UNITED STATES DISTRICT COURT

FoR THE DISTRICT oF CoLUMBIA F I L E D
D.C. HEALTHCARE sYsTEMS, INC., er al., ) SEP _7 2017
) Clerk. U.S. Dlstr|ct & Bankruptcy
Plaintiffs’ ) Courts for the D|str|ct of Columbla
)
v. ) Civil Case No. 16-1644 (RJL)
)
DISTRICT oF COLUMBIA, er al., )
)
Defendants. )
1~¢..,
MEMoRANDUM oPINIoN

 

(September L, 2017) [Dkts. ##53, 54, 55, 56, 57]

F or over a decade, D.C. Chartered Health Plan, Inc. (“Chartered”), contracted With
the District of Columbia to provide healthcare services to low-income residents of the
District. Then, in 2012, the District became concerned about the financial health of
Chartered and obtained a court order from the Superior Court of the District of Columbia
placing the company into rehabilitation During the rehabilitation proceedings that
followed, the Superior Court entered orders approving an asset purchase agreement and
reorganization plan for Chartered, and approving a settlement agreement between
Chartered and the District of Columbia resolving claims that the District underpaid
Chartered for certain services. Now, D.C. Healthcare Systems, Inc. (“DCHSI”), the sole
shareholder in Chartered and an active participant in the Superior Court proceedings, brings
this suit to recover compensatory and punitive damages resulting from the reorganization

of Chartered and the settlement of its claims against the District. Before the Court are five

motions to dismiss. Upon consideration of the pleadings, relevant laW, and the entire

record herein, the Court concludes that it is barred from reviewing the claims asserted by
DCHSI. See generally Rooker v. Fl`a'ell`l‘y Trusl Co., 263 U.S. 413 (1923); D.C. Court of
Appeals v. Feldmcm, 460 U.S. 462 (1983). Accordingly, the Court will GRANT the
motions and DISMISS this action for lack of subject-matter jurisdiction.

BACKGROUND1

The District of Columbia provides healthcare coverage for low-income adults,
uninsured children, and disabled residents through privately-owned managed care
organizations (“MCOS”) operating under government contracts. Am. Compl. il l [Dkt.
#41]. Chartered, a District of Columbia corporation, is one such MCO. From 1987 to
2013, Chartered contracted with the D.C. Department of Health Care Finance (“DHCF”)
to provide services to approximately l l(),OOO District residents enrolled in Medicaid or the
D.C. Healthcare Alliance Program, a locally-funded program covering certain individuals
who are not eligible for Medicaid. Am. Compl. W 13, 32-33. Pursuant to this
arrangement, DHCF set the reimbursement rates at which it would pay Chartered. These
rates, known as “capitation rates,” are per-member per-month rates which, by law, must be
set at “actuarially sound” levels designed to cover the cost of contracted services and permit
the MCO to generate a protit. Am. Compl. M 2, 29135.

ln 201(), Congress enacted the Patient Protection and Affordable Care Act, Pub.
Law No. lll-l48, 124 Stat. 119. Among other things, the Act changed the federal

eligibility standards for Medicaid in a manner that enticed the District to transfer

 

l At the motion to dismiss stage, the Court must accept as true all of the allegations contained in the
complaint. See Ashcl”ofl v. Iqbal, 556 U.S. 662, 678 (2009).

2

approximately 23,()0() residents from the locally-funded Alliance program to the federally-
subsidized Medicaid program. Am. Compl. 1 36. This transfer caused Chartered’s costs
to skyrocket because individuals enrolled in Medicaid are entitled to certain prescription
drug and other benefits that were not covered by the Alliance program. Am. Compl. M 36,
42. On more than one occasion, Chartered notified DHCF and the District’s actuary,
Mercer Government Human Services Consulting (“l\/lercer”),2 that the transfer would havc
a severe adverse financial impact on Chartered if the capitation rates were not adjusted to
accommodate the company’s increased costs. Am. Compl. W 37-4(). These pleas,
apparently, fell on deaf ears. DHCF did not raise the rates, and, by February 2011,
Chartered was “experiencing heavy losses.” Am. Compl. il 38. Although Chartered
continued to seek a rate increase from DHCF, none was granted, and “Chartered’s financial
condition predictably and precipitously deteriorated.” Am. Compl. 1[ 44.

