# Hospitality Hse Inc v. Gilbert

> Court of Appeals for the Fifth Circuit · August 28, 2002

URL: https://www.frixlaw.com/law-library/cases/28442

## Case

- **Court:** Court of Appeals for the Fifth Circuit
- **Decided:** August 28, 2002
- **Precedential status:** Published
- **Opinion:** Opinion
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/28442

## How later opinions describe it (automated extraction)

- holding that “[t]he Boren Amendment to the [Medicaid] Act creates a right, enforceable in a private cause of action pursuant to § 1983, to have the State adopt rates that it finds are reasonable and adequate rates to meet the costs of an efficient and economical health care pr…
- holding that the district court was without jurisdiction to enforce a settlement agreement even though the substance of the agreement was read into the record

## Opinion text

REVISED AUGUST 27, 2002

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_____________________

No. 01-50759
_____________________

HOSPITALITY HOUSE, INC; STONEBRIDGE HEALTH CENTER, INC;
REGENCY VILLAGE CARE CENTER, LTD; MEDICAL HOSPITAL OF BUNA,
INC; RIDGECREST RETIREMENT CENTER, LTD; TEXAS ALLIANCE FOR
FAIR NURSING HOME REIMBURSEMENT

Plaintiffs - Appellees

v.

DON A GILBERT, Commissioner of the Texas Health and Human
Services Commission; ERIC M BOST, Commissioner of the Texas
Department of Human Services; DAVID HERNDON, Chairman of the
Board, Texas Department of Human Services; ELIZABETH SEALE,
Member of the Board of the Texas Department of Human
Services; JOHN A CUELLAR, Member of the Board of the Texas
Department of Human Services; TERRY DURKIN WILKINSON, Member
of the Board of the Texas Department of Human Services;
CAROLE WOODARD, Member of the Board of the Texas Department
of Human Services

Defendants - Appellants

_________________________________________________________________

Appeal from the United States District Court
for the Western District of Texas
_________________________________________________________________
July 16, 2002

Before KING, Chief Judge, and GARWOOD and HIGGINBOTHAM, Circuit
Judges.

KING, Chief Judge:

The Defendants-Appellants, officials of the Texas Health and

Human Services Commission and the Texas Department of Human
Services, appeal the district court’s denial of their motion to

dismiss in which they asserted Eleventh Amendment immunity from

the district court’s exercise of jurisdiction over an action

brought by operators of nursing homes in Texas to enforce a

settlement agreement. Because the district court does not have

subject matter jurisdiction over the enforcement action, we do

not reach the issue of Eleventh Amendment immunity. Instead, we

vacate the district court’s order denying the state health

officials’ motion to dismiss and remand this case to the district

court with instructions to dismiss the nursing home operators’

enforcement action against the state health officials for lack of

subject matter jurisdiction.

I. BACKGROUND

The Defendants-Appellants in this case are various officials

of the Texas Health and Human Services Commission and the Texas

Department of Human Services (collectively the “state health

officials”). The Plaintiffs-Appellees are five businesses that

operate nursing homes in Texas and one non-profit corporation

that advocates adequate and fair Medicaid reimbursement rates for

nursing homes in Texas (collectively the “nursing home

operators”). The nursing home operators initiated the instant

case on February 28, 2001, when they filed suit in the district

court to enforce a settlement agreement (the “Agreement”) that

was negotiated pursuant to a prior lawsuit brought by the Texas

Health Care Association (“THCA”) against the state health

2
officials.1 Alleging that the state health officials had failed

to comply with the Agreement, the nursing home operators sought

declaratory and injunctive relief as intended beneficiaries of

the Agreement (or as representatives of intended beneficiaries).

The Agreement arose from a lawsuit filed by the THCA in

November 1996 to compel the state health officials to satisfy

their obligations under the Boren Amendment, 42 U.S.C.

§ 1396a(a)(13)(A) (1994) (repealed 1997).2 The Boren Amendment

required that the medical assistance plans submitted by states

participating in the Medicaid program provide for reimbursement

for “hospital services, nursing facility services, and services

in an intermediate care facility for the mentally retarded” at

rates “reasonable and adequate to meet the costs which must be

incurred by efficiently and economically operated facilities.”

