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Case Name Independent Living Center v. Maxwell-Jolly DR-CA-0030
Docket / Court 2:09-cv-00382 ( C.D. Cal. )
State/Territory California
Case Type(s) Disability Rights-Pub. Accom.
Public Benefits / Government Services
Case Summary
On January 16, 2009, a group of California pharmacies participating in the Medi-Cal fee-for-service program filed suit in the U.S. District Court for the Central District of California, against the California Department of Health Care Services. The plaintiffs, represented by private counsel, asked ... read more >
On January 16, 2009, a group of California pharmacies participating in the Medi-Cal fee-for-service program filed suit in the U.S. District Court for the Central District of California, against the California Department of Health Care Services. The plaintiffs, represented by private counsel, asked the court for preliminary injunctive relief, attorneys' fees, and costs claiming that Assembly Bill 1183 ("AB 1183") was preempted by § 30(A) of the Medicaid Act (hereinafter referred to as "§ 30(A)"). Specifically, the plaintiffs alleged that the 5% reduction in Medi-Cal fee-for-service payments to pharmacies would cause the denial of services to Medi-Cal patients, or result in a reduction in services to Medi-Cal patients, or the closure of pharmacies serving Medi-Cal patients in violation of the quality and equal access clauses of § 30(A).

The complaint explained that on September 15, 2008, the California Legislature amended AB 1883, originally a hazardous material bill, to include measures designed to reduce government expenditures in line with the provisions of the earlier 2008-2009 Budget Bill. There were no committee hearings on the amended portions of the bill and the Legislature passed the bill within twenty-four hours, even though, according to the plaintiffs, it contained changes to hundreds of health-care related subjects. The plaintiffs therefore alleged that the California Legislature did not have time to consider whether a 5% rate reduction was consistent with providing quality services and maintaining equal access to services as required under § 30(A), or time to evaluate the costs to providers of performing services and procedures as also required under § 30(A). The 5% rate reduction was therefore preempted by § 30(A), they argued.

On February 27, 2009, the District Court (Judge Christina A. Snyder) granted plaintiffs' motion for preliminary injunction, and ordered the State to refrain from implementing the 5% payment reduction to pharmacies for prescription drugs provided under the Medi-Cal fee-for-service program. Managed Pharmacy Care v. Maxwell-Jolly, 603 F. Supp. 2d 1230 (C.D. Cal. 2009). Shortly after, on March 13, 2009, the State filed a motion to alter or amend and clarify the preliminary injunctive ruling, which the District Court denied on April 3, 2009. Managed Pharmacy Care v. Maxwell-Jolly, No. CV 09-382 CAS (C.D. Cal. Apr. 3, 2009).

The State appealed the ruling to the Ninth Circuit Court of Appeals, and on March 25, 2010, the Ninth Circuit upheld the decision of the District Court. Independent Living Center v. Maxwell-Jolly, 374 Fed. Appx. 690 (9th Cir. Mar. 25, 2010). The Ninth Circuit affirmed the lower court's ruling that the California Legislature was required to study the impact of the five percent rate reduction on the statutory factors of efficiency, economy, quality, and access to care, prior to enacting AB 1183, and that the legislature had not adequately done so. It also upheld the lower court's finding of irreparable harm, noting that many brand name and generic drugs would be reimbursed at a level below costs, thereby limiting access to Medi-Cal patients.

The State appealed the Ninth Circuit ruling to the Supreme Court, and on January 18, 2011, the Supreme Court granted certiorari review in both this case and two related cases. Maxwell-Jolly v. Cal. Pharmacists Assoc., 131 S.Ct. 992 (2011). Oral argument took place on October 3, 2011. While the cases were pending in the Supreme Court, the HHS Centers for Medicare and Medicaid Services (CMS) determined that the rate reductions complied with the Medicaid statute and approved a limited retroactive implementation of the rate reductions. Consequently, the Supreme Court (Justice Stephen Breyer) found that the posture of the case had changed from the Supremacy Clause to the Administrative Procedure Act, introducing a new issue not briefed to the Court or in earlier proceedings, and therefore it vacated the decision of the Ninth Circuit and remanded for reconsideration. 132 S.Ct. 1204 (2012).

On remand, the parties agreed to enter settlement mediation and this was the last recorded action in the case. The case remains open in the Ninth Circuit.

