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GUST ROSENFELD P.L.C.

One S. Church Ave., Suite 1900
Tucson, Arizona 85701-1627
Telephone: (520) 628-7070
Facsimile: (520) 624-3849
Thomas M. Murphy 003340; PCC No. 41252
William S. Sowders 022286
tmurphy@gustlaw.com
wsowders@gustlaw.com

Attorneys for Plaintiff

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

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COCHISE REGIONAL HOSPITAL,

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Plaintiff,

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No.
COMPLAINT

vs.
SYLVIA MATHEWS BURWELL, in her
official capacity as U.S. Secretary of
Health and Human Services; Marilyn
Tavenner, as Administrator of the Centers
for Medicare & Medicaid Services; and
Cara M. Christ, as Director of the Arizona
Department of Health Services,

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Defendant.

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Plaintiff, Cochise Regional Hospital, by its undersigned attorneys, brings this

action for declaratory and injunctive relief, and alleges as follows:
INTRODUCTION

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1.

Plaintiff Cochise Regional Hospital (CRH) operates a twenty-five bed

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acute care hospital in Douglas, Arizona. On May 7, 2015, the Centers for Medicare &

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Medicaid Services (CMS) notified CRH that it was terminating CRHs provider

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agreement in the Medicare program on July 10, 2015. Immediately, CRH contacted

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CMS and the other defendants regarding the notification and sought to enforce CRHs

administrative remedies and constitutional rights.

2.

Despite, every effort by CRH to do so, the defendants largely ignored

CRHs actions to exhaust its administrative remedies and enforce its constitutional

rights. As a result, CRH will be forced to shut its doors forever without ever having had

the opportunity to be heard on the propriety of the decision.

3.

Defendants conduct violates CRH procedural due process rights

guaranteed by the Fifth and Fourteenth Amendments and should be preliminarily

enjoined to give CRH a fair opportunity to pursue its administrative rights and remedies.

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JURISDICTION AND VENUE

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4.

This Court has jurisdiction over the subject matter of this action under 28

U.S.C. 1331 and 1361.

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Plaintiffs claim arises from the Medicare Act, 42 U.S.C. 1395 et seq., the

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Fifth and Fourteenth Amendments to the United States Constitution, and the

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Administrative Procedure Act, 5 U.S.C. 551 et seq. and 28 U.S.C. 2201.

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Venue is based on 28 U.S.C. 1391(b)(2) and (e)(2) and (3) in that a

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substantial part of the events or omissions giving rise to the claim occurred and the

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plaintiff resides in this District.

THE PARTIES

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7.

Cochise Regional Hospital is a twenty-five bed acute care hospital

operating in Douglas, Arizona.

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Defendant Sylvia Mathews Burwell, sued in her official capacity, is the

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Secretary of the United States Department of Health and Human Services (the

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Secretary). As such, she is responsible for administering the Medicare Act, 42 U.S.C.

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1395 et seq.

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9.

Defendant Marilyn Tavenner, sued in her official capacity, is the

Administrator of the Centers for Medicare & Medicaid Services, a federal Health and

Human Services agency responsible for administering Medicare, Medicaid and other

health-related programs.

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Director of the Arizona Department of Health Services.

STATUTORY AND REGULATORY SCHEME

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Defendant Cara M. Christ, M.D., sued in her official capacity, is the

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Medicare is a federally funded and administered program that provides

payment for, inter alia, hospital services to aged or disabled persons who are eligible for
these services under the Social Security Act, 42 U.S.C. 426, 1395(c).
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In order to participate in the Medicare program, a hospital must meet

statutory and regulatory requirements. 42 C.F.R. Part 482.

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CMS may terminate a hospital from participation in the Medicare program

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if CMS finds that the hospital is not in substantial compliance with the provisions of

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title XVIII of the Act and the applicable regulations or if the hospital no longer

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substantially meets the appropriate conditions of participation. 42 C.F.R. 489.53(a)(1).

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A hospital that is dissatisfied with CMS's determination to terminate it

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from participation in the Medicare program is entitled to a hearing. 42 C.F.R.

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498.5(b), 498.3(b)(7).
Defendants Unfair Treatment of CRH

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15. Southeast Arizona Medical Center (SAMC) has operated in Douglas,

Arizona for over 100 years.
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In February 2013, it filed for Chapter 11 bankruptcy protection and

attempted to find a buyer for its operations.

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17.

In January 2014, Douglas Community Hospital, Inc., d/b/a Cochise

Regional Hospital (CRH) purchased the operations of SAMC.

changed to Cochise Regional Hospital.

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The name was

In 2012, the Arizona Department of Health Services (ADHS) made only

two site visits to SAMC. In 2013, ADHS made no site visits to SAMC. Since the

renaming of SAMC to CRH, ADHS has made a total of nineteen site visits to the

hospital. Most hospitals have only one site visit per year.

