United States Court of Appeals
`For the First Circuit
`
`
`
`No. 17-1731
`HEALTHPROMED FOUNDATION, INC., f/k/a Dr. Jose S. Belaval, Inc.;
`CORP. DE SERVICIOS INTEGRALES DE SALUD INTEGRAL EN LA MONTAÑA,
`INC.; MIGRANT HEALTH CENTER, INC.; NEOMED CENTER, INC., f/k/a
`Gurabo Community Health Center, Inc.; MOROVIS COMMUNITY HEALTH
`CENTER, INC.; CONCILIO DE SALUD INTEGRAL DE LOIZA, INC. (CSILO);
`CORPORACION DE SERVICIOS DE SALUD Y MEDICINA AVANZADA, INC.,
`(COSSMA),
`
`Plaintiffs, Appellants,
`
`and
`
`CAMUY HEALTH SERVICES, INC.; ATLANTIC MEDICAL CENTER, INC.;
`CENTRO DE SALUD FAMILIAR DR. JULIO PALMIERI FERRI, INC.;
`CORPORACION DE SERV. MÉDICOS PRIMARIOS Y PREVENCION DE HATILLO,
`INC.; COSTA SALUD, INC., f/k/a Rincón Health Center, Inc.; EL
`CENTRO DE SALUD DE LARES, INC.; HOSPITAL GENERAL CASTAÑAR, INC.;
`RIO GRANDE COMMUNITY HEALTH CENTER, INC.; TOA ALTA COMPREHENSIVE
`URBAN/RURAL ADVANCED HEALTH SERVICES, INC.,
`
`Plaintiffs,
`
`v.
`
`DEPARTMENT OF HEALTH AND HUMAN SERVICES; DEPARTMENT OF HEALTH
`FOR THE COMMONWEALTH OF PUERTO RICO; LORENZO GONZÁLEZ-FELICIANO,
`Secretary, Department of Health for the Commonwealth of Puerto
`Rico,
`
`Defendants, Appellees,
`
`and
`
`COMMONWEALTH OF PUERTO RICO; ALEX MICHAEL AZAR, II, as Secretary
`of United States Department of Health and Human Services,
`
`Defendants.
`
`
`
`
`
`
`
`
`For the First Circuit
`
`
`
`No. 17-1731
`HEALTHPROMED FOUNDATION, INC., f/k/a Dr. Jose S. Belaval, Inc.;
`CORP. DE SERVICIOS INTEGRALES DE SALUD INTEGRAL EN LA MONTAÑA,
`INC.; MIGRANT HEALTH CENTER, INC.; NEOMED CENTER, INC., f/k/a
`Gurabo Community Health Center, Inc.; MOROVIS COMMUNITY HEALTH
`CENTER, INC.; CONCILIO DE SALUD INTEGRAL DE LOIZA, INC. (CSILO);
`CORPORACION DE SERVICIOS DE SALUD Y MEDICINA AVANZADA, INC.,
`(COSSMA),
`
`Plaintiffs, Appellants,
`
`and
`
`CAMUY HEALTH SERVICES, INC.; ATLANTIC MEDICAL CENTER, INC.;
`CENTRO DE SALUD FAMILIAR DR. JULIO PALMIERI FERRI, INC.;
`CORPORACION DE SERV. MÉDICOS PRIMARIOS Y PREVENCION DE HATILLO,
`INC.; COSTA SALUD, INC., f/k/a Rincón Health Center, Inc.; EL
`CENTRO DE SALUD DE LARES, INC.; HOSPITAL GENERAL CASTAÑAR, INC.;
`RIO GRANDE COMMUNITY HEALTH CENTER, INC.; TOA ALTA COMPREHENSIVE
`URBAN/RURAL ADVANCED HEALTH SERVICES, INC.,
`
`Plaintiffs,
`
`v.
`
`DEPARTMENT OF HEALTH AND HUMAN SERVICES; DEPARTMENT OF HEALTH
`FOR THE COMMONWEALTH OF PUERTO RICO; LORENZO GONZÁLEZ-FELICIANO,
`Secretary, Department of Health for the Commonwealth of Puerto
`Rico,
`
`Defendants, Appellees,
`
`and
`
`COMMONWEALTH OF PUERTO RICO; ALEX MICHAEL AZAR, II, as Secretary
`of United States Department of Health and Human Services,
`
`Defendants.