Nick Kabat - 09/17/2014
- 09/12/2014


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Issues and Causes of Action
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Issues
Benefit Source
Medicaid
Constitutional Clause
Supremacy Clause
Content of Injunction
Preliminary relief granted
Defendant-type
Jurisdiction-wide
General
Public benefits (includes, e.g., in-state tuition, govt. jobs)
Plaintiff Type
Private Plaintiff
Causes of Action None on record
Defendant(s) The State of California
Plaintiff Description Members of Managed Care Pharmacy and their patients in the Medi-Cal fee-for-service program
Indexed Lawyer Organizations None on record
Class action status sought No
Class action status granted No
Prevailing Party None Yet / None
Public Int. Lawyer No
Nature of Relief Preliminary injunction / Temp. restraining order
Injunction / Injunctive-like Settlement
Source of Relief Litigation
Form of Settlement None on record
Order Duration not on record
Case Closing Year n/a
Case Ongoing Yes
Case Listing PB-CA-0016 : Independent Living Center of Southern California v. Maxwell-Jolly (C.D. Cal.)
DR-CA-0031 : Dominguez v. Schwarzenegger (N.D. Cal.)
PB-CA-0020 : California Pharmacists Association v. Maxwell-Jolly (C.D. Cal.)
PB-CA-0028 : California Pharmacists Association v. Maxwell-Jolly (C.D. Cal.)
PB-CA-0024 : National Association of Chain Drug Stores v. Schwarzenegger (C.D. Cal.)
Docket(s)
08-56422 (U.S. Supreme Court) 03/26/2012
DR-CA-0030-9001 PDF | Detail
Supreme Court website
2:09-cv-382 (C.D. Cal.) 07/12/2012
DR-CA-0030-9000 PDF | Detail
PACER [Public Access to Court Electronic Records]
General Documents
Complaint 01/16/2009
DR-CA-0030-0001 PDF | Detail
Document Source: PACER [Public Access to Court Electronic Records]
CERTIFICATION AND NOTICE OF INTERESTED PARTIES 01/16/2009 (C.D. Cal.)
DR-CA-0030-0007 PDF | Detail
Document Source: PACER [Public Access to Court Electronic Records]
PLAINTIFFS' REQUEST FOR JUDICIAL NOTICE OF LEGISLATIVE HISTORY OF AB 1183 AND AB 1781 02/02/2009
DR-CA-0030-0002 PDF | Detail
Document Source: PACER [Public Access to Court Electronic Records]
Plaintiffs' Notice of Motion, Motion for Preliminary Injunction, and Memorandum in Support of Preliminary Injunction 02/02/2009
DR-CA-0030-0015 PDF | Detail
Document Source: PACER [Public Access to Court Electronic Records]
PLAINTIFFS’ NOTICE OF MOTION, AND MOTION FOR PRELIMINARY INJUNCTION AND PLAINTIFFS’ MEMORANDUM IN SUPPORT OF MOTION FOR PRELIMINARY INJUNCTIO N 02/02/2009
DR-CA-0030-0020 PDF | Detail
Document Source: PACER [Public Access to Court Electronic Records]
DEFENDANT'S OPPOSITION TO PLAINTIFFS' MOTION FOR PRELIMINARY INJUNCTION 02/11/2009
DR-CA-0030-0003 PDF | Detail
Document Source: PACER [Public Access to Court Electronic Records]
REPLY IN SUPPORT OF MOTION FOR PRELIMINARY INJUNCTION MOTION 02/16/2009
DR-CA-0030-0004 PDF | Detail
Document Source: PACER [Public Access to Court Electronic Records]
DEFENDANT'S ANSWER TO COMPLAINT 02/19/2009
DR-CA-0030-0005 PDF | Detail
Document Source: PACER [Public Access to Court Electronic Records]
ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION 02/27/2009 (603 F.Supp.2d 1230) (C.D. Cal.)
DR-CA-0030-0006 PDF | WESTLAW| LEXIS | Detail
Document Source: PACER [Public Access to Court Electronic Records]
DEFENDANT'S MOTION TO ALTER OR AMEND, AND CLARIFY ORDER GRANTING PLAINTIFFS' MOTION FOR PRELIMINARY INJUNCTION· MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF 03/13/2009
DR-CA-0030-0008 PDF | Detail
Document Source: PACER [Public Access to Court Electronic Records]
In Chambers Opinion on Defendant’s Motion to Alter or Amend, and Clarify the Court’s February 27, 2009 04/03/2009 (2009 WL 926987) (C.D. Cal.)
DR-CA-0030-0021 PDF | WESTLAW | Detail
Document Source: PACER [Public Access to Court Electronic Records]
NOTICE OF MOTION TO ENFORCE PRELIMINARY INJUNCTION 10/11/2009