42 U.S.C. § 1396a(a)(13)(A); see also Wilder v. Vir. Hosp. Ass’n,

496 U.S. 498, 524 (1990) (holding that “[t]he Boren Amendment to

the [Medicaid] Act creates a right, enforceable in a private

cause of action pursuant to § 1983, to have the State adopt rates

that it finds are reasonable and adequate rates to meet the costs

of an efficient and economical health care provider”).3 After

1
The Texas Health Care Association is a private non-profit
organization whose members own nursing home facilities in Texas.
2
Congress repealed the Boren Amendment in August 1997.
See Balanced Budget Act of 1997, Pub. L. No. 105-33, § 4711(a),
111 Stat. 251, 507-08 (1997).
3
Congress replaced the Boren Amendment’s “reasonable and
adequate rate” requirement with the requirement that states

3
negotiations, the THCA and the state health officials entered

into the Agreement on January 27, 1997.

Under the Agreement, the state health officials were

obligated, inter alia, (1) to adopt specified reimbursement rates

for 1997, (2) “to evaluate the overall adequacy of

[reimbursement] rates and . . . the methodology [for rate

determination]” with the goal of “achiev[ing] a rate that is

reasonable and adequate to meet the costs that efficiently and

economically operated providers must incur in order to provide

care and services in conformity with applicable State and Federal

laws, regulations and quality and safety standards,” (3) to

negotiate in good faith with the nursing home operators in an

attempt to reach agreements on various issues related to Medicaid

reimbursement rates, and (4) to submit recommended changes in the

reimbursement procedure to the state legislature. In exchange,

the THCA agreed “not to bring a Boren Amendment challenge to the

1997 rates adopted pursuant to this agreement,” with the caveat

that “[t]his covenant not to sue shall not preclude THCA from

bringing any subsequent action to enforce the terms and covenants

of this agreement.” The Agreement further provided that the

parties would move for dismissal of the case without prejudice

participating in the Medicaid Program “provide . . . for a public
process for determination of rates of payment . . . for hospital
services, nursing facility services, and services of intermediate
care facilities for the mentally retarded.” Balanced Budget Act
of 1997, Pub. L. No. 105-33, § 4711(a), 111 Stat. 251, 507 (1997)
(codified at 42 U.S.C. § 1396a(a)(13)(A) (Supp. III 1997)).

4
“within three working days” after the Board of the Texas

Department of Human Services adopted the 1997 rates specified in

the Agreement.

Pursuant to the Agreement, the THCA and the state health

officials filed an agreed motion to dismiss the case without

prejudice on January 30, 1997. In this motion, the parties

incorporated by reference the Agreement, which was attached as an

exhibit. The district court granted the motion to dismiss,

entering the following order:

Before the Court is the parties’ Agreed Motion to
Dismiss. Following consideration, the Court finds the
Motion should be granted.
IT IS THEREFORE ORDERED that Civil Action No. A-96-
CA-744-SS be and said action is hereby DISMISSED WITHOUT
PREJUDICE.

Approximately four years after the district court dismissed

the THCA’s case against the state health officials, the nursing

home operators filed the instant suit to enforce the Agreement in

the same district court. The state health officials filed a

motion to dismiss on the ground that they were entitled to

Eleventh Amendment immunity. On July 13, 2001, the district

court denied the state health officials’ motion to dismiss,

concluding that the court had “jurisdiction to construe and

declare the terms of the settlement agreement . . . that was

incorporated into its [dismissal] order” and that the state

health officials were not entitled to Eleventh Amendment

5
immunity.4 In this interlocutory appeal of the denial of their

motion to dismiss, the state health officials contend that the

district court not only erred in rejecting their assertion of

Eleventh Amendment immunity from the exercise of that court’s

jurisdiction, but also erred in making the preliminary

determination that the district court had subject matter

jurisdiction (in the form of ancillary jurisdiction) to enforce

the Agreement.

II. APPELLATE JURISDICTION AND STANDARD OF REVIEW

This court has jurisdiction to address on interlocutory

appeal both the state health officials’ claim that they are

entitled to Eleventh Amendment immunity and their claim that the

district court lacks subject matter jurisdiction over the nursing

home operators’ enforcement action. Under the collateral order

doctrine, appellate courts have jurisdiction to review on

interlocutory appeal a district court’s denial of a motion to

dismiss based on a state’s assertion of Eleventh Amendment

immunity. Reickenbacker v. Foster, 274 F.3d 974, 976 (5th Cir.

2001). We review such denials de novo. Id. Further, where, as

4
The state health officials argued that the Eleventh
Amendment barred the district court from exercising jurisdiction
over the nursing home operators’ suit because the repeal of the
Boren Amendment meant that enforcement of the Agreement would no
longer remedy violations of federal law. In rejecting this
assertion of Eleventh Amendment immunity, the district court
reasoned that “the subject matter of the settlement agreement,
i.e., Medicaid reimbursement rates, is merely coincidental to the
fact that plaintiffs are seeking to enforce a prior settlement
agreement between parties before this Court.”

