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Marietta Memorial Hospital v. West Virginia Health Care Authority

United States District Court, S.D. West Virginia, Charleston Division

December 19, 2016




         Pending before the Court is Plaintiffs' Motion for Temporary Restraining Order, Preliminary and/or Permanent Injunction.[1] (ECF No. 8.) For the reasons provided below, the Court GRANTS Plaintiffs' motion for preliminary injunctive relief.

         I. BACKGROUND

         This case involves an action by out-of-state healthcare organizations Marietta Memorial Hospital and Marietta Area Health Care, Inc., and in-state corporation MHC Physicians, Inc., (collectively, “Marietta”), who are challenging a recently passed state statute that creates a new exemption to West Virginia's Certificate of Need (“CON”) program. See W.Va. Code § 16-2D- 11(c)(12). Marietta seeks to prevent the West Virginia Health Care Authority (“HCA”) from enforcing the allegedly unconstitutional statute.

         West Virginia's CON program, codified at West Virginia Code § 16-2D-1, et seq., requires that a hospital seeking to introduce or remove various health services obtain approval from HCA in the form of a CON. See § 16-2C-8. The types of changes in health services that require a CON include, among many others, constructing, developing, or acquiring a health care facility; substantially changing the bed capacity of a health care facility; and acquiring major medical equipment. See § 16-2C-8(a)(1), (5), (8), (9). To obtain a CON, a health care entity must first file an application with HCA. See Id. § 16-2D-13. HCA then reviews the application, taking into consideration the criteria set forth in § 16-2D-12. Subsection twelve requires HCA to find that the proposed change in health services is needed and consistent with the state health plan. See § 16-2D-12(a). An “affected person, ” as defined in § 16-2D-2, may request a hearing on any application, and upon such a request, HCA must hold a hearing and consider testimony and evidence offered prior to approving a CON application. See §§ 16-2D-7, 16-2D-13. After satisfaction of the statutory procedures provided in § 16-2D-13, HCA renders a final decision accompanied by written findings. See § 16-2D-15. HCA may issue an approval, denial, or approval with conditions. See Id. These laws implement the legislature's pronounced public policy regarding CONs set out in § 16-2D-1.

         Chapter Sixteen of the West Virginia Code provides various exceptions to the CON process. See §§ 16-2D-10, 16-2D-11. Under § 16-2D-10, certain health services may be provided to the public without obtaining a CON or applying to HCA for approval. On the other hand, § 16-2D-11 enumerates specific exemptions to the CON procedure that nonetheless require approval from HCA. Exemptions requiring approval from HCA include, among others, a health care facility acquiring medical equipment, adding health services, or obligating a capital expenditure, to be used solely for research and without affecting other services within the facility; the addition of forensic beds in a health care facility; and the replacement of major medical equipment with like equipment. See § 16-2D-11(c)(3), (7), (9). West Virginia's legislature enacted an exception by legislative rule in 2010 that exempted in-state hospitals from seeking a CON “for the construction, development, acquisition or other establishment by a hospital of an ambulatory health care facility.” See W.Va. Code R. § 65-27-3. If an affected person opposed the exemption, then the hospital was required to file a CON application. (See ECF No. 23 at 3, ¶ 9.)

         However, in its 2016 session, the Legislature modified this exemption. Thus, as of June 10, 2016, a full-fledged exemption to the CON process went into effect for “[t]he construction, development, acquisition or other establishment by a licensed West Virginia hospital of an ambulatory health care facility in the county in which it is located and in a contiguous county within or outside this state . . . .” § 16-2D-11(c)(12). As with other exemptions in subsection (c), and unlike the former legislative rule exemption related to ambulatory health care facilities, “[a]n affected party may not file an objection to the request for an exemption.” § 16-2D-11(b). The only review provided by this section is the ability of the exemption applicant to appeal an unfavorable decision “to the Office of Judges or refile the application with the authority.” Id. West Virginia entities Camden-Clark Memorial Hospital and Camden-Clark Physician Corporation (collectively, “Camden-Clark”), filed a request for an exemption under § 16-2D-11(c)(12), on August 15, 2016, “to open a new ambulatory health care facility by completing its multi-million dollar purchase of a large primary care physician practice in West Virginia . . . .” (ECF No. 23 at 6, ¶ 23.) That exemption request prompted Marietta to file the current action.

