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Case Name Independent Living Center of Southern California v. Maxwell-Jolly PB-CA-0016
Docket / Court 2:08-cv-03315-CAS-MAN ( C.D. Cal. )
State/Territory California
Case Type(s) Public Benefits / Government Services
Case Summary
In 2008 and 2009, the California Legislature passed three statutes modifying the State's Medicaid plan, reducing payments made to health providers. Under Title XIX of the Social Security Act, 42 U.S.C. §§ 1396 et seq. (The Medicaid Act), such modifications must be approved by the federal ... read more >
In 2008 and 2009, the California Legislature passed three statutes modifying the State's Medicaid plan, reducing payments made to health providers. Under Title XIX of the Social Security Act, 42 U.S.C. §§ 1396 et seq. (The Medicaid Act), such modifications must be approved by the federal Department of Health and Human Services Centers for Medicare and Medicaid Services (CMS) prior to being put in place. In September and December 2008, California submitted amendment proposals to CMS that incorporated most of the rate reductions the Legislature had already included in the three statutes. This suit, and several others seeking injunctions to prevent the rate reductions, was filed before CMS had completed its review of the amendments.

The Independent Living Center of Southern California (a disability advocacy group), two branches of the Gray Panthers (a healthcare and anti-ageism advocacy organization), individual Medicaid benefit recipients, and several pharmacies and pharmacists (collectively, "the petitioners") filed this suit as a petition for writ of mandamus to compel the State of California not to implement the reductions to its Medicaid program ("Medi-Cal"). The providers argued that if the cutbacks were approved, the state would not provide the level of care required under Medicaid. The case was originally filed in the Los Angeles County Superior Court on April 22, 2008, but was removed to federal U.S. District Court for the Central District of California on May 19, 2008. The defendants had requested the removal to federal court; the removal was granted because the case involved questions of federal law.

According to the plaintiffs' Petition for Mandamus, prior to the rate reduction, California Medicaid rates for physicians were 61% or less of what Medicare paid for the same services. The plaintiffs claimed that "as a result of the low Medi-Cal rates, only 55% of primary care physicians and less than 50% of specialists [were] willing to participate in the Medi-Cal program." They argued that a ten percent reduction in the fee-for-service rate would reduce physician participation to even lower levels. The plaintiffs alleged that the rate reductions violated the Medicaid Act, because they had not been approved by CMS and because the State had failed to study the potential effects of the rate reductions on the quality of and level of access to care available to Medi-Cal recipients. Plaintiffs argued that California had not shown that, were the rate reductions to go into effect, the State would be able to enlist enough providers as to make Medi-Cal services sufficiently available to benefit recipients, as required by 42 U. S. C. §1396a(a)(30)(A). The plaintiffs alleged that because these rate reductions violated the Medicaid Act, they were therefore preempted by federal law due to the Supremacy Clause of the U.S. Constitution. The plaintiffs sought declaratory and injunctive relief, asking the court to find that the rate reduction was a violation of federal law and to prevent its enforcement. They also maintained that the rate reduction was prohibited by the Americans with Disabilities Act (“ADA”).

On May 30, 2008, the petitioners filed a motion for a preliminary injunction that would prevent the rate reductions from coming into effect until further review by the District Court. On June 25th, the Court (Judge Christina A. Snyder) denied this motion, finding that the petitioners’ case had no likelihood of succeeding because the Medicaid Act did not expressly create an individual right that could be the basis of a cause of action and therefore the petitioners probably did not have standing to bring their suit. Independent Living Center of Southern California v. Shewry, 2008 WL 4298223 (C.D. Cal. 2008). The petitioners appealed this decision to the Ninth Circuit Court of Appeals, which vacated the lower court's decision on July 11, 2008, finding that the Supremacy Clause could serve as the basis for their action. Independent Living Center of Southern California v. Shewry, 543 F.3d 1047 (9th Cir. 2008).

In light of the Ninth Circuit's order, on August 18, 2008 District Judge Snyder granted in part and denied in part the petitioners' motion for a preliminary injunction, finding that their Supremacy Clause case was likely to succeed on its merits. The Court therefore issued a preliminary injunction against the implementation of the Medi-Cal fee-for-service rate reductions for physicians, dentists, pharmacies, adult day health care centers, clinics, and health systems for services provided on or after July 1, 2008. Independent Living Center of Southern California v. Shewry, 2008 WL 3891211 (C.D. Cal. 2008). On August 27, 2008, the Court issued an order modifying this injunction, so that it did not retroactively apply to the period between July 1 and August 18, 2008. On November 17, 2008, Judge Snyder granted the petitioners' motion for a preliminary injunction against the rate reductions for non-emergency medical transportation services and for in-home health services. On July 9, 2009, the Ninth Circuit (Judge Milan D. Smith, Jr.) affirmed the ruling establishing the injunction, and reversed the modification. Independent Living Center of Southern California v. Maxwell-Jolly, 572 F.3d 644 (9th Cir. 2009).

