CDCAN REPORT #172-2011: United States Supreme Court hears major California 2008-2009 Medi-Cal provider rate cut cases

US SUPREME COURT HEARS MAJOR CALIFORNIA MEDI-CAL PROVIDER RATE REDUCTION CASES

State Argues Recipients and Providers Do Not Have "Private Right of Action" To Stop Medi-Cal Provider Cuts Through Lawsuits - High Court's Eventual Decision Could Have Sweeping Impact Nationwide on Millions of People With Disabilities, Mental Health Needs, the Blind and Seniors, Their Families, Medi-Cal providers, State and Local Governments

WASHINGTON, DC (CDCAN)  [Last updated 10/03/2011 01:00 PM] - The US Supreme Court heard oral arguments this morning in Washington DC on three cases dealing with 2008 and 2009 Medi-Cal provider rate reductions in California and whether or not Medi-Cal recipients, providers and advocates have a right to sue the State of California to stop those reductions as a violation of a federal Medicaid law. [CDCAN will issue a more complete report later tonight covering more details on today's hearing before the US Supreme Court.  This report was written from Washington, DC]

Depending on how broad or narrow the high court eventually rules on those cases in the coming months (possibly in November or December or by June 2012 when the court's 2011-2012 term ends) could lead to a landmark decision that could have sweeping impact on the rights of millions of people with disabilities, mental health needs, the blind and seniors not only in California, but across the nation. With California facing yet another year of enormous on-going State budget shortfalls in 2012 - and more likely  new reductions - what the high court does in the coming months will have enormous impact on how those issues are resolved.

[CDCAN Note: Because of the importance of today's hearing, the full transcript of  today's 1 hour oral arguments is attached to this CDCAN Report as a pdf document (that persons who are blind or sight impaired should be able to view using a screen reading device) titled "2011-11-03 - United States Supreme Court - Transcript of Douglas v Independent Living Center of Southern California, et al (09-958).pdf.]

The three cases heard today before the US Supreme Court are: 

1. Douglas v. Independent Living Center of Southern California
2. Douglas v. California Pharmacists Association
3. Douglas v. Santa Rosa Memorial Hospital

(CDCAN Note:  "Douglas" is Toby Douglas, director of the Department of Health Care Services, the state agency that oversees California's Medicaid - called "Medi-Cal" program.  Douglas replaced David Maxwell-Jolly in January 2011 -  who left that position to become the new undersecretary of the California Health and Human Services Agency)

Lower federal courts in those three cases blocked California from implementing certain 2008 and 2009 cuts to Medi-Cal providers and the 2009 rollback of the State’s participation in wages for In-Home Supportive Services (IHSS) workers (that case was not officially part of the three combined cases heard today before the high court, but was linked to those cases because it covered the same legal issues).  The State subsequently - with then Governor Schwarzenegger and Governor Brown proposing and the Legislature approving - new Medi-Cal provider reductions, including elimination of Adult Day Health Care as a Medi-Cal benefit.  Some of those cuts - including the elimination of Adult Day Health Care as a Medi-Cal benefitv and payment reductions to regional center providers - have been the subject of new or additional legal action or lawsuits that are pending in lower federal district courts.

The US Supreme Court earlier in January this year granted “cert” or certiorari to hear and review those three lawsuits.  Because those cases covered nearly identical legal ground, the high court consolidated (combined) the cases so that all three could be heard in today's oral arguments before the court.

Medi-Cal Cases Among Many Controversial Cases Before US Supreme Court This Year

The three Medi-Cal cases are among the 49 appeals that are currently on the US Supreme Court's schedule for it's 2011-2012 term that began today.  Possibly 30 or more additional cases are expected to be added to that schedule in the coming months, with the caseload for the court's term finalized by February.

The Medi-Cal lawsuits are just one of several controversial cases that could have sweeping impact depending on what the high court decides including appeals from cases dealing with same sex marriage (including California's Proposition 8), the federal health care reform act, and Arizona's immigration reform law.

Cases Spark Intense Questioning from 8 of the 9 Justices

The cases seemed to spark intense interest among the justices, including Chief Justice John Roberts, with 8 of the 9 justices asking many questions to the attorneys representing both sides of the issue.  Justice Clarence Thomas was the only justice who did not ask a question - though at one point it appeared he was going to.

Carter Phillips, the attorney, for the respondents - the individuals and organizations that filed the three lawsuits - appeared to have received the brunt of most of the intense questioning from not only the conservative leaning justices - including Antonin Scalia, Samuel Alito and the Chief Justice, but also from Justice Anthony Kennedy, viewed as the court's only remaining moderate or middle of the road member; and the court's liberal leaning justices - Breyer, Ginsburg,Kagan and Sotomayor.

