Case 2:08-cv-03315-CAS-MAN Document 47 Filed 06/25/08 Page 1 of 11 Page ID #:1405

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UNITED STATES DISTRICT COURT

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DISTRICT OF CALIFORNIA

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WESTERN DIVISION

11 INDEPENDENT LIVING CENTER OF ) Case No. CV 08-3315 CAS (MANx)

SOUTHERN CALIFORNIA, et al.,

)

12

) ORDER DENYING PETITIONERS’

Petitioners

) MOTION FOR A PRELIMINARY

13

) INJUNCTION

vs.

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)

)

15 SANDRA SHEWRY, Director of

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Department of Health Services of the State )

16 of California, et al.,

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)

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)

Respondents

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18 __________________________________ )

19 I. INTRODUCTION

20

On April 22, 2008, petitioners filed a verified petition for writ of mandamus in

21 the Los Angeles County Superior Court, seeking mandamus and injunctive relief

22 against the California Department of Health Care Services (“the Department”), Sandra

23 Shewry, Director of the Department (“the Director”), and Does 1 through 50.1 The

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1 Petitioners are the Independent Living Center of Southern California, Inc.; Gray Panthers of Sacramento; the Gray Panthers of San Francisco; Gerald Shapiro, Pham.D.,

27 d/b/a Uptown Pharmacy and Gift Shoppe; Sharon Steen, d/b/a Central Pharmacy; Mark

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Beckwith; Margaret Dowling; Tran Pharmacy, Inc., d/b/a Tran Pharmacy; and Jason Young.

Case 2:08-cv-03315-CAS-MAN Document 47 Filed 06/25/08 Page 2 of 11 Page ID #:1406

Department is a California agency charged with the administration of California’s 1

2 Medicaid program, Medi-Cal. Petitioners are health care advocates and Medi-Cal

3 providers and recipients.

4

On February 16, 2008, the California Legislature enacted Assembly Bill X3 5

5 (“AB 5”) in special session. First Amended Petition ¶ 20. Section 14 of AB 5 adds Cal.

6 Welf. & Inst. Code § 14105.19, which reduces by ten percent payments under the Medi-

Cal fee-for-service program for physicians, dentists, pharmacies, adult day health care 7

8 centers, clinics, health systems, and other providers for services provided on or after

9 July 1, 2008. Cal. Welf. & Inst. § 14105.19(b)(1); First Amended Petition ¶ 22.

10 California Welfare & Institutions Code § 14105.19 also reduces payments to managed

11 care plans by the actuarial equivalent of the ten percent payment reduction. Cal. Welf.

12 & Inst. § 14105.19(b)(3); First Amended Petition ¶ 22. Section 15 of AB 5 adds Cal.

Welf. & Inst. Code § 14166.245, which reduces payments to acute care hospitals not 13

14 under contract with the Department for inpatient services provided on or after July 1,

2008. Cal. Welf. & Inst. § 14166.245(c); First Amended Petition ¶ 23.2 These rate and 15

16 payment reductions are referred to herein as the “ten percent rate reduction.”

17

Petitioners allege that the ten percent rate reduction violates Title XIX of the

18 Social Security Act, 42 U.S.C. §§ 1396 et seq. (“the Medicaid Act”), and therefore, may

not be implemented. Petitioners seek declaratory relief and injunctive relief to restrain 19

20 the implementation of the ten percent rate reduction.

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On May 19, 2008, respondents removed this action to this Court, based on federal

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2 The Department is authorized to contract with individual hospitals for the exclusive

23 right to treat Medi-Cal patients. Cal. Welf. & Inst. § 14081; Cedars-Sinai Med. Ctr. v.

24 Shewry, 137 Cal. App. 4th 964, 969-70 (2006). Contracting hospitals are reimbursed by the Department at the negotiated contract rate, and once the Department has contracted
25 with enough hospitals to meet the needs of Medi-Cal beneficiaries in a geographic area, it

26 awards no further contracts in that area. Cedars-Sinai, 137 Cal. App. 4th at 970. Noncontract hospitals are only reimbursed for treating Medi-Cal patients under certain
27 circumstances, including where emergency care or services are provided. Id.

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Case 2:08-cv-03315-CAS-MAN Document 47 Filed 06/25/08 Page 3 of 11 Page ID #:1407

question jurisdiction. On May 28, 2008, petitioners filed the operative first amended 1

2 petition against the Department and the Director. On June 1, 2008, petitioners

3 voluntarily dismissed the Department as a respondent in this case without prejudice.

4

On May 30, 2008, petitioners filed the instant motion for preliminary injunction.

Respondents filed their opposition thereto on June 12, 2008.3 On June 16, 2008, 5

6 petitioners filed a reply. A hearing was held on June 23, 2008, and the Court took this

matter under submission. After carefully considering the parties’ arguments, the Court 7

8 denies petitioners’ motion for the reasons set forth below.

9 II. BACKGROUND

10

The Medicaid Act authorizes the federal government to distribute funds to

11 participating states for the purpose of providing medical assistance to low income

12 persons who are aged, blind, disabled, or members of families with dependent children.

Medicaid is a cooperative federal program: the federal government provides federal 13

14 funding to the states so that states may provide medical care to their needy citizens.

15 State participation is voluntary; however, once a state chooses to participate by

16 accepting federal funds, it must comply with requirements imposed by the Medicaid

17 Act.

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Because California has elected to participate in the Medicaid program, it must

administer its state Medicaid program, known as Medi-Cal, in compliance with a state 19

20 plan that has been pre-approved by the Secretary of the U.S. Department of Health and

21 Human Services (“the Secretary”), and which complies with the requirements set forth

22 in 42 U.S.C. § 1396a(a)(1)-(70). In accordance with these requirements, California

23 must also provide methods and procedures for the payment of care and services that are

24 consistent with efficiency, economy, and quality of care, and that ensure their

availability to the Medicaid population to the same extent as they are available to the 25

26 3 By order dated June 19, 2008, the Court granted respondents’ ex parte application
27 to allow for the late filing of their instant opposition.

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general population in the geographic area. 42 U.S.C. § 1396a(30)(A) (“§ (30)(A)”). 1

2

Further, under California law, the Department must administer Medi-Cal in

3 accordance with the state plan; applicable state law, as specified in the Welfare and

4 Institutions Code; and Medi-Cal regulations. Cal. Code Regs. tit. 22, § 50004(b).

5

Petitioners now move to preliminary enjoin the implementation of the ten percent

6 rate reduction. The request for a preliminary injunction is predicated only on

petitioners’ first and second claims for relief.4 In their first and second claims, 7

8 petitioners allege the ten percent rate reduction violates 42 U.S.C. § 1396a(30)(A),

9 which requires that a state plan must:

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provide such methods and procedures relating to the

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utilization of, and payment for, care and services available

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under the plan . . . as may be necessary . . . to assure that

payments are consistent with efficiency, economy, and quality 13

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of care and are sufficient to enlist enough providers so that

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care and services are available under the plan at least to the

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extent that such care and services are available to the general

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population in the geographic area.

18 Petitioners allege that the Department and the Legislature improperly failed to consider

efficiency, economy, and quality of care as required by § 30(A) in enacting the ten 19

20 percent reduction, and that as a result of AB 5, there will not be a sufficient number of

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4 The first amended petition asserts four claims for relief. Petitioners’ first claim is

asserted by each of the petitioners except petitioner Jason Young. Petitioners’ second

23 claim is brought by petitioners Young and the Tran Pharmacy, Inc., d/b/a Tran Pharmacy.

24 Petitioners third and fourth claims allege that §§ 14 and 15 of AB 5 are unenforceable because they are preempted by and violate the Americans with Disabilities Act (the
25 “ADA”), 42 U.S.C. §§ 12181 et seq. However, because petitioners’ motion for preliminary

26 injunction is predicated only on the first and second claims, and only on their Supremacy Clause theory raised in their motion papers, those are the only claims and argument that
27 the Court addresses herein.

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providers to provide equal access to healthcare as mandated by § 30(A). 1

2 III. LEGAL STANDARD

3

A preliminary injunction is appropriate when the moving party shows either (1) a

4 combination of probable success on the merits and the possibility of irreparable harm,

5 or (2) the existence of serious questions going to the merits and that the balance of

6 hardships tips sharply in the moving party’s favor. See Rodeo Collection, Ltd. v. West

Seventh, 812 F.2d 1215, 1217 (9th Cir. 1987). These are not two distinct tests, but 7

8 rather “the opposite ends of a single ‘continuum in which the required showing of harm

9 varies inversely with the required showing of meritoriousness.’” Id. A “serious

10 question” is one on which the movant “has a fair chance of success on the merits.”

11 Sierra On-Line, Inc. v. Phoenix Software, Inc., 739 F.2d 1415, 1421 (9th Cir. 1984).

12 IV. DISCUSSION

The “quality of care” provision of § (30)(A) provides that 13

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[a] State plan for medical assistance must . . . provide such methods and

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procedures relating to the utilization of, and the payment for, care and

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services available under the plan . . . as may be necessary to safeguard

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against unnecessary utilization of such care and services and to assure that

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payments are consistent with efficiency, economy, and quality of care.

42 U.S.C. § 1396a(30)(A). The “equal access” provision of § 30(A) provides that 19

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[a] State plan for medical assistance must . . . provide such methods and

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procedures relating to the utilization of, and the payment for, care and

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services available under the plan . . . as may be necessary to safeguard

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against unnecessary utilization of such care and services and to assure that

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payments are . . . sufficient to enlist enough providers so that care and

services are available under the plan at least to the extent that such care and 25

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services are available to the general population in the geographic area.

27 Id.

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In Sanchez v. Johnson, 416 F.3d 1051 (9th Cir. 2005), the Ninth Circuit held that 1

2 § 30(A) does not confer individual rights that are enforceable under 42 U.S.C. § 1983.

3 Id. at 1060. There, plaintiffs, consisting of a class of developmentally disabled

4 individuals and several organizations, brought suit against California officials charged

5 with the administration of programs for persons with developmental disabilities. Id. at

6 1053-54. The plaintiffs asserted claims under 42 U.S.C. § 1983, alleging that the

defendants violated § 30(A) by failing to fund adequately community-based programs 7

8 for persons with developmental disabilities. Id. at 1055. The district court found that in

9 light of the Supreme Court’s decision in Gonzaga University v. Doe, 536 U.S. 273

10 (2002), the Medicaid Act did not confer individual rights that were enforceable by

11 recipients of Medicaid funding or providers of Medicaid services, under 42 U.S.C. §

1983.5 Id. The district court therefore granted judgment on the pleadings in favor of 12

the defendants. Id. 13

14

On appeal, the Ninth Circuit affirmed. The court reasoned that § 30(A) did not

15 “focus[] on the rights of a specific class of beneficiaries.” Id. at 1059. The court found

16 that instead, “§ 30(A) is concerned with overall methodology rather than conferring

17 individually enforceable rights on individual Medicaid recipients.” Id. at 1059-60.

18 Because a plaintiff seeking to prosecute a claim under 42 U.S.C. § 1983 must “assert

the violation of an individually enforceable right conferred specifically upon 19

20 him, not merely a violation of federal law,” and because § 30(A) does not manifest a

21 congressional intent to confer individual rights, the court found that the Medicaid Act

22 did not give rise to rights enforceable under 42 U.S.C. § 1983. Id. at 1062 (emphasis in

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26 5 In Gonzaga, the Supreme Court clarified the standard for determining whether a
27 federal statute creates rights enforceable under 42 U.S.C. § 1983.

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1 original).6

2

It is true, as petitioners argue, that in Sanchez the Ninth Circuit was presented

3 with the question of whether individuals may invoke 42 U.S.C. § 1983 to sue for an

4 alleged violation of § 30(A). However, in order to decide that issue the Ninth Circuit

5 was first required to determine whether § 30(A) gives rise to any federally created

6 individual rights: in evaluating “whether a statutory violation may be enforced through

§ 1983 . . . [a court] must first determine whether Congress intended to create a federal 7

8 right. Gonzaga, 536 U.S. at 283 (emphasis in original). Thus, in deciding that the

9 Sanchez plaintiffs could not enforce § 30(A) under 42 U.S.C. § 1983, the Ninth Circuit

10 necessarily concluded that § 30(A) does not create any individual federal rights.

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Because after Sanchez, petitioners do not have any claims for relief under 42

12 U.S.C. § 1983 by which to seek redress for violations of § 30(A), petitioners seek to

avail themselves of a claim for relief allegedly arising directly under the Supremacy 13

14 Clause, Article VI, § 2, of the United States Constitution. However, the Supremacy

15 Clause, of its own force, does not create any rights enforceable under 42 U.S.C. § 1983.

16 See Golden State Transit Corp. v. L.A., 493 U.S. 103, 108 (1989) (“‘[The Supremacy]

17 clause is not a source of any federal rights’; it [‘]secures federal rights by according

18 them priority whenever they come in conflict with state law.’”) (quoting Chapman v.

Houston Welfare Rights Org., 441 U.S. 600, 613 (1979)). 19

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In an attempt to avoid the effect of Sanchez, petitioners rely on cases following

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6 The Court notes that there is a circuit split concerning whether plaintiffs can sue

for alleged violations by state officials of § 30(A) under 42 U.S.C. § 1983. Specifically,

23 the Fifth, Sixth, Ninth, and Tenth Circuit Courts of Appeal have found that Medicaid

24 beneficiaries cannot sue for alleged violations of § 30(A) under 42 U.S.C. § 1983. On the other hand, the Eighth Circuit has concluded that § 30(A) creates individual rights that can
25 be the subject of suit under 42 U.S.C. § 1983. There is currently pending a petition for

26 certiorari to the Supreme Court from the judgment in the Fifth Circuit case, Equal Access for El Paso, Inc. v. Hawkins, 509 F.3d 697 (5th Cir. 2007), cert. pending (U.S. Supreme
27 Ct. No. 07-1160) (filed March 10, 2008).

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Shaw v. Delta Air Lines, 463 U.S. 85 (1983), to argue that AB 5 is preempted by the 1

2 Medicaid Act, and therefore invalid under the Supremacy Clause, such that they are

3 entitled to relief based on an implied right of action under the Supremacy Clause. In

4 opposition, respondents argue that the Supremacy Clause does not confer any rights on

5 petitioners. Respondents assert that petitioners therefore lack standing to maintain this

6 suit.

In Shaw, the United States Supreme Court stated that 7

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[i]t is beyond dispute that federal courts have jurisdiction over suits to

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enjoin state officials from interfering with federal rights. A plaintiff who

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seeks injunctive relief from state regulation, on the ground that such

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regulation is pre-empted by a federal statute which, by virtue of the

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Supremacy Clause of the Constitution, must prevail, thus presents a federal

question which the federal courts have jurisdiction under

28 U. S.

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C. § 1331 to resolve.

15 Shaw, 463 U.S. at 96 n.14; see e.g., Verizon Md., Inc. v. Pub. Serv. Comm’n of Md.,

16 535 U.S. 635, 641-43 (2002) (stating that the district court has federal question

17 jurisdiction under 28. U.S.C. § 1331 in a suit where the plaintiff claimed that the

18 Federal Communications Commission’s order was preempted by federal law);

Lawrence County v. Lead-Deadwood School Dist., 469 U.S. 256, 259 n.6 (1985) 19

20 (stating that the Eighth Circuit erroneously concluded that a district court lacked subject

21 matter jurisdiction where the affected plaintiff school district alleged that a South

22 Dakota statute conflicted with federal law and was therefore invalid under the

23 Supremacy Clause); see also Hydrostorage, Inc. v. Northern Cal. Boilermakers Local

24 Joint Apprenticeship Comm., 891 F.2d 719 (9th Cir. 1989).

Shaw preemption claims have been permitted in three circumstances. First, 25

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1 where the plaintiff claims that a state law requires him to act in violation of federal law.7
2 Second, such claims have been allowed where the plaintiff contends that his conduct will be restricted by a state law that is preempted by federal law.8 Third, courts have
3
4 entertained Shaw preemption claims where state law interferes with federally created

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7 See e.g., Lawrence County v. Lead-Deadwood School Dist. No. 40-1, 469 U.S.

256, 258, 260-61 (1985) (after Lawrence County refused to distribute federal funds to the

9 school district in accordance with a state statute, arguing that federal law gave it the

10 discretion to spend the federal funds for any governmental purpose it chose, the school district filed suit seeking to compel Lawrence County to distribute the federal funds);
11 Burgio & Campofelice, Inc. v. N.Y. State Dep’t of Labor, 107 F.3d 1000, 1005-07 (2d Cir.

12 1997) (suit by a public works contractor to enjoin the New York Department of Labor from

13

enforcing a state wage law, alleging the state law was preempted by ERISA); Verizon Md., Inc. v. Public Serv. Comm’n of Md., 535 U.S. 635, 641-42 (2002) (Verizon sued the

14 Maryland Public Service Commission alleging that the Federal Communications

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Commission’s order requiring Verizon to make payments under a negotiated interconnection agreement violated the Telecommunications Act of 1996); Qwest Corp.

16 v. City of Santa Fe, 380 F.3d 1258, 1264 (10th Cir. 2004) (suit by telecommunications

17 provider challenging local ordinance that imposed several requirements on telecommunications providers before they could access city-owned rights-of-way).
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8 See e.g., City of L.A. v. County of Kern, 509 F. Supp. 2d 865, 889 (C.D. Cal. 2007)

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(where the plaintiffs challenged a local ordinance on that grounds that it was preempted by state law, the court analogized the law of preemption under the California Constitution to

21 that under the Supremacy Clause, and held that the plaintiffs had standing to bring suit

22 because their “conduct would be restricted by a local ordinance they challenge[d] as preempted, even if the plaintiffs d[id] not assert rights protected by the preempting statute

23 itself”); Planned Parenthood of Cent. Tex. v. Sanchez, 280 F. Supp. 2d 590, 596, 599-602

24 (W.D. Tex. 2003) (family planning and abortion services provider challenged state statute that precluded payment of Medicaid funds to organizations providing abortions services);
25 St. Thomas--St. John Hotel & Tourism Ass’n, Inc. v. Gov’t of U.S. Virgin Islands, 218

26 F.3d 232, 240-42 (3d Cir. 2000) (challenge to territorial law providing that an employee discharged for any reason other than for cause as set forth in nine enumerated reasons will
27 be considered to have been wrongfully discharged).

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1 rights.9

2

Here, AB 5 neither compels nor restricts petitioners’ own conduct. In order to

3 state a claim, petitioners must therefore show that AB 5 interferes with some individual

4 federal right that arises under § 30(A). However, for the reasons stated supra, § (30)(A)

does not give rise to a federally created right.10 5

6

Because petitioners do not have any federal rights under § 30(A), their

probability of success on the claims at issue here is low, if not wholly lacking.11 7

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9 See e.g., League of Women Voters v. Blackwell, 340 F. Supp. 2d 823, 827-28

(N.D. Ohio 2004) (challenge to Ohio Secretary of State’s directive prescribing procedures

10 for obtaining identification from first-time voters).

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10 Petitioners reliance on Orthopaedic Hospital v. Belshe, 103 F.3d 1491 (9th Cir. 1997), decided before Sanchez, is misplaced. There, the plaintiff-providers filed suit under

13 42 U.S.C. § 1983, claiming that the Director violated § 30(A) by setting reimbursement

14 rates for hospital providers of outpatient services without considering hospital costs. Orthopaedic Hosp., 103 F.3d at 1492. In that case, however, there was no discussion of

15 whether plaintiffs had any federally created individual rights. However, because Sanchez

16 has decided that no individual right to sue is conferred by § 30(A), it appears that the holding of Orthopaedic Hospital is not controlling on that issue.
17

18

The cases addressed by petitioners at the hearing held herein are similarly

unavailing. In Ball v. Rodgers, 492 F.3d 1094 (9th Cir. 2007), the court, noting that after

19 Sanchez, § 30(A) cannot be enforced under 42 U.S.C. § 1983, analyzed different provisions

20 of the Medicaid Act, which it determined, unlike § 30(A), gave rise to individual rights. In Day v. Apoliona, 496 F.3d 1027 (9th Cir. 2007), the Ninth Circuit applied the factors
21 set forth in Blessing v. Freestone, 520 U.S. 329 (1997), and Gonzaga University v. Doe,

22 536 U.S. 273 (2002), to conclude that beneficiaries of a trust had individual rights that could be enforced under 42 U.S.C. § 1983. Arc of Wash. State Inc. v. Braddock, 427 F.3d
23 615 (9th Cir. 2005), involved a challenge under the ADA.

24 11 Petitioners’ reliance on Burgio & Campofelice, Inc. v. New York State DOL, 107
25 F.3d 1000 (2d Cir. 1997) is also misplaced. In Burgio & Campofelice, Inc., the plaintiff

26 argued that the allegedly preempted state statute improperly caused the withholding of

money that it was due under a public works contract. Burgio & Campofelice, Inc., 107

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(continued...)

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See Golden State Transit Corp. v. L.A., 493 U.S. supra at 108 (1989) (“‘[The 1

2 Supremacy] clause is not a source of any federal rights’; it [‘]secures federal rights by

3 according them priority whenever they come in conflict with state law.’”) (quoting

4 Chapman v. Houston Welfare Rights Org., 441 U.S. 600, 613 (1979)).

5

In light of the Court’s finding that petitioners have no likelihood of succeeding on

6 the merits, the Court, while acutely cognizant of the potential adverse consequences of

the ten percent rate reduction, declines to address petitioners’ arguments that they have 7

8 shown irreparable harm. See Global Horizons, Inc. v. United States DOL, 510 F.3d

9 1054, 1058 (9th Cir. 2007) (“Once a court determines a complete lack of probability of

10 success or serious questions going to the merits, its analysis may end, and no further

11 findings are necessary.”).

12 V. CONCLUSION

In accordance with the foregoing, the Court hereby DENIES petitioners’ motion 13

14 for preliminary injunction.

15

IT IS SO ORDERED.

16 Dated: June 25, 2008

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_______________________________ CHRISTINA A. SNYDER UNITED STATES DISTRICT JUDGE

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21

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11(...continued)

F.3d at 1005-06. In Pharm. Research & Mfrs. of Am. v. Concannon, 249 F.3d 66 (1st Cir.

23 2001), the First Circuit concluded that the plaintiff had standing to assert a claim under the

24 Supremacy Clause reasoning that “[w]here a party has established a concrete injury in fact, and otherwise has standing to challenge the lawfulness of the statute, it is entitled to assert
25 those concomitant rights of third parties that would be diluted or adversely affected should

26 [its] constitutional challenge fail and the statute[] remain in force.” Id. at 74 (internal quotations omitted; alterations in original). Here, § 30(A) does not give petitioners any
27 right to Medi-Cal funds.

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 </s> Case 2:08-cv-03315-CAS-MAN Document 121 Filed 08/18/08 Page 1 of 22 Page ID #:2115

1

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8

UNITED STATES DISTRICT COURT

9

DISTRICT OF CALIFORNIA

10

WESTERN DIVISION

11

) Case No. CV 08-3315 CAS (MANx)

INDEPENDENT LIVING CENTER OF )

12 SOUTHERN CALIFORNIA, et al.,

) ORDER GRANTING IN PART AND

) DENYING IN PART PETITIONERS’

13

Petitioners

) MOTION FOR PRELIMINARY

) INJUNCTION

14 vs.

)

)

15

)

SANDRA SHEWRY, Director of

)

16 Department of Health Services of the State )

of California, et al.,

)

17

)

)

18

Respondents

)

__________________________________ )

19

I. INTRODUCTION AND BACKGROUND

20

On April 22, 2008, petitioners filed a verified petition for writ of mandamus in

21

the Los Angeles County Superior Court, seeking mandamus and injunctive relief

22

against the California Department of Health Care Services (“the Department”), Sandra

23

Shewry, Director of the Department (“the Director”), and Does 1 through 50.1 The

24

25

26

1 Petitioners are the Independent Living Center of Southern California, Inc.; Gray Panthers of Sacramento; the Gray Panthers of San Francisco; Gerald Shapiro, Pharm.D.,

27 d/b/a Uptown Pharmacy and Gift Shoppe; Sharon Steen, d/b/a Central Pharmacy; Mark

28

Beckwith; Margaret Dowling; Tran Pharmacy, Inc., d/b/a Tran Pharmacy; and Jason (continued...)

Case 2:08-cv-03315-CAS-MAN Document 121 Filed 08/18/08 Page 2 of 22 Page ID #:2116

1 Department is a California agency charged with the administration of California’s

2 Medicaid program, Medi-Cal. Petitioners are health care advocates and Medi-Cal

3 providers and recipients.

4

On February 16, 2008, the California Legislature enacted Assembly Bill X3 5

5 (“AB 5”) in special session. First Amended Petition ¶ 20. Section 14 of AB 5 adds Cal.

6 Welf. & Inst. Code § 14105.19, which reduces by ten percent payments under the Medi-

7 Cal fee-for-service (sometimes referred to herein as “FFS”) program for physicians,

8 dentists, pharmacies, adult day health care centers, clinics, health systems, and other

9 providers for services provided on or after July 1, 2008. Cal. Welf. & Inst. Code §

10 14105.19(b)(1); First Amended Petition ¶ 22. California Welfare & Institutions Code §

11 14105.19 also reduces payments to managed health care plans by the actuarial

12 equivalent of the ten percent payment reduction. Cal. Welf. & Inst. Code §

13 14105.19(b)(3); First Amended Petition ¶ 22. Section 15 of AB 5 adds Cal. Welf. &

14 Inst. Code § 14166.245, which reduces payments to acute care hospitals not under

15 contract with the Department for inpatient services provided on or after July 1, 2008.

16 Cal. Welf. & Inst. Code § 14166.245(c); First Amended Petition ¶ 23.2 These rate and

17 payment reductions are referred to herein as the “ten percent rate reduction.”

18

Petitioners allege that the ten percent rate reduction violates Title XIX of the

19 Social Security Act, 42 U.S.C. §§ 1396 et seq. (“the Medicaid Act”), and that therefore,

20 1(...continued)
21 Young.

22

2 The Department is authorized to contract with individual hospitals for the exclusive

23 right to treat Medi-Cal patients. Cal. Welf. & Inst. Code § 14081; Cedars-Sinai Med. Ctr.

24 v. Shewry, 137 Cal. App. 4th 964, 969-70 (2006). Contracting hospitals are reimbursed by the Department at the negotiated contract rate, and once the Department has contracted
25 with enough hospitals to meet the needs of Medi-Cal beneficiaries in a geographic area, it

26 awards no further contracts in that area. Cedars-Sinai, 137 Cal. App. 4th at 970. Noncontract hospitals are only reimbursed for treating Medi-Cal patients under certain
27 circumstances, including where emergency care or services are provided. Id.

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1 it is invalid under the Supremacy Clause of the United States Constitution. U.S. CONST.

2 art. VI, cl. 2.3 Petitioners seek declaratory relief and injunctive relief to restrain the

3 implementation and enforcement of the ten percent rate reduction.

4

On May 19, 2008, respondents removed this action to this Court, based on federal

5 question jurisdiction. On May 28, 2008, petitioners filed the operative first amended

6 petition against the Department and the Director, alleging that Cal. Welf. & Inst. Code §

7 14105.19(a),(b)(1)-(2) and Cal. Welf. & Inst. Code § 14166.245 are preempted by the

8

9

3 Lawsuits challenging AB 5 have also been filed in two California state courts;

preliminary relief has been denied in both those cases. In Farmacia Remedios, Inc. et al.

10 v. Shewry et al., Case No. 08-0001274 (Cal. Super Ct. (Sacramento County) 2008), the

11 Sacramento County Superior Court denied the plaintiff-pharmacy providers’ application for an order temporarily restraining implementation of the ten percent rate reduction as it
12 applies to pharmacies. The court found that the plaintiffs failed to demonstrate a likelihood

13 of success on the merits because they did not show that the Department is required to “obtain prior Federal approval of an amendment to the State Plan before implementing the
14 ten percent rate reduction, or that failure to obtain such approval would render the rate

15 reduction invalid as a matter of state law.” Respondent’s Notice of Lodging of Declaration of Keven Gorospe, Ex. 1 (Transcript in Farmacia Remedios, Inc.) at 3-4. Further, with
16 respect to the issue of irreparable harm, the court found that the evidence submitted by the

17 plaintiffs was “speculative and incomplete.” Id. at 4. Subsequently, in California Medical

18

Ass’n et al. v. Sandra Shewry, et al., Case No. BC390126 (Cal. Super. Ct. (L.A. County) 2008), the Los Angeles County Superior Court denied the petitioners’, who are groups

19 representing Medi-Cal service providers, motion for preliminary injunction. The court

20

found that the “[p]etitioners ha[d] presented a substantial showing of actual harm which will likely occur as consequences of the reimbursement reductions.” Petitioners’ Notice

21 of Lodging of Los Angeles County Superior Court Order, Ex. 1 (July 29, 2008 Order in

22 California Medical Ass’n) at 28. However, the court denied the motion for preliminary injunction because the petitioners had not demonstrated any probability of success on the

23 merits, finding that the ten percent payment reduction does not violate the California

24 Constitution and that because neither the petitioners nor Medi-Cal beneficiaries have rights enforceable under § 30(A), they are not entitled to a writ of mandate under California law.
25 Id. at 21, 28. While mindful of these rulings, petitioners in this case have established on

26 the record presented a likelihood of success on their claims that AB 5 conflicts with § 30(A), and have shown for the reasons stated below that irreparable harm will be caused
27 by the implementation of AB 5.

28

3

Case 2:08-cv-03315-CAS-MAN Document 121 Filed 08/18/08 Page 4 of 22 Page ID #:2118

1 Supremacy Clause and by the Americans with Disabilities Act of 1990, 42 U.S.C. §§

2 12132 et seq. (“the ADA”).4

3

On May 30, 2008, petitioners filed a motion for preliminary injunction. A

4 hearing was held on that motion on June 23, 2008. By order dated June 25, 2008, the

5 Court denied the motion for preliminary injunction finding that in light of Sanchez v.

6 Johnson, 416 F.3d 1051 (9th Cir. 2005), petitioners could not challenge AB 5 under the

7 Supremacy Clause, and that therefore, their probability of success on the claims was

8 low, if not wholly lacking.

9

Petitioners appealed to the Ninth Circuit. By order dated July 11, 2008, the Ninth

10 Circuit vacated this Court’s June 25, 2008 order, finding that petitioners could bring

11 suit “under the Supremacy Clause to enjoin implementation of a state law allegedly

12 preempted by federal statute.” Ninth Circuit’s July 11, 2008 Order at 1-2. The Ninth

13 Circuit also concluded that “[petitioners] have demonstrated a high likelihood that the

14 State’s ten percent reduction in payments to Medi-Cal providers will cause serious

15 irreparable injury to Medi-Cal beneficiaries while this case is pending, at least with

16 regard to prescription drugs.” Id. at 4. The Ninth Circuit remanded the action to this

17 Court for a decision on the motion for preliminary injunction.

18

Upon remand, the Court ordered further briefing on this matter. On July 25,

19 2008, petitioners filed their supplemental memorandum and declarations in support of

20 preliminary injunction. Respondent filed her opposition thereto, with accompanying

21 declarations, on July 30, 2008. On July 31, 2008, petitioners filed their reply.5 A

22

23

4 On June 1, 2008, petitioners voluntarily dismissed the Department as a respondent

24 in this case without prejudice. On August 3, 2008, petitioners voluntarily dismissed their

25

third and fourth claims for relief without prejudice, which claims allege preemption of AB 5 by the ADA and violation of the ADA, respectively.

26

5 Both parties have challenged the admissibility of the evidence submitted by the

27

(continued...)

28

4

Case 2:08-cv-03315-CAS-MAN Document 121 Filed 08/18/08 Page 5 of 22 Page ID #:2119

1 hearing was held on the motion for preliminary injunction August 1, 2008. After

2 carefully considering the parties’ arguments, the Court finds and concludes as follows.

3 II. LEGAL STANDARD

4

A preliminary injunction is appropriate when the moving party shows either (1) a

5 combination of probable success on the merits and the possibility of irreparable harm,

6 or (2) the existence of serious questions going to the merits and that the balance of

7 hardships tips sharply in the moving party’s favor. See Rodeo Collection, Ltd. v. West

8 Seventh, 812 F.2d 1215, 1217 (9th Cir. 1987). These are not two distinct tests, but

9 rather “the opposite ends of a single ‘continuum in which the required showing of harm

10 varies inversely with the required showing of meritoriousness.’” Id. A “serious

11 question” is one on which the movant “has a fair chance of success on the merits.”

12 Sierra On-Line, Inc. v. Phoenix Software, Inc., 739 F.2d 1415, 1421 (9th Cir. 1984).

13 14 III. DISCUSSION

15

16

5(...continued)

17 other side. However, this Court may consider inadmissible evidence on a motion for

18

preliminary injunction, giving such evidence appropriate weight depending on the competence, personal knowledge, and credibility of the declarants. 11A Charles A.

19 Wright, Arthur K. Miller, & Mary K. Kane, Federal Practice and Procedure § 2949 at 216-

20

17 (2d ed. 1995); see also Ross-Whitney Corp. v. Smith Kline & French Laboratories, 207 F.2d 190, 198 (9th Cir. 1953) (stating that preliminary injunction may be granted on

21 affidavits); Flynt Distrib. Co. v. Harvey, 734 F.2d 1389, 1394 (9th Cir. 1984) (“The

22 urgency of obtaining a preliminary injunction necessitates a prompt determination and makes it difficult to obtain affidavits from persons who would be competent to testify at

23 trial. The trial court may give even inadmissible evidence some weight, when to do so

24 serves the purpose of preventing irreparable harm.”); Republic of Philippines v. Marcos, 862 F.2d 1355, 1363-64 (9th Cir. 1988); Seuss Ents. v. Penguin Books USA, Inc., 924 F.
25 Supp. 1559, 1562 (S.D. Cal. 1996) (“Such evidence may yet be considered by the court,

26 which has discretion to weigh the evidence as required to reflect its reliability.”). The Court therefore denies the parties’ various motions to strike as moot for present purposes,
27 and exercises its discretion to consider the proffered evidence as appropriate.

28

5

Case 2:08-cv-03315-CAS-MAN Document 121 Filed 08/18/08 Page 6 of 22 Page ID #:2120

1

A. LIKELIHOOD OF SUCCESS ON THE MERITS

2

Pursuant to the Ninth Circuit’s mandate, petitioners may pursue a claim for relief

3 under the Supremacy Clause based on the allegation that AB 5 is preempted by § 30(A)

4 of the Medicaid Act (referred to herein as “§ 30(A)”). Here, petitioners’ Supremacy

5 Clause claim is predicated upon federal conflict preemption. Under general principles

6 of federal preemption, state law is preempted only to the extent that it actually conflicts

7 with federal law. Pacific Gas & Elec. Co. v. State Energy Comm’n, 461 U.S. 190, 204

8 (1983). Such a conflict may arise either where “compliance with both federal and state

9 regulations is a physical impossibility, or where state law stands as an obstacle to the

10 accomplishment and execution of the full purposes and objectives of Congress.” Id. at

11 203-04 (citations omitted).

12

Thus, to prevail on the merits petitioners will have to prove either that it is not

13 possible for the Department to comply with both AB 5 and the Medicaid Act or that AB

14 5 stands as an obstacle to the enforcement of § 30(A). As such, the Court turns to the

15 statutory provisions at issue here.

16

The “quality of care” provision of § (30)(A) provides that

17

[a] State plan for medical assistance must . . . provide such methods and

18

procedures relating to the utilization of, and the payment for, care and

19

services available under the plan . . . as may be necessary to safeguard

20

against unnecessary utilization of such care and services and to assure that

21

payments are consistent with efficiency, economy, and quality of care.

22 42 U.S.C. § 1396a(30)(A). The “equal access” provision of § 30(A) provides that

23

[a] State plan for medical assistance must . . . provide such methods and

24

procedures relating to the utilization of, and the payment for, care and

25

services available under the plan . . . as may be necessary to safeguard

26

against unnecessary utilization of such care and services and to assure that

27

payments are . . . sufficient to enlist enough providers so that care and

28

6

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1

services are available under the plan at least to the extent that such care and

2

services are available to the general population in the geographic area.

3 Id.

4

Respondent urges that § 30(A) does not compel either the California Legislature

5 or the Department to conduct any studies or to consider provider costs or any other

6 statutory factors prior to making rate adjustments. In so arguing, respondent relies

7 largely on Sanchez v. Johnson, 416 F.3d 1051 (9th Cir. 2005), which she contends

8 effectively overruled Orthopaedic Hospital v. Belshe, 103 F.3d 1491 (9th Cir 1997)

9 (“Orthopaedic II/III”).6

10

In Orthopaedic Hospital v. Kizer, 1992 WL 345652 (C.D. Cal. 1992)

11 (“Orthopaedic I”), plaintiff-hospital providers filed suit pursuant to 42 U.S.C. § 1983

12 (“§ 1983”), claiming that the Director violated § 30(A) by setting reimbursement rates

13 for hospital outpatient services without considering the effect of hospital costs on

14 efficiency, economy, and quality of care.7 Id. at *1. The district court concluded that §

15 30(A) was enforceable in a § 1983 action, and that the Department “had a judicially

16 enforceable obligation” to consider and make findings each time it modified

17 reimbursement rates. Id. at *2. According to the district court, § 30(A) obligated the

18 Department to consider efficiency, economy, and quality of care, which it referred to as

19 the “relevant factors.” Id. at *4. The district court found that the Director had acted

20 arbitrarily and capriciously in establishing six of the seven challenged rates. Id. The

21 court then remanded the matter to the Department for further consideration. Id. at *14.

22 Upon remand, the Department conducted a rate study, and readopted the reimbursement

23 rates without change. Orthopaedic Hospital II/III, 103 F.3d at 1495.

24

25

6 Respondent also argues that Orthopaedic Hospital was incorrectly decided. However, that is an argument to be raised before the Ninth Circuit, not this Court.

26 7 The hospitals did not, however, challenge the rates under the “equal access”
27 provision. Orthopaedic I, 1992 WL 345652 at *14 n.4.

28

7

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1

The hospitals returned to the district court, filing two lawsuits (Orthopaedic II/III)

2 that the district court consolidated, arguing that the adopted rates did not comply with §

3 30(A). Id. The district court entered judgment in favor of the Department, finding that

4 the Department was not statutorily required to consider hospital costs when setting

5 reimbursement rates. Id. The hospitals appealed, and the Ninth Circuit reversed. The

6 Ninth Circuit’s interpretation held that § 30(A) “provides that payments for services

7 must be consistent with efficiency, economy, and quality of care, and that those

8 payments must be sufficient to enlist enough providers to provide access to Medicaid

9 recipients.” Id. at 1496 (emphasis in original). The Ninth Circuit therefore concluded

10 that under § 30(A)

11

the Director must set hospital outpatient reimbursement rates that bear a

12

reasonable relationship to efficient and economical hospitals’ costs of

13

providing quality services, unless the Department shows some justification

14

for rates that substantially deviate from such costs. To do this, the

15

Department must rely on responsible cost studies, its own or others’, that

16

provide reliable data as a basis for its rate setting.

17 Id.8 Further, the Ninth Circuit found that “[i]t is not justifiable for the Department to

18 reimburse providers substantially less than their costs for purely budgetary reasons.”

19

20

21

22

8 See e.g., Alaska Dep’t of Health & Soc. Servs. v. Ctrs. for Medicare & Medicaid

Servs., 424 F.3d 931, 940-41 (9th Cir. 2005); see also Arkansas Med. Soc’y v. Reynolds,

23 6 F.3d 519, 530 (8th Cir. 1993) (“We agree with the trial court’s conclusion that the

24 relevant factors that DHS is obliged to consider in its rate-making decisions are the factors outlined in 42 U.S.C. § 1396a(a)(30)(A).”); cf. Methodist Hosps. v. Sullivan, 91 F.3d 1026,
25 1030 (7th Cir. 1996) (finding that § 30(A) does not require a state to consider any

26 particular factors, but rather, requires that the state arrive at substantive results consistent with the Medicaid Act); Rite Aid, Inc. v. Houstoun, 171 F.3d 842 (3d Cir. 1999) (same).
27

28

8

Case 2:08-cv-03315-CAS-MAN Document 121 Filed 08/18/08 Page 9 of 22 Page ID #:2123

1 Id. at 1499 n.3.9

2

Whatever else its effect may have been, it is clear that Sanchez left undisturbed

3 the rule announced in Orthopaedic Hospital that § 30(A) creates duties on behalf of the

4 Department, i.e., the duty to consider efficiency, economy, and quality of care when

5 establishing reimbursement rates. Indeed, the Sanchez court recognized that “[§ 30(A)]

6 speaks . . . of the State’s obligation to develop ‘methods and procedures’ for providing

7 services generally.” Sanchez, 416 F.3d at 1059 (emphasis added).

8

Because Orthopaedic Hospital is binding authority on this Court, the Court finds

9 that when the State of California seeks to modify reimbursement rates for health care

10 services provided under the Medi-Cal program, it must consider efficiency, economy,

11 quality of care, and equality of access, as well as the effect of providers’ costs on those

12 relevant statutory factors.

13

The Court now turns to AB 5. Section 14 of AB 5 adds Cal. Welf. & Inst. Code §

14 14105.19, which directs the Director to reduce by ten percent payments under the Medi-

15 Cal fee-for-service program for physicians, dentists, pharmacies, adult day health care

16 centers, clinics, health systems, and other providers for services provided on or after

17 July 1, 2008, and which directs the Director to reduce by “actuarial equivalent” the ten

18 percent rate reduction to managed health care plans that contract with the Department

19 on or after July 1, 2008. Cal. Welf. & Inst. Code § 14105.19(b)(1), (3). Section 15 of

20 AB 5 adds Cal. Welf. & Inst. Code § 14166.245, which reduces payments to acute care

21 hospitals not under contract with the Department for inpatient services provided on or

22 after July 1, 2008. Cal. Welf. & Inst. Code § 14166.245(c).

23

24 9 Subsequently, in Sanchez v. Johnson, 416 F.3d supra at 1060, the Ninth Circuit
25 held that § 30(A) does not confer individual rights that are enforceable under 42 U.S.C. §
26 1983. Id. at 1060. However, in light of the mandate of the Ninth Circuit, the Court assumes that petitioners herein have standing because they bring suit to enjoin enforcement
27 of a state law that is claimed to be preempted by federal law.

28

9

Case 2:08-cv-03315-CAS-MAN Document 121 Filed 08/18/08 Page 10 of 22 Page ID #:2124

1

Respondent has not proffered any evidence showing that the Department

2 considered any of the “relevant factors,” in making the ten percent rate reduction

3 challenged here.10 AB 5 itself suggests that the only reason for imposing the cuts was

4 California’s current fiscal emergency. See AB 5, §§ 16-17 (“This act addresses the

5 fiscal emergency declared by the Governor . . . . This act is an urgency statute necessary

6 for the immediate preservation of the public peace, health, or safety within the meaning

7 of Article IV of the Constitution.”). Indeed, at the hearing held on the instant motion,

8 respondent’s counsel argued that neither the Legislature, nor the Department has a duty

9 to consider any particular factors or to conduct any particular studies. Therefore, based

10 on the present record, it does not appear that respondent made the required inquiries in

11 deciding to enact the ten percent rate reduction.

12

Further, the Court finds respondent’s argument that AB 5 does not conflict with

13 the State’s obligations under § 30(A) because the Legislature, not the Department, made

14 the decision to cut reimbursement rates, to be unavailing. It is clear that the Department

15 will, and in fact has, enforced AB 5. Therefore, the Department has reduced payments

16 to health care providers without regard to the statutory factors discussed supra.

17

18

10 In her supplemental opposition, respondent argues that

19

20

Petitioners’ proffered documents show that the Legislature did consider [the relevant] factors. The Legislative Analyst’s Office (LAO) Report shows that

21

the Legislature was presented with and considered the possible effects of AB

22

5 on Medi-Cal program participants.

23 Respondent’s Supplemental Opp’n at 13 (citing Petitioners’ Decl. No. 63, Declaration of
24 Jan S. Raymond, Ex. B (Legislative Analyst’s report) at 37). However, all the Legislative Analyst’s report shows is that such a report was prepared. Respondent has not shown that
25 the Legislature ever reviewed or considered the concerns raised therein. Further,
26 respondent has repeatedly argued that the State does not have any obligation to consider any of the statutory factors addressed herein, and that the Department does not conduct any
27 studies in this regard.

28

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Case 2:08-cv-03315-CAS-MAN Document 121 Filed 08/18/08 Page 11 of 22 Page ID #:2125

1

Based on the foregoing, the Court concludes that petitioners have shown a

2 likelihood of success on the merits.

3

B. IRREPARABLE HARM

4

The next question before this Court is whether petitioners have shown that Medi-

5 Cal beneficiaries will be irreparably harmed if the ten percent rate reduction is permitted

6 to go into effect. The Court therefore turns to the provision of medical services by the

7 various provider groups at issue herein.

8

1. Pharmacists

9

First, the Court considers whether petitioners have shown that reducing pharmacy

10 providers’ reimbursement rates will harm Medi-Cal beneficiaries.

11

The Ninth Circuit’s July 11, 2008 order appears to mandate the conclusion that

12 petitioners have satisfied their burden in this regard. See Ninth Circuit’s July 11, 2008

13 Order at 4 (“Appellants have demonstrated a high likelihood that the State’s ten percent

14 reduction in payments to Medi-Cal providers will cause serious irreparable injury to

15 Medi-Cal beneficiaries while this case is pending, at least with regard to access to

16 prescription drugs.”).

17

Even if review of this issue were not foreclosed by the Ninth Circuit’s July 11,

18 2008 order, the record before this Court demonstrates that the ten percent rate reduction

19 will cause irreparable harm to Medi-Cal beneficiaries as to prescription drugs by

20 reducing access to pharmacists’ services.

21

There are two primary components relating to the provision of prescription drugs:

22 dispensing cost and drug ingredient cost. Under the reimbursement rate in effect prior

23 to the ten percent rate reduction, Medi-Cal reimbursed only two-thirds of the average

24 dispensing cost for each prescription. Petitioners’ Decl. No. 66, Declaration of Lynn

25 Rolston (“Rolston Decl.”) ¶ 5. After the ten percent rate reduction, Medi-Cal will cover

26 only sixty percent of a pharmacy’s dispensing costs. Id. In the past, the positive

27 margins on drug ingredient costs offset the negative margin on ingredient

28

11

Case 2:08-cv-03315-CAS-MAN Document 121 Filed 08/18/08 Page 12 of 22 Page ID #:2126

1 reimbursement. Id., Ex. A (Myers and Stauffer LC, Certified Public Accountants,

2 Survey of Dispensing and Acquisition Costs of Pharmaceuticals in the State of

3 California, (the “Myers and Staffer Study”) (Dec. 2007)) at 586.11

4

According to petitioners, the ten percent rate reduction will eliminate the ten

5 dollar positive margin on ingredient costs observed by the Myers and Stauffer Study,

6 and will in fact create a ten dollar loss on brand name drug ingredient costs. Petitioners’

7 Decl. No. 68, Declaration of Stephen W. Schondelmeyer (“Schondelmeyer Decl.”), Ex.

8 A (Stephen W. Schondelmeyer, Impact of the 10 Percent Fee-for-Service Payment

9 Reductions on Medi-Cal Beneficiaries and Pharmacies (June 3, 2008)) at 733. These

10 brand name drugs account for sixty-six percent of Medi-Cal’s prescription drug

11 expenditures, and 27.5% of the total number of Medi-Cal prescriptions. Petitioners’

12 Decl. No. 66, Rolston Decl., Ex. A (Myers and Stauffer Study) at 591. Petitioners have

13 also “presented evidence that the ten percent cut would reduce payments to pharmacies

14 to less than what it costs them to obtain and dispense 44% of the generic prescriptions

15 they currently dispense to their patients, causing pharmacies to cease selling such drugs

16 to Medi-Cal patients and depriving ‘thousands, if not millions’ of Medi-Cal

17 beneficiaries of much-needed pharmaceuticals.” Ninth Circuit’s July 11, 2008 Order at

18 4. Generic drugs account for 72.2% of the total number of Medi-Cal prescriptions, and

19 33.1% of the program’s prescription drug expenditure. Petitioners’ Decl. No. 66,

20 Rolston Decl., Ex. A (Myers and Stauffer Study) at 591.

21

Further, petitioners have presented declarations providing evidence to the effect

22 that the ten percent rate reduction will cause independent pharmacy owners to limit the

23

24

11 Specifically, Myers and Stauffer found that single-source drugs, i.e., “patented

brand name” drugs, have average margins on drug ingredient costs of approximately $10,

25 multi-source drugs without a federal upper limit (“FUL”) price or California Maximum

26 Allowable Ingredient Costs price have average positive margins of approximately $10, and multi-source drugs with a FUL price have average margins on drug ingredient costs of $13.
27 Rolston Decl., Ex. A (Myers and Stauffer Study: Dec. 2007) at 586.

28

12

Case 2:08-cv-03315-CAS-MAN Document 121 Filed 08/18/08 Page 13 of 22 Page ID #:2127

1 scope of the services they provide to Medi-Cal beneficiaries, by, inter alia,

2 discontinuing the provision of at least some prescription drugs to Medi-Cal patients,

3 turning away new Medi-Cal patients, or by laying-off pharmacy employees, and/or

4 reducing pharmacy hours. See e.g., Petitioners’ Pharmacy Decl. No. 2, Declaration of

5 Ali Karandish, Pharm.D. (“We are loosing [sic] money on every brand medication

6 dispensed to Medi-Cal patients. We have stopped taking new patients, and if the 10%

7 cut continues we can no longer fill any brand medications to patients.”); Petitioners’

8 Pharmacy Decl. No. 3, Declaration of Pratish Mistry at 2 (“New patients have been

9 refused services.”); Petitioners’ Pharmacy Decl. No. 4, Declaration of John A. Baezel R.

10 Ph., ¶ 5 (stating that after the ten percent rate reduction went into effect, the staff

11 notified Medi-Cal beneficiaries that the pharmacy was “planning to drop the Medi-Cal

12 program unless the reimbursement injunction is reversed [sic]”). The evidence also

13 shows that because “three-fourths of the community pharmacies in California derive

14 more than 70 percent of their total revenue from prescriptions,” most pharmacies will be

15 unable to “‘make up lower prices on prescriptions by sales in the rest of the store.’”

16 Petitioners’ Decl. No. 68, Schondelmeyer Decl., Ex. A (Stephen W. Schondelmeyer,

17 Impact of the 10 Percent Fee-for-Service Payment Reductions on Medi-Cal

18 Beneficiaries and Pharmacies (June 3, 2008)) at 729.

19

To challenge petitioners’ evidence, respondent submits, among other things, the

20 declaration of Kevin Goropse, who is employed as the Department’s Chief of Medi-Cal

21 Pharmacy Policy Branch. Grospe claims that “since the ten percent rate reduction took

22 effect on July 1, 2008, Rite Aid Pharmacy, CVS Pharmacy, Longs Pharmacy, and

23 Wallgreens [sic] Pharmacy have continued, and will continue, to provide all Medi-Cal

24 covered drugs, including expensive brand name drugs, to Medi-Cal beneficiaries.” Aug.

25 4, 2008 Declaration of Kevin Gorospe (“Gorospe Decl.”) ¶ 6; see also Respondent’s

26 Decl. No. 1, July 21, 2008 Gorospe Decl. ¶ 6 (“I have not heard of any specific

27 problems with Medi-Cal recipients being unable to find one of these chain pharmacies

28

13

Case 2:08-cv-03315-CAS-MAN Document 121 Filed 08/18/08 Page 14 of 22 Page ID #:2128

1 that will provide medically necessary and approved drugs.”). However, Grospe does

2 not state the basis for his knowledge. Nor does Grospe state how many of these chain

3 pharmacy stores exist in California, or how accessible these stores are to residents of

4 California. Based on this record, and in light petitioners’ showing, the Court cannot

5 conclude that these four chain pharmacies will be able to compensate for the probable

6 adverse effect on beneficiaries’ access to pharmacies if the ten percent rate reduction

7 takes effect.12 Indeed, the many declarations submitted by petitioners show that

8 independent pharmacy providers, who constitute approximately thirty-three percent of

9 the licensed community pharmacies in California, will be hard-hit by the ten percent rate

10 reduction, and may discontinue, or at least severely reduce, services to Medi-Cal

11 beneficiaries. Petitioners’ Decl. No. 68, Schondelmeyer Decl., Ex. A (Stephen W.

12 Schondelmeyer, Impact of the 10 Percent Fee-for-Service Payment Reductions on

13 Medi-Cal Beneficiaries and Pharmacies (June 3, 2008)) at 729.

14

Gorospe also states that according to T. Allen Hansen, the manager for the Myers

15 and Stauffer Study, on average, Medi-Cal reimburses $84.62 for prescription drugs,

16 while, on average, it costs a pharmacy $77.03 to acquire and dispense a drug. After the

17 ten percent rate reduction, Medi-Cal will, on average, reimburse pharmacy providers

18 $76.16, thereby “compensat[ing] in the aggregate approximately 99 percent of provider

19 costs.” Respondent’s Decl. No. 2, July 17, 2008 Gorospe Decl. ¶ 9. First, as noted

20 above, the evidence shows that many pharmacy providers will be unable to continue

21 providing medications to Med-Cal patients if they lose any further Medi-Cal funding.

22 Second, it appears that after the ten percent rate reduction, approximately ninety, or

23 thirty-two percent, of the top 278 single source (patented brand name) drugs at the

24 National Drug Code level, will be reimbursed in an amount below a pharmacy’s costs.

25 Petitioners’ Decl. No. 68, Schondelmeyer Decl., Ex. A (Stephen W. Schondelmeyer,

26 12 This is especially true for access to services in rural areas, which is already limited.
27

28

14

Case 2:08-cv-03315-CAS-MAN Document 121 Filed 08/18/08 Page 15 of 22 Page ID #:2129

1 Impact of the 10 Percent Fee-for-Service Payment Reductions on Medi-Cal

2 Beneficiaries and Pharmacies (June 3, 2008)) at 733. Among the single source drugs

3 that will be reimbursed below cost are antipyshoctic drugs, antiretroviral drugs,

4 anticonvulsant drugs, and antineoplastic drugs. Id. Because these single source drugs

5 are protected from competition by patents, there are no available generic alternatives.

6 There can be little or no doubt that Medi-Cal patients will be harmed if these necessary

7 drugs are placed outside of their reach.

8

Based on the foregoing, the Court concludes that the ten percent rate reduction

9 has a likelihood of reducing access to prescription drugs by, inter alia, causing

10 pharmacies to stop, or at least limit, dispensing prescription medications to Medi-Cal

11 beneficiaries.

12

2. Physicians, Dentists, Pharmacies, Adult Day Health Care

13

Centers, Clinics, Health Systems, and Other Providers for

14

Services

15

The Court next to turns to the provision of medical services by physicians,

16 dentists, optometrists, adult day health care centers, and other providers.

17

According to the California Legislative Analyst’s report, the ten percent rate

18 reduction may reduce access to providers and services. Specifically, the report states

19 that “FFS physician rates have not changed since the Legislature granted rate increases

20 in the 2000-2001 budget year, though medical costs continuing to rise.” Petitioners’

21 Decl. No. 63, Declaration of Jan S. Raymond, Ex. B (Legislative Analyst’s report) at 37.

22 The report notes that evidence indicates that provider rates affect access to care, and

23 also the perception of the quality of care that beneficiaries receive. Further, “Medi-Cal

24 reimbursements may particularly impact the participation of specialists in the program.”

25 Id. The report states that lack of access to primary care services may result in

26 inappropriate use of the emergency room, and other such more expensive forms of care.

27 Id. Because of these concerns, the Legislative Analyst recommended that the

28

15

Case 2:08-cv-03315-CAS-MAN Document 121 Filed 08/18/08 Page 16 of 22 Page ID #:2130

1 Legislature reject the Governor’s proposal to reduce payments for all providers, except

2 hospitals. Id.

3

The Legislative Analyst’s concerns and predictions related to the probable harm

4 to access to primary care services are further confirmed by the many declarations and

5 studies that petitioners have submitted. Declarations submitted by petitioners

6 demonstrate that physician participation, particularly specialist participation, in Medi-

7 Cal is presently low. See e.g., Petitioners’ Decl. No. 1, Declaration of John S. Andrews

8 ¶¶ 7-8 (stating that many doctors and dentists will not accept Medi-Cal patients);

9 Petitioners’ Decl. No. 8, Declaration of Adolfo O. Chanez ¶¶ 6-9; Petitioners’ Decl. No.

10 13, Declaration of Robert E. Fuller ¶ 6; Petitioners’ Decl. No. 50, Declaration of Donald

11 Bancroft Moulds, Ex. C (Andrew B. Bindman, M.D. et al., Physician Participation in

12 Medi-Cal, 2001 (May 2003)) at 1-2 (stating that many physicians are not willing to treat

13 Medi-Cal patients). According to the California Healthcare Foundation, only forty

14 percent of private dental practices accept Denti-Cal patients. Petitioners’ Decl. No. 44,

15 Declaration of Ronald B. Mead, Ex. B (California Healthcare Foundation, Denti-Cal

16 Facts and Figures: A Look at California’s Medicaid Dental Program (May 2007)) at 3.

17 At least one study, entitled “Factors that Influence the Willingness of Private Primary

18 Care Pediatricians to Accept More Medicaid Patients,” shows that the willingness of

19 primary care pediatricians to participate in Medi-Cal increases with reimbursement

20 rates. Petitioners’ Decl. No. 3, Declaration of Stephen Berman, M.D., Ex. A (Steve

21 Berman et al., Factors that Influence the Willingness of Private Primary Care

22 Pediatricians to Accept More Medicaid Patients, 110 PEDIATRICS 239 (Aug. 2, 2002))

23 at 15-16.

24

Physicians assert that although they will continue to treat their existing Medi-Cal

25 patients, they will not accept new patients. See e.g., Petitioners’ Decl. No. 4,

26 Declaration of Arnold Blustein, M.D. ¶ 10; Petitioners’ Decl. No. 24, Declaration of

27 Carla Fulton Kakutani, M.D. ¶ 11; Petitioners’ Decl. No. 28, Declaration of Paul

28

16

Case 2:08-cv-03315-CAS-MAN Document 121 Filed 08/18/08 Page 17 of 22 Page ID #:2131

1 Kivena, M.D. ¶ 8 (stating that most pediatricians in his county do not accept new Medi-

2 Cal patients); Petitioners’ Decl. No. 40, Declaration of Theodore M. Mazer, M.D. ¶ 12

3 (stating that although he will continue to treat current Medi-Cal patients, he is currently

4 turning away new Medi-Cal patients); Petitioners’ Decl. No. 50, Declaration of Donald

5 Bancroft Moulds, Ex. C (Andrew B. Bindman, M.D. et al., Physician Participation in

6 Medi-Cal, 2001 (May 2003)) at 690 (stating that fifty-five percent of primary care

7 physicians, forty-eight percent of medical specialists, and forty-three percent of surgical

8 specialists were accepting new Medi-Cal patients). One dentist practicing in Santa

9 Maria states that he is not aware of any other dental office limited to treating children

10 from Santa Barbara County that accepts Medi-Cal patients in his geographic area.

11 Petitioners’ Decl. No. 5, Declaration of Samuel R. Burg, D.D.S. ¶ 7; see also

12 Petitioners’ Decl. No. 41, Declaration of Ronald B. Mead, D.D.S. ¶ 8 (“Other than my

13 partners, I am not aware of any other oral and maxillofacial surgeons in my area who

14 accept-Medi-Cal.”). Nonetheless, he anticipates that he will either stop treating Medi-

15 Cal patients, or, at a minimum, will be forced to reduce the services he does provide.

16 Petitioners’ Decl. No. 5, Declaration of Samuel R. Burg, D.D.S. ¶ 10; see also

17 Petitioners’ Decl. No. 16, Declaration of H. William Gottschalk ¶ 11. Other dentists

18 claim that although they will treat their current patients, they will turn away new Medi-

19 Cal patients. The same is true of optometrists. See e.g., Petitioners’ Decl. No. 7,

20 Declaration of Tony Carnevali, O.D. ¶ 11.

21

There is also evidence to suggest that the lack of access to primary care services

22 has increased the burden on emergency rooms and community health clinics. See e.g.,

23 Petitioners’ Decl. No. 1, Declaration of John S. Andrews ¶¶ 9-11; Petitioners’ Decl. No.

24 8, Declaration of Adolfo O. Chanez ¶ 6; Petitioners’ Decl. No. 28, Declaration of Paul

25 Kivena, M.D. ¶ 7; Petitioners’ Decl. No. 32, Declaration of Gerald Kozai ¶¶ 7-8;

26 Petitioners’ Decl. No. 51, Declaration of Alan Nager, M.D. ¶ 6. Adult day health care

27 providers also appear to be at risk. For instance, the Peg Taylor Center for Adult Day

28

17

Case 2:08-cv-03315-CAS-MAN Document 121 Filed 08/18/08 Page 18 of 22 Page ID #:2132

1 Health Care is the only adult day health care program serving Butte, Tehama, and Glenn

2 Counties. Petitioners’ Decl. No. 8, Declaration of Diane Cooper-Puckett ¶ 11. In

3 September 2007, it was forced to close its Orville site because it could not sustain its

4 operations on Medi-Cal reimbursement fees. Id. ¶ 5. The viability of the remaining site

5 in Butte County is now threatened by the ten percent rate reduction. Id. Similarly, the

6 Ruth Ann Rosenberg Adult Day Health Center in San Francisco represents that it has

7 not found additional resources to compensate for the loss of funds due to the ten percent

8 rate reduction, and that if it remains unable to do so, it will be forced to close.

9 Petitioners’ Decl. No. 25, Declaration of Cindy Kauffman ¶ 11; see also Petitioners’

10 Decl. No. 53, Declaration of Nina M. Nolcox, R.N., P.H ¶¶ 4-5 (stating that the primary

11 adult day health care program serving South Los Angeles will likely have to close and

12 file for bankruptcy). This evidence is sufficient to show that the ten percent rate

13 reduction has a likelihood of reducing Medi-Cal beneficiaries’ access to medical

14 services.13

15

3. Non-Contract Hospitals

16

The present record does not, however, support a finding of irreparable harm with

17 respect to the provision of medical services by non-contract hospitals.

18

The Legislative Analyst recommended that the Legislature accept the Governor’s

19 proposal to reduce payments to hospitals and nursing facilities. Petitioners’ Decl. No.

20 63, Declaration of Jan S. Raymond, Ex. B (Legislative Analyst’s report) at 37. Indeed,

21 it appears that California raised the reimbursement rate for both inpatient and outpatient

22 services between 2001 and 2004. There is evidence showing that approximately ninety

23 percent of acute care hospital inpatient services are provided by contract hospitals that

24

25

13 As pointed out by counsel at the hearing held on the instant motion, petitioners are

26 forced to rely largely on anecdotal evidence because the Department affirmatively represents that it does not have a duty to conduct studies, and that there is therefore a lack
27 of empirical evidence in this regard.

28

18

Case 2:08-cv-03315-CAS-MAN Document 121 Filed 08/18/08 Page 19 of 22 Page ID #:2133

1 are not subject to the ten percent rate reduction. Respondent’s Decl. No. 5, Declaration

2 of Gary Wong, Ex. D (California Medical Assistance Commission, California Medical

3 Assistance Commission Annual Report to the Legislature (2008)) at 000225-26.

4 Further, petitioners’ declarations show that acute care hospitals will continue to provide

5 both inpatient and outpatient care, though some patients may be transferred to other

6 more remote hospitals. See e.g., Petitioners’ Decl. No. 13, Declaration of Robert E.

7 Fuller ¶ 11. While some acute care hospitals may be forced to stop, or at least limit,

8 their provision of outpatient services, it appears that there are other providers in the area

9 to take on that care. See e.g., Petitioners’ Decl. No. 43, Declaration of Richard L.

10 Mendoza ¶ 9 (stating that Pioneers Memorial Hospital chose to close two outpatient

11 clinics because “other providers likely would be able to take on the patients that were

12 serviced by the clinic”); Petitioners’ Decl. No. 46, Declaration of Tish Miller ¶ 4

13 (stating that there are “two small outpatient clinics and a small physician practice” in

14 Mariposa). Petitioners argue that if the ten percent rate reduction goes into effect,

15 primary care physicians may cease treating many Medi-Cal patients, and if primary care

16 physicians cease doing so, then hospitals will likely be more burdened, and if hospitals

17 are more burdened they will have to pay stipends to physicians to treat patients, which

18 will in turn further impede the hospital’s ability to provide sufficient patient care.

19 However, based on the present record, this type of harm is too speculative to support a

20 finding of irreparable harm.

21

In accordance with the foregoing, the Court finds that petitioners have not shown

22 that they will be irreparably harmed if payments to non-contract hospitals are reduced.

23

4. Managed Care Plans

24

Finally, the present record does not support a finding that managed care plans

25 will “pass through” the actuarial equivalent reduction to managed care providers. The

26 only evidence that petitioners’ have submitted in this regard is the declaration of Gilbert

27 Simon, M.D., wherein Dr. Simon states that “[t]hree years ago, a situation occurred

28

19

Case 2:08-cv-03315-CAS-MAN Document 121 Filed 08/18/08 Page 20 of 22 Page ID #:2134

1 where payments from a Medi-Cal managed care plan decreased” and that of Thu-Hang

2 Tran, Pharm.D., wherein Tran states that the CalOptima Board of Directors voted to

3 decrease the current rate of payment to pharmacies in the CalOptima network.

4 Petitioners Decl. No. 73, Declaration of Gilber Simon, M.D. ¶ 11; Petitioners’

5 Supplemental Declaration of Thu-Hang Tran, Pharm.D. ¶ 7. However, this evidence,

6 by itself, is insufficient to support a finding of irreparable harm. This is especially true

7 in light of the evidence submitted by respondent to the effect that a managed care plan

8 is contractually obligated to provide full and complete access to medical care to all

9 Medi-Cal recipients enrolled in the plan. Respondent’s Decl. No. 14, Declaration of

10 Vivkie Orlich ¶¶ 3-5. Therefore, the Court finds, with respect to the provision of

11 medical services by managed care plans, the evidence submitted by petitioners to

12 establish irreparable harm appears to be speculative.

13

C. BALANCE OF HARDSHIPS

14

The Court is mindful of the difficulty facing the State of California in light of its

15 fiscal crisis: there is an estimated $14.2 billion budget shortfall.14 However, the State

16 has accepted federal funds under the Medicaid Act. In so doing, the State agreed to

17 abide by the conditions imposed by Congress. Further, retroactive relief for Medi-Cal

18 beneficiaries will likely be inadequate and, and it will come too late, to remedy their

19 pain, suffering, and harm to their mental and physical well-being. See e.g., Lopez v.

