Opinion ID: 561781
Heading Depth: 2
Heading Rank: 1

Heading: The Injunctive Order

Text: 21 We find flaws, substantive and procedural, in the preliminary injunction granted here. The procedural flaw is that the Injunctive Order failed to comply with Fed.R.Civ.P. 52(a), which provides, in pertinent part, that in granting or refusing interlocutory injunctions the court shall ... set forth the findings of fact and conclusions of law which constitute the grounds of its action. A principal purpose of this requirement, of course, is to permit the appellate court to review the decision. Mayo v. Lakeland Highlands Canning Co., 309 U.S. 310, 316, 60 S.Ct. 517, 520, 84 L.Ed. 774 (1940) (It is of the highest importance to a proper review of the action of a court in granting or refusing a preliminary injunction that there should be fair compliance with Rule 52(a) of the Rules of Civil Procedure.). Although we may proceed with our review despite inadequate findings if we  'can discern enough solid facts from the record to enable [us] to render a decision,'  Canadian Transport Co. v. Irving Trust Co., 548 F.2d 53, 55 (2d Cir.1977) (per curiam) (quoting English v. Town of Huntington, 448 F.2d 319, 321 (2d Cir.1971)), we will normally vacate the order if the findings and the record are not sufficient to enable us to be sure of the basis of the decision below, see, e.g., Weitzman v. Stein, 897 F.2d 653, 658 (2d Cir.1990); Badgley v. Santacroce, 815 F.2d 888 (2d Cir.1987) (per curiam); 9 C. Wright & A. Miller, Federal Practice and Procedure p 2577, at 697 (1971). 22 The Injunctive Order in the present case, all of whose pertinent provisions are quoted in Part I above, did not set forth any findings of fact or any substantive conclusions of law. It stated in conclusory terms that the court had subject matter jurisdiction and that Tekkno had demonstrated irreparable harm and either a likelihood of success on the merits or sufficiently serious questions going to the merits to make them a fair ground for litigation. While these statements reflect an understanding of this Circuit's general standard for the granting of a preliminary injunction, see, e.g., Paulsen v. County of Nassau, 925 F.2d 65, 68 (2d Cir.1991); Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir.1979) (per curiam); but see Plaza Health Laboratories, Inc. v. Perales, 878 F.2d 577, 580 (2d Cir.1989) (likelihood of success, rather than lesser standard of fair grounds for litigation, must be met where moving party seeks to stay governmental action taken in the public interest pursuant to a statutory or regulatory scheme); Medical Society of the State of New York v. Toia, 560 F.2d 535, 538 (2d Cir.1977) (same)), they do not provide any basis on which the appellate court may assess whether the district court has properly exercised its discretion. Since there were no findings in the Injunctive Order itself and there was no accompanying explanatory opinion, had we been asked to review the Injunctive Order prior to the court's issuance of its January 7 Opinion, we would have been compelled to vacate the injunction and remand for compliance with Rule 52(a). We would also have vacated any order of contempt entered on the basis of the Injunctive Order because of the impossibility of review of the injunction on which the contempt order was based. 23 When the court issued its January 7 Opinion, however, it set forth at some length its factual and doctrinal bases for the injunction, thus providing this Court with a basis on which to review the Injunctive Order. Thus, we may proceed to review the Injunctive Order without remanding for findings. 24 Our principal substantive difficulty with the Injunctive Order in light of the findings made in the January 7 Opinion is that its assessment of Tekkno's likelihood of succeeding on the merits does not deal with the Eleventh Amendment problem. The Eleventh Amendment provides a state, as well as its agencies and its officials acting in their official capacities, with protection from suits in federal court for damages for past wrongs. See, e.g., Edelman v. Jordan, 415 U.S. 651, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974). In general, federal suits against such defendants for monetary awards out of state funds are barred. Thus, in Edelman v. Jordan, the Court ruled that the district court lacked the power to grant retroactive payments to plaintiffs who claimed to have been deprived of welfare benefits to which they were entitled by statute. It stated that in a Sec. 1983 action ... a federal court's remedial power ... may not include a retroactive award which requires the payment of funds from the state treasury. Id. at 677, 94 S.Ct. at 1362. Accordingly, though the district court was held to have the power to grant prospective relief, including restoration of the plaintiffs to the welfare rolls, it had no power in light of the Eleventh Amendment to award past-due welfare benefits that should have been paid, but [were] not. Id. at 664, 94 S.Ct. at 1356. 