This suit was filed on November 23, 2009 in the United States District Court for the Central District of California by the California Hospital Association (CHA), against the Director of the California Department of Health Care Services in his official capacity. The plaintiff sought injunctive relief preventing the state from implementing reductions to the reimbursement rates paid for hospital services under Medi-Cal, the state's Medicaid program. In 2008 and 2009, the California Legislature passed several acts modifying the state's Medicaid plan. Under the 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. As the result of litigation in related suits, at the time this suit was filed, preliminary injunctions were already in place preventing the defendant from implementing several of these rate reductions. See related cases.
The plaintiff in the instant case sought new injunctions preventing the reductions established by California Assembly Bill X4 5 (AB 5), passed on July 28, 2009. Unlike the state's earlier efforts to reduce its reimbursement rates, AB 5 was not a flat percentage reduction. In contrast to the plan submitted to and approved by CMS, which provided for annual updates, AB 5 limited the reimbursement of certain classes of hospital services and locked the reimbursement rates for hospital services to the rates paid in the 2008-09 year. The plaintiff argued this was a violation of the Medicaid Act.
The plaintiff brought the suit under the Supremacy Clause of the United States Constitution, arguing that the state's failure to submit a plan to amend its Medicaid program to CMS for approval prior to implementing the reductions made them unlawful and therefore preempted by the federally approved plan. The plaintiff also brought a claim under 42 U.S.C. § 1983, alleging violation of its members' civil rights. The plaintiff sought preliminary and permanent injunctions preventing the AB 5 rate reductions and a declaratory judgment holding the reductions unlawful.
On January 11, 2010, the plaintiff filed a motion for a preliminary injunction enjoining the enforcement of the contested effects of AB 5, which the Court (Judge Christina A. Snyder) granted on February 24, 2010. The defendant appealed this decision to the Ninth Circuit Court of Appeals on March 26, 2010; shortly thereafter it requested a stay of appellate proceedings because of a pending request for certiorari review by the Supreme Court in Douglas v. Independent Living Center of Southern California, a related case (Clearinghouse code PB-CA-0016). The Supreme Court accepted that case for review on the question of whether the Supremacy Clause could serve as a cause of action in this class of cases, and so on June 1, 2011, Judge Snyder issued an order removing this case from the District Court's active case list pending the outcome of Douglas. She ordered that the parties file quarterly joint status reports until the case was either reactivated or voluntarily dismissed.
The case was also stayed at the Appellate Court pending the decision of the Supreme Court in Douglas. CMS approved most of the California Medicaid plan amendments while Douglas was still awaiting adjudication. 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 the Medicaid Act against a state. Instead, the Supreme Court vacated the Ninth Circuit Court's decision in Douglas and remanded that case to the Ninth Circuit for reconsideration. Douglas v. Independent Living Center of Southern California, 132 S. Ct. 1204 (U.S. 2012).
After the Supreme Court decision, the instant case as well as Douglas and several other cases entered joint settlement mediation in the Ninth Circuit. The Court of Appeals dismissed the appeal on May 28, 2014, pursuant to the parties' joint request for dismissal. The parties reached a settlement agreement on August 19, 2014, and their agreement was approved by the district court on September 22, 2014. The Settlement Agreement provided that the plaintiffs would release state and federal entities from all liability relating to the payment reductions. In return, the defendants agreed to release plaintiffs from liability relating to "DHCS’s Claimed Excess Payments." The court dismissed the case with prejudice on April 23, 2015, and determined that each party was required to bear its own costs in accordance with the dismissal. The district court retained jurisdiction until January 1, 2016 to entertain any applications for attorneys' fees, and to enforce the terms of the Settlement Agreement. The case is now closed.
Alex Colbert-Taylor - 07/24/2013
Elizabeth Heise - 11/17/2018
compress summary