20 Heckler, 713 F.2d 1432, 1437 (9th Cir. 1983). In light of the significant threat to the

21 health of Medi-Cal recipients, reducing payments to health-care service providers will

22 likely cause, and given that nothing in this Court’s order prevents respondent from

23 imposing a rate reduction after she has appropriately considered and applied the

24

25

14 The Court notes that there is evidence to suggest that if the ten percent rate

26 reduction is given effect, many Medi-Cal beneficiaries will turn to more costly forms of medical care, such as emergency room care, thereby diminishing the State’s projected
27 savings. See e.g., Rodde v. Bonta, 357 F.3d 988, 999 (9th Cir. 2004).

28

20

Case 2:08-cv-03315-CAS-MAN Document 121 Filed 08/18/08 Page 21 of 22 Page ID #:2135

1 relevant factors, the Court finds that the balance of hardships tips in favor of granting

2 the preliminary injunction.

3

D. PUBLIC INTEREST

4

“The district court’s public interest analysis should be whether there exists some

5 critical public interest that would be injured by the grant of preliminary relief.”

6 Hybritech, 849 F.2d at 1458. Clearly, there is a public interest in ensuring that the State

7 has enough money to meet its financial obligations in the face of competing demands.

8 However, there is also a public interest in ensuring access to health care. In light of all

9 the circumstances, including the fact that the State may decide to implement a rate

10 change upon making a properly reasoned and supported analysis, the Court finds that

11 the public interest does not weigh against the issuance of a preliminary injunction.

12 IV. CONCLUSION

13

Because respondent has failed to demonstrate that the State of California

14 considered whether the ten percent rate reduction would be consistent with efficiency,

15 economy, quality of care, and equality of access, or the effect of providers’ costs on

16 Medi-Cal beneficiaries’ access to medical providers and services, the Court finds that

17 petitioners have demonstrated a likelihood of succeeding on the merits of their

18 Supremacy Clause claim. In light of this likelihood of success on the merits, and

19 because it appears that if Cal. Welf. & Inst. Code § 14105.19(b)(1) is enforced Medi-

20 Cal patients will be irreparably harmed, the Court hereby GRANTS petitioners’ motion

21 for preliminary injunction to the extent that it seeks to enjoin enforcement of Cal. Welf.

22 & Inst. Code § 14105.19(b)(1), which reduces by ten percent payments under the Medi-

23 Cal fee-for-service program for physicians, dentists, pharmacies, adult day health care

24 centers, clinics, health systems, and other providers for services provided on or after

25 July 1, 2008. However, the Court DENIES without prejudice petitioners’ motion for

26 preliminary injunction to the extent that it seeks to enjoin implementation of Cal. Welf.

27 & Inst. Code § 14105.19(b)(3), which reduces payments to managed care plans, and

28

21

Case 2:08-cv-03315-CAS-MAN Document 121 Filed 08/18/08 Page 22 of 22 Page ID #:2136

1 Cal. Welf. & Inst. Code § 14166.245(c), which reduces payments to non-contract acute

2 care hospitals because the present record does not substantiate petitioners’ allegations

3 that the implementation of these statutory provisions will result in irreparable harm to

4 Medi-Cal patients or that the balance of hardships tips sharply in their favor.

5

The Court hereby orders respondent Director, her agents, servants, employees,

6 attorneys, successors, and all those working in concert with her to refrain from

7 enforcing Cal. Welf. & Inst. Code § 14105.19(b)(1), including refraining from reducing

8 by ten percent payments under the Medi-Cal fee-for-service program for physicians,

9 dentists, pharmacies, adult day health care centers, clinics, health systems, and other

10 providers for services provided on or after July 1, 2008.

11

IT IS SO ORDERED.

12 Dated: August 18, 2008

13

14

_______________________________ CHRISTINA A. SNYDER

15

UNITED STATES DISTRICT JUDGE

16

17

18

19

20

21

22

23

24

25

26

27

28

22

 </s> Case 2:08-cv-03315-CAS-MAN Document 1-2

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Filed 05/19/08 Page 34 o5f /9r2~}oP<arg:e ID #:41

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1 LYNN s. CARMAN, State Bar 028860
Medicaid Defense Fund

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STANLEY L. FRIEDMAN, State 445 S. Figueora St., 27th Floor

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of Southern California; Gray Panthers of Sacramento;~

Gray Panthers of San Francisco; Gerald Shapiro,

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Pharrn.D., dba Uptown Pharmacy & Gift Shoppe; Sharon Steen, dba Central Pharmacy; Mark Beckwith; Margaret Dowling; Tran Pharmacy, Inc. dba Tran Pharmacy; and Jason Young

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;;:;?v ( ! ! - SUPERIOR COURT OF THE STATE oYcALIFORNIA

12 13

. IN AND FOR THE COUNTY OF LOS ANGELES, UNLIMITED JURISDICTION 4/2.---16 Y'.

14 INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA, a nonprofit corporation; ORAY
15 PANTHERS OF SACRAMENTO, a nonprofit corporation; THE ORAY PANTHERS OF SAN
16 FRANCISCO, a nopprofit corporation; GERALD SHAPIRO, Pharm.D., doing business as Uptown
17 Pharmacy and Gift Shoppe; SHARON STEEN, doing business as Central Pharmacy; MARK
18 BECKWITH; MARGARET DOWLING; TRAN PHARMACY, INC., a corporation, doing business
19 as Tran Pharmacy; and JASON YOUNG,

No. BS 114459
VERIFIED FIRST AMENDED PETITION FOR WRIT OF MANDAMUS

20 -vs.SANDRA SHEWRY, Director of Department of Health
21 Care Services ofthe State of California; DEPARTMENT OF HEALTH CARE SERVICES, a department of the
22 State of California; and DOES 1 through 50, .

23

24r-------------~v=ER=IF=IE~D=FI=Rs-T=AM=E=N=oE=D-PE-.T=ITl=~-F~·O-R-W~RI=To-F-M-A~ND~A-M-US---------------

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 35 of 92 Page ID #:42
VERIFIED FIRST AMENDED PETITION FOR WRIT OF MANDAMUS (§ 1085 Code of Civil Procedure)
2 TO THE ABOVE-ENTITLED HONORABLE COURT:
3 The verified first amended petition for writ of mandamus, under § 1085
4 Code of Civil Procedure, ofpetitioners Independent Living Center of Southern
5 California, Inc.; Gray Panthers of Sacramento; The Gray Panthers of San Francisco;
6
Gerald Shapiro, Pham.D., dba Uptown Phannacy & Gift Shoppe; Sharon Steen, dba 7
Central Pharmacy; Mark Beckwith; Margaret Dowling; Tran Pharmacy, Inc., dba Tran 8
Pharmacy; and Jason Young, respectfully shows: 9
Jurisdiction and Venue1 10
1. The above-entitled Superior Court has jurisdiction under Article VI, 11
section 10, California Constitution, and§ 1085 Code of Civil Procedure ("Code Civ. 12
Proc."). Venue lies under§ 401 Code Civ. Proc. which provides that an action may be
13 filed against an officer or agency of the State of California in any county in which the
14 California Attorney General has an office; and under§ 393(b) Code Civ. Proc., which
15 provides that an action may be filed in a county in which a public officer has an office.
16
Parties
17 2. (a) The petitioner INDEPENDENT LIVING CENTER OF SOUTHERN
18 CALIFORNIA, INC. ("ILCSCal") is a nonprofit California corporation which was duly
19 organized and incorporated in California on July 25, 1977 pursuant to the General
20 Nonprofit Corporation Law of the State of California.
21
22
1 Headings and captions are not allegations, and need not be traversed or denied; but, are 23 et forth only to assist the reader.
24r--------------V=ER=IF=IE=D -FI~ RS~T - AM-E-N- DE-D-PE-T- ITI-ON-- FO-R-W-RI- T O-F-M-A- ND-A-M- US--------------~

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 36 of 92 Page ID #:43

(b) ILCSCal has its principal office and place of business in, and does

2 business in the County of Los Angeles, California.

3

3. The petitioner GRAY PANTHERS OF SACRAMENTO ("Gray Panthers

4 Sacto") is a California nonprofit public benefit corporation, whose principal office and

5 place of business is, and does business, in the County of Sacramento, California.

6

4. (a) The petitioner THE GRAY PANTHERS OF SAN FRANCISCO

7 ("Gray Panthers SF") is a nonprofit California corporation which was duly organized

8 and incorporated in California on August 28, 1978, pursuant to the General Nonprofit

9 Corporation Law of the State of California.

10

(b) GRAY PANTHERS SF has its principal office and place of business

11 in, and does business, in the City and County of San Francisco, California.

12

5. (a) The petitioner GERALD SHAPIRO, Pharm.D., is a duly licensed

13 registered pharmacist with License No. 24377, who owns and operates a duly licensed

14 retail pharmacy under the fictitious name of Uptown Pharmacy & Gift Shoppe, under

15 retail pharmacy license No. PHY 41615, in the City of Los Angeles, California.

16

(b) The petitioner SHAPIRO's pharmacy participates in the Medi-Cal fee-

17 for-service program and also in Medi-Cal managed care plans, under Medi-Cal provider

18 identification No. PHA 416150.

19

6. (a) The petitioner SHARON STEEN is an individual who is a copartner in

20 a copartnership which owns and operates a licensed retail pharmacy, under the fictitious

21 name Central Phannacy, under retail phannacy license No. PHY 38051, in the City of

22 Santa Monica, California.

23

(b) The petitioner STEEN's phannacy participates in the Medi-Cal fee-

24r-------------~V=ER=IF=IE=D -FI- RS-T - AM~E~N~ DE-D-PE-T- ITI-ON-- FO-R -W- RI- T O-F-M-A- ND-A-M- US--------------~

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 37 of 92 Page ID #:44

for-service program and also in Medi-Cal managed care plans, under Medi-Cal provider

2 identification No. PHA 380510.

3

7. The petitioners MARK BECKWITH, MARGARET DOWLING, and

4 JASON YOUNG are individuals who are recipients in the state-federal Medicaid

5 program in California (which is called "Medi-Cal").

6

8. (a) The Petitioner TRAN PHARMACY, INC. is California corporation

7 which owns and operates a duly licensed retail pharmacy under the fictitious name of

8 Tran Pharmacy, under retail pharmacy license No. PHY 43647, in Garden Grove,

9 California.

10

(b) The TRAN PHARMACY, INC.'s pharmacy participates in the Medi-

11 Cal fee-for-service program and also in Medi-Cal managed care plans, under Medi-Cal

12 provider identification No. PHA 436470.

13

9. (a) The respondent DEPARTMENT OF HEALTH CARE SERVICES

14 ("Department") is a department of the State of California. The Department administers

15 the Medi-Cal program under§ 14000 et seq. California Welfare and Institutions ("Welf.

16 & Inst.") Code. The Department has an office in the County of Los Angeles, California.

17

(b) The respondent SANDRA SHEWRY ("Director"), is the director of

18 the Department. The Director is exclusively empowered by§§ 14100.1 and 14105

19 Welf. & Inst. Code to set all policies, rules and regulations in the Medi-Cal program,

20 including all rates payable to Medi-Cal providers. The Director has an office in the

21 County ofLos Angeles. The Director SANDRA SHEWRY is sued in her official

22 capacity, only.

23

(c) Respondents DOES 1 through 50 are persons and officers whose

24r-------------~V=ER~IF=IE=D~FI=R=ST~A~M=EN=o=E~D=PE=TI=Tl=ON~FO=R=w=R=!T=o=F=MA=N=D-AM~US~------------~

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 38 of 92 Page ID #:45

identity is unknown to petitioners, and who are agents, officers, and servants of the State

2 of California, and who have some function, unknown to petitioners at this time, to assist

3 or to carry out the actions of the respondents complained of in this Petition. Petitioners

4 pray leave of the Court to amend this Petition as and when the identity and functions of

5 DOES 1 through 50 become known to the petitioners.

6

STANDING

7

Purposes of the Gray Panther petitioners

8

10. The membership of each ofthe Gray Panthers Sacto and of the Gray

9 Panthers SF, respectively, is predominantly over the age of 50. A primary function and

10 purpose of the Gray Panthers Sacto, and of the Gray Panthers SF, respectively, is to 11 advocate and advance the health care and the health care rights and civil rights of their

12 members, (1) a number of whom are Medi-Cal recipients in the Medi-Cal fee-for-

13 services program, (2) a number of whom are Medi-Cal recipients in Medi-Cal managed

14 care plans.

15

Suit as authorized by Green v. Obledo and the common law

16

11. (a) The petitioners MARK BECKWITH, MARGARET DOWLING,

17 GERALD SHAPIRO, Pharm.D, SHARON STEEN, and JASON YOUNG are each

18 citizens and residents of the State of California. The ILCSCal, the Gray Panthers Sacto,

19 the Gray Panthers SF, and the Tran Pharmacy, Inc., dba Tran Pharmacy, are also each a

20 corporate citizen and resident ofthe State of California.

21

(b) Each ofthe petitioners, mentioned the preceding sub-Paragraph (a) of

22 Paragraph 11, sue on their own behalf In their own interest, respectively, as well as,

23 also, on behalf of the public of the State of California, to procure the performance by the

24 ~------------~ VE~RI-FIE-D-FI-RS-T-AM-E=ND~E~ D ~ PE- TIT-IO-N-FO-R=W~ RIT-O-F -MA-N-DA-M-U- S ------------~

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 39 of 92 Page ID #:46

program. His Medi-Cal identification number is 568-29-5405-A.

2

18. -(a) The ILCSCal is a non-profit corporation located in Van Nuys, Santa

3 Clarita and Lancaster, California. The amended articles of incorporation of ILCSCal

4 state that its primary purposes are to:

5

" ... initiate, sponsor, promote, and carry out plans, policies, and activities that

will further the prosperity of and enhance the development of persons with

6

disabilities."

7 The ILCSCal is a designated center for independent living (CIL). CILs are community-

8 based organizations established under the California Rehabilitation Act(§ 19800 Welf.

9 & Inst. Code) to advocate for and provide services to enable people with disabilities to

10 achieve independence, including equal access to society and to all activities of society.

11

-(b) The ILCSCal works on issues ofbenefits counseling, cross-disability

12 peer modeling/peer counseling, housing referrals, personal assistants referrals, advocacy,

13 and providing technical assistance, infonnation and referral and emergency services, and

14 assistance in locating medical, phannacy, and other providers to treat, cure, and alleviate

15 their illness, injury, or condition.

16

19. The ILCSCal serves over 8,000 individuals with disabilities annually, the

17 majority of whom, (96% or more than 7,500), are categorically linked to Medi-Cal as

18 their primary insurance type, because they are SSI beneficiaries under the Social

19 Security Act; and as such, are not mandated into Medi-Cal managed care, so that most of

20 the clients ofiLCSCal who receive SSI are not enrolled in Medi-Cal managed care, and

21 instead receive their Medi-Cal services, including physician, dental, and phannacy 22 services, from fee-for-service Medi-Cal providers.

23

24

VERIFIED FIRST AMENDED PETITION FOR WRIT OF MANDAMUS

-8-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 40 of 92 Page ID #:47

- (c) Out of these 7,500 clients with disabilities served annually by

2 ILCSCal, approximately 15%, or 1,200, are eligible for both Medi-Cal and Medicare

3 Part B, and as such:

4

- (1) receive their physician under Medicare, (except for such

5 physician services which are not covered by Medicare, in which case Medi-Cal pays for

6 the physician service), and, also receive their phannacy services under Medicare Part D,

7 (except for certain "carve out" drug products which are excluded from Medicare Part D

8 and are instead dispensed under the Medi-Cal program); and,

9

- (2) receive their dental care under Medi-Cal fee-for-service.

10

LEGISLATIVE HISTORY OF ASSEMBLY BILL X3 5

11

20. On January 10, 2008, the California Governor proclaimed a State fiscal

12 emergency, sent a proposed 2008-2009 budget bill to the Legislature, and called the

13 Legislature into special session.

14

21. (a) On February 16, 2008 the Governor signed into law the Special Session

15 Budget Bill, (Assembly Bill X3), and, also, Assembly Bill X3 5 (the Special Session

16 health care trailer bill), and Assembly Bill X3 6 (the Special Session human services

17 trailer bill).

18

(b) Assembly Bill X3 5, eff. February 16, 2008, was chaptered as Chapter

19 3, Statutes 2007-2008 Third Extraordinary Session.

20

Assembly Bill X3 5

21

22. Section 14 of Assembly Bill X3 5 added §14105.19 Welf. & Inst. Code,

22 which:

23

-in subds. (a), (b)(l), (b)(2), and (c)- (e) provides that reimbursement shall be

24

VERIFIED FIRST AMENDED PETITION FOR WRIT OF MANDAMUS

-9-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 41 of 92 Page ID #:48

cut 10% across-the-board in Medi-Cal fee-for-service to physicians, dentists,

2 pharmacies, skilled nursing facilities, acute care hospitals (in respect to inpatient

3 hospital services) who have no contract with the Department, and other providers in the

4 Medi-Cal fee-for-service program, for services for dates of service on and after July 1,

5 2008; and,

6

-in subd. (b)(3) provides that payments shall be reduced by the actuarial

7 equivalent amount specified in subd. (b) of§ 14105.9 Welf. & Inst. Code, (i.e., an

8 amount of 10%), to Medi-Cal managed care plans, which reduction is to be effected

9 pursuant to contract amendments or change orders effective on July 1, 2008.

10

23. Section 15 of Assembly Bill X3 5 added §14105.245 Welf. & Inst. Code,

11 which provides that amounts paid interim payments to acute care hospitals not under

12 contract with the Department, for amounts paid as interim payments for inpatient

13 hospital services covered by Medi-Cal, shall also be cut 10% across-the-board in Medi-

14 Cal fee-for-service for acute care hospitals who have no contract with the Department

15 for fiscal year 2008-09, (commencing July 1, 2008).

16

24. § 14105.245 Welf. & Inst. Code, (added by Section 15 of Assembly Bill

17 X3 5 as set forth above), provides:

18

"(a) The Legislature finds and declares that the state faces a fiscal crisis that

requires unprecedented measures to be taken to reduce General Fund

19

expenditures to avoid reducing vital government services necessary for the

protection ofthehealth, safety, and welfare of the citizens of the State of

20

California." (Emphasis supplied.)

21

25. Finally, Sees. 16 and 17 of Assembly Bill X3 5 provide:

22

"SEC. 16. This act addresses the fiscal emergency declared by the Governor

by proclamation on January 10, 2008, pursuant to subdivision (f) of Section 10 of 23

24 t - - - -

VERIFIED FIRST AMENDED PETITION FOR WRIT OF MANDAMUS

-10-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 42 of 92 Page ID #:49

Article IV of the California Constitution.

2

SEC. 17.... In order to make statutory changes needed to implement cost

containment measures affecting health services, at the earliest possible time, it is

3

necessary that this act take effect immediately." (Emphasis supplied.)

4

Concrete injury from implementing Sees. 14 and 15 of Assembly Bill X3 5.

5

26. Each of the Petitioners, as well as:

6

-all Medi-Cal recipients who receive provider services in the Medi-Cal fee-for-

7

service program,

8

- all Medi-Cal recipients enrolled in Medi-Cal managed care plans,

9

10

-all Medi-Cal providers in the Medi-Cal fee-for-service program who are subject

11

to the aforesaid I 0% cut in Medi-Cal payments,

12

13

-all Medi-Cal managed care plans, and,

14

15

-all Medi-Cal providers in respect to or with whom Medi-Cal managed care

16

plans have contracted with or arranged for covered Medi-Cal managed care

17

services to be furnished by them, (in respect to whom the managed care plans will

18

foreseeably and inevitably pass through the aforesaid 10% cut commencing July

19

1,2008),

20 will, respectively, and foreseeably and inevitably, suffer concrete injury, and are

21 threatened with concrete injury, and are put at risk of concrete injury, by the aforesaid

22 10% cut, or the actuarial equivalent thereof, which will be put into effect commencing

23

24 ~-------------v-=ER~IF=IE=D~FI~RS=T~A-M=EN~D~E~D=PE=TI=TI~ON-F~O-R~W~R-IT~O~FM~A~N~D-AM~U-S---------------1~}-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 43 of 92 Page ID #:50

respondent public officials of public duty, as authorized by Green v. Obledo, 29 Cal.3d 2 126 (1981); namely, the perfonnance ofthe mandatory ministerial duty (1) to set aside

3 their policy to implement Sections 14 and 15 of Assembly Bill X3 5 (enacted and eff. 4 Feb. 16, 2008, at Chapter 3, Statutes 2007-2008 Third Extraordinary Session), and (2) to 5 refrain from implementing Sections 14 and 15 of Assembly Bill X3 5, including 6 refraining from reducing payments 10% to Medi-Cal doctors, dentists, phannacies, those

7 acute care hospitals who have no contract with the Department, and, other providers in 8 the Medi-Cal fee-for-service program, and Medi-Cal managed care plans, commencing
9 July 1, 2008; --which aforesaid actions of the respondents are preempted, under the

10 Supremacy Clause, (article VI, U.S. Constitution), in that the aforesaid actions:

11

- (1) violate 42 U.S.C. § 1396a(a)(30)(A), (herein, "Sec. 30(A)," including

12

the quality and access clauses of Sec. 30(A).

13

14

- (2) violate the federal Americans with Disabilities Act of 1990,

15

("ADA");

16 which suit is pennitted and authorized by all laws made and provided therefor, the

17 common law, and by Green v. Obledo (1981) 29 Cal.3d 126.

18

Prudential jus tertii suits

19

12. (a) Each of the pharmacy petitioners, (namely, the Uptown Phannacy,

20 Central Pharmacy, and Tran Pharmacy, (and their owners who are the plaintiffs Gerald 21 Shapiro, Pharm.D., Sharon Steen, and the Tran Pharmacy, Inc.), also sue in a prudential 22 jus tertii capacity to assert, respectively, the interests of their respective Medi-Cal 23 beneficiary patients, as well as the interests of their patients with disabilities, in the
24r-------------~V~ER~IF=IE=,D~F~IR~ST~A~M~EN~D=E~D7.PE=·T=IT~IO~N=Fo=R~W=R=IT~07F~M~AN=D~A~M~US~'--------------~

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 44 of 92 Page ID #:51

causes of action, claims, Supremacy Clause preemption, and relief which is sued upon

2 and sought in the within case.

3

(b) The petitioner ILCSCal also sues in a prudential jus tertii capacity, in

4 its capacity as an independent living center, -- designated and organized as such, and

5 with purposes and powers therefore, under and as authorized by the state Rehabilitation

6 Act, § 19800 et seq. Welf. & Inst. Code, -- to assert the interests of its clients who are

7 Medi-Cal beneficiary patients, as well as the interests of its clients with disabilities, in

8 the causes of action, claims, Supremacy Clause preemption, and relief which is sued

9 upon and sought in the within case.

10

(c) The petitioners Gray Panthers Sacto and Gray Panthers SF also sue in

11 a prudentialjus tertii capacity, respectively, to assert the interests of their respective 12 members who are Medi-Cal beneficiary patients, as well as the interests of their

13 members clients with disabilities, in the causes of action, claims, Supremacy Clause

14 preemption, and relief which is sued upon and sought in the within case.

15

13. Each of the respondents Gerald Shapiro and Sharon Steen, and the Tran

16 Pharmacy, Inc., a resident California corporation, also sue on all Causes of Action herein

17 in their capacity as citizen resident taxpayers of the State of California, under the

18 common law and under§ 526a, Code Civ. Proc., --in that each is a taxpayer who has

19 been assessed and paid a state income tax, within12 months on the filing of this Verified

20 First Amended Petition for Writ of Mandamus, to the State of California.

21

14. Each ofthe petitioners,-- as well as each of the patients, clients, and

22 members in respect to whom the pharmacy plaintiffs, the ILCSCal, and the Gray

23 Panthers petitioners are prudential jus tertii representatives, -- also has standing

24 r-------------~V~E=R~IF~IE~D~FI~RS='T~A~M=EN~D~E~D=PE=T=IT~!O~N~FO~.R~W~R~IT~O=F~M~AN~D~A~M~U=s--------------~

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 45 of 92 Page ID #:52

1 inasmuch as each has suffered, will suffer, and is threatened to be caused to suffer,

2 concrete and irreparable injury as shall hereinafter be specified, unless respondents are

3 restrained by a writ of mandamus from implementing the statutes which are preempted,

4 under the Supremacy Clause, by Sec. 30(A), and by the ADA, as set forth hereinafter.

5

FACTS COMMON TO ALL CLAIMS

6

15. The petitioner MARK BECKWITH was born on October 5, 1957, in

7 Corry, Pennsylvania. He is a citizen and resident of the State of California who resides

8 at 2931 Ellis St., Berkeley, California. He is a paraplegic on account of spinal muscular

9 atrophy, who requires oxygen at all times, who receives medical and pharmacy services

10 under the Medi-Cal program. He is a SSI recipient who receives $870 monthly from

11 SSI. His Medi-Cal identification number is 90111132A05026

12

16. The petitioner MARGARET DOWLING was born in Sandusky, Ohio, on

July 29, 1940. She is a citizen and resident of the State of California who resides at 426
13

W. 11th St., Pittsburg, California. She is a paraplegic who receives part of her medical 14

services under the Medi-Cal program. Her Medi-Cal identification number is 15

16 90230720A35028.

17. The petitioner JASON YOUNG was born in Inglewood, California on July
17

15, 1962. He is a citizen and resident of the State of California who resides at 8926
18

19 Independence, #204, Parthenia, California. He suffers disabilities of blindness and brain

damage and is a Supplemental Security Income (SSI) recipient, with SSI identification
20
number of 568-29-405. He receives assistive services from In-Home Supportive
21
Services and medical and other health services from the Medi-Cal managed care 22

23

24 r-------------~V~ER~IF=IE~D~F~IR=sT~AM~~~D~E~D~PE=T=ITI~O~N=Fo=R~W=R=TT~O~F~M~~D~AM~US~------------~

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 46 of 92 Page ID #:53

July 1, 2008 by the respondents, pursuant to their policy to implement the aforesaid

2 Sections 14, and 15 of Assembly Bill X3 5, including, without limitation thereby,

3 ( 1) the 10% across-the-board reduction in reimbursement to physicians, dentists,

4 phannacies, acute-care hospitals who have no contract with the Department, and other

5 providers in the Medi-Cal fee-for-service program; and (2) the equivalent actuariallO%

6 reduction in payments to Medi-Cal managed care plans, commencing July 1, 2008;

7 (hereinafter referred to, collectively, as ''the Medi-Cal cuts"); which concrete injury

8 from the Medi-Cal cuts is great, immediate, and irreparable.

9

Denial of access to physicians. and denial of quality medical services

10

27. More particularly, it is a fact that Medi-Cal rates for physicians are 61% or

11 less of what Medicare pays for the same physician services; that a 10% cut will reduce

12 reimbursement to Medi-Cal physicians to only 57% of what Medicare would pay; and

13 that as a result of the low Medi-Cal rates, only 55% of primary care physicians and less

14 than 50% or specialists are willing to participate in the Medi-Cal program, (either in the

15 Medi-Cal fee-for-service program, or in Medi-Cal managed care programs). (1) These

16 facts are verified and reported by the Legislative Analyst in Analysis of the 2008-2009

17 Budget Bill, (Budget Analysis"), citing studies on the subject, at pages C-37 and C-38 of

18 the Budget Analysis; and (2) studies funded by the California Healthcare Foundation, (a

19 respected organization with whom the Department often contracts to provide studies and

20 infonnation to the Department), consistently so report.

21

28. Further:

22

- First. It is a fact that persons with disabilities such as the petitioners

23 DOWLING, BECKWITH, and YOUNG, and the thousands of disabled clients of the

24 1 - - - - - ----::V:=E::-:Rl=FlE=::D:-::F::::lR-::::ST::-AM:-:-:::E:-::ND=-=E=o--=pE=T=IT=Io=N=Fo=R:-:W::-:-::R=lT::-:O=F=M=AN=o=-=A=M::-:-::-US ---~----=u-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 47 of 92 Page ID #:54

petitioner ILCSCal, and the thousands of home shut-ins to whom petitioner SHAPIRO 2 and STEEN deliver prescriptions in the Medi-Cal fee-for-service program, have more

3 difficulty in locating primary care and specialists who are needed by them to adequately

4 follow and care for their complex medical needs, and keep them alive, than do Medi-Cal 5 recipients without disabilities.

6

-Second. It is a fact that although Medi-Cal managed care plans do assign a

7 Medi-Cal enrollee to a primary care physician, nevertheless, persons with severe

8 disabilities such as the petitioners DOWLING, BECKWITH, and YOUNG require more 9 complex care, from specialists, than Medi-Cal managed care plans are able to furnish
1o them, due to a shortage of specialists in both Medi-Cal fee-for-service and Medi-Cal

11 managed care.

12

-But, specialists who have the capability to treat and follow the complex needs

13 of disabled persons, -- such as the paraplegic DOWLING , the quadriplegic

14 BECKWITH, and the blind and brain damaged YOUNG,-- are difficult to find and

15 retain over any period of time, whether the specialist is being sought by disabled 16 Medi-Cal recipients in the Medi-Cal fee-for-service program, or by disabled Medi..:Cal

17 recipients in Medi-Cal managed care plans.

18

- This above situation, set forth in this Paragraph, is due to the fact that payment

19 of specialists is so low that less than 50% of specialists have Medi-Cal patients; and,

20 those that do, repeatedly state in surveys that they are not willing to accept new Medi-

21 Cal patients, (whether they come from the Medi-Cal fee-for-service program or from

22 Medi-Cal managed care plans).

23

-However, given the facts which are set forth above in this Paragraph, it is

241~~~------------~ffiillFmsGM~~rrno~~rrru~~rus~-----------~

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 48 of 92 Page ID #:55

inevitable that, if the Medi-Cal cuts of Sections 14 and 15 of Assembly Bill X3 5 are 2 implemented for dates of service on and after July 1, 2008, that thousands ofMedi-Cal 3 recipients in both Medi-Cal fee-for-service and Medi-Cal managed care,-- including 4 (1) the petitioners DOWLING, BECKWITH, and YOUNG; (2) the thousands of 5 disabled patients of the petitioner pharmacies (Uptown, Central, and Tran), in Los 6 Angeles and Orange counties, (3) the thousands of disabled clients of the petitioner

7 ILCSCal, and (4) the members of the Sacto Gray Panthers and the SF Gray Panthers

8 who are Medi-Cal recipients, will be driven, and will at the least be put at great risk, of

9 being forced into institutions in order to survive, if at all.

10

Denial of access to dentists, and to quality dental care

11

29. It is also a fact, which is reflected in court decisions and studies, that

12 because of too-low rates, approximately 90% of dentists refuse to accept Medi-Cal

13 patients. Accordingly, the 10% reduction in Medi-Cal payments to dentists, will simply 14 intensify the denial of access and quality dentistry, which already presently exists.

15

Denial of access to pharmacy care

16

30. California pharmacies, both chain phannacies and independent

17 phannacies, unifonnly earn less than a 10% net profit.

18

31. Further, it is fact, -- as demonstrated by the 2006 survey by Myers &

19 Stauffer of California pharmacy costs to operate, and their costs to acquire prescription

20 drug products, that approximately 27.5 %of a typical pharmacy's prescriptions in the

21 Medi-Cal program are single source (brand) qrugs; that approximately 36% ofthe

22 prescriptions are multi-source (generic) drugs; and that approximately 36.2% of the

23 prescriptions are low-priced drugs in respect to which the federal government has set a

24 1----~--- --=v=ERJ=F=IE::"o::-=Fr=-=-R=sr:-:AM-:-:=:EN-=o-=E=-o=rE=ri=rr=-=-oN:-:-=F~o=R-=w-::::-R=rr-=o7 F M:-:A-:-::N-=o:-:-AM:-::::-:-:us=---~-- ------._Ihl4-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 49 of 92 Page ID #:56

1 federal upper limit ("FUV') or Medi-Cal has set a maximum allowable ingredient cost

2 ("MAIC") limit for reimbursing the pharmacy's cost to acquire such FUL or MAIC.

3

32. However, the figures set forth in this Myers & Stauffer report to the

4 Department are consistent with the fact, -- when the 10% payment cut commences July

5 1, 2008, -- that although California pharmacies including the petitioner phannacies

6 . would still have a small net profit on the 36% of their Medi-Cal prescriptions which

7 are multi-source (generic) prescriptions without a Ful or MAIC cap, nevertheless, they

8 would have a larger net loss, collectively, on the 27.5% of their Medi-Cal prescriptions

9 which are single source (brand) and the 36.2% of their Medi-Cal prescriptions which

10 are subject to a FUL or a MAIC cap; so that on the whole that California pharmacies,

11 including the petitioner pharmacies, will not be able to dispense Medi-Cal prescriptions

12 in the Medi-Cal fee-for-service program except at a net loss on the entire bulk of their

13 Medi-Cal prescription business, (brand, generic, and capped prescriptions).

14

33. Further, Medi-Cal managed care programs, (such as the Medi-Cal county

15 organized health system managed care program in Orange County which is known as

16 "CalOptima"), typically, (including CalOptima) pass through all reductions in payments

17 by Medi-Cal to Medi-Cal managed care plans; so that (1) pharmacies in Medi-Cal

18 managed care plans, including the petitioner pharmacies, and their patients, will suffer

19 the same reduction in ability to furnish or receive quality phannacy care, and (2)

20 specialists will become even more scare in managed care plans, so that the frail, elderly,

21 disabled Medi-Cal patients in both the Medi-Cal fee-for-service program, and in Medi-

22 Cal managed care plans, will suffer inability, and be put at risk of inability to obtain

23 specialists, and to obtain quality pharmacy services, if the July 1, 2008 10% cut in

24 1 - - - - - - - - VER- IFIE- D F- IRST-AM-EN-DED-PE-TIT- ION-FO- R W- RIT-OF- MA- NDA·MU-S - - - - - -. --:T5 -

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 50 of 92 Page ID #:57

payment to Medi-Cal managed care plans is not enjoined by the Court.

2

34. Accordingly, it is manifest, foreseeable and probable, from the foregoing

3 facts set forth above in this Petition, that the 10% reduction in total reimbursement to

4 phannacies in the Medi-Cal fee-for-service program, (as well as an actuarially

5 equivalent 10% reduction to Medi-Cal managed care plans), will result in not only many,

6 but most independent pharmacies, such as the petitioners GERALD SHAPIRO,

7 Phann.D., (owner of Uptown Pharmacy in Los Angeles), and SHARON STEEN, (owner

8 of the independent Central Pharmacy in Santa Monica), and the TRAN PHARMACY,

9 either (1) going out of business, or (2) refusing to accept Medi-Cal any longer, or (3)
1o refusing to fill those particular Medi-Cal prescriptions in respect to which they suffer a

11 net loss in the acquisition and costs to dispense, or (4) reducing staff, hours of phannacy

12 operation, and eliminating or reducing delivery services to shut-ins, under the new 10%

13 Medi-Cal payment reduction.

14

35. Further, many independent pharmacies, but few chain pharmacies, deliver

15 Medi-Cal prescriptions to the aged, frail, and disabled Medi-Cal recipients who are shut-

16 in to their homes.

17

36. For example, 98% of the prescriptions dispensed by the independent

18 Uptown Pharmacy in Los Angeles,-- owned by the petitioner GERALD SHAPIRO,

19 Pharm.D., -- are deliveries to approximately 5,000 home shut-ins.

20

37. More particularly, approximately 55% of the shut-ins to whom Uptown

21 Pharmacy delivers prescriptions receive their medications under Medicare Part D, (i.e.,

22 those who are 65 or older, or are Social Security Disability Income beneficiaries). But,

23 also, approximately 30% of the shut-in clientele ofUptown Phannacy are on the Medi-

24 f----.---------V-E-RI_F_l_E_D_F_'lR_S_T_AM-E--N-D-ED-PETITION FOR WRIT OF MANDAMUS

-16-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 51 of 92 Page ID #:58

1 Cal fee-for-service program, due to the fact they are under 65 or, although disabled,

2 have not qualified for S.S.D.I.

3

38. However, Uptown's net profit on its entire pharmacy business is less than

4 10% net profit. Accordingly, the petitio~er SHAPIRO, -- and two other delivery

5 phannacies whose owners he knows in Los Angeles, -- have no realistic choice but to

6 close their phannacies if the 10% cut in pharmacy reimbursement is implemented in

7 July 2008; or at the best, eliminate or reduce deliveries. Thus, if the 10% cut is not

8 restrained by the Court, thousands of disabled home shut-ins in Los Angeles, (and

9 similar in other parts of the state), who are Medi-Cal recipients, will no longer have any
1o access to life-necessary drugs, and, many of them will suffer and die therefrom.

11

Summary of overall effect of the 10% Medi-Cal cut

12

39. Accordingly, due to the too-low rates already paid physicians, dentists,

13 pharmacies, and other providers by Medi-Cal, (1) the further 10% payments reduction if 14 implemented in July 2008, to physicians, will drive and tend to drive even more primary 15 care physicians and specialists, and dentists, pharmacies, and other providers out of the 16 Medi-Cal program, or cause them to terminate present provider-patient relationships, or 17 reduce services, or refuse to new Medi-Cal patients, or increase appointment wait 18 periods; such that (2) many Medi-Cal recipients, both in the Medi-Cal fee-for-service 19 program and in the Medi-Cal managed care program,-- and, especially the tens of 20 thousands who are home-bound shut-ins who depend upon medicine delivery, and also 21 those who are disabled, - will be denied access to life-sustaining medical, dental, and 22 prescription services, with (3) the consequence that Medi-Cal recipients in general will 23 be denied quality medical services and access to quality medical services. More

24 r--~---------::-:v=ER=IF=IE="o-=FI=-Rs=r:-:-A·MENDED PETITION FOR WRIT OF MANDAMUS

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 52 of 92 Page ID #:59

particularly, due to the 10% provider payment cuts (including the actuarial equivalent

2 thereof to Medi-Cal managed care plans, many disabled Medi-Cal recipients such as

3 the petitioners DOWLING, BECKWITH, and YOUNG, and the thousands of clients of

4 independent living centers such as the petitioner ILCSCal, will lose, or are threatened

5 with loss, of their primary care and specialist physicians, so that many persons with

6 disabilities, including the petitioners Beckwith and Dowling, will be forced into

7 institutions or will be at risk of being forced into institutions in order to survive, and

8 will suffer injury and pain from untreated illness, injury, or condition.

9

FIRST CAUSE OF ACTION

10

By each of the petitioners except petitioner Jason Young, for mandamus

and injunctive relief to enjoin each of the respondents to refrain from

11

implementing a 10% reduction of payments to Medi-Cal fee-for-service

providers under subds. (a), (b)(l), (b)(2), and (c)- (e) of§ 14105.19 Welf.

12

& Inst. Code, and§ 14166.245 Welf. & Inst. Code),-- which state statutes

and the state action of respondents to implement the state statutes violate,

13

and are hence preempted under the Supremacy Clause by, the quality and

equal access clauses of 42 U.S.C. § 1396a(a)(30(A).

14
* * * * * * *
15
40. Petitioners refer to and incorporate each of the allegations in each of the

16 preceding Paragraphs of this Petition, as if fully set forth herein.

17
41. The Medicaid Act, in 42 U.S.C. § 1396a, subd. (a)(30)(A), provides:

18 "(a) A State plan for medical assistance must- (30)(A) provide for such methods

19

and procedures relating to the utilization of, and the payment for, care and

services available under the plan (including but not limited to utilization review

20

plans as provided for in section 1396b(i)(4) of this title) as may be necessary to

safeguard against unnecessary utilization of such care and services and to assure

21

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

22

under the plan at least to the extent that such care and services are available to the

general population in the geographic area; ... " (Emphasis supplied.) 23

24 ~-------------yVEEFRWIFTf'IEillDFJFI~Rs~-T~A~MEEN~DffiEDDPEPEmTimTI~ONNFFcOmR~WffiRITITOflMMiDAlMll;-----~------~~

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 53 of 92 Page ID #:60

44. 42 U.S.C. § 1396a, subd. (a)(30)(A), shall hereinafter be referred to as

2 "Sec. 30(A)."

3

45. However, in view of the fact that on January 10, 2008, the Governor

4 proclaimed a fiscal emergency and called the Legislature into Special Session; and that

5 on February 16, 2008 the Legislature enacted and the Governor signed into law

6 Assembly Bill X3 5, which proclaims in Sec. 15 that "the state faces a fiscal crisis that

7 requires unprecedented measures to be taken to reduce General Fund expenditures," and

8 which proclaims in Sections 16 and 17 that:

9

"SEC. 16. This act addresses the fiscal emergency declared by the Governor

by proclamation on January 10, 2008, pursuant to subdivision (f) of Section 10 of

10

Article IV of the California Constitution.

11 SEC. 17.... In order to make statutory changes needed to implement cost

12

containment measures affecting health services, at the earliest possible time, it is

necessary that this act take effect immediately.'' (Emphasis supplied.)

13

14 it is manifest that the sole function and purpose, and the conclusive consideration in the

15 Legislature's decision to enact subds. (a), (b)(l), (b)(2), and (c)- (e) of § 14105.19

16 Welf. & Inst. Code; and§ 14166.245 Welf. & Inst. Code,-- which provides that the 17 respondents shall (1) cut Medi-Cal payments to providers in the Medi-Cal fee-for-

18 service program, was budgetary considerations, to "address the fiscal emergency"

19 declared by the Governor, and to effect "cost contaimnent measures affecting health

20 services," by making statutory changes needed to reduce expenditures, (to fit the States

21 reduced budget), commencing July 1, 2008.

22

46. However, therein, by each and all of the above allegations, the enactment

23 of subds. (a), (b)(1 ), (b)(2), and (c) - (e) of § 14105.19 Welf. & Inst. Code; and

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 54 of 92 Page ID #:61

§ 14166.245 Welf. & Inst. Code, by the Legislature (1) was without any consideration of 2 quality and access as required by Sec. 30(A),2 and as· without any consideration of what

3 it costs providers to perfonn the various services and procedures, as required by Sec. 4 30(A);3 such that the State's sole purpose, and the conclusive factor, in enacting the

5 across-the-board 10% reduction in reimbursement to providers in the Medi-Cal fee-for-

6 service program, was to reduce the budget deficit. Accordingly, under the standard of

7 Orthopaedic Hosp., 103 F.3d 1491, at 1500 (1997); and Arkansas Medical Society. Inc.

8 v. Reynolds, 6 F.3d 519 (8th Cir.l983), the action ofthe Legislature to enact the

9 aforesaid subds. (a), (b)(l), (b)(2), and (c)- (e) of §14105.19 Welf. & Inst. Code; and§

10 14166.245 Welf. & Inst. Code, and the policy and action of the respondents to

11 implement these statutes by reducing payments to providers in the Medi-Cal fee-for-

12 service program, was and is arbitrary and capricious, and contrary to and in violation of

13 the quality and access provisions of Sec. 30(A); so that hence, under the Supremacy

14 Clause, the aforesaid subds. (a), (b)(l), (b)(2), and (c)- (e) of §14105.19 Welf. & Inst.

15 Code; and§ 14166.245 Welf. & Inst. Code are preempted by Sec. 30(A)..

16

47. Accordingly, by each and all of the foregoing facts alleged, subds. (a),

17 (b)(l), (b)(2), and (c)- (e) of§ 14105.19 Welf. & Inst. Code; and§ 14166.245 Welf. &

18 Inst. Code., were and are unlawful, in v~olation of the quality and access provisions of

19 Sec. 30(A), so as to be preempted, under the Supremacy Clause, by the quality and

20

21

2 Othopaedic Hospital v. Belshe, 103 F.3d 1491, 1500 (9th Cir.l997).

22

3 1d, 103 F.3d at 1500; Arkansas Medical Society, Inc. v. Reynolds, 6 F.3d 519

8th Cir. 1993 ).

23

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 55 of 92 Page ID #:62

access provisions of Sec. 30(A), such that the respondent Director and the respondent

2 Department act in excess of and without jurisdiction to implement subds. (a), (b)(1 ),

3 (b)(2), and (c)- (e) of § 14105.19 Welf. & Inst. Code; and§ 14166.245 Welf. & Inst.

4 Code, in implementing the provisions therein of reducing reimbursement to physicians,

5 dentists, pharmacies, and other providers, in the Medi-Cal fee-for-service program,

6 commencing July 1, 2008.

7

48. Further, unless restrained by the Court by an appropriate writ of mandamus

8 under§ 1085 Code Civ. Proc. or by an appropriate injunction, the respondents Director

9 and Department will implement the aforesaid subds. (a), (b)(1), (b)(2), and (c)- (e) of

10 § 14105.19 Welf. & Inst. Code; and§ 14166.245 Welf. & Inst. Code, and thereby will

11 cause injury to each of the petitioners (except petitioner Jason Young, who is in a Medi-

12 Cal managed care plan); which injury is irreparable, all, as has been hereinbefore set

13 forth in detail in the within amended Petition, but, the petitioners have no administrative

14 remedy, and the petitioners have no plain, speedy, or adequate remedy whatsoever or at

15 all, except by this Verified First Amended Petition for Writ of Mandamus.

16

WHEREFORE, the Petitioners respectively pray for judgment as shall hereinafter

17 be specified:

18 II

19 II

20 II

21 II

22 II

23 II

24

VERIFIED FIRST AMENDED PETITION FOR WRIT OF MANDAMUS

-21-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 56 of 92 Page ID #:63

SECOND CAUSE OF ACTION

2

By petitioners Jason Young and the Tran Pharmacy, Inc., dba Tran

Pharmacy, for mandamus and injunctive relief to enjoin each of the

3

respondents to refrain from implementing the actuarial equivalent'

of a 10% reduction of payments to Medi-Cal managed care plans

4

under subd. (b)(3) of§ 14105.19 Welf. & Inst. Code, which state

statute and the action of respondents to implement the state statutes

.5

violate, and are hence preempted under the Supremacy Clause by, the

quality and equal access clauses of 42 U.S.C. § 1396a(a)(30(A).

6
* * * * *
7

49. Petitioners refer to and incorporate each of the allegations in each of the 8

preceding Paragraphs of this Petition, as if fully set forth herein; and, especially, refer to 9

and incorporate each ofthe allegations in the First Cause of Action as if fully set forth 10

herein. 11

12

50. The provisions of 42 U.S.C. § 1396a(a)(30)(A), --herein, "Sec. 30(A)" --

13 apply to all managed care plans and managed care entities, who arrange to furnish or

14 otherwise furnish Medi-Cal services to their members or beneficiaries, just as directly,

15 fully, and equally as Sec. 30(A) applies to providers in the Medi-Cal fee-for-service

16 program,

17

51. The provisions of Social Security Act§ 1915(b)(4), (42 U.S.C.

18 § 1396n(b)(4)), also specifically, by its tenns, requires that the State of California set

19 rates and payments for Medi-Cal managed care plans and Medi-Cal managed care

20 entities, upon the same standards as are set forth in Sec. 30(A).

21

52. Accordingly,-- by each and all of the allegations in the preceding

22 Paragraphs of this Petition,-- and because Medi-Cal managed care plans and entities are

23

24 1 - - - - - - - - =V-ER-IF-IED-F-IR:ST:A-M,EN-D-ED-P-ET-IT-IO-N -FO-R -WR-IT-O-F MANDAMUS

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 57 of 92 Page ID #:64

agents of the State who, in effect, set the rates which shall be payable to providers for

2 services to Medi-Cal recipients in Medi-Cal managed care plans,-- the actions of the

3 Legislature in enacting subd. (b)(3) of§ 14105.19 Welf. & Inst. Code, to reduce
4 payments to Medi-Cal managed care plans and entities by 10%, or the actuarial
5 equivalent thereof, was arbitrary and capricious, and contrary to Sec. 30(A), and contrary
6 to Social Security Act§ 1915(b)(4), (42 U.S.C. § 1396n(b)(4); such that the policy of the
7 respondents to implement, and the action of the respondents to implement subd. (b)(3) of
8 § 14105.19 Welf. & Inst. Code, including the reduction of payments to Medi-Cal
9 managed care plans and entities by 10%, or the actuarial equivalent thereof,
10 managed care plans and entities, is thereby, under the Supremacy Clause, preempted by
11
Sec. 30(A) and by Social Security Act§ 1915(b)(4), (42 U.S.C. § 1396n(b)(4)),
12
such that, unless the Court issues an appropriate writ of mandamus or injunction, the 13
petitioner Jason Young and the petitioner Tran Pharmacy, Inc., dba Tran Pharmacy, (who 14
are a managed care recipient and managed care provider),-- will be irreparably injured, 15
and put at risk of injury, in the same wise as has been prior alleged in the First Cause of 16
Action, by the respondents reducing payments, commencing July 1, 2008, to Medi-Cal
17
18 managed care plans, in the actuarial equivalent of a 10% reduction in payment, which
19 reduction will be passed through to providers who serve Medi-Cal managed care plan
20 patients, causing fewer providers to participate in Medi-Cal managed care plans and

21 injuring Medi-Cal managed care patients such as petitioner Josh Young, and forcing

22 them or tending to force into institutions in order to survive..

23

WHEREFORE, the petitioners pray for judgment as shall hereinafter be specified:

24 1 - - - - -

VERIFIED FIRST AMENDED PETITION FOR WRIT OF MANDAMUS

-23-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 58 of 92 Page ID #:65

THIRD CAUSE OF ACTION

2

(By all petitioners against each respondent.)

3

Preemption by the Americans with Disabilities Act of 1990,

42 U.S.C. § 12132, ("ADA"), under the Supremacy Clause,

4

of Sections 14, and 15 of Assembly Bill X3 5, for violation

of the ADA, 42 U.S.C. § 12132, by forcing or threatening to

5

force disabled persons into institutions, -- such that such

administration of the Medi-Cal program prevents, and does

6

not provide, disabled persons with the most integrated setting

appropriate to their needs, as mandated by the ADA and by

7

Olmstead v. L.C., 527 U.S. 581 (1999).

8

53. Petitioners here refer to and incorporate each of the allegations in the 9

preceding Paragraphs as if fully set forth herein. 10

54. By each and all of the foregoing facts alleged in Paragraphs 1 through 53 11

of this Petition, Sections 14, and 15 of Assembly Bill X3 5 are, singly and cumulatively,

12

unlawful, in violation of the Americans with Disabilities Act of 1990, ("ADA"), 42

13

U.S.C. § 12132, which provides: 14

"Subject to the provisions of this subchapter, no qualified individual

15

with a disability shall, by reason of such disability, be denied the

benefits of the services, programs, or activities of a public entity, or

16

be subjected to discrimination by any such entity(,"

17 in that the aforesaid 10% cut in Medi-Cal provider and hospital reimbursement of
18
Sections 14 and 15 of Assembly Bill X3 5, will, singly, cumulatively, and proximately
19
result in forcing, and threatening to force, thousands of persons who are qualified
20
individuals with a disability, as defined in the ADA, into institutions, and place them at
21
risk of being forced into institutions, in order to survive; and many will in any event be 22
injured in their person and in their spirit and will die or be put at risk of dying; including 23

24

~------------~~~~~~~~~~~~~~~~~----------­ VERIFIED FIRST AMENDED PETITION FOR WRIT OF MANDAMUS

-=24-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 59 of 92 Page ID #:66

but not limited to:

2

-the petitioners Margaret Dowling, Mark Beckwith, and Jason Young;

3

4

-hundreds of SSI recipients who are clients of the petitioner ILCSCal;

5

6

-many patients of the patients of the pharmacy petitioners,

7

8

- some members of the SF Gray Panthers and Sacto Gray Panthers,

9 so that therein, many qualified individuals with a disability, (as defined in the ADA),

10 including but not limited to disabled SSI recipients who depend on Medi-Cal services to

11 be able to live in the community, will be denied and will become unable to live in the

12 most integrated setting appropriate to (1) the needs ofthose hundreds of thousands of

13 Medi-Cal recipients who are SSI disabled persons, including (2) the needs of the

14 disabled petitioners Margaret Dowling, Mark Beckwith, and Jason Young, and

15 including (3) the needs ofthousands ofSSI disabled persons who are clients ofthe

16 petitioner ILCSCal; and including (4) disabled patients of the phannacy petitioners; so

17 that such administration of the Medi-Cal program does not provide qualified

18 individuals with a disability the most integrated setting appropriate to their needs,

19 as mandated by the ADA, by Olmstead v. L.C., supra, 527 U.S. 581 (1999), and 28 Code

20 of Federal Regulations,§ 35.130(d). [1988].

21

55. Further, once the State has placed qualified individuals with a disability,

22 (as defined by the ADA), in the community, including the petitioners Dowling,

23 Beckwith, and Young, and the disabled persons listed in the preceding Paragraph; all,

24

VERIFIED FIRST AMENDED PETJT!ON FOR WRIT OF MANDAMUS

-25-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 60 of 92 Page ID #:67

with medical, attendant, and other services and life-needed supplied furnished and paid

2 by Medi-Cal fee-for-service and managed care program, or, assisted by these Medi-Cal

3 programs of the State, so as to enable them to be so integrated into the community, the

4 State has the burden, under the ADA, to justifY and to show reasonable grounds why

5 such level, kinds, and quality of supporting services, assistance, and framework for

6 independent living may be withdrawn by the State, as, in case at bar, by (1) provider

7 payments for one month being arbitrarily and capriciously held for one month, and (2)

8 provider and hospital payments being reduced 10%, permanently, by the State to Medi-

9 Cal providers and Medi-Cal managed care plans, (which reductions to the managed care
1o plans, will foreseeably and inevitably be passed through to the providers who provide the

11 services of the Medi-Cal managed care plan to Medi-Cal recipients).

12

56. Therein and thereby, as set forth in the preceding Paragraphs of this Third

13 Cause of Action, Sees. 14, and 15 of Assembly Bill X3 5 violate the ADA, and are

14 preempted, under the Supremacy Clause, by the ADA specifically, by 42 U.S.C. §

15 12132, by forcing or threatening to force, individuals with a disability (as defined by the

16 ADA), into institutions, and by putting them at risk to be forced into institutions,

17 (including the petitioners Dowling, Beckwith, and Young, and the patients, clients, and

18 members of the petitioner phannacies, the ILCSCal, the Sacto Gray Panthers, and the SF

19 Gray Panthers, -- which is not the most integrated setting appropriate to their needs, as

20 mandated by ADA and by Olmstead v. L.C., supra, 527 U.S. 581.

21

Therein and thereby, the respondent Director and Department, by violating the

22 ADA and of Olmstead on a statewide basis, are and will act in excess ofwithout

23 jurisdiction to implement the aforesaid statutes (i.e., Sees. 14, and 15 of Assembly Bill

24 r-------------~~~~~--------~~--~---------
VERIFIED FIRST AMENDED PETJTION FOR WRIT OF MANDAMUS

-26-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 61 of 92 Page ID #:68

1 X3 5).

2

57. Further, unless restrained by the Court by an appropriate writ of mandamus

3 under§ 1085 Code Civ. Proc. or by an appropriate injunction, the respondents Director

4 and Department will implement the aforesaid Sees. 14, and 15 of Assembly Bill X3 5,

5 and therein will cause each of the petitioners concrete injury, which is irreparable, as set

6 forth in detail in the preceding Paragraphs of this Verified First Amended Petition for

7 Writ of Mandamus; but, the petitioners have no administrative remedy, and no plain,

8 speedy, or adequate remedy whatsoever or at all, except by this Verified First Amended

9 Petition for Writ of Mandamus.

10

WHEREFORE, the Petitioners respectively pray for judgment as shall hereinafter

11 be specified:

12

FOURTH CAUSE OF ACTION

13

Separate statement of violation of ADA

14

(By each petitioner against each respondent.)

15

58. Petitioners here refer to and incorporate each of the allegations in the

16 preceding Paragraphs as if fully set forth herein.

17

59. Each and all ofthe acts of each of the respondents in violation of the ADA,

18 which are set forth in the preceding Third Cause of Action, tend to force, do force, and

19 threaten to force qualified individuals with a disability in the Medi-Cal program,--

20 (including the petitioners Margaret Dowling, Mark Beckwith, and Jason Young, and the

21 disabled patients, clients, and members of the remaining petitioners), -- into institutions;

22 all, in violation of the ADA (42 U.S.C. §12132) and Olmstead, supra. Accordingly,

23

24 r-------------~v=ER~IF=IE=D~Fl=Rs=T~AM~EN~D~E~D=PE=TI=Tl=ON~FO=R~W·=ru=r=o=FM~~~D~AM~U=S~'------------~

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 62 of 92 Page ID #:69

under the ADA, including 42 U.S.C. §§ 12123, and 12133, --which incorporates, via 29

2 U.S.C. § 794a(a)(2), the remedies of Title VI of the Civil Rights Act of 1964, (namely,

3 · 42 U.S.C. § 2000d-1 et seq.),-- the petitioners herein have a federal right to an

4 appropriate injunction herein to restrain the respondents from implementing Sees. 14,

5 and 15 of Assembly Bill X3 5, plus, statutory reasonable attorneys's fees as provided by
6 42 u.s.c. § 12133.

7

WHEREFORE, the petitioners and each of them pray for judgment as follows;

8

1. That petitioners have judgment against each of the respondents, and that

9 respondents take nothing.

10

First Cause of Action

11

2. That an alternative writ of mandamus, and then a peremptory writ of

12 mandamus, and/or an injunction, be issued to command the respondents DEPARTMENT

13 OF HEALTH CARE SERVICES ("Department") and SANDRA SHEWRY, Director of

14 the Department, to set aside their preempted policy to implement subds. (a), (b)(l),

15 (b)(2), and (c)- (e) of § 14105.19 Welf. & Inst. Code; and§ 14166.245 Welf. & Inst.

16 Code, and to refrain from implementing the aforesaid subds. (a), (b)(l), (b)(2), and (c)-

17 (e) of§ 14105.19 Welf. & Inst. Code; and§ 14166.245 Welf. & Inst. Code, including

18 refraining from reducing payments by 10%, or at all, to providers in the Medi-Cal fee-for

19 service program;

20

3. That petitioners have reasonable attorneys' fees under§ 1021.5 Code Civ.

21 Proc.

22

Second Cause of Action

23

4. That an alternative writ of mandamus, and then a peremptory writ of

24 ~------------~V~ER-IF-IE-D~FI~RS-T -AM~E~ND-E-D -PE-TIT-IO-N-FO-R-W~R-IT-OF-M-A-ND-A-M-US---------~-2~8-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 63 of 92 Page ID #:70

mandamus, and/or an injunction, be issued to command the respondents DEPARTMENT

2 OF HEALTH CARE SERVICES ("Department") and SANDRA SHEWRY, Director of

3 the Department, to set aside their preempted policy to implement subd. (b)(3) of

4 § 14105.19 Welf. & Inst. Code, and to refrain from implementing the aforesaid

5 preempted subd. (b)(3) of§ 14105.19 Welf. & Inst. Code, including refraining from 6 reducing payments to Medi-Cal managed care plans by 10%, or by the actuarial

7 equivalent thereof, and in any other amount of payment reduction.

8

5. That petitioners have reasonable attorneys' fees under§ 1021.5 Code Civ.

9 Proc.

1 o

Third Cause of Action

1 1

6. That a writ of mandamus or injunction be issued to order the

12 respondents DEPARTMENT OF HEALTH CARE SERVICES ("Department") and

13 SANDRA SHEWRY, Director of the Department, to set aside their preempted policy of

14 implementing Sections 14, and 15 of Assembly Bill X3 5, and refrain from implementing

15 the aforesaid preempted Sections 14, ands 15 of Assembly Bill X3 5, in whole or in part;

16 including, refraining from educing payments by 10% or any other amount of reduction,

17 to Medi-Cal providers in the Medi-Cal fee-for-service program, and Medi-Cal managed

18 care plans, for dates of service on and after July 1, 2008, or at any other time.

19

7. That petitioners have reasonable attorneys' fees under§ 1021.5 Code of

20 Civil Procedure.

21

· Fourth Cause of Action

22

8. That an injunction be issued under the Americans with Disabilities Act of

23 1990, ("ADA"), to command the respondents DEPARTMENT OF HEALTH CARE

24 1-------~ - - -
VERIFIED FIRST AMENDED PETITION FOR WRIT OF MANDAMUS

-29-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 64 of 92 Page ID #:71

SERVICES ("Department") and SANDRA SHEWRY, Director of the Department, to 2 refrain from implementing Sees. 14, and 15 of Assembly Bill X3 5, in whole and in

3 every part, including, refraining from implementing a 10% reduction, or any other

4 reduction in payments, to Medi-Cal fee-for-services providers and Medi-Cal managed

5 care plans.

6

9. That petitioners have reasonable attorneys' fees under 42 U.S.C.

7 § 12133.

8

All Causes of Action

9

10. That petitioners have costs of suit incurred, together with such other and

10 further relief as may be just.

11 Dated: May 12, 2008.

12

13

14

"~Y"...H'f'ys for PetitiOners

I ae endent Living Center of Southern California,

15

.; Gray Panthers of Sacramento; The Gray

Panthers of San Francisco; Gerald Shapiro,

16

Pharm.D., dba Uptown Pharmacy & Gift

Shoppe; Sharon Steen, dba Central Pharmacy;

17

Tran Pharmacy, Inc., dba Tran Pharmacy;

Margaret Dowling; Mark Beckwith; and

18

Jason Young

19

20

21
22

23

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 65 of 92 Page ID #:72

1

VERIFICATION

2 LYNN S. CARMAN deposes and says:

3

I am the attorney for the Petitioners in the within Verified First Amended Petition

4 for Writ of Mandamus. I make this verification for the reason that the Petitioners are

5 absent from the county where I have my office. I have read the pleading and I am 6 informed and believe the matters therein to be true and on that ground allege that the

7 matters stated therein are true.

8

I declare under penalty of perjury under the laws of the State of California that the

9 foregoing is true and correct. Executed in Novato, California, on May 12, 2008.

10

11

12
13

14

15

16

17

18

19

20

21

22

23

24~----·------yERffiEDBJ~MrnDED!~~MWMrc~mw~----------:~

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 67 of 92 Page ID #:74

LYNN S. CARMAN, State Bar 028860 Medicaid Defense Fund 2 28 Newport Landing Dr. Novato, CA 94949-8214 3 Telephone: (415) 927-4023 Facsimile : (415) 499-1687 4 STANLEY L. FRIEDMAN, State Bar 120551 5 445 S. Figueora St., 27th Floor Los Angeles, CA 90071-1631 6 Telephone: (213) 629-1500 Facsimile: (213) 489-6899 7 Attorneys for Petitioners Independent Living Center 8 of Southern California. Inc.; Gray Panthers of Sacramento; The Gray Panthers of San Francisco; Gerald Shapiro, 9 Pharm.D., dba Uptown Pharmacy & Gift Shoppe; Sharon Steen, dba Central Pharmacy; Mark Beckwith; 10 Margaret Dowling; Tran Pharmacy, dba Tran Pharmacy; and Jason Young 11
SUPERJOR COURT OF THE STATE OF CALIFORNIA 12
IN AND FOR THE COUNTY OF LOS ANGELES, UNLIMITED JURJSDICTION
13

14 INDEPENDENT LIVING CENTER OF SOUTHERN

No. BS 114459

CALIFORNIA, INC., a nonprofit corporation; GRAY

15 PANTHERS OF SACRAMENTO, a nonprofit

corporation; THE GRAY PANTHERS OF SAN

Date: June 5, 2008

16 FRANCISCO, a nonprofit corporation; GERALD

Time: 9:30a.m.

SHAPIRO, Pharm.D., doing business as Uptown

Dept.: 85

17 Pharmacy and Gift Shoppe; SHARON STEEN, doing

Judge: Hon. James C. Calfant

business as Central Pharmacy; MARK BECKWITH;

18 and MARGARET DOWLING; TRAN PHARMACY,

INC., a corjJoration, doing business s Tran Pharmacy;

19 and JASON YOUNG,

PETITIONERS' MEMORANDUM

Petitioners,

IN SUPPORT OF WRIT OF

20 -vs.-

MANDAMUS, OR IN THE

SANDRA SHEWRY, Director of Department of Health ALTERNATIVE, FOR

21 Care Services ofthe State of California; DEPARTMENT PERMANENT OR

OF HEALTH CARE SERVICES, a department of the PRELIMINARY INJUNCTION

22 State of California; and DOES 1 through 50,

23

,_ _ _ _ _ _ _ "_ _ _ __

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 68 of 92 Page ID #:75

TABLE OF CONTENTS

2

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF

MANDAMUS , OR IN THE ALTERNATIVE, PERMANENT INJUNCTION

3

DISCUSSION

3

4

Legislative History of Assembly Bill X3 5

4

5

Comment and ultimate factual finding

6

6

Ultimate finding of fact, conclusion oflaw, and reliefto be issued.

7

7

FURTHER DISCUSSION

9

8 1. Courts, in reviewing the setting of Sec. 30(A) rates, use the

9

"arbitrary and capricious" standard of review. Thus, if the

9

State fails to adequately consider provider costs or any other

factor which bears on whether the rates are consistent with

10

quality and access, the rate is void ab initio; all, without necessity for the plaintiff to also show that it is likely that the

new rates will negatively impact quality of care or access to

11

quality care.

12

Conclusion

10

13 2. 14 15 16
3. 17 18

The Supremacy Clause has always been a shield against state action against

10

Medicaid beneficiaries and providers, which is contrary to and hence preempted

by provisions of the Medicaid Act, such as, especially, Sec. 30(A).

Conclusions on sub-point

12

FURTHER DISCUSSION OF STANDING TO SUE, AND INJURY 13

Next. The plaintiffs each sue, as authorized by Green v. Obledo, 29 Cal.3d

14

(1981 ), on the own behalf and on behalf of the public, to procure performances

of public duty by public officials; hence need now show they have any legal or

special interest in the result.

19 4. 20 21

Clayworth, 295 F.Supp.2d at 1117-1119, ruled that provider and beneficiary

14

associations have prudential standing to assert the interests of their patients or

members. Under the view of these rulings, the plaintiff pharmacies, the

ILSCal, and the San Francisco Gray Panthers may, on a prudential basis,

assert the interests of their patients, clients, or members (as the case may be),

in the within proceeding.

22 Injury

14

23 Summary, and relief requested

15

24

-1-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 69 of 92 Page ID #:76

TABLE OF AUTHORITIES 2

3

Amisub (PSL), Inc. v. Colorado Dept. of Soc. Ser.