In response to questions from Chief Justice Roberts, the attorney cited an earlier US Supreme Court decision, "Ex parte Young",  saying that the court's ruling in that case allowed for an an injunction which restrains a state from taking any steps to the "enforcement of an unconstitutional enactment to the injury of the complainant is the basis for relief. And that's exactly the circumstance we have in this case."

What Legal Issues Are Before the US Supreme Court

At issue before the US Supreme Court is whether or not persons have a right to legal action to enforce Section 30(A) of the federal Medicaid laws (42 U.S.C. Section 1396a(a)(30)(A), is commonly referred to as the "Equal Access Provision" or "30A" requirement. This provision requires states to "assure that Medicaid (or Medi-Cal in California) provider payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available to the general population in the geographic area.

The Carter Phillips, the Washington, DC-based  attorney representing those who filed the Medi-Cal lawsuits contend that the State violated that part of the Medicaid statute that Congress intended - as it has done in other laws - for the right of private action (to correct or stop a violation of the law)

Karin S. Schwartz, Supervising Deputy California Attorney General,  representing the State of California,  rejected that notion saying that Section 30(A) is "broad and undefined and which includes competing policy interests" that are "suited to administrative enforcement, with all the expertise and judgment and discretion and administrative know-how that can be brought to bear" and that Section 30(A) is "not enforceable".

She contended that Congress controls who can enforce federal law and that it did not provide for private enforcement of Section 30(A) and that if Congress wants to provide such rights to private party litigation "...it must do so clear and unambiguously, and it has not done so in this case."

Some Legal Phrases Or Terms Used During Hearing (and in Briefs Filed):

In reading the briefs filed by both sides of the cases, or by listening at the oral arguments today or reading the subsequent transcripts (or listening to the audio recording) several legal terms or phrases are mentioned that might be confusing to some.  Here are the CDCAN definitions or background for some of those:

"Section 30(A)" - refers to a section of the federal Medicaid laws (42 U.S.C. Section 1396a(a)(30)(A),  commonly referred to as the "Equal Access Provision" or "30A" requirement. As previously mentioned in this CDCAN Report, this provision requires states to "assure that Medicaid (or Medi-Cal in California) provider payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available to the general population in the geographic area.

"Supremacy Clause" - Article VI, Section 2, of the US Constitution is known as the "Supremacy Clause" because it provides that the "Constitution, and the Laws of the United States … shall be the supreme Law of the Land." It means that the federal government, in exercising any of the powers under the US Constitution,  prevails over any conflicting or inconsistent state law or regulation.

"Ex parte Young" -  is a 1908 US Supreme Court case that allows suits in federal courts against officials acting on behalf of states of the union to proceed despite the State's Sovereign immunity, when the State acted unconstitutionally.  "Young" is the last name of the then Minnesota state Attorney General back in the early 1900's.

"Ex parte" -  is a Latin legal term that means "from (by or for) one party" and is a court decision that is decided by a judge without requiring all of the parties to the controversy to be present

Attorneys Who Argued the Cases Before the US Supreme Court Today

• The State of California was represented by Karin S. Schwartz, Supervising Deputy California Attorney General, argued on behalf of the petitioner (the State of California)
• The Obama Administration was present in support of California's position, with Edwin S. Kneedler, Deputy Solicitor General, the US Department of Justice, providing arguments in support of the State (the Petitioner) as "amicus curiae". meaning "friend of the court"  (defined as someone who is not a party to the lawsuit, but who believes that the court's decision may affect its interest in some way).
• The respondents - those who originally filed the three lawsuits in federal district court in California - were represented by attorney Carter G. Phillips of Washington DC.

Lead Attorney for Original Case and Other Advocates Present in Chambers

The Medicaid Defense Fund, headed by 82 year old attorney Lynn Carman of Novato, a longtime respected advocate for the rights of people with disabilities and seniors, and the lead attorney in the Southern California Independent Living Center lawsuit, was present at the hearing,  and said the cases were "extremely important" to the lives of children and adults with disabilities, mental health needs and seniors.

He was joined inside the US Supreme Court chambers by several advocates including Norma Jean Vescovo, executive director of the Independent Living Center of Southern California, attorney Stanley Friedman of Los Angeles, pharmacists Jerry Shapiro and Thu-Hang Tran, Stacey M. Leyton of Altshuler Berzon law firm in San Francisco, Debra Roth of SEIU, Marty Omoto, California Disability Community Action Network (CDCAN), disability advocate Patricia Harrison from South Carolina and others.

Two California State officials were present inside the chambers: David Maxwell-Jolly, undersecretary of the California Health and Human Services Agency,  the agency that oversees the Department of Health Care Services and all the other California health and human services departments and Toby Douglas, the director of the California Department of Health Care Services.