`
`
`
`
`
`
`
`
`
`No. 17-1812
`
`ATLANTIC MEDICAL CENTER, INC.; CAMUY HEALTH SERVICES, INC.;
`CENTRO DE SALUD FAMILIAR DR. JULIO PALMIERI FERRI, INC.; CIALES
`PRIMARY HEALTH CARE SERVICES, INC.; CORPORACION DE SERV. MÉDICOS
`PRIMARIOS Y PREVENCION DE HATILLO, INC.; COSTA SALUD, INC.,
`f/k/a Rincón Health Center, Inc.; EL CENTRO DE SERVICIOS
`PRIMARIOS DE SALUD DE PATILLAS, INC.; HOSPITAL GENERAL CASTAÑAR,
`INC.; EL CENTRO DE SALUD DE LARES, INC.,
`
`Plaintiffs, Appellants,
`
`and
`
`RIO GRANDE COMMUNITY HEALTH CENTER, INC.; TOA ALTA COMPREHENSIVE
`URBAN/RURAL ADVANCED HEALTH SERVICES, INC.; CONCILIO DE SALUD
`INTEGRAL DE LOIZA, INC. (CSILO); CORP. DE SERVICIOS INTEGRALES
`DE SALUD INTEGRAL EN LA MONTAÑA, INC.; CORPORACION DE SERVICOS
`DE SALUD Y MEDICINA AVANZADA, INC., (COSSMA); HEALTHPROMED
`FOUNDATION, INC., f/k/a Dr. Jose S. Belaval, Inc.; MIGRANT
`HEALTH CENTER, INC.; MOROVIS COMMUNITY HEALTH CENTER, INC.;
`NEOMED CENTER, INC., f/k/a Gurabo Community Health Center, Inc.;
`MUNICIPALITY OF SAN JUAN,
`
`Plaintiffs,
`
`v.
`
`LORENZO GONZÁLEZ-FELICIANO, as Secretary of Department of Health
`for Puerto Rico; ALEX MICHAEL AZAR, II, as Secretary of United
`States Department of Health and Human Services,
`
`Defendants, Appellees,
`
`and
`JOHNNY RULLAN; COMMONWEALTH OF PUERTO RICO
`
`Defendants.
`
`
`APPEAL FROM THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF PUERTO RICO
`
`[Hon. Gustavo A. Gelpí, Jr., U.S. District Judge]
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Before
`
`Lynch, Lipez, and Barron,
`Circuit Judges.
`
`
`Nicole M. Bacon, with whom James L. Feldesman, Khatereh S.
`Ghiladi, and Feldesman Tucker Liefer Fidell LLP were on brief, for
`appellants Atlantic Medical Center, Inc., Camuy Health Services,
`Inc., Centro de Salud Familiar Dr. Julio Palmieri Ferri, Inc.,
`Ciales Primary Health Care Services, Inc., Corporacion de Serv.
`Médicos Primarios y Prevención de Hatillo, Inc., Costa Salud, Inc.,
`El Centro de Salud de Lares, Inc., El Centro de Servicios Primarios
`de Salud de Patillas, Inc., and Hospital General Castañar, Inc.
`
`Robert A. Graham, with whom Iyen A. Acosta and Reno &
`Cavanaugh, PLLC were on brief, for appellants HealthproMed, Salud
`Integral en la Montaña, Migrant Health Center, COSSMA, Morovis
`Community Health Center, NeoMed Center, and Concilio de Salud
`Integral de Loiza.
`Carlos Lugo-Fiol, with whom Solicitor General of Puerto Rico
`Isaías Sánchez-Báez was on brief, for appellees Commonwealth of
`Puerto Rico and Lorenzo González-Feliciano, in his official
`capacity as Secretary of the Department of Health for Puerto Rico.