In April 2012, then-Commissioner of the D.C. Department of Insurance, Securities
and Banking (“DISB”), William White, wrote to Chartered’s president to inform him that
Chartered’s financial statement for the previous year had shown a level of “risk-based
capital” that was “significantly below” the threshold required by D.C. law. Am. Compl.
il47. Shortly thereafter, Commissioner White retained consultant Daniel Watkins to
conduct a financial review of Chartered. Am. Compl. Wl 15, 5(), 55. In October 2012,
White and Watkins began working with Wayne Turnage, Director of DHCF, to obtain

consent from Chartered’s board of directors to place Chartered into rehabilitation Am.

 

2 l\/lercer Government Human Services Consulting is the trade name for Mercer LLC, a Delaware
limited liability company. Am. Compl. 11 18.

Compl. W l6, 62. As part of that negotiation process, Watkins represented to Jeffrey
Thompson, DCHSI’s owner, that if Watkins were appointed rehabilitator, he would consult
with DCHSI in the reorganization of Chartered, cause Chartered to bid on new Medicaid
and Alliance contracts, refrain from suing DCHSI and Thompson, and seek approval of the
extension of Chartered’s Medicaid contract. Am. Compl. W 62-63. Following these
representations, Thompson gave his consent to rehabilitation Am. Compl. jljl 64-65.

On October l9, 2012, Commissioner White filed an emergency consent petition in
the Superior Court of the District of Columbia, seeking to place Chartered into
rehabilitation pursuant to D.C. Code §§ 3l-l303, 31-1310, 3l-l3l l, 3 l-l312, and 31-342().
A Superior Court judge issued an Emergency Consent Order of Rehabilitation later that
same day. See Defs.’ Mot. Dismiss First Am. Compl. (“Defs.’ Mot.”) [Dkt. #54], Ex. F
(“Rehabilitation Order”) [Dkt. #54-8]. The Rehabilitation Order appointed Commissioner
White as Rehabilitator, authorized White to appoint deputies, and vested him “with all
appropriate and necessary powers” under D.C. law, including “[a]ll powers of the directors,
officers and managers of Chartered,” “[a]uthority to take possession and control of
Chartered’s assets and administer them under the general supervision of the Court,” and
“[a]uthority to take such action as deemed necessary or appropriate to reform and revitalize
Chartered.” Rehabilitation Order 1~2. The Order directed the Rehabilitator to “seek Court
approval of any compromise or settlement of Chartered’s claim . . . regarding capitation
rates” and to “submit a plan of rehabilitation of Chartered for Court approval, if one is
feasible.” Rehabilitation Order 2-3. The Order also specified that the Superior Court

retained jurisdiction during Chartered’s rehabilitation Rehabilitation Order 3.

4

Following entry of the Rehabilitation Order, Commissioner White appointed
Watkins as Special Deputy to the Rehabilitator (“SDR”). On February 22, 2013, SDR
Watkins submitted f`or Superior Court approval a proposed rehabilitation plan and a
proposed asset purchase agreement between Chartered and another D.C.-based MCO,
AmeriHealth Caritas District of Columbia, Inc.3 Defs.’ Mot., Ex. H (SDR’s Second Status
R. and Pet.) [Dkt. #54-10]. DCHSI appeared as a “party in interest” to opposc thc plan and
agreement. Defs.’ l\/lot., Ex. I (DCHSI’s Mot. Opp’n) [Dkt. #54-11]; Am. Compl. jj 82.
DCHSI argued that the plan and agreement would cause it to “suffer irreparable harm
because the proposed transaction effectively liquidates Chartered, which is DCHSI’s sole
source of revenue.” Defs.’ Mot., Ex. H, at l. Nevertheless, on March l, 2013, following
a hearing, Superior Court Judge Melvin R. Wright issued an Order Approving the Asset
Purchase Agreement, Plan of Reorganization and Related Matters. Defs.’ Mot., Ex. K
(“Reorganization Order”) [Dkt. #54-13]. The court found that “the Agreement and Plan of
Reorganization are necessary and appropriate and fair and equitable to all parties
concerned.” Reorganization Order 2. lt rejected due process and statutory authority
objections raised by DCHSI, stating that the Rehabilitation Order “gave the rehabilitator
the right, based upon the statute, to marshal the assets and to seek rehabilitation.” Defs.’