Back in the district court, on March 26, 2010, Judge Snyder granted a motion to allow several outside groups to join the case as intervenor plaintiffs, who raised issues similar to those of the original petitioners. Independent Living Center of Southern California v. Shewry, 2010 WL 1235762 (C.D. Cal. 2010).

On February 10, 2010, the defendants sought review in the United States Supreme Court of the decision of the Ninth Circuit holding that the Supremacy Clause of the U.S. Constitution could serve as a basis for a cause of action in this case. The Supreme Court granted certiorari review on January 18, 2011, consolidating this case with four others that raised the same issue, 131 S.Ct. 992 (2011). These four cases were California Pharmacists Association v. Maxwell-Jolly (Clearinghouse case code PB-CA-0020), Managed Pharmacy Care v. Maxwell-Jolly (PB-CA-0019), Dominguez v. Schwarzenegger (DR-CA-0031), and Santa Rosa Memorial Hospital v. Shewry (Docket #: 3:08-cv-05173-SC). On June 1, 2011, Judge Snyder issued an order removing this action from the list of active District Court cases pending the decision of the Supreme Court.

Oral argument before the Supreme Court took place on October 3, 2011. After oral argument, while the cases were pending in the Supreme Court, CMS approved California's amendments to its Medicaid plan. In light of this, on February 22, 2012, the Supreme Court declined to issue a ruling on whether the Supremacy Clause could serve as a basis for a private suit to enforce Title XIX against a state. Instead, the Supreme Court vacated the Ninth Circuit Court's decision and remanded the case to the Ninth Circuit for reconsideration, with instructions to take into account CMS's approval of the amendments. Douglas v. Independent Living Center of Southern California, 132 S. Ct. 1204 (U.S. 2012).

On April 12, 2012, the petitioners moved to have the stay lifted in the District Court. The Court denied this motion because issues that would be determinative of the outcome of the case were still awaiting adjudication at the Ninth Circuit Court. Independent Living Center of Southern California v. Douglas, 2012 WL 1622346 (C.D. Cal. 2012).

Following the Supreme Court’s ruling, the parties entered into mediation efforts. On May 22, 2012, the parties' unanimous joint motion to enter mediation, and to stay the supplemental briefing schedule during the pendancy of mediation was granted by the Ninth Circuit.

The District Court directed the parties to submit a joint status report, which was filed on July 23, 2013. On November 5, 2013, the District Court reviewed the parties' positions from the joint status report, as well as issues presented in a certiorari petition pending in the United States Supreme Court in a totally different case (brought by other parties against the same defendant, involving some but not all the same issues)(Managed Pharmacy Care v. Sebelius, S.Ct. Docket 13-253). In this and another 19 similar cases, the District Court stayed or continued an existing stay of the proceedings.

The parties then settled, and filed a joint request for dismissal of several appeals in the 9th Circuit; this was granted on May 28, 2014. Back in the district court, on August 14, 2014 the parties filed a Joint Motion for Approval of Settlement Agreement; Judge Snyder granted the motion on September 22, 2014.

In the settlement, all parties agreed to dismiss any remaining pending appeals pursuant to the original preliminary injunction. The petitioners also agreed to dismiss the entire case with prejudice. The District Court retained jurisdiction to decide the plaintiffs’ motions for attorneys' fees, and also to determine any of the plaintiffs’ motions to enforce the Agreement up to January 1, 2016. Each side would bear its own costs, outside of any plaintiffs’ attorneys’ fees that the District Court decided to award. Since fee-for-service delivery systems are where health care providers are paid for each service, the preliminary injunction against rate reductions for Medi-Cal cost the defendants money. Due to this, the defendants had filed claims against Medi-Cal providers in order to recoup these funds. In the Settlement Agreement, the defendants agreed to forego these claims outside of a few specified exceptions.

The plaintiffs also agreed to release state and federal entities from liability for claims concerning payment reductions, unless the claims related to the accuracy of reimbursement. In return, the defendants agreed to release the plaintiff from liability for claims of “excess payment”, including payments made while the preliminary injunction was in effect, but where the rate reductions ultimately received federal approval.

