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Healthy Teen Network v. Azar

United States District Court, D. Maryland

April 25, 2018

Healthy Teen Network, et al.
v.
Alex M. Azar II, et al.

          MEMORANDUM

          Catherine C. Blake United States District Judge.

         The plaintiffs, Healthy Teen Network and the Mayor and City Council of Baltimore (“Baltimore City”) have sued the defendants, Alex M. Azar II, Secretary of the U.S. Department of Health and Human Services, and the Department of Health and Human Services itself, (collectively “HHS”), claiming that the defendants' decision to end their grant award under the Teen Pregnancy Prevention, (“TPP”), program early is contrary to the agency's regulations and arbitrary and capricious. Healthy Teen Network and Baltimore City now move for a preliminary or permanent injunction. HHS opposes the motion, and has cross moved for dismissal for failure to state a claim or for summary judgment. Because both parties agree that there are no disputed issues of fact, and that the plaintiffs' case presents pure issues of law, the plaintiffs' motion will be treated as a motion for summary judgment.[1] For the reasons stated below, the plaintiffs will be granted summary judgment and the defendants' motion will be denied.

         Regulatory Background

         Although administered through the Office of Adolescent Health in HHS, (Defs.' Mot., ECF No. 27, Ex. B, p. 3), the TPP program is a creature of Congress. For the first time in the Consolidated Appropriations Act of 2010, Congress directed that of the funding appropriated to HHS:

$110, 000, 000 shall be for making competitive contracts and grants to public and private entities to fund medically accurate and age appropriate programs that reduce teen pregnancy and for the Federal costs associated with administering and evaluating such contracts and grants, of which not less than $75, 000, 000 shall be for replicating programs that have been proven effective through rigorous evaluation to reduce teenage pregnancy, behavioral risk factors underlying teenage pregnancy, or other associated risk factors, of which not less than $25, 000, 000 shall be available for research and demonstration grants to develop, replicate, refine, and test additional models and innovative strategies for preventing teenage pregnancy, and of which any remaining amounts shall be available for training and technical assistance, evaluation, outreach, and additional program support activities.

         Consolidated Appropriations Act, 2010, Pub. L. No. 111-117, 123 Stat. 3034 (2009). The program has been renewed in every appropriations act since, including the 2018 Act. See Consolidated Appropriations Act, 2018, Pub. L. No. 115-141, 132 Stat. 348 (2018).

         As a result of this funding, HHS announced two funding opportunities-labelled Tier 1 and Tier 2-in April 2010. (Am. Compl. at ¶ 23). Tier 1 grants were to be awarded to tried and true program models that had already shown promise in reducing teen pregnancy and delaying sexual activity. (Id.) Tier 2 grants were to break ground, and fund new research and programs for reducing teenage pregnancy. (Id.)[2]

         Five years later, HHS expanded its funding opportunities, this time adding Tier 1B and 2B grants. Tier 1B grants were awarded to “replicate evidence-based TPP programs to scale in communities with the greatest need.” (Defs.' Mot., ECF No. 27, Ex. B, p. 3). And Tier 2B grants were designed to test “new or innovative approaches to prevent teen pregnancy.” (Id.). These two grants provided funding to Baltimore City and Healthy Teen Network.

         To support what HHS anticipated would be “substantial programmatic involvement . . . between OAH and the grantee during performance of the project, ” (Am. Compl. at ¶ 34), Tier 1B and Tier 2B awards were distributed over two periods. The first is called the budget period, and refers to the funding successful applicants were guaranteed for one fiscal year. (Defs.' Mot., ECF No. 27, Ex. B, I-34). The second is called the project period-the amount of funding successful applicants could expect over the course of a five year project plan. (Id.) Successful applicants were not guaranteed funding for the entire project period, but were required to submit a non-competing continuation application-which had to include a “progress report for the current budget year, and work plan, budget and budget justification for the upcoming year”-for each of the four budget periods, after the initial award year, during the project period. (Id.)

         Each award required grantees to “comply with all terms and conditions outlined in their grant awards, ” and with HHS's Grants Policy Statement. (Defs.' Mot., ECF No. 27, City of Baltimore 2015-16 Notice of Award, Ex. A at 68).[3] The Grants Policy Statement is important for two reasons. First, the Statement warned that funding over the course of a project period is:

contingent on satisfactory progress, the availability of funds, and the continued best interests of the Federal government. They are not guarantees that the project or program will be funded or will be funded at those levels, and they create no legal obligation to provide funding beyond the ending date of the current budget period.

(Defs.' Mot. ECF No. 27, Grants Policy Statement, U.S. Dep't of Health & Human Servs., Ex. B at I-34). The Statement further warns that HHS may decide not to “make a non-competing continuation award” because (1) “[a]dequate Federal funds are not available to support the project;” (2) “[a] recipient failed to show satisfactory progress in achieving the objectives of the project;” (3) “[a] recipient failed to meet the terms and conditions of a previous award;” or (4) “[f]or whatever reason, continued funding would not be in the best interests of the Federal government.” (Id. at II-89).