Mot., Ex. J (Tr. oer’g before J. Wright (Mar. 1,2()13), at 35:24~36:06) [Dkt. #54-12]. In

 

3 AmeriHealth Caritas District of Columbia, Inc., is a wholly-owned subsidiary of AmeriHealth
Caritas Health Plan, a Pennsylvania partnership. Am. Compl. 111 19-20. Plaintiff refers to these entities
collectively as “AmeriHealth,” and the Court will adopt that convention here. A separate entity, known as
AmeriHealth Caritas Health Partnership or AmeriHealth Caritas Partnership, was voluntarily dismissed in
December ZOl 6. See Mem. Op. & Order [Dkt. #68].

5

addition, Judge Wright informed DCHSI that it “certainly ha[s] the right to note an appeal
now . . . because this would be a final order.” Ia’. at 36:20-22.

Five days after the Superior Court entered the Reorganization Order, DCHSI filed
a motion for reconsideration or stay pending appeal. Defs.’ Mot., Ex. L (Party-in-Interest
DCHSI Mot. Stay Pending Appeal & Injunctive Relief) [Dkt. #54-14]. The company
argued, among other things, that it was likely to succeed on the merits of its appeal because
the Rehabilitator had “exceeded the limits of his authority” by “effect[ing] a
‘transformation’ of Chartered” outside the scope envisioned by the D.C. Code and the
Rehabilitation Order. Id. at 23. The Superior Court denied the motion lt concluded that
DCHSI was unlikely to succeed on the merits because the Rehabilitator had complied with
the requirements of the D.C. Code and the Rehabilitation Order. See Defs.’ Mot., Ex. O
(Order), at 2-4 [Dkt. #54-17]. The court also found that DCHSI had not shown irreparable
harm stemming from the Reorganization Order because “Chartered was set to lose its
[existing] Medicaid contract” and “was unqualified to receive a new contract under the
term[s] of the Medicaid RFP issued in late 2012.” Ia’. at 4.

Meanwhile, the District and Chartered entered into a settlement agreement in which
the District agreed to pay Chartered $48 million to settle $62.5 million in claims brought
by the Rehabilitator on behalf of Chartered for the payment of unsound capitation rates.
Am. Compl. W 86~87, 9l. As required by the Rehabilitation Order, the Rehabilitator
sought Superior Court approval of the proposed settlement. The Rehabilitator and SDR
described the proposed settlement as the product of arms-length negotiations by

experienced counsel, arguing that the settlement would benefit Chartered by resulting in

6

payment to the company without further litigation or uncertainty. Defs.’ Mot., Ex. Q
(Rehabilitators’ Mem. P. & A. Supp. Mot. for Order Approving Settlement Agreement)
[Dkt. #54-19]. DCHSI opposed the settlement on the ground that it was “unreasonable and
contrary to Chartered’s best interests” because it undervalued Chartered’s claims and
because litigation ofthose claims was likely to be successful. Defs.’ Mot., Ex. B (DCHSI’s
Mem. Opp’n to Mot. Approve Settlement Agreement), at 2, 15 [Dkt. #54-4]; see also Defs.’
Mot., Ex. T (Suppl. to DCHSI’s Mem. Opp’n to Mot. Approve Settlement Agreement)
[Dkt. #54-22].

On August 21, 2013, Judge Wright held a hearing on the proposed settlement
agreement. In regard to DCHSI’s objections, Judge Wright stated:

The objections by [DCHSI] who is not a party ha[ve] been considered by the

court and the court will rule that they are not a party to this case and really

didn’t have the right to be permitted to do what they have done. The court

has permitted them to do that. Because had they filed a motion to intervene,

the court probably would have grant[ed] it, but it did serve a purpose to have

the court examine the record. 1 just do not agree with [DCHSI’s] calculations
[regarding the value of Chartered’s claims].

Defs.’ Mot., Ex. U (Tr. oer’g before J. Wright (Aug. 21, 2013), at 10:20-11:3) [Dkt. #54-
23]. Judge Wright went on to acknowledge that DCHSI had a right to appeal, but stated
that any appeal “may be moot” because “had you been a party, 1 would have overruled
your objection anyway. . . . I’ve considered all the things that you would have raised had
you been granted standing.” Ia'. at 21:9-17; see also ia’. at 22:518 (“[H]ad standing been

granted, the court would have approved the settlement anyway over your objection.”).4

 

4 l\/lultiple parties filed transcripts of this hearing. lnterestingly, DCHSI filed a truncated version
omitting the clarifications “for the appellate record.” Tr. oer’g before J. Wright (Aug. 21, 2013), at 15:16;
cf. Pl.’s Consolidated Opp’n Defs.’ Mots. Dismiss [Dl<t. #59], Ex. l (omitting pages 13-28) [Dkt. #59-1].

