NEW ORLEANS — Jefferson Parish government and officials have prevailed on appeal against the embattled Jefferson Community Health Care Centers, which sought to enjoin its eviction from parish-owned facilities.
The JCHCC, a federally-funded nonprofit established to provide medical services to an underserved community following Hurricanes Katrina and Rita, had claimed that the parish wanted it evicted solely because it did not allow one of the council members "to unlawfully influence JCHCC’s affairs,” according to court documents.
In its Feb. 24 filing, the 5th Circuit Court of Appeals reversed a finding from the Eastern District of Louisiana that granted a preliminary injunction preventing the parish from evicting JCHCC but allowing the injunction to be terminated by showing that the needs of the medically underserved would be met if JCHCC were evicted.
According to background information in the opinion, the parish decided to allow JCHCC to use parish-owned facilities to restore basic health services in the aftermath of Katrina and Rita. In 2006, the JCHCC and the parish entered into an agreement that allowed it to operate rent-free for 10 years at a facility in Marrero.
The agreement allowed for a five-year renewal at the end of the term "unless any of the parties notify the other parties in writing of its intent not to renew at least 60 days prior to the expiration of the term then in effect."
For its occupancy of the Marrero facility, the JCHCC would provide primary care as well as clinical preventative services throughout the parish.
According to background information in the court opinion, JCHCC and the parish entered into a separate agreement for free occupancy of a facility in River Ridge on a month-by-month basis.
But following federal and state audits between 2009 and 2012, officials “found widespread misconduct in JCHCC’s management, including commingling and misappropriation of funds, improper lending to employees, and overpayments to contractors,” the opinion stated.
The JCHCC’s then-CEO resigned after the audits, and the former chief financial officer pleaded guilty to embezzlement.
The organization nearly lost its federal funding, and the Health Resources and Service Administration of the Department of Health and Human Services imposed a corrective-action plan that would require the JCHCC to seek recoupment of the previously misspent funds, the opinion stated.
Dr. Shondra Williams, who led JCHCC following the audits, sent demand letters to those who wrongfully received funds, including JCHCC's former CEO and its attorney.
"Soon after sending the demand letters, Williams received a fax message from the office of Parish Councilman [Mark] Spears with a proposed resolution to terminate the Marrero CEA [cooperative-endeavor agreement]," the opinion stated. "Williams perceived the message as a threat precipitated by JCHCC’s corrective-action plan."
The opinion also said that Williams had alleged that Spears requested she terminate the JCHCC's CFO who took part in an audit that produced negative findings and appoint an acquaintance of Spears to the governing board.
"On another occasion, Spears suggested that JCHCC should hire an attorney of his recommendation," the opinion stated. "Spears then told Williams that he would be interested in modifying JCHCC’s CEAs to allow continued use of the Marrero facility only if JCHCC satisfied his requests."
It also stated that Williams found out that Spears tried to persuade several JCHCC board members to end her employment as CEO.
Action by the parish council in May 2016 resulted in the termination of the lease agreement for the Marrero and River Ridge facilities.
The council advertised for prospective health-care providers, and the only submission came from Ochsner Health System with JCHCC as subcontractor. The council then twice extended deadlines for proposals. In the meantime, JCHCC filed suit against Jefferson Parish and various officials of its government.
According to the opinion, the district court held a hearing on JCHCC's motion for preliminary injunction and, on July 26, 2016, enjoined the parish from evicting JCHCC from the Marrero and River Ridge facilities, but allowed the parish to “terminate the injunction upon a showing that the medical needs of JCHCC’s Medicaid patients would be met if JCHCC were evicted.”
The three-judge panel that included Judge James Dennis, Chief Judge Carl Stewart and Judge Jerry Smith concluded that the JCHCC did not establish a "substantial likelihood" of success on the merits of "the only claim that is properly before us."