 886 F.3d 496 (5th Cir.
2018). Pending before the court are Defendant's Motion
for Modification of Court's Order Issued February 15,
2019 at Docket No. 42 ("Defendant's Motion for
Modification of Preliminary Injunction") (Docket Entry
No. 43) and Plaintiff's Motion for Release of Recouped
Funds (Docket Entry No. 45).
Factual and Procedural Background
filed its Verified Complaint for Injunctive Relief and
Attorneys Fees on October 4, 2018, alleging, among other
things, that it was denied procedural due process by
Defendant's recoupment of alleged Medicare overpayments
before an administrative law judge ("ALJ") could
rule on its administrative appeal.Plaintiff also moved for
the imposition of a temporary restraining order requesting
that Defendant "suspend and refund" recouped
Medicare payments until after the ALJ's hearing and
filed a motion to dismiss Plaintiff's Complaint on
November 20, 2018, alleging both that the court lacks subject
matter jurisdiction over Plaintiff's claims and that
Plaintiff had failed to state plausible claims for
relief. The court held a telephone hearing on
December 6, 2018, during which it denied Defendant's
Motion to Dismiss. During the hearing the court also
addressed Plaintiff's Motion for TRO. Plaintiff's
counsel recognized that Defendant had already recouped $400,
000.00 in alleged overpayments and that Plaintiff's
desired remedy was for Defendant to "stop recoupment.
" During the hearing the court stated
that Defendant would not be prejudiced by imposition of a
preliminary injunction because "defendant has already
withheld $400, 000, and all the plaintiff seeks is the
cessation of recoupment" so that it may continue its
business and submit approximately $80, 000.00 in new
claims. Plaintiff's counsel did not
represent to the court during the December 6th hearing that
it also sought a refund of the $400, 000.00 being held by
Defendant. The court did not rule on Plaintiff's Motion
for TRO at the December 6th hearing in order to give
Defendant an opportunity to file a response.
subsequently filed a response to Plaintiff's Motion for
TRO,  to which Plaintiff
replied. The court held a scheduling conference
on February 15, 2019, during which the parties requested that
the court rule on Plaintiff's Motion for TRO on the
papers.Because both parties appeared before
the court at the December 6th hearing and Defendant has filed
a Response to Plaintiff's Motion for TRO, Plaintiff's
Motion for TRO was no longer ex parte; and the court
considered it as a motion for preliminary
injunction. Having considered the arguments presented
by the parties in their written filings, the court granted
Plaintiff's motion for preliminary injunction, finding
that "(1) plaintiff has shown a substantial likelihood
of success on the merits; (2) there is a substantial threat
of irreparable injury to plaintiff; (3) the threatened injury
to plaintiff outweighs any prejudice to defendant; and (4)
granting the injunctive relief will not disserve the public
interest." In its order the court enjoined Defendant
from further "withholding or offsetting payments"
in recoupment of the alleged Medicare
Defendant's Motion for Modification of
Defendant's Motion for Modification of Preliminary
Injunction, Defendant asks the court to modify its
Preliminary Injunction into a temporary restraining
order. Defendant argues that he only agreed
to a ruling on the papers for Plaintiff's Motion for TRO,
not on imposition of a preliminary injunction.
an adverse party has been given notice, the court may
properly convert a motion for a temporary restraining order
into a request for a preliminary injunction. See Esparza
v. Board of Trustees, 182 F.3d 915 (5th Cir.
1999) ("But when the adverse party has notice, the
protective provisions of rule 65(b) do not control, and the
court has discretion to consider granting more lasting relief
under a [preliminary injunction]."). When the court
entered a Preliminary Injunction Defendant had appeared and
filed multiple pleadings and exhibits addressing
Plaintiff's Motion for TRO. The court was
therefore within its discretion to convert Plaintiff's
Motion for TRO into a motion for preliminary injunction.
Defendant's Motion for Modification of Preliminary
Injunction will be denied.
Plaintiff's Motion for Release of Recouped
Motion for Release of Recouped Funds, Plaintiff seeks the
release of the $400, 000.00 that Defendant has already
collected in recoupment. Plaintiff argues that the
court's Preliminary Injunction entitles it to a refund of
Plaintiff's Motion for TRO asked that Defendant be
ordered to "refund" the funds it had already
collected in recoupment, Plaintiff represented at the
December 6th hearing that it sought only a cessation of
recoupment. The court's finding that Defendant would not
be prejudiced by imposition of a preliminary injunction was
premised on Defendant's ability to retain the $400,
000.00 already collected in recoupment. Moreover, the court
is not persuaded that it has subject matter jurisdiction to
determine that Defendant's recoupment was wrongful and
order Defendant to refund the recouped funds to Plaintiff.
See Family Rehabilitation, 886 F.3d at 503-04
(holding that district courts may suspend recoupment pending
an administrative hearing but that they lack jurisdiction to
examine the merits of the underlying dispute). The
court's Preliminary Injunction should therefore be
construed only as requiring the cessation of further
recoupment efforts by Defendant and not as requiring
Defendant to refund to Plaintiff the amount already collected
in recoupment. Plaintiff's Motion for Release of Recouped
Funds (Docket Entry No. 45) will be denied.
reasons explained above, Defendant's Motion for
Modification of Court's Order Issued February 15, 2019 at
Docket No. 42 (Docket Entry No. 43) is
DENIED. Plaintiff's Motion for ...