7

The next day, Judge Wright issued an Order Approving Settlement Between Chartered and
the District of Columbia. Defs.’ Mot., Ex. V (“Settlement Order”) [Dkt. #54-24]. The
Settlement Order “resolve[d] all of Chartered’s claims” stemming from the allegedly '
unsound capitation rates “and all potential related claims.” Settlement Order 1.

DCHSl appealed from the Reorganization Order and the Settlement Order. The
company argued that the Reorganization Order was invalid because the Rehabilitator had
exceeded the limits of his statutory authority and denied due process to DCHSI. Defs.’
Mot., Ex. W (DCHSl’s Appellant’s Op’g Br.) [Dkt. #54-25]. ln regard to the Settlement
Order, it argued that the settlement was “manifestly unfair.” Def. Mercer LLC’s Mot. to
Dismiss the First Am. Compl. (“Mercer Mot.”) [Dkt. #57], Ex. 15 (Br. of Appellant
DCHSI), at 29 [Dkt. #57-16]. DCHSI also argued that it had “standing” because it had
been “treated as a party” throughout the rehabilitation proceeding Ia’. at 28~29. The D.C.
Court of Appeals set oral argument for October 15, 2014. Eight days before that argument,
however, DCHSl voluntarily dismissed its appeal. See Mercer l\/lot., Ex. 16 (Stipulation
of Voluntary Dismissal of Appeal) [Dkt. #57-17]. n

DCHSI filed this action in August 2016. The amended complaint, filed in
December, contains eleven counts. lt names as defendants the District of Columbia,
AmeriHealth, Mercer, former DlSB Commissioner William White, current DlSB
Commissioner Stephen Taylor, SDR Daniel Watkins, and DHCF Director Wayne Turnage.
lt also names Chartered as a nominal defendant. The nub of the amended complaint is the
accusation that “senior District officials engaged in a scheme to take Chartered from

DCHSl so they could then take Chartered’s assets from Chartered.” Am. Compl. 11 8
8

(emphasis omitted). Counts one through six cast this “scheme” as violating DCHSl’s
constitutional and statutory rights. Specifically, these counts contain 42 U.S.C. § 1983
claims alleging that the District, in combination with various of the other defendants, took
Chartered and its assets without just compensation or due process, and violated “federal
Medicaid law” to the detriment of DCHSl. Am. Compl. jljl l 12-5(). The remaining counts
attack the “scheme” under common law theories. Counts seven and eight allege that the
District breached express and implied contracts by paying Chartered actuarially unsound
rates and instructing Mercer to set and certify those rates. Am. Compl. W 151-65. Counts
nine and ten allege that several of the defendants used fraudulent means to induce DCHSl’s
consent to the Rehabilitation Order. Am. Compl. W 166-85. And count eleven alleges
that the District officials who serve or have served as Rehabilitators_i.e., former
Commissioner William White, current Commissioner Stephen Taylor, and SDR Daniel
Watkins»-breached fiduciary duties to Chartered and DCHSl. Am. Compl. 111 186-92.
DCHSl seeks compensatory damages in excess of $90 million, punitive damages, and the
award of attorneys’ fees, litigation expenses, and costs. Am. Compl., at 53-54.

STANDARD OF REVIEW

All defendants move to dismiss the amended complaint for lack of subject-matter
jurisdiction Fed. R. Civ. P. l2(b)(l). “The objection that a federal court lacks subject-
matter jurisdiction may be raised by a party, or by a court on its own initiative, at any stage
in the litigation.” Arbaugl/z v. Y&H Corp., 546 U.S. 500, 506 (2()06) (citation omitted). “ln
considering a motion to dismiss for lack of subject matter jurisdiction, courts are required
to ‘accept as true all of the factual allegations contained in the complaint.”’ Am. Freea’om

9

Law Cir. v. Obama_, 821 F.3d 44, 49 (D.C. Cir. 2016) (quoting Swierkz'ewl`cz v. Sorema
N.A,, 534 U.S. 506, 508 n.l (2002)). “Nonetheless,” the court “‘may consider materials
outside the pleadings in deciding whether to grant a motion to dismiss for lack of
jurisdiction.”’ Ia’. (quoting Jerome Stevens Pharm., Inc. v. FDA, 402 F.3d 1249, 1253
(D.C. Cir. 2005)). “[T]he plaintiff bears the burden of establishing the factual predicates
of`jurisdiction by a preponderance ofthe evidence.” Scc)l'i v. Frankel, 77 F. Supp. 3d 124,
127 (D.D.C.), aff’a’, No. 15-5028, 2015 WL 4072075 (D.C. Cir. June 8, 2015).