9

4 879 F.2d 789 (1Oth Cir.1989)

5 Arkansas Medical Society, Inc. v. Reynolds 6 F.3d519 (8th Cir.l998)
6
Clayworth v. Bonta 7 295 F.Supp.2d 1110 (E.D.Cal.2003)

9 8,passim

8 Ex parte Young 209 U.S. 123, S.Ct. 441, 52 L.Ed. 714 (1908)
9 Green v. Obledo
10 29 Cal.3d 126 (1981)
11 Harmony Nursing Homes, Inc. v. Anderson 341 F.Supp. 957, 958 (D.Minn.l972)
12
National Credit Union Adm. v. First National Bank & Trust Co.
13 522 u.s. 47 (1998).
14 Orthopaedic Hospital v. Belshe

3,passim 13 11 12
5,passim

15 103 F.3d 1491 E.D.Cal.2005).

16 Pharmaceutical Research and Manufacturers of America (PllRMA) v. Concannon 11-12

17 249 F.3d 66 (1st Cir.2001).

18 Sanchez v. Johnson

9

416 F.3d 1051 (2005)

19

Wisconsin Hospital Assn. v. Reivitz

10

20 735 F.2d 1226, 1227 (71h Cir.)

21

Constitutions

22 Supremacy Clause, (article VI, cl. 2, U.S. Constitution

l,passim

23

24

-ii-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 70 of 92 Page ID #:77

1
2 Statutes
3 California
4 Code Civ. Proc.
5 § 1021.5

TABLE OF AUTHORITIES (Cont.)

6 Welf. & Inst. Code

14105.19

7

Subds. (a), (b)(l), (b)(2), and (c)- (g)

8 § 14166.245

9 Chapter 3, Statutes 2007-2008 Third Extraordinary Session

10 Assembty Bill X3 5:

Sec. 14

11

" 15

" 16

12

" 17

13

Federal

14

42 U .S.C.:

15

§ 1396a, subd. (a)(30)(A):

- quality of care clause

16

- equal access clause

§ 1983

17

18 Authorities

19 Floor Analysis (Assembly Budget Committee)
20

21

22

23

24

-iii-

15
2,passim 2,passim
2
2,passim 2,passim
6 6
2,passim 2,passim 2,passim
9
5

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 71 of 92 Page ID #:78

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS, OR IN THE ALTERNATIVE, PERMANENT INJUNCTION
2
Petitioners ("plaintiffs") Margaret Dowling; Mark Beckwith; Gerald Shapiro, Pharm.D., 3
dba Uptown Pharmacy and Gift Shoppe; Sharon Steen, dba Central Pharmacy; Tran Pharmacy, 4
Inc, dba Tran Pharmacy; the Independent Living Center of Southern California, Inc.; and The Gray 5
Panthers of San Francisco, ("San Francisco Gray Panthers"), -- file this Memorandum in support 6
7 of their motion for peremptory writ of mandamus, or in the alternative, a permanent or preliminary
8 injunction, in the First Cause of Action only, to restrain the respondents Department of Health
9 Services and its Director, Sandra Shewry, as set forth below.1

10

--ooOOoo-

11

This is a Supremacy Clause preemption case}

12

The movant petitioners are:

--two Medi-Cal recipients who are in Medi-Cal fee-for-service;'

13

--three pharmacies who are providers in Medi-Cal fee-for-service;3

--an independent living center whose disabled clients are Medi-Cal fee-for-service;4

14

15

1 The petitioners Gray Panthers of Sacramento, and Jason Young, are not moving parties in

this within motion. 16

2 The Supremacy Clause (article VI, cl. 2 of U.S. Constitution) provides: 17

"This Constitution, and the laws of the United States which shall be made in pursuance

18

thereof, ... shall be the supreme law of the land; and the judges of every state shall be

bound thereby, anything in the Constitution or laws of any State to the contrary,

19

notwithstanding."

20

3 Gerald Shapiro, Pharm.D., owner of Uptown Pharmacy in Los Angeles;

Sharon Steen, copartner in a copartnership which owns Central Pharmacy in Santa Monica; 21 Tran Pharmacy, Inc., owner ofTran Pharmacy, Inc, in Garden Grove.

22

4 Independent Living Center of Southern California, Inc., ("ILCSCal"), who annually

assists and advocates for 7,500 disabled persons, who are mostly SSI recipients who receive

23 their health care from Medi-Cal fee-for-service.

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 72 of 92 Page ID #:79

--the San Francisco Gray Panthers which has several members in Medi-Cal fee-forservice. 2 They seek peremptory writ of mandamus under§ 1085 Code Civ. Proc. (or in the alternative, a 3 permanent or preliminary injunction), in the First Cause of Action only, to order the California
4 Department of Health Care Services ("DHCS") and Sandra Shewry, its Director, to set aside their
5 policy to implement, and to refrain from implementing a 10% across-the-board cut in

6 reimbursement paid by the Medi-Cal program to providers in the Medi-Cal fee-for-services

7 program, fordates of service on and after July l, 2008; --all, as provided in subds. (a), (b)(l),
8 (b)(2), and (c) - (e) of § 14105.19 Welf. & Inst. Code; and § 14166.245 Welf. & Inst. Code, --
9 which were part of Sections 14 and 15 Assembly Bill X3 5, which was enacted Feb. 16,2008.5
Movants shall refer to these provisions, (subds. (a), (b)(1 ), (b)(2), and (c) - (e) of§ 10
14105.19 Welf. & Inst. Code; and§ 14166.245 Welf. & Inst. Code), collectively, as the "FFS 11
Payment Statutes."6 12
However, the FFS Payment Statutes violate the below federal statutes, so as to be 13
preempted, -- due to the Supremacy Clause, -- by the below preempting federal statutes; namely: 14
-the "quality of care" clause of subd. (a)(30)(A) of 42 U.S.C. § 1396a, --herein, "Sec. 15
II 16
II 17
II 18

19 5 Assembly Bill X3 5 was chaptered as Chapter 3, Statutes of2007-2008 Third
20 Extraordinary Session.

21

6 A copy of Sections 14 and 15 of Assembly Bill X3 5, which contain the FFS Payment

Statutes-- (namely, subds. (a), (b)(l), (b)(2), and (c)- (e) of§ 14105.19 Welf. & Inst. Code; and

22 § 14166.245 Welf. & Inst. Code) -- is attached as Exhibit A to this brief.

Petitioners have requested judicial notice of the FFS Payment Statutes, in Paragraph A of

23 Petitioners' Request for Judicial Notice in Support ofPetition for Writ of Mandamus and Other

Relief, ("RJN"), filed herewith.

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 73 of 92 Page ID #:80

30(A);7 and,

2

- the "equal access" clause of Sec. 30(A),8

3 and, as the inevitable result, (1) each of the two movant Medi-Cal recipients, (Dowling and

4 Beckwith), the pharmacy plaintiffs, the plaintiff Southern California Independent Living Center,

5 Inc. ("ILCSoCal"), and the plaintiff Gray Panthers of San Francisco ("Gray Panthers"), as well as

6 (2) the patients, clients, and members of the plaintiff pharmacies, ILCSCal, and Gray Panthers

7 (who are their prudential jus tertii representatives), as well as millions of other Medi-Cal

8 beneficiaries receiving health care in the Medi-Cal fee-for-service program, will be injured or put

9 at risk of injury by implementation of the 10% provider payment cuts to Medi-Cal fee-for-service

10 providers, under the federally preempted FFS Payment Statute; -- all as set forth later in this

11 brief, and, in their declarations filed herewith.

12

See, generally, Ex Parte Young, 209 U.S. 123 (1908).

13

DISCUSSION

14

The FFS Payment Statutes of Assembly Bill 3X 5 were enacted by a legislative history

15 replete with gubernatorial and legislative declarations which identify the bill as a pure budget

16 7 The "quality of care" clause of Sec. 30(A) provides in relevant part:

17 "(a) A state plan for medical assis~ance must- (30)(A) provide such methods and

18

procedures relating to the ... payment for, care and services available under the

plan ... as may be necessary ... to assure that payments are consistent with

19

efficiency, economy, and quality of care ... "

20

8 The "equal access" clause of Sec. 30(A) provides in relevant part:

21 22 23 241---

"(a) A state plan for medical assistance must- (30)(A) provide such methods and procedures relating to the ... payment for, care and services available under the the plan ... as may be necessary ... to assure that payments ... are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area."
PETITIONERS' MEMORANDUM .IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 74 of 92 Page ID #:81

reducing measure, not, any measure in respect to which the Legislature, the Lord forbid, might

2 engage in any inquiry or consideration of whether the 10% reduced payments would be sufficient

3 to assure that payments are consistent with quality of care, and with beneficiary equal access to

4 quality care, as absolutely required by Sec. 30(A).

5

LEGISLATIVE HISTORY OF ASSEMBLY BILL X3 5

6

1. On January 10, 2008, the Governor proclaimed a State fiscal emergency, sent a

7 proposed 2008-09 budget bill to the Legislature, and called the Legislature into special 8 session.9 10

9

2. On February 4, 7, and 15, 2008, Assembly Bill X3 5, a health budget trailer bill

10 was introduced, then amended to include the FFS Payment Statutes in Sections 14 and 15, 11 and was.enacted on February 16, 2008.ll 12

12

3. A copy of the FFS Payment Statutes of Assembly Bill X3 5 is set forth in Exhibit

13 A attached to this Memorandum; and is also set forth as Exhibit A of petitioners' RJN.

14

4. When Assembly Bill X3 5 was scheduled for final vote, the Assembly Floor

15 Analysis of the Assembly Budget Committee informed legislators that the Governor's original

16 proposal to commence the 10% Medi-Cal provider cut in June 2008, was postponed, in Assembly

17 Bill X3 5, to commence in July 2008. The analysis explained:

18

19

9 Governor's website, Jan. 10, 2008. (A download copy is set forth in Exhibit F ofRJN.)

20

10 A copy of the Governor's fiscal emergency proclamation is set forth in Exhibit B of

Petitioner's Request for Judicial Notice in Support of Writ ofMandamus and Other Relief,

21 ("RJN").

A copy of the Governor's special session proclamation is set forth in Exhibit C ofRJN. 22
11 Bill Documents of Assembly Bill 3X 5, set forth in Exhibit D ofRJN.

23 12 Bill Documents, (Exhibit D of RJN).

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 75 of 92 Page ID #:82

"The primary purpose of the delay of the reduction until the start of the new fiscal year is

to allow time for further review of provider rates during the regular budget process to

2

identify any particularly critical consequences of the reduction and to evaluate the

possibility of using a more refined approach to mitigate those consequences while still

3

achieving savings." (Boldface emphasis supplied.)13

4 As, in Alice in Wonderland, sentence first, verdict afterwards. Thus, in the rush to cut provider

5 . rates 10%, the Legislature here articulated its conscious and deliberate purpose to postpone and

6 refrain from considering, before the bill was enacted, the effect of the 10% payment cut and

7 whether the cut was consistent with quality of care and beneficiary access to quality care.

8

(But, this violated Sec. 30(A), which requires that a State consider all factors which relate

9 to whether a proposed Medicaid rate is consistent with quality and with recipient access~ before a

10 new rate is promulgated. See, Orthopaedic Hospital v. Belshe, 103 F.3d 1491, 1500 (9th

11

Cir.1997),

which

is

a

very

strong

case

on

this

point.

14 )

12

5. The Legislature, within the four comers of Assembly Bill X3 5 itself, also

13 repeatedly articulated that the Legislature's purpose in the bill was to reduce the State budget.

14

6. Thus, Sec. 14 of Assembly Bill X3 5 added§ 14105.19 to the Welf. & Inst. Code,

15 to provide:

16

"(a) Notwithstanding any other provision oflaw, in order to implement changes in the

level of funding for health care services, the director shall reduce provider payments as

17

specified in this section." (Emphasis supplied.)

18 This is an admission by the Legislature that the purpose ofthe I 0% Medi-Cal provider cut in

19 Section 14 of Assembly Bill X3 5, was to implement the Governor's budget reductions in the

20 fiscal 2008-09 budget bill, (not, to consider whether the cuts would affect quality of services or

21 beneficiary access to quality services).

22 13 Page 1 of Assembly Floor Analysis for Third Reading. (Exhibit E ofRJN.)

23 14 This point will be later more fully addressed.

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 76 of 92 Page ID #:83

1

7. Then, Section 15 of Assembly Bill X3 5, --which imposes the 10% cut in Medi-

2 Cal payments to non-contract hospitals, -- added §141 05.245, subd. (a) to Welf. & Inst. Code, to 3 expressly provide

4

"(a) The Legislature finds and declares that the state faces a fiscal crisis that requires

unprecedented measures to be taken to reduce General Fund expenditure to avoid

5

reducing vital government services necessary for the protection of the health, safety, and

welfare of the citizens of the State of California." (Emphasis supplied.)15 6

7

8. Also, Sec. 16 of Assembly Bill X3 5 expressly provides:

8

"SEC. 16. This act addresses the fiscal emergency declared by the Governor

by proclamation on January 10, 2008, pursuant to subdivision (f) of Section 10 of

9

Article IV of the California Constitution." (Emphasis supplied.Y6

10

9. And, Section 17 of Assembly Bill X3 5 expressly provides:

11

"SEC. 17. . .. In order to make statutory changes needed to implement cost

containment measures affecting health services, at the earliest possible time, it is

12

necessary that this act take effect immediately." (Emphasis supplied.) 17

13

Comment and ultimate factual finding

14

It is manifest from the legislative history that the conclusive factor in enacting the FFS

15 Payment Statutes, in Sections 14 and 15 of Assembly Bill X3 5, complained of, was not whether

16 the Legislature could assure that the new rates were consistent with quality and access, as

17 required by Sec. 30(a), but, rather, were solely budgetary considerations. 18

19

20

15 Section 15 of Assembly Bill X3 5 is set forth in Exhibit A attached t-o this brief, and, in

Exhibit A of petitioners' RJN.

21 16 Section 16 of Assembly Bill X3 5 is set forth in Exhibit A attached to this brief, and, in

22 Exhibit A of petitioners' RJN.

23

17 Section 15 of Assembly Bill X3 5 is set forth in Exhibit A attached to this brief, and, in

Exhibit A of petitioners' RJN.

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

-6-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 77 of 92 Page ID #:84

Ultimate finding of fact, conclusion of law, and relief to be issued

2

From the above legislative history of Assembly Bill X3 5, including:

3

- the Assembly Budget Committee told Assembly members in February 2008 that they

4

should first pass the cuts now, then take time, only later, to determine the effect of their

5

action;

6

7

-the four declarations in Sections 14, 15, 16, and 17 of Assembly Bill X3 5, that,

8 essentially, the Legislature was enacting these provisions for budgetary reasons, only,

9 because of the need to cut State expenditures; and,

10

11

- the context which surrounds the bill, namely, that the 10% rate cut was enacted within

12 37 days from the Governor's proclamation that the State's economic sky was falling, and

13 that an unprecedented budget shortfall required the Legislature to drastically reduce State

14 spending, it follows that the Legislature, in enacting the 10% Medi-Cal cut in payments to fee-

lS for-service providers in and by the FFS Payment Statutes,-- (i.e., subds. (a), (b)(1), (b)(2), and (c)

16 -(e) of § 14105.19 Welf. & Inst. Code; and§ 14166.245 Welf. & Inst. Code, which are part of

17 Sections 14 ands 15 of Assembly Bill X3 5), -- (1) did so solely for budgetary reasons; (2)

18 without consideration of the factors necessary to be considered to determine if the proposed new

19 rates were consistent with quality of care and access to services; and, that (3) the conclusive

20 factor in the decision of the Legislature to make these cuts was budgetary considerations.

21

Hence, such action of the Legislature to promulgate the FFS Payment Statutes of

22 Assembly Bill X3 5, --as well as the respondent DHCS and the Director's policy and action to

23 implement these measures, -- were and are arbitrary and capricious, and contrary to law; namely,

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 78 of 92 Page ID #:85

in violation of the aforesaid quality and access clauses of Sec. 30(A); so as to be thereby

2 preempted, under the Supremacy Clause, by Sec. 30(A).

3

Hence, an appropriate peremptory writ of mandamus (or in the alternative, a permanent

4 injunction), or at the very least, a preliminary injunction must be issued before July 1, 2008, to

5 order DHCS and its Director (1) to set aside their policy to implement the 10% payment cut of the

6 FFS Payment Statutes ofAssembly Bill X3 5, and (2) to refrain from implementing the same.

7

FURTHER DISCUSSION

8 1. 9 10 11 12

Courts, in reviewing the setting of Sec. 30(A) rates, use the "arbitrary and capricious" standard of review. Thus, if the State fails to adequately consider provider costs or any other factor which bears on whether the rates are consistent with quality and access, the rate is void ab initio; indeed, without any necessity for the plaintiff to show that it is likely that the new rates will negatively impact quality care or beneficiaries' access to quality care.

The case at bar is deja vu all over again. 13

In 2003 the Legislature enacted a prior bill to cut all Medi-Cal provider and managed care
14

payments 5% across-the-board for budgetary reasons; and declared in the bill, --just as in case at 15

bar, -- that it was enacted due to a budget shortfall, to implement reduction in funding for health 16

services. 17

In Clavworth v. Bonta, 295 F.Supp.2d 1110, 1126-1130 (E.D.Cal.2003), preliminary 18

injunction issued to enjoin the 5% rate cut in the Medi-Cal fee-for-service program, on the basis 19

that because budgetary considerations were the conclusive factor in enacting the cut, that the 20

action of the State to reduce Medicaid rates was arbitrary and capricious, in violation of the 21

requirement of Sec. 30(A) that a Medicaid rate setter must consider quality and access in setting 22

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 79 of 92 Page ID #:86

1 the rate. 18

2

The District Court in Clayworth concluded that the State's purpose in enacting the 5% cut

3 "was to reduce the budget shortfall," noting that "the statute declares on its face that the rate

4 reduction is ' [d]ue to the significant state budget deficit projected for the year," (id., 295 F.Supp.

5 at 1128), and held that:

6

"Budget constraints are not alone a valid justification for rate setting. See, Ark. Med.

Soc'y., 6 F3d at 531 ('Abundant persuasive precedent supports the proposition that

7

budgetary considerations cannot be the conclusive factor in decisions regarding

Medicaid,'); Orthopaedic Hosp., 103 F.3d at 1499, n.3;19 Amisub, 879 F.2 at 800-01."20

8

In analyzing Sec. 30(A) the District Court in Clayworth relied on Orthopaedic Hospital v. Belshe,

9

103 F.3d 1491, 1496-1497, 1500. The District Court noted that Orthopaedic Hosp. 103 F.3d at

10

1500, held that under the quality clause of Sec. 30(A) that there must be a reasonable relationship

11

between the rates set and providers' costs to provide quality care. (Clayworth, 295 F.Supp. at

12

1126.)

13

Further, this rule is procedural, (Clayworth, 103 F.3d at 1127): if the State does not

14

consider providers' costs, or cuts rates without any evidence that the cut can be sustained by

15

16

18 Note: The order for preliminary injunction in Clayworth was reversed in the 9th Circuit,

17 in a one-sentence order filed August 2, 2005, stating that the Sanchez v. Johnson, 416 F.3d 1051

(9th Cir.2005), holding that Congress did not intend, in 42 U.S.C. § 1983, to create any private

18 right of action in Medicaid beneficiaries or providers, compelled reversal of the Clayworth

preliminary injunction. (Copy of the 9th Circuit order is set forth in Exhibit G ofRJN.)

19

In sum, the 9th Circuit reversal of the Clayworth preliminary injunction did not overrule

or relate to any of the District Court's ruling in Clayworth, supra, other than the single

20 (erroneous) order of the District Court, to wit, that § 1983 afforded jurisdiction to the federal

comis to entertain challenges by Medicaid beneficiaries and providers to California's compliance

21 with Sec. 30(A), --which§ 1983 issue is irrelevant to any issue raised by plaintiffs in the case at

bar. 22
19 Arkansas Medical Society, Inc. v. Reynolds, 6 F.3d 519 (8th Cir.19983).

23 20 Amisub (PSL), Inc. v. Colorado Dept. of Soc. Ser., 879 F.2d 789 (1Oth Cir.1989).

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

~·---=9-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 80 of 92 Page ID #:87

providers, in light of their costs, without a loss of quality or equal access for Medi-Cal recipients,

2 (see, Clayworth, 295 F.Supp. at 1128), then the rate is held to be "arbitrary and capricious,"

3 contrary to Sec. 30(A), and hence void, without more. -- i.e., without any necessity for the

4 plaintiff to show that the rate is too low to enable providers to furnish quality services, or, that

5 insufficient providers will continue in the program. (Orthopaedic Hosp., 103 F.3d at 1500;

6 Clayworth, 295 F/Supp.2d at 1127.)

7

The basis for enjoining a Medicaid rate set arbitrarily and capriciously, without

8 consideration of provider costs or without consideration of quality or access at all, is that:

9

"(I)t is safe to assume that a rate that is set arbitrarily, without reference to the Sec. 30(A)

requirements, is unlikely to meet the equal access and quality requirements. Thus, a

1 0

beneficiary plaintiff may insist that the State, at a minimum, consider the effect of a rate

reduction on qual access to quality services in light of provider costs." Clayworth, 295

11

F.Supp.2d at 1127, citing Orthopaedic Hosp., 103 FJd at 1500.

12

Conclusion

13

One would have to believe in the tooth fairy, to believe on this legislative record that the

14 Legislature, -- in enacting the 10% provider rate, -- considered whether the reduced payments are

15 consistent with quality of services and access to quality services, or considered whether the

16 reduced payment amounts bear a reasonable relation to provider costs, (as required Sec. 30(A)

17 under the rulings of Orthopaedic Hosp., 103 F.3d at 1500, and Clayworth, 295 F.Supp. at 1117,

18 fu.6).

19 2. 20

The Supremacy Clause has always been a shield against State action, (1) which threatens to injure Medicaid beneficiaries and providers, and (2) is preempted, under the Supremacy Clause, by contrary provisions of the Medicaid Act,

21 In Wisconsin Hospital Assn. v. Reivitz, 735 F.2d 1226, 1227 (71h Cir.), a hospital
22 association and several hospitals had standing to sue to enforce Sec. 30(A), under the Supremacy
23

-----·:.-ro- 24 I-----=r=Er=Ir=Io=N=E=R=s,-=M=E=M-=o=RA-=N=o=u-::-M-:-:I-:-:-N-=-su:-:-:r=r-=-oR=-=r::-co=-=F:-:cw=ru=r=-co=-=F:-:-:cMANDAMUs AN DOT-HER RELIEF____

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 81 of 92 Page ID #:88

Clause.

2

In Harmony Nursing Homes, Inc. v. Anderson. 341 F. Supp. 957, 958 (D.Minn.1972), a

3 nursing home had standing to sue under the Supremacy Clause to restrain a state's"freeze" on

4 Medicaid payments to providers.

5

Also, the three pharmacy plaintiffs, the plaintiff ILCSCAL, and the plaintiff San

6 Francisco Gray Panthers have just as much or more a right, under the Supremacy Clause, to sue

7 to obtain a protective injunction, for themselves and the benefit of their Medi-Cal patients,

8 clients, or members, against the federally preempted 10% Medi-Cal provider cut, (due to its

9 violation of Sec. 30(A)), as did the pharmaceutical manufacturers association in Pharmaceutical

10 Research and Manufacturers of America (PhRMA) v. Concannon, (249 FJd 66 (1 51 Cir.2001) to

11 sue to enjoin state action, in violation of the Medicaid Act, injuring the manufacturers and the

12 Medicaid patients whom they prudentially represented.

13

In PhRMA, a pharmaceutical manufacturers association, -- not one of whose members

14 had any professional relationship with Medicaid beneficiaries,-- was readily afforded prudential

15 standing to sue under the Supremacy Clause to pre-empt a state statute enacted in violation of the

16 Medicaid Act.

17

I.e., all that is necessary to be a plaintiff in a Supremacy Clause claim, (Article VI, cl. 2,

18 Constitution), is a showing that the interests of the plaintiff are within the zone of interests

19 arguably to be protected by the federal statute. Thus PhRMA held, (249 F.3d 66, 72-74 (1 51 Cir.

20 2001):

21

"The initial question is whether PhRMA has prudential standing to challenge the prior

authorization provision of the Act. ... The Supreme Court recently reiterated the standard

22

for determining prudential standing:

23

In applying the 'zone of interests" test, we do not ask whether, in enacting the

24 I------=P=ET=IT=Jo::::N-::E=R=s·=M-=E=M-=o·=-R-=AN-=o=u-=M=l-=N-=su-=p=-=p=oR=T=-o=-=F=-=w-=ru=T=-o=-=F-=M-=A-=N=---DAMUS AND OT::-:H=ER:---:-:RE=,L-:--::IE=F-··----_.,-·1-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 82 of 92 Page ID #:89

statutory provision at issue, Congress specifically intended to benefit the plaintiff.

Instead, we first discern the interests 'arguably ... to be protected' by the statutory

2

provision at issue; we then inquire whether the plaintiffs interests affected by the

agency action in question are among them.

3 (National Credit Union Adm. v. First National Bank & Trust Co., 522 U.S. 479, 492

4

(1998).

5

PhRMA has not asserted an action to enforce rights under the Medicaid statute,

... but rather a preemption-based challenge under the Supremacy Clause. In this

6

type of action, it is the interests protected by the Supremacy Clause, not by the

preempting statute, that are at issue. [Citation.] As the Third Circuit recently pointed out,

7

an entity does not need prudential standing to invoke the protection of the Supremacy

Clause: 8

We know of no governing authority to the effect that the federal statutory

9

provision which allegedly preempts enforcement of local legislation by conflict

must confer a right on the party that argues in favor of preemption. On the

10

contrary, a state or territorial law can be unenforceable as preempted by federal

law even when the federal law secures no substantive right for the partv arguing

11

preemption.

12

Id. Thus, regardless of whether the Medicaid statute's relevant provisions were designed

to benefit PhRMA, PhRMA can invoke the statute's preemptive force....

13

Given that PhRMA has prudential standing grounded in the Supremacy Clause, we think

it may fairly assert the rights ofMedicaid recipients for purposes of this action. Where a

14

party has established a concrete injury in fact, and otherwise has standing to challenge the

lawfulness of the statute, it is 'entitled to assert those concomitant rights of third parties

15

that would be "diluted or adversely affected" should [its] constitutional challenge fail and

the statute remain in force.... " (Emphasis supplied.) 16

17

Conclusion on sub-point: It follows form this unbroken line of cases on the Supremacy

18 Clause, that Medicaid providers as well as beneficiaries are within the "zone of interests"

19 intended to be protected, by Congress, in enacting the Medicaid Act; especially, Sec. 30(A).

20

Thus both Medicaid beneficiaries and providers may sue, as in case at bar, to protect

21 against injury from state action which violates, and is hence preempted, under the Supremacy

22 Clause, by the Medicaid Act, (here, Sec. 30(A)).

23 Accordingly, the two Medi-Cal beneficiaries (Dowling and Beckwith) who obtain their

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

-12-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 83 of 92 Page ID #:90

Medi-Cal services in the Medi-Cal fee-for-service program, plus, the three Medi-Cal fee-for-

2 service phannacy plaintiffs, (the Uptown, Central, and Iran phannacies), are manifestly entitled,

3 under Supremacy Clause decisional law, to a writ of mandamus or injunction, in the First Cause

4 of Action, to enjoin the respondents from injuring them by implementing the 10% cut in

5 payments to Medi-Cal fee-for-service providers, under the FFS Payment Statutes, (namely,

6 subds. (a), (b)(l), (b)(2), and (c)- (e) of § 14105.19 Welf. & Inst. Code; and§ 14166.245 Welf.

7 & Inst. Code), enacted as part of Sections 14 and 15 of the Assembly Bill X3 5, which violate the

8 quality and access provisions of Sec. 30(A), --i.e., , 42 U.S.C.. § 1396a(a)(30)(A).

9 FURTHER DISCUSSION OF STANDING TO SUE, AND INJURY

10
3. 11
12

Next. The plaintiffs each sue, as authorized by Green v. Obledo, 29 Cal.3d 126 (1981), on their own behalf and on behalf of the public, to procure performance of public duty by public officials; hence, need not show they have any legal or special

13

It is sufficient, held Green, supra, that the plaintiff "is interested as a citizen in having the

14 laws executed and the duty in question enforce." (29 Cal.3d at 144-145.)

15

Thus each of the movant plaintiffs, -- who are citizens and residents of the State of

16 California as shown by their declarations, -- may sue in this case to enforce the public duty ofthe
17
respondent State officials to comply with the public duty,-- pursuant to the Supremacy Clause,--
18 to obey federal law where, as in case at bar, Sec. 30(A) preempts contrary state law, (here, the
19 10% Medi-Cal provider rate cut promulgated by subds. (a), (b)(1), (b)(2), and (c)- (e) of
20 § 14105.19 Welf. & Inst. Code; and§ 14166.245 Welf. & Inst. Code, (which are part of
21 Sections 14 and 15 of the Assembly Bill X3 5 ("Exhibit A attached).
22

23

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

-13-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 84 of 92 Page ID #:91

4. 2 3 4

Clayworth, 295 F.Supp.2d at 1117-1119, ruled that providers and beneficiary associations have prudenlial standing to assert the interests of their patients or members. Under the view of these rulings, the plaintiff pharmacies, the ILCSCal, and the San Francisco Gray Panthers may, on a prudential basis, assert the interests of their patients, clients, or members {as the case may be), in the within proceeding.
The interest of Medi-Cal beneficiaries,-- who are patients, clients, or members of

5 the two pharmacy plaintiffs, the ILCSCal, and the San Francisco Gray Panthers, -- is the interest

6 of not being injured from implementation of the 10% cut in payments to Medi-Cal provider in the

7 Medi-Cal fee-for-serve program, in violation of the federally pre-empted FFS Payment Statutes,

8 (namely, the aforesaid subds. (a), (b)(l), (b)(2), and (c)- (e) of§ 14105.19 Welf. & Inst. Code;

9 and § 14166.245 Welf. & Inst. Code, -- (which provisions are part of Sections 14 and 15

10 Assembly Bill X3 5, in Exhibit A attached).

11

As shown by the declarations of the CEO of the ILCSCal, and the co-chief of the San

12 Francisco Gray Panthers, filed herein, each of these beneficial or member organizations meet the

13 tests described by Clayworth, 295 F.Supp/2d at 1117-1119, for having prudential standing to
14 asse1i the rights of their clients or members who are Medi-Cal beneficiaries, in the case at bar.
15 Injury
16 Also, plaintiffs have introduced evidence of a severe shortage of dentists and of doctors
17 and specialists, which will be exacerbated by this newest 10% payment cut to fee-for-service
18
providers. Also, the declarations of the two movant Medi-Cal beneficiaries,-- Beckwith and 19
Dowling, the former a quadriplegic who requires oxygen and 8 attendants daily to stay alive, and 20
the latter a paraplegic with diagnosis of terminal rectal cancer,-- show they will be injured, and 21

22 are at severe risk for injury, pain and suffering, and of being forced into institutions, and of even

23 death, -- (as are thousands like them), -- from loss of their doctors and specialists, and access to

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

-14-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 85 of 92 Page ID #:92

1 quality medical and pharmacy services, which will certainly occur if the 10% payment cut to

2 Medi-Cal fee-for-service patients, is not enjoined by a writ or injunction, which is requested..

3

Summary, and relief requested:

4

Petitioners request that the Court, based on the above Memorandum of facts and law, and

5 the facts of prospective severe injury to Medi-Cal fee-for-service recipients, (including the

6 plaintiffs Dowling and Beckwith), which are shown by the supporting declarations, order:

7

A. That a writ of mandamus be issued in the First Cause of Action under

8 § 1085 Code Civ. Proc., or in the alternative, a permanent injunction, (or at the very least, a

9 preliminary injunction), which orders the respondents Department of Health Care Services, and
10 its Director to set aside their policy to implement the FFS Payment Statutes,(namely, subds. (a),
11 (b)(l), (b)(2), and (c)- (e) of § 14105.19 Welf. & Inst. Code; and§ 14166.245 Welf. & Inst.
12 Code), which are part of Sections 14 and 15 of Assembly Bill X3 5, (Chapter 3, Statutes 2007-
13
2008 Third Extraordinary Session), and to refrain from implementing the 10% reduction of 14
payments to Medi-Cal fee-for-service providers specified in the aforesaid FFS Payment Statutes, 15

or any other reduction of payments to providers in the Medi-Cal fee-for-service program, for 16

17 dates of service on or after July 1, 2008, or at any other time..

18

B. That petitioners have costs of suit, plus reasonable attorneys' fees under § 1021.5

19 Code Civ. Proc, and such other and further relief as may be just.

20

Dated: May 12,2008.

Respectfully submitted,

21

22

23

24 --------;:P:;:::;ET:;::;IT;;::;:IO;::::;N:-;;E:;:::-.R;::::;S'7ME::;::;:-:M::::c0RAN;::-;-::-:;:::::D-:;-UM::-:-:::IN:-;S::-:UP=:P::-.::O:=RT=-o::::-:;F::-:cWRI=T:::-:O:::::F:-:-MAND-:-:-::-::=-AMU-:-:-::::::::S:-:AN~D-=o=m=E=R-=RE=L:-::IE::::F-:--------,-_15-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 86 of 92 Page ID #:93
Exhibit A

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 87 of 92 Page ID #:94
Assembly Bill No. 5
CHAPTER3
An act to amend Section 95004 ofthe Government Code, and to amend Sections 4640.6,4643,4648.4, 4681.3, 4681.5, 4691.6, 4781.6, and4783 of: and to add Sections 4681.6, 4689.8, 4691.9, 14041.1, 14105.19, and 14166.245 to, the Welfare and Institutions Code, relating to health, and declaring the urgency thereof: to take effect immediately.
[Approved by Govcmor February 16, 2008. Filed with Secretary of State February 16, 2008.]
LEGISLATIVE COUNSEL'S DIGEST
AB 5, Committee on Budget Public health programs. Under existing law, the State Department of Developmental Services provides funding for regional centers for the provision orpurchase ofservices and supports to persons with developmental disabilities. Existing law prescribes a specified ratio for regional center service coordinator to consumer, which is in effect until June 30, 2008. This bill would extend indefinitely the effective date of this ratio. Existing law provides for the assessment ofcertain individuals for whom benefits are provided by regional centers. Existing law provides that if assessment is needed, prior to July 1, 2008, the assessment shall be performed within 120 days following initial intake, and requires that assessments after that date shall be performed within 60 days following intake. This bill would extend indefinitely the 120-day assessment requirement. Existing law, with certain exceptions, for the 2007-08 :fiscal year, proln'bits a regional center from paying any provider ofspecified services a rate that is greater than the rate that is in effect on July 1, 2007, unless the increase is required by contract between the regional center and the vendor that is in effect on June 30, 2007. This bill would extend indefinitely this prohibition with respect to the payment ofrates in excess ofthose in effect on June 30, 2008. Existing law provides that, during the 2007-08 fiscal year, no regional center may approve any service level for a residential service provider. This bill would extend indefinitely this provision. It would also prohibit, commencing July 1, 2008, a regional center from negotiating rates with residential care providers, except as prescribed. Existing law requires the State Department of Developmental Services to make payments to providers of supported living services for adults with developmental dis~bilities. Under existing law, the department, by July 1, 2002, is required to establish, by regulation, an equitable and cost~effective
95

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 88 of 92 Page ID #:95

Ch.3

-2-

methodology for the determination of supported living costs and a methodology of payment for these providers.
This bill would, commencing July 1, 2008, impose prescnoedrate increase 'restrictions on reimbursement to these service providers and would also prohibit a regional center from negotiating rates with these providers, except
as prescribed. Existing law prolubits, during the 2007-08 fiscal year, the State
Department of Developmental Services from establishing any permanent payment rate for a community-based day program or in-home respite care agency that has a temporary payment rate in effect on July 1, 2007, or from making other specified changes or adjustments that would result.in a rate
increase. This bill would extend indefinitely this provision, and would apply it to
rates in effect June 30, 2008. It would also prohibit a regional center from negotiating rates with these providers, except as prescribed.
Existing law provides that, for the 2007-08 fiscal year only, a regional center shall not expend any purchase ofservice funds for the startup ofany new program unless the expenditure is necessary to protect the consumer's health or safety or because of other extraordinary circumstances and the·
department has granted prior written authorization.
This bill would extend indefinitely this prohibition.
Under existing law, the California Early Start Intervention Services Act,
various state entities provide coordinated services to infants and toddlers with disabilities and their families. Existing law requires early intervention services to be provided directly to eligtble infants and toddlers and their families through the regional center system and the local education system. Existing law requires that, in providing services under the act, regional
centers comply with the Lanterman Developmental Disabilities Services Act, and its implementing regulations, including, but not limited to, those
provisions relating to vendorization and ratesetting, except where compliance with those provisions would result in any delays in, or any cost to families for, the provision ofearly iritervention, or otherwise conflict with the act or its implementing regulations. Existing law, until July 1, 2009, also contains
family cost participation requirements for specified services obtained by
regional centers for persons with developmental disabilities.
This bill would extend indefinitely the family cost participation requirements, and would also require that, subject to federal approval, in providing those early intervention services under the Lanterman Developmental Disabilities Services Act, regional centers apply the family cost participation requirements that require families of children receiving early intervention services to contribute a specified amount to the cost of
those services based on family size and scaled income levels. It would also revise the family cost participation schedule and the procedures governing
how a parent may appeal a decision made by the executive director of a regional center, with respect to the amount ofthe parents' cost participation.

95

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 89 of 92 Page ID #:96

-3-

Ch.3

Existing law provides for the Medi-Cal program, administered by the State Department ofHealth Care Services, under which quali:fied low-income persons are provided with a variety of health services.
Existing law contains various provisions governing reimbursement rates
for Medi-Cal providers. This bill would, notwithstanding any other provision of law, and to the
extent not otherwise conflicting with federal law, authorize the department
to withhold, or direct the medical fiscal intermediary to withhold, payments for providers, as described, for a period of one month for a month ending
prior to January 1, 2009. Existing law creates various health programs, including the Child Health
and Disability Prevention Program, the California Children's Services Program, the Genetically Handicapped Person's Program, and specified
family planning programs. This bill would, with certain exceptions, for services rendered under these
programs on and after July 1, 2008, require the Director of Health Care Services to reduce provider reimbursement rates by 100/o.
The bill would specify that the reductions imposed pursuant to the bill would apply only to the General Fund share of the payment, and only to payments for services from funds appropriated to the department
Existing law establishes the Medi-Cal Hospital/Uninsured Care Demonstration Project Act, which revises hospital reimbursement methodologies under the Medi-Cal program in order to maximize the use of federal funds consistent with federal Medicaid law and· stabilize the distribution of funding for hospitals that provide care to Medi-Cal beneficiaries and uninsured patients. This demonstration project provides for funding, in supplementation of Medi-Cal reimbursement, to various hospitals, including designated public hospitals, nondesignated public hospitals, and private hospitals, as defined in accordance with certain
provisions relating to disproportionate share hospitals. This bill would reduce by 10% payments for inpatient hospital services .
to acute care hospitals not under selective contracts with the department that are provided on and after July 1, 2008.
The California Constitution authorizes the Governor to declare a fiscal emergency and to call the Legislature into special session for that purpose. The Governor issued a proclamation declaring a fiscal emergency, and calling a special session for this purpose, on January 10, 2008.
This bill would state that it addresses the fiscal emergency declared by the Governor by proclamation issued on January 10, 2008, pursuant to the California Constitution.
This bill would declare that it is to take effect immediately as an urgency statute.

95

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 90 of 92 Page ID #:97

Ch.3

-16-

SEC. 14. Sectio~ 14105.19 is added to the Welfare and Institutions Code,
to read:
14105.19. (a) Notwithstanding any other provision of law, in order to implement changes in the level of funding for health care services, the director shall reduce provider payments as specified in this section.
(b) (1) Except as provided in subdivision (c), payments shall be reduced by 10 percent for Medi-Cal fee-for.service benefits for dates of service on and after July 1, 2008.
(2) Except as provided in subdivision (c), payments shall be reduced by 10 percent for non-Medi-Cal programs descnoed in Article 6 (commencing with Section 124025) of Chapter 3 ofPart 2 ofDivision 106 ofthe Health and Safety Code, and Section 14105.18, for dates of service on and after July I, 2008.
(3) For managed health care plans that contract with the department
pursuant to this chapter, Chapter 8 (commencing with Section 14200), and Chapter 8.75 (commencing with Section 14590), payments shall be reduced

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 91 of 92 Page ID #:98

-17-

Ch.3

by the actuarial equivalent amount of the payment reduction specified in this subdivision pursuant to contract amendments or change orders effective on July 1, 2008.
(c) The services listed in this subdivision shall be exempt from the payment reductions specified in subdivision (b):
(1) Acute hospital inpatient services, except for payments to hospitals not under contract with the State Department of Health Care Services, as provided in Section 14166.245.
(2) Federally qualified health center services, including those :fu.cili.ties deemed to have federally qualified health center statns pursuant to a waiver under subdivision (a) ofSection 1315 ofTitle 42 ofthe United States Code.
(3) Rural health clinic services. (4) All ofthe following facilities: (A) A skilled nursing facility pursuant to subdivision (c) ofSection 1250 of the Health and Safety Code, except a skilled nursing facility that is a
distinct part ofa general acute care hospital. For purposes ofthis paragraph, "distinct part" has the same meaning as defined in Section 72041 of Title
22 of the California Code ofRegulations. (B) An intermediate care facility for the developmentally disabled
pursuant to subdivision (e), (g), or (h) of Section 1250 of the Health and Safety Code, or a facility providing continuous skilled nursing care to
developmentallydisabled individuals pursuantto the pilot project established by Section 14495.10.
(C) A subacute care unit, as defined in Section 51215.5 of Title 22 of the California Code ofRegulations.
(5) Payments to facilities owned or operated by the State Department of Mental Health or the State Department ofDeve1opmental Services.
(6) Hospice. (7) Contract services as designated by the director pursuant to subdivision
(e).
(8) Payments to providers to the extent that the payments are funded by means of a certified public expenditure or an intergovernmental transfer pursuant to Section 433.51 ofTitle 42 ofthe Code ofFederal Regulations.
(9) Services pursuant to local assistance contracts and interagency agreements to the extent the funding is not included in the funds appropriated to the department in the annual Budget Act.
(10) Payments to Medi-Cal managed care plans pursuant to Section
4474.5 for services to consumers transitioning fromAgnews Developmental Center into Alameda, San Mateo, and Santa Clara Counties pursuant to the Plan for the Closure ofAgnews Developmental Center.
(11) Breast and cervical cancer treatment provided pursuant to Section 14007.71.
(12) The Family Planning, Access, Care, and Treatment (Family PACT) Waiver Program pursuant to Section 141 OS .18.
(d) Subject to the exception for services listed in subdivision (c), the payment reductions required by subdivision (b) shall apply to the services rendered by any provider who may be authorized to bill for the service,

95

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 92 of 92 Page ID #:99

-19-

Ch.3

(e) Notwithstanding the rulemaking proVISions of Chapter 3.5
(commencing with Section 11340) ofPart 1 of Division 3 ofTitle 2 ofthe Government Code, the director may implement subdivision (b) by means
ofa provider bulletin, or other similar instruction, without taking regulatory
action. (f) The director shall promptly seek all necessary federal approvals in
order to implement this section, including necessary amendments to the
state plan.
SEC. 16. This act addresses the fiscal emergency declared by the Governor by proclamation on January 10, 2008, pursuant to subdivision (f) of Section 10 ofArticle IV of the California Constitution.
SEC. 17. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV ofthe Constitution and shall go into immediate effect. The facts
constituting the necessity are:
In order to make statutory changes needed to implement cost containment measures affecting health services, at the earliest possible time, it is necessary that this act take effect immediately.

0
95

 </s> ./i

Case 2:08-cv-03315-CAS-MAN Document 1 Filed 05/19/08 Page 1 of 7 Page ID #:1

f\LEO

1 EDMUND G. BROWN JR.

Attorney General of the State of California

2 3

RP:IECfHm1A}Rs~D!fTR.~Wk!AR1L:DAOttoWrney General

1nU~

~~1

g
\...·

p"'
. q 'r:

3; :c3o~3·~

T

4

Supervising De:Ruty Attorney General PHILLIP J. MATSUMOTO, State Bar

No.

14038·&/~cL~.N~(:-1~\~_,'us

:.··• ;. :··;:. r.r.:.lt;4Gf ·::,

De2_uty Attofi1_e_y General

5 TARA L. NEWMAN, State BarNo. 210960

t~i

--

Deputy Attorney General

6 SARA UGAZ, State BarNo. 239031

Deputy Attorney General

7 300 South Sprmg Stree~ Suite 1702

Los Angeles, C.A 9001 j

8 Telephone: (213) 897-2463

Fax: (213) 897-1805

9 Email: Sara.Ugaz@doj.ca.gov

Attorneys for Respondents Sandra Shewry Director of

10 the California Department of Health Care Services, and

the California Department of Health Care Services

11

12

IN THE UNITED STATES DISTRICT COURT

13

FOR THE CENTRAL DISTRICT OF CALIFORNIA

14

WESTERN DIVISION

15 INDEPENDENT LIVING CENTER OF
16 SOUTHERN CALIFORNIA, a nonprofit corporation; GRAY
17 PANTHERS OF SACRAMENTO, a nonprofit corporation; GRAY

caseNCV08- 0331 5 CA
(Los Angeles Superior Court Of\~~1\
Case No. BS 114459)

18 PANTHERS OF SAN FRANCISCO, a .nonprofit corporation; GERALD
19 SHAPIRO, Pharm.D. doing business as Uptown Pharmacy and Gift Shoppe;

RESPONDENTS' NOTICE OF REMOVAL OF ACTION UNDER 42 U.S.C. § 1441(b)

20 SHARON STEEN, doing )Jusiness as

Central Pharmacy; MARK

21 BECKWITH; and MARGARET .

DOWLING, TRAN PHARMACY, INC., 22 AND JASON YOUNG,

23

24

v.

Petitioners,

25 SANDRA SHEWRY, Director of the Department of Health Care Services,
26 State of California; CALIFORNIA DEPARTMENT OF HEALTH CARE
27 SERVICES,

28

Res ondents.

1

Case 2:08-cv-03315-CAS-MAN Document 1 Filed 05/19/08 Page 2 of 7 Page ID #:2
1 TO THE CLERK OF THE ABOVE-ENTITLED COURT: 2 PLEASE TAKE NOTICE that Respondents Sandra Shewry, Director of the 3 California Department of Health Care Services, and the California Department of 4 Health Care Services, hereby remove to this Court the state court action described 5 below: 6 1. On April 22, 2008, Petitioners filed a Verified Petition for Writ of 7 Mandamus in the Superior Court of California, in and for the County of Los 8 Angeles, entitled "Independent Living Center of Southern California, a nonprofit 9 corporation; Gray Panthers of Sacramento, a no~profit corporation; Gray Panthers 10 of San Francisco, a nonprofit corporation; Gerald Shapiro, Pharm.D. doing 11 business as Uptown Pharmacy and Gift Shoppe; Sharon Steen, doing business as 12 Central Pharmacy; Mark Beckwith; and Margaret Dowling, Petitioners, vs. Sandra 13 Shewry, Director of the Department ofHealth Care Services, State of California; 14 California Department of Health Care Services, Respondents" as case number 15 BS114459. 16 2. In their Verified Petition for Writ of Mandamus, Petitioners, who are 17 health care advocates and Medi-Cal providers and recipients, seek to enjoin 18 Respondents from implementing a 10% reduction in Medi-Cal payments to Medi19 Cal providers. Petitioners allege that the proposed reduction, which is planned to 20 go into effect on July 1, 2008, violates the Medicaid Act, namely 42 U.S.C. § 21 1396a subd. (a)(30)(a), the Americans with Disabilities Act of 1990, and the 22 Social Security Act, among other things. 23 3. Respondents Sandra Shewry, Director of the California Department of 24 Health Care Services, and the California Department of Health Care Services were 25 served with copies of the Verified Petition for Writ of Mandamus on April 22, 26 2008. 27 4. On May 12, 2008, Petitioners filed a Verified First Amended Petition for 28 Writ of Mandamus and a Memorandum in Support of Writ of Mandamus,
2

Case 2:08-cv-03315-CAS-MAN Document 1 Filed 05/19/08 Page 3 of 7 Page ID #:3

1 or in the Alternative, For Permanent or Preliminary Injunction. The Amended

2 Petition added Petitioners Tran Pharmacy, Inc. and Jason Young. Respondents

3 were served on May 12, 2008 with the Verified First Amended Petition for Writ of

4 Mandamus and the Memorandum in Support of Writ of Mandamus, or in the

5 Alternative, For Permanent or Preliminary Injunction. Petitioners again allege that

6 Respondents violated the Medicaid Act, namely 42 U.S.C. § 1396a subd.

7 (a)(30)(a), the Americans with Disabilities Act of 1990, and the Social Security

8 Act, among other things.

9

5. On or around May 15, 2008, Petitioners filed an Ex Parte Application for

10 Alternative Writ of Mandamus under California Code of Civil Procedure section

11 1085 to immediately enjoin Respondents from implementing the 10% reduction in

12 Medi-Cal payments to Medi-Cal providers. The hearing on this application is set

13 for May 20, 2008 at 8:30a.m. at the Los Angeles Superior Court before the

14 Honorable James C. Chalfant in Department 85.

15

6. Under 28 U.S.C. § 1331, this civil action is within the original jurisdiction

16 of this Court. Respondents may remove this case to this Court under 28 U.S. C.§

17 1441 (b) because Plaintiff alleges that Respondents violated federal laws, namely

18 the Medicaid Act, the Americans with Disabilities Act, and the Social Security

19 Act.

20

7. Under 28 U.S.C. § 1446(a), attached are true and correct copies of the

21 state-court file in this case, as served on Respondents:

22

a. Exhibit A: Verified Petition for Writ of Mandamus.

23

b. Exhibit B: Civil Case Cover Sheet.

24

c. Exhibit C: Civil Case Cover Sheet Addendum and Statement of

25

Location.

26

d. Exhibit D: Verified First Amended Petition for Writ of Mandamus.

27

e. Exhibit E: Petitioners' Memorandum in Support of Writ of Mandamus,

28

or in the Alternative, For Permanent or Preliminary Injunction.

3

Case 2:08-cv-03315-CAS-MAN Document 1 Filed 05/19/08 Page 4 of 7 Page ID #:4

1 f. Exhibit F: Petitioners' Notice of Ex Parte Application and Ex Parte

2

Application for Alternative Writ of Mandamus Under § 1085 Cal. Code of

3

Civil Procedure with supporting documentation

4

Dated: May 19, 2008

5 6 7 8 9 10 11 12 13 14 15 16
60301014.wpd
17
LA2008600735
18

Respectfully submitted,
EDMUND G. BROWN JR. Attorney General of the State of California
RICHARDT. WALDOW Supervising Deputy Attorney General
JENNIFER M. KIM Supervising Deputy Attorney General
PHILLIP J. MATSUMOTO Deputy Attorney General
TARA L. NEWMAN Deputy Attorney General
&:t)Q I
I
SARAUGAZ Deputy Attorney en al Attorneys for Respondents Sandra Shewry Director of the California Department of Health Care Services, and the California Department of Health Care Services

19

20

21

22

23

24

25

26

27

28

4

Case 2:08-cv-03315-CAS-MAN Document 1 Filed 05/19/08 Page 5 of 7 Page ID #:5

MODE = MEMORY TRANSMISSION

START=MAY-19 14:49 END=MAY-19 14:50

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STN COMM. NO.

STATION NAME/EMAIL ADDRESS/TELEPHONE NO. PAGES DURATION

001 OK

a914154991687

005/005 00:00:51

EDMUND G. BROWN JR. Attorney General

-CA DOJ/LA B&T HEW SECTION2138972672- ttt~~~~*~
State of California DEPARTMENT OF JUSTICE

FAX TRANSMISSION COVER SHEET
IMPORTANT/CONFIDENTIAL: This communication Is intended only for the use of the individual or entity to whk'h it is addressed. This message contains information from the State of California, Attorney General's Office, which m' ., be privileged. confidential, and exempt from disclosure under applicable Jaw. If the reader of this communication is not tne int,nded rGclpient, you are hereby notified that any dissemination, distriDution. or copying of this communication is strictly prohlbltoi!.

DATE: May 19, 2008

TIME: 1:24 PM

TO: NAME: OFFICE: LOCATION: FAX NO.:

Lynn S. Carman Medicare Defense Fund 28 Newport Landing Drive (415) 499-1687

PHONE NO.:

NO. OF PAGE::;.: (Including Fax Ccve-r-=S-h:e-e--t):-:--

FROM: NAME:

Jin S. Nam, Legal Secretary to SARA UGAZ, Deputy Attorney G~~l_n_er_a_l_ __

OFFICE:

_____________________________ _____ LOCATION: FAX NO.:

_!L=o~s~~~---.;__-----------···-----

(213) 897-2805

PHONE NO.:

897-2461 ,,,

.M'ESSAGE/tNSTRUCTIONS
-----------------------------··~~-----
Re: Independent Living Ctr. of So. Cal. et al. v. DHCS; USOC Case No. TBD

Please see attached document:

RESPONDENTS' NOTICE OF REMOVAL OF ACTION UNDER 42 U.S.C. §
t44I(b) #/~uf .,£xA,'kl-s
•Hard copies sent via Overnight Delivery

6Q302124.wpd

PLEASE DELIVER AS SOON AS POSSIBLE FOR ASSISTANCE WITH THIS FAX, PLEASE CALL THE SENDER

Case 2:08-cv-03315-CAS-MAN Document 1 Filed 05/19/08 Page 6 of 7 Page ID #:6
UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA
CIVIL COVER SHEET AFTER COMPLETING THE FRONT SIDE OF FORM CV-71, COMPLETE THE INFORMATION REQUESTED BELOW.
Vlll(b). RELATED CASES: Have any cases been previously filed that are related to the present case? fi"No D Yes
If yes, list casenumtbe1r(s): _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
Civil cases are deemed related if a previously filed case and the present case:
(Check all boxes that apply) D A. Arise from the same or closely related traosactions, happenings, or events; or D B. Call for determination ofthe same or substantially related or similar questions of law and fact; or D C. For other reasons would entail substaotial duplication of labor if heard by different judges; or D D. Involve the same patent, trademark or copyright, aod one of the factors identified above in a, b or c also is present.
IX. VENUE: List the California County, or State if other thao California, in which EACH named plaintiff resides (Use ao additional sheet if necessary) D Check here if the U.S. government, its agencies or employees is a named plaintiff.
Petitioners Independent Living Center of Southern California, Inc., Gerald Shapiro d/b/a "Uptown Pharmacy & Gift Shoppe," and Sharon Steen d/b/a "Central Pharmacy" are located in Los Angeles County. Petitioner Gray Panthers of San Francisco is located in San Francisco County. Petitioner Gray Panthers of Sacramento is located in Sacramento County. Petitioner Tran Pharmacy, Inc., is located in Orange County. Petitioners Mark Beckwith, Margaret Dowling, and Jason Young's counties of residence are not alleged in the Petition.
List the California County, or State if other than California, in which EACH named defendant resides. (Use an additional sheet if necessary).
D Check here if the U.S. government, its agencies or employees is a named defendaot. Respondents Sandra Shewry and the California Department of Health Care Services are located in Sacramento County, but have offices in Los Angeles County.
List the California County, or State if other than California, in which EACH claim arose. (Use an additional sheet if necessary) Note: In land condemnation cases, use the location ofthe tract of land involved
The Petition was filed in Los Angeles County Superior Court.

Notice to Counsel/Parties: The CV-71 (JS-44) Civil Cover Sheet and the inform tion ontained herein neither replace nor supplement the filing and service ofpleadings or other papers as required by Jaw. This form, approved by the Judicial Conference o the United States in September 1974, is required pursuaot to Local Rule 3-1 is not filed but is used by the Clerk ofthe Court for the purpose of statistics, venue and initiating the civil docket sheet. (For more detailed instructions, see separate instructions sheet.)

Key to Statistical codes relating to Social Security Cases: Nature of Suit Code Abbreviation Substantive Statement of Cause of Action

861

FilA

All claims for health insurance benefits (Medicare) under Title I8, Part A, ofthe Social Security Act, as amended.

Also, include claims by hospitals, skilled nursing facilities, etc., for certitlcation as providers of services under the

program. (42 U.S.C. 1935FF(b))

862

BL

All claims for "Black Lung" benefits under Title 4, Part B, of the Federal Coal Mine Health and Safety Act of 1969.

(30 u.s.c. 923)

863

DIWC

All claims filed by insured wolkers for disability insurance benefits under Title 2 of the Social Security Act, as

amended; plus all claims filed for child's insurance benefits based on disability. (42 U.S.C. 405(g))

863

DIWW

All claims filed for widows or widowers insuraoce benefits based on disability under Title 2 of the Social Security

Act, as amended. (42 U.S.C. 405(g))

864

SSID

All claims for supplemental security income payments based upon disability filed under Title 16 of the Social

Security Act, as amended.

