University of Michigan Law School
Civil Rights Litigation Clearinghouse
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Case Name Sierra Medical Services Alliance v. Maxwell-Jolly PB-CA-0023
Docket / Court 2:10-cv-04182 ( C.D. Cal. )
State/Territory California
Case Type(s) Public Benefits / Government Services
Case Summary
On June 6, 2010, a coalition of medical transportation providers filed this action against the California Department of Health Care Services in the U.S. District Court for the Central District of California, Western Division, challenging Assembly Bill 5 (AB 5), the California state budget bill for ... read more >
On June 6, 2010, a coalition of medical transportation providers filed this action against the California Department of Health Care Services in the U.S. District Court for the Central District of California, Western Division, challenging Assembly Bill 5 (AB 5), the California state budget bill for the fiscal year of 2009-2010. Plaintiffs, represented by private counsel, brought their suit under the Supremacy Clause; 42 U.S.C. § 1983; the Declaratory Judgment Act, 28 U.S.C. § 2201; and Title XIX of the Social Security Act, 42 U.S.C. § 1396, claiming that the rate freeze on medical transportation imposed by AB 5 was unlawful. Specifically, plaintiffs claimed that the rate freeze was preempted by the Medicaid Act, an unconstitutional taking under the Fifth Amendment, and a violation of equal protection and procedural and substantive due process under the Fourteenth Amendment. They sought declaratory, injunctive and monetary relief.

This suit was one of many filed challenging the State of California's reduction in Medicaid reimbursement rates due to its budgetary crisis. Other cases in the Clearinghouse include Douglas v. Independent Living Center, No. 2:08−cv−03315 (C.D. Cal.) [PB-CA-0016]; California Association For Health Services At Home v. Shewry, No. 2:08-cv-07045 (C.D. Cal.) [PB-CA-0017]; California Medical Transportation Association, Inc. v. Shewry, No. 2:08-cv-07046 (C.D. Cal.) [PB-CA-0018]; Managed Pharmacy Care v. Maxwell-Jolly, No. 2:09-cv-00382 (C.D. Cal.) [PB-CA-0019]; California Pharmacists Association v. Maxwell-Jolly, No. 2:09-cv-00722 (C.D. Cal.) [PB-CA-0020]; California Medical Association v. Shewry, No. 2:08-cv-03363 (C.D. Cal.) [PB-CA-0021]; California Hospital Association v. Maxwell-Jolly, No. 2:09-cv-03694 (C.D. Cal.) [PB-CA-0022]; National Association of Chain Drug Stores v. Schwarzenegger, No. 2:09-cv-07097 (C.D. Cal.) [PB-CA-0024]; California Hospital Association v. Maxwell-Jolly, No. 2:09-cv-08642 (C.D. Cal.) [PB-CA-0025]; Development Services Network v. Maxwell-Jolly, No. 2:10-cv-03284 (C.D. Cal.) [PB-CA-0026]; California Association of Health Facilities v. Maxwell-Jolly, No. 2:10-cv-03259 (C.D. Cal.) [PB-CA-0027]; California Pharmacists Association v. Maxwell-Jolly, No. 2:09-cv-08200 (C.D. Cal.) [PB-CA-0028].

On June 4, 2010, plaintiffs filed a motion seeking to enjoin application of the rate freeze. Rather than deciding on this motion, however, on July 16, 2010, the Court (Judge Christina A. Snyder) stayed the case, finding that pending actions in the Supreme Court could be dispositive of some of plaintiffs' claims, and ordered the parties to file quarterly status reports until the case was reactivated or dismissed.

So far, the Court has denied two requests by plaintiffs to lift the stay. See Sierra Med. Servs. Alliance v. Maxwell-Jolly, No. 2:10-cv-04182, 2011 WL 3205358, 2011 U.S. Dist. LEXIS 82013 (C.D. Cal. July 26, 2011); Sierra Med. Servs. Alliance v. Maxwell-Jolly, No. 2:10-cv-04182, 2011 WL 3837076, 2011 U.S. Dist. LEXIS 97363 (C.D. Cal. Aug. 29, 2011). In their most recent status report, dated May 2, 2012, the parties noted that all of the cases before the Supreme Court have been decided. Plaintiffs stated their intent to once again move for a lifting of the stay, while defendants believed the stay should be continued, citing key issues still pending before the Ninth Circuit on remand from the Supreme Court.

On Sept. 11, 2012, the court granted the plaintiffs leave to file an amended complaint, lifted the stay, and placed the case on the court's active list.

Plaintiffs filed their amended complaint on Sept. 20, 2012. It made essentially the same claims as the original complaint, including unconstitutional takings without just compensation, procedural due process violations, equal protection violations, and violations of the Contract and Interstate Commerce Clauses. The plaintiffs again sought injunctive relief and compensatory damages.

On Oct. 25, 2013, the state moved for summary judgment. After the court ordered and then later lifted another temporary stay, it (Judge Christina A. Snyder) granted the state's motion for summary judgment on Aug. 11, 2014. The court held that the takings and due process claims failed because plaintiffs did not have a property interest in the reimbursement rates set by the California Code of Regulations. The Contracts Clause claim failed because plaintiffs did not show that the state's failure to increase the reimbursement rates has substantially impaired their contracts with the cities and special districts they contracted with. Finally, the Commerce Clause claim failed because all plaintiffs could show was that the new reimbursement rates burdened them "by not compensating them as well as they would prefer."