`
`
`December 4, 2020
`
`
`
`
`
`
`
`
`
`
`
`LYNCH, Circuit Judge. These consolidated appeals, and
`the companion appeal No. 19-1336, arise out of the long-running
`litigation between Puerto Rico and several Federally Qualified
`Health Centers (FQHCs) over the Commonwealth's failure to make
`payments to the FQHCs. The FQHCs assert new claims that the
`Commonwealth has again failed to pay in full the statutorily
`required reimbursement amounts for the services they provide to
`poor patients under the Medicaid Act. We dismiss these appeals
`without reaching the merits, because we conclude that the orders
`appealed from are void -- having been issued in violation of the
`stay entered by the Title III court.
`I. Background
`The Medicaid Act requires FQHCs to provide care to
`underserved populations. States must reimburse the FQHCs for the
`full cost of these services through a Prospective Payment System
`(PPS). 42 U.S.C. § 1396a(bb)(1)-(3). Puerto Rico has contracted
`with Managed Care Organizations (MCOs) to run its Medicaid program.
`The MCOs in turn contract with FQHCs to deliver services as
`required. When the MCOs pay less than the PPS rate, Puerto Rico1
`must make up the difference through quarterly supplemental
`"wraparound" payments. Id. § 1396a(bb)(5).
`
`
`1
`Puerto Rico is a state for purposes of the Medicaid
`statute. 42 U.S.C. § 1301(a)(1).
`
`- 4 -
`
`
`
`This litigation has been ongoing since 2003, when the
`FQHCs first sued the Commonwealth for failure to make the required
`wraparound payments. The factual and procedural history behind
`these appeals is described in our eight prior opinions in this
`matter, including most recently in Municipality of San Juan v.
`Puerto Rico, 919 F.3d 565 (1st Cir. 2019).2
`
`In 2009, the district court appointed a Special Master
`to oversee the Medicaid payment calculations. In 2010, at the
`recommendation of the Special Master, the district court entered
`a preliminary injunction3 requiring the Commonwealth to make
`interim payments calculated by the Special Master, and directing
`the parties to calculate the actual PPS rates and then reconcile
`the interim payments with the amount actually due under the
`appropriate PPS formula.4
`
`
`2
`These are: Rio Grande Community Health Center, Inc.
`v. Rullan, 397 F.3d 56 (1st Cir. 2005); Dr. Jose S. Belaval, Inc.
`v. Peréz-Perdomo, 465 F.3d 33 (1st Cir. 2006); Dr. Jose S. Belaval,
`Inc. v. Peréz-Perdomo, 488 F.3d 11 (1st Cir. 2007); Concilio de
`Salud Integral de Loiza, Inc. v. Peréz-Perdomo, 551 F.3d 10 (1st
`Cir. 2008); Concilio de Salud Integral de Loiza, Inc. v. Peréz-
`Perdomo, 625 F.3d 15 (1st Cir. 2010); Consejo de Salud de la
`Comunidad de la Playa de Ponce, Inc. v. González-Feliciano, 695
`F.3d 83 (1st Cir. 2012); Rio Grande Community Health Center, Inc.
`v. Armendáriz, 792 F.3d 229 (1st Cir. 2015); and Municipality of
`San Juan v. Puerto Rico, 919 F.3d 565 (1st Cir. 2019).
`3
`The district court previously entered a preliminary
`injunction in 2004, but vacated it after Puerto Rico created a PPS
`office. We reversed that decision in Concilio de Salud Integral
`de Loiza, Inc., 551 F.3d at 19.
`4
`The FQHCs represent that during the period of 2010-
`2014, "[t]he bulk of the efforts of both the parties and the
`
`- 5 -
`
`
`
`By the fourth quarter of 2014, the scope of services
`
`that the FQHCs provide had changed. The Medicaid Act obligates
`the Commonwealth to recalculate the PPS rates to account for the
`changes in the scope of service. 42 U.S.C. § 1396a(bb)(3)(B).
`The district court ordered the Special Master to calculate the
`appropriate PPS rates for the period beginning with the fourth
`quarter of 2014, and reconcile those rates with the interim
`payments that the Commonwealth continued to make.