865

RSI

All claims for retirement (old age) and survivors benefits under Title 2 of the Social Security Act, as amended. (42

u.s.c. (g))

CV-71 (07/05)

CIVIL COVER SHEET

Page 2 of2

Case 2:08-cv-03315-CAS-MAN Document 1 Filed 05/19/08 Page 7 of 7 Page ID #:7

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003/003 BATCH

-CA DOJ/LA B&T HEW SECTION-

~~~*~ UF-8000 V2 ~~*~~**~~~~~*~***** -9TH FLOOR NORTH - ****~ -

2138972672- **~~*~~~~

EDMUND G. BROWN JR. Attorney GeneNzl

State of California DEPARTMENT OF JUSTICE

FAX TRANSMISSION COVER SHEET
IMPORTANT/CONFIDENTIAL: This communication is intended only ·tor the YSe of the individYal or entity tow~ <~:h it is
addressed. This message contains information from the State ol Cslllornle. Attorney General's Office, which m;,y be privileged, confidential, and exempt from disclosure under applicable law. II the reader of this communication is not the ir 1:onded recipient, you are hereby notified that any dissemination. distribution. or copying of this communication is strlclly prohiblte·:l.

DArE: May 19, 2008

TIME: 1:25 PM

TO: NAME: OFFICE: LOCATION: FAX NO.:

Lynn S. Carman Medicare Defense Fund 28 Newport Landing Drive (415) 499-1687

PHONE NO.:

NO. OF PAGES: ~-:---:--
(Including Fax Ccver Sheet)

FROM:
NAME:

Jin S. Nam, Legal Secretary to SARA UGAZ, Deputy Attorney c:::~_n_e_ra_l_ __

OFFICE:

LOCATION: Los Angeles

-------------------------------------------------------1-1-"1'_1·'----- FAX NO.:

(213) 897·2805

PHONE NO.: (213) 897-2461

M1ESSAGEnNSTRUCTI'ONS

____ _

Re: lndepen1:Jent Living Ctr. of So. Cal. et al. v. DHCS; USDC Case No. TBO

Please see attached document:

RESPONDENTS' NOTICE OF INTERESTED PARTIES

•Hard copies sent via Overnight Delivery

PLEASE DELIVER AS SOON AS POSSIBLE FOR ASSISTANCE WITH THIS FAX, PLEASE CALL THE SENDER

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 1 of 92 Page ID #:8
EXHIBIT - A

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 2 of 92 Page ID #:9

LYNN S. CARMAN, State Bar 028860 Medicaid Defense Fund 2 28 Newport Landing Dr. Novato, CA 94949-8214 3 Telephone: (415) 927-4023 Facsimile : (415) 499-1687 4 STANLEY L. FRIEDMAN, State Bar 120551 5 445 S. Figueora St., 27th Floor Los Angeles, CA 90071-1631 6 Telephone: (213) 629-1500 Facsimile: (213) 489-6899 7 Attorneys for Petitioners Independent Living Center 8 of Southern California. Inc.; Gray Panthers of Sacramento; The Gray Panthers of San Francisco; Gerald Shapiro, 9 Pharm.D., dba Uptown Pharmacy & Gift Shoppe; Sharon Steen, dba Central Pharmacy; Mark Beckwith; 10 Margaret Dowling; Tran Pharmacy, dba Tran Pharmacy; and Jason Young 11
SUPERJOR COURT OF THE STATE OF CALIFORNIA 12
IN AND FOR THE COUNTY OF LOS ANGELES, UNLIMITED JURJSDICTION
13

14 INDEPENDENT LIVING CENTER OF SOUTHERN

No. BS 114459

CALIFORNIA, INC., a nonprofit corporation; GRAY

15 PANTHERS OF SACRAMENTO, a nonprofit

corporation; THE GRAY PANTHERS OF SAN

Date: June 5, 2008

16 FRANCISCO, a nonprofit corporation; GERALD

Time: 9:30a.m.

SHAPIRO, Pharm.D., doing business as Uptown

Dept.: 85

17 Pharmacy and Gift Shoppe; SHARON STEEN, doing

Judge: Hon. James C. Calfant

business as Central Pharmacy; MARK BECKWITH;

18 and MARGARET DOWLING; TRAN PHARMACY,

INC., a corjJoration, doing business s Tran Pharmacy;

19 and JASON YOUNG,

PETITIONERS' MEMORANDUM

Petitioners,

IN SUPPORT OF WRIT OF

20 -vs.-

MANDAMUS, OR IN THE

SANDRA SHEWRY, Director of Department of Health ALTERNATIVE, FOR

21 Care Services ofthe State of California; DEPARTMENT PERMANENT OR

OF HEALTH CARE SERVICES, a department of the PRELIMINARY INJUNCTION

22 State of California; and DOES 1 through 50,

23

,_ _ _ _ _ _ _ "_ _ _ __

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 3 of 92 Page ID #:10

TABLE OF CONTENTS

2

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF

MANDAMUS , OR IN THE ALTERNATIVE, PERMANENT INJUNCTION

3

DISCUSSION

3

4

Legislative History of Assembly Bill X3 5

4

5

Comment and ultimate factual finding

6

6

Ultimate finding of fact, conclusion oflaw, and reliefto be issued.

7

7

FURTHER DISCUSSION

9

8 1. Courts, in reviewing the setting of Sec. 30(A) rates, use the

9

"arbitrary and capricious" standard of review. Thus, if the

9

State fails to adequately consider provider costs or any other

factor which bears on whether the rates are consistent with

10

quality and access, the rate is void ab initio; all, without necessity for the plaintiff to also show that it is likely that the

new rates will negatively impact quality of care or access to

11

quality care.

12

Conclusion

10

13 2. 14 15 16
3. 17 18

The Supremacy Clause has always been a shield against state action against

10

Medicaid beneficiaries and providers, which is contrary to and hence preempted

by provisions of the Medicaid Act, such as, especially, Sec. 30(A).

Conclusions on sub-point

12

FURTHER DISCUSSION OF STANDING TO SUE, AND INJURY 13

Next. The plaintiffs each sue, as authorized by Green v. Obledo, 29 Cal.3d

14

(1981 ), on the own behalf and on behalf of the public, to procure performances

of public duty by public officials; hence need now show they have any legal or

special interest in the result.

19 4. 20 21

Clayworth, 295 F.Supp.2d at 1117-1119, ruled that provider and beneficiary

14

associations have prudential standing to assert the interests of their patients or

members. Under the view of these rulings, the plaintiff pharmacies, the

ILSCal, and the San Francisco Gray Panthers may, on a prudential basis,

assert the interests of their patients, clients, or members (as the case may be),

in the within proceeding.

22 Injury

14

23 Summary, and relief requested

15

24

-1-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 4 of 92 Page ID #:11

TABLE OF AUTHORITIES 2

3

Amisub (PSL), Inc. v. Colorado Dept. of Soc. Ser.

9

4 879 F.2d 789 (1Oth Cir.1989)

5 Arkansas Medical Society, Inc. v. Reynolds 6 F.3d519 (8th Cir.l998)
6
Clayworth v. Bonta 7 295 F.Supp.2d 1110 (E.D.Cal.2003)

9 8,passim

8 Ex parte Young 209 U.S. 123, S.Ct. 441, 52 L.Ed. 714 (1908)
9 Green v. Obledo
10 29 Cal.3d 126 (1981)
11 Harmony Nursing Homes, Inc. v. Anderson 341 F.Supp. 957, 958 (D.Minn.l972)
12
National Credit Union Adm. v. First National Bank & Trust Co.
13 522 u.s. 47 (1998).
14 Orthopaedic Hospital v. Belshe

3,passim 13 11 12
5,passim

15 103 F.3d 1491 E.D.Cal.2005).

16 Pharmaceutical Research and Manufacturers of America (PllRMA) v. Concannon 11-12

17 249 F.3d 66 (1st Cir.2001).

18 Sanchez v. Johnson

9

416 F.3d 1051 (2005)

19

Wisconsin Hospital Assn. v. Reivitz

10

20 735 F.2d 1226, 1227 (71h Cir.)

21

Constitutions

22 Supremacy Clause, (article VI, cl. 2, U.S. Constitution

l,passim

23

24

-ii-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 5 of 92 Page ID #:12

1
2 Statutes
3 California
4 Code Civ. Proc.
5 § 1021.5

TABLE OF AUTHORITIES (Cont.)

6 Welf. & Inst. Code

14105.19

7

Subds. (a), (b)(l), (b)(2), and (c)- (g)

8 § 14166.245

9 Chapter 3, Statutes 2007-2008 Third Extraordinary Session

10 Assembty Bill X3 5:

Sec. 14

11

" 15

" 16

12

" 17

13

Federal

14

42 U .S.C.:

15

§ 1396a, subd. (a)(30)(A):

- quality of care clause

16

- equal access clause

§ 1983

17

18 Authorities

19 Floor Analysis (Assembly Budget Committee)
20

21

22

23

24

-iii-

15
2,passim 2,passim
2
2,passim 2,passim
6 6
2,passim 2,passim 2,passim
9
5

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 6 of 92 Page ID #:13

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS, OR IN THE ALTERNATIVE, PERMANENT INJUNCTION
2
Petitioners ("plaintiffs") Margaret Dowling; Mark Beckwith; Gerald Shapiro, Pharm.D., 3
dba Uptown Pharmacy and Gift Shoppe; Sharon Steen, dba Central Pharmacy; Tran Pharmacy, 4
Inc, dba Tran Pharmacy; the Independent Living Center of Southern California, Inc.; and The Gray 5
Panthers of San Francisco, ("San Francisco Gray Panthers"), -- file this Memorandum in support 6
7 of their motion for peremptory writ of mandamus, or in the alternative, a permanent or preliminary
8 injunction, in the First Cause of Action only, to restrain the respondents Department of Health
9 Services and its Director, Sandra Shewry, as set forth below.1

10

--ooOOoo-

11

This is a Supremacy Clause preemption case}

12

The movant petitioners are:

--two Medi-Cal recipients who are in Medi-Cal fee-for-service;'

13

--three pharmacies who are providers in Medi-Cal fee-for-service;3

--an independent living center whose disabled clients are Medi-Cal fee-for-service;4

14

15

1 The petitioners Gray Panthers of Sacramento, and Jason Young, are not moving parties in

this within motion. 16

2 The Supremacy Clause (article VI, cl. 2 of U.S. Constitution) provides: 17

"This Constitution, and the laws of the United States which shall be made in pursuance

18

thereof, ... shall be the supreme law of the land; and the judges of every state shall be

bound thereby, anything in the Constitution or laws of any State to the contrary,

19

notwithstanding."

20

3 Gerald Shapiro, Pharm.D., owner of Uptown Pharmacy in Los Angeles;

Sharon Steen, copartner in a copartnership which owns Central Pharmacy in Santa Monica; 21 Tran Pharmacy, Inc., owner ofTran Pharmacy, Inc, in Garden Grove.

22

4 Independent Living Center of Southern California, Inc., ("ILCSCal"), who annually

assists and advocates for 7,500 disabled persons, who are mostly SSI recipients who receive

23 their health care from Medi-Cal fee-for-service.

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 7 of 92 Page ID #:14

--the San Francisco Gray Panthers which has several members in Medi-Cal fee-forservice. 2 They seek peremptory writ of mandamus under§ 1085 Code Civ. Proc. (or in the alternative, a 3 permanent or preliminary injunction), in the First Cause of Action only, to order the California
4 Department of Health Care Services ("DHCS") and Sandra Shewry, its Director, to set aside their
5 policy to implement, and to refrain from implementing a 10% across-the-board cut in

6 reimbursement paid by the Medi-Cal program to providers in the Medi-Cal fee-for-services

7 program, fordates of service on and after July l, 2008; --all, as provided in subds. (a), (b)(l),
8 (b)(2), and (c) - (e) of § 14105.19 Welf. & Inst. Code; and § 14166.245 Welf. & Inst. Code, --
9 which were part of Sections 14 and 15 Assembly Bill X3 5, which was enacted Feb. 16,2008.5
Movants shall refer to these provisions, (subds. (a), (b)(1 ), (b)(2), and (c) - (e) of§ 10
14105.19 Welf. & Inst. Code; and§ 14166.245 Welf. & Inst. Code), collectively, as the "FFS 11
Payment Statutes."6 12
However, the FFS Payment Statutes violate the below federal statutes, so as to be 13
preempted, -- due to the Supremacy Clause, -- by the below preempting federal statutes; namely: 14
-the "quality of care" clause of subd. (a)(30)(A) of 42 U.S.C. § 1396a, --herein, "Sec. 15
II 16
II 17
II 18

19 5 Assembly Bill X3 5 was chaptered as Chapter 3, Statutes of2007-2008 Third
20 Extraordinary Session.

21

6 A copy of Sections 14 and 15 of Assembly Bill X3 5, which contain the FFS Payment

Statutes-- (namely, subds. (a), (b)(l), (b)(2), and (c)- (e) of§ 14105.19 Welf. & Inst. Code; and

22 § 14166.245 Welf. & Inst. Code) -- is attached as Exhibit A to this brief.

Petitioners have requested judicial notice of the FFS Payment Statutes, in Paragraph A of

23 Petitioners' Request for Judicial Notice in Support ofPetition for Writ of Mandamus and Other

Relief, ("RJN"), filed herewith.

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 8 of 92 Page ID #:15

30(A);7 and,

2

- the "equal access" clause of Sec. 30(A),8

3 and, as the inevitable result, (1) each of the two movant Medi-Cal recipients, (Dowling and

4 Beckwith), the pharmacy plaintiffs, the plaintiff Southern California Independent Living Center,

5 Inc. ("ILCSoCal"), and the plaintiff Gray Panthers of San Francisco ("Gray Panthers"), as well as

6 (2) the patients, clients, and members of the plaintiff pharmacies, ILCSCal, and Gray Panthers

7 (who are their prudential jus tertii representatives), as well as millions of other Medi-Cal

8 beneficiaries receiving health care in the Medi-Cal fee-for-service program, will be injured or put

9 at risk of injury by implementation of the 10% provider payment cuts to Medi-Cal fee-for-service

10 providers, under the federally preempted FFS Payment Statute; -- all as set forth later in this

11 brief, and, in their declarations filed herewith.

12

See, generally, Ex Parte Young, 209 U.S. 123 (1908).

13

DISCUSSION

14

The FFS Payment Statutes of Assembly Bill 3X 5 were enacted by a legislative history

15 replete with gubernatorial and legislative declarations which identify the bill as a pure budget

16 7 The "quality of care" clause of Sec. 30(A) provides in relevant part:

17 "(a) A state plan for medical assis~ance must- (30)(A) provide such methods and

18

procedures relating to the ... payment for, care and services available under the

plan ... as may be necessary ... to assure that payments are consistent with

19

efficiency, economy, and quality of care ... "

20

8 The "equal access" clause of Sec. 30(A) provides in relevant part:

21 22 23 241---

"(a) A state plan for medical assistance must- (30)(A) provide such methods and procedures relating to the ... payment for, care and services available under the the plan ... as may be necessary ... to assure that payments ... are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area."
PETITIONERS' MEMORANDUM .IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 9 of 92 Page ID #:16

reducing measure, not, any measure in respect to which the Legislature, the Lord forbid, might

2 engage in any inquiry or consideration of whether the 10% reduced payments would be sufficient

3 to assure that payments are consistent with quality of care, and with beneficiary equal access to

4 quality care, as absolutely required by Sec. 30(A).

5

LEGISLATIVE HISTORY OF ASSEMBLY BILL X3 5

6

1. On January 10, 2008, the Governor proclaimed a State fiscal emergency, sent a

7 proposed 2008-09 budget bill to the Legislature, and called the Legislature into special 8 session.9 10

9

2. On February 4, 7, and 15, 2008, Assembly Bill X3 5, a health budget trailer bill

10 was introduced, then amended to include the FFS Payment Statutes in Sections 14 and 15, 11 and was.enacted on February 16, 2008.ll 12

12

3. A copy of the FFS Payment Statutes of Assembly Bill X3 5 is set forth in Exhibit

13 A attached to this Memorandum; and is also set forth as Exhibit A of petitioners' RJN.

14

4. When Assembly Bill X3 5 was scheduled for final vote, the Assembly Floor

15 Analysis of the Assembly Budget Committee informed legislators that the Governor's original

16 proposal to commence the 10% Medi-Cal provider cut in June 2008, was postponed, in Assembly

17 Bill X3 5, to commence in July 2008. The analysis explained:

18

19

9 Governor's website, Jan. 10, 2008. (A download copy is set forth in Exhibit F ofRJN.)

20

10 A copy of the Governor's fiscal emergency proclamation is set forth in Exhibit B of

Petitioner's Request for Judicial Notice in Support of Writ ofMandamus and Other Relief,

21 ("RJN").

A copy of the Governor's special session proclamation is set forth in Exhibit C ofRJN. 22
11 Bill Documents of Assembly Bill 3X 5, set forth in Exhibit D ofRJN.

23 12 Bill Documents, (Exhibit D of RJN).

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 10 of 92 Page ID #:17

"The primary purpose of the delay of the reduction until the start of the new fiscal year is

to allow time for further review of provider rates during the regular budget process to

2

identify any particularly critical consequences of the reduction and to evaluate the

possibility of using a more refined approach to mitigate those consequences while still

3

achieving savings." (Boldface emphasis supplied.)13

4 As, in Alice in Wonderland, sentence first, verdict afterwards. Thus, in the rush to cut provider

5 . rates 10%, the Legislature here articulated its conscious and deliberate purpose to postpone and

6 refrain from considering, before the bill was enacted, the effect of the 10% payment cut and

7 whether the cut was consistent with quality of care and beneficiary access to quality care.

8

(But, this violated Sec. 30(A), which requires that a State consider all factors which relate

9 to whether a proposed Medicaid rate is consistent with quality and with recipient access~ before a

10 new rate is promulgated. See, Orthopaedic Hospital v. Belshe, 103 F.3d 1491, 1500 (9th

11

Cir.1997),

which

is

a

very

strong

case

on

this

point.

14 )

12

5. The Legislature, within the four comers of Assembly Bill X3 5 itself, also

13 repeatedly articulated that the Legislature's purpose in the bill was to reduce the State budget.

14

6. Thus, Sec. 14 of Assembly Bill X3 5 added§ 14105.19 to the Welf. & Inst. Code,

15 to provide:

16

"(a) Notwithstanding any other provision oflaw, in order to implement changes in the

level of funding for health care services, the director shall reduce provider payments as

17

specified in this section." (Emphasis supplied.)

18 This is an admission by the Legislature that the purpose ofthe I 0% Medi-Cal provider cut in

19 Section 14 of Assembly Bill X3 5, was to implement the Governor's budget reductions in the

20 fiscal 2008-09 budget bill, (not, to consider whether the cuts would affect quality of services or

21 beneficiary access to quality services).

22 13 Page 1 of Assembly Floor Analysis for Third Reading. (Exhibit E ofRJN.)

23 14 This point will be later more fully addressed.

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 11 of 92 Page ID #:18

1

7. Then, Section 15 of Assembly Bill X3 5, --which imposes the 10% cut in Medi-

2 Cal payments to non-contract hospitals, -- added §141 05.245, subd. (a) to Welf. & Inst. Code, to 3 expressly provide

4

"(a) The Legislature finds and declares that the state faces a fiscal crisis that requires

unprecedented measures to be taken to reduce General Fund expenditure to avoid

5

reducing vital government services necessary for the protection of the health, safety, and

welfare of the citizens of the State of California." (Emphasis supplied.)15 6

7

8. Also, Sec. 16 of Assembly Bill X3 5 expressly provides:

8

"SEC. 16. This act addresses the fiscal emergency declared by the Governor

by proclamation on January 10, 2008, pursuant to subdivision (f) of Section 10 of

9

Article IV of the California Constitution." (Emphasis supplied.Y6

10

9. And, Section 17 of Assembly Bill X3 5 expressly provides:

11

"SEC. 17. . .. In order to make statutory changes needed to implement cost

containment measures affecting health services, at the earliest possible time, it is

12

necessary that this act take effect immediately." (Emphasis supplied.) 17

13

Comment and ultimate factual finding

14

It is manifest from the legislative history that the conclusive factor in enacting the FFS

15 Payment Statutes, in Sections 14 and 15 of Assembly Bill X3 5, complained of, was not whether

16 the Legislature could assure that the new rates were consistent with quality and access, as

17 required by Sec. 30(a), but, rather, were solely budgetary considerations. 18

19

20

15 Section 15 of Assembly Bill X3 5 is set forth in Exhibit A attached t-o this brief, and, in

Exhibit A of petitioners' RJN.

21 16 Section 16 of Assembly Bill X3 5 is set forth in Exhibit A attached to this brief, and, in

22 Exhibit A of petitioners' RJN.

23

17 Section 15 of Assembly Bill X3 5 is set forth in Exhibit A attached to this brief, and, in

Exhibit A of petitioners' RJN.

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

-6-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 12 of 92 Page ID #:19

Ultimate finding of fact, conclusion of law, and relief to be issued

2

From the above legislative history of Assembly Bill X3 5, including:

3

- the Assembly Budget Committee told Assembly members in February 2008 that they

4

should first pass the cuts now, then take time, only later, to determine the effect of their

5

action;

6

7

-the four declarations in Sections 14, 15, 16, and 17 of Assembly Bill X3 5, that,

8 essentially, the Legislature was enacting these provisions for budgetary reasons, only,

9 because of the need to cut State expenditures; and,

10

11

- the context which surrounds the bill, namely, that the 10% rate cut was enacted within

12 37 days from the Governor's proclamation that the State's economic sky was falling, and

13 that an unprecedented budget shortfall required the Legislature to drastically reduce State

14 spending, it follows that the Legislature, in enacting the 10% Medi-Cal cut in payments to fee-

lS for-service providers in and by the FFS Payment Statutes,-- (i.e., subds. (a), (b)(1), (b)(2), and (c)

16 -(e) of § 14105.19 Welf. & Inst. Code; and§ 14166.245 Welf. & Inst. Code, which are part of

17 Sections 14 ands 15 of Assembly Bill X3 5), -- (1) did so solely for budgetary reasons; (2)

18 without consideration of the factors necessary to be considered to determine if the proposed new

19 rates were consistent with quality of care and access to services; and, that (3) the conclusive

20 factor in the decision of the Legislature to make these cuts was budgetary considerations.

21

Hence, such action of the Legislature to promulgate the FFS Payment Statutes of

22 Assembly Bill X3 5, --as well as the respondent DHCS and the Director's policy and action to

23 implement these measures, -- were and are arbitrary and capricious, and contrary to law; namely,

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 13 of 92 Page ID #:20

in violation of the aforesaid quality and access clauses of Sec. 30(A); so as to be thereby

2 preempted, under the Supremacy Clause, by Sec. 30(A).

3

Hence, an appropriate peremptory writ of mandamus (or in the alternative, a permanent

4 injunction), or at the very least, a preliminary injunction must be issued before July 1, 2008, to

5 order DHCS and its Director (1) to set aside their policy to implement the 10% payment cut of the

6 FFS Payment Statutes ofAssembly Bill X3 5, and (2) to refrain from implementing the same.

7

FURTHER DISCUSSION

8 1. 9 10 11 12

Courts, in reviewing the setting of Sec. 30(A) rates, use the "arbitrary and capricious" standard of review. Thus, if the State fails to adequately consider provider costs or any other factor which bears on whether the rates are consistent with quality and access, the rate is void ab initio; indeed, without any necessity for the plaintiff to show that it is likely that the new rates will negatively impact quality care or beneficiaries' access to quality care.

The case at bar is deja vu all over again. 13

In 2003 the Legislature enacted a prior bill to cut all Medi-Cal provider and managed care
14

payments 5% across-the-board for budgetary reasons; and declared in the bill, --just as in case at 15

bar, -- that it was enacted due to a budget shortfall, to implement reduction in funding for health 16

services. 17

In Clavworth v. Bonta, 295 F.Supp.2d 1110, 1126-1130 (E.D.Cal.2003), preliminary 18

injunction issued to enjoin the 5% rate cut in the Medi-Cal fee-for-service program, on the basis 19

that because budgetary considerations were the conclusive factor in enacting the cut, that the 20

action of the State to reduce Medicaid rates was arbitrary and capricious, in violation of the 21

requirement of Sec. 30(A) that a Medicaid rate setter must consider quality and access in setting 22

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 14 of 92 Page ID #:21

1 the rate. 18

2

The District Court in Clayworth concluded that the State's purpose in enacting the 5% cut

3 "was to reduce the budget shortfall," noting that "the statute declares on its face that the rate

4 reduction is ' [d]ue to the significant state budget deficit projected for the year," (id., 295 F.Supp.

5 at 1128), and held that:

6

"Budget constraints are not alone a valid justification for rate setting. See, Ark. Med.

Soc'y., 6 F3d at 531 ('Abundant persuasive precedent supports the proposition that

7

budgetary considerations cannot be the conclusive factor in decisions regarding

Medicaid,'); Orthopaedic Hosp., 103 F.3d at 1499, n.3;19 Amisub, 879 F.2 at 800-01."20

8

In analyzing Sec. 30(A) the District Court in Clayworth relied on Orthopaedic Hospital v. Belshe,

9

103 F.3d 1491, 1496-1497, 1500. The District Court noted that Orthopaedic Hosp. 103 F.3d at

10

1500, held that under the quality clause of Sec. 30(A) that there must be a reasonable relationship

11

between the rates set and providers' costs to provide quality care. (Clayworth, 295 F.Supp. at

12

1126.)

13

Further, this rule is procedural, (Clayworth, 103 F.3d at 1127): if the State does not

14

consider providers' costs, or cuts rates without any evidence that the cut can be sustained by

15

16

18 Note: The order for preliminary injunction in Clayworth was reversed in the 9th Circuit,

17 in a one-sentence order filed August 2, 2005, stating that the Sanchez v. Johnson, 416 F.3d 1051

(9th Cir.2005), holding that Congress did not intend, in 42 U.S.C. § 1983, to create any private

18 right of action in Medicaid beneficiaries or providers, compelled reversal of the Clayworth

preliminary injunction. (Copy of the 9th Circuit order is set forth in Exhibit G ofRJN.)

19

In sum, the 9th Circuit reversal of the Clayworth preliminary injunction did not overrule

or relate to any of the District Court's ruling in Clayworth, supra, other than the single

20 (erroneous) order of the District Court, to wit, that § 1983 afforded jurisdiction to the federal

comis to entertain challenges by Medicaid beneficiaries and providers to California's compliance

21 with Sec. 30(A), --which§ 1983 issue is irrelevant to any issue raised by plaintiffs in the case at

bar. 22
19 Arkansas Medical Society, Inc. v. Reynolds, 6 F.3d 519 (8th Cir.19983).

23 20 Amisub (PSL), Inc. v. Colorado Dept. of Soc. Ser., 879 F.2d 789 (1Oth Cir.1989).

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

~·---=9-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 15 of 92 Page ID #:22

providers, in light of their costs, without a loss of quality or equal access for Medi-Cal recipients,

2 (see, Clayworth, 295 F.Supp. at 1128), then the rate is held to be "arbitrary and capricious,"

3 contrary to Sec. 30(A), and hence void, without more. -- i.e., without any necessity for the

4 plaintiff to show that the rate is too low to enable providers to furnish quality services, or, that

5 insufficient providers will continue in the program. (Orthopaedic Hosp., 103 F.3d at 1500;

6 Clayworth, 295 F/Supp.2d at 1127.)

7

The basis for enjoining a Medicaid rate set arbitrarily and capriciously, without

8 consideration of provider costs or without consideration of quality or access at all, is that:

9

"(I)t is safe to assume that a rate that is set arbitrarily, without reference to the Sec. 30(A)

requirements, is unlikely to meet the equal access and quality requirements. Thus, a

1 0

beneficiary plaintiff may insist that the State, at a minimum, consider the effect of a rate

reduction on qual access to quality services in light of provider costs." Clayworth, 295

11

F.Supp.2d at 1127, citing Orthopaedic Hosp., 103 FJd at 1500.

12

Conclusion

13

One would have to believe in the tooth fairy, to believe on this legislative record that the

14 Legislature, -- in enacting the 10% provider rate, -- considered whether the reduced payments are

15 consistent with quality of services and access to quality services, or considered whether the

16 reduced payment amounts bear a reasonable relation to provider costs, (as required Sec. 30(A)

17 under the rulings of Orthopaedic Hosp., 103 F.3d at 1500, and Clayworth, 295 F.Supp. at 1117,

18 fu.6).

19 2. 20

The Supremacy Clause has always been a shield against State action, (1) which threatens to injure Medicaid beneficiaries and providers, and (2) is preempted, under the Supremacy Clause, by contrary provisions of the Medicaid Act,

21 In Wisconsin Hospital Assn. v. Reivitz, 735 F.2d 1226, 1227 (71h Cir.), a hospital
22 association and several hospitals had standing to sue to enforce Sec. 30(A), under the Supremacy
23

-----·:.-ro- 24 I-----=r=Er=Ir=Io=N=E=R=s,-=M=E=M-=o=RA-=N=o=u-::-M-:-:I-:-:-N-=-su:-:-:r=r-=-oR=-=r::-co=-=F:-:cw=ru=r=-co=-=F:-:-:cMANDAMUs AN DOT-HER RELIEF____

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 16 of 92 Page ID #:23

Clause.

2

In Harmony Nursing Homes, Inc. v. Anderson. 341 F. Supp. 957, 958 (D.Minn.1972), a

3 nursing home had standing to sue under the Supremacy Clause to restrain a state's"freeze" on

4 Medicaid payments to providers.

5

Also, the three pharmacy plaintiffs, the plaintiff ILCSCAL, and the plaintiff San

6 Francisco Gray Panthers have just as much or more a right, under the Supremacy Clause, to sue

7 to obtain a protective injunction, for themselves and the benefit of their Medi-Cal patients,

8 clients, or members, against the federally preempted 10% Medi-Cal provider cut, (due to its

9 violation of Sec. 30(A)), as did the pharmaceutical manufacturers association in Pharmaceutical

10 Research and Manufacturers of America (PhRMA) v. Concannon, (249 FJd 66 (1 51 Cir.2001) to

11 sue to enjoin state action, in violation of the Medicaid Act, injuring the manufacturers and the

12 Medicaid patients whom they prudentially represented.

13

In PhRMA, a pharmaceutical manufacturers association, -- not one of whose members

14 had any professional relationship with Medicaid beneficiaries,-- was readily afforded prudential

15 standing to sue under the Supremacy Clause to pre-empt a state statute enacted in violation of the

16 Medicaid Act.

17

I.e., all that is necessary to be a plaintiff in a Supremacy Clause claim, (Article VI, cl. 2,

18 Constitution), is a showing that the interests of the plaintiff are within the zone of interests

19 arguably to be protected by the federal statute. Thus PhRMA held, (249 F.3d 66, 72-74 (1 51 Cir.

20 2001):

21

"The initial question is whether PhRMA has prudential standing to challenge the prior

authorization provision of the Act. ... The Supreme Court recently reiterated the standard

22

for determining prudential standing:

23

In applying the 'zone of interests" test, we do not ask whether, in enacting the

24 I------=P=ET=IT=Jo::::N-::E=R=s·=M-=E=M-=o·=-R-=AN-=o=u-=M=l-=N-=su-=p=-=p=oR=T=-o=-=F=-=w-=ru=T=-o=-=F-=M-=A-=N=---DAMUS AND OT::-:H=ER:---:-:RE=,L-:--::IE=F-··----_.,-·1-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 17 of 92 Page ID #:24

statutory provision at issue, Congress specifically intended to benefit the plaintiff.

Instead, we first discern the interests 'arguably ... to be protected' by the statutory

2

provision at issue; we then inquire whether the plaintiffs interests affected by the

agency action in question are among them.

3 (National Credit Union Adm. v. First National Bank & Trust Co., 522 U.S. 479, 492

4

(1998).

5

PhRMA has not asserted an action to enforce rights under the Medicaid statute,

... but rather a preemption-based challenge under the Supremacy Clause. In this

6

type of action, it is the interests protected by the Supremacy Clause, not by the

preempting statute, that are at issue. [Citation.] As the Third Circuit recently pointed out,

7

an entity does not need prudential standing to invoke the protection of the Supremacy

Clause: 8

We know of no governing authority to the effect that the federal statutory

9

provision which allegedly preempts enforcement of local legislation by conflict

must confer a right on the party that argues in favor of preemption. On the

10

contrary, a state or territorial law can be unenforceable as preempted by federal

law even when the federal law secures no substantive right for the partv arguing

11

preemption.

12

Id. Thus, regardless of whether the Medicaid statute's relevant provisions were designed

to benefit PhRMA, PhRMA can invoke the statute's preemptive force....

13

Given that PhRMA has prudential standing grounded in the Supremacy Clause, we think

it may fairly assert the rights ofMedicaid recipients for purposes of this action. Where a

14

party has established a concrete injury in fact, and otherwise has standing to challenge the

lawfulness of the statute, it is 'entitled to assert those concomitant rights of third parties

15

that would be "diluted or adversely affected" should [its] constitutional challenge fail and

the statute remain in force.... " (Emphasis supplied.) 16

17

Conclusion on sub-point: It follows form this unbroken line of cases on the Supremacy

18 Clause, that Medicaid providers as well as beneficiaries are within the "zone of interests"

19 intended to be protected, by Congress, in enacting the Medicaid Act; especially, Sec. 30(A).

20

Thus both Medicaid beneficiaries and providers may sue, as in case at bar, to protect

21 against injury from state action which violates, and is hence preempted, under the Supremacy

22 Clause, by the Medicaid Act, (here, Sec. 30(A)).

23 Accordingly, the two Medi-Cal beneficiaries (Dowling and Beckwith) who obtain their

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

-12-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 18 of 92 Page ID #:25

Medi-Cal services in the Medi-Cal fee-for-service program, plus, the three Medi-Cal fee-for-

2 service phannacy plaintiffs, (the Uptown, Central, and Iran phannacies), are manifestly entitled,

3 under Supremacy Clause decisional law, to a writ of mandamus or injunction, in the First Cause

4 of Action, to enjoin the respondents from injuring them by implementing the 10% cut in

5 payments to Medi-Cal fee-for-service providers, under the FFS Payment Statutes, (namely,

6 subds. (a), (b)(l), (b)(2), and (c)- (e) of § 14105.19 Welf. & Inst. Code; and§ 14166.245 Welf.

7 & Inst. Code), enacted as part of Sections 14 and 15 of the Assembly Bill X3 5, which violate the

8 quality and access provisions of Sec. 30(A), --i.e., , 42 U.S.C.. § 1396a(a)(30)(A).

9 FURTHER DISCUSSION OF STANDING TO SUE, AND INJURY

10
3. 11
12

Next. The plaintiffs each sue, as authorized by Green v. Obledo, 29 Cal.3d 126 (1981), on their own behalf and on behalf of the public, to procure performance of public duty by public officials; hence, need not show they have any legal or special

13

It is sufficient, held Green, supra, that the plaintiff "is interested as a citizen in having the

14 laws executed and the duty in question enforce." (29 Cal.3d at 144-145.)

15

Thus each of the movant plaintiffs, -- who are citizens and residents of the State of

16 California as shown by their declarations, -- may sue in this case to enforce the public duty ofthe
17
respondent State officials to comply with the public duty,-- pursuant to the Supremacy Clause,--
18 to obey federal law where, as in case at bar, Sec. 30(A) preempts contrary state law, (here, the
19 10% Medi-Cal provider rate cut promulgated by subds. (a), (b)(1), (b)(2), and (c)- (e) of
20 § 14105.19 Welf. & Inst. Code; and§ 14166.245 Welf. & Inst. Code, (which are part of
21 Sections 14 and 15 of the Assembly Bill X3 5 ("Exhibit A attached).
22

23

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

-13-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 19 of 92 Page ID #:26

4. 2 3 4

Clayworth, 295 F.Supp.2d at 1117-1119, ruled that providers and beneficiary associations have prudenlial standing to assert the interests of their patients or members. Under the view of these rulings, the plaintiff pharmacies, the ILCSCal, and the San Francisco Gray Panthers may, on a prudential basis, assert the interests of their patients, clients, or members {as the case may be), in the within proceeding.
The interest of Medi-Cal beneficiaries,-- who are patients, clients, or members of

5 the two pharmacy plaintiffs, the ILCSCal, and the San Francisco Gray Panthers, -- is the interest

6 of not being injured from implementation of the 10% cut in payments to Medi-Cal provider in the

7 Medi-Cal fee-for-serve program, in violation of the federally pre-empted FFS Payment Statutes,

8 (namely, the aforesaid subds. (a), (b)(l), (b)(2), and (c)- (e) of§ 14105.19 Welf. & Inst. Code;

9 and § 14166.245 Welf. & Inst. Code, -- (which provisions are part of Sections 14 and 15

10 Assembly Bill X3 5, in Exhibit A attached).

11

As shown by the declarations of the CEO of the ILCSCal, and the co-chief of the San

12 Francisco Gray Panthers, filed herein, each of these beneficial or member organizations meet the

13 tests described by Clayworth, 295 F.Supp/2d at 1117-1119, for having prudential standing to
14 asse1i the rights of their clients or members who are Medi-Cal beneficiaries, in the case at bar.
15 Injury
16 Also, plaintiffs have introduced evidence of a severe shortage of dentists and of doctors
17 and specialists, which will be exacerbated by this newest 10% payment cut to fee-for-service
18
providers. Also, the declarations of the two movant Medi-Cal beneficiaries,-- Beckwith and 19
Dowling, the former a quadriplegic who requires oxygen and 8 attendants daily to stay alive, and 20
the latter a paraplegic with diagnosis of terminal rectal cancer,-- show they will be injured, and 21

22 are at severe risk for injury, pain and suffering, and of being forced into institutions, and of even

23 death, -- (as are thousands like them), -- from loss of their doctors and specialists, and access to

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

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Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 20 of 92 Page ID #:27

1 quality medical and pharmacy services, which will certainly occur if the 10% payment cut to

2 Medi-Cal fee-for-service patients, is not enjoined by a writ or injunction, which is requested..

3

Summary, and relief requested:

4

Petitioners request that the Court, based on the above Memorandum of facts and law, and

5 the facts of prospective severe injury to Medi-Cal fee-for-service recipients, (including the

6 plaintiffs Dowling and Beckwith), which are shown by the supporting declarations, order:

7

A. That a writ of mandamus be issued in the First Cause of Action under

8 § 1085 Code Civ. Proc., or in the alternative, a permanent injunction, (or at the very least, a

9 preliminary injunction), which orders the respondents Department of Health Care Services, and
10 its Director to set aside their policy to implement the FFS Payment Statutes,(namely, subds. (a),
11 (b)(l), (b)(2), and (c)- (e) of § 14105.19 Welf. & Inst. Code; and§ 14166.245 Welf. & Inst.
12 Code), which are part of Sections 14 and 15 of Assembly Bill X3 5, (Chapter 3, Statutes 2007-
13
2008 Third Extraordinary Session), and to refrain from implementing the 10% reduction of 14
payments to Medi-Cal fee-for-service providers specified in the aforesaid FFS Payment Statutes, 15

or any other reduction of payments to providers in the Medi-Cal fee-for-service program, for 16

17 dates of service on or after July 1, 2008, or at any other time..

18

B. That petitioners have costs of suit, plus reasonable attorneys' fees under § 1021.5

19 Code Civ. Proc, and such other and further relief as may be just.

20

Dated: May 12,2008.

Respectfully submitted,

21

22

23

24 --------;:P:;:::;ET:;::;IT;;::;:IO;::::;N:-;;E:;:::-.R;::::;S'7ME::;::;:-:M::::c0RAN;::-;-::-:;:::::D-:;-UM::-:-:::IN:-;S::-:UP=:P::-.::O:=RT=-o::::-:;F::-:cWRI=T:::-:O:::::F:-:-MAND-:-:-::-::=-AMU-:-:-::::::::S:-:AN~D-=o=m=E=R-=RE=L:-::IE::::F-:--------,-_15-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 21 of 92 Page ID #:28
Exhibit A

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 22 of 92 Page ID #:29
Assembly Bill No. 5
CHAPTER3
An act to amend Section 95004 ofthe Government Code, and to amend Sections 4640.6,4643,4648.4, 4681.3, 4681.5, 4691.6, 4781.6, and4783 of: and to add Sections 4681.6, 4689.8, 4691.9, 14041.1, 14105.19, and 14166.245 to, the Welfare and Institutions Code, relating to health, and declaring the urgency thereof: to take effect immediately.
[Approved by Govcmor February 16, 2008. Filed with Secretary of State February 16, 2008.]
LEGISLATIVE COUNSEL'S DIGEST
AB 5, Committee on Budget Public health programs. Under existing law, the State Department of Developmental Services provides funding for regional centers for the provision orpurchase ofservices and supports to persons with developmental disabilities. Existing law prescribes a specified ratio for regional center service coordinator to consumer, which is in effect until June 30, 2008. This bill would extend indefinitely the effective date of this ratio. Existing law provides for the assessment ofcertain individuals for whom benefits are provided by regional centers. Existing law provides that if assessment is needed, prior to July 1, 2008, the assessment shall be performed within 120 days following initial intake, and requires that assessments after that date shall be performed within 60 days following intake. This bill would extend indefinitely the 120-day assessment requirement. Existing law, with certain exceptions, for the 2007-08 :fiscal year, proln'bits a regional center from paying any provider ofspecified services a rate that is greater than the rate that is in effect on July 1, 2007, unless the increase is required by contract between the regional center and the vendor that is in effect on June 30, 2007. This bill would extend indefinitely this prohibition with respect to the payment ofrates in excess ofthose in effect on June 30, 2008. Existing law provides that, during the 2007-08 fiscal year, no regional center may approve any service level for a residential service provider. This bill would extend indefinitely this provision. It would also prohibit, commencing July 1, 2008, a regional center from negotiating rates with residential care providers, except as prescribed. Existing law requires the State Department of Developmental Services to make payments to providers of supported living services for adults with developmental dis~bilities. Under existing law, the department, by July 1, 2002, is required to establish, by regulation, an equitable and cost~effective
95

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 23 of 92 Page ID #:30

Ch.3

-2-

methodology for the determination of supported living costs and a methodology of payment for these providers.
This bill would, commencing July 1, 2008, impose prescnoedrate increase 'restrictions on reimbursement to these service providers and would also prohibit a regional center from negotiating rates with these providers, except
as prescribed. Existing law prolubits, during the 2007-08 fiscal year, the State
Department of Developmental Services from establishing any permanent payment rate for a community-based day program or in-home respite care agency that has a temporary payment rate in effect on July 1, 2007, or from making other specified changes or adjustments that would result.in a rate
increase. This bill would extend indefinitely this provision, and would apply it to
rates in effect June 30, 2008. It would also prohibit a regional center from negotiating rates with these providers, except as prescribed.
Existing law provides that, for the 2007-08 fiscal year only, a regional center shall not expend any purchase ofservice funds for the startup ofany new program unless the expenditure is necessary to protect the consumer's health or safety or because of other extraordinary circumstances and the·
department has granted prior written authorization.
This bill would extend indefinitely this prohibition.
Under existing law, the California Early Start Intervention Services Act,
various state entities provide coordinated services to infants and toddlers with disabilities and their families. Existing law requires early intervention services to be provided directly to eligtble infants and toddlers and their families through the regional center system and the local education system. Existing law requires that, in providing services under the act, regional
centers comply with the Lanterman Developmental Disabilities Services Act, and its implementing regulations, including, but not limited to, those
provisions relating to vendorization and ratesetting, except where compliance with those provisions would result in any delays in, or any cost to families for, the provision ofearly iritervention, or otherwise conflict with the act or its implementing regulations. Existing law, until July 1, 2009, also contains
family cost participation requirements for specified services obtained by
regional centers for persons with developmental disabilities.
This bill would extend indefinitely the family cost participation requirements, and would also require that, subject to federal approval, in providing those early intervention services under the Lanterman Developmental Disabilities Services Act, regional centers apply the family cost participation requirements that require families of children receiving early intervention services to contribute a specified amount to the cost of
those services based on family size and scaled income levels. It would also revise the family cost participation schedule and the procedures governing
how a parent may appeal a decision made by the executive director of a regional center, with respect to the amount ofthe parents' cost participation.

95

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 24 of 92 Page ID #:31

-3-

Ch.3

Existing law provides for the Medi-Cal program, administered by the State Department ofHealth Care Services, under which quali:fied low-income persons are provided with a variety of health services.
Existing law contains various provisions governing reimbursement rates
for Medi-Cal providers. This bill would, notwithstanding any other provision of law, and to the
extent not otherwise conflicting with federal law, authorize the department
to withhold, or direct the medical fiscal intermediary to withhold, payments for providers, as described, for a period of one month for a month ending
prior to January 1, 2009. Existing law creates various health programs, including the Child Health
and Disability Prevention Program, the California Children's Services Program, the Genetically Handicapped Person's Program, and specified
family planning programs. This bill would, with certain exceptions, for services rendered under these
programs on and after July 1, 2008, require the Director of Health Care Services to reduce provider reimbursement rates by 100/o.
The bill would specify that the reductions imposed pursuant to the bill would apply only to the General Fund share of the payment, and only to payments for services from funds appropriated to the department
Existing law establishes the Medi-Cal Hospital/Uninsured Care Demonstration Project Act, which revises hospital reimbursement methodologies under the Medi-Cal program in order to maximize the use of federal funds consistent with federal Medicaid law and· stabilize the distribution of funding for hospitals that provide care to Medi-Cal beneficiaries and uninsured patients. This demonstration project provides for funding, in supplementation of Medi-Cal reimbursement, to various hospitals, including designated public hospitals, nondesignated public hospitals, and private hospitals, as defined in accordance with certain
provisions relating to disproportionate share hospitals. This bill would reduce by 10% payments for inpatient hospital services .
to acute care hospitals not under selective contracts with the department that are provided on and after July 1, 2008.
The California Constitution authorizes the Governor to declare a fiscal emergency and to call the Legislature into special session for that purpose. The Governor issued a proclamation declaring a fiscal emergency, and calling a special session for this purpose, on January 10, 2008.
This bill would state that it addresses the fiscal emergency declared by the Governor by proclamation issued on January 10, 2008, pursuant to the California Constitution.
This bill would declare that it is to take effect immediately as an urgency statute.

95

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 25 of 92 Page ID #:32

Ch.3

-16-

SEC. 14. Sectio~ 14105.19 is added to the Welfare and Institutions Code,
to read:
14105.19. (a) Notwithstanding any other provision of law, in order to implement changes in the level of funding for health care services, the director shall reduce provider payments as specified in this section.
(b) (1) Except as provided in subdivision (c), payments shall be reduced by 10 percent for Medi-Cal fee-for.service benefits for dates of service on and after July 1, 2008.
(2) Except as provided in subdivision (c), payments shall be reduced by 10 percent for non-Medi-Cal programs descnoed in Article 6 (commencing with Section 124025) of Chapter 3 ofPart 2 ofDivision 106 ofthe Health and Safety Code, and Section 14105.18, for dates of service on and after July I, 2008.
(3) For managed health care plans that contract with the department
pursuant to this chapter, Chapter 8 (commencing with Section 14200), and Chapter 8.75 (commencing with Section 14590), payments shall be reduced

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 26 of 92 Page ID #:33

-17-

Ch.3

by the actuarial equivalent amount of the payment reduction specified in this subdivision pursuant to contract amendments or change orders effective on July 1, 2008.
(c) The services listed in this subdivision shall be exempt from the payment reductions specified in subdivision (b):
(1) Acute hospital inpatient services, except for payments to hospitals not under contract with the State Department of Health Care Services, as provided in Section 14166.245.
(2) Federally qualified health center services, including those :fu.cili.ties deemed to have federally qualified health center statns pursuant to a waiver under subdivision (a) ofSection 1315 ofTitle 42 ofthe United States Code.
(3) Rural health clinic services. (4) All ofthe following facilities: (A) A skilled nursing facility pursuant to subdivision (c) ofSection 1250 of the Health and Safety Code, except a skilled nursing facility that is a
distinct part ofa general acute care hospital. For purposes ofthis paragraph, "distinct part" has the same meaning as defined in Section 72041 of Title
22 of the California Code ofRegulations. (B) An intermediate care facility for the developmentally disabled
pursuant to subdivision (e), (g), or (h) of Section 1250 of the Health and Safety Code, or a facility providing continuous skilled nursing care to
developmentallydisabled individuals pursuantto the pilot project established by Section 14495.10.
(C) A subacute care unit, as defined in Section 51215.5 of Title 22 of the California Code ofRegulations.
(5) Payments to facilities owned or operated by the State Department of Mental Health or the State Department ofDeve1opmental Services.
(6) Hospice. (7) Contract services as designated by the director pursuant to subdivision
(e).
(8) Payments to providers to the extent that the payments are funded by means of a certified public expenditure or an intergovernmental transfer pursuant to Section 433.51 ofTitle 42 ofthe Code ofFederal Regulations.
(9) Services pursuant to local assistance contracts and interagency agreements to the extent the funding is not included in the funds appropriated to the department in the annual Budget Act.
(10) Payments to Medi-Cal managed care plans pursuant to Section
4474.5 for services to consumers transitioning fromAgnews Developmental Center into Alameda, San Mateo, and Santa Clara Counties pursuant to the Plan for the Closure ofAgnews Developmental Center.
(11) Breast and cervical cancer treatment provided pursuant to Section 14007.71.
(12) The Family Planning, Access, Care, and Treatment (Family PACT) Waiver Program pursuant to Section 141 OS .18.
(d) Subject to the exception for services listed in subdivision (c), the payment reductions required by subdivision (b) shall apply to the services rendered by any provider who may be authorized to bill for the service,

95

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 27 of 92 Page ID #:34

-19-

Ch.3

(e) Notwithstanding the rulemaking proVISions of Chapter 3.5
(commencing with Section 11340) ofPart 1 of Division 3 ofTitle 2 ofthe Government Code, the director may implement subdivision (b) by means
ofa provider bulletin, or other similar instruction, without taking regulatory
action. (f) The director shall promptly seek all necessary federal approvals in
order to implement this section, including necessary amendments to the
state plan.
SEC. 16. This act addresses the fiscal emergency declared by the Governor by proclamation on January 10, 2008, pursuant to subdivision (f) of Section 10 ofArticle IV of the California Constitution.
SEC. 17. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV ofthe Constitution and shall go into immediate effect. The facts
constituting the necessity are:
In order to make statutory changes needed to implement cost containment measures affecting health services, at the earliest possible time, it is necessary that this act take effect immediately.

0
95

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 28 of 92 Page ID #:35
EXHIBIT - B

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 29 of 92 Page ID #:C3M6-010

ATTORNEY OR PARTY WITHOUT ATTORNEY (Name, State Bar number, and address):

FOR COURT USE ONLY

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'2 <t;- !Y ~ /"' ~ &:r LA-N t? IN- 9 [) t2~

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FAX NO.: l( f
____

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SUPERIOR COURT OF CALIFORNIA, COUNTY OF
STREET ADDRESS:
MAILING ADDREss:

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Q
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1lA1' nQg\UeG\eS1N8A.I\".1' 1"\efi0f

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CITY AND ZIP CODE: BRANcH NAME:

C fZ- N ~ 14 L

~Ar1't\1\'1

") '
"-

':1QC~ l

q

Items 1-6 below must be completed (see instructions on page 2).

1. Check one box below for the case type that best describes this case:

Auto Tort
0 Auto (22) 0 Uninsured motorist (46)

Contract
D Breach of contracUwarranty (06) D Rule 3.740 collections (09)

Provisionally Complex Civil Litigation (Cal. Rules of Court, rules 3.400-3.403)
D Antitrust/Trade regulation (03)

Other PI/PD/WD (Personal Injury/Property Damage/Wrongful Death) Tort

D Other collections (09) 0 Insurance coverage (18)

D Asbestos (04)

0 Other contract (37)

0 Product liability (24)

Real Property

0 Medical malpractice (45) 0 Other PIIPD/WD (23)

0 Eminent domain/Inverse
condemnation (14)

Non-PI/PD/WD (Other) Tort

D Wrongful eviction (33)

D D Business tort/unfair business practice (07)

Other real property (26)

~Civil rights (08}
0 Defamation (13)
0 Fraud (16)

Unlawful Detainer
0 Commercial (31) D Residential (32)

0 Intellectual property (19)

0 Drugs(38)

0 Professional negligence (25)

Judicial Review

0 Other non-PIIPD/WD tort (35)

D Asset forfeiture (05)

Employment

0 Petition re: arbitration award 1 111

0 Wrongful termination (36)

0 Writ of mandate (02)

D Construction defect (10) D Mass tort (40)
r - l Securities litigation (28)
Environmental/Toxic tort (30)

Insurance coverage claims arising from the above listed provisionally complex case types (41)

Enf?rcement of Judgment -~ Enforcement of judgment (20)

Miscellaneous Civil Complaint

RICO (27)

Other complaint (not specified above) (42)

Mtscellaneous Civil Petition

,

Partnership and corporate governance (21)

_ Other petition (not specified above) (43)

0 Other employment (15)

0 Other judicial review (39)

U 2. This case

is L2:fis not complex under rule 3.400 of the Californ1a Rules of Court. If the case is complex, mark the

factors requiring excepfional judicial management:

D a.

Large number of separately represented parties

D d.

Large number of witnesses

D 0 b.

Extensive motion practice raising difficult or novel e.

Coordination with related actions pending in one or more courts

issues that will be time-consuming to resolve

D c.

Substantial amount of documentary evidence

in other counties, states, or countries, or in a federal court

D f.

Substantial postjudgment judicial supervision

D 3. Remedies sought (check all that apply): a.D monetary b.~nmonetary; declaratory or injunctive relief c.

punitive

(TYPE OR PRINT NAME)

NOTICE • Plaintiff must file this cover sheet with the first paper filed in the action or proceeding (except small claims cases or cases filed
under the Probate Code, Family Code, or Welfare and Institutions Code). (Cal. Rules of Court, rule 3.220.) Failure to file may result
in sanctions. • File this cover sheet in addition to any cover sheet required by local court rule. • If this case is complex under rule 3.400 et seq. of the California Rules of Court, you must serve a copy of this cover sheet on all
other parties to the acf1on or proceeding. • Unless this is a collections case under rule 3.740 or a complex case, this cover sheet will be used for statistical purposes onlv.
f5ae1of2

Form Adopted for Mandatory Use
-··-·-·- Judicial Council of C'ali..f.o...r..n.-i.a

CIVIL CASE COVER SHEET

Cat Rules of Court. rules 2.30, 3.220, 3.400-3.403. 3. 740; Cal. Standards of Judicial Administration. std. 3.10

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 30 of 92 Page ID #:37
EXHIBIT - C

r
Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 (Page 31 of 92 Page ID #:38

T SHORT TITLE: h 5ov(i.e v-i'\

CIVIL CASE COVER SHEET ADDENDUM AND STATEMENT OF LOCATION CERTIFICATE OF GROUNDS FOR ASSIGNMENT TO COURTHOUSE LOCATION

This form is required pursuant to LASC Local Rule 2.0 in all new·civil case filings in the Los Angeles Superior Court.

Item I. Check the types of hearing and fill in the estimated length of hearing expected for this case:

.3 JURY TRIAL? D YES CLASS ACTION? DYES LIMITED CASE? DYES TIME ESTIMATED FOR TRIAL

0 HOURS;

AYS

Item II. Select the correct district and courthouse location (4 steps- If you checked "Limited Case", skip to Item Ill, g. 4):

Step 1: After first completing t.he Civil Case Cover Sheet Form, find the main civil case cover sheet heading for your case in

the left margin below, and, to the right in ColumnA, the Civil Case.Cover Sheet-case type you selected.
Step 2: Check one Superior Court type of action in Column B below which best describe:; the nature of this case.

Step 3: In Column C, circle the reason for the court location choice that applies to the type of action you have checked. For any exception to the court location, see Los Angeles Superior Court Local Rule 2.0.

Applicable Reasons for Choosing Courthouse Location (see Column C below)

1. Class Actions'must be filed in·the Stanley Mask-Courthouse, Cer:~trai:District. 6. Location otproperty ocpermanently_gar~:~ged vehicle.

2. May be filed in Central :(Other county, or no Bodily Injury/Property Damage).

7. Location where petitioner resides.

3. Location where cause of action arose.

8. Location wherein·defendantlrespondent functions wholly.

4. Location where bodily injury, death or damage occurred.

9. Location where one or more of the parties reside..

5. Location where perforf!lance required or defendant resides.

10. Location-of Labor Commissioner Off1ce.

Step 4 : Fill in the information requested on page 4 in Item Ill; complete Item Iv Sign the declaration.

A

B

Civil Case Cover Sheet Type of Action

t::

Category No.

(Check only one)

0

1-

Auto (22)

0

0 A7100 Motor Vehicle Personal Injury/Property Damage/Wrongful Death

'5

<(

Uninsured Motorist (46) 0 A7110 Personal Injury/Property Damage/Wrongful D!l!'llh- Uninsured Motorist

c
Applicable Reasons • See Step 3 Above
1., 2., 4.
1.. 2.,4.

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Asbestos (04)
Product Liability (24)
Medical Malpractice (45)
Other Personal Injury Property Damage Wrongful Death
(23)

o· Mo7o Asbestos Property Damage
0 A7221 Asbestos Personal Injury/Wrongful Death ...
0 A7260 Product Liability (not asbestos or toxic/environmental)
0 A7210 Medical Malpractice - Physicians & Surgeons 0 A7240 Other Professional Health Care Malpractice
0 A7250 Premises Liability (e.g., slip and fall) 0 A7230 Intentional Bodily Injury/Property Damage/Wrongful Death (e.g.,
assault, vandalism, etc.)
0 A7270 Intentional Infliction of Emotional Distress D A7220 Other Personallrijury/Property Damage/Wrongful Death

2. 2.
.. 1., 2., 3., 4., 8.
1., 2., 4. 1., 2., 4.
1., 2., 4.
1., 2., 4. 1., 2., 3. 1., 2., 4.

Business Tort (07)

Civil Rights (08)

;:.,

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lS1l::Qc.!.

0
(/)

,0_

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Defamation (13) Fraud (16)

LACIV 109 (Rev. 01/07) LASC Approvec 03-0L

D A6029 Other Commercial/Business Tort (not fraud/breach of contract)
~6005 Civil Rights/Discrimination
0 A6010 Defamation (slander/libel) 0 A6013 Fraud (no contract)

CIVIL

CASE

C

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V

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"

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E.

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T

ADDENDUM

AND STATEMENT OF LOCATION

1., 2., 3.
1(!).
1., 2., 3. 1.. 2.. 3.
LASC, rule L'.O Page 1 o·f 4

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 32 of 92 Page ID #:39

't: r q-/ SHORT TITLE: ]
lo~r1fl'"t

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( [( /l.l' y, h ( c,

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CASE NUMBER

j /pV\ ...IY (f

A
Civil Case Cover Sheet Category No.

Writ of Mandate
(02)
Other Judicial Review (39)

X
Q)
0.. E
0 t: (,) 0
'->cit:,:i:::C::r::o::l
0 ·-
··;(;-/:) ..J
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Antitrust/Trade Regulation (03)
Construction Defect (10)
Claims Involving Mass Tort (40)
Securities Litigation (28)
Toxic Tort Environmental (30) Insurance Coverage Claims from Complex
Case (41)
Enforcement of Judgment
(20)

B
Type of Action (Check only one)
0 A6151 Writ Administrative Mandamus 0 A6152 Writ - Mandamus on Limited Court Case Matter 0 A6153 Writ - Other Limited Court Case Review
0 A6150 Other Writ /Judicial Review
0 A6003 AntitrusVTrade Regulation
0 A6007 Construction defect
0 A6006 Claims Involving Mass Tort
0 A6035 Securities Litigation Case
-
0 A6036 Toxic Tort/Environmental
0 A6014 Insurance Coverage/Subrogation (complex case only)
0 A6141 S~ster State_ Judgment 0 A6160 Abstract of Judgment 0 A6107 Confession of Judgment (non-domestic relations) 0 A6140 Administrative Agency Award (not unpaid taxes) 0 A6114 Petition/Certificate for Entry of Judgment on Unpaid Tax 0 A6112 Other Enforcement of Judgment Case

RICO (27}
Other Complaints (Not Specified Above)
(42) Partnership Corporation
Govemance(21}
Other Petitions (Not Specified Above)
(43)

0 A6033 Racketeering (RICO) Case
0 A6030 Declaratory Relief Only 0 A6040 Injunctive Relief Only (not domestic/harassment) 0 A6011 Other Commercial Complaint Case (non-tort/non-complex} 0 A6000 Other Civil Complaint (nonctort/non-complex)
0 A6113 Partnership and Corporate Governance Case
0 A6121 Civil Harassment 0 A6123 Workplace Harassment 0 A6124 Elder/Dependent Adult Abuse Case 0 A6190 Election Contest 0 A6110 Petition for Change of Name 0 A6170 Petition for Relief from Late Claim Law 0 A6100 Other Civil Petition

c
Applicable Reasons • See Step 3 Above
2., 8. 2. 2.
2., 8.
1., 2., 8.
1., 2., 3.
1., 2., 8.
1., 2., 8.
1., 2., 3., 8.
1., 2., 5., 8.
2., 9. 2., 6. 2., 9. 2., 8. 2., 8. 2., 8., 9.
1., 2., 8.
1., 2., 8. 2., 8. 1., 2., 8. 1., 2., 8.
2., 8.
2., 3., 9. 2., 3., 9. 2., 3., 9. 2. 2., 7. 2., 3., 4 .. 8. 2., 9.

LACIV 109 (Rev. 01/07) ~ASC Approved 03-04

CIVIL CASE COVER SHEET ADDENDUM AND STATEMENT OF LOCATION

LASC, rule 2.0 Page 3 of 4

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 33 of 92 Page ID #:40
EXHIBIT - D

Case 2:08-cv-03315-CAS-MAN Document 1-2

, I' ~

\rt' ')L f\ 1\J •v v

Filed 05/19/08 Page 34 o5f /9r2~}oP<arg:e ID #:41

I b ·.if~

1 LYNN s. CARMAN, State Bar 028860
Medicaid Defense Fund

I J

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2 28 Newport Landing Dr.
Novato,CA94949-8214 3 Telephone: (415) 927-4023

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Facsimile: (415)499-1687

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STANLEY L. FRIEDMAN, State 445 S. Figueora St., 27th Floor

Bar

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Los Angeles, CA 90071-1631 ·6 Telephone: (213) 629-1500

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Facsimile:(213)489-6899

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f/. . 7 Attorneys for Petitioners Independent Living Center

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8

of Southern California; Gray Panthers of Sacramento;~

Gray Panthers of San Francisco; Gerald Shapiro,

~

~,!. ~~ ./ . 7 ~-~

9 10

Pharrn.D., dba Uptown Pharmacy & Gift Shoppe; Sharon Steen, dba Central Pharmacy; Mark Beckwith; Margaret Dowling; Tran Pharmacy, Inc. dba Tran Pharmacy; and Jason Young

p M \1!l(~ J /'-1. / /

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11

;;:;?v ( ! ! - SUPERIOR COURT OF THE STATE oYcALIFORNIA

12 13

. IN AND FOR THE COUNTY OF LOS ANGELES, UNLIMITED JURISDICTION 4/2.---16 Y'.

14 INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA, a nonprofit corporation; ORAY
15 PANTHERS OF SACRAMENTO, a nonprofit corporation; THE ORAY PANTHERS OF SAN
16 FRANCISCO, a nopprofit corporation; GERALD SHAPIRO, Pharm.D., doing business as Uptown
17 Pharmacy and Gift Shoppe; SHARON STEEN, doing business as Central Pharmacy; MARK
18 BECKWITH; MARGARET DOWLING; TRAN PHARMACY, INC., a corporation, doing business
19 as Tran Pharmacy; and JASON YOUNG,

No. BS 114459
VERIFIED FIRST AMENDED PETITION FOR WRIT OF MANDAMUS

20 -vs.SANDRA SHEWRY, Director of Department of Health
21 Care Services ofthe State of California; DEPARTMENT OF HEALTH CARE SERVICES, a department of the
22 State of California; and DOES 1 through 50, .

23

24r-------------~v=ER=IF=IE~D=FI=Rs-T=AM=E=N=oE=D-PE-.T=ITl=~-F~·O-R-W~RI=To-F-M-A~ND~A-M-US---------------

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 35 of 92 Page ID #:42
VERIFIED FIRST AMENDED PETITION FOR WRIT OF MANDAMUS (§ 1085 Code of Civil Procedure)
2 TO THE ABOVE-ENTITLED HONORABLE COURT:
3 The verified first amended petition for writ of mandamus, under § 1085
4 Code of Civil Procedure, ofpetitioners Independent Living Center of Southern
5 California, Inc.; Gray Panthers of Sacramento; The Gray Panthers of San Francisco;
6
Gerald Shapiro, Pham.D., dba Uptown Phannacy & Gift Shoppe; Sharon Steen, dba 7
Central Pharmacy; Mark Beckwith; Margaret Dowling; Tran Pharmacy, Inc., dba Tran 8
Pharmacy; and Jason Young, respectfully shows: 9
Jurisdiction and Venue1 10
1. The above-entitled Superior Court has jurisdiction under Article VI, 11
section 10, California Constitution, and§ 1085 Code of Civil Procedure ("Code Civ. 12
Proc."). Venue lies under§ 401 Code Civ. Proc. which provides that an action may be
13 filed against an officer or agency of the State of California in any county in which the
14 California Attorney General has an office; and under§ 393(b) Code Civ. Proc., which
15 provides that an action may be filed in a county in which a public officer has an office.
16
Parties
17 2. (a) The petitioner INDEPENDENT LIVING CENTER OF SOUTHERN
18 CALIFORNIA, INC. ("ILCSCal") is a nonprofit California corporation which was duly
19 organized and incorporated in California on July 25, 1977 pursuant to the General
20 Nonprofit Corporation Law of the State of California.
21
22
1 Headings and captions are not allegations, and need not be traversed or denied; but, are 23 et forth only to assist the reader.
24r--------------V=ER=IF=IE=D -FI~ RS~T - AM-E-N- DE-D-PE-T- ITI-ON-- FO-R-W-RI- T O-F-M-A- ND-A-M- US--------------~

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 36 of 92 Page ID #:43

(b) ILCSCal has its principal office and place of business in, and does

2 business in the County of Los Angeles, California.

3

3. The petitioner GRAY PANTHERS OF SACRAMENTO ("Gray Panthers

4 Sacto") is a California nonprofit public benefit corporation, whose principal office and

5 place of business is, and does business, in the County of Sacramento, California.

6

4. (a) The petitioner THE GRAY PANTHERS OF SAN FRANCISCO

7 ("Gray Panthers SF") is a nonprofit California corporation which was duly organized

8 and incorporated in California on August 28, 1978, pursuant to the General Nonprofit

9 Corporation Law of the State of California.

10

(b) GRAY PANTHERS SF has its principal office and place of business

11 in, and does business, in the City and County of San Francisco, California.

12

5. (a) The petitioner GERALD SHAPIRO, Pharm.D., is a duly licensed

13 registered pharmacist with License No. 24377, who owns and operates a duly licensed

14 retail pharmacy under the fictitious name of Uptown Pharmacy & Gift Shoppe, under

15 retail pharmacy license No. PHY 41615, in the City of Los Angeles, California.

16

(b) The petitioner SHAPIRO's pharmacy participates in the Medi-Cal fee-

17 for-service program and also in Medi-Cal managed care plans, under Medi-Cal provider

18 identification No. PHA 416150.

19

6. (a) The petitioner SHARON STEEN is an individual who is a copartner in

20 a copartnership which owns and operates a licensed retail pharmacy, under the fictitious

21 name Central Phannacy, under retail phannacy license No. PHY 38051, in the City of

22 Santa Monica, California.

23

(b) The petitioner STEEN's phannacy participates in the Medi-Cal fee-

24r-------------~V=ER=IF=IE=D -FI- RS-T - AM~E~N~ DE-D-PE-T- ITI-ON-- FO-R -W- RI- T O-F-M-A- ND-A-M- US--------------~

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 37 of 92 Page ID #:44

for-service program and also in Medi-Cal managed care plans, under Medi-Cal provider

2 identification No. PHA 380510.

3

7. The petitioners MARK BECKWITH, MARGARET DOWLING, and

4 JASON YOUNG are individuals who are recipients in the state-federal Medicaid

5 program in California (which is called "Medi-Cal").

6

8. (a) The Petitioner TRAN PHARMACY, INC. is California corporation

7 which owns and operates a duly licensed retail pharmacy under the fictitious name of

8 Tran Pharmacy, under retail pharmacy license No. PHY 43647, in Garden Grove,

9 California.

10

(b) The TRAN PHARMACY, INC.'s pharmacy participates in the Medi-

11 Cal fee-for-service program and also in Medi-Cal managed care plans, under Medi-Cal

12 provider identification No. PHA 436470.

13

9. (a) The respondent DEPARTMENT OF HEALTH CARE SERVICES

14 ("Department") is a department of the State of California. The Department administers

15 the Medi-Cal program under§ 14000 et seq. California Welfare and Institutions ("Welf.

16 & Inst.") Code. The Department has an office in the County of Los Angeles, California.

17

(b) The respondent SANDRA SHEWRY ("Director"), is the director of

18 the Department. The Director is exclusively empowered by§§ 14100.1 and 14105

19 Welf. & Inst. Code to set all policies, rules and regulations in the Medi-Cal program,

20 including all rates payable to Medi-Cal providers. The Director has an office in the

21 County ofLos Angeles. The Director SANDRA SHEWRY is sued in her official

22 capacity, only.

23

(c) Respondents DOES 1 through 50 are persons and officers whose

24r-------------~V=ER~IF=IE=D~FI=R=ST~A~M=EN=o=E~D=PE=TI=Tl=ON~FO=R=w=R=!T=o=F=MA=N=D-AM~US~------------~

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 38 of 92 Page ID #:45

identity is unknown to petitioners, and who are agents, officers, and servants of the State

2 of California, and who have some function, unknown to petitioners at this time, to assist

3 or to carry out the actions of the respondents complained of in this Petition. Petitioners

