Rock River Health Care, LLC v. Eagleson

Dist. Ct. erred in granting defendant’s motion to dismiss in plaintiffs-medical providers’ section 1983 action, alleging that defendant denied plaintiffs their procedural due process rights by retroactively recalculating their Medicaid reimbursement rates by lowering said rates for three-month period, where, according to plaintiffs, defendant conducted audits, where auditors did not provide plaintiffs preliminary results of audits and did not identify allegedly missing or deficient documents or provide plaintiffs with opportunity to respond prior to instant recalculation made by defendant. Plaintiffs further submit that procedure for reconsideration is inadequate for purposes of due process, because it prohibited them from providing any new evidence not provided to auditors at initial stage of audit to cure any perceived lack of evidence in their initial submissions. Plaintiffs had protected property interest in accurate payments for their services at legally prescribed rate, and plaintiffs sufficiently alleged violation of due process, where relevant Code provisions required that defendants provide plaintiffs with notice of alleged deficiencies and initial conclusions prior to rendering final decision. Moreover, plaintiffs' allegations of procedures used by defendants, including failure to allow plaintiffs to present additional evidence, sufficiently alleged due process violation, where alleged procedures used by defendant lacked basic and fundamental protection against unfair or mistaken findings.