On May 22, 2009, a trade association representing the interests of hospitals in the State of California filed a lawsuit against the California Department of Health Care Services in the U.S. District Court for the Central District of California, Western Division. The plaintiff, represented by private counsel, brought suit under the Supremacy Clause; 42 U.S.C. § 1983; the Declaratory Judgment Act, 28 U.S.C. § 2201; Title XIX of the Social Security (Medicaid) Act, 42 U.S.C §1396; and the state constitution, claiming that California had illegally enacted payment rates from Medi-Cal managed care plans for emergency and poststabilization services provided by hospitals that do not contract with those plans. Specifically, the plaintiff claimed that the rates, as enacted by Assembly Bill 1183 and implemented by All Plan Letters 08-008 and 08-010 of the Department of Health Care Services, were unlawful as preempted under federal Medicaid law because they were not consistent with efficiency, economy, quality of care and sufficiency of access, did not represent an accurate average of the rates received by hospitals under their Medi-Cal contracts, and had not been subjected to public process; under California law because they attempted to establish rates lower than what the law allows and because they attempt to establish regulations outside the bounds of formal rulemaking; and under the Fifth Amendment and California Constitution because they constituted an uncompensated taking. Plaintiff sought declaratory, injunctive and mandamus 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]; Sierra Medical Services Alliance v. Maxwell-Jolly
, No. 2:10-cv-04182 (C.D. Cal.) [PB-CA-0023]; 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 October 30, 2009, the California Association of Health Plans (CAHP) moved to intervene as a third party defendant. The District Court (Judge Christina A. Snyder) granted CAHP's motion on November 23, finding that its members' interest in not having to pay more to non-contracting hospitals was sufficiently incongruous with that of the Department of Health Care Services as to make it inadequately represented by the latter party. Cal. Hosp. Ass'n v. Maxwell-Jolly
, No. 09-cv-03694, 2009 WL 4120725, 2009 U.S. Dist. LEXIS 118036 (C.D. Cal. Nov. 23, 2009).
Over the following year, proceedings were repeatedly postponed as parties attempted to reach a settlement agreement. (While the Court notes at docket entry 70 that parties informed it that they had come to a settlement on December 10, 2010, no further reference to the settlement is made, perhaps due to the stay described below.)
On September 2, 2010, the state defendant moved to stay the case until the Supreme Court resolved petitions for certiorari in Maxwell-Jolly v. Independent Living Center of Southern California, Inc.
, No. 09-958 [PB-CA-0016], Maxwell-Jolly v. California Pharmacists Ass'n
, No. 09-115 [PB-CA-0028], and Maxwell-Jolly v. Santa Rosa Memorial Hospital
, No. 10-283, all of which dealt with similar Supremacy Clause issues in Medi-Cal reimbursement rate cases. The District Court (Judge Snyder) granted the motion on September 7, staying the case pending resolution of the Supreme Court proceedings.
On June 11, 2011, the court removed the case from its active caseload and ordered the parties to file a quarterly joint status report until the case was reactivated or dismissed.
As of the date of this summary, there have been four such reports filed. The latest of these, dated May 18, 2011, notes that the Supreme Court issued a decision in Maxwell-Jolly v. Independent Living Center of Southern California, Inc.
(restyled Douglas v. Independent Living Center of Southern California, Inc.
), No. 09-958 [PB-CA-0016], remanding to the Ninth Circuit and calling into question the Supremacy Clause cause of action in this group of cases. Plaintiff urges that the stay be lifted, while defendants believe it should be continued pending the outcome of the cases remanded to the Ninth Circuit.Christopher Schad - 06/25/2012