4 pray leave of the Court to amend this Petition as and when the identity and functions of

5 DOES 1 through 50 become known to the petitioners.

6

STANDING

7

Purposes of the Gray Panther petitioners

8

10. The membership of each ofthe Gray Panthers Sacto and of the Gray

9 Panthers SF, respectively, is predominantly over the age of 50. A primary function and

10 purpose of the Gray Panthers Sacto, and of the Gray Panthers SF, respectively, is to 11 advocate and advance the health care and the health care rights and civil rights of their

12 members, (1) a number of whom are Medi-Cal recipients in the Medi-Cal fee-for-

13 services program, (2) a number of whom are Medi-Cal recipients in Medi-Cal managed

14 care plans.

15

Suit as authorized by Green v. Obledo and the common law

16

11. (a) The petitioners MARK BECKWITH, MARGARET DOWLING,

17 GERALD SHAPIRO, Pharm.D, SHARON STEEN, and JASON YOUNG are each

18 citizens and residents of the State of California. The ILCSCal, the Gray Panthers Sacto,

19 the Gray Panthers SF, and the Tran Pharmacy, Inc., dba Tran Pharmacy, are also each a

20 corporate citizen and resident ofthe State of California.

21

(b) Each ofthe petitioners, mentioned the preceding sub-Paragraph (a) of

22 Paragraph 11, sue on their own behalf In their own interest, respectively, as well as,

23 also, on behalf of the public of the State of California, to procure the performance by the

24 ~------------~ VE~RI-FIE-D-FI-RS-T-AM-E=ND~E~ D ~ PE- TIT-IO-N-FO-R=W~ RIT-O-F -MA-N-DA-M-U- S ------------~

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 39 of 92 Page ID #:46

program. His Medi-Cal identification number is 568-29-5405-A.

2

18. -(a) The ILCSCal is a non-profit corporation located in Van Nuys, Santa

3 Clarita and Lancaster, California. The amended articles of incorporation of ILCSCal

4 state that its primary purposes are to:

5

" ... initiate, sponsor, promote, and carry out plans, policies, and activities that

will further the prosperity of and enhance the development of persons with

6

disabilities."

7 The ILCSCal is a designated center for independent living (CIL). CILs are community-

8 based organizations established under the California Rehabilitation Act(§ 19800 Welf.

9 & Inst. Code) to advocate for and provide services to enable people with disabilities to

10 achieve independence, including equal access to society and to all activities of society.

11

-(b) The ILCSCal works on issues ofbenefits counseling, cross-disability

12 peer modeling/peer counseling, housing referrals, personal assistants referrals, advocacy,

13 and providing technical assistance, infonnation and referral and emergency services, and

14 assistance in locating medical, phannacy, and other providers to treat, cure, and alleviate

15 their illness, injury, or condition.

16

19. The ILCSCal serves over 8,000 individuals with disabilities annually, the

17 majority of whom, (96% or more than 7,500), are categorically linked to Medi-Cal as

18 their primary insurance type, because they are SSI beneficiaries under the Social

19 Security Act; and as such, are not mandated into Medi-Cal managed care, so that most of

20 the clients ofiLCSCal who receive SSI are not enrolled in Medi-Cal managed care, and

21 instead receive their Medi-Cal services, including physician, dental, and phannacy 22 services, from fee-for-service Medi-Cal providers.

23

24

VERIFIED FIRST AMENDED PETITION FOR WRIT OF MANDAMUS

-8-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 40 of 92 Page ID #:47

- (c) Out of these 7,500 clients with disabilities served annually by

2 ILCSCal, approximately 15%, or 1,200, are eligible for both Medi-Cal and Medicare

3 Part B, and as such:

4

- (1) receive their physician under Medicare, (except for such

5 physician services which are not covered by Medicare, in which case Medi-Cal pays for

6 the physician service), and, also receive their phannacy services under Medicare Part D,

7 (except for certain "carve out" drug products which are excluded from Medicare Part D

8 and are instead dispensed under the Medi-Cal program); and,

9

- (2) receive their dental care under Medi-Cal fee-for-service.

10

LEGISLATIVE HISTORY OF ASSEMBLY BILL X3 5

11

20. On January 10, 2008, the California Governor proclaimed a State fiscal

12 emergency, sent a proposed 2008-2009 budget bill to the Legislature, and called the

13 Legislature into special session.

14

21. (a) On February 16, 2008 the Governor signed into law the Special Session

15 Budget Bill, (Assembly Bill X3), and, also, Assembly Bill X3 5 (the Special Session

16 health care trailer bill), and Assembly Bill X3 6 (the Special Session human services

17 trailer bill).

18

(b) Assembly Bill X3 5, eff. February 16, 2008, was chaptered as Chapter

19 3, Statutes 2007-2008 Third Extraordinary Session.

20

Assembly Bill X3 5

21

22. Section 14 of Assembly Bill X3 5 added §14105.19 Welf. & Inst. Code,

22 which:

23

-in subds. (a), (b)(l), (b)(2), and (c)- (e) provides that reimbursement shall be

24

VERIFIED FIRST AMENDED PETITION FOR WRIT OF MANDAMUS

-9-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 41 of 92 Page ID #:48

cut 10% across-the-board in Medi-Cal fee-for-service to physicians, dentists,

2 pharmacies, skilled nursing facilities, acute care hospitals (in respect to inpatient

3 hospital services) who have no contract with the Department, and other providers in the

4 Medi-Cal fee-for-service program, for services for dates of service on and after July 1,

5 2008; and,

6

-in subd. (b)(3) provides that payments shall be reduced by the actuarial

7 equivalent amount specified in subd. (b) of§ 14105.9 Welf. & Inst. Code, (i.e., an

8 amount of 10%), to Medi-Cal managed care plans, which reduction is to be effected

9 pursuant to contract amendments or change orders effective on July 1, 2008.

10

23. Section 15 of Assembly Bill X3 5 added §14105.245 Welf. & Inst. Code,

11 which provides that amounts paid interim payments to acute care hospitals not under

12 contract with the Department, for amounts paid as interim payments for inpatient

13 hospital services covered by Medi-Cal, shall also be cut 10% across-the-board in Medi-

14 Cal fee-for-service for acute care hospitals who have no contract with the Department

15 for fiscal year 2008-09, (commencing July 1, 2008).

16

24. § 14105.245 Welf. & Inst. Code, (added by Section 15 of Assembly Bill

17 X3 5 as set forth above), provides:

18

"(a) The Legislature finds and declares that the state faces a fiscal crisis that

requires unprecedented measures to be taken to reduce General Fund

19

expenditures to avoid reducing vital government services necessary for the

protection ofthehealth, safety, and welfare of the citizens of the State of

20

California." (Emphasis supplied.)

21

25. Finally, Sees. 16 and 17 of Assembly Bill X3 5 provide:

22

"SEC. 16. This act addresses the fiscal emergency declared by the Governor

by proclamation on January 10, 2008, pursuant to subdivision (f) of Section 10 of 23

24 t - - - -

VERIFIED FIRST AMENDED PETITION FOR WRIT OF MANDAMUS

-10-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 42 of 92 Page ID #:49

Article IV of the California Constitution.

2

SEC. 17.... In order to make statutory changes needed to implement cost

containment measures affecting health services, at the earliest possible time, it is

3

necessary that this act take effect immediately." (Emphasis supplied.)

4

Concrete injury from implementing Sees. 14 and 15 of Assembly Bill X3 5.

5

26. Each of the Petitioners, as well as:

6

-all Medi-Cal recipients who receive provider services in the Medi-Cal fee-for-

7

service program,

8

- all Medi-Cal recipients enrolled in Medi-Cal managed care plans,

9

10

-all Medi-Cal providers in the Medi-Cal fee-for-service program who are subject

11

to the aforesaid I 0% cut in Medi-Cal payments,

12

13

-all Medi-Cal managed care plans, and,

14

15

-all Medi-Cal providers in respect to or with whom Medi-Cal managed care

16

plans have contracted with or arranged for covered Medi-Cal managed care

17

services to be furnished by them, (in respect to whom the managed care plans will

18

foreseeably and inevitably pass through the aforesaid 10% cut commencing July

19

1,2008),

20 will, respectively, and foreseeably and inevitably, suffer concrete injury, and are

21 threatened with concrete injury, and are put at risk of concrete injury, by the aforesaid

22 10% cut, or the actuarial equivalent thereof, which will be put into effect commencing

23

24 ~-------------v-=ER~IF=IE=D~FI~RS=T~A-M=EN~D~E~D=PE=TI=TI~ON-F~O-R~W~R-IT~O~FM~A~N~D-AM~U-S---------------1~}-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 43 of 92 Page ID #:50

respondent public officials of public duty, as authorized by Green v. Obledo, 29 Cal.3d 2 126 (1981); namely, the perfonnance ofthe mandatory ministerial duty (1) to set aside

3 their policy to implement Sections 14 and 15 of Assembly Bill X3 5 (enacted and eff. 4 Feb. 16, 2008, at Chapter 3, Statutes 2007-2008 Third Extraordinary Session), and (2) to 5 refrain from implementing Sections 14 and 15 of Assembly Bill X3 5, including 6 refraining from reducing payments 10% to Medi-Cal doctors, dentists, phannacies, those

7 acute care hospitals who have no contract with the Department, and, other providers in 8 the Medi-Cal fee-for-service program, and Medi-Cal managed care plans, commencing
9 July 1, 2008; --which aforesaid actions of the respondents are preempted, under the

10 Supremacy Clause, (article VI, U.S. Constitution), in that the aforesaid actions:

11

- (1) violate 42 U.S.C. § 1396a(a)(30)(A), (herein, "Sec. 30(A)," including

12

the quality and access clauses of Sec. 30(A).

13

14

- (2) violate the federal Americans with Disabilities Act of 1990,

15

("ADA");

16 which suit is pennitted and authorized by all laws made and provided therefor, the

17 common law, and by Green v. Obledo (1981) 29 Cal.3d 126.

18

Prudential jus tertii suits

19

12. (a) Each of the pharmacy petitioners, (namely, the Uptown Phannacy,

20 Central Pharmacy, and Tran Pharmacy, (and their owners who are the plaintiffs Gerald 21 Shapiro, Pharm.D., Sharon Steen, and the Tran Pharmacy, Inc.), also sue in a prudential 22 jus tertii capacity to assert, respectively, the interests of their respective Medi-Cal 23 beneficiary patients, as well as the interests of their patients with disabilities, in the
24r-------------~V~ER~IF=IE=,D~F~IR~ST~A~M~EN~D=E~D7.PE=·T=IT~IO~N=Fo=R~W=R=IT~07F~M~AN=D~A~M~US~'--------------~

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 44 of 92 Page ID #:51

causes of action, claims, Supremacy Clause preemption, and relief which is sued upon

2 and sought in the within case.

3

(b) The petitioner ILCSCal also sues in a prudential jus tertii capacity, in

4 its capacity as an independent living center, -- designated and organized as such, and

5 with purposes and powers therefore, under and as authorized by the state Rehabilitation

6 Act, § 19800 et seq. Welf. & Inst. Code, -- to assert the interests of its clients who are

7 Medi-Cal beneficiary patients, as well as the interests of its clients with disabilities, in

8 the causes of action, claims, Supremacy Clause preemption, and relief which is sued

9 upon and sought in the within case.

10

(c) The petitioners Gray Panthers Sacto and Gray Panthers SF also sue in

11 a prudentialjus tertii capacity, respectively, to assert the interests of their respective 12 members who are Medi-Cal beneficiary patients, as well as the interests of their

13 members clients with disabilities, in the causes of action, claims, Supremacy Clause

14 preemption, and relief which is sued upon and sought in the within case.

15

13. Each of the respondents Gerald Shapiro and Sharon Steen, and the Tran

16 Pharmacy, Inc., a resident California corporation, also sue on all Causes of Action herein

17 in their capacity as citizen resident taxpayers of the State of California, under the

18 common law and under§ 526a, Code Civ. Proc., --in that each is a taxpayer who has

19 been assessed and paid a state income tax, within12 months on the filing of this Verified

20 First Amended Petition for Writ of Mandamus, to the State of California.

21

14. Each ofthe petitioners,-- as well as each of the patients, clients, and

22 members in respect to whom the pharmacy plaintiffs, the ILCSCal, and the Gray

23 Panthers petitioners are prudential jus tertii representatives, -- also has standing

24 r-------------~V~E=R~IF~IE~D~FI~RS='T~A~M=EN~D~E~D=PE=T=IT~!O~N~FO~.R~W~R~IT~O=F~M~AN~D~A~M~U=s--------------~

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 45 of 92 Page ID #:52

1 inasmuch as each has suffered, will suffer, and is threatened to be caused to suffer,

2 concrete and irreparable injury as shall hereinafter be specified, unless respondents are

3 restrained by a writ of mandamus from implementing the statutes which are preempted,

4 under the Supremacy Clause, by Sec. 30(A), and by the ADA, as set forth hereinafter.

5

FACTS COMMON TO ALL CLAIMS

6

15. The petitioner MARK BECKWITH was born on October 5, 1957, in

7 Corry, Pennsylvania. He is a citizen and resident of the State of California who resides

8 at 2931 Ellis St., Berkeley, California. He is a paraplegic on account of spinal muscular

9 atrophy, who requires oxygen at all times, who receives medical and pharmacy services

10 under the Medi-Cal program. He is a SSI recipient who receives $870 monthly from

11 SSI. His Medi-Cal identification number is 90111132A05026

12

16. The petitioner MARGARET DOWLING was born in Sandusky, Ohio, on

July 29, 1940. She is a citizen and resident of the State of California who resides at 426
13

W. 11th St., Pittsburg, California. She is a paraplegic who receives part of her medical 14

services under the Medi-Cal program. Her Medi-Cal identification number is 15

16 90230720A35028.

17. The petitioner JASON YOUNG was born in Inglewood, California on July
17

15, 1962. He is a citizen and resident of the State of California who resides at 8926
18

19 Independence, #204, Parthenia, California. He suffers disabilities of blindness and brain

damage and is a Supplemental Security Income (SSI) recipient, with SSI identification
20
number of 568-29-405. He receives assistive services from In-Home Supportive
21
Services and medical and other health services from the Medi-Cal managed care 22

23

24 r-------------~V~ER~IF=IE~D~F~IR=sT~AM~~~D~E~D~PE=T=ITI~O~N=Fo=R~W=R=TT~O~F~M~~D~AM~US~------------~

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 46 of 92 Page ID #:53

July 1, 2008 by the respondents, pursuant to their policy to implement the aforesaid

2 Sections 14, and 15 of Assembly Bill X3 5, including, without limitation thereby,

3 ( 1) the 10% across-the-board reduction in reimbursement to physicians, dentists,

4 phannacies, acute-care hospitals who have no contract with the Department, and other

5 providers in the Medi-Cal fee-for-service program; and (2) the equivalent actuariallO%

6 reduction in payments to Medi-Cal managed care plans, commencing July 1, 2008;

7 (hereinafter referred to, collectively, as ''the Medi-Cal cuts"); which concrete injury

8 from the Medi-Cal cuts is great, immediate, and irreparable.

9

Denial of access to physicians. and denial of quality medical services

10

27. More particularly, it is a fact that Medi-Cal rates for physicians are 61% or

11 less of what Medicare pays for the same physician services; that a 10% cut will reduce

12 reimbursement to Medi-Cal physicians to only 57% of what Medicare would pay; and

13 that as a result of the low Medi-Cal rates, only 55% of primary care physicians and less

14 than 50% or specialists are willing to participate in the Medi-Cal program, (either in the

15 Medi-Cal fee-for-service program, or in Medi-Cal managed care programs). (1) These

16 facts are verified and reported by the Legislative Analyst in Analysis of the 2008-2009

17 Budget Bill, (Budget Analysis"), citing studies on the subject, at pages C-37 and C-38 of

18 the Budget Analysis; and (2) studies funded by the California Healthcare Foundation, (a

19 respected organization with whom the Department often contracts to provide studies and

20 infonnation to the Department), consistently so report.

21

28. Further:

22

- First. It is a fact that persons with disabilities such as the petitioners

23 DOWLING, BECKWITH, and YOUNG, and the thousands of disabled clients of the

24 1 - - - - - ----::V:=E::-:Rl=FlE=::D:-::F::::lR-::::ST::-AM:-:-:::E:-::ND=-=E=o--=pE=T=IT=Io=N=Fo=R:-:W::-:-::R=lT::-:O=F=M=AN=o=-=A=M::-:-::-US ---~----=u-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 47 of 92 Page ID #:54

petitioner ILCSCal, and the thousands of home shut-ins to whom petitioner SHAPIRO 2 and STEEN deliver prescriptions in the Medi-Cal fee-for-service program, have more

3 difficulty in locating primary care and specialists who are needed by them to adequately

4 follow and care for their complex medical needs, and keep them alive, than do Medi-Cal 5 recipients without disabilities.

6

-Second. It is a fact that although Medi-Cal managed care plans do assign a

7 Medi-Cal enrollee to a primary care physician, nevertheless, persons with severe

8 disabilities such as the petitioners DOWLING, BECKWITH, and YOUNG require more 9 complex care, from specialists, than Medi-Cal managed care plans are able to furnish
1o them, due to a shortage of specialists in both Medi-Cal fee-for-service and Medi-Cal

11 managed care.

12

-But, specialists who have the capability to treat and follow the complex needs

13 of disabled persons, -- such as the paraplegic DOWLING , the quadriplegic

14 BECKWITH, and the blind and brain damaged YOUNG,-- are difficult to find and

15 retain over any period of time, whether the specialist is being sought by disabled 16 Medi-Cal recipients in the Medi-Cal fee-for-service program, or by disabled Medi..:Cal

17 recipients in Medi-Cal managed care plans.

18

- This above situation, set forth in this Paragraph, is due to the fact that payment

19 of specialists is so low that less than 50% of specialists have Medi-Cal patients; and,

20 those that do, repeatedly state in surveys that they are not willing to accept new Medi-

21 Cal patients, (whether they come from the Medi-Cal fee-for-service program or from

22 Medi-Cal managed care plans).

23

-However, given the facts which are set forth above in this Paragraph, it is

241~~~------------~ffiillFmsGM~~rrno~~rrru~~rus~-----------~

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 48 of 92 Page ID #:55

inevitable that, if the Medi-Cal cuts of Sections 14 and 15 of Assembly Bill X3 5 are 2 implemented for dates of service on and after July 1, 2008, that thousands ofMedi-Cal 3 recipients in both Medi-Cal fee-for-service and Medi-Cal managed care,-- including 4 (1) the petitioners DOWLING, BECKWITH, and YOUNG; (2) the thousands of 5 disabled patients of the petitioner pharmacies (Uptown, Central, and Tran), in Los 6 Angeles and Orange counties, (3) the thousands of disabled clients of the petitioner

7 ILCSCal, and (4) the members of the Sacto Gray Panthers and the SF Gray Panthers

8 who are Medi-Cal recipients, will be driven, and will at the least be put at great risk, of

9 being forced into institutions in order to survive, if at all.

10

Denial of access to dentists, and to quality dental care

11

29. It is also a fact, which is reflected in court decisions and studies, that

12 because of too-low rates, approximately 90% of dentists refuse to accept Medi-Cal

13 patients. Accordingly, the 10% reduction in Medi-Cal payments to dentists, will simply 14 intensify the denial of access and quality dentistry, which already presently exists.

15

Denial of access to pharmacy care

16

30. California pharmacies, both chain phannacies and independent

17 phannacies, unifonnly earn less than a 10% net profit.

18

31. Further, it is fact, -- as demonstrated by the 2006 survey by Myers &

19 Stauffer of California pharmacy costs to operate, and their costs to acquire prescription

20 drug products, that approximately 27.5 %of a typical pharmacy's prescriptions in the

21 Medi-Cal program are single source (brand) qrugs; that approximately 36% ofthe

22 prescriptions are multi-source (generic) drugs; and that approximately 36.2% of the

23 prescriptions are low-priced drugs in respect to which the federal government has set a

24 1----~--- --=v=ERJ=F=IE::"o::-=Fr=-=-R=sr:-:AM-:-:=:EN-=o-=E=-o=rE=ri=rr=-=-oN:-:-=F~o=R-=w-::::-R=rr-=o7 F M:-:A-:-::N-=o:-:-AM:-::::-:-:us=---~-- ------._Ihl4-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 49 of 92 Page ID #:56

1 federal upper limit ("FUV') or Medi-Cal has set a maximum allowable ingredient cost

2 ("MAIC") limit for reimbursing the pharmacy's cost to acquire such FUL or MAIC.

3

32. However, the figures set forth in this Myers & Stauffer report to the

4 Department are consistent with the fact, -- when the 10% payment cut commences July

5 1, 2008, -- that although California pharmacies including the petitioner phannacies

6 . would still have a small net profit on the 36% of their Medi-Cal prescriptions which

7 are multi-source (generic) prescriptions without a Ful or MAIC cap, nevertheless, they

8 would have a larger net loss, collectively, on the 27.5% of their Medi-Cal prescriptions

9 which are single source (brand) and the 36.2% of their Medi-Cal prescriptions which

10 are subject to a FUL or a MAIC cap; so that on the whole that California pharmacies,

11 including the petitioner pharmacies, will not be able to dispense Medi-Cal prescriptions

12 in the Medi-Cal fee-for-service program except at a net loss on the entire bulk of their

13 Medi-Cal prescription business, (brand, generic, and capped prescriptions).

14

33. Further, Medi-Cal managed care programs, (such as the Medi-Cal county

15 organized health system managed care program in Orange County which is known as

16 "CalOptima"), typically, (including CalOptima) pass through all reductions in payments

17 by Medi-Cal to Medi-Cal managed care plans; so that (1) pharmacies in Medi-Cal

18 managed care plans, including the petitioner pharmacies, and their patients, will suffer

19 the same reduction in ability to furnish or receive quality phannacy care, and (2)

20 specialists will become even more scare in managed care plans, so that the frail, elderly,

21 disabled Medi-Cal patients in both the Medi-Cal fee-for-service program, and in Medi-

22 Cal managed care plans, will suffer inability, and be put at risk of inability to obtain

23 specialists, and to obtain quality pharmacy services, if the July 1, 2008 10% cut in

24 1 - - - - - - - - VER- IFIE- D F- IRST-AM-EN-DED-PE-TIT- ION-FO- R W- RIT-OF- MA- NDA·MU-S - - - - - -. --:T5 -

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 50 of 92 Page ID #:57

payment to Medi-Cal managed care plans is not enjoined by the Court.

2

34. Accordingly, it is manifest, foreseeable and probable, from the foregoing

3 facts set forth above in this Petition, that the 10% reduction in total reimbursement to

4 phannacies in the Medi-Cal fee-for-service program, (as well as an actuarially

5 equivalent 10% reduction to Medi-Cal managed care plans), will result in not only many,

6 but most independent pharmacies, such as the petitioners GERALD SHAPIRO,

7 Phann.D., (owner of Uptown Pharmacy in Los Angeles), and SHARON STEEN, (owner

8 of the independent Central Pharmacy in Santa Monica), and the TRAN PHARMACY,

9 either (1) going out of business, or (2) refusing to accept Medi-Cal any longer, or (3)
1o refusing to fill those particular Medi-Cal prescriptions in respect to which they suffer a

11 net loss in the acquisition and costs to dispense, or (4) reducing staff, hours of phannacy

12 operation, and eliminating or reducing delivery services to shut-ins, under the new 10%

13 Medi-Cal payment reduction.

14

35. Further, many independent pharmacies, but few chain pharmacies, deliver

15 Medi-Cal prescriptions to the aged, frail, and disabled Medi-Cal recipients who are shut-

16 in to their homes.

17

36. For example, 98% of the prescriptions dispensed by the independent

18 Uptown Pharmacy in Los Angeles,-- owned by the petitioner GERALD SHAPIRO,

19 Pharm.D., -- are deliveries to approximately 5,000 home shut-ins.

20

37. More particularly, approximately 55% of the shut-ins to whom Uptown

21 Pharmacy delivers prescriptions receive their medications under Medicare Part D, (i.e.,

22 those who are 65 or older, or are Social Security Disability Income beneficiaries). But,

23 also, approximately 30% of the shut-in clientele ofUptown Phannacy are on the Medi-

24 f----.---------V-E-RI_F_l_E_D_F_'lR_S_T_AM-E--N-D-ED-PETITION FOR WRIT OF MANDAMUS

-16-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 51 of 92 Page ID #:58

1 Cal fee-for-service program, due to the fact they are under 65 or, although disabled,

2 have not qualified for S.S.D.I.

3

38. However, Uptown's net profit on its entire pharmacy business is less than

4 10% net profit. Accordingly, the petitio~er SHAPIRO, -- and two other delivery

5 phannacies whose owners he knows in Los Angeles, -- have no realistic choice but to

6 close their phannacies if the 10% cut in pharmacy reimbursement is implemented in

7 July 2008; or at the best, eliminate or reduce deliveries. Thus, if the 10% cut is not

8 restrained by the Court, thousands of disabled home shut-ins in Los Angeles, (and

9 similar in other parts of the state), who are Medi-Cal recipients, will no longer have any
1o access to life-necessary drugs, and, many of them will suffer and die therefrom.

11

Summary of overall effect of the 10% Medi-Cal cut

12

39. Accordingly, due to the too-low rates already paid physicians, dentists,

13 pharmacies, and other providers by Medi-Cal, (1) the further 10% payments reduction if 14 implemented in July 2008, to physicians, will drive and tend to drive even more primary 15 care physicians and specialists, and dentists, pharmacies, and other providers out of the 16 Medi-Cal program, or cause them to terminate present provider-patient relationships, or 17 reduce services, or refuse to new Medi-Cal patients, or increase appointment wait 18 periods; such that (2) many Medi-Cal recipients, both in the Medi-Cal fee-for-service 19 program and in the Medi-Cal managed care program,-- and, especially the tens of 20 thousands who are home-bound shut-ins who depend upon medicine delivery, and also 21 those who are disabled, - will be denied access to life-sustaining medical, dental, and 22 prescription services, with (3) the consequence that Medi-Cal recipients in general will 23 be denied quality medical services and access to quality medical services. More

24 r--~---------::-:v=ER=IF=IE="o-=FI=-Rs=r:-:-A·MENDED PETITION FOR WRIT OF MANDAMUS

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 52 of 92 Page ID #:59

particularly, due to the 10% provider payment cuts (including the actuarial equivalent

2 thereof to Medi-Cal managed care plans, many disabled Medi-Cal recipients such as

3 the petitioners DOWLING, BECKWITH, and YOUNG, and the thousands of clients of

4 independent living centers such as the petitioner ILCSCal, will lose, or are threatened

5 with loss, of their primary care and specialist physicians, so that many persons with

6 disabilities, including the petitioners Beckwith and Dowling, will be forced into

7 institutions or will be at risk of being forced into institutions in order to survive, and

8 will suffer injury and pain from untreated illness, injury, or condition.

9

FIRST CAUSE OF ACTION

10

By each of the petitioners except petitioner Jason Young, for mandamus

and injunctive relief to enjoin each of the respondents to refrain from

11

implementing a 10% reduction of payments to Medi-Cal fee-for-service

providers under subds. (a), (b)(l), (b)(2), and (c)- (e) of§ 14105.19 Welf.

12

& Inst. Code, and§ 14166.245 Welf. & Inst. Code),-- which state statutes

and the state action of respondents to implement the state statutes violate,

13

and are hence preempted under the Supremacy Clause by, the quality and

equal access clauses of 42 U.S.C. § 1396a(a)(30(A).

14
* * * * * * *
15
40. Petitioners refer to and incorporate each of the allegations in each of the

16 preceding Paragraphs of this Petition, as if fully set forth herein.

17
41. The Medicaid Act, in 42 U.S.C. § 1396a, subd. (a)(30)(A), provides:

18 "(a) A State plan for medical assistance must- (30)(A) provide for such methods

19

and procedures relating to the utilization of, and the payment for, care and

services available under the plan (including but not limited to utilization review

20

plans as provided for in section 1396b(i)(4) of this title) as may be necessary to

safeguard against unnecessary utilization of such care and services and to assure

21

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

22

under the plan at least to the extent that such care and services are available to the

general population in the geographic area; ... " (Emphasis supplied.) 23

24 ~-------------yVEEFRWIFTf'IEillDFJFI~Rs~-T~A~MEEN~DffiEDDPEPEmTimTI~ONNFFcOmR~WffiRITITOflMMiDAlMll;-----~------~~

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 53 of 92 Page ID #:60

44. 42 U.S.C. § 1396a, subd. (a)(30)(A), shall hereinafter be referred to as

2 "Sec. 30(A)."

3

45. However, in view of the fact that on January 10, 2008, the Governor

4 proclaimed a fiscal emergency and called the Legislature into Special Session; and that

5 on February 16, 2008 the Legislature enacted and the Governor signed into law

6 Assembly Bill X3 5, which proclaims in Sec. 15 that "the state faces a fiscal crisis that

7 requires unprecedented measures to be taken to reduce General Fund expenditures," and

8 which proclaims in Sections 16 and 17 that:

9

"SEC. 16. This act addresses the fiscal emergency declared by the Governor

by proclamation on January 10, 2008, pursuant to subdivision (f) of Section 10 of

10

Article IV of the California Constitution.

11 SEC. 17.... In order to make statutory changes needed to implement cost

12

containment measures affecting health services, at the earliest possible time, it is

necessary that this act take effect immediately.'' (Emphasis supplied.)

13

14 it is manifest that the sole function and purpose, and the conclusive consideration in the

15 Legislature's decision to enact subds. (a), (b)(l), (b)(2), and (c)- (e) of § 14105.19

16 Welf. & Inst. Code; and§ 14166.245 Welf. & Inst. Code,-- which provides that the 17 respondents shall (1) cut Medi-Cal payments to providers in the Medi-Cal fee-for-

18 service program, was budgetary considerations, to "address the fiscal emergency"

19 declared by the Governor, and to effect "cost contaimnent measures affecting health

20 services," by making statutory changes needed to reduce expenditures, (to fit the States

21 reduced budget), commencing July 1, 2008.

22

46. However, therein, by each and all of the above allegations, the enactment

23 of subds. (a), (b)(1 ), (b)(2), and (c) - (e) of § 14105.19 Welf. & Inst. Code; and

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 54 of 92 Page ID #:61

§ 14166.245 Welf. & Inst. Code, by the Legislature (1) was without any consideration of 2 quality and access as required by Sec. 30(A),2 and as· without any consideration of what

3 it costs providers to perfonn the various services and procedures, as required by Sec. 4 30(A);3 such that the State's sole purpose, and the conclusive factor, in enacting the

5 across-the-board 10% reduction in reimbursement to providers in the Medi-Cal fee-for-

6 service program, was to reduce the budget deficit. Accordingly, under the standard of

7 Orthopaedic Hosp., 103 F.3d 1491, at 1500 (1997); and Arkansas Medical Society. Inc.

8 v. Reynolds, 6 F.3d 519 (8th Cir.l983), the action ofthe Legislature to enact the

9 aforesaid subds. (a), (b)(l), (b)(2), and (c)- (e) of §14105.19 Welf. & Inst. Code; and§

10 14166.245 Welf. & Inst. Code, and the policy and action of the respondents to

11 implement these statutes by reducing payments to providers in the Medi-Cal fee-for-

12 service program, was and is arbitrary and capricious, and contrary to and in violation of

13 the quality and access provisions of Sec. 30(A); so that hence, under the Supremacy

14 Clause, the aforesaid subds. (a), (b)(l), (b)(2), and (c)- (e) of §14105.19 Welf. & Inst.

15 Code; and§ 14166.245 Welf. & Inst. Code are preempted by Sec. 30(A)..

16

47. Accordingly, by each and all of the foregoing facts alleged, subds. (a),

17 (b)(l), (b)(2), and (c)- (e) of§ 14105.19 Welf. & Inst. Code; and§ 14166.245 Welf. &

18 Inst. Code., were and are unlawful, in v~olation of the quality and access provisions of

19 Sec. 30(A), so as to be preempted, under the Supremacy Clause, by the quality and

20

21

2 Othopaedic Hospital v. Belshe, 103 F.3d 1491, 1500 (9th Cir.l997).

22

3 1d, 103 F.3d at 1500; Arkansas Medical Society, Inc. v. Reynolds, 6 F.3d 519

8th Cir. 1993 ).

23

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 55 of 92 Page ID #:62

access provisions of Sec. 30(A), such that the respondent Director and the respondent

2 Department act in excess of and without jurisdiction to implement subds. (a), (b)(1 ),

3 (b)(2), and (c)- (e) of § 14105.19 Welf. & Inst. Code; and§ 14166.245 Welf. & Inst.

4 Code, in implementing the provisions therein of reducing reimbursement to physicians,

5 dentists, pharmacies, and other providers, in the Medi-Cal fee-for-service program,

6 commencing July 1, 2008.

7

48. Further, unless restrained by the Court by an appropriate writ of mandamus

8 under§ 1085 Code Civ. Proc. or by an appropriate injunction, the respondents Director

9 and Department will implement the aforesaid subds. (a), (b)(1), (b)(2), and (c)- (e) of

10 § 14105.19 Welf. & Inst. Code; and§ 14166.245 Welf. & Inst. Code, and thereby will

11 cause injury to each of the petitioners (except petitioner Jason Young, who is in a Medi-

12 Cal managed care plan); which injury is irreparable, all, as has been hereinbefore set

13 forth in detail in the within amended Petition, but, the petitioners have no administrative

14 remedy, and the petitioners have no plain, speedy, or adequate remedy whatsoever or at

15 all, except by this Verified First Amended Petition for Writ of Mandamus.

16

WHEREFORE, the Petitioners respectively pray for judgment as shall hereinafter

17 be specified:

18 II

19 II

20 II

21 II

22 II

23 II

24

VERIFIED FIRST AMENDED PETITION FOR WRIT OF MANDAMUS

-21-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 56 of 92 Page ID #:63

SECOND CAUSE OF ACTION

2

By petitioners Jason Young and the Tran Pharmacy, Inc., dba Tran

Pharmacy, for mandamus and injunctive relief to enjoin each of the

3

respondents to refrain from implementing the actuarial equivalent'

of a 10% reduction of payments to Medi-Cal managed care plans

4

under subd. (b)(3) of§ 14105.19 Welf. & Inst. Code, which state

statute and the action of respondents to implement the state statutes

.5

violate, and are hence preempted under the Supremacy Clause by, the

quality and equal access clauses of 42 U.S.C. § 1396a(a)(30(A).

6
* * * * *
7

49. Petitioners refer to and incorporate each of the allegations in each of the 8

preceding Paragraphs of this Petition, as if fully set forth herein; and, especially, refer to 9

and incorporate each ofthe allegations in the First Cause of Action as if fully set forth 10

herein. 11

12

50. The provisions of 42 U.S.C. § 1396a(a)(30)(A), --herein, "Sec. 30(A)" --

13 apply to all managed care plans and managed care entities, who arrange to furnish or

14 otherwise furnish Medi-Cal services to their members or beneficiaries, just as directly,

15 fully, and equally as Sec. 30(A) applies to providers in the Medi-Cal fee-for-service

16 program,

17

51. The provisions of Social Security Act§ 1915(b)(4), (42 U.S.C.

18 § 1396n(b)(4)), also specifically, by its tenns, requires that the State of California set

19 rates and payments for Medi-Cal managed care plans and Medi-Cal managed care

20 entities, upon the same standards as are set forth in Sec. 30(A).

21

52. Accordingly,-- by each and all of the allegations in the preceding

22 Paragraphs of this Petition,-- and because Medi-Cal managed care plans and entities are

23

24 1 - - - - - - - - =V-ER-IF-IED-F-IR:ST:A-M,EN-D-ED-P-ET-IT-IO-N -FO-R -WR-IT-O-F MANDAMUS

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 57 of 92 Page ID #:64

agents of the State who, in effect, set the rates which shall be payable to providers for

2 services to Medi-Cal recipients in Medi-Cal managed care plans,-- the actions of the

3 Legislature in enacting subd. (b)(3) of§ 14105.19 Welf. & Inst. Code, to reduce
4 payments to Medi-Cal managed care plans and entities by 10%, or the actuarial
5 equivalent thereof, was arbitrary and capricious, and contrary to Sec. 30(A), and contrary
6 to Social Security Act§ 1915(b)(4), (42 U.S.C. § 1396n(b)(4); such that the policy of the
7 respondents to implement, and the action of the respondents to implement subd. (b)(3) of
8 § 14105.19 Welf. & Inst. Code, including the reduction of payments to Medi-Cal
9 managed care plans and entities by 10%, or the actuarial equivalent thereof,
10 managed care plans and entities, is thereby, under the Supremacy Clause, preempted by
11
Sec. 30(A) and by Social Security Act§ 1915(b)(4), (42 U.S.C. § 1396n(b)(4)),
12
such that, unless the Court issues an appropriate writ of mandamus or injunction, the 13
petitioner Jason Young and the petitioner Tran Pharmacy, Inc., dba Tran Pharmacy, (who 14
are a managed care recipient and managed care provider),-- will be irreparably injured, 15
and put at risk of injury, in the same wise as has been prior alleged in the First Cause of 16
Action, by the respondents reducing payments, commencing July 1, 2008, to Medi-Cal
17
18 managed care plans, in the actuarial equivalent of a 10% reduction in payment, which
19 reduction will be passed through to providers who serve Medi-Cal managed care plan
20 patients, causing fewer providers to participate in Medi-Cal managed care plans and

21 injuring Medi-Cal managed care patients such as petitioner Josh Young, and forcing

22 them or tending to force into institutions in order to survive..

23

WHEREFORE, the petitioners pray for judgment as shall hereinafter be specified:

24 1 - - - - -

VERIFIED FIRST AMENDED PETITION FOR WRIT OF MANDAMUS

-23-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 58 of 92 Page ID #:65

THIRD CAUSE OF ACTION

2

(By all petitioners against each respondent.)

3

Preemption by the Americans with Disabilities Act of 1990,

42 U.S.C. § 12132, ("ADA"), under the Supremacy Clause,

4

of Sections 14, and 15 of Assembly Bill X3 5, for violation

of the ADA, 42 U.S.C. § 12132, by forcing or threatening to

5

force disabled persons into institutions, -- such that such

administration of the Medi-Cal program prevents, and does

6

not provide, disabled persons with the most integrated setting

appropriate to their needs, as mandated by the ADA and by

7

Olmstead v. L.C., 527 U.S. 581 (1999).

8

53. Petitioners here refer to and incorporate each of the allegations in the 9

preceding Paragraphs as if fully set forth herein. 10

54. By each and all of the foregoing facts alleged in Paragraphs 1 through 53 11

of this Petition, Sections 14, and 15 of Assembly Bill X3 5 are, singly and cumulatively,

12

unlawful, in violation of the Americans with Disabilities Act of 1990, ("ADA"), 42

13

U.S.C. § 12132, which provides: 14

"Subject to the provisions of this subchapter, no qualified individual

15

with a disability shall, by reason of such disability, be denied the

benefits of the services, programs, or activities of a public entity, or

16

be subjected to discrimination by any such entity(,"

17 in that the aforesaid 10% cut in Medi-Cal provider and hospital reimbursement of
18
Sections 14 and 15 of Assembly Bill X3 5, will, singly, cumulatively, and proximately
19
result in forcing, and threatening to force, thousands of persons who are qualified
20
individuals with a disability, as defined in the ADA, into institutions, and place them at
21
risk of being forced into institutions, in order to survive; and many will in any event be 22
injured in their person and in their spirit and will die or be put at risk of dying; including 23

24

~------------~~~~~~~~~~~~~~~~~----------­ VERIFIED FIRST AMENDED PETITION FOR WRIT OF MANDAMUS

-=24-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 59 of 92 Page ID #:66

but not limited to:

2

-the petitioners Margaret Dowling, Mark Beckwith, and Jason Young;

3

4

-hundreds of SSI recipients who are clients of the petitioner ILCSCal;

5

6

-many patients of the patients of the pharmacy petitioners,

7

8

- some members of the SF Gray Panthers and Sacto Gray Panthers,

9 so that therein, many qualified individuals with a disability, (as defined in the ADA),

10 including but not limited to disabled SSI recipients who depend on Medi-Cal services to

11 be able to live in the community, will be denied and will become unable to live in the

12 most integrated setting appropriate to (1) the needs ofthose hundreds of thousands of

13 Medi-Cal recipients who are SSI disabled persons, including (2) the needs of the

14 disabled petitioners Margaret Dowling, Mark Beckwith, and Jason Young, and

15 including (3) the needs ofthousands ofSSI disabled persons who are clients ofthe

16 petitioner ILCSCal; and including (4) disabled patients of the phannacy petitioners; so

17 that such administration of the Medi-Cal program does not provide qualified

18 individuals with a disability the most integrated setting appropriate to their needs,

19 as mandated by the ADA, by Olmstead v. L.C., supra, 527 U.S. 581 (1999), and 28 Code

20 of Federal Regulations,§ 35.130(d). [1988].

21

55. Further, once the State has placed qualified individuals with a disability,

22 (as defined by the ADA), in the community, including the petitioners Dowling,

23 Beckwith, and Young, and the disabled persons listed in the preceding Paragraph; all,

24

VERIFIED FIRST AMENDED PETJT!ON FOR WRIT OF MANDAMUS

-25-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 60 of 92 Page ID #:67

with medical, attendant, and other services and life-needed supplied furnished and paid

2 by Medi-Cal fee-for-service and managed care program, or, assisted by these Medi-Cal

3 programs of the State, so as to enable them to be so integrated into the community, the

4 State has the burden, under the ADA, to justifY and to show reasonable grounds why

5 such level, kinds, and quality of supporting services, assistance, and framework for

6 independent living may be withdrawn by the State, as, in case at bar, by (1) provider

7 payments for one month being arbitrarily and capriciously held for one month, and (2)

8 provider and hospital payments being reduced 10%, permanently, by the State to Medi-

9 Cal providers and Medi-Cal managed care plans, (which reductions to the managed care
1o plans, will foreseeably and inevitably be passed through to the providers who provide the

11 services of the Medi-Cal managed care plan to Medi-Cal recipients).

12

56. Therein and thereby, as set forth in the preceding Paragraphs of this Third

13 Cause of Action, Sees. 14, and 15 of Assembly Bill X3 5 violate the ADA, and are

14 preempted, under the Supremacy Clause, by the ADA specifically, by 42 U.S.C. §

15 12132, by forcing or threatening to force, individuals with a disability (as defined by the

16 ADA), into institutions, and by putting them at risk to be forced into institutions,

17 (including the petitioners Dowling, Beckwith, and Young, and the patients, clients, and

18 members of the petitioner phannacies, the ILCSCal, the Sacto Gray Panthers, and the SF

19 Gray Panthers, -- which is not the most integrated setting appropriate to their needs, as

20 mandated by ADA and by Olmstead v. L.C., supra, 527 U.S. 581.

21

Therein and thereby, the respondent Director and Department, by violating the

22 ADA and of Olmstead on a statewide basis, are and will act in excess ofwithout

23 jurisdiction to implement the aforesaid statutes (i.e., Sees. 14, and 15 of Assembly Bill

24 r-------------~~~~~--------~~--~---------
VERIFIED FIRST AMENDED PETJTION FOR WRIT OF MANDAMUS

-26-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 61 of 92 Page ID #:68

1 X3 5).

2

57. Further, unless restrained by the Court by an appropriate writ of mandamus

3 under§ 1085 Code Civ. Proc. or by an appropriate injunction, the respondents Director

4 and Department will implement the aforesaid Sees. 14, and 15 of Assembly Bill X3 5,

5 and therein will cause each of the petitioners concrete injury, which is irreparable, as set

6 forth in detail in the preceding Paragraphs of this Verified First Amended Petition for

7 Writ of Mandamus; but, the petitioners have no administrative remedy, and no plain,

8 speedy, or adequate remedy whatsoever or at all, except by this Verified First Amended

9 Petition for Writ of Mandamus.

10

WHEREFORE, the Petitioners respectively pray for judgment as shall hereinafter

11 be specified:

12

FOURTH CAUSE OF ACTION

13

Separate statement of violation of ADA

14

(By each petitioner against each respondent.)

15

58. Petitioners here refer to and incorporate each of the allegations in the

16 preceding Paragraphs as if fully set forth herein.

17

59. Each and all ofthe acts of each of the respondents in violation of the ADA,

18 which are set forth in the preceding Third Cause of Action, tend to force, do force, and

19 threaten to force qualified individuals with a disability in the Medi-Cal program,--

20 (including the petitioners Margaret Dowling, Mark Beckwith, and Jason Young, and the

21 disabled patients, clients, and members of the remaining petitioners), -- into institutions;

22 all, in violation of the ADA (42 U.S.C. §12132) and Olmstead, supra. Accordingly,

23

24 r-------------~v=ER~IF=IE=D~Fl=Rs=T~AM~EN~D~E~D=PE=TI=Tl=ON~FO=R~W·=ru=r=o=FM~~~D~AM~U=S~'------------~

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 62 of 92 Page ID #:69

under the ADA, including 42 U.S.C. §§ 12123, and 12133, --which incorporates, via 29

2 U.S.C. § 794a(a)(2), the remedies of Title VI of the Civil Rights Act of 1964, (namely,

3 · 42 U.S.C. § 2000d-1 et seq.),-- the petitioners herein have a federal right to an

4 appropriate injunction herein to restrain the respondents from implementing Sees. 14,

5 and 15 of Assembly Bill X3 5, plus, statutory reasonable attorneys's fees as provided by
6 42 u.s.c. § 12133.

7

WHEREFORE, the petitioners and each of them pray for judgment as follows;

8

1. That petitioners have judgment against each of the respondents, and that

9 respondents take nothing.

10

First Cause of Action

11

2. That an alternative writ of mandamus, and then a peremptory writ of

12 mandamus, and/or an injunction, be issued to command the respondents DEPARTMENT

13 OF HEALTH CARE SERVICES ("Department") and SANDRA SHEWRY, Director of

14 the Department, to set aside their preempted policy to implement subds. (a), (b)(l),

15 (b)(2), and (c)- (e) of § 14105.19 Welf. & Inst. Code; and§ 14166.245 Welf. & Inst.

16 Code, and to refrain from implementing the aforesaid subds. (a), (b)(l), (b)(2), and (c)-

17 (e) of§ 14105.19 Welf. & Inst. Code; and§ 14166.245 Welf. & Inst. Code, including

18 refraining from reducing payments by 10%, or at all, to providers in the Medi-Cal fee-for

19 service program;

20

3. That petitioners have reasonable attorneys' fees under§ 1021.5 Code Civ.

21 Proc.

22

Second Cause of Action

23

4. That an alternative writ of mandamus, and then a peremptory writ of

24 ~------------~V~ER-IF-IE-D~FI~RS-T -AM~E~ND-E-D -PE-TIT-IO-N-FO-R-W~R-IT-OF-M-A-ND-A-M-US---------~-2~8-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 63 of 92 Page ID #:70

mandamus, and/or an injunction, be issued to command the respondents DEPARTMENT

2 OF HEALTH CARE SERVICES ("Department") and SANDRA SHEWRY, Director of

3 the Department, to set aside their preempted policy to implement subd. (b)(3) of

4 § 14105.19 Welf. & Inst. Code, and to refrain from implementing the aforesaid

5 preempted subd. (b)(3) of§ 14105.19 Welf. & Inst. Code, including refraining from 6 reducing payments to Medi-Cal managed care plans by 10%, or by the actuarial

7 equivalent thereof, and in any other amount of payment reduction.

8

5. That petitioners have reasonable attorneys' fees under§ 1021.5 Code Civ.

9 Proc.

1 o

Third Cause of Action

1 1

6. That a writ of mandamus or injunction be issued to order the

12 respondents DEPARTMENT OF HEALTH CARE SERVICES ("Department") and

13 SANDRA SHEWRY, Director of the Department, to set aside their preempted policy of

14 implementing Sections 14, and 15 of Assembly Bill X3 5, and refrain from implementing

15 the aforesaid preempted Sections 14, ands 15 of Assembly Bill X3 5, in whole or in part;

16 including, refraining from educing payments by 10% or any other amount of reduction,

17 to Medi-Cal providers in the Medi-Cal fee-for-service program, and Medi-Cal managed

18 care plans, for dates of service on and after July 1, 2008, or at any other time.

19

7. That petitioners have reasonable attorneys' fees under§ 1021.5 Code of

20 Civil Procedure.

21

· Fourth Cause of Action

22

8. That an injunction be issued under the Americans with Disabilities Act of

23 1990, ("ADA"), to command the respondents DEPARTMENT OF HEALTH CARE

24 1-------~ - - -
VERIFIED FIRST AMENDED PETITION FOR WRIT OF MANDAMUS

-29-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 64 of 92 Page ID #:71

SERVICES ("Department") and SANDRA SHEWRY, Director of the Department, to 2 refrain from implementing Sees. 14, and 15 of Assembly Bill X3 5, in whole and in

3 every part, including, refraining from implementing a 10% reduction, or any other

4 reduction in payments, to Medi-Cal fee-for-services providers and Medi-Cal managed

5 care plans.

6

9. That petitioners have reasonable attorneys' fees under 42 U.S.C.

7 § 12133.

8

All Causes of Action

9

10. That petitioners have costs of suit incurred, together with such other and

10 further relief as may be just.

11 Dated: May 12, 2008.

12

13

14

"~Y"...H'f'ys for PetitiOners

I ae endent Living Center of Southern California,

15

.; Gray Panthers of Sacramento; The Gray

Panthers of San Francisco; Gerald Shapiro,

16

Pharm.D., dba Uptown Pharmacy & Gift

Shoppe; Sharon Steen, dba Central Pharmacy;

17

Tran Pharmacy, Inc., dba Tran Pharmacy;

Margaret Dowling; Mark Beckwith; and

18

Jason Young

19

20

21
22

23

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 65 of 92 Page ID #:72

1

VERIFICATION

2 LYNN S. CARMAN deposes and says:

3

I am the attorney for the Petitioners in the within Verified First Amended Petition

4 for Writ of Mandamus. I make this verification for the reason that the Petitioners are

5 absent from the county where I have my office. I have read the pleading and I am 6 informed and believe the matters therein to be true and on that ground allege that the

7 matters stated therein are true.

8

I declare under penalty of perjury under the laws of the State of California that the

9 foregoing is true and correct. Executed in Novato, California, on May 12, 2008.

10

11

12
13

14

15

16

17

18

19

20

21

22

23

24~----·------yERffiEDBJ~MrnDED!~~MWMrc~mw~----------:~

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 66 of 92 Page ID #:73
EXHIBIT - E

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 67 of 92 Page ID #:74

LYNN S. CARMAN, State Bar 028860 Medicaid Defense Fund 2 28 Newport Landing Dr. Novato, CA 94949-8214 3 Telephone: (415) 927-4023 Facsimile : (415) 499-1687 4 STANLEY L. FRIEDMAN, State Bar 120551 5 445 S. Figueora St., 27th Floor Los Angeles, CA 90071-1631 6 Telephone: (213) 629-1500 Facsimile: (213) 489-6899 7 Attorneys for Petitioners Independent Living Center 8 of Southern California. Inc.; Gray Panthers of Sacramento; The Gray Panthers of San Francisco; Gerald Shapiro, 9 Pharm.D., dba Uptown Pharmacy & Gift Shoppe; Sharon Steen, dba Central Pharmacy; Mark Beckwith; 10 Margaret Dowling; Tran Pharmacy, dba Tran Pharmacy; and Jason Young 11
SUPERJOR COURT OF THE STATE OF CALIFORNIA 12
IN AND FOR THE COUNTY OF LOS ANGELES, UNLIMITED JURJSDICTION
13

14 INDEPENDENT LIVING CENTER OF SOUTHERN

No. BS 114459

CALIFORNIA, INC., a nonprofit corporation; GRAY

15 PANTHERS OF SACRAMENTO, a nonprofit

corporation; THE GRAY PANTHERS OF SAN

Date: June 5, 2008

16 FRANCISCO, a nonprofit corporation; GERALD

Time: 9:30a.m.

SHAPIRO, Pharm.D., doing business as Uptown

Dept.: 85

17 Pharmacy and Gift Shoppe; SHARON STEEN, doing

Judge: Hon. James C. Calfant

business as Central Pharmacy; MARK BECKWITH;

18 and MARGARET DOWLING; TRAN PHARMACY,

INC., a corjJoration, doing business s Tran Pharmacy;

19 and JASON YOUNG,

PETITIONERS' MEMORANDUM

Petitioners,

IN SUPPORT OF WRIT OF

20 -vs.-

MANDAMUS, OR IN THE

SANDRA SHEWRY, Director of Department of Health ALTERNATIVE, FOR

21 Care Services ofthe State of California; DEPARTMENT PERMANENT OR

OF HEALTH CARE SERVICES, a department of the PRELIMINARY INJUNCTION

22 State of California; and DOES 1 through 50,

23

,_ _ _ _ _ _ _ "_ _ _ __

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 68 of 92 Page ID #:75

TABLE OF CONTENTS

2

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF

MANDAMUS , OR IN THE ALTERNATIVE, PERMANENT INJUNCTION

3

DISCUSSION

3

4

Legislative History of Assembly Bill X3 5

4

5

Comment and ultimate factual finding

6

6

Ultimate finding of fact, conclusion oflaw, and reliefto be issued.

7

7

FURTHER DISCUSSION

9

8 1. Courts, in reviewing the setting of Sec. 30(A) rates, use the

9

"arbitrary and capricious" standard of review. Thus, if the

9

State fails to adequately consider provider costs or any other

factor which bears on whether the rates are consistent with

10

quality and access, the rate is void ab initio; all, without necessity for the plaintiff to also show that it is likely that the

new rates will negatively impact quality of care or access to

11

quality care.

12

Conclusion

10

13 2. 14 15 16
3. 17 18

The Supremacy Clause has always been a shield against state action against

10

Medicaid beneficiaries and providers, which is contrary to and hence preempted

by provisions of the Medicaid Act, such as, especially, Sec. 30(A).

Conclusions on sub-point

12

FURTHER DISCUSSION OF STANDING TO SUE, AND INJURY 13

Next. The plaintiffs each sue, as authorized by Green v. Obledo, 29 Cal.3d

14

(1981 ), on the own behalf and on behalf of the public, to procure performances

of public duty by public officials; hence need now show they have any legal or

special interest in the result.

19 4. 20 21

Clayworth, 295 F.Supp.2d at 1117-1119, ruled that provider and beneficiary

14

associations have prudential standing to assert the interests of their patients or

members. Under the view of these rulings, the plaintiff pharmacies, the

ILSCal, and the San Francisco Gray Panthers may, on a prudential basis,

assert the interests of their patients, clients, or members (as the case may be),

in the within proceeding.

22 Injury

14

23 Summary, and relief requested

15

24

-1-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 69 of 92 Page ID #:76

TABLE OF AUTHORITIES 2

3

Amisub (PSL), Inc. v. Colorado Dept. of Soc. Ser.

9

4 879 F.2d 789 (1Oth Cir.1989)

5 Arkansas Medical Society, Inc. v. Reynolds 6 F.3d519 (8th Cir.l998)
6
Clayworth v. Bonta 7 295 F.Supp.2d 1110 (E.D.Cal.2003)

9 8,passim

8 Ex parte Young 209 U.S. 123, S.Ct. 441, 52 L.Ed. 714 (1908)
9 Green v. Obledo
10 29 Cal.3d 126 (1981)
11 Harmony Nursing Homes, Inc. v. Anderson 341 F.Supp. 957, 958 (D.Minn.l972)
12
National Credit Union Adm. v. First National Bank & Trust Co.
13 522 u.s. 47 (1998).
14 Orthopaedic Hospital v. Belshe

3,passim 13 11 12
5,passim

15 103 F.3d 1491 E.D.Cal.2005).

16 Pharmaceutical Research and Manufacturers of America (PllRMA) v. Concannon 11-12

17 249 F.3d 66 (1st Cir.2001).

18 Sanchez v. Johnson

9

416 F.3d 1051 (2005)

19

Wisconsin Hospital Assn. v. Reivitz

10

20 735 F.2d 1226, 1227 (71h Cir.)

21

Constitutions

22 Supremacy Clause, (article VI, cl. 2, U.S. Constitution

l,passim

23

24

-ii-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 70 of 92 Page ID #:77

1
2 Statutes
3 California
4 Code Civ. Proc.
5 § 1021.5

TABLE OF AUTHORITIES (Cont.)

6 Welf. & Inst. Code

14105.19

7

Subds. (a), (b)(l), (b)(2), and (c)- (g)

8 § 14166.245

9 Chapter 3, Statutes 2007-2008 Third Extraordinary Session

10 Assembty Bill X3 5:

Sec. 14

11

" 15

" 16

12

" 17

13

Federal

14

42 U .S.C.:

15

§ 1396a, subd. (a)(30)(A):

- quality of care clause

16

- equal access clause

§ 1983

17

18 Authorities

19 Floor Analysis (Assembly Budget Committee)
20

21

22

23

24

-iii-

15
2,passim 2,passim
2
2,passim 2,passim
6 6
2,passim 2,passim 2,passim
9
5

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 71 of 92 Page ID #:78

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS, OR IN THE ALTERNATIVE, PERMANENT INJUNCTION
2
Petitioners ("plaintiffs") Margaret Dowling; Mark Beckwith; Gerald Shapiro, Pharm.D., 3
dba Uptown Pharmacy and Gift Shoppe; Sharon Steen, dba Central Pharmacy; Tran Pharmacy, 4
Inc, dba Tran Pharmacy; the Independent Living Center of Southern California, Inc.; and The Gray 5
Panthers of San Francisco, ("San Francisco Gray Panthers"), -- file this Memorandum in support 6
7 of their motion for peremptory writ of mandamus, or in the alternative, a permanent or preliminary
8 injunction, in the First Cause of Action only, to restrain the respondents Department of Health
9 Services and its Director, Sandra Shewry, as set forth below.1

10

--ooOOoo-

11

This is a Supremacy Clause preemption case}

12

The movant petitioners are:

--two Medi-Cal recipients who are in Medi-Cal fee-for-service;'

13

--three pharmacies who are providers in Medi-Cal fee-for-service;3

--an independent living center whose disabled clients are Medi-Cal fee-for-service;4

14

15

1 The petitioners Gray Panthers of Sacramento, and Jason Young, are not moving parties in

this within motion. 16

2 The Supremacy Clause (article VI, cl. 2 of U.S. Constitution) provides: 17

"This Constitution, and the laws of the United States which shall be made in pursuance

18

thereof, ... shall be the supreme law of the land; and the judges of every state shall be

bound thereby, anything in the Constitution or laws of any State to the contrary,

19

notwithstanding."

20

3 Gerald Shapiro, Pharm.D., owner of Uptown Pharmacy in Los Angeles;

Sharon Steen, copartner in a copartnership which owns Central Pharmacy in Santa Monica; 21 Tran Pharmacy, Inc., owner ofTran Pharmacy, Inc, in Garden Grove.

22

4 Independent Living Center of Southern California, Inc., ("ILCSCal"), who annually

assists and advocates for 7,500 disabled persons, who are mostly SSI recipients who receive

23 their health care from Medi-Cal fee-for-service.

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 72 of 92 Page ID #:79

--the San Francisco Gray Panthers which has several members in Medi-Cal fee-forservice. 2 They seek peremptory writ of mandamus under§ 1085 Code Civ. Proc. (or in the alternative, a 3 permanent or preliminary injunction), in the First Cause of Action only, to order the California
4 Department of Health Care Services ("DHCS") and Sandra Shewry, its Director, to set aside their
5 policy to implement, and to refrain from implementing a 10% across-the-board cut in

6 reimbursement paid by the Medi-Cal program to providers in the Medi-Cal fee-for-services

7 program, fordates of service on and after July l, 2008; --all, as provided in subds. (a), (b)(l),
8 (b)(2), and (c) - (e) of § 14105.19 Welf. & Inst. Code; and § 14166.245 Welf. & Inst. Code, --
9 which were part of Sections 14 and 15 Assembly Bill X3 5, which was enacted Feb. 16,2008.5
Movants shall refer to these provisions, (subds. (a), (b)(1 ), (b)(2), and (c) - (e) of§ 10
14105.19 Welf. & Inst. Code; and§ 14166.245 Welf. & Inst. Code), collectively, as the "FFS 11
Payment Statutes."6 12
However, the FFS Payment Statutes violate the below federal statutes, so as to be 13
preempted, -- due to the Supremacy Clause, -- by the below preempting federal statutes; namely: 14
-the "quality of care" clause of subd. (a)(30)(A) of 42 U.S.C. § 1396a, --herein, "Sec. 15
II 16
II 17
II 18

19 5 Assembly Bill X3 5 was chaptered as Chapter 3, Statutes of2007-2008 Third
20 Extraordinary Session.

21

6 A copy of Sections 14 and 15 of Assembly Bill X3 5, which contain the FFS Payment

Statutes-- (namely, subds. (a), (b)(l), (b)(2), and (c)- (e) of§ 14105.19 Welf. & Inst. Code; and

22 § 14166.245 Welf. & Inst. Code) -- is attached as Exhibit A to this brief.

Petitioners have requested judicial notice of the FFS Payment Statutes, in Paragraph A of

23 Petitioners' Request for Judicial Notice in Support ofPetition for Writ of Mandamus and Other

Relief, ("RJN"), filed herewith.

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 73 of 92 Page ID #:80

30(A);7 and,

2

- the "equal access" clause of Sec. 30(A),8

3 and, as the inevitable result, (1) each of the two movant Medi-Cal recipients, (Dowling and

4 Beckwith), the pharmacy plaintiffs, the plaintiff Southern California Independent Living Center,

5 Inc. ("ILCSoCal"), and the plaintiff Gray Panthers of San Francisco ("Gray Panthers"), as well as

6 (2) the patients, clients, and members of the plaintiff pharmacies, ILCSCal, and Gray Panthers

7 (who are their prudential jus tertii representatives), as well as millions of other Medi-Cal

8 beneficiaries receiving health care in the Medi-Cal fee-for-service program, will be injured or put

9 at risk of injury by implementation of the 10% provider payment cuts to Medi-Cal fee-for-service

10 providers, under the federally preempted FFS Payment Statute; -- all as set forth later in this

11 brief, and, in their declarations filed herewith.

12

See, generally, Ex Parte Young, 209 U.S. 123 (1908).

13

DISCUSSION

14

The FFS Payment Statutes of Assembly Bill 3X 5 were enacted by a legislative history

15 replete with gubernatorial and legislative declarations which identify the bill as a pure budget

16 7 The "quality of care" clause of Sec. 30(A) provides in relevant part:

17 "(a) A state plan for medical assis~ance must- (30)(A) provide such methods and

18

procedures relating to the ... payment for, care and services available under the

plan ... as may be necessary ... to assure that payments are consistent with

19

efficiency, economy, and quality of care ... "

20

8 The "equal access" clause of Sec. 30(A) provides in relevant part:

21 22 23 241---

"(a) A state plan for medical assistance must- (30)(A) provide such methods and procedures relating to the ... payment for, care and services available under the the plan ... as may be necessary ... to assure that payments ... are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area."
PETITIONERS' MEMORANDUM .IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 74 of 92 Page ID #:81

reducing measure, not, any measure in respect to which the Legislature, the Lord forbid, might

2 engage in any inquiry or consideration of whether the 10% reduced payments would be sufficient

3 to assure that payments are consistent with quality of care, and with beneficiary equal access to

4 quality care, as absolutely required by Sec. 30(A).

5

LEGISLATIVE HISTORY OF ASSEMBLY BILL X3 5

6

1. On January 10, 2008, the Governor proclaimed a State fiscal emergency, sent a

7 proposed 2008-09 budget bill to the Legislature, and called the Legislature into special 8 session.9 10

9

2. On February 4, 7, and 15, 2008, Assembly Bill X3 5, a health budget trailer bill

10 was introduced, then amended to include the FFS Payment Statutes in Sections 14 and 15, 11 and was.enacted on February 16, 2008.ll 12

12

3. A copy of the FFS Payment Statutes of Assembly Bill X3 5 is set forth in Exhibit

13 A attached to this Memorandum; and is also set forth as Exhibit A of petitioners' RJN.

14

4. When Assembly Bill X3 5 was scheduled for final vote, the Assembly Floor

15 Analysis of the Assembly Budget Committee informed legislators that the Governor's original

16 proposal to commence the 10% Medi-Cal provider cut in June 2008, was postponed, in Assembly

17 Bill X3 5, to commence in July 2008. The analysis explained:

18

19

9 Governor's website, Jan. 10, 2008. (A download copy is set forth in Exhibit F ofRJN.)

20

10 A copy of the Governor's fiscal emergency proclamation is set forth in Exhibit B of

Petitioner's Request for Judicial Notice in Support of Writ ofMandamus and Other Relief,

21 ("RJN").

A copy of the Governor's special session proclamation is set forth in Exhibit C ofRJN. 22
11 Bill Documents of Assembly Bill 3X 5, set forth in Exhibit D ofRJN.

23 12 Bill Documents, (Exhibit D of RJN).

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 75 of 92 Page ID #:82

"The primary purpose of the delay of the reduction until the start of the new fiscal year is

to allow time for further review of provider rates during the regular budget process to

2

identify any particularly critical consequences of the reduction and to evaluate the

possibility of using a more refined approach to mitigate those consequences while still

3

achieving savings." (Boldface emphasis supplied.)13

4 As, in Alice in Wonderland, sentence first, verdict afterwards. Thus, in the rush to cut provider

5 . rates 10%, the Legislature here articulated its conscious and deliberate purpose to postpone and

6 refrain from considering, before the bill was enacted, the effect of the 10% payment cut and

7 whether the cut was consistent with quality of care and beneficiary access to quality care.

8

(But, this violated Sec. 30(A), which requires that a State consider all factors which relate

9 to whether a proposed Medicaid rate is consistent with quality and with recipient access~ before a

10 new rate is promulgated. See, Orthopaedic Hospital v. Belshe, 103 F.3d 1491, 1500 (9th

11

Cir.1997),

which

is

a

very

strong

case

on

this

point.

14 )

12

5. The Legislature, within the four comers of Assembly Bill X3 5 itself, also

13 repeatedly articulated that the Legislature's purpose in the bill was to reduce the State budget.

14

6. Thus, Sec. 14 of Assembly Bill X3 5 added§ 14105.19 to the Welf. & Inst. Code,

15 to provide:

16

"(a) Notwithstanding any other provision oflaw, in order to implement changes in the

level of funding for health care services, the director shall reduce provider payments as

17

specified in this section." (Emphasis supplied.)

18 This is an admission by the Legislature that the purpose ofthe I 0% Medi-Cal provider cut in

19 Section 14 of Assembly Bill X3 5, was to implement the Governor's budget reductions in the

20 fiscal 2008-09 budget bill, (not, to consider whether the cuts would affect quality of services or

21 beneficiary access to quality services).

22 13 Page 1 of Assembly Floor Analysis for Third Reading. (Exhibit E ofRJN.)

23 14 This point will be later more fully addressed.

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 76 of 92 Page ID #:83

1

7. Then, Section 15 of Assembly Bill X3 5, --which imposes the 10% cut in Medi-

2 Cal payments to non-contract hospitals, -- added §141 05.245, subd. (a) to Welf. & Inst. Code, to 3 expressly provide

4

"(a) The Legislature finds and declares that the state faces a fiscal crisis that requires

unprecedented measures to be taken to reduce General Fund expenditure to avoid

5

reducing vital government services necessary for the protection of the health, safety, and

welfare of the citizens of the State of California." (Emphasis supplied.)15 6

7

8. Also, Sec. 16 of Assembly Bill X3 5 expressly provides:

8

"SEC. 16. This act addresses the fiscal emergency declared by the Governor

by proclamation on January 10, 2008, pursuant to subdivision (f) of Section 10 of

9

Article IV of the California Constitution." (Emphasis supplied.Y6

10

9. And, Section 17 of Assembly Bill X3 5 expressly provides:

11

"SEC. 17. . .. In order to make statutory changes needed to implement cost

containment measures affecting health services, at the earliest possible time, it is

12

necessary that this act take effect immediately." (Emphasis supplied.) 17

13

Comment and ultimate factual finding

14

It is manifest from the legislative history that the conclusive factor in enacting the FFS

15 Payment Statutes, in Sections 14 and 15 of Assembly Bill X3 5, complained of, was not whether

16 the Legislature could assure that the new rates were consistent with quality and access, as

17 required by Sec. 30(a), but, rather, were solely budgetary considerations. 18

19

20

15 Section 15 of Assembly Bill X3 5 is set forth in Exhibit A attached t-o this brief, and, in

Exhibit A of petitioners' RJN.

21 16 Section 16 of Assembly Bill X3 5 is set forth in Exhibit A attached to this brief, and, in

22 Exhibit A of petitioners' RJN.

23

17 Section 15 of Assembly Bill X3 5 is set forth in Exhibit A attached to this brief, and, in

Exhibit A of petitioners' RJN.

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

-6-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 77 of 92 Page ID #:84

Ultimate finding of fact, conclusion of law, and relief to be issued

2

From the above legislative history of Assembly Bill X3 5, including:

3

- the Assembly Budget Committee told Assembly members in February 2008 that they

4

should first pass the cuts now, then take time, only later, to determine the effect of their

5

action;

6

7

-the four declarations in Sections 14, 15, 16, and 17 of Assembly Bill X3 5, that,

8 essentially, the Legislature was enacting these provisions for budgetary reasons, only,

9 because of the need to cut State expenditures; and,

10

11

- the context which surrounds the bill, namely, that the 10% rate cut was enacted within

12 37 days from the Governor's proclamation that the State's economic sky was falling, and

13 that an unprecedented budget shortfall required the Legislature to drastically reduce State

14 spending, it follows that the Legislature, in enacting the 10% Medi-Cal cut in payments to fee-

lS for-service providers in and by the FFS Payment Statutes,-- (i.e., subds. (a), (b)(1), (b)(2), and (c)

16 -(e) of § 14105.19 Welf. & Inst. Code; and§ 14166.245 Welf. & Inst. Code, which are part of

17 Sections 14 ands 15 of Assembly Bill X3 5), -- (1) did so solely for budgetary reasons; (2)

18 without consideration of the factors necessary to be considered to determine if the proposed new

19 rates were consistent with quality of care and access to services; and, that (3) the conclusive

20 factor in the decision of the Legislature to make these cuts was budgetary considerations.

21

Hence, such action of the Legislature to promulgate the FFS Payment Statutes of

22 Assembly Bill X3 5, --as well as the respondent DHCS and the Director's policy and action to

23 implement these measures, -- were and are arbitrary and capricious, and contrary to law; namely,

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 78 of 92 Page ID #:85

in violation of the aforesaid quality and access clauses of Sec. 30(A); so as to be thereby

2 preempted, under the Supremacy Clause, by Sec. 30(A).

3

Hence, an appropriate peremptory writ of mandamus (or in the alternative, a permanent

4 injunction), or at the very least, a preliminary injunction must be issued before July 1, 2008, to

5 order DHCS and its Director (1) to set aside their policy to implement the 10% payment cut of the

6 FFS Payment Statutes ofAssembly Bill X3 5, and (2) to refrain from implementing the same.

7

