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Genesis Health Care, Inc. v. Soura

United States District Court, D. South Carolina, Columbia Division

February 22, 2017

Genesis Health Care, Inc., Plaintiff,
v.
Christian Soura, Director of the South Carolina Department of Health and Human Services, Defendant.

          OPINION AND ORDER ON MOTIONS TO DISMISS AND AMEND (ECF NOS. 9, 24)

          CAMERON MCGOWAN CURRIE Senior United States District Judge

         Through this action, Plaintiff Genesis Health Care, Inc. (“Genesis”) seeks declaratory and injunctive relief against Defendant, Christian Soura (“Soura”), who serves as Director of the South Carolina Department of Health and Human Services (“DHHS”). Complaint ¶ 1 (ECF No. 1) Specifically, Genesis seeks “an order requiring [Soura] to reimburse [Genesis] for required Medicaid [Federally Qualified Health Center (“FQHC”)] services to Medicaid patients in a manne consistent with federal law.” Id.

         The matter is before the court on two motions: Soura's motion to dismiss for lack of venue or, alternatively, for failure to state a claim on which relief can be granted, ECF No. 9 (seeking dismissal without prejudice under Fed.R.Civ.P. 12(b)(3) & (6)), and Genesis's motion to amend the Complaint, ECF No. 24 (seeking to delete express reliance on contractual venue provisions) Both aspects of the motion to dismiss depend on provisions found in the contract(s) under which Genesis provides services to Medicaid patients, specifically, Articles IX (“Appeals Procedures”) and Article X (“Venue of Actions”). For reasons addressed below, the court denies the motion to amend the complaint as futile, grants Soura's motion dismiss for lack of venue, and dismisses the action without prejudice. The court does not reach Soura's alternative argument for dismissal fo failure to state a claim (failure to exhaust administrative remedies).

         COMPLAINT

         Genesis asserts six causes of action against Soura. All six rest on allegations DHHS' payment practices, for which Soura is responsible, violate various subparts of 42 U.S.C. 1396a(bb). One cause of action also alleges violation of various interrelated statutes, 42 U.S.C §§ 256b, 1396, 1396a, 1396r-8(j), and DHHS's plan for providing Medicaid Services in Sout Carolina (“State Plan”). This cause of action challenges DHHS's method of paying specialty dru claims, which Genesis alleges results in denial of benefits Genesis is entitled to receive under th 340B Drug Discount Program, codified as 42 U.S.C. § 256b.[1]

         All causes of action are pursued under 42 U.S.C. § 1983. Genesis also seeks attorneys fees under 42 U.S.C. § 1988. No cause of action is expressly founded on a contract theory, thoug several causes of action refer directly or implicitly to the existence of a contract between th parties. See Complaint ¶ 3.c. (referring to “contracts between the parties”); id. ¶ 16 (allegin DHHS “refus[ed] to offer Genesis a provider contract containing” required terms); id. ¶ 1 (alleging DHHS is using reimbursement methods “Genesis has never agreed to”).

         PROPOSED AMENDED COMPLAINT

         Genesis's Proposed Amended Complaint is identical to the original Complaint with one exception: it deletes a subparagraph referring to the venue provision in the “contracts between the parties.” No other allegations and no legal theories are modified.

         ARGUMENTS

         Soura Arguments for Dismissal. Soura argues that two provisions found in identical contracts between the parties, the 2010 and 2013 Provider Agreements (collectively “Provider Agreements”), require dismissal for lack of venue or, alternatively, for failure to exhaust administrative remedies. The relevant provisions of the Provider Agreements read as follows:

         ARTICLE IX APPEALS PROCEDURES

If any dispute shall arise under the terms of this contract, the sole and exclusive remedy shall be the filing of a Notice of Appeal within thirty (30) days of receipt of written notice of SCDHHS' action or decision which forms the basis of the appeal. Administrative appeals shall be in accordance with SCDHHS' regulations 27 S.C. Code Ann. Regs. §126-150 et seq. (1976, as amended), and in accordance with the Administrative Procedures Act, SC Code Ann. §1-23-310 et seq., (1976, as amended). Judicial review of any final SCDHHS administrative decisions shall be in accordance with S.C. Code Ann. §1-23-380 (1976, as amended).

         Provider Agreements, Article IX (emphasis added).

         ARTICLE X ...


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