DR-CA-0030-0010 PDF | Detail
Document Source: PACER [Public Access to Court Electronic Records]
DEFENDANT'S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO PLAINTIFFS' MOTION TO ENFORCE PRELIMINARY INJUNCTION AND REQUEST FOR SANCTIONS 10/26/2009
DR-CA-0030-0011 PDF | Detail
Document Source: PACER [Public Access to Court Electronic Records]
Ninth Circuit Order Upholding Preliminary Injunction 03/25/2010 (374 Fed.Appx. 690)
DR-CA-0030-0012 PDF | WESTLAW| LEXIS | Detail
Document Source: PACER [Public Access to Court Electronic Records]
On Petition for Writ of Certiorari...BRIEF OF RESPONDENTS INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA, INC. IN THE SUPREME COURT OF THE UNITED STATES 05/24/2010
DR-CA-0030-0014 PDF | Detail
Supreme Court Opinion 02/22/2012 (132 S.Ct. 1204)
DR-CA-0030-0017 PDF | WESTLAW | Detail
Document Source: Supreme Court website
Order 04/26/2012 (C.D. Cal.)
DR-CA-0030-0018 PDF | Detail
Document Source: PACER [Public Access to Court Electronic Records]
Order 05/22/2012 (C.D. Cal.)
DR-CA-0030-0019 PDF | Detail
Document Source: U.S. Court of Appeals website
Judges Breyer, Stephen Gerald (First Circuit, SCOTUS)
DR-CA-0030-0017
Fletcher, William A. (Ninth Circuit)
DR-CA-0030-0012 | DR-CA-0030-0018 | DR-CA-0030-0019
Nagle, Margaret A. (C.D. Cal.) [Magistrate]
DR-CA-0030-9000
Reinhardt, Stephen Roy (Ninth Circuit)
DR-CA-0030-0012 | DR-CA-0030-0018 | DR-CA-0030-0019
Smith, Milan Dale Jr. (Ninth Circuit)
DR-CA-0030-0012 | DR-CA-0030-0018 | DR-CA-0030-0019
Snyder, Christina A. (C.D. Cal.)
DR-CA-0030-0006 | DR-CA-0030-0021 | DR-CA-0030-9000
Monitors/Masters None on record
Plaintiff's Lawyers Berzon, Stephen P. (California)
DR-CA-0030-9001
Bobroff, Rochelle (District of Columbia)
DR-CA-0030-0014
Cannizzo, Craig J. (California)
DR-CA-0030-9001
Carman, Lynn S. (California)
DR-CA-0030-0001 | DR-CA-0030-0002 | DR-CA-0030-0004 | DR-CA-0030-0007 | DR-CA-0030-0010 | DR-CA-0030-0014 | DR-CA-0030-0015 | DR-CA-0030-0020 | DR-CA-0030-9000 | DR-CA-0030-9001
Friedman, Stanley Lester (California)
DR-CA-0030-0001 | DR-CA-0030-0002 | DR-CA-0030-0004 | DR-CA-0030-0007 | DR-CA-0030-0010 | DR-CA-0030-0014 | DR-CA-0030-0015 | DR-CA-0030-0020 | DR-CA-0030-9000
Maynard, Deanne (District of Columbia)
DR-CA-0030-9001
Phillips, Carter G (District of Columbia)
DR-CA-0030-9001
Defendant's Lawyers Bates, Eric D. (California)
DR-CA-0030-0003 | DR-CA-0030-0005 | DR-CA-0030-0008 | DR-CA-0030-0011 | DR-CA-0030-9000
Brown, Edmund G. Jr. (California)
DR-CA-0030-0003 | DR-CA-0030-0005 | DR-CA-0030-0008 | DR-CA-0030-0011
Cardenas, Jesse (California)
DR-CA-0030-0005 | DR-CA-0030-0008 | DR-CA-0030-0011 | DR-CA-0030-9000
Kim, Jennifer M. (California)
DR-CA-0030-0003 | DR-CA-0030-0005 | DR-CA-0030-0008 | DR-CA-0030-0011 | DR-CA-0030-9000
Schwartz, Karin S. (California)
DR-CA-0030-9001
Waldow, Richard T. (California)
DR-CA-0030-0003 | DR-CA-0030-0005 | DR-CA-0030-0008 | DR-CA-0030-0011
Wong, Michele Li (California)
DR-CA-0030-0003 | DR-CA-0030-0005 | DR-CA-0030-0008 | DR-CA-0030-0011 | DR-CA-0030-9000
Other Lawyers Ball, Frederick R. (Illinois)
DR-CA-0030-9001
Bullock, Louis Werner (Oklahoma)
DR-CA-0030-9001
Bursch, John J. (Michigan)
DR-CA-0030-9001
Hallward-Driemeier, Douglas Harry (District of Columbia)
DR-CA-0030-9001
Joseph, Lawrence J (District of Columbia)
DR-CA-0030-9001
Kneedler, Edwin S. (District of Columbia)
DR-CA-0030-9001
McConnell, Michael W. (Utah)
DR-CA-0030-9001
Perkins, Martha Jane (North Carolina)
DR-CA-0030-9001
Restuccia, B. Eric (Michigan)
DR-CA-0030-9001
Smith, Paul M. (District of Columbia)
DR-CA-0030-9001
Untereiner, Alan (District of Columbia)
DR-CA-0030-9001
Verrilli, Donald B. Jr. (District of Columbia)
DR-CA-0030-9001
Vladeck, Stephen I (District of Columbia)
DR-CA-0030-9001
Wolfson, Paul Reinherz (District of Columbia)
DR-CA-0030-9001

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