`
`In April 2017, the Special Master issued a report and
`recommendation, which resolved the parties' disputes over the
`methodology for calculating the PPS rates, but which led to these
`appeals. The Special Master recommended that the revised PPS rates
`be made effective January 1, 2017, rather than the full
`reconciliation period beginning in the fourth quarter of 2014, in
`order to "promote[] finality, efficiency, and realistic cost
`saving targets . . . [and] prevent the administrative burden and
`uncertainty that . . . retroactive application would imply."
`
`In 2016, Congress passed the Puerto Rico Oversight,
`Management, and Economic Stability Act (PROMESA), which authorized
`Puerto Rico to file for the equivalent of bankruptcy protection
`under Title III of the Act. 48 U.S.C. §§ 2161-2177. On May 3,
`
`
`Special Master . . . were devoted to resolving disputes
`over . . . payment rates and . . . the court's interim payment
`order(s) rather than to reconciliation of the interim payments."
`
`- 6 -
`
`
`
`2017, Puerto Rico invoked Title III under PROMESA, and triggered
`an automatic bankruptcy stay.5
`
`After the PROMESA stay took effect, on May 10, 2017, the
`district court in this litigation adopted the Special Master's
`April 2017 report and recommendation, approved an agreed-upon
`formula for calculating Medicaid wraparound payments going
`forward, and made the new formula effective from January 1, 2017.
`In August, 2017, the FQHCs brought these consolidated appeals.
`
`In 2019, this court held that the automatic stay applies
`to the orders at issue in this appeal. Mun. of San Juan, 919 F.3d
`at 581-82. On June 21, 2019, this court stayed these appeals,
`which were already in abeyance,6 in light of our decision in
`Municipality of San Juan.
`
`
`5
`Title III of PROMESA incorporates parts of the
`Bankruptcy Code, including 11 U.S.C. § 362(a)(1), which
`automatically stays "the commencement or continuation, including
`the issuance or employment of process, of a judicial,
`administrative, or other action or proceeding against the debtor
`that was or could have been commenced before the commencement of
`the case under this title, or to recover a claim against the debtor
`that arose before the commencement of the case under this title."
`
`6
`On December 21, 2017, we ordered the parties to show
`cause whether the automatic stay applies to these appeals. Both
`parties stated that this litigation should move forward despite
`the stay. The FQHCs argued the stay simply should not apply, and
`the Commonwealth stated "[it] would have no objection to a lift of
`the stay should Plaintiffs-Appellants so request it pursuant to
`the procedures established for such purpose in the Title III
`proceedings." We then placed these appeals in abeyance to permit
`the parties to seek relief from the automatic stay to the extent
`that it applied to these appeals.
`
`- 7 -
`
`
`
`On July 29, 2019, the parties entered and submitted a
`
`stipulation to the Title III court in an effort on their part to
`permit these appeals to move forward. The stipulation states:
`The Title III Stay is hereby modified solely
`to the limited extent necessary to allow (a)
`the pending appeals for the United States
`Court of Appeals for the First Circuit in
`Appeals Nos. 17-1731, 17-1812, and 19-1336 to
`proceed to judgment [and (b) to continue to
`allow the Commonwealth to make the wraparound
`payments under the existing formula.]
`
`The Title III court adopted this stipulation without modification
`in its Eleventh Omnibus Order Granting Relief from the Automatic
`Stay. We then ordered briefing.
`
`After these appeals were filed, on December 31, 2018,
`the Special Master issued another report and recommendation,
`which, among other things, recommended that the district court
`revise the effective date of the new PPS rates to January 1, 2019,
`in light of Puerto Rico's financial circumstances. The district
`court did not adopt this proposal, and left the January 1, 2017,
`effective date in place. The Commonwealth appealed that decision
`in appeal No. 19-1336.
`
`II. Discussion
`As to the merits, the FQHCs attempt to challenge the
`effective date of the revised PPS rates and other portions of the
`district court's order adopting the Special Master's report and
`
`- 8 -
`
`
`
`recommendation. Because the orders are void, we cannot reach the
`merits of these issues, and dismiss for lack of jurisdiction.