Brief Description of the 3 Combined Medi-Cal Cases Heard Today

The US Supreme Court heard and will eventually issue a decision  of the United States 9th Circuit Court of Appeals – which upheld lower federal district court rulings that blocked several different Medi-Cal provider rate reductions implemented in 2008 and early 2009, and a rollback of the State’s participation in IHSS worker wages that was scheduled to go into effect July 1, 2009 in three different cases (the cases previously had as lead defendant "David Maxwell-Jolly, who was the previous director of the Department of Health Care Services, and now is Assistant Secretary of the California Health and Human Services Agency.  Toby Douglas replaced Maxwell-Jolly earlier in 2011)) :

CASE  #1:  "Toby Douglas [Director of the Department of Health Care Services] v. Independent Living Center of Southern California, Inc., et al."

• (Supreme Court No. 09-958) (or “ILC I”)
• This case involved a ruling by US District Court in Los Angeles in August and November 2008 that blocked the State from implementing the 10% cut in Medicaid provider payments passed as part of the 2007-2008 State Budget ( in AB 5)
• Lead counsel (lawyers) for plaintiffs (for those who filed the lawsuit to stop the cut): Lynn S. Carman of the Medicaid Defense Fund (415-927-4023)

CASE #2: Toby Douglas [Director of the Department of Health Care Services]  v. California Pharmacists Association, et al.

• (Supreme Court No. 09-1158)
• Lead counsel (lawyers) for plaintiffs (for those who filed the lawsuit to stop the cut):  Craig Cannizzo of Hooper Lundy Bookman in San Francisco, 415-875-8511)].
• Note: this case includes 4 different decisions by the US 9th Circuit of Appeals that upheld (sustained) lower federal district court rulings in four other lawsuits that stopped several different reductions (different from the cut in Case #1)  from taking place impacting Medi-Cal providers and IHSS providers:
  • 1).  “Independent  Living Center of Southern California, Inc. et al. v. Maxwell-Jolly”; (also known as “ILC II”)  which blocked the State from implementing a 5% Medi-Cal provider rate cut as provided for in AB 1183 [Counsels: Lynn S.  Carman of Medicaid Defense Fund, 415-927-4023 and Rochelle Bobroff, of National Senior Citizens Law Center 202-289-6972, ext. 214, or cell 292-372-5446];
  • 2).  “California Pharmacists Association,  et al. v. Maxwell Jolly”, (also known as "CPHA I"), that blocked the State from implementing the same 5% Medi-Cal provider rate cut for adult day health centers as provided for in AB 1183  (lead counsel is Craig Cannizzo, above);
  • 3).  In the same case, “California Pharmacists Association, et al. v. Toby Douglas”, (this case might be referred to as “CPHA II”)overruled the lower federal district court’s ruling that did not stop the 5% Medi-Cal provider rate cut for the California Hospital Association and instead issued a decision that blocked the reduction.  (Lead counsel is Craig Cannizzo, above.); and
  • 4).  Lydia Dominguez et al. v. Schwarzenegger, that blocked the State from implementing reduction in the State’s participation toward IHSS worker wages effective July 1, 2009  (Lead counsel or lawyers for plaintiffs is Stacey M. Leyton of Altshuler Berzon, 415-421-7151)

CASE #3:  Toby Douglas [Director of the Department of Health Care Services] v. Santa Rosa Memorial Hospital

• (Supreme Court No., 10-282)
• This case involves a preliminary injunction (temporary order from lower federal court blocking the Medi-Cal provider cut) against a hospital.

NEXT STEPS

• US Supreme Court, after today's (October 3, 2011) hearing, could issue a decision regarding these cases as early as November or December this year - or by June 2012.   
• The US 9th Circuit Court of Appeals still has to issue its ruling on a separate October 2009 lawsuit regarding the IHSS reduction that would reduce or eliminate eligibility for all services under IHSS based on one’s functional index ranking in tasks and one’s overall functional index score (these are internal assessment tools used by counties).  This cut was meant to go into effect November 1, 2009, (passed as part of the 2009-2010 State Budget as revised in July 2009) but was blocked in October 2009 by a federal district court judge in Oakland.  The State appealed the ruling to the US 9th Circuit Court of Appeals.  No ruling has been handed down yet by the 9th Circuit Court since oral arguments were made to the court nearly two years ago. The appeals court is likely waiting to see what the US Supreme Court will do on the 3 Medi-Cal provider cases - because the high court's decision - depending on how broad or narrow it is - could have enormous impact on Medi-Cal related cases in the lower federal courts.

File Attachments: 

2011-10-03 - United States Supreme Court - Transcript of Douglas v Independent Living Center of Southern California.pdf