Some of the defendants also move to dismiss certain counts of the amended
complaint for failure to state a claim upon which relief can be granted. Fed. R. Civ. P.
12(b)(6). To survive a Rule 12(b)(6) motion to dismiss, “a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its
face.”’ Aslzcroft v. labal, 556 U.S. 662, 678 (2009) (quoting BellAtl. Corp. v. Twombly,
550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiffpleads factual
content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Ia’. “[W]hen a court decides whether a petitioner stated a
valid claim for relief, a court must treat the complaint’s factual allegations as true and may
not use factual findings and legal conclusions drawn from outside the pleadings.” Um'tea’
States v. Emor, 785 F.3d 671, 677 (D.C. Cir. 2015) (citing, inter alia, Holy Lana’ Founcl.

for Rell`ef& Dev. v. Asth/Oft, 333 F.3d 156, 165 (D.C. Cir. 2003)).

10

ANALYSIS

Defendants raise several threshold issues to review. Because it is jurisdictional, and
because it is raised by all defendants, l will begin with the Rooker-Fela’man doctrine. For
the reasons discussed below, that is also where my analysis ends.

The Rooker-Felclman doctrine “is drawn from 28 U.S.C. § 1257, which channels
directly to the Supreme Court all federal review of judicial decisions of state (and D.C.)
courts oflast resort.” Stanton v. D.C. Court oprpeals, 127 F.3d 72, 75 (D.C. Cir. 1997).
“By making clear that the inferior federal courts lack jurisdiction over such decisions,
Rooker-Fela’man ensures that the Court’s appellate jurisdiction is exclusive.” Ia’. The
Supreme Court has clarified in recent years that Rooker-Fela’man is limited in scope and
“confined to cases of the kind from which the doctrine acquired its name: cases brought by
state-court losers complaining of injuries caused by state-court judgments rendered before
the district court proceedings commenced and inviting district court review and rejection
of thosejudgments.” Exxon Mobz`l Corp. v. Saua’z' Basic Ina’as. Corp., 544 U.S. 280, 284
(2005); see also Skinner v. Swz'lzer, 562 U.S. 521, 531-33 (2011). “The doctrine otherwise
has no effect on overlapping state and federal litigation, and it does not ‘override or
supplant’ other principles-like preclusion and abstention_that govern in such
circumstances.” Sz`rzgletary v. District of Colambz`a, 766 F.3d 66, 71 (D.C. Cir. 2014)
(quoting Exxon, 544 U.S. at 284).

Rooker-Fela’man bars federal jurisdiction when three criteria are met. First, the
action must be “brought by [a] state-court loser[.]” Exxon, 544 U.S. at 284. That is, “the
party against whom the doctrine is invoked” must have been “a party to the underlying

11

state-court proceeding” and thus “in a ‘position to ask th[e Supreme] Court to review the
state court’s judgment.”’ Lance v. Dennz`s, 546 U.S. 459, 464 (2006) (quoting Johnson v.
De Grana’y, 512 U.S. 997, 1006 (1994)). DCHSl insists that this criterion is not met here
because the company did not intervene as a party defendant in the Superior Court action
Pl.’s Consolidated Opp’n to Defs.’ Mots. to Dismiss 12-13, 17 (“Opp’n”) [Dkt. #59]. l
disagree. The record shows that the Superior Court treated DCHSl as a party in all relevant
respects. The company appeared in the case as a self-styled “party in interest” and was
addressed as such by the court. lt participated in status conferences and hearings. lt filed
and argued motions and opposition briefs, including the motion for reconsideration or stay
of the Reorganization Order (which was denied on the merits). lmportantly, DCHSl was
informed by the Superior Court on at least two separate occasions that it had the right to
appeal from the Reorganization Order and the Settlement Order_a right the company
exercised when it noticed (and then voluntarily dismissed) appeals from both orders,
explaining to the D.C. Court of Appeals that it fit within the “well-recognized exception”
for entities “treated as a party” in Superior Court. Br. of Appellant DCHSl 28. Moreover,
even when the Superior Court concluded for purposes of the Settlement Order that DCHSl
was “not a party,” it clarified that “[t]he court has permitted them” to act as a party, Tr. of