         Grant termination is the last piece of this case's regulatory puzzle. HHS regulations define “termination” as “the ending of a Federal award, in whole or in part at any time prior to the planned end of period of performance.” 45 C.F.R. § 75.2. And “period of performance” is its own term of art, referring to the “time during which the non-Federal entity may incur new obligations to carry out the work authorized under the Federal award.” 45 C.F.R. § 75.2.

         HHS may only terminate a grant award if: (1) the grantee failed “to comply with the terms and conditions of the award;” (2) “for cause;” (3) “with the consent” of the grantee; or (4) if the grantee requests termination and provides written notification of the reasons for such termination. 45 C.F.R. § 75.372(a)(1)-(4).

         Factual Background

         Healthy Teen Network and Baltimore City both were awarded funding under the TPP program in 2015 for five-year project periods ending in 2020.

         Baltimore City

         On June 29, 2015, Baltimore City was awarded an $8.745 million grant over a five year project period, with $1.749 million anticipated for each budget period. (Pls.' Mot., ECF No. 18, Ex. 2, ¶ 9). The award noted that Baltimore City was guaranteed funding for the first year (the budget period) of the project period, and that projected future funding (over the project period) was “subject to the availability of funds and satisfactory progress of the project.” (Id.) After submitting non-competing applications, Baltimore City was granted funding through year two of the project period. On July 3, 2017, however, Baltimore City received a notice of award for the third budget period, which explained the award and warned that “this award also shortens the project period to end on June 30, 2018, ” two years earlier than was projected when Baltimore City won funding in 2015. (Id. at ¶ 24). The notice did not explain HHS's decision to cut the project period short, although Baltimore City is sure that it “complied with all program requirements throughout the grant, ” (id.), and HHS has not stated otherwise.

         Baltimore City appealed the termination of the grant in August of 2017 without response. (Id. at ¶ 25). Indeed, HHS still has not provided Baltimore City with any specific reason for its decision to end the City's project period by two years. (Id. at ¶ 24).

         Healthy Teen Network

         On July 1, 2015, Healthy Teen Network was awarded $3.6 million in funding over a five year project period, with $723, 000 anticipated for each one year budget period.[4] (Pls.' Mot., ECF No. 18, Ex. 3, ¶ 3). As was true for Baltimore City's award, notice of Healthy Teen Network's award warned that the project period merely represents “recommended future support . . . subject to the availability of funds and satisfactory progress of the project.” (Id. at p. 10). Also like Baltimore City, Healthy Teen Network successfully submitted non-competing continuation applications for the next two years of the project period. On July 6, 2017, along with its award for year three of the project period, however, Healthy Teen Network was notified that its project period would be cut short by two years. (Id. at ¶ 13). HHS's decision was unexplained, (id. at ¶ 15), and Healthy Teen Network alleges that in August 2017 it was advised by an HHS employee that there was no use in appealing the agency's decision, (Id. at ¶ 18).

         ***

         After ending Baltimore City's and Healthy Teen Network's project periods early, HHS later provided two public explanations for its decision. It claimed: (1) “that there was strong evidence of negative impact or no impact by the funded projects;” and (2) that because the President's proposed budget for Fiscal Year 2018 eliminated funding for the TPP program, HHS anticipated it would lack funding for the projects and terminated them early. (Am. Compl. at ¶¶ 107-08). Healthy Teen Network and Baltimore City contend that these explanations are merely pretense undercut by HHS's longstanding praise for their work, which persisted even after their funding was terminated, (Pls.' Mot., ECF No. 18, Ex. 2, ¶¶ 22, 26); by the Tier 1B grants themselves, which were only awarded to programs that had demonstrated positive results in reducing teen pregnancy; and by the fact that, despite what the President's budget might have suggested, only Congress possesses the power to eliminate funding for the TPP program, (Am. Compl. at ¶¶ 107-10).

         The plaintiffs sued HHS on February 15, 2018, and subsequently moved for a preliminary or permanent injunction. HHS cross-moved for dismissal under Federal Rule of Civil Procedure 12(b)(6) or for summary judgment under Rule 56. The court heard oral argument on the motions on April 19, 2018.

         Standard of Review

         Federal Rule of Civil Procedure 56(a) provides that summary judgment should be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a) (emphases added). “A dispute is genuine if ‘a reasonable jury could return a verdict for the nonmoving party.'” Libertarian Party of Va. v. Judd, 718 F.3d 308, 313 (4th Cir. 2013) (quoting Dulaney v. Packaging Corp. of Am., 673 F.3d 323, 330 (4th Cir. 2012)). “A fact is material if it ‘might affect the outcome of the suit under the governing law.'” Id. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). Accordingly, “the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment[.]” Anderson, 477 U.S. at 247-48. The court must view the evidence in the light most favorable to the nonmoving party, Tolan v. Cotton, 134 S.Ct. 1861, 1866 (2014) (per curiam), and draw all reasonable inferences in that party's favor, Scott v. Harris, 550 U.S. 372, 378 (2007) (citations omitted); see also Jacobs v. N.C. Admin. Office ...


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