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Sixth Circuit Determines That Medicaid Injunction Dispute Is Moot

Posted in Recent Cases

In an interesting, albeit unusual, decision the Sixth Circuit found that it could not review the propriety of an injunction based on mootness in Appalachian Regional Healthcare, Inc. v. Coventry Health and Life Insurance Company.  The backdrop for the case concerns Kentucky’s transition from fee-for-services for its Medicaid program to managed care (the opinion also offers a nice primer on managed care for those who are interested).  Coventry, a managed care organization, ended up entering into a contract with Appalachian, which was a rural hospital.  As a result of a number of factors, Coventry notified Appalachian that it intended to terminate the agreement.  At that point, Appalachian ran into court and sought injunctive relief to prevent the termination based on the threat and harm to its patient population.  The district court ultimately granted an injunction that kept Appalachian in Coventry’s network until November 1, 2012. 

 Coventry sought to appeal the injunction decision, but the Sixth Circuit determined that because the injunction had expired, the appeal was moot.  Coventry sought to salvage the appeal by claiming that the case involved injuries that are capable of repetition yet evading review, but the Sixth Circuit was not persuaded.  The Court recognized that there was no compulsion between Coventry and Appalachian to enter into any further contract, so the situation was not likely to repeat itself.  

Another interesting aspect of the decision was that it considered Coventry’s appeal based on the district court’s denial of its motion for bond in connection with the injunction.  The district court declined to impose any bond upon its conclusion that Coventry would suffer little, if any, harm if the injunction were entered.  Although the Sixth Circuit found the district court’s characterization inaccurate, it did not find reversible error in denying the bond.  Overall, the Court emphasized that Coventry had not substantiated its bond request with sufficient estimates of the damages it would suffer upon compliance with the preliminary injunction.  As a result, the Court found no abuse of discretion in denying any bond. (This is a good practice pointer for parties who want the enjoining party to post a bond – you must produce evidence substantiating your likely damages).