The Arc of California v. Toby Douglas

757 F.3d 975, 2014 WL 2922662, 2014 U.S. App. LEXIS 12260
CourtCourt of Appeals for the Ninth Circuit
DecidedJune 30, 2014
Docket13-16544
StatusPublished
Cited by86 cases

This text of 757 F.3d 975 (The Arc of California v. Toby Douglas) 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
The Arc of California v. Toby Douglas, 757 F.3d 975, 2014 WL 2922662, 2014 U.S. App. LEXIS 12260 (9th Cir. 2014).

Opinion

OPINION

BERZON, Circuit Judge:

This case concerns California’s generous program of home- and community-based care for developmentally disabled residents. To fund its program, California relies in large part on federal money provided under the Medicaid Act (“the Act”), 42 U.S.C. §§ 1396-1396w-5. California has reduced the funding for this program, as it has for other Medicaid-funded programs at various times, and, as in the past, affected groups have challenged the reductions. We therefore are obliged to address once again the scope of the state’s federal obligations under the Act to compensate for covered services. See, e.g., Managed Pharmacy Care v. Sebelius, 716 F.3d 1235 (9th Cir.2013); Developmental Servs. Network v. Douglas, 666 F.3d 540 (9th Cir.2011).

In this instance, beginning in 2009, the California legislature enacted a series of statutes reducing the state’s compensation, partially funded under the federal Medicaid Act, of home- and community-based services provided to developmentally disabled persons. The plaintiffs in this case, Arc of California and the United Cerebral Palsy Association of San Diego (together, *979 “Arc”) — non-profit organizations representing developmentally disabled persons, their families, and the organizations that serve them — allege that California’s implementation of those statutes was inconsistent with the Medicaid Act; violated the federal Americans with Disabilities Act (“ADA”), 42 U.S.C. § 12132, and the federal Rehabilitation Act, 29 U.S.C. § 794(a); and was invalid under California’s Lanter-man Developmental Disabilities Services Act, Cal. Welf. & Inst.Code §§ 4500-4869. Arc sought preliminary injunctive relief against the continued enforcement of California’s recently enacted statutes. The district court denied that motion and, in a simultaneously released order, dismissed Arc’s Medicaid Act claims, reasoning that those claims are meritless and that Arc had not demonstrated a likelihood of irreparable harm.

We hold that the district court abused its discretion in denying Arc’s motion for a preliminary injunction, because it misconstrued the Medicaid Act and applied deference to a federal agency decision where none was due. We also assert pendent appellate jurisdiction over the dismissal of Arc’s Medicaid Act claims, which relied on exactly the same reasoning, and reverse.

We cannot on this appeal, however, go beyond correcting the district court’s statutory interpretation to determining the propriety of preliminary injunctive relief. The primary state statute Arc challenges expired while the case was on appeal, so that challenge is moot. While the two other challenged statutes remain in effect, their impact was not the focus of the preliminary injunction proceeding. The current record is therefore inadequate to adjudge whether that impact amounts to irreparable harm. We therefore remand to allow augmentation of the record and reconsideration of the propriety of injunctive relief in the changed circumstances, applying the correct irreparable harm analysis.

I.

California established under its Lanter-man Act, Cal. Welf. & Inst.Code §§ 4500-4869, a comprehensive statutory scheme that seeks

“to prevent or minimize the institutionalization of developmentally disabled persons and their dislocation from family and community, and to enable them to approximate the pattern of everyday living of nondisabled persons of the same age and to lead more independent and productive lives in the community.”

Sanchez v. Johnson, 416 F.3d 1051, 1064 (9th Cir.2005) (quoting Ass’n for Retarded Citizens v. Dep’t of Developmental Servs., 38 Cal.3d 384, 211 Cal.Rptr. 758, 696 P.2d 150, 154 (1985)).

Under the Lanterman Act, developmentally disabled persons receive services through providers under contract with a “regional center.” CaLCode Regs. tit. 17, §§ 50602(n)-(o), 54010. A regional center is “a diagnostic, counseling, and service coordination center for developmentally disabled persons and their families” that operates as a “private nonprofit community agency or corporation acting as a contracting agency.” Cal.Code Regs. tit. 17, § 54302(a)(54). Regional centers receive funding from the state, among other sources. See Cal. Welf. & Inst.Code §§ 4620, 4659.

California, in turn, receives some of the funding for its Lanterman Act programs through the federal Medicaid program. See Cal. Welf. & Inst.Code § 4659(a)(1). State participation in Medicaid is not compulsory, but participating states must comply with the Act and the regulations that implement it. See, e.g., Managed Pharmacy Care, 716 F.3d at 1241. The Act conditions receipt of feder *980 al funds on approval of a “state plan,” see, e.g., 42 U.S.C. §§ 1396-1, 1396b(a), which “is a comprehensive written statement submitted by the [state] agency describing the nature and scope of its Medicaid program and giving assurance that it will be administered in conformity” with the Act and its accompanying regulations, 42 C.F.R. § 430.10. The Secretary of the Department of Health and Human Services (“Secretary”) administers the Act, see, e.g., Managed Pharmacy Care, 716 F.3d at 1241; 42 U.S.C. § 1396a(b), but has delegated to the regional administrator for the Centers for Medicare and Medicaid Services (“CMS”) the responsibility of reviewing in the first instance state plans for compliance with the provisions of the Act, see 42 C.F.R. § 430.15(b). The Secretary also requires the submission of state plan amendments (“SPAs”) for certain changes to a state plan, which CMS again reviews in the first instance for compliance with the Act. See 42 C.F.R. § 430.12(c).

The Medicaid Act authorizes the Secretary to waive certain of the Act’s otherwise-applicable requirements by granting a so-called home- and community-based services (“HCBS”) waiver. See 42 U.S.C. § 1396n(c). That waiver provision originated

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757 F.3d 975, 2014 WL 2922662, 2014 U.S. App. LEXIS 12260, Counsel Stack Legal Research, https://law.counselstack.com/opinion/the-arc-of-california-v-toby-douglas-ca9-2014.