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The dramatic increase in site visits was no coincidence. Connie Belden,

who is Team Leader for medical facilities licensing at ADHS, told CRH in August 2014

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that CRH was complaint with all policy and procedures but intended to have CRHs

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hospital license revoked because she just does not like the nurses at CRH. In

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response, CRH informed Ms. Belden that CRH would seek a hearing before an

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Administrative Law Judge should she attempt to revoke CRHs license.

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Afterwards, Ms. Belden backed down and signed a basic agreement that

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CRH will continue to improve nursing services based upon the agreed upon criteria in a

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new agreement with ADHS.

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In December 2014, CRH was granted a new hospital license.

From

December 2014 to February 2015, the site visits decrease but do not cease.

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22. In May 2015, Ms. Belden submitted a recommendation to CMS and HHS to

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stop Medicare reimbursement to CRH because of inadequate nursing services. This was

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surprising to CRH because the very same nurses work or have worked at other hospitals

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and they are credentialed.

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On May 8, 2015, CRH received a letter from CMS informing CRH that

CMS was terminating CRHs Medicare provider agreement due to inadequate nursing

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services. CMS in its termination letter also informed CRH that CRH had 60 days in

which to appeal CMSs decision.

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In accordance with its administrative rights and remedies, CRH filed an

appeal on June 11, 2015.

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Over the next few weeks, CRH attempted on numerous occasions to get in

touch with CMS to discuss its appeal and see whether CRH could do anything in order

to resolve the situation.

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Finally, CRH was able to speak with Rufus Arther on July 2, 2015.

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On July 8, 2015, CRHs representatives flew to San Francisco to meet

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with Mr. Arther in person to present a plan of correction and discuss the disparity in the

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level of oversight of CRH.

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Mr. Arther advised CRHs representatives that all factors would be taken

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under advisement. The next day Mr. Arther notified CRH that despite the progress

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made by the hospital and that fact that CRH is the only comprehensive healthcare

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facility in Douglas, Arizona, CMS would continue with its plans to terminate CRHs

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Medicare provider agreement effective July 10, 2015. CRH also advised Mr. Arther

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that this will cause irreparable financial and operational damage to the hospital and

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CMSs decision essentially would force the closure of CRH without sufficient due

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process and before CRH had exhausted its administrative rights and remedies.

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29.

If CRH closes, the 20,000 people living in Douglas, Arizona will be

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without access to top quality medical care. CRH is the only hospital in the southeastern

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border of Arizona for rural citizens in this area. All of the areas fire department

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patients will need to be transported to Bisbee (25 miles) or Sierra Vista (45 miles)

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causing a significant impact to the staffing levels at the areas fire station not taking into

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account the fiscal impact to Douglass city budget and the patients. Chronically-ill

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patients (heart failure, renal failure, diabetes, chest pain, hip/knee replacement, etc.) will

have to drive two hours just for basic hospital in-patient medical care.

patients family will also have to drive 2 hours to provide love and support for their sick

family member. Any person in Douglas, Arizona seeking surgery, chemotherapy, basic

heart stress tests, colon cancer screening, or immediate medical attention to life

threatening illnesses will have to trek two hours. Furthermore, the 70 CRH employees

will lose their jobs immediately, causing distress on an already financially-challenged

community.

And the

CLAIM FOR RELIEF

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(Declaratory Judgment re: Fifth and Fourteenth Amendment Due Process)

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CRH repeats the allegation of paragraphs 1 29.

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CRH has valuable property rights in its Medicare provider agreement.

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CRH has been denied a meaningful opportunity to be heard in a

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meaningful manner before termination of its Medicare provider agreement.

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33.

CRH has no adequate remedy at law.

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34.

By reason of the foregoing, CRH is entitled to a declaratory judgment that

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defendants have violated its procedural due process rights guaranteed by the Fifth and

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Fourteenth Amendments of the United States Constitution.

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WHEREFORE, CRH demands judgment:

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A. Declaring that defendants have violated its procedural due process rights

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guaranteed by the Fifth and Fourteenth Amendments of the United States Constitution

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and directing defendants to provide it with administrative review of the defendants

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decision to terminate CRHs Medicare provider agreement;

B. Enjoining the defendants from terminating any Medicare payments to CRH;

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and

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C.

Awarding the costs and disbursements of this action and for such other and

further relief as the Court deems just and proper.

RESPECTFULLY SUBMITTED this 16th day of July, 2015.

GUST ROSENFELD P.L.C.

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By /s/ William S. Sowders (#022286)

One S. Church Ave., Suite 1900
Tucson, Arizona 85701-1627

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Attorneys for Plaintiff

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