After the Settlement Agreement was approved, pursuant to its terms, on April 22, 2015, the petitioners and intervenors filed a Joint Ex Parte Application for Voluntary Dismissal of Action as well as a motion for an award of attorneys’ fees and costs as the prevailing party. They also brought three other motions for attorneys’ fees and costs the next day. On April 23, 2015, Judge Snyder, considering application, ordered that this case be dismissed with prejudice, and that each party bear its own costs in accordance with the Settlement Agreement. Judge Snyder declined to grant any attorneys' fees.

In order to acquire attorneys’ fees from the defendants, on July 24 and 28th, 2015 the plaintiffs and intervenors filed additional appeals in the Ninth Circuit to Judge Snyder's order denying fees. However, during a settlement conference on November 16, 2015, the motion for attorneys’ fees was settled, though the terms are not available.

There has been no further activity on the docket since December 15, 2015.

Alex Colbert-Taylor - 07/23/2013
Matt Ramirez - 06/15/2016


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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
Hospital/Health Department
Jurisdiction-wide
Disability
disability, unspecified
General
Funding
Government Services (specify)
Payment for care
Public benefits (includes, e.g., in-state tuition, govt. jobs)
Plaintiff Type
Non-profit NON-religious organization
Private Plaintiff
Causes of Action Americans with Disabilities Act (ADA), 42 U.S.C. §§ 12111 et seq.
Title XIX of the Social Security (Medicaid) Act, 42 U.S.C §1396
Defendant(s) The State of California
Plaintiff Description a coalition of health care rights advocacy groups, pharmacies and pharmacists who participate in California's Medicaid program, Medi-Cal, and individual recipients of Medi-Cal
Indexed Lawyer Organizations None on record
Class action status sought No
Class action status granted No
Prevailing Party Plaintiff
Public Int. Lawyer Yes
Nature of Relief Preliminary injunction / Temp. restraining order
Injunction / Injunctive-like Settlement
Source of Relief Litigation
Settlement
Form of Settlement Private Settlement Agreement
Order Duration 2008 - n/a
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-0021 : California Medical Association v. Shewry (C.D. Cal.)
PB-CA-0022 : California Hospital Association v. Maxwell-Jolly (C.D. Cal.)
PB-CA-0023 : Sierra Medical Services Alliance v. Maxwell-Jolly (C.D. Cal.)
PB-CA-0024 : National Association of Chain Drug Stores v. Schwarzenegger (C.D. Cal.)
PB-CA-0025 : California Hospital Association v. Maxwell-Jolly (C.D. Cal.)
PB-CA-0026 : Development Services Network v. Maxwell-Jolly (C.D. Cal.)
PB-CA-0027 : California Association of Health Facilities v. Maxwell-Jolly; Development Services Network v. Maxwell-Jolly (C.D. Cal.)
PB-CA-0028 : California Pharmacists Association v. Maxwell-Jolly (C.D. Cal.)
DR-CA-0031 : Dominguez v. Schwarzenegger (N.D. Cal.)
DR-CA-0030 : Independent Living Center v. Maxwell-Jolly (C.D. Cal.)
Docket(s)
09-958 (U.S. Supreme Court)
PB-CA-0016-9001.pdf | Detail
Date: 03/26/2012
Source: Supreme Court website
2:08-cv-03315 (C.D. Cal.)
PB-CA-0016-9000.pdf | Detail
Date: 12/15/2015
Source: PACER [Public Access to Court Electronic Records]
General Documents
Verified First Amended Petition for Writ of Mandamus
PB-CA-0016-0009.pdf | Detail
Date: 05/12/2008
Source: PACER [Public Access to Court Electronic Records]
Respondents' Notice of Removal of Action Under 42 U.S.C. § 1441(b)
PB-CA-0016-0010.pdf | Detail
Date: 05/19/2008
Source: PACER [Public Access to Court Electronic Records]