25 The Eleventh Amendment principles established in Edelman v. Jordan are equally applicable to claims against the states by Medicaid providers, see, e.g., Florida Department of Health and Rehabilitative Services v. Florida Nursing Home Ass'n, 450 U.S. 147, 101 S.Ct. 1032, 67 L.Ed.2d 132 (1981). Tekkno's attempts to parry the Eleventh Amendment defense on this appeal lack even facial plausibility. For example, it argues that [t]he injury suffered by Tekkno brings this case squarely within the exception for prospective monetary relief, stating that [t]he relief granted by the district court is not compensation for the damage suffered by Tekkno, it merely directs that the illegal deprivation shall not continue to Tekkno's further injury. (Tekkno brief on appeal at 21.) This argument is specious. The Injunctive Order explicitly ordered the State to pay moneys out of its treasury in compensation of the claims submitted by Tekkno prior to the date of this order. Though Tekkno seeks to get around this problem by labeling its claim as one for the return of its property and calling the withheld payments funds seized from Tekkno, in the present circumstances these characterizations are frivolous. 26 In sum, though Tekkno has demanded other, prospective, relief in its complaint, the preliminary injunction grants interim relief that the district court had no jurisdiction to grant in light of the Eleventh Amendment. 27 Finally, we note that the Injunctive Order prohibits the State from withholding payment of Tekkno's claims pending the resolution of this lawsuit. Though that provision could have had some prospective effect if Tekkno had submitted new claims after November 14, it appears to have had no such effect since (a) the record does not indicate that any new claims were submitted, and (b) the record reveals that Tekkno was terminated as a Medicaid provider as of December 1, 1990. To the extent that the injunction was intended to have, or may have had, prospective effect, we note two difficulties with the assessment of Tekkno's likelihood of success on the merits. First, in making its assessment, the district court stated that it was persuaded by Patchogue Nursing Center v. Bowen, 797 F.2d 1137, 1144-45 (2d Cir.1986), cert. denied, 479 U.S. 1030, 107 S.Ct. 873, 93 L.Ed.2d 828 (1987), and Oberlander v. Perales, 740 F.2d 116, 120 (2d Cir.1984), that plaintiffs like Tekkno have a constitutionally protected property interest in reimbursement for Medicaid services already performed. January 7 Opinion at 11. Neither of those cases, however, involved the State's withholding of payments pending investigation. Rather, Oberlander involved changes in Medicaid reimbursement rates, and we ruled that under state law the provider has no property interest in future reimbursements; and Patchogue involved the termination of the providers' participation in the program. See also Kelly Kare, Ltd. v. O'Rourke, 930 F.2d 170, 175 (2d Cir.1991) (Medicaid providers in New York have no property interest in continuous participation in Medicaid programs). Second, neither of these authorities stands for the proposition that, where the State gives notice that it is withholding payment pending an investigation of billings it has reason to suspect, provision of a hearing to be held after that notice would not suffice to satisfy the Due Process Clause. See, e.g., FDIC v. Mallen, 486 U.S. 230, 240-47, 108 S.Ct. 1780, 1787-91, 100 L.Ed.2d 265 (1988); id. at 240, 108 S.Ct. at 1787 (An important government interest, accompanied by a substantial assurance that the deprivation is not baseless or unwarranted, may in limited cases demanding prompt action justify postponing the opportunity to be heard until after the initial deprivation.).