6
in the instant case, we have interlocutory appellate jurisdiction

to review a district court’s denial of Eleventh Amendment

immunity, we may first determine whether there is federal subject

matter jurisdiction over the underlying case. See Timpanogos

Tribe v. Conway, 286 F.3d 1195, 1201 (10th Cir. 2002) (“[B]ecause

we have appellate jurisdiction over the interlocutory appeal of

defendants’ assertion of Eleventh Amendment immunity, we also

have appellate jurisdiction to determine whether the district

court had subject matter jurisdiction over the Tribe’s underlying

claim against defendants in the first instance.”); cf. Texas v.

Real Parties in Interest, 259 F.3d 387, 391 (5th Cir. 2001)

(noting that “[w]ith appellate jurisdiction [over the state’s

interlocutory appeal of the denial of Eleventh Amendment

immunity] established,” it was proper “to address the primary

jurisdictional inquiry in this appeal: whether the district court

erred by exercising removal jurisdiction over this state court

action under the All Writs Act”).5

The nursing home operators contend that this court should

decline to address the state health officials’ claim that the

district court is without subject matter jurisdiction because the

officials failed to raise this issue in the district court.

Initially, we note that “parties cannot waive a want of subject

5
Generally, appellate courts do not have jurisdiction to
review on interlocutory appeal a district court’s denial of a
motion to dismiss based on lack of subject matter jurisdiction.
See Catlin v. United States, 324 U.S. 229, 236 (1945).

7
matter jurisdiction.” Ziegler v. Champion Mortgage Co., 913 F.2d

228, 229 (5th Cir. 1990). Furthermore, as the Supreme Court has

stated: “On every writ of error or appeal, the first and

fundamental question is that of jurisdiction, first, of this

court, and then of the court from which the record comes. This

question the court is bound to ask and answer for itself, even

when not otherwise suggested.” Steel Co. v. Citizens for a

Better Env’t, 523 U.S. 83, 94 (1998) (internal quotations and

citation omitted); see also Ruhrgas AG v. Marathon Oil Co., 526

U.S. 574, 583 (1999) (“[S]ubject-matter delineations must be

policed by the courts on their own initiative even at the highest

level.”). Accordingly, it is appropriate for this court to

determine whether there is federal jurisdiction over the nursing

home operators’ enforcement action before considering whether the

Eleventh Amendment bars the exercise of federal jurisdiction.

III. SUBJECT MATTER JURISDICTION: A DISTRICT COURT’S ANCILLARY JURISDICTION
TO ENFORCE A SETTLEMENT AGREEMENT

In Kokkonen v. Guardian Life Insurance Co., 511 U.S. 375

(1994), the Supreme Court explained that “[e]nforcement of [a]

settlement agreement . . . is more than just a continuation or

renewal of the dismissed suit, and hence requires its own basis

for jurisdiction.” Id. at 378. The Court held that a court’s

“ancillary jurisdiction” “to manage its proceedings, vindicate

its authority, and effectuate its decrees” provides such an

independent jurisdictional basis to enforce a settlement

agreement only if “the parties’ obligation to comply with the

8
terms of the settlement agreement ha[s] been made part of the

order of dismissal.” Id. at 380-81. The Court specified two

ways in which a court may make a settlement agreement part of its

dismissal order: “either by separate provision (such as a

provision ‘retaining jurisdiction’ over the settlement agreement)

or by incorporating the terms of the settlement agreement in the

order.” Id.6

In the instant case, there is no question that the district

court did not make the Agreement part of its dismissal order by

including a separate provision retaining jurisdiction to enforce

the Agreement. Rather, the district court concluded that it had

ancillary jurisdiction because it incorporated the Agreement’s

terms into its dismissal order. Specifically, the district court

stated:

On January 27, 1997, the parties signed a settlement
agreement and submitted it as an attachment to an agreed
motion to dismiss. On January 31, 1997, this Court
granted the agreed motion to dismiss, and incorporated
the settlement agreement into its Order by attaching it
as an exhibit as requested by the parties.