Order Denying Petitioners' Motion for a Preliminary Injunction (2008 WL 4298223 / 2008 U.S.Dist.LEXIS 120364) (C.D. Cal.)
PB-CA-0016-0002.pdf | WESTLAW| LEXIS | Detail
Date: 06/25/2008
Source: PACER [Public Access to Court Electronic Records]
[Ninth Circuit] Order [Vacating the District Court's Order of June 25, 2008, and Remanding for Further Proceedings] (543 F.3d 1047)
PB-CA-0016-0011.pdf | WESTLAW| LEXIS | Detail
Date: 07/11/2008
Source: PACER [Public Access to Court Electronic Records]
Order Granting in Part and Denying in Part Petitioners' Motion for Preliminary Injunction (2008 WL 3891211 / 2008 U.S.Dist.LEXIS 77525) (C.D. Cal.)
PB-CA-0016-0004.pdf | WESTLAW| LEXIS | Detail
Date: 08/18/2008
Source: PACER [Public Access to Court Electronic Records]
Order Modifying Preliminary Injunction (C.D. Cal.)
PB-CA-0016-0012.pdf | Detail
Date: 08/27/2008
Source: PACER [Public Access to Court Electronic Records]
Complaint in Intervention
PB-CA-0016-0013.pdf | Detail
Date: 09/15/2008
Source: PACER [Public Access to Court Electronic Records]
[Ninth Circuit] Opinion [Reversing the District Court's Order of June 25, 2008] (543 F.3d 1050)
PB-CA-0016-0014.pdf | WESTLAW| LEXIS | Detail
Date: 09/17/2008
Source: U.S. Court of Appeals website
Order [Granting] Respondent's Ex Parte Application for Order Staying the Action (C.D. Cal.)
PB-CA-0016-0015.pdf | Detail
Date: 11/03/2008
Source: PACER [Public Access to Court Electronic Records]
Order Granting Petitioners' Third Motion for Preliminary Injunction (C.D. Cal.)
PB-CA-0016-0016.pdf | Detail
Date: 11/17/2008
Source: PACER [Public Access to Court Electronic Records]
[Ninth Circuit] Opinion [Affirming in Part and Reversing in Part the District Court's Order of August 18, 2008] (572 F.3d 644)
PB-CA-0016-0005.pdf | WESTLAW| LEXIS | Detail
Date: 07/09/2009
[Ninth Circuit] Memorandum [Affirming the District Court's Order of November 11, 2008] (342 Fed.Appx. 306)
PB-CA-0016-0017.pdf | WESTLAW| LEXIS | Detail
Date: 08/07/2009
Source: U.S. Court of Appeals website
Order [Denying Petitioners'] Motion to Enforce Preliminary Injunction and, Also, to Stay and Preliminarily Enjoin Implementation of Payment Cuts (C.D. Cal.)
PB-CA-0016-0018.pdf | Detail
Date: 11/02/2009
Source: PACER [Public Access to Court Electronic Records]
[Ninth Circuit] Order [Denying Respondents' Motion to Vacate] (590 F.3d 725)
PB-CA-0016-0019.pdf | WESTLAW| LEXIS | Detail
Date: 12/21/2009
Source: U.S. Court of Appeals website
Order Amending [the District] Court’s August 18, 2008 Order Pursuant to the Ninth Circuit Court of Appeals Mandate Issued December 21, 2009 (C.D. Cal.)
PB-CA-0016-0020.pdf | Detail
Date: 01/22/2010
Source: PACER [Public Access to Court Electronic Records]
Order Denying Respondents' Motion to Stay the [District] Court's January 22, 2010 Order Amending the August 18, 2008 Injunction (C.D. Cal.)
PB-CA-0016-0021.pdf | Detail
Date: 02/25/2010
Source: PACER [Public Access to Court Electronic Records]
Complaint in Intervention
PB-CA-0016-0022.pdf | Detail
Date: 03/26/2010
Source: PACER [Public Access to Court Electronic Records]
Opinion (2010 WL 1235762) (C.D. Cal.)
PB-CA-0016-0028.pdf | WESTLAW | Detail
Date: 03/26/2010
Source: Westlaw
Order Terminating the [Stay of the Case] (C.D. Cal.)
PB-CA-0016-0023.pdf | Detail
Date: 05/27/2010
Source: PACER [Public Access to Court Electronic Records]
[Petitioners'] Motion for Summary Judgment [and] Memorandum of Points and Authorities [in Support]
PB-CA-0016-0024.pdf | Detail
Date: 05/28/2010
Source: PACER [Public Access to Court Electronic Records]