         Marietta filed its Complaint in this Court on September 6, 2016, challenging the exemption set out in § 16-2D-11(c)(12). (ECF No. 1.) Subsequently, it filed the current motion on September 15, 2016. (ECF No. 8.) Defendants responded to the motion on October 19, 2016, (ECF No. 20), and a motion hearing was held by the Court on October 24, 2016. (ECF No. 24.) As such, Marietta's motion has been briefed and argued by the parties and is ready for disposition.


         “Rule 65 of the Federal Rules of Civil Procedure provides for the issuance of preliminary injunctions as a means of preventing harm to one or more of the parties before the court can fully adjudicate the claims in dispute.” Fred Hutchinson Cancer Research Ctr. v. BioPet Vet Lab, Inc., 768 F.Supp.2d 872, 874 (E.D. Va. 2011). A preliminary injunction is an extraordinary remedy never awarded as of right. See Real Truth About Obama, Inc. v. FEC, 575 F.3d 342, 345 (4th Cir. 2009) (hereinafter “Real Truth I”), vacated on other grounds, 559 U.S. 1089 (2010), reissued as to Parts I & II, Real Truth About Obama, Inc. v. FEC, 607 F.3d 355 (4th Cir. 2010). In each case, the Court must balance the competing claims of injury and consider the effect of granting or withholding the requested relief. “In exercising their sound discretion, courts of equity should pay particular regard for the public consequences in employing the extraordinary remedy of injunction.” Weinberger v. Romero-Barcelo, 456 U.S. 305, 312 (1982).

         “A plaintiff seeking a preliminary injunction must establish (1) that he is likely to succeed on the merits, (2) that he is likely to suffer irreparable harm in the absence of preliminary relief, (3) that the balance of equities tips in his favor, and (4) that an injunction is in the public interest.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008) (citing Munaf v. Geren, 553 U.S. 674, 689-90 (2008)). “All four elements must be established by a ‘clear showing' before the injunction will issue.” Imagine Medispa, LLC v. Transformations, Inc., 999 F.Supp.2d 862, 868 (S.D. W.Va. 2014) (quoting Real Truth I, 575 F.3d at 346). The plaintiff bears the burden of showing a “sufficient factual basis” for granting the injunction “beyond the unverified allegations in the pleadings.” Id. at 868-69 (citations omitted).

         The plaintiff must demonstrate a likelihood of irreparable harm without a preliminary injunction; a mere possibility of harm will not suffice. Id. at 21. Such likelihood of irreparable harm justifies a preliminary injunction to protect the status quo and “preserve the court's ability to render a meaningful judgment on the merits.” United States v. South Carolina, 720 F.3d 518, 524 (4th Cir. 2013) (quoting In re Microsoft Corp. Antitrust Litig., 333 F.3d 517, 525 (4th Cir. 2003)). See also Univ. of Tex. v. Camenisch, 451 U.S. 390, 395 (1981) (“The purpose of a preliminary injunction is merely to preserve the relative positions of the parties until a trial on the merits can be held.”). A plaintiff does not have to prove his or her case in full to succeed on a motion for preliminary injunction, and the findings of fact and conclusions of law made at this stage are not binding at a trial on the merits. See Id. (citations omitted).

         Regarding likelihood of success, prior law in the Fourth Circuit was that there is a “‘flexible interplay' among all the factors considered . . . for all four [factors] are intertwined and each affects in degree all the others.” Blackwelder Furniture Co. of Statesville v. Seilig Mfg. Co., 550 F.2d 189, 196 (4th Cir. 1977) (citations omitted). Accordingly, plaintiffs were not strictly required to demonstrate likelihood of success on the merits. Rather, “it [was] enough that grave or serious questions on the merits [were] presented.” Id. But in the wake of the Supreme Court decision in Winter, the Blackwelder balancing approach “may no longer be applied in granting or denying preliminary injunctions in the Fourth Circuit.” Real Truth I, 575 F.3d at 347. Instead, the Fourth Circuit has held that a party seeking a preliminary injunction must demonstrate by “a clear showing that it is likely to succeed at trial on the merits.” Id. at 351. The Fourth Circuit has not expressly required a movant to prove that success on the merits is “more likely than not” in order to meet the requirement of a clear showing, but the new requirement “is far stricter than the Blackwelder requirement that the plaintiff demonstrate only a grave or serious question for litigation.” Id. at 345-46.