6
The Kokkonen Court made clear that a district court may
have ancillary jurisdiction to enforce a settlement agreement
even where, as in the instant case, the previous dismissal was
not effected by court order, but rather by the filing of “a
stipulation of dismissal signed by all parties” pursuant to
Federal Rule of Civil Procedure 41(a)(1)(ii). FED. R. CIV. P.
41(a)(1)(ii). The Court noted that even though Rule 41(a)(1)(ii)
“does not by its terms empower a district court to attach
conditions to the parties’ stipulation of dismissal,” the
district court has the authority to make a settlement agreement
part of its dismissal order “if the parties agree.” 511 U.S. at
381-82.

9
It is not entirely clear whether the district court meant that

the Agreement had been attached to the dismissal order or to the

motion to dismiss.7 In any event, the parties agree that the

Agreement was not attached to the district court’s dismissal

order.8 Moreover, even assuming that the Agreement were attached

to the order, this fact alone would not be sufficient to

incorporate the Agreement into the order under Kokkonen. At

most, physical attachment of a settlement agreement to a

dismissal order evinces the district judge’s “awareness and

approval of the terms of the settlement agreement,” which “do not

suffice to make them part of his order.” Kokkonen, 511 U.S. at

381.9

7
Notably, while the parties did state in their agreed
motion to dismiss that the Agreement “is attached hereto as
Exhibit 1 and incorporated herein as if fully set forth,” neither
in the motion to dismiss nor in the Agreement did the parties
request that the Agreement be attached to the district court’s
dismissal order “as an exhibit.” Thus, the district court’s
statement that the Agreement had been attached “as an exhibit”
may indicate that the district court was referring to the fact
that the Agreement was attached to the agreed motion to dismiss.
8
Although the nursing home operators argue in their brief
that their agreed motion to dismiss (with the Agreement attached
thereto as an exhibit) was attached to the dismissal order, their
counsel clarified at oral argument that the Agreement was
attached only to the agreed motion to dismiss, not to the
dismissal order.
9
In a pre-Kokkonen decision, this court held that “once a
court dismisses an action with prejudice because of a settlement
agreement, and the agreement is neither approved of nor
incorporated by the court in its decree or order and the court
does not indicate any intention to retain jurisdiction, an action
to enforce the settlement agreement requires federal jurisdiction
independent of the action that was settled.” Langley v. Jackson
State Univ., 14 F.3d 1070, 1074 (5th Cir. 1994) (emphasis added).

10
The Kokkonen Court’s determination that a district court has

ancillary jurisdiction to enforce a settlement agreement only if

the court makes the agreement part of its dismissal order is

based on the principle that “[f]ederal courts are courts of

limited jurisdiction.” Id. at 377. The Court pointed out that

“[n]o federal statute” gives federal courts jurisdiction to hear

a claim for breach of an agreement merely by virtue of the fact

that “part of the consideration for [the agreement] was dismissal

of an earlier federal suit.” Id. at 381. However, the Court

reasoned, where a district court makes the agreement part of its

dismissal order, “a breach of the agreement would be a violation

of the order,” and, thus, enforcement of the agreement would

amount to enforcement of the order, an action that the court may

take pursuant to its ancillary jurisdiction “to manage its

proceedings, vindicate its authority, and effectuate its

decrees.” Id. at 380-81. Correspondingly, the Court explained

that where the district court does not make a settlement

agreement part of its dismissal order, “jurisdiction over [the

agreement] is in no way essential to the conduct of federal-court

business,” and, thus, absent some independent basis for federal

jurisdiction, “enforcement of the settlement agreement is for

state courts.” Id. at 381-82. Accordingly, Kokkonen makes clear

We take this opportunity to clarify that, to the extent that
Langley is inconsistent with Kokkonen’s explicit statement that a
district court’s “mere awareness and approval” of a settlement
agreement is insufficient to provide a basis for ancillary
jurisdiction, Langley is necessarily overruled by Kokkonen.

11
that in the context of ancillary jurisdiction to enforce

settlement agreements, the principle that federal courts are

courts of limited jurisdiction requires distinguishing a district

court’s intention to make the terms of a settlement agreement

part of its dismissal order from the court’s mere recognition or

approval of the settlement agreement. See id. at 381. We thus

conclude that to make a settlement agreement part of a dismissal

order by incorporation, Kokkonen requires a district court to

clearly indicate its intention within the dismissal order itself

by expressly incorporating the agreement’s terms.

Admittedly, the Kokkonen Court did not explicitly hold that

a district court’s order of dismissal must contain an express

statement incorporating a settlement agreement in order to vest

the court with ancillary jurisdiction to enforce the agreement.

