Independent Living Center of Southern California, Inc. v. Sandra Shewry

CourtCourt of Appeals for the Ninth Circuit
DecidedSeptember 17, 2008
Docket08-56061
StatusPublished

This text of Independent Living Center of Southern California, Inc. v. Sandra Shewry (Independent Living Center of Southern California, Inc. v. Sandra Shewry) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Independent Living Center of Southern California, Inc. v. Sandra Shewry, (9th Cir. 2008).

Opinion

FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

INDEPENDENT LIVING CENTER OF  SOUTHERN CALIFORNIA, INC., a nonprofit corporation; GRAY PANTHERS OF SACRAMENTO, a nonprofit corporation; GRAY PANTHERS OF SAN FRANCISCO, a nonprofit corporation; GERALD SHAPIRO, PHARM. D. doing business as UPTOWN PHARMACY AND GIFT No. 08-56061 SHOPPE; SHARON STEEN doing D.C. No. business as CENTRAL PHARMACY; MARK BECKWITH; MARGARET  2:08-cv-03315-CAS- MAN DOWLING; TRAN PHARMACY, INC., doing business as TRAN PHARMACY; OPINION JASON YOUNG, Petitioners-Appellants, v. SANDRA SHEWRY, Director of the Department of Health Care Services, State of California, Respondent-Appellee.  Appeal from the United States District Court for the Central District of California Christina A. Snyder, District Judge, Presiding

Argued and Submitted July 11, 2008—Pasadena, California

Filed September 17, 2008

Before: Stephen Reinhardt, Marsha S. Berzon, and Milan D. Smith, Jr., Circuit Judges.

13025 13026 INDEPENDENT LIVING CENTER v. SHEWRY Opinion by Judge Berzon INDEPENDENT LIVING CENTER v. SHEWRY 13029

COUNSEL

Lynn S. Carman and Stanley L. Friedman (argued) for Inde- pendent Living Center of Southern California, et al., petitioners-appellants.

Edmund G. Brown, Jr., Attorney General of the State of Cali- fornia; Richard T. Waldow, Supervising Deputy Attorney General; Jennifer M. Kim (argued), Supervising Deputy Attorney General; Phillip J. Matsumoto, Tara L. Newman, Gregory M. Cribs, and Sara Ugaz, Deputy Attorneys General; for Sandra Shewry, Director of the Department of Health Care Services of the State of California, respondent-appellee. 13030 INDEPENDENT LIVING CENTER v. SHEWRY OPINION

BERZON, Circuit Judge:

Petitioner-appellants, a group of pharmacies, health care providers, senior citizens’ groups, and Medi-Cal beneficiaries (collectively “ILC”),1 seek to enjoin a state official from implementing legislation reducing payments to medical ser- vice providers under the state’s Medicaid program, known as “Medi-Cal,” by ten percent. ILC alleged in its complaint that the state legislation violates certain provisions of the federal Medicaid Act, and is therefore preempted under the Suprem- acy Clause.2 Although ILC sought preliminary relief, the dis- trict court denied any such relief, holding that ILC could not allege any viable claim for injunctive relief because none of the petitioners or their members have any federal right to 1 Petitioner-appellants include the Independent Living Center of South- ern California, a non-profit corporation providing services to over 8,000 disabled individuals annually; Gray Panthers of Sacramento and San Fran- cisco, senior citizens’ advocacy groups whose members include a number of Medi-Cal recipients; Gerald Shapiro, a licensed registered pharmacist operating Uptown Pharmacy & Gift Shoppe, which delivers prescription drugs to roughly 5,000 home-bound patients in Los Angeles; Sharon Steen, co-owner of Central Pharmacy in Santa Monica; Mark Beckwith, a quadriplegic suffering from spinal muscular atrophy who receives medi- cal and pharmacy services under Medi-Cal; Margaret Dowling, a paraple- gic who receives part of her medical services under Medi-Cal; Jason Young, an individual suffering from blindness and brain damage who receives in-home support services from a Medi-Cal managed care pro- gram; and Tran Pharmacy, Inc., a California corporation operating a retail pharmacy in Garden Grove. Independent Living Center, the Gray Pan- thers, and the pharmacy petitioners also sued to assert the interests of their respective patients and members. We refer to petitioner-appellants collec- tively as “petitioners,” “Independent Living Center,” or “ILC.” 2 The Supremacy Clause provides that “[t]his Constitution, and the Laws of the United States which shall be made in Pursuance thereof . . . shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.” U.S. CONST. art. VI, cl. 2. INDEPENDENT LIVING CENTER v. SHEWRY 13031 Medi-Cal payments or benefits. We do not agree that this suit fails for this threshold reason, and therefore reverse.

I.

A.

Under Title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq. (the “Medicaid Act”), the federal government provides funds to participating states to “enabl[e] each State, as far as practicable . . . to furnish [ ] medical assistance on behalf of families with dependent children and of aged, blind, or disabled individuals, whose income and resources are insufficient to meet the costs of necessary medical services[.]” 42 U.S.C. § 1396. Medicaid is a cooperative federal-state pro- gram, enacted by Congress pursuant to its powers under the Spending Clause, see U.S. CONST. art. I, § 8, cl. 1, that “ ‘di- rects federal funding to states to assist them in providing med- ical assistance to low-income individuals.’ ” Ball v. Rodgers, 492 F.3d 1094, 1098 (9th Cir. 2007) (quoting Katie A. v. Los Angeles County, 481 F.3d 1150, 1153-54 (9th Cir. 2007)). To receive federal funds, states are required to administer their programs in compliance with individual “State plans for med- ical assistance” approved by the federal Secretary of Health and Human Services. 42 U.S.C. § 1396. The Act sets forth detailed requirements for state plans, see id. § 1396a(a)(1)- (71), including the specific provision at issue in this appeal.

Under that provision, § 1396a(a)(30)(A) (“Section 30(A)”), a state plan must:

provide such methods and procedures relating to . . . the payment for[ ] care and services . . . as may be necessary . . . to assure that payments are (consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the 13032 INDEPENDENT LIVING CENTER v. SHEWRY extent that such care and services are available to the general (population in the geographic area[.]

That is, a state plan must establish reimbursement rates for health care providers that are both consistent with high- quality medical care (the “quality of care provision”) and suf- ficient to enlist enough providers to ensure that medical ser- vices are generally available to Medicaid recipients (the “access to care provision”). See generally Orthopaedic Hosp. v. Belshe, 103 F.3d 1491 (9th Cir. 1997).

B.

California Assembly Bill X3 5 (“AB 5”), enacted on Febru- ary 16, 2008, during a special session convened by the Gover- nor to address the state’s budget deficit, reduces payments to medical providers participating in the state’s Medi-Cal pro- gram by ten percent. Section 14 of AB 5 instructs the Director of the Department of Health Care Services, the state agency responsible for administering the Medi-Cal program, to reduce payments to physicians, dentists, pharmacies, adult day health care centers, clinics, health systems and other pro- viders participating in Medi-Cal’s fee-for-service program by ten percent. See CAL. WELF. & INST. CODE § 14105.19 (2008). Section 14 also reduces payments to managed health care plans under contract with the Department by the “actuarial equivalent” of ten percent. Id. Section 15 of AB 5 instructs the Director to reduce payments for inpatient services pro- vided by acute care hospitals not under contract with the Department by ten percent. See id. § 14166.245. All of these cuts were scheduled to take effect July 1, 2008.

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