On Sept. 10, 2014, the plaintiffs appealed the court's decision to the U.S. Court of Appeals for the 9th Circuit.

Christopher Schad - 06/25/2012
Andrew Junker - 10/09/2014


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Issues and Causes of Action
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Issues
Benefit Source
Medicaid
Constitutional Clause
Commerce Power
Due Process
Equal Protection
Defendant-type
Hospital/Health Department
General
Funding
Payment for care
Plaintiff Type
Private Plaintiff
Causes of Action Title XIX of the Social Security (Medicaid) Act, 42 U.S.C §1396
Declaratory Judgment Act, 28 U.S.C. § 2201
42 U.S.C. § 1983
Defendant(s) California Department of Health Care Services
Plaintiff Description A coalition of providers of medical transportation services.
Indexed Lawyer Organizations None on record
Class action status sought No
Class action status granted No
Prevailing Party Defendant
Public Int. Lawyer No
Nature of Relief None
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-0017 : California Association For Health Services At Home v. Shewry (C.D. Cal.)
PB-CA-0018 : California Medical Transportation Association, Inc. v. Shewry (C.D. Cal.)
PB-CA-0019 : Managed Pharmacy Care v. Maxwell-Jolly (C.D. Cal.)
PB-CA-0020 : California Pharmacists Association v. Maxwell-Jolly (C.D. Cal.)
PB-CA-0016 : Independent Living Center of Southern California v. Maxwell-Jolly (C.D. Cal.)
Docket(s)
2:10-cv-04182 (C.D. Cal.) 09/25/2014
PB-CA-0023-9000.pdf | Detail
PACER [Public Access to Court Electronic Records]
General Documents
Complaint for Injunctive Relief, Declaratory Relief and Damages; Demand for Jury Trial 06/04/2010
PB-CA-0023-0001.pdf | Detail
Document Source: PACER [Public Access to Court Electronic Records]
Notice of Motion and Motion for Stay 07/07/2010
PB-CA-0023-0002.pdf | Detail
Document Source: PACER [Public Access to Court Electronic Records]
[Order Granting] Defendants' Ex Parte Application for a Stay 07/16/2010 (2010 WL 2891547 / 2010 U.S.Dist.LEXIS 82397) (C.D. Cal.)
PB-CA-0023-0003.pdf | WESTLAW| LEXIS | Detail
Document Source: PACER [Public Access to Court Electronic Records]
[Order Denying] Plaintiffs' [First] Request to Lift Stay 07/26/2011 (2011 WL 3205358 / 2011 U.S.Dist.LEXIS 82013) (C.D. Cal.)
PB-CA-0023-0004.pdf | WESTLAW| LEXIS | Detail
Document Source: PACER [Public Access to Court Electronic Records]
[Order Denying] Plaintiffs' [Second] Request to Lift Stay 08/29/2011 (2011 WL 3837076 / 2011 U.S.Dist.LEXIS 97363) (C.D. Cal.)
PB-CA-0023-0005.pdf | WESTLAW| LEXIS | Detail
Document Source: PACER [Public Access to Court Electronic Records]
Sierra Medical Services Alliance v. David Maxwell-Jolly - FIRST AMENDED COMPLAINT 09/20/2012
PB-CA-0023-0006.pdf | Detail
Document Source: PACER [Public Access to Court Electronic Records]
Opinion and Order granting defendant's MSJ 07/28/2014 (C.D. Cal.)
PB-CA-0023-0007.pdf | Detail
Document Source: PACER [Public Access to Court Electronic Records]
Judges Nagle, Margaret A. (C.D. Cal.) [Magistrate]
PB-CA-0023-9000
Snyder, Christina A. (C.D. Cal.)
PB-CA-0023-0003 | PB-CA-0023-0004 | PB-CA-0023-0005 | PB-CA-0023-0007 | PB-CA-0023-9000
Monitors/Masters None on record
Plaintiff's Lawyers Hagemann, Kelly M. (California)
PB-CA-0023-0006 | PB-CA-0023-9000
Selesnick, Andrew H. (California)
PB-CA-0023-0006 | PB-CA-0023-9000
Ulloa, Edward R. (California)
PB-CA-0023-0001 | PB-CA-0023-0006 | PB-CA-0023-9000
Warren, Kevin R. (California)
PB-CA-0023-0001 | PB-CA-0023-0006 | PB-CA-0023-0007 | PB-CA-0023-9000
Defendant's Lawyers Angelopoulos, Tracey L. (California)
PB-CA-0023-0002 | PB-CA-0023-9000
Brown, Edmund G. Jr. (California)
PB-CA-0023-0002
Crane, Chara L. (California)
PB-CA-0023-0002 | PB-CA-0023-9000
Elias, Nimrod P (California)
PB-CA-0023-9000
Kim, Jennifer M. (California)
PB-CA-0023-0002 | PB-CA-0023-9000
McElroy, Leslie P. (California)
PB-CA-0023-0002 | PB-CA-0023-9000
Newman, Tara L. (California)
PB-CA-0023-0002 | PB-CA-0023-9000
Stanton, Hadara Rachel (California)
PB-CA-0023-0007 | PB-CA-0023-9000
Waldow, Richard T. (California)
PB-CA-0023-0002 | PB-CA-0023-9000
Other Lawyers None on record

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