[Order Granting] Respondent's Ex Parte Application for Stay of the Trial Court Proceedings [Pending Disposition of the Petition of Certiorari in the Supreme Court] (C.D. Cal.)
PB-CA-0016-0025.pdf | Detail
Date: 06/17/2010
Source: PACER [Public Access to Court Electronic Records]
[Supreme Court] Opinion [Vacating the Ninth Circuit's Judgments of July 9 and August 7, 2009, and Remanding for Further Proceedings] (132 S.Ct. 1204)
PB-CA-0016-0026.pdf | WESTLAW | Detail
Date: 02/22/2012
Source: Westlaw
[Order Denying] Petitioners' Motion to Lift Stay and Restore Case to Active Status (2012 WL 1622346 / 2012 U.S.Dist.LEXIS 65210) (C.D. Cal.)
PB-CA-0016-0027.pdf | WESTLAW| LEXIS | Detail
Date: 05/08/2012
Source: PACER [Public Access to Court Electronic Records]
Memorandum of Points and Authorities [includes Settlement Agreement]
PB-CA-0016-0029.pdf | Detail
Date: 08/19/2014
Source: PACER [Public Access to Court Electronic Records]
Minutes for Petitioners' and Intervenors' Motions for Attorneys Fees
PB-CA-0016-0030.pdf | Detail
Date: 07/06/2015
Source: PACER [Public Access to Court Electronic Records]
Judges Berzon, Marsha Siegel (Ninth Circuit)
PB-CA-0016-0011 | PB-CA-0016-0014
Breyer, Stephen Gerald (SCOTUS, First Circuit)
PB-CA-0016-0026
Fletcher, William A. (Ninth Circuit)
PB-CA-0016-0017 | PB-CA-0016-0019
Nagle, Margaret A. (C.D. Cal.) [Magistrate]
PB-CA-0016-9000
Reinhardt, Stephen Roy (Ninth Circuit)
PB-CA-0016-0011 | PB-CA-0016-0017 | PB-CA-0016-0019
Roberts, John Glover Jr. (D.C. Circuit, SCOTUS)
PB-CA-0016-0026
Smith, Milan Dale Jr. (Ninth Circuit)
PB-CA-0016-0005 | PB-CA-0016-0011 | PB-CA-0016-0017 | PB-CA-0016-0019
Snyder, Christina A. (C.D. Cal.)
PB-CA-0016-0002 | PB-CA-0016-0004 | PB-CA-0016-0012 | PB-CA-0016-0015 | PB-CA-0016-0016 | PB-CA-0016-0018 | PB-CA-0016-0020 | PB-CA-0016-0021 | PB-CA-0016-0023 | PB-CA-0016-0025 | PB-CA-0016-0027 | PB-CA-0016-0028 | PB-CA-0016-0030 | PB-CA-0016-9000
Monitors/Masters None on record
Plaintiff's Lawyers Bookman, Lloyd A. (California)
PB-CA-0016-0013 | PB-CA-0016-0022 | PB-CA-0016-0024 | PB-CA-0016-9000 | PB-CA-0016-9001
Cannizzo, Craig J. (California)
PB-CA-0016-0013 | PB-CA-0016-0022 | PB-CA-0016-0024 | PB-CA-0016-0029 | PB-CA-0016-9000
Carman, Lynn S. (California)
PB-CA-0016-0009 | PB-CA-0016-0029 | PB-CA-0016-9000
Friedman, Stanley Lester (California)
PB-CA-0016-0009 | PB-CA-0016-0029 | PB-CA-0016-9000
Gross, Byron J. (California)
PB-CA-0016-0013 | PB-CA-0016-0022 | PB-CA-0016-0024 | PB-CA-0016-9000
Keville, Jordan B. (California)
PB-CA-0016-0013 | PB-CA-0016-0022 | PB-CA-0016-0024 | PB-CA-0016-9000
Maynard, Deanne (District of Columbia)
PB-CA-0016-9001
Phillips, Carter G (District of Columbia)
PB-CA-0016-9001
Sze, Felicia Y. (California)
PB-CA-0016-0013 | PB-CA-0016-0022 | PB-CA-0016-0024 | PB-CA-0016-9000
Defendant's Lawyers Brown, Gregory David (California)
PB-CA-0016-0010
Carson, Susan (California)
PB-CA-0016-0029 | PB-CA-0016-9000
Cribbs, Gregory Martin (California)
PB-CA-0016-9000
Dhadwal, S. Andrew (California)
PB-CA-0016-9000
Kim, Jennifer M. (California)
PB-CA-0016-0010 | PB-CA-0016-9000 | PB-CA-0016-9001
Linton, Elizabeth Ann (California)
PB-CA-0016-9000
Matsumoto, Phillip J. (California)
PB-CA-0016-0010 | PB-CA-0016-9000
Newman, Tara L. (California)
PB-CA-0016-0010 | PB-CA-0016-9000
Schwartz, Karin S. (California)
PB-CA-0016-9001
Snuggs, Carmen (California)
PB-CA-0016-9000
Ugaz, Sarah (California)
PB-CA-0016-0010 | PB-CA-0016-9000
Venegas, John F. (California)
PB-CA-0016-9000
Waldow, Richard T. (California)
PB-CA-0016-0010
Other Lawyers Canan, Stacy (District of Columbia)
PB-CA-0016-9000
Jones, Barbara Anne (California)
PB-CA-0016-9000

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