Opinion
Civil Action No: 04-142 JWB
January 15, 2004
NORRIS, McLAUGHLIN MARCUS, A Professional Corporation, Somerville, NJ, James J. Shrager,
JONES DAY, Washington, D.C., Gregory M. Luce, Jesse A. Witten, Attorneys for Plaintiffs.
ORDER TO SHOW CAUSE FOR PRELIMINARY INJUNCTION AND EXPEDITED DISCOVERY
Plaintiffs Robert Wood Johnson University Hospital, Robert Wood Johnson University Hospital at Rahway, and Robert Wood Johnson University Hospital at Hamilton (collectively, "the RWJ Hospitals") have filed a Verified Complaint for injunctive and declaratory relief, together with a supporting memorandum of law, and supporting declarations.
1. The Verified Complaint pleads that the United States Department of Health and Human Services ("HHS"), and the Centers for Medicare and Medicaid Services ("CMS") acted arbitrarily, capriciously, and in excess of statutory authority, in violation of the Administrative Procedure Act ("APA"), 5 U.S.C. § 702 et seq., in approving a certain demonstration project known as the Performance-Based Demonstration Project ("the Demonstration Project") under the Medicare Demonstration Project Statute ("the Demonstration Statute"), 42 U.S.C. § 1395b-1. The Verified Complaint further pleads that the Demonstration Project violates the RWJ Hospitals' rights to equal protection under the Due Process Clause.
2. The Verified Complaint asserts that the Demonstration Project selectively and unlawfully waives the application of the Physician Self-Referral Law, 42 U.S.C. § 1395nn ("the Stark Law") to eight New Jersey hospitals. Only these eight participating hospitals are permitted to offer to physicians who admit Medicare patients to those hospitals certain financial incentives that would otherwise be considered by the government to be illegal under the Stark Law. Non-participating hospitals, such as the RWJ Hospitals, remain subject to the restrictions on hospital-physician financial relationships established by the Stark Law. Hospitals excluded from the Demonstration Project (like the RWJ Hospitals) are placed at a competitive disadvantage because they must comply with the Stark Law whereas the eight hospitals participating in the Demonstration Project need not so comply.
3. The RWJ Hospitals have been able to gather only limited information about the Demonstration Project. CMS has produced only one government document, entitled "Terms and Conditions," that describes the Demonstration Project and declined to release for copying or inspection any other documents related to the Demonstration Projection. On December 19, 2003, the RWJ Hospitals made a formal request under the Freedom of Information Act ("FOIA") for "all applications, approvals, descriptions, analyses, reviews, reports, memoranda, and correspondence" relating to the Demonstration Project, but no documents in response to that request have been produced.
4. Based upon the limited information available to them, the RWJ Hospitals also requested the opportunity to participate in the Demonstration Project by letters from each RWJ Hospital, dated December 24, 2003. No response to those letters has been received.
5. The RWJ Hospitals seek injunctive relief prohibiting CMS from continuing the Demonstration Project or, in the alternative, directing CMS to allow the RWJ Hospitals to participate in the Demonstration Project. The RWJ Hospitals also seek an injunction directing CMS to produce documents responsive to their FOIA request.
The Court having considered the Verified Complaint dated January 13, 2004, together with the accompanying exhibits and the accompanying memorandum of law and supporting declarations, and for good cause shown, and
NOW, THEREFORE, upon the foregoing findings,
1. CMS show cause before this Court on the 9th day ofFeb, 2004 at 2.30 o'clock in the P.M. on that day, or as soon thereafter as counsel can be heard, in Room 3, United States Post office Court house Newark, New Jersey, why a preliminary injunction should not be entered, under Rule 65 of the Federal Rules of Civil Procedure, pending the trial and decision in this action, ordering CMS, its agents, servants, and employees, and all persons in active participation with CMS:
(a) to cease and desist from continuing the Performance-Based Demonstration Project [or, in the alternative,]
(b) to admit Plaintiffs Robert Wood Johnson University Hospital, Robert Wood Johnson University Hospital at Rahway, and Robert Wood Johnson University Hospital at Hamilton to participation in the Project.; and
(c) to produce forthwith all documents responsive to Plaintiffs' December 19, 2003 FOIA request for the production of "all applications, approvals, descriptions, analyses, reviews, reports, memoranda, and correspondence" relating to the Demonstration Project;
And it is further ORDERED that
2. Defendants shall file and serve their papers in opposition to the motion for preliminary injunction by Feb. 2, 2004,
3. Plaintiff shall serve a copy of this Order to Show Cause upon defendants, together with a copy of the Verified Complaint, supporting declarations, and memorandum of law, within 5 days from the date hereof via overnight courier service.