Hr’g before J. Wright (Aug 21, 2013), at 10:20-1 1 :3, and that they had the right to appeal.5

 

5 Judge Wright went on to explain “for the appellate record” that he had “considered all the things
that you would have raised” and “would have approved the settlement anyway over your objection.” Tr.
of Hr’g before J. Wright (Aug. 2l, 2013), at l5:l6, 2l:l6, 2217-8. See also Reply Mem. of l\/lercer LLC
[Dkt. #65], Ex. A (Superior Court Order Denying Mot. to lntervene) (“Judge Wright did permit DCHSl to
paiticipate in this case in order to present its objections to the settlement DCHS l’s position was considered
and rejected on the merits by Judge Wright.”) [Dkt. #65-1].

12

This is more than sufficient to show, under federal or D.C. law, that DCHSl was treated as
a party. See, e.g., Karclzer v. May, 484 U.S. 72, 77 (1987) (“[T]he general rule [is] that
one who is not a party or has not been treated as a party to a judgment has no right to appeal
therefrom.”); In re Orshansky, 804 A.2d 1077, 1090 (D.C. 2002) (explaining individual
“was a party by any other measure” where “[t]he court directed its orders at [her] by name
and informed [her] that she could appeal”). DCHSl’s decision to appear as a party in
interest rather than a defendant-intervenor does not change the fact that the company was
a state-court loser. Rooker-Felclman’s first requirement is therefore satisfied.

Second, to come within Rooker-Felclman’s limited grasp, the federal action must
“complain[] of injuries caused by state-court judgments.” Exxon, 544 U.S. at 284. This
criterion is met where a federal district court is asked to decide a claim “so ‘inextricably
intertwined’ with a state court decision that ‘the district court is in essence being called
upon to review the state-court decision.”’ Stanton, 127 F.3d at 75 (quoting Fela’man, 460
U.S. at 483 n.16). That is the very situation here. Although DCHSl styles its claims as
arising under various constitutional protections, federal statutes, and common law
doctrines, in reality DCHSl is seeking, in essence, to have this Court undo the orders
entered by the Superior Court. This fatal intertwining is evident on the face of the amended
complaint. For example, DCHSl states in support of its Section 1983 takings and due
process claims that defendants “seized exclusive control over Chartered’s business through
the rehabilitation process,” “transferr[ed] Chartered’s assets and ongoing business to a
competitor,” and “‘negotiat[ed]’ a sham ‘settlement’ of claims owed by the District to

Chartered.” Am. Compl. 1111 114, 120, 138. But these actions, of course, were approved ex

13

ante by the Rehabilitation Order (which removed Chartered from DCHSl’s control), the
Reorganization Order (which approved the transfer of Chartered’s assets to AmeriHealth),
and the Settlement Order (which approved the settlement of Chartered’s claims). ln other
words, “the deprivation of property that was allegedly without just compensation or due
process was the deprivation ordered by the state court.” Campbell v. Cily of Spencer, 682
F.3d 1278, 1284 (10th Cir. 2012) (affirming dismissal under Roolcer~Felclma/l). The
claims are therefore properly dismissed; hearing them would require me “to review the
state-court decision[s]” authorizing the deprivations. Stanton, 127 F.3d at 75.

DCHSl, which bears the burden of establishing jurisdiction, does not contend that
any particular count in its amended complaint avoids this fatal intertwining with the
Superior Court’s orders. lnstead, the company seeks to save its entire suit by characterizing
it as a “challenge [to] the defendants’ misuse of official power and legal process” and not
as a “challenge [to] the rehabilitation court’s decision[s].” Opp’n 19. This argument, to
say the least, is unpersuasive. Courts in this District, and elsewhere, have recognized that
federal plaintiffs may not elude Rooker-Fela’man through “clever pleading fictions” which
purport to challenge third-party actions taken pursuant to a court order rather than the court
order itself. Galz‘l`eri v. Kelly, 441 F. Supp. 2d 447, 455 (E.D.N.Y. 2006) (citing Hoblock
v. Albany Cly. Ba'. ofElectz'ons, 422 F.3d 77, 88 (2d Cir. 2005) (“Can a federal plaintiff
avoid Rooker-Felclman simply by clever pleading~by alleging that actions taken pursuant
to a court order violate his rights without ever challenging the court order itself`? Surely
not.”)); accord Laverpool v. Taylor Bean & Whitaker Reo LLC, 229 F. Supp. 3d 5, 16-17