FURTHER DISCUSSION

8 1. 9 10 11 12

Courts, in reviewing the setting of Sec. 30(A) rates, use the "arbitrary and capricious" standard of review. Thus, if the State fails to adequately consider provider costs or any other factor which bears on whether the rates are consistent with quality and access, the rate is void ab initio; indeed, without any necessity for the plaintiff to show that it is likely that the new rates will negatively impact quality care or beneficiaries' access to quality care.

The case at bar is deja vu all over again. 13

In 2003 the Legislature enacted a prior bill to cut all Medi-Cal provider and managed care
14

payments 5% across-the-board for budgetary reasons; and declared in the bill, --just as in case at 15

bar, -- that it was enacted due to a budget shortfall, to implement reduction in funding for health 16

services. 17

In Clavworth v. Bonta, 295 F.Supp.2d 1110, 1126-1130 (E.D.Cal.2003), preliminary 18

injunction issued to enjoin the 5% rate cut in the Medi-Cal fee-for-service program, on the basis 19

that because budgetary considerations were the conclusive factor in enacting the cut, that the 20

action of the State to reduce Medicaid rates was arbitrary and capricious, in violation of the 21

requirement of Sec. 30(A) that a Medicaid rate setter must consider quality and access in setting 22

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 79 of 92 Page ID #:86

1 the rate. 18

2

The District Court in Clayworth concluded that the State's purpose in enacting the 5% cut

3 "was to reduce the budget shortfall," noting that "the statute declares on its face that the rate

4 reduction is ' [d]ue to the significant state budget deficit projected for the year," (id., 295 F.Supp.

5 at 1128), and held that:

6

"Budget constraints are not alone a valid justification for rate setting. See, Ark. Med.

Soc'y., 6 F3d at 531 ('Abundant persuasive precedent supports the proposition that

7

budgetary considerations cannot be the conclusive factor in decisions regarding

Medicaid,'); Orthopaedic Hosp., 103 F.3d at 1499, n.3;19 Amisub, 879 F.2 at 800-01."20

8

In analyzing Sec. 30(A) the District Court in Clayworth relied on Orthopaedic Hospital v. Belshe,

9

103 F.3d 1491, 1496-1497, 1500. The District Court noted that Orthopaedic Hosp. 103 F.3d at

10

1500, held that under the quality clause of Sec. 30(A) that there must be a reasonable relationship

11

between the rates set and providers' costs to provide quality care. (Clayworth, 295 F.Supp. at

12

1126.)

13

Further, this rule is procedural, (Clayworth, 103 F.3d at 1127): if the State does not

14

consider providers' costs, or cuts rates without any evidence that the cut can be sustained by

15

16

18 Note: The order for preliminary injunction in Clayworth was reversed in the 9th Circuit,

17 in a one-sentence order filed August 2, 2005, stating that the Sanchez v. Johnson, 416 F.3d 1051

(9th Cir.2005), holding that Congress did not intend, in 42 U.S.C. § 1983, to create any private

18 right of action in Medicaid beneficiaries or providers, compelled reversal of the Clayworth

preliminary injunction. (Copy of the 9th Circuit order is set forth in Exhibit G ofRJN.)

19

In sum, the 9th Circuit reversal of the Clayworth preliminary injunction did not overrule

or relate to any of the District Court's ruling in Clayworth, supra, other than the single

20 (erroneous) order of the District Court, to wit, that § 1983 afforded jurisdiction to the federal

comis to entertain challenges by Medicaid beneficiaries and providers to California's compliance

21 with Sec. 30(A), --which§ 1983 issue is irrelevant to any issue raised by plaintiffs in the case at

bar. 22
19 Arkansas Medical Society, Inc. v. Reynolds, 6 F.3d 519 (8th Cir.19983).

23 20 Amisub (PSL), Inc. v. Colorado Dept. of Soc. Ser., 879 F.2d 789 (1Oth Cir.1989).

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

~·---=9-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 80 of 92 Page ID #:87

providers, in light of their costs, without a loss of quality or equal access for Medi-Cal recipients,

2 (see, Clayworth, 295 F.Supp. at 1128), then the rate is held to be "arbitrary and capricious,"

3 contrary to Sec. 30(A), and hence void, without more. -- i.e., without any necessity for the

4 plaintiff to show that the rate is too low to enable providers to furnish quality services, or, that

5 insufficient providers will continue in the program. (Orthopaedic Hosp., 103 F.3d at 1500;

6 Clayworth, 295 F/Supp.2d at 1127.)

7

The basis for enjoining a Medicaid rate set arbitrarily and capriciously, without

8 consideration of provider costs or without consideration of quality or access at all, is that:

9

"(I)t is safe to assume that a rate that is set arbitrarily, without reference to the Sec. 30(A)

requirements, is unlikely to meet the equal access and quality requirements. Thus, a

1 0

beneficiary plaintiff may insist that the State, at a minimum, consider the effect of a rate

reduction on qual access to quality services in light of provider costs." Clayworth, 295

11

F.Supp.2d at 1127, citing Orthopaedic Hosp., 103 FJd at 1500.

12

Conclusion

13

One would have to believe in the tooth fairy, to believe on this legislative record that the

14 Legislature, -- in enacting the 10% provider rate, -- considered whether the reduced payments are

15 consistent with quality of services and access to quality services, or considered whether the

16 reduced payment amounts bear a reasonable relation to provider costs, (as required Sec. 30(A)

17 under the rulings of Orthopaedic Hosp., 103 F.3d at 1500, and Clayworth, 295 F.Supp. at 1117,

18 fu.6).

19 2. 20

The Supremacy Clause has always been a shield against State action, (1) which threatens to injure Medicaid beneficiaries and providers, and (2) is preempted, under the Supremacy Clause, by contrary provisions of the Medicaid Act,

21 In Wisconsin Hospital Assn. v. Reivitz, 735 F.2d 1226, 1227 (71h Cir.), a hospital
22 association and several hospitals had standing to sue to enforce Sec. 30(A), under the Supremacy
23

-----·:.-ro- 24 I-----=r=Er=Ir=Io=N=E=R=s,-=M=E=M-=o=RA-=N=o=u-::-M-:-:I-:-:-N-=-su:-:-:r=r-=-oR=-=r::-co=-=F:-:cw=ru=r=-co=-=F:-:-:cMANDAMUs AN DOT-HER RELIEF____

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 81 of 92 Page ID #:88

Clause.

2

In Harmony Nursing Homes, Inc. v. Anderson. 341 F. Supp. 957, 958 (D.Minn.1972), a

3 nursing home had standing to sue under the Supremacy Clause to restrain a state's"freeze" on

4 Medicaid payments to providers.

5

Also, the three pharmacy plaintiffs, the plaintiff ILCSCAL, and the plaintiff San

6 Francisco Gray Panthers have just as much or more a right, under the Supremacy Clause, to sue

7 to obtain a protective injunction, for themselves and the benefit of their Medi-Cal patients,

8 clients, or members, against the federally preempted 10% Medi-Cal provider cut, (due to its

9 violation of Sec. 30(A)), as did the pharmaceutical manufacturers association in Pharmaceutical

10 Research and Manufacturers of America (PhRMA) v. Concannon, (249 FJd 66 (1 51 Cir.2001) to

11 sue to enjoin state action, in violation of the Medicaid Act, injuring the manufacturers and the

12 Medicaid patients whom they prudentially represented.

13

In PhRMA, a pharmaceutical manufacturers association, -- not one of whose members

14 had any professional relationship with Medicaid beneficiaries,-- was readily afforded prudential

15 standing to sue under the Supremacy Clause to pre-empt a state statute enacted in violation of the

16 Medicaid Act.

17

I.e., all that is necessary to be a plaintiff in a Supremacy Clause claim, (Article VI, cl. 2,

18 Constitution), is a showing that the interests of the plaintiff are within the zone of interests

19 arguably to be protected by the federal statute. Thus PhRMA held, (249 F.3d 66, 72-74 (1 51 Cir.

20 2001):

21

"The initial question is whether PhRMA has prudential standing to challenge the prior

authorization provision of the Act. ... The Supreme Court recently reiterated the standard

22

for determining prudential standing:

23

In applying the 'zone of interests" test, we do not ask whether, in enacting the

24 I------=P=ET=IT=Jo::::N-::E=R=s·=M-=E=M-=o·=-R-=AN-=o=u-=M=l-=N-=su-=p=-=p=oR=T=-o=-=F=-=w-=ru=T=-o=-=F-=M-=A-=N=---DAMUS AND OT::-:H=ER:---:-:RE=,L-:--::IE=F-··----_.,-·1-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 82 of 92 Page ID #:89

statutory provision at issue, Congress specifically intended to benefit the plaintiff.

Instead, we first discern the interests 'arguably ... to be protected' by the statutory

2

provision at issue; we then inquire whether the plaintiffs interests affected by the

agency action in question are among them.

3 (National Credit Union Adm. v. First National Bank & Trust Co., 522 U.S. 479, 492

4

(1998).

5

PhRMA has not asserted an action to enforce rights under the Medicaid statute,

... but rather a preemption-based challenge under the Supremacy Clause. In this

6

type of action, it is the interests protected by the Supremacy Clause, not by the

preempting statute, that are at issue. [Citation.] As the Third Circuit recently pointed out,

7

an entity does not need prudential standing to invoke the protection of the Supremacy

Clause: 8

We know of no governing authority to the effect that the federal statutory

9

provision which allegedly preempts enforcement of local legislation by conflict

must confer a right on the party that argues in favor of preemption. On the

10

contrary, a state or territorial law can be unenforceable as preempted by federal

law even when the federal law secures no substantive right for the partv arguing

11

preemption.

12

Id. Thus, regardless of whether the Medicaid statute's relevant provisions were designed

to benefit PhRMA, PhRMA can invoke the statute's preemptive force....

13

Given that PhRMA has prudential standing grounded in the Supremacy Clause, we think

it may fairly assert the rights ofMedicaid recipients for purposes of this action. Where a

14

party has established a concrete injury in fact, and otherwise has standing to challenge the

lawfulness of the statute, it is 'entitled to assert those concomitant rights of third parties

15

that would be "diluted or adversely affected" should [its] constitutional challenge fail and

the statute remain in force.... " (Emphasis supplied.) 16

17

Conclusion on sub-point: It follows form this unbroken line of cases on the Supremacy

18 Clause, that Medicaid providers as well as beneficiaries are within the "zone of interests"

19 intended to be protected, by Congress, in enacting the Medicaid Act; especially, Sec. 30(A).

20

Thus both Medicaid beneficiaries and providers may sue, as in case at bar, to protect

21 against injury from state action which violates, and is hence preempted, under the Supremacy

22 Clause, by the Medicaid Act, (here, Sec. 30(A)).

23 Accordingly, the two Medi-Cal beneficiaries (Dowling and Beckwith) who obtain their

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

-12-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 83 of 92 Page ID #:90

Medi-Cal services in the Medi-Cal fee-for-service program, plus, the three Medi-Cal fee-for-

2 service phannacy plaintiffs, (the Uptown, Central, and Iran phannacies), are manifestly entitled,

3 under Supremacy Clause decisional law, to a writ of mandamus or injunction, in the First Cause

4 of Action, to enjoin the respondents from injuring them by implementing the 10% cut in

5 payments to Medi-Cal fee-for-service providers, under the FFS Payment Statutes, (namely,

6 subds. (a), (b)(l), (b)(2), and (c)- (e) of § 14105.19 Welf. & Inst. Code; and§ 14166.245 Welf.

7 & Inst. Code), enacted as part of Sections 14 and 15 of the Assembly Bill X3 5, which violate the

8 quality and access provisions of Sec. 30(A), --i.e., , 42 U.S.C.. § 1396a(a)(30)(A).

9 FURTHER DISCUSSION OF STANDING TO SUE, AND INJURY

10
3. 11
12

Next. The plaintiffs each sue, as authorized by Green v. Obledo, 29 Cal.3d 126 (1981), on their own behalf and on behalf of the public, to procure performance of public duty by public officials; hence, need not show they have any legal or special

13

It is sufficient, held Green, supra, that the plaintiff "is interested as a citizen in having the

14 laws executed and the duty in question enforce." (29 Cal.3d at 144-145.)

15

Thus each of the movant plaintiffs, -- who are citizens and residents of the State of

16 California as shown by their declarations, -- may sue in this case to enforce the public duty ofthe
17
respondent State officials to comply with the public duty,-- pursuant to the Supremacy Clause,--
18 to obey federal law where, as in case at bar, Sec. 30(A) preempts contrary state law, (here, the
19 10% Medi-Cal provider rate cut promulgated by subds. (a), (b)(1), (b)(2), and (c)- (e) of
20 § 14105.19 Welf. & Inst. Code; and§ 14166.245 Welf. & Inst. Code, (which are part of
21 Sections 14 and 15 of the Assembly Bill X3 5 ("Exhibit A attached).
22

23

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

-13-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 84 of 92 Page ID #:91

4. 2 3 4

Clayworth, 295 F.Supp.2d at 1117-1119, ruled that providers and beneficiary associations have prudenlial standing to assert the interests of their patients or members. Under the view of these rulings, the plaintiff pharmacies, the ILCSCal, and the San Francisco Gray Panthers may, on a prudential basis, assert the interests of their patients, clients, or members {as the case may be), in the within proceeding.
The interest of Medi-Cal beneficiaries,-- who are patients, clients, or members of

5 the two pharmacy plaintiffs, the ILCSCal, and the San Francisco Gray Panthers, -- is the interest

6 of not being injured from implementation of the 10% cut in payments to Medi-Cal provider in the

7 Medi-Cal fee-for-serve program, in violation of the federally pre-empted FFS Payment Statutes,

8 (namely, the aforesaid subds. (a), (b)(l), (b)(2), and (c)- (e) of§ 14105.19 Welf. & Inst. Code;

9 and § 14166.245 Welf. & Inst. Code, -- (which provisions are part of Sections 14 and 15

10 Assembly Bill X3 5, in Exhibit A attached).

11

As shown by the declarations of the CEO of the ILCSCal, and the co-chief of the San

12 Francisco Gray Panthers, filed herein, each of these beneficial or member organizations meet the

13 tests described by Clayworth, 295 F.Supp/2d at 1117-1119, for having prudential standing to
14 asse1i the rights of their clients or members who are Medi-Cal beneficiaries, in the case at bar.
15 Injury
16 Also, plaintiffs have introduced evidence of a severe shortage of dentists and of doctors
17 and specialists, which will be exacerbated by this newest 10% payment cut to fee-for-service
18
providers. Also, the declarations of the two movant Medi-Cal beneficiaries,-- Beckwith and 19
Dowling, the former a quadriplegic who requires oxygen and 8 attendants daily to stay alive, and 20
the latter a paraplegic with diagnosis of terminal rectal cancer,-- show they will be injured, and 21

22 are at severe risk for injury, pain and suffering, and of being forced into institutions, and of even

23 death, -- (as are thousands like them), -- from loss of their doctors and specialists, and access to

24

PETITIONERS' MEMORANDUM IN SUPPORT OF WRIT OF MANDAMUS AND OTHER RELIEF

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Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 85 of 92 Page ID #:92

1 quality medical and pharmacy services, which will certainly occur if the 10% payment cut to

2 Medi-Cal fee-for-service patients, is not enjoined by a writ or injunction, which is requested..

3

Summary, and relief requested:

4

Petitioners request that the Court, based on the above Memorandum of facts and law, and

5 the facts of prospective severe injury to Medi-Cal fee-for-service recipients, (including the

6 plaintiffs Dowling and Beckwith), which are shown by the supporting declarations, order:

7

A. That a writ of mandamus be issued in the First Cause of Action under

8 § 1085 Code Civ. Proc., or in the alternative, a permanent injunction, (or at the very least, a

9 preliminary injunction), which orders the respondents Department of Health Care Services, and
10 its Director to set aside their policy to implement the FFS Payment Statutes,(namely, subds. (a),
11 (b)(l), (b)(2), and (c)- (e) of § 14105.19 Welf. & Inst. Code; and§ 14166.245 Welf. & Inst.
12 Code), which are part of Sections 14 and 15 of Assembly Bill X3 5, (Chapter 3, Statutes 2007-
13
2008 Third Extraordinary Session), and to refrain from implementing the 10% reduction of 14
payments to Medi-Cal fee-for-service providers specified in the aforesaid FFS Payment Statutes, 15

or any other reduction of payments to providers in the Medi-Cal fee-for-service program, for 16

17 dates of service on or after July 1, 2008, or at any other time..

18

B. That petitioners have costs of suit, plus reasonable attorneys' fees under § 1021.5

19 Code Civ. Proc, and such other and further relief as may be just.

20

Dated: May 12,2008.

Respectfully submitted,

21

22

23

24 --------;:P:;:::;ET:;::;IT;;::;:IO;::::;N:-;;E:;:::-.R;::::;S'7ME::;::;:-:M::::c0RAN;::-;-::-:;:::::D-:;-UM::-:-:::IN:-;S::-:UP=:P::-.::O:=RT=-o::::-:;F::-:cWRI=T:::-:O:::::F:-:-MAND-:-:-::-::=-AMU-:-:-::::::::S:-:AN~D-=o=m=E=R-=RE=L:-::IE::::F-:--------,-_15-

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 86 of 92 Page ID #:93
Exhibit A

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 87 of 92 Page ID #:94
Assembly Bill No. 5
CHAPTER3
An act to amend Section 95004 ofthe Government Code, and to amend Sections 4640.6,4643,4648.4, 4681.3, 4681.5, 4691.6, 4781.6, and4783 of: and to add Sections 4681.6, 4689.8, 4691.9, 14041.1, 14105.19, and 14166.245 to, the Welfare and Institutions Code, relating to health, and declaring the urgency thereof: to take effect immediately.
[Approved by Govcmor February 16, 2008. Filed with Secretary of State February 16, 2008.]
LEGISLATIVE COUNSEL'S DIGEST
AB 5, Committee on Budget Public health programs. Under existing law, the State Department of Developmental Services provides funding for regional centers for the provision orpurchase ofservices and supports to persons with developmental disabilities. Existing law prescribes a specified ratio for regional center service coordinator to consumer, which is in effect until June 30, 2008. This bill would extend indefinitely the effective date of this ratio. Existing law provides for the assessment ofcertain individuals for whom benefits are provided by regional centers. Existing law provides that if assessment is needed, prior to July 1, 2008, the assessment shall be performed within 120 days following initial intake, and requires that assessments after that date shall be performed within 60 days following intake. This bill would extend indefinitely the 120-day assessment requirement. Existing law, with certain exceptions, for the 2007-08 :fiscal year, proln'bits a regional center from paying any provider ofspecified services a rate that is greater than the rate that is in effect on July 1, 2007, unless the increase is required by contract between the regional center and the vendor that is in effect on June 30, 2007. This bill would extend indefinitely this prohibition with respect to the payment ofrates in excess ofthose in effect on June 30, 2008. Existing law provides that, during the 2007-08 fiscal year, no regional center may approve any service level for a residential service provider. This bill would extend indefinitely this provision. It would also prohibit, commencing July 1, 2008, a regional center from negotiating rates with residential care providers, except as prescribed. Existing law requires the State Department of Developmental Services to make payments to providers of supported living services for adults with developmental dis~bilities. Under existing law, the department, by July 1, 2002, is required to establish, by regulation, an equitable and cost~effective
95

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 88 of 92 Page ID #:95

Ch.3

-2-

methodology for the determination of supported living costs and a methodology of payment for these providers.
This bill would, commencing July 1, 2008, impose prescnoedrate increase 'restrictions on reimbursement to these service providers and would also prohibit a regional center from negotiating rates with these providers, except
as prescribed. Existing law prolubits, during the 2007-08 fiscal year, the State
Department of Developmental Services from establishing any permanent payment rate for a community-based day program or in-home respite care agency that has a temporary payment rate in effect on July 1, 2007, or from making other specified changes or adjustments that would result.in a rate
increase. This bill would extend indefinitely this provision, and would apply it to
rates in effect June 30, 2008. It would also prohibit a regional center from negotiating rates with these providers, except as prescribed.
Existing law provides that, for the 2007-08 fiscal year only, a regional center shall not expend any purchase ofservice funds for the startup ofany new program unless the expenditure is necessary to protect the consumer's health or safety or because of other extraordinary circumstances and the·
department has granted prior written authorization.
This bill would extend indefinitely this prohibition.
Under existing law, the California Early Start Intervention Services Act,
various state entities provide coordinated services to infants and toddlers with disabilities and their families. Existing law requires early intervention services to be provided directly to eligtble infants and toddlers and their families through the regional center system and the local education system. Existing law requires that, in providing services under the act, regional
centers comply with the Lanterman Developmental Disabilities Services Act, and its implementing regulations, including, but not limited to, those
provisions relating to vendorization and ratesetting, except where compliance with those provisions would result in any delays in, or any cost to families for, the provision ofearly iritervention, or otherwise conflict with the act or its implementing regulations. Existing law, until July 1, 2009, also contains
family cost participation requirements for specified services obtained by
regional centers for persons with developmental disabilities.
This bill would extend indefinitely the family cost participation requirements, and would also require that, subject to federal approval, in providing those early intervention services under the Lanterman Developmental Disabilities Services Act, regional centers apply the family cost participation requirements that require families of children receiving early intervention services to contribute a specified amount to the cost of
those services based on family size and scaled income levels. It would also revise the family cost participation schedule and the procedures governing
how a parent may appeal a decision made by the executive director of a regional center, with respect to the amount ofthe parents' cost participation.

95

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 89 of 92 Page ID #:96

-3-

Ch.3

Existing law provides for the Medi-Cal program, administered by the State Department ofHealth Care Services, under which quali:fied low-income persons are provided with a variety of health services.
Existing law contains various provisions governing reimbursement rates
for Medi-Cal providers. This bill would, notwithstanding any other provision of law, and to the
extent not otherwise conflicting with federal law, authorize the department
to withhold, or direct the medical fiscal intermediary to withhold, payments for providers, as described, for a period of one month for a month ending
prior to January 1, 2009. Existing law creates various health programs, including the Child Health
and Disability Prevention Program, the California Children's Services Program, the Genetically Handicapped Person's Program, and specified
family planning programs. This bill would, with certain exceptions, for services rendered under these
programs on and after July 1, 2008, require the Director of Health Care Services to reduce provider reimbursement rates by 100/o.
The bill would specify that the reductions imposed pursuant to the bill would apply only to the General Fund share of the payment, and only to payments for services from funds appropriated to the department
Existing law establishes the Medi-Cal Hospital/Uninsured Care Demonstration Project Act, which revises hospital reimbursement methodologies under the Medi-Cal program in order to maximize the use of federal funds consistent with federal Medicaid law and· stabilize the distribution of funding for hospitals that provide care to Medi-Cal beneficiaries and uninsured patients. This demonstration project provides for funding, in supplementation of Medi-Cal reimbursement, to various hospitals, including designated public hospitals, nondesignated public hospitals, and private hospitals, as defined in accordance with certain
provisions relating to disproportionate share hospitals. This bill would reduce by 10% payments for inpatient hospital services .
to acute care hospitals not under selective contracts with the department that are provided on and after July 1, 2008.
The California Constitution authorizes the Governor to declare a fiscal emergency and to call the Legislature into special session for that purpose. The Governor issued a proclamation declaring a fiscal emergency, and calling a special session for this purpose, on January 10, 2008.
This bill would state that it addresses the fiscal emergency declared by the Governor by proclamation issued on January 10, 2008, pursuant to the California Constitution.
This bill would declare that it is to take effect immediately as an urgency statute.

95

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 90 of 92 Page ID #:97

Ch.3

-16-

SEC. 14. Sectio~ 14105.19 is added to the Welfare and Institutions Code,
to read:
14105.19. (a) Notwithstanding any other provision of law, in order to implement changes in the level of funding for health care services, the director shall reduce provider payments as specified in this section.
(b) (1) Except as provided in subdivision (c), payments shall be reduced by 10 percent for Medi-Cal fee-for.service benefits for dates of service on and after July 1, 2008.
(2) Except as provided in subdivision (c), payments shall be reduced by 10 percent for non-Medi-Cal programs descnoed in Article 6 (commencing with Section 124025) of Chapter 3 ofPart 2 ofDivision 106 ofthe Health and Safety Code, and Section 14105.18, for dates of service on and after July I, 2008.
(3) For managed health care plans that contract with the department
pursuant to this chapter, Chapter 8 (commencing with Section 14200), and Chapter 8.75 (commencing with Section 14590), payments shall be reduced

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 91 of 92 Page ID #:98

-17-

Ch.3

by the actuarial equivalent amount of the payment reduction specified in this subdivision pursuant to contract amendments or change orders effective on July 1, 2008.
(c) The services listed in this subdivision shall be exempt from the payment reductions specified in subdivision (b):
(1) Acute hospital inpatient services, except for payments to hospitals not under contract with the State Department of Health Care Services, as provided in Section 14166.245.
(2) Federally qualified health center services, including those :fu.cili.ties deemed to have federally qualified health center statns pursuant to a waiver under subdivision (a) ofSection 1315 ofTitle 42 ofthe United States Code.
(3) Rural health clinic services. (4) All ofthe following facilities: (A) A skilled nursing facility pursuant to subdivision (c) ofSection 1250 of the Health and Safety Code, except a skilled nursing facility that is a
distinct part ofa general acute care hospital. For purposes ofthis paragraph, "distinct part" has the same meaning as defined in Section 72041 of Title
22 of the California Code ofRegulations. (B) An intermediate care facility for the developmentally disabled
pursuant to subdivision (e), (g), or (h) of Section 1250 of the Health and Safety Code, or a facility providing continuous skilled nursing care to
developmentallydisabled individuals pursuantto the pilot project established by Section 14495.10.
(C) A subacute care unit, as defined in Section 51215.5 of Title 22 of the California Code ofRegulations.
(5) Payments to facilities owned or operated by the State Department of Mental Health or the State Department ofDeve1opmental Services.
(6) Hospice. (7) Contract services as designated by the director pursuant to subdivision
(e).
(8) Payments to providers to the extent that the payments are funded by means of a certified public expenditure or an intergovernmental transfer pursuant to Section 433.51 ofTitle 42 ofthe Code ofFederal Regulations.
(9) Services pursuant to local assistance contracts and interagency agreements to the extent the funding is not included in the funds appropriated to the department in the annual Budget Act.
(10) Payments to Medi-Cal managed care plans pursuant to Section
4474.5 for services to consumers transitioning fromAgnews Developmental Center into Alameda, San Mateo, and Santa Clara Counties pursuant to the Plan for the Closure ofAgnews Developmental Center.
(11) Breast and cervical cancer treatment provided pursuant to Section 14007.71.
(12) The Family Planning, Access, Care, and Treatment (Family PACT) Waiver Program pursuant to Section 141 OS .18.
(d) Subject to the exception for services listed in subdivision (c), the payment reductions required by subdivision (b) shall apply to the services rendered by any provider who may be authorized to bill for the service,

95

Case 2:08-cv-03315-CAS-MAN Document 1-2 Filed 05/19/08 Page 92 of 92 Page ID #:99

-19-

Ch.3

(e) Notwithstanding the rulemaking proVISions of Chapter 3.5
(commencing with Section 11340) ofPart 1 of Division 3 ofTitle 2 ofthe Government Code, the director may implement subdivision (b) by means
ofa provider bulletin, or other similar instruction, without taking regulatory
action. (f) The director shall promptly seek all necessary federal approvals in
order to implement this section, including necessary amendments to the
state plan.
SEC. 16. This act addresses the fiscal emergency declared by the Governor by proclamation on January 10, 2008, pursuant to subdivision (f) of Section 10 ofArticle IV of the California Constitution.
SEC. 17. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV ofthe Constitution and shall go into immediate effect. The facts
constituting the necessity are:
In order to make statutory changes needed to implement cost containment measures affecting health services, at the earliest possible time, it is necessary that this act take effect immediately.

0
95

 </s> Case: 08-56061 Document: 16 07/11/2008 Page: 1
FILED

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

JUL 11 2008
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

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 SHOPPE; SHARON STEEN doing business as CENTRAL PHARMACY; MARK BECKWITH; MARGARET DOWLING; TRAN PHARMACY, INC., doing business as TRAN PHARMACY; JASON YOUNG,

No. 08-56061 D.C. No. 2:08-cv-03315-CAS Central District of California, Los Angeles
ORDER

Petitioners - Appellants,

v.

SANDRA SHEWRY, Director of the Department of Health Care Services, State of California,

Respondent - Appellee.

Before: REINHARDT, BERZON, and M. SMITH, Circuit Judges. Under well-established law of the Supreme Court, this court, and our sister
circuits, a plaintiff may bring suit under the Supremacy Clause to enjoin implementation of a state law allegedly preempted by federal statute, regardless of

Case: 08-56061 Document: 16 07/11/2008 Page: 2
whether the federal statute at issue confers an express “right” or cause of action on the plaintiff. See Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96 n.14 (1983); Bud Antle, Inc. v. Barbosa, 45 F.3d 1261, 1269 (9th Cir. 1994) (“Even in the absence of an explicit statutory provision establishing a cause of action, a private party may ordinarily seek declaratory and injunctive relief against state action on the basis of federal preemption.”); see also Lankford v. Sherman, 451 F.3d 496, 509-10 (8th Cir. 2006); Planned Parenthood of Houston & Se. Tex. v. Sanchez, 403 F.3d 324, 331-35 (5th Cir. 2005); Local Union No. 12004, United Steelworkers of Am. v. Massachusetts, 377 F.3d 64, 75 (1st Cir. 2004); Pharm. Research & Mfrs. of Am. v. Thompson, 362 F.3d 817, 819 n.3 (D.C. Cir. 2004); Pharm. Research & Mfrs. of Am. v. Concannon, 249 F.3d 66, 73 (1st Cir. 2001), aff’d sub nom. Pharm. Research & Mfrs. of Am. v. Walsh, 538 U.S. 644 (2003); Ill. Ass’n of Mortgage Brokers v. Office of Banks & Real Estate, 308 F.3d 762, 765 (7th Cir. 2002); St. Thomas-St. John Hotel & Tourism Ass’n v. Virgin Islands, 218 F.3d 232, 241 (3d Cir. 2000); Village of Westfield v. Welch’s, 170 F.3d 116, 124 n.4 (2d Cir. 1999); Burgio & Campofelice, Inc. v. N.Y. Dep’t of Labor, 107 F.3d 1000, 1005-07 (2d Cir. 1997).
The district court nonetheless concluded that appellants’ probability of success on the merits was “low, if not wholly lacking,” because they may not seek
-2-

Case: 08-56061 Document: 16 07/11/2008 Page: 3
injunctive relief under the Supremacy Clause in the absence of “some individual federal right that arises under [the Medicaid Act].” As the cases above make clear, this holding was legal error. Because the district court’s denial of a preliminary injunction was based solely on that error, we vacate its order and remand for a decision on appellants’ motion consistent with this order.1 The district court should expedite its consideration of the merits of appellants’ motion, to the degree possible, in light of the fact that under the challenged statute the first of the reduced payments to Medi-Cal providers is scheduled to be issued within weeks.
In addition, appellants have requested interim relief from this court enjoining implementation of A.B. 5 while any further proceedings on the motion for a preliminary injunction are pending. Injunctive relief is warranted when the party requesting such relief demonstrates some combination of probable success on the merits and the possibility of irreparable harm. These two factors are not independent tests, but rather “opposite ends of a single continuum in which the required showing of harm varies inversely with the required showing of meritoriousness.” Rodeo Collection, Ltd. v. West Seventh, 812 F.2d 1215, 1217 (9th Cir. 1987) (internal quotation marks and citation omitted). When the balance
1 The panel will issue an opinion, in due course, further explaining this holding.
-3-

Case: 08-56061 Document: 16 07/11/2008 Page: 4
of harm “tips decidedly toward the plaintiff,” injunctive relief may be granted if the plaintiff raises questions “serious enough to require litigation.” Benda v. Grand Lodge of the Int’l Ass’n of Machinists & Aerospace Workers, 584 F.2d 308, 315 (9th Cir. 1978); see also Golden Gate Rest. Ass’n v. City & County of San Francisco, 512 F.3d 1112, 1115-16 (9th Cir. 2008) (order).
The district court noted that it was “acutely cognizant of the potential adverse consequences of the ten percent rate reduction,” and so are we. Appellants have demonstrated a high likelihood that the State’s ten percent reduction in payments to Medi-Cal providers will cause serious irreparable injury to Medi-Cal beneficiaries while this case is pending, at least with regard to access to prescription drugs. Appellants presented evidence that the ten percent cut would reduce payments to pharmacies to less than what it costs them to obtain and dispense 44% of the generic prescriptions they currently dispense to their patients, causing pharmacies to cease selling such drugs to Medi-Cal patients and depriving “thousands, if not millions” of Medi-Cal beneficiaries of much-needed pharmaceuticals. The State has not asserted any countervailing interest of this magnitude.
Appellants have also raised at least a question “serious enough to require litigation” of their claim that A.B. 5 is preempted by the federal Medicaid Act.
-4-

Case: 08-56061 Document: 16 07/11/2008 Page: 5
The Act requires, inter alia, that a state Medicaid plan provide “such methods and procedures” for payment as are necessary “to assure that payments . . . are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.” 42 U.S.C. § 1396a(a)(30)(A). As noted above, the record provides some support for the conclusion that the ten percent reduction will force some pharmacies to stop dispensing pharmaceuticals to Medi-Cal patients, pharmaceuticals that are widely available to the “general population.”2
In light of this showing, we vacate the district court’s order denying appellants’ motion for a preliminary injunction and remand for further proceedings. We also temporarily enjoin appellee from implementing A.B. 5's ten percent reduction in the reimbursement rate for prescription drugs, until August 11, 2008. If the district court has not ruled by then on appellants’ motion for preliminary injunction, appellants may seek further temporary relief from this court.
An Opinion will follow.
2 At this juncture, the record does not provide such support with regard to the provision of other medical services, as the appellants have provided only speculative evidence that the ten percent cut will cause the State’s Medicaid program to conflict with the requirements for such other medical services set by § 1396a(a)(30)(A).
-5-

Case: 08-56061 Document: 16 07/11/2008 Page: 6 IT IS SO ORDERED.
-6-

 </s> Case 2:08-cv-03315-CAS-MAN Document 135 Filed 08/27/08 Page 1 of 1 Page ID #:2315

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

CV 08-3315 CAS (MANx)

Date

August 27, 2008

Independent Living Center of Southern California et al. v. Sandra Shewry

Present: The Honorable

CHRISTINA A. SNYDER, U.S. DISTRICT JUDGE

CATHERINE JEANG/ PAUL SONGCO
Deputy Clerk

N/A Court Reporter / Recorder

Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Proceedings:

(IN CHAMBERS) ORDER MODIFYING PRELIMINARY INJUNCTION

Whereas on August 18, 2008, this Court issued an Order Granting in Part and Denying in Part Petitioners’ Motion for Preliminary Injunction. The Court hereby modifies the second paragraph of the Conclusion, set forth at page 22 of its order, as follows: “The Court hereby orders respondent Director, her agents, servants, employees, attorneys, successors, and all those working in concert with her to refrain from enforcing Cal. Welf. & Inst. Code § 14105.19(b)(1), including refraining from reducing by ten percent payments under the Medi-Cal fee-for-service program for physicians, dentist, pharmacies, adult day health care centers, clinics, health systems, and other providers for services provided on or after August 18, 2008.”

Initials of Preparer

: PS

CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 1 of 1

 </s> Case 2:08-cv-03315-CAS-MAN Document 368 Filed 09/15/08 Page 1 of 14 Page ID #:2717

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1 LLOYD A. BOOKMAN (State Bar No. 89251)
BYRON J. GROSS (State Bar No. 76626)
2 JORDAN B. KEVILLE (State Bar No. 217868) HOOPER, LUNDY & BOOKMAN, INC.
3 1875 Century Park East, Suite 1600
Los Angeles~ California 90067-2517
4 Telephone: 310) 551-8111
Facsimile: ( 10) 551-8181
5 E-Mail: jkeville@health-law.com

OPf

FILED

.

CLERK, U.S. DISTRICT COURT ;

SEP I 5 2008

CE~-;-;::-;-;~~,__---1
BY

6 CRAIG J. CANNIZZO (State Bar No. 70379)
FELICIA Y SZE (State Bar No. 233441)
7 HOOPER, LUNDY & BOOKMAN, INC.
575 Market Street, Suite 2300
8 San Francisco, CA 94105
Telephone: (415) 875-8500
9 Facsimile: (415) 875-8519
E-Mail: ccanriizzo@health-law.com
10
Attorneys for Intervenors
11 SACRAMENTO FAMILY MEDICAL
CLINICS, INC., THEODORE M.
12 MAZER, M.D., EASTERN PLUMAS
HEALTH CARE DISTRICT, PIONEERS
13 MEMORIAL HEALTH CARE
DISTRICT, KAWEAH DELTA HEALTH
14 CARE DISTRIC~ RONALD B. MEAD,
D.D.S~ and ACAciA ADULT DAY
15 SERV1CES

16

17

UNITED STATES DISTRICT COURT

18

CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION

19

20 INDEPENDENT LIVING CENTER
OF SOUTHERN CALIFORNIA, et al. ,
21
Petitioners,
22
vs.
23
SANDRA SHEWRY, Director ofthe
24 Department of Health Care Services of
the State of California, et al.,
25
Respondents.
26
SACRAMENTO FAMILY MEDICAL
27 CLINICS, INC., et al.,

CASE NO. CV 08-3315 CAS (MANx)
COMPLAINT IN INTERVENTION

28

1052106.1

COMPLAINT IN INTERVENTION

Case 2:08-cv-03315-CAS-MAN Document 368 Filed 09/15/08 Page 2 of 14 Page ID #:2718

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1

By leave of court, Intervenors Sacramento Family Medical Clinics, Inc.,

2 Theodore M. Mazer, M.D., Eastern Plumas Health Care District, Pioneers Memorial

3 Health Care District, Kaweah Delta Health Care District, Ronald B. Mead, D.D.S.,

4 and Acacia Adult Day Services (collectively, "Intervenors") file this complaint and

5 thereby intervenes in this action. Intervenors join with Petitioners Independent

6 Living Center of Southern California, et al. in challenging the validity of an across-

7 the-board ten percent reduction in reimbursement rates for health care services

8 provided to beneficiaries of California's Medicaid program, Medi-Cal, which

9 Respondent Sandra Shewry, Director of the California Department of Health Care

10 Services ("Department" or "DHCS") and DHCS are responsible for implementing,

11 alleging as follows:

12

INTRODUCTION

13

1. Medi-Cal is a major component of the "safety net" that ensures the

14 State's poor have access to health care services. Unfortunately for those who

15 depend on it to access basic healthcare services, the low rates at which the State

16 currently pays providers to care for Medi-Cal patients have created a gaping hole in

17 that net. Health care providers of virtually every type have been steadily leaving the

18 Medi-Cal program or scaling back services because the rates they are being paid are

19 not even sufficient to cover the costs they incur in providing services. The exodus

20 of providers from the program is leaving massive numbers of Californians without

21 access to critical services or is forcing them to obtain care in the already over-

22 crowded and increasingly scarce emergency departments of hospitals throughout the

23 state. Despite this disturbing state of affairs, California has decided to reduce Medi-

24 Cal rates again, without regard to the impact of these reductions.

25

2. On January 10,2008, California Governor Arnold Schwarzenegger

26 issued a Fiscal Emergency Proclamation pursuant to Section 1O(f) of Article IV of

27 the Constitution of the State of California, at the same time he proposed his budget

28 for fiscal year 2008-09. The Governor determined that the General Fund revenues

1052106.1

COMPLAINT IN INTERVENTION

Case 2:08-cv-03315-CAS-MAN Document 368 Filed 09/15/08 Page 3 of 14 Page ID #:2719

1 for fiscal Year 2007-08 will decline substantially below the estimate of General

2 Fund revenues upon which the 2007 Budget Bill was based. Accordingly, the

3 Governor declared a fiscal emergency based on the projected budget imbalance and

4 insufficient cash reserves for Fiscal Year 2007-08 and the projected insufficient cash

5 reserves and potential budgetary and cash deficit in Fiscal Year 2008-09. The

6 Governor caused the Legislature to assemble in special session to address the fiscal

7 emergency.

8

3. On February 16, 2008, the California Legislature enacted Assembly

9 Bill X3 5 ("AB 5") in special session. Section 14 of said Act added Section

10 14105.19 to the Welfare and Institutions Code, which provides in relevant part, as

11 follows:

12

{a) Notwithstanding any other provision of law in order to

implement changes in the level offunding for heafth care services, the

13

director shall reduce provider payments as specified in this section.

14

(b)(1) Except as provided in subdivision (c), pa}:ments shall be reduced

by l 0 percent for Medi-Cal fee for service benefits for dates of service

15

on or afterJuly 1, 2008

16

17

(e) Notwithstandin_g Chapter 3.5 (commencing with section 11340)

of Part 1 ofDivi~ion 3~ ofTttl~ 2 oftJle Government Code_, the

.

18

department may Implement th1s sectiOn by means of provider bulletm,

or similar instruction, without taking regulatory action.

19

20

(g) The department shall promptry seek any necessary federal

21

approvals for the implementation ofthis section.

22

4. Pursuant to paragraph (b)( 1) of Welfare and Institutions Code §

23 14105.19, payments under the Medi-Cal fee for service program for physicians,

24 dentists, pharmacies, ADHCs, clinics, health systems and other providers will be

25 reduced by ten percent for services provided on or after July 1, 2008. The rate

26 reduction will also impact inpatient services furnished by noncontract hospitals,

27 outpatient services furnished by all hospitals, and skilled nursing services provided

28 in distinct part units of hospitals [hereinafter "DP/NF services"].

1052106.1

COMPLAINT IN INTERVENTION

Case 2:08-cv-03315-CAS-MAN Document 368 Filed 09/15/08 Page 4 of 14 Page ID #:2720

1

5. Pursuant to section 15 of AB 5, the L~gislature also enacted Welfare

2 and Institutions Code§ 14166.245, which reduces payments to noncontract hospitals

3 for inpatient services furnished on or after July 1, 2008, by ten percent. This is

4 accomplished by reducing interim payments for inpatient hospital services furnished

5 by noncontract hospitals on or after July 1, 2008, by ten percent, and by limiting the

6 final reimbursement for each patient day of inpatient hospital services furnished on

7 or after July 1, 2008, to 90% of the hospital's audited allowable cost per day.

8

6. The rate and payment reductions set forth in Welfare and Institutions

9 Code sections 14105 .19(b)(1) and 14166.245 are referred to herein as "the Ten

10 Percent Rate Reduction."

11

PROCEDURAL BACKGROUND

12

7. On April 22, 2008, Petitioners in the above-entitled action filed a

13 Verified Petition for Writ of Mandamus ("Petition") in the Superior Court of the

14 County of Los Angeles against the Respondents to challenge the validity of the Ten

15 Percent Rate Reduction.

16

8. The Petition alleges in pertinent part that the Ten Percent Rate

17 Reduction violates the Supremacy Clause of the United States Constitution because

18 it conflicts with 42 United States Code (''U.S.C.") § 1396a(a)(30)(A), which is part

19 of the federal Medicaid Act, and the Americans with Disabilities Act ("ADA"). The

20 Petition also alleges a separate claim under the ADA, independent of the Supremacy

21 Clause.

22

9. The Petition seeks an injunction preventing from Respondents from

23 implementing the Ten Percent Rate Reduction, attorneys' fees and costs.

24

10. Respondents removed Petitioner's action from state to federal court on

25 May 19, 2008. Petitioners did not seek to have the case remanded to state court.

26

11. On May 30, 2008, Petitioners filed a notice of motion and motion for a

27 preliminary injunction to prevent the Respondents from implementing the Ten

28 Percent Rate Reduction on July 1, 2008 on the grounds that Petitioners had a

1052106.1

COMPLAINT IN INTERVENTION

Case 2:08-cv-03315-CAS-MAN Document 368 Filed 09/15/08 Page 5 of 14 Page ID #:2721

1 substantial likelihood of prevailing on their legal claims that the Ten Percent Rate

2 Reduction conflicts with Section 30(A) and that, ifnot enjoined, the Ten Percent

3 Rate Reduction would result in irreparable harm to the Petitioners, other Medi-Cal

4 providers and Medi-Cal beneficiaries.

5

12. On June 25, 2008, this Court issued an order denying Petitioners'

6 motion for a preliminary injunction on the grounds that Petitioners did not establish

7 a likelihood of prevailing on its legal claims. Relying on the case ofSanchez v.

8 Johnson, 416 F.3d 1051 (9th Cir. 2005), the Court concluded that Section 30(A) is

9 not privately enforceable in federal court through the Supremacy Clause or any

10 other procedural vehicle. The Court did not reach the issue of whether the

11 Petitioners had adequately shown that the Ten Percent Rate Reduction would cause

12 irreparable harm.

·13

13. Petitioners immediately appealed the Court's ruling on the motion for

14 preliminary injunction to the Court of Appeals for the Ninth Circuit. By order dated

15 July 16, 2008, the Ninth Circuit reversed the Court's decision, holding that the

16 Supremacy Clause does provide a vehicle for enforcement of federal laws such as

17 Section 30(A) and remanded the matter back to the this Court for further

18 proceedings.

19

14. Upon remand, Petitioners' motion for preliminary injunction again

20 came before the Court on August 1, 2008. The Court entertained argument froni

21 both Petitioners and Respondents and thereafter took the matter under submission.

22

15. On August 18,·2008, the Court issued an order granting in part the

23 Petitioners' motion for preliminary injunction. The Court ordered the Respondents

24 to refrain from enforcing and otherwise implementing the Ten Percent Rate

25 Reduction authorized purs~ant to California Welfare and Institutions Code section

26 141 05.19(b)(I) with respect to Medi-Cal payments for services provided on or after

27 July 1, 2008. The Court specifically declined to grant any relief from the Ten

28 Percent Rate Reduction authorized pursuant to California Welfare and Institutions

1052106.1

COMPLAINT IN INTERVENTION

Case 2:08-cv-03315-CAS-MAN Document 368 Filed 09/15/08 Page 6 of 14 Page ID #:2722

a;

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1 Code section 14166.245(c) with respect to Medi-Cal payments for acute inpatient

2 services provided by "non-contract" acute care hospitals.

3

16. On August 22, 2008, Petitioners filed an Ex Parte Application for Order

4 to Show Cause re: Contempt against Respondents for failure to comply with this

5 court's preliminary injunction. On August 25,2008, this court scheduled a hearing

6 on that Application on August 28, 2008. On August 28, 2008, this court scheduled

7 an additional hearing on the issue of contempt on September 5, 2008.

8

17. On August 25, 2008, Respondents filed a Motion to Stay the Court's

9 August 18, 2008 Order Pending Appeal. On August 26, 2008, Respondents filed a

10 Notice of Appeal on the preliminary injunction to the Ninth Circuit.

11

18. On August 27, 2008, Respondents filed a Motion to Alter or Amend,

12 and Clarify Order Granting In Part Petitioners' Motion for Preliminary Injunction.

13 The hearing on that Motion is scheduled for August 15,2008.

14

INTERVENORS AND THEIR INTEREST IN THIS LITIGATION

15

19. Intervenor Sacramento Family Medical Clinics, Inc. ("SFMC") is a

16 corporation incorporated in the State of California with a primary business address

17 of3441 Marysville Boulevard, Sacramento, CA 95838. SFMC is a wholly owned

18 professional corporation, owned and operated by Dr. Gilbert Simon, a physician

19 licensed in the State of California. Dr. Simon has been practicing medicine for the

20 last 20 years as a Pediatrician and Medical Director of the SFMC. Since 1989, the

21 SFMC has focused entirely on providing primary care services to the Medi-Cal

22 insured community of the Greater Sacramento area. SFMC currently has nine

23 clinics and 20 providers. Nearly all the patients served by the nine clinics are

24 insured by Medi-Cal, including through the fee-for-service program. If the 10% rate

25 reduction is implemented, SFMC will not be able to continue to operate it currently

26 does, forcing it or Dr. Simon to potentially borrow money, consolidate clinics or

27 eliminate staff. SFMC also does business as the Hmong New Life Health Center

28 and the Del Paso Heights Medical Center.

1052106.1

COMPLAINT IN INTERVENTION

Case 2:08-cv-03315-CAS-MAN Document 368 Filed 09/15/08 Page 7 of 14 Page ID #:2723

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20. Intervenor Theodore M. Mazer, M.D., is an individual and a physician

2 licensed in the State of California, with a business address of 6699 Alvarado Road,

3 Suite 2209, San Diego, CA 92120. Dr. Mazer has practiced medicine for the last 20

4 years as an Otolaryngologist (Ear Nose and Throat surgeon) in San Diego, as a

5 private, solo practice physician. Dr. Mazer provides medical services to Medi-Cal

6 patients, both through the fee-for-service program and managed care. Dr. Mazer has

7 served the Medi-Cal population for approximately twenty years because of his

8 personal commitment to ensuring access to medical services for the different

9 segments of our communities. As a result of the Ten Percent Rate Reduction, Dr.

10 Mazer has directed his staff to tum away new patients for Medi-Cal fee-for-service,

11 or any other plans that reduce payment below existing Medi-Cal rates as of June 30,

12 2008. At this time, Dr. Mazer intends to continue to care for his current patients

13 who are insured by Medi-Cal.

14

21. Intervenor Eastern Plumas Health Care District ("Eastern Plumas") is a

15 political subdivision of the State of California. Eastern Plumas provides the only

16 medical services available for virtually all of Eastern Plumas and Sierra Counties in

17 northeastern California. Eastern Plumas operates two hospitals with campuses in

18 Plumas and Sierra Counties with a total of76 beds, of which 67 are devoted

19 exclusively to distinct part skilled nursing patients. Among the other health care

20 services provided by Eastern Plumas are four rural health clinics and the only

21 emergency room and ambulance services available in Eastern Plumas and Sierra

22 Counties. Eastern Plumas is heavily dependent on government health care benefit

23 programs, including Medi-Cal for revenue. Approximately 70% of the patients

24 serviced by Eastern Plumas are either Medi-Cal or Medicare beneficiaries. In fact,

25 nearly every distinct part skilled nursing patient Eastern Plumas treats at its two

26 hospital campuses are beneficiaries of the Medi-Cal program. Due to its

27 dependence on Medi-Cal reimbursement and the increasing costs of providing

28 health care services, Eastern Plumas is currently not a financially viable

1052106.1

COMPLAINT IN INTERVENTION

Case 2:08-cv-03315-CAS-MAN Document 368 Filed 09/15/08 Page 8 of 14 Page ID #:2724

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1 organization. If it goes forward, the Medi-CaJ rate reduction enacted in 2008 will

2 cause Eastern Plumas to significantly reduce services available Medi-Cal and other

3 patients and potentially cause the financial failure of the district altogether.

4

22. Intervenor Pioneers Memorial Health Care District ("Pioneers") is a

5 politic1;1.l subdivision of the State of California. Pioneers operates several health care

6 facilities in Brawley, California and other areas of Imperial County, which is in the

7 southern most portion of California, close to the Mexican border. One of the

8 facilities Pioneers operates in Pioneers Memorial Hospital ("PMH"), which is a 107

9 bed general acute care hospital. PMH offers a comprehensive range of inpatient and

10 outpatient services, including intensive care, cardiopulmonary care and surgery.

11 PMH also offers a 24 hour-per-day emergency department. Approximately 35% of

12 the patients PMH treats are Medi-Cal beneficiaries. In particular, a majority of the

13 services PMH furnishes in the outpatient setting are for the benefit of Medi-Cal

14 patients. As such, Pioneers is dependent on Medi-Cal reimbursement to fund the

15 operations ofPMH and other facilities. Due in large part to already low Medi-Cal
r·
16 reimbursement rates, Pioneers is already in a financially vulnerable position.

17 Pioneers is projecting that, if the Medi-Cal rate reduction goes forward, it will result

18 in nearly $2.2 million in annual losses for the district. In anticipation of these

19 losses, before the rate reduction even went into effect, Pioneers was forced to shut

20 down two outpatient clinics and is attempting to sell a third. The rate reduction may

21 require even further reductions in the services offered in Pioneers.

22

23. Intervenor Kaweah Delta Health Care District ("Kaweah') is a political

23 subdivision of the State of California. Kaweah is governed by an elected board of

24 directors and derives a small amount of income from local tax revenues. All other

25 funding for the district comes from patient care operations. The mission of Kaweah

26 is to provide high quality, customer oriented and financially strong health care

27 services to the residents of Visalia, California and its surrounding communities. In

28 furtherance of this mission, Kaweah operates four health care facilities, including

1052106.1

COMPLAINT IN INTERVENTION

Case 2:08-cv-03315-CAS-MAN Document 368 Filed 09/15/08 Page 9 of 14 Page ID #:2725

1 Kaweah Delta Hospital ("KDH"). KDH is a 495 bed general acute care hospital that

2 provides a broad range of both inpatient and outpatient services, including among

3 other things, cardiac care, oncology orthopedics and mental health services. KDH

4 also operates a distinct part skilled nursing unit and a subacute unit. KDH has is

5 enrolled to participate in the Medi-Cal and treats a significant number of Medi-Cal

6 beneficiaries. Nearly 25% of the inpatients treated as KDH are Medi-Cal

7 beneficiaries. The utilization ofKDH's outpatient services by Medi-Cal patients is

8 similar. In contrast, virtually every patient treated in the facility's subacute unit is a

9 Medi-Cal beneficiary. As such, Kaweah is heavily dependent on Medi-Cal

10 reimbursement to fund operations at KDH. At present, Kaweah does not have a

11 contract with the California Department of Health Care Services for inpatient care

12 rendered to Medi-Cal beneficiaries.

13

24. Ronald B. Mead, DDS ("Dr. Mead") is an individual and a dentist

14 practicing San Luis Obispo, California. Dr. Mead has been licensed to practice

15 dentistry in California since approximately 1973. He specializes in oral and

16 maxillofacial surgery. Dr. Mead currently operates and office with two other

17 dentists. Among the patients that Dr. Mead and his partners service are Medi-Cal

18 beneficiaries. The services that Dr. Mead provides to Medi-Cal beneficiaries

19 include examination and diagnoses, performance of certain types oftests,

20 prescription of medications and other treatments like biopsies and extractions.

21 Other than his partners, Dr. Mead is not aware of another maxillofacial surgeon

22 within 100 miles of San Luis Obispo that services Medi-Cal patients. Dr. Mead has

23 continued to treat Medi-Cal beneficiaries despite the fact that the reimbursement

24 rates offered by Medi-Cal for dental services are not sufficient to cover the costs he

25 incurs. An additional reduction in Medi-Cal payments will make it effectively

26 impossible for Dr. Mead to continue to treat Medi-Cal patients. As such, since the

27 State of California has implemented a 10% reduction in Medi-Cal payments, Dr.

28 Mead has discontinued seeing Medi-Cal patients. Dr. Mead will resume treating

I 052106.1

COMPLAINT IN INTERVENTION

Case 2:08-cv-03315-CAS-MAN Document 368 Filed 09/15/08 Page 10 of 14 Page ID #:2726

1 Medi-Cal patients if the 10% reduction in payment rates is eliminated.

2

25. Intervenor Acacia Adult Day Services ("AADS") is a non-profit

3 organization incorporated in the State of California. AADS is licensed by the State

4 of California to operate an ADHC located at 11391 Acacia Parkway, Garden Grove,

5 California. ADHCs provide intensive day services through a multi-disciplinary

6 team of health and social services professionals to frail elderly and disabled persons,

7 in order to maintain their ability to reside in the community. In operation for almost

8 29 years, AADS is viewed as a model program for Alzheimer's care and services for

9 frail elders and disabled adults. AADS currently serves 163 participants, all of

10 whom have complex, fragile medical conditions. The majority of these participants

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11 are insured by Medi-Cal, including Medi-Cal fee-for-service. On October 13,2007, 12 AADS had to close a second ADHC site due to an inadequate Medi-Cal 13 reimbursement, the tremendous costs of getting the center licensed, the costs of 14 meeting all of the regulations during the process of growing the census, and finally 15 the sudden and lengthy delay of Medi-Cal payments during the 2007 state budget 16 crisis. Since AADS is dependent on Medi-Cal reimbursement for the majority of 17 our participants, any change to the reimbursement or cash flow has an immediate 18 impact on its financial status. Without an increase in the ADHC Medi-Cal 19 reimbursement rate in August, 2007, AADS was unable to fully cover our financial

20 losses, causing an estimated June 30 year end deficit for 2007-08 of$100,000. As a

21 resultofthe Ten Percent Rate Reduction, AADS will lose an additional $140,000 in

22 Medi-Cal funding. The changes in Medi-Cal reimbursement, along with the

23 scheduled deferral by the State of our Medi-Cal reimbursement in August, will put

24 AADS in the position of having no other alternative but to close.

25

26. Intervenors may, with leave of Court, intervene as of right or,

26 alternatively, permissively in this matter pursuant to Federal Rule of Civil Procedure

27 ("F.R.C.P.") 24(a) & (b).

28

27. Intervenors have a right to intervene in this action because they have a

1052106.1

COMPLAINT IN INTERVENTION

Case 2:08-cv-03315-CAS-MAN Document 368 Filed 09/15/08 Page 11 of 14 Page ID #:2727

1 "significantly protectable" interest in this litigation as health care providers that

2 participate in the Medi-Cal program who otherwise will be impacted by the Ten

3 Percent Rate Reduction. Each of the Intervenors participates in the Medi-Cal

4 program and provide services that are subject to the Ten Percent Rate Reduction.

5 Intervenors need to prevent Medi-Cal payment rates from being further reduced in

6 order to ensure that they can continue to provide quality services to Medi-Cal

7 beneficiares. Each Intervenor has a direct interest in this litigation as they will

8 pecuniarily be impacted by the outcome of this litigation. Moreoever, as each of the

9 Intervenors are part of the healthcare safety net providing care to poor and indigent

10 patients, they will be directly impacted by an increased demand for their services

11 from Medi-Cal patients as other providers pull out of the Medi-Cal program as a

12 result of the Ten Percent Rate Reduction. Lastly, each of the Intervenors treats

13 Medi-Cal beneficiaries who are directly impacted as their access to quality services

14 declines as a result of the Ten Perc.ent Rate Reduction and have standing to assert

15 their patients' interests.

16

28. Adjudication of the Petitioners' claims with the participation of the

17 Intervenors will impede the ability of the Intervenors to protect their interest in

18 adequate Medi-Cal reimbursement rates. If this Court ultimately finds that the Ten

19 Percent Rate Reduction is lawful, or finds that the Ten Percent Rate Reduction is

20 lawful with respect to some categories of providers, but not others, Intervenors will

21 be unable to protect their interests in adequate Medi-Cal reimbursement for the

22 services they provide.

23

29. The Intervenors' interests are not adequately represented by the parties

24 to this litigation. The current Petitioners in this litigation are either Medi-Cal

25 beneficiaries, beneficiary groups or pharmacists and do not include physicians,

26 dentists, adult day health care centers or hospitals. As such, the Petitioners are

27 unlikely to have access to evidence relating to the impact of low Medi-Cal

28 reimbursement rates on physicians, dentists, adult day health care centers and

1052106.1

COMPLAINT IN INTERVENTION

Case 2:08-cv-03315-CAS-MAN Document 368 Filed 09/15/08 Page 12 of 14 Page ID #:2728

1 hospitals. Intervenors, on the other hand, have access to such information. Further,

2 there are arguments as to why the Ten Percent Rate Reduction conflicts with Section

3 30(A) that are specific different provider types, such as hospitals, that do not apply

4 with respect to pharmacy services.

5

30. In the alternative, as demonstrated above, Intervenors should be

6 permitted to permissively intervene. Intervenors' involvement will not expand the

7 issues in this case as Intervenors are challenging the lawfulness of the Ten Percent

8 Rate Reduction on grounds raised by the Petitioners. Intervenors' claims are

9 identical to the Petitioners' claims and therefore, raise all the same questions of law

10 (e.g., whether AB 5 is preempted by 42 U.S.C. § 1396a(a)(30)(A)) and many

11 overlapping questions of fact (e.g., whether the Respondents relied on responsible

12 cost studies as a basis for its rate setting).

13

31. Adjudication of the Intervenors' interests will not delay or prejudice the

14 adjudication of the rights of the original parties to this action. This action is in the

15 early stages, as no settlements have yet been made and no issues in this case have

16 yet been finally adjudicated. As Intervenors' claims raise questions of law and fact

17 in common with those of the existing parties, Intervenors will not bring any new

18 issues to this case or expand the scope of the case. The participation of the

19 Intervenors will benefit this court by giving the court this supplemental briefing and

20 evidence for its consideration. For example, declarations from some of the

21 Intervenors were submitted in support of Petitioners' motion for preliminary

22 injunction adjudicated by this court. If Intervenors become parties to the case, the

23 Respondents will have a greater opportunity to further question the declarants who

24 are among the Intervenors.

25

32. Medi-Cal providers, such as Intervenors, are in a unique position to

26 advance the interests of Medi-Cal beneficiaries. Inte_rvenors have an extremely

27 close relationship with their Medi-Cal beneficiary patients who seek that care. A

28 Medi-Cal beneficiary cannot secure medical services without his/her health care

1052106.1

COMPLAINT IN INTERVENTION

Case 2:08-cv-03315-CAS-MAN Document 368 Filed 09/15/08 Page 13 of 14 Page ID #:2729

-Ill
c..)oo~u';-l!-l - z-"·'NI l-l
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1 providers, and without reimbursement by Medi-Cal for those services.

2

33. Medi-Cal providers, such as Intervenors, are better positioned and

3 informed as to the impact of a reimbursement rate cut on the services they intend to

4 provide. Medi-Cal beneficiaries lack information about the effect of Medi-Cal

5 reimbursement rates on providers in light of providers' costs and the further effect of

6 a rate cut on the provision of services to Medi-Cal beneficiaries. Providers know

7 the relationship of reimbursement to service and to their costs. As compared to

8 beneficiaries, providers are in a better position to evaluate the State's decisional

9 process and the data relied upon by the State in determining reimbursement rates.

10 This informational hurdle is sufficient to confer standing on providers, who

11 comprise substantial portions of Petitioner's membership, to assert the interests of

12 their patients who are Medi-Cal beneficiaries.

13

34. Furthermore, Medi-Cal beneficiaries face economic hindrances to their

14 ability to assert their own rights in this case. To qualify for Medi-Cal, an individual

15 must demonstrate financial need for medical assistance from the State. In light of

16 their finances and the cost of litigation, Medi-Cal beneficiaries may not be able to

17 effectively protect their interests.

18

CLAIMS AND DEFENSES

19

35. Intervenors join in the First Cause of Action set forth in Petitioners

20 Independent Living Centers of Southern California, et al.'s Petition for Writ of

21 Mandamus, which is for preemption by the Supremacy Clause of the Ten Percent

22 Rate Reduction for violation of Section 30(A).

23

24

WHEREFORE, Intervenors pray for judgment as follows:

25

1. For an Order permanently enjoining Respondents from effectuating the

26 Medi-Cal rate reduction imposed by Welfare and Institutions Code§§ 14105.19 and

27 14166.245 or reducing to any degree the Medi-Cal rates for health care services that

28 are affected by Welfare and Institutions Code§§ 14105.19 and 14166.245;

1052106.1

COMPLAINT IN INTERVENTION

Case 2:08-cv-03315-CAS-MAN Document 368 Filed 09/15/08 Page 14 of 14 Page ID #:2730

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1

2. For the costs of suit, including reasonable attorneys' fees; and

2

3. Such other and further relief that the court deems just and proper.

3 4 DATED: August 1-1, 2008 5 6 7 8 9 10 11

HOOPER, LUNDY & BOOKMAN, INC.
By:~~~
Attorneys for Intervenors SACRAMENTO FAMILY MEDICAL CLINICS, INC., THEODORE M. MAZER, M.D., EASTERN PLUMAS HEALTH CARE DISTRICT PIONEERS MEMORIAL HEALTH CARE
DISTRICT~KAWEAHDELTAHEALTH
CARE DIS 1 RICT RONALD B. MEAD, D.D.S., and ACACIA ADULT DAY SERVICES

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1052106.1

COMPLAINT IN INTERVENTION

 </s> Case 2:08-cv-03315-CAS-MAN Document 228 Filed 11/03/08 Page 1 of 2 Page ID #:3378

1

2

3

4

5

6

7

8

IN THE UNITED STATES DISTRICT COURT

9

FOR THE CENTRAL DISTRICT OF CALIFORNIA

10

WESTERN DIVISION

11 INDEPENDENT LIVING CENTER OF
12 SOUTHERN CALIFORNIA, a nonprofit corporation; GRAY
13 PANTHERS OF SACRAMENTO, a nonprofit corporation; GRAY
14 PANTHERS OF SAN FRANCISCO, a nonprofit corporation; GERALD
15 SHAPIRO, Pharm.D. doing business as Uptown Pharmacy and Gift Shoppe;
16 SHARON STEEN, doing business as Central Pharmacy; MARK
17 BECKWITH; MARGARET DOWLING; TRAN PHARMACY, INC.,
18 a corporation, doing business as Tran Pharmacy; and JASON YOUNG,
19 Petitioners,
20 v.
21 SANDRA SHEWRY, Director of the
22 Department of Health Care Services of the State of California; DEPARTMENT
23 OF HEALTH CARE SERVICES, a Department of the State of California;
24 and DOES 1 through 50,

CV08-03315 CAS (MANx) [PROPOSED] ORDER RE: RESPONDENT’S EX PARTE APPLICATION FOR ORDER STAYING THE ACTION AND THE TWO NEW RELATED CASES OR, IN THE ALTERNATIVE, CONTINUING HEARING ON PETITIONERS’ THIRD MOTION FOR PRELIMINARY INJUNCTION AND EXTENDING TIME TO RESPOND TO THE TWO NEW RELATED CASES

25

Respondents.

26

27

28

1

Case 2:08-cv-03315-CAS-MAN Document 228 Filed 11/03/08 Page 2 of 2 Page ID #:3379

1

Respondent Sandra Shewry, Director of the California Department of Health

2 Care Services, appeared ex parte to request an Order staying the underlying

3 Independent Living matter and the Two New Related Cases in their entirety or, in

4 the alternative, continue the hearing on Petitioners’ Third Motion for Preliminary

5 Injunction for no less than thirty (30) days and extend the time for Respondent to

6 file responsive pleadings to the Two New Related Cases to thirty (30) days after

7 opposition to the Third Motion for Preliminary Injunction is due. FOR GOOD

8 CAUSE SHOWING, Respondent’s request is GRANTED in part and DENIED in

9 part.

10

The following cases are hereby stayed in their entirety until further order of

11 Court:

12

CV 08-07045-CAS (MANx): California Association for Health Services at

13

Home v. Sandra Shewry;

14

CV 08-07046-CAS(MANx): California Medical Transportation Association

15

v. Sandra Shewry ; and

16

CV 08-3315-CAS Independent Living et al v. Sandra Shewry

17

The Third Motion for Preliminary Injunction shall be heard on November