However, the Court did suggest such a requirement by noting that

the dismissal order at issue in that case not only “did not

reserve jurisdiction in the District Court to enforce the

settlement agreement[, but also] did not so much as refer to the

settlement agreement.” 511 U.S. at 377. Furthermore, a number

of our sister circuits have similarly interpreted Kokkonen to

require that a dismissal order expressly indicate the district

court’s intention to make the terms of a settlement agreement

part of its dismissal order.

For example, in Miener v. Missouri Department of Mental

Health, 62 F.3d 1126 (8th Cir. 1995), the Eighth Circuit noted

12
that “although Kokkonen does not state how a district court may

incorporate a settlement agreement in a dismissal order, the case

does suggest the agreement must be ‘embod[ied]’ in the dismissal

order.” Id. at 1128 (quoting Kokkonen, 511 U.S. at 381)

(alteration in original). The Miener court thus concluded that a

“mere reference” in the dismissal order at issue “to the fact of

settlement does not incorporate the settlement agreement in the

dismissal order.” Id. (citing Hagestad v. Tragesser, 49 F.3d

1430, 1433 (9th Cir. 1995)). Similarly, in In re Phar-Mor, Inc.

Securities Litigation, 172 F.3d 270 (3d Cir. 1999), the Third

Circuit held that the district court’s inclusion of the phrase

“pursuant to the terms of the Settlement” in its dismissal order

did not make the settlement agreement part of the order as

contemplated by the Court in Kokkonen. Id. at 274-75. Rejecting

the argument that this phrase was ambiguous and that the court of

appeals should thus defer to the district court’s determination

that the agreement was incorporated into the order, the Third

Circuit reasoned that “under Kokkonen, unexpressed intent is

insufficient to confer subject matter jurisdiction.” Id. at 275.

Likewise, in Smyth v. Rivero, 282 F.3d 268 (4th Cir. 2002),

the Fourth Circuit held that under Kokkonen, “[t]he obligation to

comply with a settlement’s terms must be expressly made part of a

court’s order for jurisdiction to enforce the settlement after

dismissal of the action to exist.” Id. at 283 (citing Kokkonen,

511 U.S. at 381). The Smyth court thus found that the dismissal

13
order at issue did not provide the district court with ancillary

jurisdiction to enforce the settlement agreement because “the

court’s findings [in its dismissal order] are most properly read

as noting and reciting the agreement . . . as a component of its

analysis of the mootness of the case.” Id. at 284. According to

the Smyth court, “[n]othing in th[e dismissal] order suggests

that the terms of the parties’ agreement are ‘incorporated’ into

the order by a clear indication that they must be complied with

pursuant to the order itself, as opposed to the principles of

contractual obligation.” Id. Thus, the courts of appeals in

Miener, In re Phar-Mor, and Smyth all concluded that under

Kokkonen, a dismissal order’s mere reference to a settlement

agreement is not sufficient to vest a district court with

ancillary jurisdiction to enforce that agreement.

In the instant case, the district court’s dismissal order

does not even contain a reference to the Agreement. The district

court’s dismissal order, in its entirety, states only the

following:

Before the Court is the parties’ Agreed Motion to
Dismiss. Following consideration, the Court finds the
Motion should be granted.
IT IS THEREFORE ORDERED that Civil Action No. A-96-
CA-744-SS be and said action is hereby DISMISSED WITHOUT
PREJUDICE.

The nursing home operators contend that the dismissal order’s

reference to the agreed motion to dismiss achieves incorporation

of the Agreement under Kokkonen, reasoning that the dismissal

order refers to the agreed motion to dismiss, which, in turn,

14
expressly incorporates the Agreement.10 Accordingly, the nursing

home operators contend, the district court in effect expressly

incorporated the Agreement into the dismissal order by

referencing a document (the parties’ agreed motion to dismiss)

that expressly incorporated the Agreement.

In light of Kokkonen and its progeny, we conclude that a

district court’s reference in its dismissal order to an agreed

motion to dismiss does not indicate an intention to make a

settlement agreement attached to that motion to dismiss part of

the order. That the parties’ motion to dismiss expressly

incorporated the Agreement does not affect this conclusion.