(D.D.C. 2017); Braa’ley v. DeWine, 55 F. Supp. 3d 31, 42 (D.D.C. 2014). Here, DCHSl

14

has not identified any harms that are independent of the Superior Court’s judgments, and
the company’s allegations that “defendants conspired to abuse the judicial process in order
to unlawfully deprive [DCHSI] of [its] property” only serve to demonstrate that it “seeks
review of the state-court judgment[s]” authorizing these deprivations. Braa’ley, 55 F. Supp.
3d at 42.

The cases cited by plaintiff reinforce this conclusion ln particular, they highlight
my duty to “draw a line between permissible general challenges to rules” on the one hand,
“and impermissible attempts to review judgments” applying rules on the other. Stanton,
127 F.3d at 75; see also Skinner, 562 U.S. at 532 (“A state-court decision is not reviewable
by lower federal courts, but a statute or rule governing the decision may be challenged in
a federal action.”). DCHSl supports its jurisdictional argument with cases from one side
of this line_cases addressing permissible challenges to general rules. See Opp’n 18
(relying principally on Coleman v. District of Columbia, 70 F. Supp. 3d 58, 65 (D.D.C.
2014) (holding Rooker~Felclma)/z inapplicable to suit asserting “that the District’s tax-sale
statute violate[d] the Takings Clause of the Fifth Amend1nent”) and Bell v. Cily ofBoz`se,
709 F.3d 890, 893 (9th Cir. 2013) (holding Rooker-Fela’man inapplicable to complaint
“challenging the [City of Boise’s] Camping and Sleeping Ordinances” on Eighth
Amendment grounds)). But those cases have no application here. DCHSl is not
challenging any rule, ordinance, or statute underlying the Superior Court’s orders. The
company does not attack, for example, the provisions of the D.C. Code authorizing a court-
appointed rehabilitator to take possession of an MCO and to take such action as deemed

necessary or appropriate to reform and revitalize the MCO. See D.C. Code §§ 31-1312,

15

31-3420. ln other words, plaintiff is not mounting a permissible general challenge`to a
rule, but an impermissible attempt to reviewjudgments_namely, the Rehabilitation Order,
Reorganization Order, and Settlement Order. Rooker-Fela’marz’s second requirement is
therefore satisfied

The third and final requirement of Rooker-F eldman is that the injurious “state-court
judgments [must be] rendered before the district court proceedings commenced.” Exxon,
544 U.S. at 284. Plaintiff filed this action in August 2016, years after entry of the
Rehabilitation Order (2012), Reorganization Order (2013), and Settlement Order (2013).
Although some aspects of the D.C.-court rehabilitation proceedings appear to have
continued after DCHSl filed this federal suit, no party disputes that the relevant judgments
were entered before this suit commenced. The third and final requirement of Rooker-
Felclman is therefore easily satisfied. Cf. Terry v. First Merz't Naz"l Bank, 75 F. Supp. 3d
499, 509 (D.D.C. 2014) (holding Rooker-Fela’man barred jurisdiction although “the
process of eviction and sale appears to have continued after the filing of this action”).

ln sum, all three requirements of the Rooker-Fela’man doctrine are met in this case,
and the Court therefore lacks jurisdiction to hear what is “the functional equivalent of an
appeal from a state court.” Gray v. Poole, 275 F.3d 1113, 1119 (D.C. Cir. 2002). Because
the Court concludes that Rooker-Felalman bars jurisdiction, “the Court does not reach other
merits-based arguments or jurisdictional bases for dismissing the claims against

[d]efendant[s].” Terry, 75 F. Supp. 3d at 512.

16

CONCLUSION
For the above reasons, the Court will grant the Rule 12(b)(1) motions and dismiss
this action for lack of subject-matter jurisdiction An Order consistent with this decision

accompanies this Memorandum Opinion.

 

 

17