18 17, 2008 at 10:00 a.m., as originally scheduled.

19

IT IS SO ORDERED.

20

21 Dated: November 3, 2008 22

The Honorable Christina A. Snyder United States District Court Judge

23

24

25

26

27

28

2

 </s> Case 2:08-cv-03315-CAS-MAN Document 238 Filed 11/17/08 Page 1 of 15 Page ID #:3526

1

2

3

4

5

6

7

8

UNITED STATES DISTRICT COURT

9

CENTRAL DISTRICT OF CALIFORNIA

10

WESTERN DIVISION

11

)

INDEPENDENT LIVING CENTER OF )

12 SOUTHERN CALIFORNIA, ET AL. )

)

13

)

)

14

Plaintiffs,

)

)

15 vs.

)

)

16 SANDRA SHEWRY, ET AL.

)

)

17

)

Defendants

)

18

)

_________________________________

19

Case No. CV 08-3315 CAS (MANx) ORDER GRANTING PETITIONERS’ THIRD MOTION FOR PRELIMINARY INJUNCTION

20 I. INTRODUCTION AND BACKGROUND

21

The facts and procedural history of this action are known to the parties and

22 summarized in the Court’s August 18, 2008 order granting in part and denying in part

23 petitioners’ motion for preliminary injunction. The August 18, 2008 order is currently

24 under appeal in the Ninth Circuit.

25

On October 24, 2008, the California Association of Health Services at Home

26 (“CAHSAH”) filed a related action: California Association of Health Services at Home

27 v. Sandra Shewry, Case No. CV 08-7045 CAS (MANx). Also on October 24, 2008, the

28 California Medical Transportation Association (“CMTA”) filed a related action:

Case 2:08-cv-03315-CAS-MAN Document 238 Filed 11/17/08 Page 2 of 15 Page ID #:3527

1 California Medical Transportation Association v. Sandra Shewry, CV 08-7046

2 (MANx).

3

On October 29, 2008, respondent filed a motion to stay proceedings or in the

4 alternative for continuance of hearing on the instant third motion for preliminary

5 injunction. Petitioners and intervenors filed oppositions on October 30, 2008. On

6 November 3, 2008, the Court issued an order staying all three proceedings until further

7 order by the Court, but declining to the continue the hearing for the instant motion.

8

The instant third motion for preliminary injunction was filed by petitioners on

9 October 27, 2008. The motion seeks to enjoin the 10 percent Medi-Cal reimbursement

10 rate reduction mandated by Assembly Bill X3 5 (“AB 5”) as to providers of non-

11 emergency medical transportation (“NEMT”) services and providers of home health

12 services. Respondent filed an opposition on November 3, 2008. On November 3, 2008,

13 respondent also filed objections to portions of petitioners’ submitted declarations.1 A

14 reply was filed on November 10, 2008. On November 11, 2008, petitioners filed two

15

16

17

18

1 Respondent objects to the adm issibility of certain portions of the declarations

19 submitted by petitioners. However, this Court may consider inadmissible evidence on a

20 motion for preliminary injunction, giving such evidence appropriate weight depending on the competence, personal knowledge, and credib ility of the declarants. 11A Charles A.
21 Wright, Arthur K. Miller, & Mary K. Kane, Federal Practice and Procedure § 2949 at 216-

22 17 (2d ed. 1995); seealso Ross-Whitney Corp. v. SmithKline & French Laboratories, 207 F.2d 190, 198 (9th C ir. 1953) (stating tha t preliminary injunction may be granted on
23 affidavits); Flynt Distrib. Co. v. Harvey , 734 F.2d 1389, 1394 (9th C ir. 1984) (“T he

24 urgency of obtaining a prelim inary injunction necessitates a prom pt determination and

25

makes it difficult to obtain affidavits from persons who would be competent to testify at trial. The trial court m ay give even inadmissible evidence some weight, when to do so

26 serves the purpose of preventing irreparable harm.”); Republic of Philippines v. Marcos,

27

862 F.2d 1355, 1363-64 (9th Cir. 1988); Seuss Ents. v. Penguin Books USA, Inc., 924 F. Supp. 1559, 1562 (S.D. Cal. 1996) (“Such evidence may yet be considered by the court,

28 which has discretion to weigh the evidence as required to reflect its reliability.”).

2

Case 2:08-cv-03315-CAS-MAN Document 238 Filed 11/17/08 Page 3 of 15 Page ID #:3528

1 requests for judicial notice.2 A hearing was held on November 17, 2008. After

2 carefully considering the arguments set forth by the parties, the Court finds and

3 concludes as follows.

4 II. LEGAL STANDARD

5

A preliminary injunction is appropriate when the moving party shows either (1) a

6 combination of probable success on the merits and the possibility of irreparable harm,

7 or (2) the existence of serious questions going to the merits and that the balance of

8 hardships tips sharply in the moving party’s favor. See Rodeo Collection, Ltd. v. West

9 Seventh, 812 F.2d 1215, 1217 (9th Cir. 1987). These are not two distinct tests, but

10 rather “the opposite ends of a single ‘continuum in which the required showing of harm

11 varies inversely with the required showing of meritoriousness.’” Id. A “serious

12 question” is one on which the movant “has a fair chance of success on the merits.”

13 Sierra On-Line, Inc. v. Phoenix Software, Inc., 739 F.2d 1415, 1421 (9th Cir. 1984).

14 III. DISCUSSION

15

Petitioners state that when they briefed the Court earlier this year regarding their

16 motion for preliminary injunction of AB 5's ten percent Medi-Cal reimbursement rate

17 reduction, they did not yet have evidence regarding the effect of the ten percent rate

18 reduction on NEMT providers and home health services providers. Mot. at 1.

19 Petitioners argue that they have now obtained such evidence, and therefore move the

20

21

2Petitioners request that the Court take judicial notice of the following documents:

22 Cal. Welf. & Inst. Code §§ 14105, 14132(i)-(j); 42 U.S.C. §§ 1396(a)(28), 1396d(a)(7); 42 C.F.R. §§ 440.70, 440.130,440.170, 440.180, 440.181, 440.185,441.15; State Medicaid
23 Plan, Attachment 3.1-B; 22 Cal. Code of Regulations §§ 51151, 51523; Bill Documents

24 of Assembly Bill 3X 5; “HCBS Waivers - Section 1915(c) (fromthe Department of Health

25

Care Services website); and this Court’s August 18, 2008 Order Granting in Part and Denying in Part Petitioners’ Motion for Preliminary Injunction, pp 1-11. Under Fed. R.

26 Evid. 201, a court may take judicial notice of “matters of public record.” Mack v. South

27

Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir.1986). As such, judicial notice is proper. However, the Court need not take judicialnotice of the Court’s August 18, 2008 order, as

28 it is part of the record in the instant action.

3

Case 2:08-cv-03315-CAS-MAN Document 238 Filed 11/17/08 Page 4 of 15 Page ID #:3529

1 Court to preliminarily enjoin the ten percent rate reduction as to these two provider

2 groups. Mot. at 1.

3

A. STANDING

4

Before proceeding to the merits of petitioners’ argument, the Court must first

5 address the issue of standing raised by the parties. Petitioners argue that the services at

6 issue – NEMT and home health services – are used by clients and members of plaintiffs

7 Independent Living Center and the Gray Panthers, and that the ten percent Medi-Cal

8 reimbursement rate reduction threatens these clients and members with “at the very

9 least, . . . loss or difficulty in obtaining their home health care and their life-needed

10 transportation to their treating physicians or clinics.” Mot. at 2. Petitioners also argue

11 that three named plaintiffs – Mark Beckwith, Margaret Dowling, and Jason Young – are

12 threatened with irreparable injury from the ten percent rate reduction to NEMT and

13 home health services. Reply at 3. Petitioners argue that, therefore, they may sue in a

14 jus tertii capacity to advance the interests of their patients and clients where such

15 patients and clients are unable to advance their own interests. Mot. at 5.

16

Respondent, however, argues that petitioners do not have standing. Specifically,

17 respondent argues that petitioners may not sue on behalf of CMTA and CAHSAH,

18 because petitioners do not have a special relationship with NEMT providers or home

19 health services providers, and because there is no evidence that CMTA and CAHSAH

20 cannot represent their own interests. Opp’n at 7.

21

Respondent’s argument, however, does not demonstrate that petitioners lack

22 standing. Petitioners do not claim standing to sue on behalf of CMTA and CAHSAH,

23 but rather on behalf of their clients and members whose interests may be affected by the

24 ten percent Medi-Cal reimbursement rate reduction to NEMT and home health services.

25 In its September 17, 2008 Order, the Ninth Circuit held that petitioners have standing to

26 challenge AB 5. The Court noted that, in addition to representing independent

27 pharmacies and health care providers participating in the Medi-Cal program,

28

petitioners also include several individual Medi-Cal beneficiaries,

4

Case 2:08-cv-03315-CAS-MAN Document 238 Filed 11/17/08 Page 5 of 15 Page ID #:3530

1

who will be injured or put at risk of injury by implementation of

2

the 10% provider payments cuts because those cuts will reduce

3

quality services, and access to quality services. This injury, like

4

the injury to medical providers discussed above, is the direct

5

result of the Director's implementation of AB 5, and would

6

certainly be remedied by a decision granting injunctive relief.

7

Such an injury to those individuals most directly affected by the

8

administration of [a state welfare] program is sufficient to allow

9

petitioners to seek injunctive relief in federal court.

10 Indep. Living Ctr. of S. Cal. v. Shewry, 2008 U.S. App. LEXIS 19725 (9th Cir.

11 2008). Because petitioners represent Medi-Cal beneficiaries who may be

12 harmed by the ten percent rate reduction, the Court holds that petitioners have

13 standing.

14

B. JURISDICTION

15

Respondent also argues that this Court is divested of jurisdiction to decide

16 petitioners’ motion, because the motion involves an issue that is currently on appeal in

17 the Ninth Circuit: whether Title XIX of the Social Security Act, 42 U.S.C. §§ 1396 et

18 seq. (“the Medicaid Act”) preempts AB 5. Opp’n at 5. However, the Court notes that

19 the specific issue on appeal before the Ninth Circuit is whether the Court properly

20 enjoined the ten percent rate reduction as to “physicians, dentists, pharmacies, adult day

21 health care centers, [and] clinics.” See August 18, 2008 Order. Here, by contrast, the

22 issue to be decided is whether the ten percent rate reduction should be enjoined as to

23 NEMT and home health services providers. Therefore, because a different issue is

24 before the Court than that which is currently on appeal, the Court finds that it is not

25 divested of jurisdiction to consider petitioners’ motion.

26

C. LIKELIHOOD OF SUCCESS ON THE MERITS

27

Pursuant to the Ninth Circuit’s mandate, petitioners may pursue a claim for relief

28 under the Supremacy Clause based on the allegation that AB 5 is preempted by § 30(A)

5

Case 2:08-cv-03315-CAS-MAN Document 238 Filed 11/17/08 Page 6 of 15 Page ID #:3531

1 of the Medicaid Act (referred to herein as “§ 30(A)”). Here, petitioners’ Supremacy

2 Clause claim is predicated upon federal conflict preemption. Under general principles

3 of federal preemption, state law is preempted only to the extent that it actually conflicts

4 with federal law. Pacific Gas & Elec. Co. v. State Energy Comm’n, 461 U.S. 190, 204

5 (1983). Such a conflict may arise either where “compliance with both federal and state

6 regulations is a physical impossibility, or where state law stands as an obstacle to the

7 accomplishment and execution of the full purposes and objectives of Congress.” Id. at

8 203-04 (citations omitted).

9

Thus, to prevail on the merits petitioners will have to prove either that it is not

10 possible for the Department to comply with both AB 5 and the Medicaid Act or that AB

11 5 stands as an obstacle to the enforcement of § 30(A). As such, the Court turns to the

12 statutory provisions at issue here.

13

The “quality of care” provision of § (30)(A) provides that

14

[a] State plan for medical assistance must . . . provide such methods and

15

procedures relating to the utilization of, and the payment for, care and

16

services available under the plan . . . as may be necessary to safeguard

17

against unnecessary utilization of such care and services and to assure that

18

payments are consistent with efficiency, economy, and quality of care.

19 42 U.S.C. § 1396a(30)(A). The “equal access” provision of § 30(A) provides that

20

[a] State plan for medical assistance must . . . provide such methods and

21

procedures relating to the utilization of, and the payment for, care and

22

services available under the plan . . . as may be necessary to safeguard

23

against unnecessary utilization of such care and services and to assure that

24

payments are . . . sufficient to enlist enough providers so that care and

25

services are available under the plan at least to the extent that such care and

26

services are available to the general population in the geographic area.

27 Id.

28

In Orthopaedic Hospital v. Kizer, 1992 WL 345652 (C.D. Cal. 1992)

6

Case 2:08-cv-03315-CAS-MAN Document 238 Filed 11/17/08 Page 7 of 15 Page ID #:3532

1 (“Orthopaedic I”), plaintiff-hospital providers filed suit pursuant to 42 U.S.C. § 1983

2 (“§ 1983”), claiming that the Director violated § 30(A) by setting reimbursement rates

3 for hospital outpatient services without considering the effect of hospital costs on

4 efficiency, economy, and quality of care.3 Id. at *1. The district court concluded that §

5 30(A) was enforceable in a § 1983 action, and that the Department “had a judicially

6 enforceable obligation” to consider and make findings each time it modified

7 reimbursement rates. Id. at *2. According to the district court, § 30(A) obligated the

8 Department to consider efficiency, economy, and quality of care, which it referred to as

9 the “relevant factors.” Id. at *4. The district court found that the Director had acted

10 arbitrarily and capriciously in establishing six of the seven challenged rates. Id. The

11 court then remanded the matter to the Department for further consideration. Id. at *14.

12 Upon remand, the Department conducted a rate study, and readopted the reimbursement

13 rates without change. Orthopaedic Hospital II/III, 103 F.3d at 1495.

14

The hospitals returned to the district court, filing two lawsuits (Orthopaedic II/III)

15 that the district court consolidated, arguing that the adopted rates did not comply with §

16 30(A). Id. The district court entered judgment in favor of the Department, finding that

17 the Department was not statutorily required to consider hospital costs when setting

18 reimbursement rates. Id. The hospitals appealed, and the Ninth Circuit reversed. The

19 Ninth Circuit’s interpretation held that § 30(A) “provides that payments for services

20 must be consistent with efficiency, economy, and quality of care, and that those

21 payments must be sufficient to enlist enough providers to provide access to Medicaid

22 recipients.” Id. at 1496 (emphasis in original). The Ninth Circuit therefore concluded

23 that under § 30(A)

24

the Director must set hospital outpatient reimbursement rates that bear a

25

reasonable relationship to efficient and economical hospitals’ costs of

26

27

3 The hospitals did not, however, cha llenge the rates under the “equal access”

28 provision. Orthopaedic I, 1992 WL 345652 at *14 n.4.

7

Case 2:08-cv-03315-CAS-MAN Document 238 Filed 11/17/08 Page 8 of 15 Page ID #:3533

1

providing quality services, unless the Department shows some justification

2

for rates that substantially deviate from such costs. To do this, the

3

Department must rely on responsible cost studies, its own or others’, that

4

provide reliable data as a basis for its rate setting.

5 Id.4 Further, the Ninth Circuit found that “[i]t is not justifiable for the Department to

6 reimburse providers substantially less than their costs for purely budgetary reasons.”

7 Id. at 1499 n.3.5

8

Whatever else its effect may have been, it is clear that Sanchez v. Johnson, 416

9 F.3d 1051 (9th Cir. 2005) left undisturbed the rule announced in Orthopaedic Hospital

10 that § 30(A) creates duties on behalf of the Department, i.e., the duty to consider

11 efficiency, economy, and quality of care when establishing reimbursement rates.

12 Indeed, the Sanchez court recognized that “[§ 30(A)] speaks . . . of the State’s

13 obligation to develop ‘methods and procedures’ for providing services generally.”

14 Sanchez, 416 F.3d at 1059 (emphasis added).

15

Because Orthopaedic Hospital is binding authority on this Court, the Court finds

16 that when the State of California seeks to modify reimbursement rates for health care

17 services provided under the Medi-Cal program, it must consider efficiency, economy,

18

19

4 See e.g., Alaska Dep’t of Health & Soc. Servs. v. Ctrs. for Medicare & Medicaid Servs., 424 F.3d 931, 940-41 (9th Cir. 2005); seealso Arkansas Med. Soc’y v. Reynolds,

20 6 F.3d 519, 530 (8th Cir. 1993) (“We agree w ith the trial court’s conclusion that the

21

relevant factors that DHS is obliged to consider in its rate-making decisions are the factors outlined in 42 U.S.C. § 1396a(a)(30)(A).”); cfM. ethodist Hosps. v. Sullivan, 91 F.3d 1026,

22 1030 (7th Cir. 1996) (finding that § 30(A) does not require a state to consider any

23 particular factors, but rather, requires that the state arrive at substantive results consistent with the Medicaid Act); Rite Aid, Inc. v. Houstoun, 171 F.3d 842 (3d Cir. 1999) (same).

24

25

5 Subsequently, in Sanchez v. Johnson , 416 F.3d 1051 (9th Cir. 2005), the Ninth

26 Circuit held that § 30(A) does not confer individual rights that are enforceable under 42

27

U.S.C. § 1983. Id. at 1060. However, in light of th e mandate of the Ninth Circuit, the Court assumes that petitioners herein have standing because they bring suit to enjoin

28 enforcement of a state law that is claimed to be preempted by federal law.

8

Case 2:08-cv-03315-CAS-MAN Document 238 Filed 11/17/08 Page 9 of 15 Page ID #:3534

1 and quality of care, as well as the effect of providers’ costs on those relevant statutory

2 factors.

3

The Court now turns to AB 5. Section 14 of AB 5 adds Cal. Welf. & Inst. Code §

4 14105.19, which directs the Director to reduce by ten percent payments under the Medi-

5 Cal fee-for-service program for physicians, dentists, pharmacies, adult day health care

6 centers, clinics, health systems, and other providers for services provided on or after

7 July 1, 2008, and which directs the Director to reduce by “actuarial equivalent” the ten

8 percent rate reduction to managed health care plans that contract with the Department

9 on or after July 1, 2008. Cal. Welf. & Inst. Code § 14105.19(b)(1), (3). Section 15 of

10 AB 5 adds Cal. Welf. & Inst. Code § 14166.245, which reduces payments to acute care

11 hospitals not under contract with the Department for inpatient services provided on or

12 after July 1, 2008. Cal. Welf. & Inst. Code § 14166.245(c).

13

In the Court’s August 18, 2008 order, the Court noted that respondent had not

14 proffered any evidence showing that the Department considered any of the “relevant

15 factors,” in making the ten percent rate reduction challenged here.6 The Court further

16 noted that AB 5 itself suggests that the only reason for imposing the cuts was

17

18

6 In her supplem ental opposition subm itted in the August 18, 2008 injunction

proceeding, respondent argued that

19

20

Petitioners’ proffered documents show that the Legislature did consider [the

relevant] factors. The LegislativeAnalyst’s Office (LAO) Report shows that

21

the Legislature was presented with andconsidered the possible effects of AB

22

5 on Medi-Cal program participants.

23 Respondent’s Supplemental Opp’n at 13 (citing Petitioners’ Decl. No. 63, Declaration of

24 Jan S. Raymond, Ex. B (Legislative Analyst’s report) at 37). However, the Court noted

25

that all the Legislative Analyst’s report showed was that such a report was prepared. The Court determined that respondent had not shown that the Legislature ever reviewed or

26 considered the concerns raised therein. Further, the Court noted that respondent had

27

repeatedly argued that the State does not ha ve any obligation to consider any of the statutory factors addressed herein, and that the Department does not conduct any studies

28 in this regard.

9

Case 2:08-cv-03315-CAS-MAN Document 238 Filed 11/17/08 Page 10 of 15 Page ID #:3535

1 California’s current fiscal emergency. See AB 5, §§ 16-17 (“This act addresses the

2 fiscal emergency declared by the Governor . . . . This act is an urgency statute necessary

3 for the immediate preservation of the public peace, health, or safety within the meaning

4 of Article IV of the Constitution.”). The Court also stated that, at the hearing,

5 respondent argued that neither the Legislature, nor the Department had a duty to

6 consider any particular factors or to conduct any particular studies. Therefore, the Court

7 determined that respondent had not made the required inquiries in deciding to enact the

8 ten percent rate reduction.

9

In its opposition to the instant motion, respondent provides the declaration of

10 Timothy Matsumoto (“Matsumoto”), the Department’s Chief of the Provider Rate

11 Section, Rate Development Branch, which, respondent argues, demonstrates that the

12 Department did, in fact, make the required inquiry in deciding to enact the ten percent

13 rate reduction. Opp’n at 15. The Matsumoto declaration states that at the time the ten

14 percent reduction was implemented, the Department was “not aware” of any problems

15 with Medi-Cal recipients having access to NEMT and home health services.

16 Matsumoto Decl. ¶¶ 5, 6. Furthermore, the declaration states that the Department has

17 compared the number of paid claims for NEMT and home health services in July 2008

18 to the number in July 2007, and has found that the number of paid claims are roughly

19 comparable.7 However, respondent fails to show how the Department’s “lack of

20 awareness” and its one after-the-fact comparison of the number of paid claims are

21 sufficient to establish that the Department considered the “relevant factors” of

22 efficiency, economy, and quality of care in establishing reimbursement rates, as required

23

24

7 Matsumoto states that the number of paid claims for home health services in July

25

2008 was 92 percent of the number for July 2007. Matsumoto Dec. ¶ 5. Matusumoto also states that the number of paid claims for NEMT services in July 2008 was 98 percent of

26 the number for July 2007. Matsumoto Dec. ¶ 6. Matsumoto states that he believes that the

27

remaining discrepancies between the number of claims for July 2007 and July 2008 are attributable to the fact that some claims for July 2008 may not have been processed yet.

28 Matsumoto Dec. ¶ 5-6.

10

Case 2:08-cv-03315-CAS-MAN Document 238 Filed 11/17/08 Page 11 of 15 Page ID #:3536

1 by § 30(A).

2

Respondent additionally argues that because the August 18, 2008 order is pending

3 before the Ninth Circuit, and because the Ninth Circuit has not yet ruled on whether

4 petitioners are likely to succeed on the merits, petitioners “cannot legitimately argue that

5 they are likely to succeed on the merits of this case,” because “the outcome of the

6 pending appeals is truly uncertain.” Opp’n at 12. However, respondent provides no

7 authority, nor is the Court aware of any, which would indicate that, because a related

8 issue has yet to be decided on appeal, that this Court is prevented from determining that

9 petitioners have a likelihood of success on the merits.

10

Based on the foregoing, the Court concludes that petitioners have shown a

11 likelihood of success on the merits.

12

D. IRREPARABLE HARM

13

Therefore, the next issue to be addressed in the current motion for preliminary

14 injunction is whether petitioners have made a sufficient showing of the possibility of

15 irreparable harm caused by the ten percent Medi-Cal reimbursement rate reduction to

16 NEMT and home health services providers. After reviewing the declarations submitted

17 by petitioners, the Court finds that petitioners have made a sufficient showing of

18 irreparable harm to warrant an injunction.

19

Petitioners submit a number of declarations from NEMT and home health

20 services providers and their representatives, which allege that the ten percent Medi-Cal

21 reimbursement rate reduction has forced or will force NEMT and home health services

22 providers to reduce the geographic area they are able to serve, to decline to take new

23 Medi-Cal patients, and, in some cases, to cease furnishing services to existing Medi-Cal

24 patients. See, e.g., Barnaby Decl. ¶ 8 (“to my personal knowledge, since the ten percent

25 reimbursement reduction of Assembly Bill X3 5 went into effect on July 1, 2008, at

26 least five (5) NEMT firms who were members of CMTA have ceased to serve Medi-Cal

27 beneficiaries, and at least four (4) NEMT firms who are members of CMTA have

28 curtailed their service areas . . .”); Colby Decl. (“as a result of the 10% Medi-Cal rate

11

Case 2:08-cv-03315-CAS-MAN Document 238 Filed 11/17/08 Page 12 of 15 Page ID #:3537

1 cut, Spirit Home Healthcare will not accept any new Medi-Cal patients.”); Thesman

2 Decl. ¶ 4 (“After July 1, 2008 when the 10% rate cut went into effect, Care Van

3 discontinued service to a few patients who lived outside our core areas of service.”);

4 Donley Decl. ¶ 4 (“In light of the 10% Medi-Cal payment rate reduction, Assisted

5 Healthcare is no longer accepting new Medi-Cal patients.”); Erman Decl. (“In light of

6 the 10% Medi-Cal repayment reduction . . . Rx Staffing & Home Care, Inc. has given

7 notice to three Medi-Cal patients . . . That [it] will be unable to continue to provide

8 home health care service to them.”); Horne Decl. ¶ 8 (“Our office received requests for

9 transportation services for 25 patients in the first week of September, and approximately

10 the same number of requests each week since then . . . We are unable to provide

11 services to those patients due [in part] to the 10% reduction.. .”); Hafkenschiel Decl. ¶ 5;

12 Barret Decl. at 2. These declarations also state that some providers have or may in the

13 future be forced to close their business. See, e.g., Dermendjian Decl. ¶ 6 (“if [the 10%

14 cut is] continued . . . We will soon be forced to completely close down the business and

15 stop providing our [NEMT] services for our patients.”); Barnaby Decl. ¶ 8;

16 Hafkenschiel Decl. ¶ 5. In addition, petitioners submit the declaration of Henry

17 Zaretsky, who conducted an analysis for CAHSAH and found that “the 10-percent

18 payment reduction can do nothing but exacerbate the already significant payment

19 shorfalls facing home-health agencies, which are likely to result in even fewer agencies

20 available to Medi-Cal beneficiaries in need of their services.” Zaretsky Decl. ¶ 9.

21

Respondent is correct that evidence that NEMT and home health services

22 providers are experiencing monetary injury due to the ten percent rate reduction does

23 not, alone, establish irreparable harm, as the Ninth Circuit has held that “monetary

24 injury is not normally considered irreparable.” See L.A. Mem'l Coliseum Comm'n v.

25 Nat'l Football League, 634 F.2d 1197, 1202 (9th Cir.1980); Opp’n at 16. However, the

26 statements quoted above from petitioners’ declarations establish not only that NEMT

27 and home health services are experiencing monetary injury, but also that such injury is

28 resulting or may imminently result in a loss of access to NEMT and home health

12

Case 2:08-cv-03315-CAS-MAN Document 238 Filed 11/17/08 Page 13 of 15 Page ID #:3538

1 services for Medi-Cal beneficiaries. Such loss of access may force some Medi-Cal

2 beneficiaries to enter nursing facilities or hospitals and to use hospital emergency rooms

3 and ambulance services more frequently. See, e.g., Colby Decl. ¶ 8 (“With the 10%

4 cuts, many patients are not going to be able to find an agency to take care of them . . .

5 patients must often be readmitted to the hospital because of the lack of available home

6 health nursing care.”); Horne Decl. ¶ 9 (effect of denial of requests for transportation

7 services is that “patients will be getting a lot sicker and will be forced to use hospital

8 emergency rooms for their needed care.”); Malofsky-Berlowe Decl. ¶ 4; Vescovo Decl.

9 ¶ 9; Eshaghian Decl. ¶ 8.

10

Indeed, petitioners also submit evidence that the curtailment of services provided

11 by NEMT and home health services providers has already prevented altogether some

12 Medi-Cal beneficiaries from obtaining needed services. For example, the president of

13 CAHSAH’s states that “thousands of Medi-Cal recipients, in the Medi-Cal fee-for-

14 service program, who were formerly receiving life-necessary home health services in

15 their homes before July 1, 2008 are now unable, and will continue to be unable, to

16 access or obtain home health services in the Medi-Cal fee-for-service program.” See

17 Hafkenschiel Decl. ¶ 5. Similarly, Diane Brabetz, owner of At Home Nursing Services,

18 and Kenneth Erman, administrator for RX Staffing & Home Care, Inc., state that at least

19 some prospective patients that their organizations declined to accept as new patients

20 have been subjected to longer terms of institutional care. Brabetz Decl. ¶ 6; Erman

21 Decl. ¶ 6.

22

Therefore, the Court finds that, based on the declarations, petitioners have shown

23 a threat of irreparable harm, as well as some evidence that some Medi-Cal beneficiaries

24 are currently experiencing irreparable harm.8

25

26

8 Respondent submits the Matsumoto declaration, who states that the number of paid

27

claims for Medi-Cal covered NEMT and home health services in July 2008 is comparable to the number of paid claims for July 2007, indicating, respondent argues, that there has

28

(continued...)

13

Case 2:08-cv-03315-CAS-MAN Document 238 Filed 11/17/08 Page 14 of 15 Page ID #:3539

1

E. BALANCE OF HARDSHIPS

2

The Court is mindful of the difficulty facing the State of California in light of its

3 fiscal crisis. However, the State has accepted federal funds under the Medicaid Act. In

4 so doing, the State agreed to abide by the conditions imposed by Congress. Further,

5 retroactive relief for Medi-Cal beneficiaries will likely be inadequate and, and it will

6 come too late, to remedy the hardships they may experience due to loss of NEMT and

7 home health services, including increased institutionalization. See e.g., Lopez v.

8 Heckler, 713 F.2d 1432, 1437 (9th Cir. 1983). In light of the significant threat to the

9 health of Medi-Cal recipients that reducing payments to NEMT and home health

10 providers will likely cause, and given that nothing in this Court’s order prevents

11 respondent from imposing a rate reduction after she has appropriately considered and

12 applied the relevant factors, the Court finds that the balance of hardships tips in favor of

13 granting the preliminary injunction.

14

F. PUBLIC INTEREST

15

“The district court’s public interest analysis should be whether there exists some

16 critical public interest that would be injured by the grant of preliminary relief.”

17 Hybritech Inc. v. Abbott Laboratories, 849 F.2d at 1446, 1458 (Fed. Cir. 1988).

18 Clearly, there is a public interest in ensuring that the State has enough money to meet its

19 financial obligations in the face of competing demands. However, there is also a public

20 interest in ensuring access to health care. In light of all the circumstances, including the

21 fact that the State may decide to implement a rate change upon making a properly

22 reasoned and supported analysis, the Court finds that the public interest does not weigh

23

24

8(...continued)

25

not been a reduction in NEMT and hom e health services provided to Medi-Cal beneficiaries. Matsumoto Decl. ¶ 6. Ho wever, this argum ent, alone, does not defeat

26 petitioners’ showing that many providers are being forced to curtail services to Medi-Cal

27

beneficiaries, particularly given that the data submitted by petitioners is for services provided over three months ago, when the full effect of the rate reduction might not yet

28 have been felt by NEMT and home health services providers.

14

Case 2:08-cv-03315-CAS-MAN Document 238 Filed 11/17/08 Page 15 of 15 Page ID #:3540

1 against the issuance of a preliminary injunction.

2 IV. CONCLUSION

3

For the foregoing reasons, the Court GRANTS petitioners’ third motion for

4 preliminary injunction. The Court hereby orders respondent Director, her agents,

5 servants, employees, attorneys, successors, and all those working in concert with her to

6 refrain from enforcing Cal. Welf. & Inst. Code § 14105.19(b)(1), including refraining

7 from reducing by ten percent payments under the Medi-Cal fee-for-service program for

8 NEMT and home health services provided on or after November 17, 2008.9

9

10

IT IS SO ORDERED.

11

12 13 Dated: November 17, 2008 14 15

____________________________ CHRISTINA A. SNYDER
UNITED STATES DISTRICT JUDGE

16

17

18

19

20

21

22

23

24

9 Petitioners request an injunction for serivces provided on or after October 27, 2008,

25

the date upon which petitioners filed the instanmt otion. Petitioners argue that, in removing the instant action to federal court, the stat e waived its Eleventh Amendment rights, and

26 therefore retroactive relief may be grante d. Reply at 8, citing Em bry v. King, 361 F.3d

27

562, 566 (9th Cir. 2004). However, as it did in its August 18, 2008 order granting in part petitioners’ motion for preliminary injunction, the Court declines to provide retroactive

28 relief in the instant action.

15

 </s> Case 2:08-cv-03315-CAS-MAN Document 307 Filed 11/02/09 Page 1 of 8 Page ID #:4650

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

CV 08-3315 CAS (MANx)

Date November 2, 2009

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA ET AL V. SANDRA SHEWRY

Present: The Honorable CHRISTINA A. SNYDER

CATHERINE JEANG

Not Present

N/A

Deputy Clerk

Court Reporter / Recorder

Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Not Present

Not Present

Proceedings:

(Chambers:) PLAINTIFFS’ MOTION TO ENFORCE PRELIMINARY INJUNCTION AND, ALSO, TO STAY AND PRELIMINARILY ENJOIN IMPLEMENTATION OF PAYMENT CUTS FOR LACK OF PUBLIC NOTICE AS REQUIRED BY 42 C.F.R. § 407.205 (filed 10/11/09)

I. INTRODUCTION & BACKGROUND

The facts and procedural history of this action are known to the parties and summarized in the Court’s August 18, 2008 order granting in part and denying in part petitioners’ motion for preliminary injunction. The August 18, 2008 order preliminarily enjoined the ten percent Medi-Cal reimbursement rate reduction codified in Assembly Bill X3 5, Cal. Welf. & Inst. Code § 14105.19, as to certain fee-for-service providers, including pharmacies. The Ninth Circuit affirmed the Court’s August 18, 2009 order. 572 F.3d 644, 663 (9th Cir. 2009) (affirming in part and reversing in part the Court’s subsequent order modifying the injunction to apply only prospectively).

On February 27, 2009, the Court in a related action, Managed Pharmacy Care v. David Maxwell Jolly, CV 09-382 CAS (MANx), granted petitioners’ motion for preliminary injunction. The February 27, 2009 order preliminarily enjoined the five percent Medi-Cal payment reduction codified in Assembly Bill 1183, modifying Cal. Wel. Inst. Code § 14105.191(b)(3), as to payments to pharmacies for prescription drugs provided under the Medi-Cal fee-for service program. The Court’s February 27, 2009 order is currently being appealed to the Ninth Circuit.

Petitioners allege that the Department of Health Care Services (“DHCS”) has adopted, in violation of these two preliminary injunctions, three new practices that reduce

CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 1 of 8

Case 2:08-cv-03315-CAS-MAN Document 307 Filed 11/02/09 Page 2 of 8 Page ID #:4651
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

CV 08-3315 CAS (MANx)

Date November 2, 2009

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA ET AL V. SANDRA SHEWRY

payments to pharmacies in the Medi-Cal fee-for-service and managed care programs. Mot. at 7-9. Specifically, on July 28, 2009, the California Legislature enacted Assembly Bill X4 5 (“AB 5"). AB 5 modifies the manner in which the DHCS is to calculate the maximum amount, known as the “maximum allowable ingredient costs” (“MAIC”), it reimburses Medi-Cal pharmacy providers for generically equivalent drugs. See Cal. Welf. & Inst. Code § 14105.45. In addition, AB 5 provides that payment to Medi-Cal pharmacy providers will be the lower of the pharmacy’s “usual and customary charge” or the statutory reimbursement rate for legend and non-legend drugs.1 See Cal. Welf. & Inst. Code § 14105.455 (cross-referencing the rate provided in subdivision (b) of section 14105.45). Finally, petitioners allege that on September 26, 2009, DHCS reduced payments to all Medi-Cal pharmacies by 4% because First Data Bank, Inc. (“First DataBank”), the department’s “primary reference source” for pricing the reimbursement rate for brand drug products, changed its standard and formula for arriving at “average wholesale prices” (“AWP”). This change to the published AWP was allegedly a result of a class settlement in a separate lawsuit involving First Data Bank.2

On October 11, 2009, petitioners filed the instant motion to enforce the August 18,
2008 and February 27, 2009 injunctions, and to stay and preliminarily enjoin implementation of the three alleged payment cuts.3 Respondent filed an opposition on

1 The “usual and customary charge” means the lower of the following: (1) the lowest price reimbursed to the pharmacy by other third-party payers in California, excluding Medi-Cal managed care plans and Medicare Part D prescription drug plans; or (2) the lowest price routinely offered to any segment of the general public. See Cal. Welf. & Inst. Code § 14105.455(b)(1)-(2).

2 See New England Carpenters Health Benefits Fund, et al. v. First DataBank, et al., No. 05-11148 PBS (D. Md. Aug. 3, 2009).

3 Petitioners request that the Court take judicial notice of several filings with the

Court. Under Fed. R. Evid. 201, a court may take judicial notice of “matters of public

record.” Mack v. South Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir.1986). Since

the Court the does not rely on the filed documents to rule on the motion, the Court denies

petitioners’ request as moot.

CV-90 (06/04)

CIVIL MINUTES - GENERAL

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Case 2:08-cv-03315-CAS-MAN Document 307 Filed 11/02/09 Page 3 of 8 Page ID #:4652

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

CV 08-3315 CAS (MANx)

Date November 2, 2009

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA ET AL V. SANDRA SHEWRY

October 26, 2009.4 Petitioners filed a reply on October 29, 2009. On October 30, 2009, the Court vacated the hearing date of November 2, 2009 and took the matter under submission. After carefully considering the arguments set forth by the parties, the Court finds and concludes as follows.

II. DISCUSSION

Petitioners move the Court to enforce the two existing injunctions and to order respondent David Maxwell-Jolly, Director of the DHCS (the “Director”), to refrain from reducing any payments to Medi-Cal pharmacies, as provided by Cal. Welf. & Inst. Code sections 14105.45 and 14105.455, or on account of any reduced AWP published by First DataBank or other publishers affected by the New England Carpenters lawsuit. Mot. at 1. In addition, they request that the Court order respondent to refrain from reducing, “whatsoever or at all,” any reimbursement or payments to pharmacies for their costs to acquire brand drug products, in the Medi-Cal fee-for-service or managed care program, during the pendency of this litigation and to refund all the payments DHCS is allegedly withholding under these challenged payment practices.5 Id. at 1-2.

Petitioners also request that the Court stay and preliminarily enjoin the implementation of these alleged payment cuts for lack of public notice as required by 42 C.F. R. § 407.205.

4 Respondent requests that the Court issue sanctions against petitioners for allegedly failing to meet and confer, pursuant to Local Rule 7-3, and for allegedly filing a frivolous pleading, in violation of Fed. R. Civ. P. 11. Opp’n at 17-20. The Court denies respondent’s requests.

5 Petitioners seek for the above described enforcement order to have effect until

respondent does the following: (1) applies to and obtains an order from the Court which

terminates or amends the existing preliminary injunctions; (2) publishes a public notice,

as required by 42 C.F.R. § 447.205, of the three alleged changes in statewide methods

and standards for setting and paying Medi-Cal payment rates for services; and (3) the

Director, exercising his powers under section 14105, ceases to implement the three

challenged practices so that no reimbursement rates are reduced. Mot. 2-5.

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UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

CV 08-3315 CAS (MANx)

Date November 2, 2009

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA ET AL V. SANDRA SHEWRY

A. Application of the August 18, 2008 Order and February 27, 2009 Order to the Alleged Payment Cuts to Medi-Cal Pharmacies

Petitioners contend that these three new alleged payment cuts to Medi-Cal pharmacies are in violation of the August 18, 2008 and February 27, 2009 preliminary injunctions because the orders were “couched in terms of ordering the Director to ‘refrain from reducing by [ten and five percent, respectively] payments under the Medi-Cal fee for service program’ for prescription drugs.” Mot. at 7; Reply at 4-5. In support of their argument, they assert that these three new practices cumulatively result in “at least a 5% cut in overall payments annually to pharmacies in the Medi-Cal program.” Mot. at 8; Reply at 5 (citing Declaration of Richard D. Wilson). Petitioners argue that even if respondents believe that the existing injunctions were mooted, as a result of subsequent events or by amendment to existing statutes, that respondents must comply with the existing injunctions until they obtain an order from the court that modifies or terminates the injunctions. Mot. at 10 (citing e.g., U.S. v. Swift, 286 U.S. 106, 119 (1932)).

Respondent contends that this Court’s August 18, 2008 order is expressly limited to the ten percent payment reduction mandated by Cal. Welf. & Inst. Code § 14105.19(b)(1), and that the three practices challenged in this motion do not relate to the enjoined statutory provision.6 Opp’n at 4, 6. Accordingly, he argues that the scope of the prior injunction in this case is limited to the express terms of the injunction, and that the order cannot be the basis for enjoining all future legislative action that might possibly

6 Respondent further contends that the new statutory provisions, unlike the

enjoined statutory provisions, do not mandate payment reduction for any drugs. Opp’n at

3. Specifically, he argues that section 14105.455 “merely codified into statute a

longstanding Medi-Cal regulation prohibiting providers from discriminating against the

Medi-Cal program by charging it more than the usual and customary charges they charge

to members of the general public.” Id. at 4. In addition, he argues that it is unclear to

what extent section 14105.45 concerning MAICs will impact the reimbursement for

multi-source drugs. Id. at 5. Finally, respondent argues that the AWP is established by a

third party entity over which he has no authority, and that any impact to a provider’s

reimbursement for a drug will be based on the existing Medi-Cal reimbursement statute,

regulation, or policy. Id.

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UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

CV 08-3315 CAS (MANx)

Date November 2, 2009

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA ET AL V. SANDRA SHEWRY

have any impact on reimbursement to any pharmacy. Id. (citing Firefighters Local Union v. Stotts, 467 U.S. 561, 574 (1984)). Respondent further argues that reimbursements to Medi-Cal pharmacies may be “reduced for a variety of reasons every day, having nothing whatsoever to do with this case,” and that the relief petitioners are seeking is to create a system wherein the Court becomes the sole administrator of the Medi-Cal programs. Id. at 7. Such an arrangement, he contends, would clearly violate the separation of powers doctrine and the Medicaid Act. Id.

Furthermore, he argues that Cal. Welf. & Inst. Code sections 14105.45 and 14105.455, and the issue of AWP arising out of the New England Carpenters litigation, have not previously been “briefed, argued or referenced within the scope of this case.” Opp’n at 5. Respondent contends that petitioners’ new grievances can only be the subject of a separate lawsuit, and that the Court cannot decide issues improperly raised in the instant motion because they are completely outside the relief requested in the petition and proceedings in this action.7 Id. at 8 (citing Sunlight Carbon Co. v. St Louis & S.F.R. Co., 15 F.2d 802, 804 (1926)). In addition, he argues that Swift, cited by petitioners, is inapplicable because the case involved a consent decree, and moreover, that petitioners in Swift raised their new claims for relief in a new petition for relief. Id. at 9-10 (citing 286 U.S. 106, 120 (1932)).

A district court has continuing jurisdiction to enforce its injunction. Crawford v. Honig, 37 F.3d 485, 488 (9th Cir.1994). Petitioners, in seeking to enforce the injunction, must show that the injunction clearly forbids the challenged conduct, and thus demonstrate that respondent received “explicit notice of precisely what conduct is forbidden.” Clark v. Coye, 60 F.3d 600, 604 (9th Cir. 1995) (explaining why Fed. R. Civil P. 65(d) “requires the language of injunctions to be reasonably clear so that ordinary persons will know precisely what action is proscribed,” and why “all

7 Respondent further contends that the proper procedure to add or change one’s

claims for relief based on new or change facts is a Fed. R. Civ. P. 15(d) motion. Opp’n at

9. He also argues that even if petitioners had sought a joinder of their new claim,

pursuant to Fed. R. Civ. P. 20(a), that joinder would be inappropriate because the three

grievances petitioners allege are not transactionally related to the payment reduction

mandated by Cal. Welf. & Inst. Code § 14105.19. Id. at 10-11.

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Case 2:08-cv-03315-CAS-MAN Document 307 Filed 11/02/09 Page 6 of 8 Page ID #:4655
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

CV 08-3315 CAS (MANx)

Date November 2, 2009

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA ET AL V. SANDRA SHEWRY

ambiguities are resolved in favor of the person subject to the injunction”) (quoting United States v. Holtzman, 762 F.2d 720, 726 (9th Cir.1985)). However, the Court finds that the August 18, 2009 order, issued in the instant action, expressly states that it is limited to the ten percent rate reduction codified in Cal. Welf. & Inst. Code § 14105.19(b)(1). Likewise, the February 27, 2009 order, issued in the related action Managed Pharmacy Care v. David Maxwell Jolly, CV 09-382 CAS (MANx), expressly states that is limited to the five percent rate reduction codified in Cal. Welf. & Inst. Code § 14105.191(b)(3). Because the Court’s orders were expressly limited to these specific statutory provisions, and because they do not at all contemplate the alleged payment cuts challenged in the instant motion, the Court declines to construe the injunctions to apply to Cal. Welf. & Inst. Code sections 14105.45 or 14105.455, or to the alleged payment reduction to pharmacies arising out of the New England Carpenters litigation. The Court finds that petitioners are in fact raising new claims not covered by the current injunctions.

B. Injunction and Stay of Payment Cuts for Failure to Give Public Notice Required by 42 C.F.R. § 447.205

Petitioners contend that respondent should be preliminarily enjoined from implementing these alleged payment cuts until the Director complies with the public notice requirements of 42 C.F.R. § 447.205. Mot. at 13. Section 447.205 requires public notice of significant changes in statewide methods and standards for setting payment rates unless certain enumerated exceptions apply. See 47 C.F.R. § 447.205. Petitioners argue that no public notice has been provided informing the public that First DataBank changed its standard and formula for calculating the AWP, which is the “reference source” used by DHCS to set its pharmacy payment rates, and that this change allegedly resulted in a “4% AWP markdown.”8 Mot. at 14-20. As to the other two alleged

8 Specifically, petitioners argue that whereas the State Plan filed with the Centers

for Medicare and Medicaid Services must, pursuant to 42 U.S.C. § 1396(a)(30)(A),

“provide such methods and procedures relating to . . . the payment for, care and services,”

that the State Plan filed by DHCS only states that the method used to establish the

maximum drug product payments is based on the AWP published by an “undisclosed

primary reference source.” Id. at 15-16. Petitioners assert that the State Plan does not

disclose that First DataBank, the primary reference source, uses a “secret proprietary

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Case 2:08-cv-03315-CAS-MAN Document 307 Filed 11/02/09 Page 7 of 8 Page ID #:4656
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

CV 08-3315 CAS (MANx)

Date November 2, 2009

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA ET AL V. SANDRA SHEWRY

payment cuts, petitioners argue that although the Director did post a notice of the two
statutory changes, codified in AB 5, that he failed to comply with specific notice requirements under section 447.205.9 Mot. at 21-24.

Respondent contends that petitioners’ complaint in this action does not allege a claim based on 42 C.F.R. § 447.205, and that petitioners are improperly attempting to have this Court address an issue not previously or currently before it. Opp’n at 10-14 (citing E. & J. Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280, 1297 (9th Cir. 1992) (finding that the terms of the injunction must be tailored to eliminate “only the specific harm alleged)). Nevertheless, respondent argues that even if section 447.205 were relevant to the case, he has not violated this statutory public notice requirement. Id. at 14-17.

As previously discussed, the Court finds that petitioners are in fact raising a new claim by challenging these alleged payment cuts, which are not the subject of petitioners’ complaint, and by alleging a violation of a new statute. The gravamen of the Court’s previous two orders was that petitioners had demonstrated a strong likelihood of success in showing that Cal. Welf. & Inst. Code § 14105.19(b)(1) and § 14105.19(b)(3) were preempted by § 30(A) of the Medicaid Act, 42 U.S.C. § 1396a(30)(A). The Court’s analysis of the § 30(A) claims, under a preliminary injunction standard, do not resolve or address the challenge raised by petitioners in this motion.

IV. CONCLUSION

For the foregoing reasons, the Court DENIES petitioners’ motion to enforce the preliminary injunction, with leave to amend, and DENIES petitioners’ motion to stay and

formula” to arrive at its published AWP, and that on September 26, 2009, this formula was changed resulting in a one-time 4% price reduction for 18,000 to 20,000 brand drug products. Id.

9 Specifically, petitioners argue that the public notice posted in the California

Regulatory Notice Register fails to explain why DHCS is changing its methods and

standards, and to give an estimate of any expected increase or decrease in annual

aggregate expenditures due to these two changes. Mot. at 21-24.

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UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

CV 08-3315 CAS (MANx)

Date November 2, 2009

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA ET AL V. SANDRA SHEWRY

preliminarily enjoin the challenged practices, with leave to amend.

IT IS SO ORDERED.

Initials of Preparer

00 : 00 CMJ

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 </s> Case 2:08-cv-03315-CAS-MAN Document 323 Filed 01/22/10 Page 1 of 3 Page ID #:4761

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

CV 08-3315 CAS (MANx)

Date January 22, 2010

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA ET AL V. SANDRA SHEWRY

Present: The Honorable CHRISTINA A. SNYDER, U.S. DISTRICT JUDGE

PAUL D. PIERSON

N/A

N/A

Deputy Clerk

Court Reporter / Recorder

Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

N/A

N/A

Proceedings:

(In Chambers:) Order Amending this Court’s August 18, 2008 Order Pursuant to the Ninth Circuit Court of Appeals Mandate Issued December 21, 2009 (08-56422 & 08-56554)

The facts and procedural history of this action are known to the parties and summarized in this Court’s August 18, 2008 order granting in part and denying in part petitioners’ motion for preliminary injunction. In the August 18, 2008 order, this Court ordered respondents “to refrain from enforcing Cal. Welf. & Inst. Code § 14105.19(b)(1), including refraining from reducing by ten percent payments under the Medi-Cal fee-forservice program for physicians, dentists, pharmacies, adult day health care centers, clinics, health systems, and other providers for services provided on or after July 1, 2008.” On August 27, 2008, this Court issued an order modifying the injunction to apply only to payments for services provided on or after August 18, 2008.
On July 9, 2009, the Ninth Circuit affirmed in part and reversed in part this Court’s August 18, 2008 order. 572 F.3d 644, 662-63 (9th Cir. 2009). Specifically, the Ninth Circuit affirmed this Court’s order granting in part petitioners’ motion for preliminary injunction, but found that this Court’s “subsequent order modifying the injunction to apply only to payments for services provided on or after August 18 was based on an erroneous legal standard.” Id. at 663. Further, the Ninth Circuit found that
by basing its order on an erroneous legal standard, the district court erred in eliminating the injunction's retroactive effect. We hold that the district court's injunction should extend to all services covered by that injunction and provided on or after July 1, 2008.

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Case 2:08-cv-03315-CAS-MAN Document 323 Filed 01/22/10 Page 2 of 3 Page ID #:4762
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

CV 08-3315 CAS (MANx)

Date January 22, 2010

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA ET AL V. SANDRA SHEWRY

Id. Accordingly, the Ninth Circuit reversed the order modifying the injunction and remanded the case to this Court. Id. On December 21, 2009, the Ninth Circuit denied respondent’s motion to vacate that opinion and ordered the mandate to reissue immediately. Nos. 08-56422, 08-56554, 2009 WL 4893657, at *4 (9th Cir. Dec. 21, 2009).

On January 4, 2010, a hearing was held and this Court ordered the spreading of the mandate.1 Pursuant to the mandate from the Ninth Circuit, this Court hereby vacates the August 27, 2008 order modifying the injunction and amends the August 18, 2008 order to change the effective date to July 1, 2008. Accordingly, the Court hereby orders respondent Director, her agents, servants, employees, attorneys, successors, and all those working in concert with her to refrain from enforcing Cal. Welf. & Inst. Code § 14105.19(b)(1), including refraining from reducing by ten percent payments under the Medi-Cal fee-for-service program for physicians, dentists, pharmacies, adult day health care centers, clinics, health systems, and other providers for services provided on or after July 1, 2008.

1 At the hearing, the Court indicated that it was prepared to amend the August 18, 2008 order in accordance with the Ninth Circuit mandate and inquired as to the parties’ response to the proposed amendment. The Court allowed counsel to file their responses to this inquiry. On January 8, 2010, respondent filed their response, and then on January 13, 2010, intervenor Sacramento Family Medical Clinics, Inc, et al. (“intervenors”), filed their response.

Respondents request that any order amending the August 18, 2008 preliminary

injunction must specifically indicate that it only applies to six providers and service

categories — prescription drugs, physicians, dentists, optometrists, Adult Health Care

Centers (“ADHCs”), and clinics — of which they contend the August 18, 2008 applied.

The intervenors agree with respondents that the mandate requires amendment only of the

Court’s August 18, 2008 preliminary injunction order to change the effective date to July

1, 2008, and that this order only applies expressly to prescription drugs, physician,

dentist, optometrist, ADHCs and clinic services. Both parties agree that the mandate

does not require amendment of this Court’s November 17, 2008 preliminary injunction

which applies to non-emergency medical transportation and home health services.

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Case 2:08-cv-03315-CAS-MAN Document 323 Filed 01/22/10 Page 3 of 3 Page ID #:4763
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

CV 08-3315 CAS (MANx)

Date January 22, 2010

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA ET AL V. SANDRA SHEWRY

IT IS SO ORDERED.

cc: Ninth Circuit Court of Appeals

Initials of Preparer

: n/a PDP

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 </s> Case 2:08-cv-03315-CAS-MAN Document 338 Filed 02/25/10 Page 1 of 6 Page ID #:4897

1

2

3

4

5

6

7

8

UNITED STATES DISTRICT COURT

9

CENTRAL DISTRICT OF CALIFORNIA

10

WESTERN DIVISION

11 INDEPENDENT LIVING CENTER OF )

SOUTHERN CALIFORNIA, ET AL., )

12

)

Petitioners,

)

13

)

and

)

14

)

SACRAMENTO FAMILY MEDICAL )

15 CLINICS, INC., et al.,

)

)

16

Intervenors,

)

)

17

)

vs.

)

18

)

)

19 SANDRA SHEWRY, Director of the )

Department of Health Care Services of )

20 the State of California; DEPARTMENT )

OF HEALTH CARE SERVICES, a )

21 Department of California

)

)

22

)

Respondent.

)

23 _________________________________ )

Case No. CV 08-3315 CAS (MANx) ORDER DENYING RESPONDENTS MOTION TO STAY THE COURT’S JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION

24

25

The Court finds this motion appropriate for decision without oral argument. Fed.

26 R. Civ. P. 78; Local Rule 7-15. Accordingly, the hearing date of March 1, 2010, is

27 hereby vacated, and the matter is hereby taken under submission.

28

Case 2:08-cv-03315-CAS-MAN Document 338 Filed 02/25/10 Page 2 of 6 Page ID #:4898

1 I. INTRODUCTION

2

The facts and procedural history of this action are known to the parties and

3 summarized in this Court’s August 18, 2008 order granting in part and denying in part

4 petitioners’ motion for preliminary injunction. On January 22, 2010, this Court issued

5 an order amending this Court’s August 18, 2009 order pursuant to the mandate from the

6 Ninth Circuit Court of Appeals. See Indep. Living Ctr. of S. Cal. v. Maxwell-Jolly,

7 (“ILC II”), 572 F.3d 644, 662-63 (9th Cir. 2009) (affirming in part and reversing in part

8 this Court’s August 18, 2008 order); Indep. Living Ctr. of S. Cal. v. Maxwell-Jolly,

9 (“ILC III”), 590 F.3d 725, 730 (9th Cir. 2009) (denying respondent’s motion to vacate

10 ILC II and ordering the mandate to reissue ). Pursuant to the mandate, this Court

11 vacated the August 27, 2008 order modifying the injunction and amended the August 18,

12 2008 order to change the effective date to July 1, 2008. Accordingly, this Court ordered

13 “respondent Director, her agents, servants, employees, attorneys, successors, and all

14 those working in concert with her to refrain from enforcing Cal. Welf. & Inst. Code §

15 14105.19(b)(1), including refraining from reducing by ten percent payments under the

16 Medi-Cal fee-for-service program for physicians, dentists, optometrists, prescription

17 drugs, adult day health care centers, and clinics for services provided on or after July 1,

18 2008."1 See Jan. 22 and 29, 2010 orders.

19

On January 29, 2010, respondent filed the instant motion to stay, under Fed. R.

20 Civ. P. 62(c), this Court’s January 22, 2010 order pending filing and disposition of

21 respondent’s petition for certiorari to the Supreme Court. On February 8, 2010,

22 petitioners and intervenors (collectively, “petitioners”) filed an opposition. A reply was

23 filed on February 16, 2008. After carefully considering the arguments set forth by both

24 parties, the Court finds and concludes as follows.

25

26

27 1 On January 29, 2010, the Court issued a minute order amending the January 22,
28 2010 order to clarify the six categories of services subject to injunction.

2

Case 2:08-cv-03315-CAS-MAN Document 338 Filed 02/25/10 Page 3 of 6 Page ID #:4899

1 II. LEGAL STANDARD

2

While an appeal is pending from an interlocutory order or final judgment that

3 grants, dissolves, or denies an injunction, a court may suspend, modify, restore, or grant

4 an injunction on terms for bond or other terms that secure the opposing party's rights.

5 Fed. R. Civ. P. 62(c). Although different rules of procedure govern the power of district

6 courts and court of appeals to stay an order pending appeal, see Fed. R. Civ. P. 62(c) and

7 Fed. Rule App. P. 8(a), the Supreme Court has held that the factors regulating the

8 issuance of a stay are generally the same: (1) whether the stay applicant has made a

9 strong showing that he is likely to succeed on the merits; (2) whether the applicant will

10 be irreparably injured absent a stay; (3) whether issuance of the stay will substantially

11 injure the other parties interested in the proceeding; and (4) where the public interest

12 lies. Hilton v. Braunskill, 481 U.S. 770, 776 (1987); Cal. Pharmacists Ass’n v.

13 Maxwell-Jolly, 563 F.3d 847, 849-50 (9th Cir. 2009).

14 III. DISCUSSION

15

Respondent moves to stay this Court’s January 22, 2010 order pending disposition

16 of his petition for certiorari to the Supreme Court.2 Mot. at 1. Respondent contends that

17 compliance with the January 22, 2010 order will cause respondent to suffer

18 administrative and financial hardship, which if the Supreme Court rules in his favor,

19 would have been “in vain and to the taxpayers’ detriment since the additional payments

20 would then have to be re-collected at an additional expense.” Id. at 3-4. Specifically, he

21 asserts that because the order lengthens the period of reimbursement from August 18,

22

23

2 Respondent requests that the Court take judicial notice of his petition for certiorari

24 filed in the United States of Suprem e Court. Under Fed. R. Evid. 201, a court m ay take

25 judicial notice of “matters of public record.” Mack v. South Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986). As such, judicial notice is proper insofar as judicial notice is
26 taken that this filing was m ade. The C ourt GRANTS respondent’s request for judicial

27 notice to the extent he requests that the Court take judicial notice that the document was filed with the Court. However, the Court does not take judicial notice of the truth of the
28 matters asserted therein.

3

Case 2:08-cv-03315-CAS-MAN Document 338 Filed 02/25/10 Page 4 of 6 Page ID #:4900

1 2008 back to July 1, 2008, that respondent will be compelled to reprocess

2 “approximately 8 million medical provider claims and 620,635 dental provider claims.”

3 Id.; Dworman Decl. ¶ 4; Marks Decl. ¶ 4. Further, respondent asserts that the total cost

4 to reimburse ten percent claims processed during this period and to develop the

5 necessary administrative procedures and programs to accomplish this reimbursement

6 would be approximately “$62 million for medical providers and $8,367,688 for dental

7 providers.”3 Id. Accordingly, respondent argues that under the applicable standard, the

8 balance of hardships weighs heavily in favor of granting a stay.4 Id. Moreover,

9 respondent contends that his petition for certiorari to the Supreme Court presents

10 important legal questions that merit review, most notably whether private parties may

11 maintain a claim under the Supremacy Clause to enforce a provision of the Medicaid

12 Act, 42 U.S.C. § 1396a(a)(30(A). Id. at 4-5. Finally, respondent argues that any further

13 strain on scarce public resources would not be in the public interest. Id. at 6.

As a

14 threshold matter, petitioners respond that this Court is bound by the rule of mandate to

15 execute the Ninth Circuit’s mandate, and thus lacks jurisdiction to stay the January 22,

16 2010 order. Opp’n at 1-2 (citing U.S. v. Thrasher, 483 F.3d 977, 982 (9th Cir. 2007)).

17

18

3 According to respondent, the estimated cost of developing and running a program

19 to recoup reim bursements, if the injuncti ons are overturned by the Suprem e Court, is $119,080 for medical providers and $78,00 for dental providers. Mot. at 4; Dworman
20 Decl. ¶ 5; Marks Decl. ¶ 5.

21

4 Respondent maintains that the Ninth Circuit interprets the standard for granting

22 a stay as “two interrelated legal tests” operating along a continuum. Mot. at 2. “At one end

23

of the continuum, the moving party is required to show both a probability of success on the merits and the possibility of irreparable injury. . . . At the other end of the continuum, the

24 moving party m ust demonstrate that ‘serious legal questions’ are raised and that the

25 ‘balance of hardships tips sh arply in its favor.’” Golden Gate Rest. Ass’n v. City and County of San Francisco, 713 F.3d 1112, 1115-16 (9th Cir. 2008). The “relative hardship
26 to the parties,” respondent contends is the “critical element” in deciding at which point

27 along the continuum is justifie d. Mot. a t 2. Petitioners re spond that the continuum standard was expressly repudiated in Winter v. Natural Res. Def. Council, 129 S. Ct. 365,
28 374 (2008). Opp’n at 2.

4

Case 2:08-cv-03315-CAS-MAN Document 338 Filed 02/25/10 Page 5 of 6 Page ID #:4901

1 According to petitioners, to obtain the relief requested in the instant motion, respondent

2 should have timely filed a motion with the Ninth Circuit, pursuant to Fed. R. App. P.

3 41(d), to stay the mandate pending petition for certiorari.5 Id. In the event that the Court

4 determines that jurisdiction over the motion is proper, petitioners contend that

5 respondent cannot demonstrate that he is likely to prevail on the merits. Id. at 3-4.

6 Moreover, given that the Supreme Court already declined to review the legal issues

7 identified by respondent in Maxwell-Jolly v. Indep. Living Ctr. of S. Cal, 129 S. Ct.

8 2828 (2009) (denying petition for writ of certiorari in ILC I, 543 F.3d 1050 (9th Cir.

9 2008)), petitioners argue that respondent cannot even demonstrate that he will be granted

10 review. Id. Finally, petitioners argue that the only harm claimed by respondent is

11 monetary injury which is not recognized as irreparable, and thus the public interest

12 favors denying a stay. Id. at 5.

13

Respondent replies that although this Court is bound by the Ninth Circuit

14 mandate, it has discretion to suspend the injunction pending appeal, under Fed. R. Civ.

15 P. 62(c). Reply at 2. Accordingly, respondent reiterates that he meets the threshold

16 requirements for a stay. Id. at 3-7.

17

This Court is expressly bound by the Ninth Circuit mandate and issued the

18 January 22, 2010 order in accordance with this mandate. See Thrasher, 483 F.3d at 981

19 (On remand, the district court “is bound by the decree as the law of the case, and must

20

21

5 Rule 41(d) provides that a “party may move to stay the mandate pending the filing of a petition for writ of certiorari in the Supr eme Court.” Fed. R. App. P. 41(d)(2 )(A).

22 The Supreme Court “rarely grants a stay of mandate pending the filing and disposition of

23

petition for certiorari,” unless three conditions are met: First, there m ust be a reasonable probability that four Justices will

24

consider the issue sufficiently meritorious to grant certiorari. Second,

25

there must be a significant possibility that a majority of the Court will

conclude that the decision below was erroneous. Finally, there must be

26

a likelihood that irreparable harmwill result if the decision below is not

27

stayed.

Curry v. Baker, 479 U.S. 1301, 1302 (1986).

28

5

Case 2:08-cv-03315-CAS-MAN Document 338 Filed 02/25/10 Page 6 of 6 Page ID #:4902

1 carry it into execution according to the mandate. That court cannot vary it, or examine it

2 for any other purpose than execution; or give any other or further relief . . . .”). Thus,

3 given that the law and findings in this case have been affirmed on appeal, the Court does

4 not find it appropriate to stay the January 22, 2010 order. Even if it could be said that

5 this Court has the discretion to suspend the execution of the mandate, there does not

6 appear to be any basis to stay that order. While the Court is mindful of the difficulty

7 facing the State of California in light of its fiscal crisis, respondent has not demonstrated

8 a strong showing that he is likely to succeed on the merits of his petition for certiorari,

9 nor that he will be irreparably harmed absent a stay. Just as the Ninth Circuit held that

10 vacating the ILC II opinion would “neither be in the public interest, nor would it be fair

11 to the parties to the litigation,” ILC III, 590 F.3d at 730, this Court finds that it would not

12 be in the public interest to stay the order issued in accordance with that mandate.

13 IV. CONCLUSION

14

In accordance with the foregoing, the Court DENIES respondent’s motion to stay.

15

16

IT IS SO ORDERED

17 18 Dated: February 25, 2010 19 20

________________________________ CHRISTINA A. SNYDER
UNITED STATES DISTRICT JUDGE

21

22

23

24

25

26

27

28

6

 </s> Case 2:08-cv-03315-CAS-MAN Document 362 Filed 03/26/10 Page 1 of 15 Page ID #:5025
OR\G\N_AL

1 LLOYD A. BOOKMAN (State Bar No. 89251) BYRON J. GROSS ~tate Bar No. 76626f
2 JORDAN B. KEVIL E ~State Bar No. 2 7868) I!OOPER, LUNDY & OOKl\.fAN, INC.
3 1875 Centucy Park East, Suite 1600 Los Angeles~ California 90067-2517
4 Telephone: 310) 551-8103 Facsimile: ( 10) 551-8181
5 E-Mail: Ibookriian@health-law.com

FILED CLERK, U.S. DISTRICT COURT
r~-2~ 1· 2010

CENTRAL DISTRICT OF CALIFORNIA

BY

Ill,

DEPUTY

0

+'

6 CRAIG J. CANNIZZO ~tate Bar No. 70379) FELICIA Y s~gtate ar No. 23344&
7 HOOPER, L Y & BOOKMAN, C. 575 Market Street, Suite 2300
8 San Francisco, CA 94105 Telephone: ~415) 875-8500
9 Facsnnile: ( 15) 875-8519 E-Mail: ccannizzo@health-law.com
10 Attorn~for Intervenors CALIFORNIA 11 ASSO .- TION OF MEDICAL
PRODUCT SUPPLIERff CALIFORNIA 12 HOSPITAL ASSOCIA ON· SHARP
MEMORIAL HOSPITALf GROSSMONT 13 HOSPITAL CORPORAT 0~ SHARP
CHULA VISTA MEDICAL ENTER 14 and SHARP CORONADO HOSPITAL
AND I-IEALTHCARE CENTER 1 5

16 ,..

UNITED STATES DISTRICT COURT

~= g~::l Cl NTRAL DISTRICf OF CALIFORNIA, WESTERN DIVISION

19~~

-~-•;').....a 1\: .Ul t-::~·t:l

'll :INB:aPE I.JpENT LNING CENTER

20-. ·OF.$.G)U 1IERN CALIFORNIA, et al. ,
~ , ::·;.:...J

21-~~ ·) ;~::::;:c'ed

Petitioners,

221 ~ ~ ;~~-

CASE NO. CV 08-3315 CAS (MANx) COMPLAINT IN INTERVENTION

23 DAVID MAXWELL-JOLLY Director

of the Department of Health Care

24 Services of the State of California, et

al.,

2 5

Respondents.

2 6

SACRAMENTO FAMILY MEDICAL

27 CLINICS, INC., et al.,

2 8

l ..

1070036.1

COMPLAINT IN INTERVENTION