`Our decision in Municipality of San Juan makes clear
`that the automatic stay applies to the Medicaid litigation. 919
`F.3d at 581-82. The stay became effective May 3, 2017, seven days
`before the district court's order. An order which post-dates the
`stay is void. In re Soares, 107 F.3d 969, 976-77 (1st Cir. 1997)
`(an order issued after a bankruptcy stay is void absent "unusual
`and unusually compelling" circumstances). A void order is a "legal
`nullity." United Student Aid Funds, Inc. v. Espinosa, 559 U.S.
`260, 270 (2010). It is "without legal effect." Baella-Silva v.
`Hulsey, 454 F.3d 5, 10 (1st Cir. 2006) (quoting Fafel v. DiPaola,
`399 F.3d 403, 410 (1st Cir. 2005)).
`If the orders underlying this appeal are "without legal
`effect," we lack jurisdiction to decide their merits. See Preiser
`v. Newkirk, 422 U.S. 395, 401 (1975) ("[A] federal court has
`neither the power to render advisory opinions nor to decide
`questions that cannot affect the rights of litigants in the case
`before them." (quoting North Carolina v. Rice, 404 U.S. 244, 246
`(1971))).
`The FQHCs argue that the parties' stipulation and the
`Title III court's Omnibus Order permit us to reach the merits of
`these appeals. We disagree. The stipulation and order state only
`that "[t]he Title III Stay is . . . modified solely to the limited
`
`- 9 -
`
`
`
`extent necessary to allow . . . the pending appeals for the United
`States Court of Appeals for the First Circuit in Appeals Nos. 17-
`1731, 17-1812, and 19-1336 to proceed to judgment." The Title III
`court was not asked to and did not lift the stay retroactively.7
`No party has adequately argued the Title III court order has that
`effect.
`
`In the companion appeal No. 19-1336 the Commonwealth
`also took the position that In re Soares and 11 U.S.C. § 362(d)
`permit this court to retroactively lift the automatic stay in
`appropriate circumstances. The FQHCs endorsed this view. We
`reject that argument. Neither In re Soares nor the statute gives
`the court of appeals as opposed to the bankruptcy court such
`authority. The parties appear to read In re Soares and 11 U.S.C.
`§ 362(d) to give any court confronted with an automatic stay the
`power to grant retroactive relief in "unusual and unusually
`compelling circumstances." We see no support for this proposition
`in the text of 11 U.S.C. § 362(d) or In re Soares. The Bankruptcy
`Code specifically refers to the powers of the bankruptcy court in
`particular. In re Soares also states that "11 U.S.C. § 362(d)
`permits bankruptcy courts to lift the automatic stay
`retroactively." 107 F.3d at 976 (emphasis added).
`
`
`7
`This does not change the Commonwealth's existing
`obligation to make wraparound payments under the 2010 preliminary
`injunction and prior district court orders. The Commonwealth has
`stipulated that it will continue to make these payments.
`
`- 10 -
`
`
`
`This court articulated these same jurisdictional
`concerns to the parties at oral argument. We ordered that the
`parties,
`
`report whether they agree to seek the
`following relief from the Title III court: (1)
`An order from the Title III court
`retroactively lifting the automatic stay as to
`the district court's May 10, 2017, January 22,
`2019, and January 28, 2019 orders, as well as
`any related orders by the district court, such
`that no portion of those orders are void under
`the automatic stay; and (2) An order from the
`Title III court stating the automatic stay
`does not limit this court's consideration of
`the merits of appeal numbers 17-1731; 17-1812;
`and 19-1336, and this Court has jurisdiction
`to reach all questions on the merits of these
`appeals.
`
`But for reasons not stated, the parties responded to our order by
`stating they "agreed to refrain from seeking any further relief
`from the PROMESA Title III court with respect to their July 29,
`2019 stipulation and the court's Eleventh Omnibus Order."
`
`We decide only that we lack jurisdiction to resolve the
`merits of the underlying orders, given that they are void. We
`order dismissal of these appeals.
`
`No costs are awarded.
`
`- 11 -
`
`
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