         Marietta argues that each of the Winter factors is satisfied in this case and requests that the Court enter preliminary injunctive relief. (See ECF No. 9 at 5-14.) Defendants contest each of the Winter factors. (See ECF No. 20 at 11-32.) For the reasons that follow, the Court finds that each of the Winter factors weighs in favor of granting a preliminary injunction in this matter.[2]

         A. Likelihood of Success on Merits

         Under the first Winter factor, “plaintiffs seeking preliminary injunctions must demonstrate that they are likely to succeed on the merits.” Pashby v. Delia, 709 F.3d 307, 321 (4th Cir. 2013) (citing Winter, 555 U.S. at 20). “Although this inquiry requires plaintiffs seeking injunctions to make a clear showing that they are likely to succeed at trial, plaintiffs need not show a certainty of success.” Id. (citations omitted). Nonetheless, “[m]erely showing that ‘grave or serious questions are presented for litigation' will not suffice.” Imagine Medispa, LLC v. Transformations, Inc., 999 F.Supp.2d 862, 871 (S.D. W.Va. 2014) (quoting Real Truth I, 575 F.3d at 346‒47).

         Marietta relies on the following four bases in the Complaint when arguing that West Virginia Code § 16-2D-11(c)(12) is unconstitutional: the dormant commerce clause, the Fourteenth Amendment due process clause, Civil Rights Act of 1871, 42 U.S.C. §§ 1983, 1988, and the Fourteenth Amendment equal protection clause. For the purposes of the instant opinion addressing prospective injunctive relief, the Court shall focus on Marietta's claim that HCA is enforcing a state law that violates Marietta's rights under the dormant commerce clause. (See ECF No. 9 at 6-9; ECF No. 1 at 17, ¶¶ 56-60.)

         The commerce clause provides the United State Congress a vehicle with which to regulate aspects of interstate commerce. See U.S. Const. art. I, § 8, cl. 3. Congress has the authority to regulate the channels and instrumentalities of interstate commerce as well as economic activities that have a substantial effect on interstate commerce. See, e.g., Hodel v. Va. Surface Min. & Reclamation Ass'n, Inc., 452 U.S. 264, 275-77 (1981); Perez v. United States, 402 U.S. 146, 150- 52 (1971). The Tenth Amendment to the U.S. Constitution acts as a limit on Congressional powers by stating that all powers not granted to the United States, nor prohibited to the states, are reserved to the states or the people. See U.S. Const. amend. X; S. Pac. Co. v. Arizona ex rel. Sullivan, 325 U.S. 761, 767 (1945) (“[I]n the absence of conflicting legislation by Congress, there is a residuum of power in the state to make laws governing matters of local concern which nevertheless in some measure affect interstate commerce or even, to some extent, regulate it.”).

         Despite this localized power, a state or local law may be held unconstitutional if it places undue burden on interstate commerce. See C & A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383, 390 (1994) (hereinafter “Carbone”). Courts have long held that the commerce clause “limits the power of the States to erect barriers against interstate trade.” See, e.g., Dennis v. Higgins, 498 U.S. 439, 446 (1991) (quoting Lewis v. BT Inv. Managers, Inc., 447 U.S. 27, 35 (1980)). The doctrine analyzed below, the dormant commerce clause, has been inferred by the Supreme Court to represent the negative implications of the commerce clause. See, e.g., Wickard v. Filburn, 317 U.S. 111, 123-24 (1942). See also Envtl. Tech. Council v. Sierra Club, 98 F.3d 774, 782 (4th Cir. 1996).

         If a state law burdens interstate commerce, it violates the dormant commerce clause unless it is necessary to achieve a legitimate government purpose. See Maine v. Taylor, 477 U.S. 131, 138 (1986). Otherwise, a state law “that discriminates against interstate commerce is the clearest example of the type of State law that imposes an unconstitutional burden” on commerce. Beskind v. Easley, 325 F.3d 506, 514 (4th Cir. 2003). A law discriminating against out-of-state actors is presumed invalid unless the state government shows a legitimate local purpose and demonstrates that the discrimination is necessary to achieve that goal-that the purpose cannot be achieved through any less discriminatory method. See Envtl. Tech. Council, 98 F.3d at 785. Favoring a state's own citizens is not a sufficient purpose, nor is advancing the state's economy while harming the economies of other states. See Yahama Motor Corp. v. Jim's Motorcycle, Inc., 401 F.3d 560, 567 (4th Cir. 2005) ...

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