Kokkonnen requires that the dismissal order contain a provision

incorporating the Agreement. While the Kokkonen Court did

consider the content of the parties’ stipulation of dismissal as

well as the dismissal order, unlike the instant case, the parties

in Kokkonen drafted the stipulation and order as one document and

submitted it to the court for its signature. See 511 U.S. at

376-77. Where, as here, the district court drafts and signs its

own dismissal order granting an agreed motion to dismiss (rather

than signing a “stipulation and order of dismissal” submitted by

the parties), Kokkonen requires a provision within that order

10
See supra, note 7.

15
expressly incorporating the agreement’s terms as the order’s

terms.11

Further, even assuming a district court could effect

incorporation of a settlement agreement by incorporating a motion

to dismiss that in turn incorporates the agreement, that is not

what the district court did in this case. Rather, the district

court stated only that “[b]efore the Court is the parties’ Agreed

Motion to Dismiss.” This statement merely recognizes that the

dismissal is based on the motion and, at most, recognizes the

fact of the Agreement attached thereto —— not any intention on

the part of the district court to incorporate the Agreement into

11
For the same reason, the nursing home operators’
incorporation argument based on a provision contained in the
Agreement —— specifically, that the “THCA is not preclude[d]
. . . from bringing any subsequent action to enforce the terms
and covenants of this agreement” —— is unpersuasive.
The THCA and a similar organization, as amici for the
nursing home operators, likewise make an argument based on the
possibility of future litigation relating to the dismissed suit.
In particular, the amici contend that the district court’s
dismissal of the case without prejudice indicates its intent to
retain jurisdiction to enforce the Agreement. The amici reason
that, unlike a dismissal with prejudice, “[a] dismissal without
prejudice allows parties to bring subsequent actions concerning
the case.” They further maintain that the district court’s
dismissal without prejudice distinguishes the instant case from
Kokkonen, which involved a dismissal with prejudice. That
distinction has no relevance, however. Even where a dismissal
was without prejudice, a district court still must have an
independent basis of jurisdiction to hear any future actions
relating to the dismissed case. Furthermore, we note that the
fact that the dismissal at issue in Kokkonen was with prejudice
was irrelevant to the Court’s determination that the district
court was without jurisdiction to enforce the settlement
agreement. Indeed, the Court proceeded on the assumption that
the district court would have had jurisdiction to enforce the
settlement agreement if that court had made the agreement part of
its order.

16
its order or to retain jurisdiction to enforce the Agreement.

Under Kokkonen, such a statement is insufficient to make

enforcement of the Agreement equivalent to enforcement of the

district court’s order, and thus cannot confer ancillary

jurisdiction. See 511 U.S. at 381 (“The judge’s mere awareness

and approval of the terms of the settlement agreement do not

suffice to make them part of his order.”); cf. id. at 376

(holding that the district court was without jurisdiction to

enforce a settlement agreement even though the substance of the

agreement was read into the record).

Thus, the district court does not have subject matter

jurisdiction to enforce the Agreement based on that court’s order

dismissing the prior suit that gave rise to the Agreement. Given

that the nursing home operators have not asserted another

independent basis of federal jurisdiction, any action to enforce

the Agreement is “for state courts.” Kokkonen, 511 U.S. at

382.12

12
In their complaint initiating the instant case, in
addition to seeking enforcement of the Agreement, the nursing
home operators invoked 42 U.S.C. § 1983, asserting that the state
health officials violated the nursing home operators’
“constitutional and statutory rights . . . by reason of [the
state health officials’] arbitrary and capricious failure to
comply with the terms of the [Agreement].” However, in response
to the state health officials’ motion to dismiss the § 1983 claim
on the ground that the nursing home operators had failed to
allege the violation of a federal right, the nursing home
operators insisted that “this is not a lawsuit wherein any of the
plaintiffs are asserting violations of federal ‘rights’ with
regard to the administration of the State’s Medicaid program.”
Rather, the nursing home operators maintained, “[t]his is,
primarily, a contract case.” They reasserted this

17
IV. CONCLUSION

For the foregoing reasons, we VACATE the district court’s

order denying the state health officials’ motion to dismiss and

REMAND this case to the district court with instructions to

dismiss the nursing home operators’ enforcement action against

the state health officials for lack of subject matter

jurisdiction. Costs shall be borne by the Plaintiffs-Appellees.

characterization of their suit during oral argument before the
district court on the state health officials’ motion to dismiss,
stating that “this is not a [§] 1983 case.” Accordingly, in its
order denying the state health officials’ motion to dismiss, the
district court found that “the issue [in the case] is simply
holding the defendants to the settlement agreement that resulted
from the 1996 litigation.” Thus, by their clear representations
to the district court that they were not alleging any violations
of federal rights, the nursing home operators abandoned any
§ 1983 claim that they may have attempted to assert in their
initial complaint.

18

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/28442. Public record. Not legal advice.