Case 2:08-cv-03315-CAS-MAN Document 362 Filed 03/26/10 Page 2 of 15 Page ID #:5026

-

0

t:

iii iii

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w~'>tn
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n

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1

CALIFORNIA ASSOCIATION OF

2 MEDICAL PRODUCT SUPPLIERS;

CATHOLIC HEALTHCARE WEST;

3 SHARP MEMORIAL HOSPITAL·

GROSSMONT HOSPITAL

'

4 CORPORATION· SHARP CHULA

VISTA MEDICAL CENTER and

5 SHARP CORONADO HOSPiTAL

AND HEALTHCARE CENTER,

6

Intervenors,

7

8
By leave of court, Intervenors CALIFORNIA ASSOCIATION OF 9
:MEDICAL PRODUCT SUPPLIERS ("CAMPS,), CALIFORNIA HOSPITAL 10
ASSOCIATION ("CHA"), SHARP MEMORIAL HOSPITAL ("SMH"), 11
GROSSMONT HOSPITAL CORPORATION, SHARP CHULA VISTA 12
MEDICAL CENTER, and SHARP CORONADO HOSPITAL AND 13
HEALTHCARE CENTER ("SCI-llf.C") (collectively, "Intervenors") file this 14
complaint and thereby intervene in this action. Intervenors join with Petitioners 15
Independe~t Living Center of Southern California, et al. (collectively, "Petitioners") 16 17 in challenging the validity of an across-the-board ten percent reduction in
reimbursement rates fm health care services provided to beneficiaries of California's 18
Medicaid program, Medi-Cal, which Respondent David Maxwell-Jolly, Director of 19
the California Department of Health Care Services is responsible for implementing, 20
alleging as follows: 21
INTRODUCTION 22
1. Medi-Cal is a major component of the ~'safety net" that ensures the 23
State's poor have access to health care services. Unfortunately for those who 24
depend on ~t to access basic healthcare services, the low rates ~t which the State 25
26 cun-ently pays providers to care for Medi-Cal patients have created a gaping hole in
that net. Health care providers of virtually every type have been steadily leaving the 27
Medi-Cal program or scaling back services because the rates they are being paid are 28

1070036.1

1
COMPLAINT IN INTERVENTION

Case 2:08-cv-03315-CAS-MAN Document 362 Filed 03/26/10 Page 3 of 15 Page ID #:5027

1 not even sufficient to cover the costs they incur in providing services. The exodus

2 of providers from the program is leaving massive numbers of Californians without

3 access to critical services or is forcing them to obtain care in the already over-

4 crowded and increasingly scarce emergency departments of hospitals throughout the

5 state. Despite this disturbing state of affairs, California has decided to reduce Medi-

6 Cal rates again, without regard to the impact of these reductions.

7

2. On January 10, 2008, California Governor Arnold Schwarzenegger

8 issued a Fiscal Emergency Proclamation pursuant to Section IO(f) of Article N of

9 the Constitution ofthe State of California, at the same time he pmposed his budget

10 for fiscal year 2008~09. The Governor determined that the General Fund revenues

11 for fiscal Year 2007-08 will decline substantially below the estimate of General

12 Fund revenues upon which the 2007 Budget Bill was based. Accordingly, the

13 Governor declared a fiscal emergency based on the projected budget imbalance and

14 insufficient cash reserves for Fiscal Year 2007-08 and the projected insufficient cash

15 reserves and potential budgetary and cash deficit in Fiscal Year 2008-09. The

16 Governor caused the Legislature to assemble in special session to address the fiscal

17 emergency.

18

3. On February 16, 2008, the California Legislature enacted Assembly

19

Bill X3

5

eAB

511 )

in special session.

Section 14 of said Act added Section

20 14105.19 to the Welfare and Institutions Code, which provides in relevant part, as

21 follows:

22

{a) Notwithstanding any other provision of law in order to

Implement changes in the level offunding for heafth care services, the

23

director shall reduce provider payments as specified in this section,

24

oy(b)( l) Except as provided in subdivision (c), payments shall be reduced
10 percent for Medi-Cal fee for service benefits for dates of service

25

on or after July 1, 2008

26

27

(oef)PartN1ootwfiDthivstiasniodnin:rgoCfhTaiptlteer23o.5f

(commencing with section
the Government Code, the

11340)

28

department may implement this section by means of proVIder bulletin,

1070036.1

COMPLAINT IN INTERVENTION

Case 2:08-cv-03315-CAS-MAN Document 362 Filed 03/26/10 Page 4 of 15 Page ID #:5028

1

or similar instruction, without taking regulatory action.

2

3

(g) The department shall promptlY seek any necessary federal

approvals for the implementation ofthis section.

4

4. Pursuant to paragraph (b)(l) ofWel.fare and Institutions Code§

5

14105.19, payments under the Medi..Cal fee for service program for physicians,

6

dentists, pharmacies, ADHCs, clinics, health systems, DME providers, and other

7

providers are reduced by ten percent for services provided on or after July 1, 2008.

8

The rate reduction also impacts inpatient services furnished by noncontract

9

hospitals, outpatient services furnished by all hospitals, sub-acute services furnished

10

by hospitals (as Respondents have implemented Section 14105.19(b)(l)), and

11

skilled nursing services provided in distinct part units of hospitals [hereinafter

12

"DPINF services11].

13

5. Pursuant to section 15 of AB 5, the Legislature also enacted Welfare

14

and Institutions Code§ 14166.245, which reduces payments to noncontract hospitals

15

for inpatient services fumished on or after July 1, 2008, by ten percent. This is

16

accomplished by reducing interim payments for inpatient hospital services furnished

17

by noncontract hospitals on or after July 1, 2008, by ten percent, and by limiting the

18

final reimbursement for each patient day of inpatient hospital services furnished on

19

or after July 1, 2008, to 90% of the hospital's audited allowable cost per day.

20

6. The rate and payment reductions set forth in Welfare and Institutions

21

Code sections 14105.19(b)(1) and 14166.245, as enacted by AB 5, are referred to

22

herein as "the Ten Percent Rate Reduction."

23

7. . On September 18, 2008, after a protracted budget stalemate, Govemor

24

Schwarzenegger signed Assembly Billl183 ("AB 1183"), the budget trailer bill for

25

fiscal year 2008-09. AB 1183 amended Welfare and Institutions Code section

26

14105.19, making the ten percent rate reduction imposed by that section applicable

27

to small and rural hospitals until October 31, 2008, and applicable to other affected.

28

1070036.1

COMPLAINT IN INTERVENTION

Case 2:08-cv-03315-CAS-MAN Document 362 Filed 03/26/10 Page 5 of 15 Page ID #:5029

.

g

iii !::;

0~-"~'";';'

. - .z::.ta:iw --il"o~"';no;~;
0~ ~- "( .. o?lz~ mw~IL

KI~IL.
5~~::

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8ll.OzO
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1 providers through February 29, 2009.

2

8. AB 1183 enacted modified rate reductions impacting Medi-Cal

3 providers on and after March 1, 2009, by adding Welfare and ]nstitutions Code§

4 14105.191. This statute effectively replaced the Ten Percent Rate Reduction for

5 most classes of services with smaller rate reductions. Most pertinent for the present

6 Motion, DME provider and hospital outpatient rates were reduced under AB 1183

7 by one percent, while rates for hospital-based distinct part nursing and subacute

8 services were reduced by five percent.

9

9. AB 1183 also modified the reduction on reimbursement for hospitals

10 that do not operate under a contract with the Department of Health Care Services for

11 inpatient hospital services. AB 1183 carried forward the ten percent reduction for

12 non-contract hospital services was originally enacted through AB 5. The statute

13 also enacted an additional limitation on such services by amending Welfare and

14 Institutions Code section 14166.245 effective November 1, 2008. This additional

15 limit capped reimbursement for impacted hospitals at the lower of a hospital's costs,

16 reduced by.l 0 percent, or a 11regional average" rate..

17

10. Intervenors challenge in this complaint the ten percent rate reductions

18 within the scope of the above-captioned case as originally filed, namely, the

19 reductions in Welfare and Institutions Code sections 14105.19 and 14166.245(b)(l)

20 and 14166.245(c)(3)(A). Intervenors do not waive, and expressly reserve, their

21 rights to challenge the new payment reductions contained in AB 1183 or· elsewhere.

22

PROCEDURAL BACKGROUND

23

11. On April 22, 2008, Petitioners in the above-entitled action filed a

24 Verified Petition for Writ ofMandamus (''Petition11) in the Superior Court of the 25 County of Los Angeles against the Respondents to challenge the validity of the Ten

26 Percent Rate Reduction.

27

12. The Petition allege~ in pertinent part that the Ten Percent Rate

28 Reduction violates the Supremacy Clause ofthe United States Constitution because

1070036.1

COMPLAINT IN INTERVENTION

Case 2:08-cv-03315-CAS-MAN Document 362 Filed 03/26/10 Page 6 of 15 Page ID #:5030

1 it conflicts with 42 United States Code ("U.S.C.") § 1396a(a)(30)(A), which is part

2 of the federal Medicaid Act, and the Americans with Disabilities Act ("ADA"). The

3 Petition also alleges a separate claim under the ADA, independent ofthe Supremacy

4 Clause.

5

13. The Petition seeks an injunction preventing from Respondents from

6 implementing the Ten Percent Rate Reduction, attorneys' fees and costs.

7

14.. Respondents removed Petitioners' action from state to federal court on

8 May 19,.2008. Petitioners did not seek to have the case remanded to state court.

9

15. On May 30, 2008? Petitioners filed a notice ofmotion and motion for a

10 preliminary injunction to prevent the Respondents from implementing the Ten

11 Percent Rate Reduction on July 1, 2008 on the grounds that Petitioners had a

12 substantial-likelihood of prevailing on their legal claims that the Ten Percent Rate

13 Reduction conflicts with Section 30(A) and that, if not enjoined, the Ten Percent

14 Rate Reduction would result in irreparable harm to the Petitioners, other Medi-Cal

15 providers and Medi-Cal beneficiaries.

16

16.. On June 25, 2008, this Court issued an order denying Petitioners'

17 motion for a preliminary injunction on the grounds that Petitioners did not establish

18 a likelihood of prevailing on its legal claims. Relying on the case of Sanchez v.

19 Johnson, 416 F.3d 1051 (9th Cir. 2005), the Court concluded that Section 30(A) is

20 not privately enforceable in federal court through the Supremacy Clause or any

21 other procedural vehicle. The Court did not reach the issue of whether the

22 Petitioners had adequately shown that the Ten Percent Rate Reduction would cause

23 irreparable harm.

24

17. Petitioners immediately appealed the Court's ruling on the motion for

25 preliminary injunction to the Court of Appeals for the Ninth Circuit. By order dated 26 July 16, 2008, the Ninth Circuit reversed the Court's decision, holding that the 27 Supremacy Clause does provide a vehicle for enforcement of federal laws such as 28 Section 30(A) and remanded the matter back to the this Court for fmther

1070036.1

COMPLAINT IN INTERVENTION

Case 2:08-cv-03315-CAS-MAN Document 362 Filed 03/26/10 Page 7 of 15 Page ID #:5031

.~ ,

. 8 t ; u 'D IQ I
~- <:1;;;
- w ... Ill
Z ~-l:-loO "o ' --

~ ~ ~ ~ -(1)01<')

~

~

W~IL

g: ~K):o~cb-. I
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1 proceedings. The Opinion in that appeal was issued on September 17, 2008

2

18. Upon remand, Petitioners' motion for preliminary injunction again

3 came before the Court on August 1, 2008. The Court entertained argument from

4 both Petitioners and Respondents and thereafter took the matter under submission.

5

19. On August 18, 2008, the Court issued an order granting in part the

6 Petitioners' motion for preliminru.y injunction. The Court ordered the Respondents

7 to refrain from enforcing and otherwise implementing the Ten Percent Rate

8 Reduction authorized pursuant to California Welfare and Institutions Code section

9 14105.19(b)(1) with respect to Medi-Cal payments for services provided on or after

10 July 1, 2008. The Court specifically declined to grant any relief from the Ten

11 Percent Rate Reduction authorized pursuant to Califomia Welfare and Institutions

12 Code section 14166.245(c) with respect to Medi-Cal payments for acute inpatient

13 services provided by 1'non-contract" acute care hospitals.

14

.20. On August 22, 2008, Petitioners filed an Ex Parte Application for Order

15 to Show Cause re: Contempt against Respondents for failure to comply with this

16 court's preliminary injunction. On August 25,2008, this court scheduled a hearing

17 on that Application on August 28, 2008. On August 28, 2008, this court scheduled

18 an additional hearing on the issue of contempt on September 5, 2008.

19

21. On August 25, 2008, Respondents filed a Motion to Stay the Court's

20 August 18,_2008 Order Pending Appeal. On August 26, 2008, Respondents filed a

21 Notice of Appeal on the preliminary injunction to the Ninth Circuit.

22

22. On August 27, 2008, Respondents filed a Motion to Alter or Amend,

23 and Clarify Order Granting In Part Petitioners' Motion for Prelimimuy Injunction.

24 The hearing on that Motion was held on August 15, 2008.

25

23. · On September 15,2008, this court denied Respondents' motion to stay

26 the preliminary injunction pending appeal. The court also on that date amended its 27 preliminary injunction to clarify the application to pharmacies and the reference to 28 "health systems, or other providers." The court otherwise denied Respondents'

1070036.1

COMPLAINT IN INTERVENTION

Case 2:08-cv-03315-CAS-MAN Document 362 Filed 03/26/10 Page 8 of 15 Page ID #:5032

1 Motion to Alter or Amend as a motion for reconsideration. The preliminary

2 injunction as amended by the court does not apply to items or services furnished by

3 hospitals or DME providers.

4

24. On August 29,2008, Proposed Intervenors Sacramento Family Medical

5 Clinics, Inc., Theodore M. Mazer, M.D., Eastern Plumas Health Care District,

6 Pioneers Memorial Health Care District, Kaweah Delta Health Care District, Ronald

7 B. Mead, D.D.S., and Acacia Adult Day Services moved this court for leave to

8 intervene. On September 15, 2008, this court granted leave to intervene to

9 Sacramento Family Medical Clinics, Inc., Theodore M. Mazer, M.D., Ronald B.

10 Mead, D.D.S. and Acacia Adult Day Services, denying leave to intervene to the

11 three hospital districts on the basis that they lacked standing to intervene as public

12 hospital districts.

13

25. On September 18, 2008, Petitioners appealed this court•s order on the

14 Motion to Amend or Appeal to the Ninth Circuit.

15

26. On September 29, 2008, while the appeals arising from the preliminary

16 injunction order still were pending, Proposed Intervenor CAMPS, SMH, Grossmont

17 Hospital CorporationJ Sharp Chula Vista Medical Center and SCHHC filed a motion

18 with this Court, pursuant to FRCP 24, to intervene in the case. Respondents

19 opposed the motion.

20

27. By Order dated October 20, 2008, the Court denied the motion to

21 intervene without prejudice. The Court concluded that intervention as a matter of

22 right under FRCP 24(a) was not appropriate because the, at the time, there was

23 reason to believe that the Proposed Intervenors• interests in the case would be

24 adequately represented by the Petitioners and original Intervenors. The CoUit also

25 declined to.grant permissive intervention under FRCP 24(b) on the grounds that the

26 intervention motion was not timely. The Court•s conclusion regarding timeliness of

27 intervention was based entirely on a finding that Respondents would be prejudiced

28 by the Proposed Intervenors• involvement in the case because it would increase the

1070036.1

COMPLAINT TN INTERVENTrON

Case 2:08-cv-03315-CAS-MAN Document 362 Filed 03/26/10 Page 9 of 15 Page ID #:5033

;
. 0 ~I)
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~ -:'?0:00~

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U)lllll)

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1 briefing burden in the appeal proceedings.

2

28. On July 9, 2009, the Ninth Circuit issued a published decision

3 regarding the various appeals concerning of this Court's injunction of the Ten

4 Percent Rate Reduction. See Independent Living Center ofSouthern California, Inc. 5 v. Maxwell-Jolly, 572 F.3d 644 (91h Cir. 2009). The Ninth Circuit affirmed the

6 Court 's determination that Petitioners were likely to prevail on their claim that AB 5

7 was not enacted in accordance with, and therefore is preempted by, Section 30(A).

8 The Ninth Circuit also concluded that this Court did not abuse its discretion in

9 determining that Petitioners adequately demonstrated a likelihood of irreparable

10 harm if the Ten Percent Reduction was not enjoined.

11

29. The Ninth Circuit ruled that the effective date ofthe preliminary

12 injunction should have been July 1, 2008, notwithstanding the fact that the Court's

13 order was issued on August 18,2008. See ILC, 572 F.3d at 661-663. The

14 appellate court concluded that the State would not be immune from a retroactive

15 order were the case to be litigated in state colll't and that Respondent waived any

16 Eleventh Amendment immunity by removing the case from state to federal com1.

17 Id. at 663. Accordingly, the Ninth Circuit reasoned that there was nothing

18 precluding this Court from making the effective date ofthe injunction retroactive to

19 the date that the Ten Percent Rate Reduction became effective- July 1, 2008. !d.

20 The Ninth Circuit remanded the case back to this Court for further proceedings.

21

30. In January 2009, the AB 1183 Medi~Cal cuts were challenged by a

22 coalition of impacted providers or provider organizations, including Proposed

23 Intervenor CHA, on the grounds that AB 1183 was preempted by Section 30{A).

24 The lawsuit eventually resulted in a published decision from the Ninth Circuit

25 staying the.AB 1183 rate cuts that impacted hospitals. See California Pharmacists 26 Ass'n v. Maxwell-Jolly, 563 F.3d 847 (91h Cir. 2009).

27

31. In Cal. Pharm., the Ninth Circuit concluded that the plaintiffs showed

28 that AB 1183 likely was preempted by Section 30(A) because the statute, and the

1070036.1

COMPLAINT IN INTERVENTION

Case 2:08-cv-03315-CAS-MAN Document 362 Filed 03/26/10 Page 10 of 15 Page ID #:5034

;;;
~u!. I00}!I.::U.;;.};
~~to~ ;·-::10 00CIIOII'I
- ~ ~0 !l1--1F1<~1~1...
"zb' <l.~C.~:10-L -::,:
3 §ri! -f-...IUl
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1 Medi-Cal rate cuts called for thereby, was enacted without considerations of

2 efficiency, economy, qualify of care and impact on beneficiary access to services.

3 ld. at 850. Cal. Pharm. also establishes that unlawfully reduced Medi-Cal

4 reimbursement constitutes an injury to the providers subject to the decreased rates

5 and that such an injury can be irreparable when, due to sovereign immunity, the

6 reimbursement differential cannot be recovered in a suit for money damages. !d. at

7 851-853.

8

32. · Based on the findings described in paragraph 29, the Cal. Pharm. court

9 stayed the AB 1183 rate cuts impacting hospitals. However, the Ninth Circuit made

10 clear that the stay order did not extend to the ten percent reduction for rates paid to

11 non-contract hospitals for inpatient services because that cut was originally enacted

12 by AB 5 and not by AB 1183. That component of the Ten Percent Rate Reduction

13 has never been enjoined and remains in effect as of today.

14

INTERVENORS AND THEIR INTEREST IN TIDS LITIGATION

15

33. Intervenor CAMPS is a nonprofit, statewide trade association

16 representing the California durable medical equipment ("DME11) industry. CAMPS

17 is headqurutered in Sacramento representing approximately 150 DME providers

18 with over 200 branches in California. The mission of CAMPS is to deliver to its

19 members ser¥ices and products that enable the members to excel in the provision of

20 service to their patients. The services offered by CAMPS include, "government

21 relations and advocacy, educational programs and resource materials, liaison

22 between members and claims payers, and advocacy for users of home medical

23 equipment." Pursuant to CAMPS' mission, it brings this action in its representative

24 capacity on behalf of its members, many of whom are providers under California's

25 Medi-Cal program and have been and will continue to be directly and adversely

26 affected by-the ten percentrate reductions, and on behalf of its members' patients.

27

34. Proposed Intervenor CALIFORNIA HOSPITAL ASSOCIATION

28 ("CHA") is a trade association representing the interests of hospitals in the State of

1070036.1

COMPLAINT IN INTERVBNTION

Case 2:08-cv-03315-CAS-MAN Document 362 Filed 03/26/10 Page 11 of 15 Page ID #:5035

1 California. CHA is incorporated in the State of California with its principal office in

2 Sacramento, California. CHA's member hospitals provide both inpatient and

3 outpatient hospital services. In addition, many of CHA's members operate special

4 units, such as emergency departments or distinct part nursing units (11DP!NFs") that

5 provide skilled nursing care. CHA represents nearly 450 hospitals and health

6 systems throughout California, including general acute care hospitals, children's

7 hospitals, rural hospitals, psychiatric hospitals, academic medical centers, county

8 hospitals, investor-owned hospitals, and multi-hospital health systems. These

9 hospitals furnish vital health care services to millions of our states' citizens CHA

10 also represents more than ISO Executive, Associate and Personal members. CHA

11 brings this action on its own behalf and in its representative capacity on behalf of its

·12 members, many of which are providers under California's Medi-Cal program and

13 will be directly and adversely affected by the threatened rate reduction, and on

14 behalf of its members' patients.

15

35. Intervenor SMH is a California non-profit public benefit corporation.

16 SMH operates five hospital facilities, including Sharp Memorial Hospital, Sharp

17 Cabrillo Hospital, Sharp Mary Birch Hospital for Women and Children, and Sharp

18 Mesa Vista Hospital, all in San Diego, California. Through these facilities, SMH

19 participates in the Medi-Cal program and is reimbursed directly by the Medi-Cal

20 program for services provided to Medi-Cal beneficiaries, including outpatient

21 hospital services and distinct part nursing services. Accordingly, SMH is directly

22 impacted by the ten percent rate reduction.

23

36. · Intervenor SHARP CHULA VISTA MEDICAL CENTER is a

24 California nonprofit public benefit corporation. SHARP CHULA VISTA

25 lvffiDICAL CENTER operates a hospital named Sharp Chula Vista Medical Center

26 in Chula Vista, CA, which includes the Birch-Patrick Skilled Nursing Facility.

27 SHARP CHULA VISTA MEDICAL CEN1ER participates in the Medi~Cal

28 program and is reimbursed directly by the Medi-Cal program for services provided

1070036.1

COMPLAINT IN INTERVENTION

Case 2:08-cv-03315-CAS-MAN Document 362 Filed 03/26/10 Page 12 of 15 Page ID #:5036

1 to Medi~Cal beneficiaries, including outpatient hospital services and distinct part

2 nursing services. Accordingly, SHARP CIDJLA VISTA MEDICAL CENTER is

3 directly impacted by the ten percent rate reduction.

4

37. Intervenor GROSSMONT HOSPITAL CORPORATION is a

5 California nonprofit public benefit corporation. GROSSMONT HOSPITAL

6 CORPORATION operates under a single license a hospital named Grossmont

7 Hospital and the Briar Patch Skilled Nursing Facility. GROSSMONT HOSPITAL

8 CORPORATION participates in the Medi-Cal program and is reimbursed directly

9 by the Medi-Cal program for services provided to Medi-Cal beneficiaries, including

10 outpatient hospital services and distinct part nursing services. Accordingly,

11 GROSSMONT HOSPITAL CORPORATION is directly impacted by the ten

12 percent rate reduction.

13

38. Intervenor SHARP CORONADO HOSPITAL AND HEALTH

14 CENTER (11SCHHC") is a California nonprofit public benefit corporation. SCHHC

15 operates under one license a hospital named Sharp Coronado Hospital and

16 Healthcare Center and the Villa Coronado Skilled Nursing Facility, which provides

17 distinct part nursing services and subacute services under the Medi-Cal program, in

18 La Mesa, CA. SCHHC participates in the Medi-Cal program and is reimbursed

19 directly by the Medi-Cal program for outpatient hospital services, distinct part

20 nursing services, and sub-acute services provided to Medi-Cal beneficiaries.

21 Accordingly, SCHHC is directly impacted by the ten percent rate reduction.

22

39. Intervenors may, with leave of Court, intervene as ofright or,

23 alternatively, pennissively in this matter pursuant to Federal Rule of Civil Procedure

24 ("F.R.C.P.") 24(a) & (b).

25

40. Intervenors have a right to intervene in this action because they have a

26 "significantly protectable" interest in this litigation as health care providers that

27 participate in the Medi-Cal program who otherwise will be impacted by the Ten

28 Percent Ra~e Reduction. Each of the Intervenors participates in the Medi-Cal

1070036.1

COMPLAINT lN INTERVENTION

Case 2:08-cv-03315-CAS-MAN Document 362 Filed 03/26/10 Page 13 of 15 Page ID #:5037

o an' or-i-ii

~

g
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- ~-::J0o0.lll'"<'l
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1 program and provides services that are subject to the Ten Percent Rate Reduction.

2 Each Intervenor has a direct interest in this litigation as they have been, and in some

3 cases will continue to be, pecuniarily be impacted by the outcome of this litigation.

4

41. Adjudication of the Petitioners• claims without the participation of the

5 Intervenors would impede the ability of the Intervenors to protect their interest in

6 adequate Medi-Cal reimbursement rates. If this Court ultimately finds that the Ten

7 Percent Rate Reduction are lawful, or fmds that the Ten Percent Rate Reduction is

8 lawful with respect to some categories of providers, but not others, or finds that,

9 notwithstanding the invalidity of the Ten Percent Rate Reduction, relief from the·

10 rate cuts is not available to some categories from providers, Intervenors will be

11 unable to protect their interests in adequate Medi-Cal reimbursement for the services

12 they provide.

13

42. The Intervenors' interests are not adequately represented by the parties

14 to this litigation. The current Petitioners and original Intervenors in this litigation

15 are Medi-Cal beneficiaries, beneficiary groups, pharmacist~. physicians, dentists,

16 and adult day health centers, and do not include DME providers or hospitals. These

17 classes of providers already have been afforded significant relief from the Ten

18 Percent Rate Reduction through the preliminary injunction issued in this case. In

19 contrast, the classes ofproviders represented by Intervenors have been afforded no

20 relief from the Ten Percent Rate Reduction to date. As such, Intervenors have a

21 greater stake in the outcome of the litigation than to any of the current parties.

22 Further, the Petitioners and original Intervenors are unlikely to have access to

23 evidence relating to the hrum caused by the lowered Med.iMCal reimbursement rates

24 to DME providers or hospitals, which will need to be considered in determining the

25 remedy from the Ten Percent Rate Reduction available for these classes of

26 providers. Intervenors, on the other hand, have access to such information.

27

43. In the alternative, as demonstrated above, Intervenors should be

28 pennitted to permissively intervene. Intervenors' involvement will not expand the

1070036.1

COMPLAINT IN INTERVENTION

Case 2:08-cv-03315-CAS-MAN Document 362 Filed 03/26/10 Page 14 of 15 Page ID #:5038

1 issues in this case as Intervenors are challenging the lawfulness of the Ten Percent

2 Rate Reduction on grounds raised by the Petitioners. Intervenors' claims are

3 identical to·the Petitioners' claims and therefore, raise all the same questions of law

4 (e.g., whether AB 5 is preempted by 42 U.S.C. § 1396a(a)(30)(A)) and many

5 overlapping questions of fact (e.g., whether the Respondents relied on responsible

6 cost studies as a basis for its rate setting).

7

44. Adjudication of the Intervenors' interests will not delay or prejudice the

8 adjudication of the rights of the original parties to this action. Now that the appeal

9 proceedings in the case have been completed and the matter has been remanded

10 back to the District Court, this phase ofthe case action is in the early stages. No

11 dispostive motions on the merits have been filed, no discovery has been conducted

12 and no settlements have yet been made. The participation of the Intervenors will

13 benefit this court by giving the court this supplemental briefmg and evidence for its

14 consideration.

15

CLAIMS AND DEFENSES

16

45. Intervenors join in the First Cause of Action set forth in Petitioners

17 Independent Living Centers of Southern California, et al.'s Petition for Writ of

18 Mandamus, which is for preemption by the Supremacy Clause of the Ten Percent

19 Rate Reduction for violation of Section 30(A).

20

21

WHEREFORE, Intervenors pray for judgment as follows:

22

1. For an Order permanently enjoining Respondent from effectuating the

23 ten percent Medi-Cal rate reduction imposed by Welfare and Institutions Code§§

24 14105.19 and 14166.245 or reducing to any degree the Medi-Cal rates for health

25 care servic~s that are affected by Welfare and Institutions Code§§ 14105.19 and

26 14166.245(b)(1) and 14166.245(c)(3)(A), effective July 1, 2008;

27

2. For an Order requiring Respondent to disgorge any Medi-Cal

28 reimbursement unlawfhlly withheld from impacted Medi-Cal providers as a result of

1070036.1

COMPLAINT IN INTERVENTION

Case 2:08-cv-03315-CAS-MAN Document 362 Filed 03/26/10 Page 15 of 15 Page ID #:5039

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1 the application ofthe Ten Percent Rate Reduction from any time between July 1,

2 2008 and the present;

3

3. For the costs of suit, including reasonable attorneys' fees; and

4

4. Such other and further relief that the court deems just and proper.

5

6 DATED: October 5, 2009

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1070036.1

14
COMPLAINT IN INTERVENTION

 </s> Case 2:08-cv-03315-CAS-MAN Document 369 Filed 05/27/10 Page 1 of 2 Page ID #:5146

UNITED STATES DISTRICT COURT

o

CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

CV 08-3315 CAS (MANx)

Date May 27, 2010

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA ET AL V. SANDRA SHEWRY

Present: The Honorable CHRISTINA A. SNYDER

CATHERINE JEANG

Not Present

N/A

Deputy Clerk

Court Reporter / Recorder

Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Not Present

Not Present

Proceedings:

(Chambers:) PETITIONERS' MOTIONS AND REQUESTS FOR: 1) ORDER TO REQUIRE INTERVENORS TO FILE THEIR COMPLAINT IN INTERVENTION WITHIN 7 DAYS, OR BE DISMISSED; 2) ORDER SETTING SETTING HEARING DATE FOR RESPONDENT'S MOTION TO DISMISS, [#36]; AND, 3) ORDER TERMINATING THE ORDER [#228] IN RESPECT TO THE WITHIN CASE NO. CV08-3315-CAS INDEPENDENT LIVING CENTER, ET AL., V. SANDRA SHEWRY (filed 5/17/10)

The Court finds this motion appropriate for decision without oral argument. Fed. R. Civ. P. 78; Local Rule 7-15. Accordingly, the hearing date of June 14, 2010, is hereby vacated, and the matter is hereby taken under submission.

The facts and procedural history of this action are known to the parties and summarized in this Court’s August 18, 2008 order granting in part and denying in part petitioners’ motion for preliminary injunction and this Court’s November 17, 2008 order granting petitioners’ motion for preliminary injunction. On May 17, 2010, petitioners filed the instant motion. On May 24, 2010, respondent filed a notice of non-opposition to the instant motion and intervenors filed a response to petitioners’ first request.

The Court addresses petitioners’ three requests in turn.

I. Request for an Order to Require Intervenors to File their Complaint in Intervention within 7 Days, or be Dismissed

On September 15, 2008, the Court granted permission to intervene to Sacramento Family Medical Clinics, Inc.; Theodore M. Mazer, M.D.; Ronald B. Mead, D.D.S.; and

CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 1 of 2

Case 2:08-cv-03315-CAS-MAN Document 369 Filed 05/27/10 Page 2 of 2 Page ID #:5147

UNITED STATES DISTRICT COURT

o

CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

CV 08-3315 CAS (MANx)

Date May 27, 2010

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA ET AL V. SANDRA SHEWRY

Acacia Adult Day Services (“first intervenors”); and denied Eastern Plumas Health Care District; Pioneers Memorial Health Care District; and Kaweah Delta Health Care District permission to intervene. The first intervenors’ complaint in intervention was lodged with the Court on August 29, 2008, with their motion to intervene. Given that the complaint in intervention was filed on the docket on May 25, 2010, Dkt. No. 368, the Court DENIES petitioners’ first request as moot. The Court STRIKES proposed intervenors Eastern Plumas Health Care District, Pioneers Memorial Health Care District; and Kaweah Delta Health Care District from the complaint in intervention, pursuant to the Court’s September 15, 2008 order.

II. Request for an Order Setting A Hearing Date for Respondent’s Motion to Dismiss (Dkt. No. 36)

Given that respondent filed on May 24, 2010, a notice of withdrawal of its motion to dismiss, the Court DENIES petitioners’ second request as moot.

III. Request for an Order Terminating the Order, Dkt. No. 228, with Respect to the Instant Case

On November 3, 2008, the Court granted in part and denied in part respondent’s ex parte application. Specifically, the Court stayed the instant action, and two related actions, until further order of the Court. Respondent does not oppose petitioners’ request for an order terminating this order. The Court GRANTS petitioners’ request, and hereby orders the stay lifted.

IV. CONCLUSION

Based on the foregoing, the Court grants in part and denies in part petitioners’ motion. Specifically, the Court DENIES petitioners’ first and second requests, and grants their third request.

IT IS SO ORDERED.

Initials of Preparer

00

:

00

CMJ

CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 2 of 2

 </s> Case 2:08-cv-03315-CAS-MAN Document 370 Filed 05/28/10 Page 1 of 3 Page ID #:5148

HOOPER, LUNDY & BOOKMAN, INC.
575 MARKET STREET, SUITE 2300 SAN FRANCISCO, CALIFORNIA 94105 TEL: (415) 875-8500 • FAX: (415) 875-8519

1 LLOYD A. BOOKMAN (State Bar No. 89251)

BYRON J. GROSS (State Bar No. 76626)

2 JORDAN B. KEVILLE (State Bar No. 217868)

E-Mail:

jkeville@health-law.com

3 HOOPER, LUNDY & BOOKMAN, P.C.

1875 Century Park East, Suite 1600

4 Los Angeles, CA 90067-2517

Telephone: (310) 551-8103

5 Facsimile: (310) 551-8181

6 CRAIG J. CANNIZZO (State Bar No. 70379)

E-Mail:

ccanizzo@health-law.com

7 FELICIA Y SZE (State Bar No. 233441)

HOOPER, LUNDY & BOOKMAN, P.C.

8 575 Market Street, Suite 2300

San Francisco, CA 94105

9 Telephone: (415) 875-8500

Facsimile: (415) 875-8519

10 Attorneys for Intervenors

11 SACRAMENTO FAMILY MEDICAL CLINICS, INC., et al.

12

13

14

UNITED STATES DISTRICT COURT

15

CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION

16 INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA,
17 et al.,

18

Petitioners

19

and

20 SACRAMENTO FAMILY 21 MEDICAL CLINICS, INC., et al.,

22

Intervenors,

23

vs.

24 DAVID MAXWELL-JOLLY, Director of the Department of Health
25 Care Services of the State of 26 California, et al.,

27

Respondents.

CASE NO. CV 08-3315 CAS (MANx)

NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT

[Memorandum of Points and Authorities, Declarations of Raymond, Dauner, Achermann, Mazer, Mead, Pumpian, Simon, Vega, Keville, and Exhibits Thereto; [Proposed] Order on Summary Judgment; [Proposed] Judgment, Separate Statement of Uncontroverted Facts and Request for Judicial Notice filed concurrently herewith]

Date: Time: Crtrm.:

July 19, 2010

150, 2:0n0d

a.m. Floor

Hon. Christina A. Snyder, Judge Presiding Action Filed: April 22, 2008

28

1080074.1

Case 2:08-cv-03315-CAS-MAN Document 370 Filed 05/28/10 Page 2 of 3 Page ID #:5149

HOOPER, LUNDY & BOOKMAN, INC.
575 MARKET STREET, SUITE 2300 SAN FRANCISCO, CALIFORNIA 94105 TEL: (415) 875-8500 • FAX: (415) 875-8519

1

TO PETITIONERS INDEPENDENT LIVING CENTER OF

2 SOUTHERN CALIFORNIA, INC., et al. and RESPONDENT DAVID

3 MAXWELL-JOLLY, DIRECTOR OF THE DEPARTMENT OF HEALTH

4 CARE SERVICES, AND THEIR ATTORNEYS OF RECORD:

5

NOTICE IS HEREBY GIVEN that on July 19, 2010 at 10:00 a.m. or as

6 soon thereafter as counsel may be heard by the above-entitled Court, located at 312

7 N. Spring Street, Los Angeles, California 90012, Intervenors SACRAMENTO

8 FAMILY MEDICAL CLINICS, INC., THEODORE M. MAZER, M.D., RONALD

9 B. MEAD, D.D.S., ACACIA ADULT DAY SERVICES, CALIFORNIA

10 ASSOCIATION OF MEDICAL PRODUCT SUPPLIERS, CALIFORNIA

11 HOSPITAL ASSOCIATION, SHARP MEMORIAL HOSPITAL, GROSSMONT

12 HOSPITAL CORPORATION, SHARP CHULA VISTA MEDICAL CENTER and

13 SHARP CORONADO HOSPITAL AND HEALTH CARE CENTER (collectively,

14 "Intervenors") will and hereby do move the Court for summary judgment on the

15 ground that there is no genuine issue as to any material fact and that Intervenors are

16 entitled to judgment as a matter of law for the reason that the Medi-Cal payment rate

17 reductions challenged in the above-entitled action, which were enacted pursuant to

18 California Assembly Bill 3xxx 5 of 2008 ("AB 5") and set forth in California

19 Welfare and Institutions Code §§ 14105.19 and 14166.245, respectively, as applied

20 to physician, dentist, adult day health care center, inpatient hospital, outpatient

21 hospital, distinct part skilled nursing and hospital based subacute services, were

22 adopted by the California Legislature for purely budgetary reasons, without any

23 consideration by the Legislature of the impact on the rate reductions on efficiency,

24 economy quality of care, and beneficiary access to health care services and therefore

25 violate the mandates of 42 United States Code § 1396a(a)(30)(A) and are preempted

26 under the Supremacy Clause of the United States Constitution.

27

Intervenors are further entitled to an equitable order permanently enjoining

28 Respondent, his agents, employees, and all others working in concert with him from

1079361.1

NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370 Filed 05/28/10 Page 3 of 3 Page ID #:5150

HOOPER, LUNDY & BOOKMAN, INC.
575 MARKET STREET, SUITE 2300 SAN FRANCISCO, CALIFORNIA 94105 TEL: (415) 875-8500 • FAX: (415) 875-8519

1 implementing or otherwise applying the unlawful provisions of AB 5 to them or to

2 the classes of Medi-Cal provider they represent because there is no adequate legal

3 remedy available to Intervenors and/or their members for Respondent's unlawful

4 application of the Medi-Cal payment rate reductions called for by AB 5.

5

This motion is made following the conference of counsel required by Central

6 District Local Rule 7-3, which took place between April 21, 2010 and April 22,

7 2010. See Declaration of Jordan B. Keville filed concurrently herewith.

8

As indicated above, through this motion for summary judgment, Intervenors

9 seek an order permanently enjoining Respondent from implementing or otherwise

10 applying the Medi-Cal rate reductions called for by AB 5 and requiring Respondent

11 to disgorge any funds wrongfully withheld from Medi-Cal providers due to the

12 application the unlawful payment rate reductions at any time between July 1, 2008

13 and the present.

14

This motion is based upon this Notice of Motion and Motion, the

15 accompanying Memorandum of Points of Authorities, Request for Judicial Notice,

16 Declarations of Theodore M. Mazer, M.D., Ronald B. Mead, D.D.S., Gilbert Simon,

17 M.D., Ann Pumpian, C. Duane Dauner, Robert J. Achermann, Jan S. Raymond,

18 Esq., and Jordan B. Keville all pleadings and papers on file in this action, and upon

19 such other matters as may be presented to the Court at the time of hearing.

20

21 DATED: May 28, 2010

HOOPER, LUNDY & BOOKMAN, INC.

22

23

By:

/s/

JORDAN B. KEVILLE

24

Attorneys for Intervenors

25

26

27

28

2
NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 1 of 31 Page ID #:5151

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1 LLOYD A. BOOKMAN (State Bar No. 89251)

BYRON J. GROSS (State Bar No. 76626)

2 JORDAN B. KEVILLE (State Bar No. 217868)

E-Mail:

jkeville@health-law.com

3 HOOPER, LUNDY & BOOKMAN, P.C.

1875 Century Park East, Suite 1600

4 Los Angeles, CA 90067-2517

Telephone: (310) 551-8103

5 Facsimile: (310) 551-8181

6 CRAIG J. CANNIZZO (State Bar No. 70379)

E-Mail:

ccanizzo@health-law.com

7 FELICIA Y SZE (State Bar No. 233441)

HOOPER, LUNDY & BOOKMAN, P.C.

8 575 Market Street, Suite 2300

San Francisco, CA 94105

9 Telephone: (415) 875-8500

Facsimile: (415) 875-8519

10

Attorneys for Intervenors SACRAMENTO

11 FAMILY MEDICAL CLINICS, INC., et al.

12 UNITED STATES DISTRICT COURT

13

CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION

14

INDEPENDENT LIVING CENTER CASE NO. CV 08-3315 CAS (MANx)

15 OF SOUTHERN CALIFORNIA, et 16 al.,

17

Petitioners

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

18

and

19

SACRAMENTO FAMILY MEDICAL CLINICS, INC., et al.,

20

Intervenors

21

vs.

22 DAVID MAXWELL-JOLLY, 23 Director of the Department of Health
Care Services of the State of 24 California, et al.,

[Notice of Motion and Motion for Summary Judgment, Declarations of Raymond, Dauner, Mazer, Pumpian, Achermann, Mead, Simon, Vega, Keville and Exhibits Thereto; [Proposed] Order on Summary Judgment; [Proposed] Judgment, Separate Statement of Uncontroverted Facts and Request for Judicial Notice filed concurrently herewith]

Date: Time: Crtrm.:

July 19, 2010

150, 2:0n0d

a.m. Floor

25

Respondents.

Hon. Christina A. Snyder, Judge Presiding

26

Action Filed: April 22, 2008

27

28
1078976.3

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 2 of 31 Page ID #:5152
TABLE OF CONTENTS Page

1 2 I. 3 II. 4

INTRODUCTION............................................................................................. 1 LEGAL BACKGROUND................................................................................. 1 A. The Federal Medicaid Program .............................................................. 1

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

5

B. The California Medi-Cal Program .......................................................... 2

6 III. FACTUAL AND PROCEDURAL BACKGROUND...................................... 3

7

A. Assembly Bill X3 5 of 2008 ................................................................... 3

8

B. ILCSC, et al. v. Shewry .......................................................................... 4

9 10
IV. 11
V. 12
VI. 13 14 15

C. The 2008-09 Budget Trailer Bill and the California Pharmacists Ass’n Decisions ....................................................................................... 7
STANDARD OF REVIEW FOR SUMMARY JUDGMENT ......................... 9 STANDARD FOR INJUNCTIVE RELIEF ................................................... 10 LEGAL ARGUMENT .................................................................................... 11 A. Intervenors Have Standing.................................................................... 11 B. State Medicaid Provisions That Are Inconsistent With Federal
Law Are Invalid Under The Supremacy Clause And Preempted......... 14

16

C. The Ten Percent Rate Reductions Violate Section (30)(A).................. 15

17

1. The Requirements of Section 30(A)........................................... 15

18

2. The Rate Reductions Were Adopted For Budgetary

Reasons ....................................................................................... 16

19

3. The Legislature Did Not Consider the EEQ Factors.................. 16

20 4. The Legislature Failed To Consider Provider Costs .................. 19

21 5. The Department's Studies Do Not Satisfy Section 30(A) .......... 19

22

VII. RELIEF REQUESTED ................................................................................... 21

23

A. There Is No Adequate Remedy At Law................................................ 23

24 B. Intervenors Are Entitled to Retrospective Relief.................................. 24

25 VIII. CONCLUSION ............................................................................................... 26

26

27

28
1078976.3

i
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 3 of 31 Page ID #:5153
TABLE OF AUTHORITIES Page

1

2 FEDERAL CASES

3 Alexander v. Choate

4

469 U.S. 287 (1985) .................................................................................................................. 2

5

Asuncion v. District Director of the United State Immigration & Naturalization Service 427 F.2d 523 (9th Cir. 1970).................................................................................................... 10

6 Burbank-Glendale-Pasadena Airport Authority v. City of Los Angeles

7

979 F.2d 1338 (9th Cir. 1992).................................................................................................. 22

8 California Pharmacists Ass'n v. Maxwell-Jolly
563 F.3d 847 (9th Cir. 2009) ......................................................................................... 8, 12, 22
9

10

California Pharmacists Ass'n v. Maxwell-Jolly 596 F.3d 1098 (9th Cir. 2010)........................................................................................... passim

11 Celotex Corp. v. Catrett 12 477 U.S. 317, 106 S. Ct. 2548, 91 L.Ed.2d 265 (1986) ...................................................... 9, 10

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

13 Colwell v. Department of Health and Human Services

558 F.3d 1112 (9th Cir. 2009)................................................................................................. 13
14

Continental Airlines v. Intra Brokers, Inc.

15

24 F.3d 1099 (9th Cir. 1994)........................................................................................ 10, 11, 23

16 Contract Services Network, Inc. v. Aubry

17

62 F.3d 294 (9th Cir. 1995)...................................................................................................... 10

18 Embury v. King
361 F.3d 562 (9th Cir. 2004).................................................................................................... 24

19

Exeter Memorial Hospital Assn. v. Belshe

20

145 F.3d 1106 (9th Cir. 1995).................................................................................................... 2

21 Gathright v. City of Portland

22

482 F. Supp.2d 1210 (D. Oregon 2007) .................................................................................. 10

23 Harris v. McRae
448 U.S. 297 (1980) .................................................................................................................. 2
24
Hartley Pen Co. v. Lindy Pen Co.
25 16 F.R.D. 141 (S.D.Cal. 1954)................................................................................................ 25

26 In re Regents of the University of California

27

964 F.2d 1128 (Fed. Cir. 1992)............................................................................................... 24

28
1078976.3

ii
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 4 of 31 Page ID #:5154
TABLE OF AUTHORITIES Page

1 Independent Living Ctr. of S. California v. Maxwell-Jolly
572 F.3d 644 (9th Cir. 2009)............................................................................................. passim

2

Independent Living Ctr. of Southern California v. Shewry

3

543 F.3d 1047 (9th Cir. 2008)........................................................................................... passim

4 International Ass'n of Machinists and Aerospace Workers, Dist. 776 v. Texas Steel Co.

5

538 F.2d 1116 (5th Cir. 1976).................................................................................................. 10

6

Koniag, Inc. v. Koncor Forest Resource 39 F.3d 991 (9th Cir. 1994)...................................................................................................... 11

7

Lankford v. Sherman

8 451 F.3d 496 (8th Cir. 2006).................................................................................................... 14

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

9 Mattel, Inc. v. Walking Mountain Productions

10

353 F.3d 792 (9th Cir. 1993).................................................................................................... 10

11

Moreno Roofing Co., Inc. v. Nagle 99 F.3d 340 (9th Cir. 1996)...................................................................................................... 10

12
Orthopaedic Hosp. v. Belshe

13 103 F.3d 1491 (9th Cir. 1997), cert. den. Belshe v. Orthopaedic Hosp.

14

(1998) 522 U.S. 1044 ....................................................................................................... passim

15

Pacific Gas & Elec. Co. v. State Energy Comm'n 461 U.S. 190 (1983) ................................................................................................................ 14

16 Planned Parenthood of Houston & Southeast Texas v. Sanchez

17

403 F.3d 324 (5th Cir. 2005).................................................................................................... 14

18 Sanchez v. Johnson
416 F.3d 1051 (9th Cir. 2005).................................................................................................. 23
19

20

Santa Rosa Memorial Hospital v. Maxwell-Jolly 2009 WL 3925498 (N.D. Cal. 2009)....................................................................................... 21

21 United States v. State of Or.

22

657 F.2d 1009 (9th Cir. 1981)................................................................................................. 25

23 FEDERAL STATUTES

24 Fed. R. Civ. Proc. 56(c)................................................................................................................... 9

25 42 U.S.C. § 1396a(a)(5) .................................................................................................................. 2

26 42 U.S.C. § 1396a(a)(30)(A)....................................................................................................... 1, 2 27

28
1078976.3

iii
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 5 of 31 Page ID #:5155
TABLE OF AUTHORITIES Page

1 FEDERAL REGULATIONS

2 42 C.F.R. § 430.10 .......................................................................................................................... 2

3 42 C.F.R. § 447.201 ........................................................................................................................ 2

4 5 CALIFORNIA STATUTES 6 Welf. & Inst. Code § 14105.19 ......................................................................................... 3, 5, 7, 17 7 Welf. & Inst. Code § 14105.191 ..................................................................................................... 7
8 Welf. & Inst. Code § 14166.245 ........................................................................................... 3, 8, 17

9

10

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28
1078976.3

iv
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 6 of 31 Page ID #:5156

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1 I. INTRODUCTION

2

By this Motion for Summary Judgment ("Motion"), Intervenors request that

3 this court decide, as a matter of law, that the Medi-Cal reimbursement reductions

4 being challenged in this litigation are not consistent with the mandates of 42 United

5 States Code ("U.S.C.") § 1396a(a)(30)(A) ("Section 30(A)") and are therefore

6 preempted under the Supremacy Clause of the United States Constitution. Both this

7 court, as well as the Ninth Circuit Court of Appeals, have already decided that the

8 statutes adopting the reductions are preempted. There is no evidence that

9 Respondent, the Director of the California Department of Health Care Services

10 ("Director"), can present now that would compel a contrary conclusion. The

11 relevant facts have not previously been, and cannot now be, reasonably disputed.

12 The California Legislature enacted the challenged payment rate reductions for

13 purely budgetary reasons without consideration of the impact of the reduced rates on

14 efficiency, economy, quality of care and Medi-Cal beneficiary access to services.

15 This renders the rate reductions invalid under Section 30(A) as a matter of law.

16 Accordingly, summary judgment in Intervenors' favor is appropriate.

17

Given the invalidity of the rate reductions, Intervenors are entitled to an order

18 permanently enjoining the Director from applying or otherwise enforcing these

19 reductions with respect to physician, dentist, adult day health care center, inpatient

20 hospital, outpatient hospital, distinct part skilled nursing ("DP/NF"), hospital based

21 subacute and durable medical equipment ("DME") services rendered on or after July

22 1, 2008. In light of what the Ninth Circuit has ruled in this case in regard to the

23 Director's Eleventh Amendment waiver, such an order would require the Director to

24 disgorge any funds previously withheld from providers based on the reductions.

25 II. LEGAL BACKGROUND

26

A. The Federal Medicaid Program

27

The Medicaid Act, 42 U.S.C. § 1396 et seq., authorizes federal financial

1078976.3

28 support to states for medical assistance provided to low-income persons who are 1
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 7 of 31 Page ID #:5157

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1 aged, blind, disabled, or members of families with dependent children. The program

2 is jointly financed by the federal and state governments and administered by the

3 states. To receive federal funds, states must agree to comply with the applicable

4 federal Medicaid law and regulations. See Alexander v. Choate 469 U.S. 287, fn.1

5 (1985) ; Harris v. McRae, 448 U.S. 297, 301 (1980); see also Orthopaedic Hosp. v.

6 Belshe, 103 F.3d 1491, 1493 (9th Cir. 1997), cert. den. Belshe v. Orthopaedic Hosp.

7 (1998) 522 U.S. 1044 (“Orthopaedic II”); California Pharmacists Ass'n v. Maxwell8 Jolly, 596 F.3d 1098, 1102 (9th Cir. 2010) ("Cal. Pharm. II").

9

At the state level, Medicaid is administered by a single state agency, which

10 must establish and comply with a State Medicaid Plan that, in turn, must comply

11 with federal Medicaid law. 42 U.S.C. § 1396a(a)(5); 42 Code of Federal

12 Regulations ("C.F.R.") §§ 430.10, 431.10. The state Medicaid plan must be

13 submitted to the Secretary of the United States Department of Health and Human

14 Services (the “Secretary”) for approval and must describe the policies and methods

15 used to set payment rates. 42 C.F.R. §§ 430.10, 447.201(b). State Plan changes

16 must be approved by the Secretary prior to implementation. See Exeter Memorial 17 Hospital Assn. v. Belshe, 145 F.3d 1106, 1108 (9th Cir. 1995).

18

Under 42 U.S.C. § 1396a(a)(30)(A), a state plan must:

19

[p]rovide such methods and procedures relating . . . the payment for . . .

care and services . . . as may be necessary . . . to assure that payments

20

are consistent with efficiency, economy, and quality of care and are

sufficient to enlist enough providers so that care and services are

21

available under the plan at least to the extent that such care and services

are available to the general population in the geographic area.

22

42 U.S.C. § 1396a(a)(30)(A). This provision imposes clear duties on states when

23

setting Medicaid payment rates for health care providers, as discussed below.

24

B. The California Medi-Cal Program

25

California participates in Medicaid through the Medi-Cal program. See Welf.

26

& Inst. Code § 14000 et seq.; Cal. Code Regs., tit. 22 (hereafter “C.C.R.”), § 50000

27

et seq. The Department of Health Care Services (“Department”) is the single state

28

1078976.3

2
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 8 of 31 Page ID #:5158

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1 agency charged with operating Medi-Cal. The Director oversees the Department.

2 This case concerns reimbursement for Medi-Cal services that are not covered by a

3 managed care plan, commonly referred to as “fee-for-service” Medi-Cal.

4 III. FACTUAL AND PROCEDURAL BACKGROUND

5

The factual background of this case is well known to the court and the parties.

6 Accordingly, the following discussion focuses on the facts and procedural

7 background most directly relevant to Intervenors' Motion, including a brief

8 recounting of the history of the Medi-Cal rate reductions that are in dispute and the

9 major procedural developments in the case that have preceded the present Motion.

10

A. Assembly Bill X3 5 of 2008

11

On February 16, 2008, the California Legislature enacted Assembly Bill X3 5

12 ("AB 5") in special session. Section 14 of AB 5 added Section 14105.19 to the

13 Welfare and Institutions Code, which provided in relevant part, as follows:

14

(a) Notwithstanding any other provision of law, in

order to implement changes in the level of funding for

15

health care services, the director shall reduce provider

payments as specified in this section.

16 (b)(1) Except as provided in subdivision (c), payments

17

shall be reduced by 10 percent for Medi-Cal fee for service

benefits for dates of service on or after July 1, 2008

18 ....

19 (g) The Department shall promptly seek any necessary

20

federal approvals for the implementation of this section.

21 AB 5, § 14 (Request for Judicial Notice (“RJN”) Exhibit (“Exh.”) A).

22

Pursuant to section 15 of AB 5, the Legislature also enacted Welfare and

23 Institutions Code § 14166.245, which reduces payments to hospitals that do not have

24 a contract with the Department for inpatient services furnished on or after July 1,

25 2008, by ten percent. The rate and payment reductions set forth in Welfare and

26 Institutions Code sections 14105.19(b)(1) and 14166.245 are referred to hereinafter

27 as the "Ten Percent Rate Reductions."

28
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3
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 9 of 31 Page ID #:5159

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1

B. ILCSC, et al. v. Shewry

2

On April 22, 2008, the original Petitioners in the above-entitled action - as

3 distinguished from subsequent Intervenors - filed a Verified Petition for Writ of

4 Mandamus in the Superior Court of the County of Los Angeles against the

5 Respondents to challenge the validity of the Ten Percent Rate Reductions.

6 According to the Petition, the Petitioners are organizations representing the interests

7 of seniors and/or the disabled, two pharmacists and two Medi-Cal beneficiaries.

8

The Petition alleges that the Ten Percent Rate Reductions violate the

9 Supremacy Clause of the United States Constitution because they conflict with

10 Section 30(A). The Petition asserts that the California Legislature enacted the Ten

11 Percent Rate Reductions for purely budgetary reasons, without consideration of

12 efficiency, economy, quality of care or on the impact the reduced payment rates

13 would have on beneficiary access to care. The Petition seeks an injunction

14 preventing the Director from implementing the Ten Percent Rate Reductions as

15 applied to services rendered by doctors, dentists, pharmacies, noncontract acute care

16 hospitals and “other providers,” and also seeks attorneys’ fees and costs. First

17 Amended Petition for Writ of Mandate (“FAP”) ¶ 11 (Docket No. 6).

18

The Director removed Petitioners’ action from state to federal court on May

19 19, 2008. Petitioners did not seek to have the case remanded to state court and

20 subsequently filed a motion for preliminary injunction seeking to stop the Director

21 from implementing the Ten Percent Rate Reductions. The Court initially denied the

22 motion on the grounds that Section 30(A) is not privately enforceable in federal

23 court, even through the Supremacy Clause. Petitioners immediately appealed the

24 ruling and sought an emergency stay order from the Ninth Circuit. The Ninth

25 Circuit granted Petitioners' emergency motion on July 11, 2008 on the grounds that

26 Petitioners could pursue an action under the Supremacy Clause to challenge the Ten

27 Percent Rate Reductions and accordingly remanded the case back to this Court.

28
1078976.3

4
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 10 of 31 Page ID #:5160

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1 See Independent Living Ctr. of Southern California v. Shewry, 543 F.3d 1047, 10492 1050 (9th Cir. 2008).

3

On August 18, 2008, this court issued an order granting in part the

4 Petitioners’ preliminary injunction motion. The court ordered the Director to refrain

5 from enforcing and otherwise implementing the Ten Percent Rate Reductions

6 authorized pursuant to California Welfare and Institutions Code § 14105.19(b)(1), as

7 applied to physicians, dentists, pharmacies, adult day health care centers

8 ("ADHCs"), clinics, health systems and other providers, with respect to Medi-Cal

9 payments for services provided on or after July 1, 2008.

10

The court specifically declined to grant any relief from the Ten Percent Rate

11 Reductions for acute inpatient services provided by “non-contract” acute care

12 hospitals on the grounds that the hospitals did not adequately demonstrate

13 irreparable harm that would result from the cuts in the form of reduced beneficiary

14 access to hospital services. On September 15, 2008, the court amended its order to

15 clarify that, among other things, the preliminary injunction did not apply to services

16 furnished by hospitals. The order also did not enjoin the Ten Percent Rate

17 Reductions applicable to reimbursement for durable medical equipment. Both

18 Petitioners and Director appealed aspects of this court's preliminary injunction

19 ruling to the Ninth Circuit Court of Appeals.

20

On August 29, 2008, while the appeals of the preliminary injunction ruling

21 were pending, Sacramento Family Medical Clinics, Inc. ("SFMC"), Theodore M.

22 Mazer, M.D. ("Dr. Mazer"), Eastern Plumas Health Care District, Pioneers

23 Memorial Health Care District, Kaweah Delta Health Care District, Ronald B.

24 Mead, D.D.S. ("Dr. Mead"), and Acacia Adult Day Services ("Acacia") moved this

25 court for leave to intervene in the case. These parties were a physician, a physician

26 clinic, a dentist, an ADHC and three hospital districts. The court granted leave to

27 intervene to SFMC, Dr. Mazer, Dr. Mead and Acacia, denying leave to intervene to

1078976.3

28 the three health care districts. Intervenors joined the Petitioners’ first cause of 5
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 11 of 31 Page ID #:5161

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1 action for mandamus and injunctive relief alleged in the FAP. See Sacramento

2 Family Medical Clinics, Inc., et al., Complaint in Intervention, ¶ 35 (Docket No.

3 368).

4

On July 9, 2009, the Ninth Circuit issued a published decision regarding

5 Respondents' appeal of this court's injunction of the Ten Percent Rate Reductions. 6 See Independent Living Ctr. of S. California v. Maxwell-Jolly, 572 F.3d 644 (9th Cir.

7 2009) [hereinafter “ILC II”]. The Ninth Circuit affirmed the court 's determination

8 that Petitioners were likely to prevail on their claim that AB 5 was not enacted in

9 accordance with, and therefore is preempted by, Section 30(A). The Ninth Circuit

10 also concluded that this court did not abuse its discretion in determining that

11 Petitioners adequately demonstrated a likelihood of irreparable harm if the Ten

12 Percent Reductions were not enjoined. However, the court disagreed as to what was

13 the proper effective date of the injunction.

14

The Ninth Circuit ruled that the effective date of the preliminary injunction

15 order should have been July 1, 2008, notwithstanding the fact that the court's

16 decision was issued on August 18, 2008. See ILC II, 572 F.3d at 661-663. The

17 court reasoned that the State would not be immune from a retroactive order were the

18 case to be litigated in State court and that the Director waived any Eleventh

19 Amendment immunity by removing the case from state to federal court. Id. at 663.

20 There was therefore nothing precluding this court from making the effective date of

21 the injunction retroactive to the date that the Ten Percent Rate Reductions became

22 effective – July 1, 2008. Id.

23

After the case was remanded back to this court, on October 5, 2009, the

24 California Association of Medical Product Suppliers (“CAMPS”), the California

25 Hospital Association (“CHA”), Sharp Memorial Hospital, Grossmont Hospital

26 Corporation, Sharp Chula Vista Medical Center, and Sharp Coronado Hospital and

27 Healthcare Center (collectively, the "Sharp Facilities") filed a motion seeking to

1078976.3

28 intervene in the case. By order dated March 26, 2010, the court granted all of these 6
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 12 of 31 Page ID #:5162

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1 parties leave to intervene. Like the first set of Intervenors, this second group of

2 Intervenors also joined the Petitioners’ claim for mandamus and injunctive relief

3 based on alleged violation of Section 30(A). CAMPS, et al., Complaint in

4 Intervention, ¶ 45 (Docket No. 362).

5

The Ninth Circuit’s mandate arising from the ILC II opinion issued on

6 December 21, 2009. This court issued an order spreading the mandate on January 4,

7 2010. By order dated January 22, 2010, in accordance with the Ninth Circuit’s

8 directive, this court amended its August 18, 2008 preliminary injunction of the Ten

9 Percent Rate Reductions to apply retroactive to July 1, 2008. Minute Order

10 Amending This Court’s August 18, 2008 Order Pursuant to the Ninth Circuit Court

11 of Appeals Mandate Issued December 21, 2009 (Docket No. 323). The amended

12 injunction order applies only to services rendered by six categories of Medi-Cal

13 providers: physicians, dentists, pharmacies, ADHCs, optometrists and clinics. Id.

14 Consistent with the amended order, the Director has already commenced making

15 additional payments to some classes of providers with respect to services that were

16 rendered between July 1, 2008 and August 18, 2008 and subject to the rate

17 reductions. Hospitals and DME suppliers were unaffected by the court’s amended

18 injunction order and have not yet obtained any relief from the rate cuts.

19

C. The 2008-09 Budget Trailer Bill and the California Pharmacists

20

Ass’n Decisions

21

On September 18, 2008, Governor Schwarzenegger signed Assembly Bill

22 1183 (“AB 1183”). AB 1183 amended Welfare and Institutions Code § 14105.19,

23 suspending the ten percent rate reductions imposed by that section applicable to

24 "small and rural" hospitals after October 31, 2008, and superseded the rate

25 reductions for all other non-institutional providers, effective March 1, 2009, through

26 the enactment of new Welfare and Institutions Code § 14105.191.

27

In addition, AB 1183 modified the reduction on reimbursement for inpatient

1078976.3

28 services for hospitals not under contract with the Department of Health Care 7
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 13 of 31 Page ID #:5163

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1 Services, as set forth in Welfare and Institutions Code § 14166.245, by adding a

2 secondary limitation that caps reimbursement at the lower of a hospital's costs,

3 reduced by 10 percent, or a "regional average" rate. Significantly, the statute left

4 intact the ten percent reduction for non-contract inpatient hospital services that was

5 originally enacted through AB 5.

6

Like the Ten Percent Rate Reductions, the AB 1183 Medi-Cal cuts were

7 challenged by a coalition of impacted providers and provider organizations on the

8 grounds that AB 1183 was preempted by Section 30(A). The lawsuit eventually

9 resulted in two published decisions on appeal from the Ninth Circuit. See California 10 Pharmacists Ass'n v. Maxwell-Jolly, 563 F.3d 847 (9th Cir. 2009) (hereinafter “Cal.

11 Pharm. I.”) and Cal. Pharm. II, 569 F.3d 1098.

12

In Cal. Pharm. I, the Ninth Circuit concluded that the plaintiffs showed that

13 AB 1183 likely was preempted by Section 30(A) because the statute, and the Medi-

14 Cal rate cuts called for therein, were enacted by the Legislature without

15 consideration of efficiency, economy, quality of care, the impact of the lower rates

16 on beneficiary access to services or provider costs. Cal. Pharm. I, 563 F.3d at 851.

17 Cal. Pharm. I also establishes that unlawfully reduced Medi-Cal reimbursement

18 constitutes an injury to the providers subject to the decreased rates and that such an

19 injury is irreparable when, due to sovereign immunity, the lost payments cannot be

20 recovered in a suit for money damages in federal court. Id. at 851-853.

21

The Ninth Circuit’s decision in Cal. Pharm. I stayed the AB 1183 rate cuts

22 impacting hospitals. However, the Ninth Circuit made clear in a subsequent order

23 that the stay did not extend to the ten percent reduction for rates paid to non-contract

24 hospitals for inpatient services because that cut was originally enacted by AB 5 and

25 not by AB 1183, nor was it in any way modified by AB 1183. See California

26 Pharmacists Ass’n v. Maxwell-Jolly, Ninth Cir. Case No. 09-55365, Order On

27 Urgent Motion for Clarification (May 28, 2009) (RJN Exh. B). That component of

1078976.3

28 the Ten Percent Rate Reductions has never been enjoined and remains in effect. 8
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 14 of 31 Page ID #:5164

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1

In Cal. Pharm. II, the Ninth Circuit affirmed this Court’s preliminary

2 injunction of the AB 1183 rate reduction as applied to ADHCs. Cal. Pharm. II, 596

3 F.3d at 1115. Among other things, in reaching this holding the Ninth Circuit ruled

4 that this Court was correct in finding that AB 1183 was likely preempted by Section

5 30(A) because there was no evidence that the Legislature considered any of the 6 EEQ1 factors before enacting the challenged rate cuts. Id. at 1105-1113. The court

7 rejected the Director’s suggestion that Section 30(A) is not binding on the

8 Legislature. Rather, since in this instance it was the Legislature that set the relevant

9 Medi-Cal rates, it was the Legislature’s responsibility to consider the Section 30(A)

10 factors in doing so. Id. at 1105-1107. Consequently, the Ninth Circuit went on to

11 hold that the “studies” performed by the Department regarding the potential impact

12 of the rate cuts after AB 1183 was already enacted were not adequate to satisfy the

13 State’s obligations under Section 30(A). Id. at 1109-1112.

14 IV. STANDARD OF REVIEW FOR SUMMARY JUDGMENT

15

Under Federal Rule of Civil Procedure 56, a party is entitled to summary

16 judgment, "if the pleadings, depositions, answers to interrogatories, and admissions

17 on file, together with the affidavits, if any, show that there is no genuine issue as to

18 any material fact and that the moving party is entitled to a judgment as a matter of

19 law." Fed. R. Civ. Proc. 56(c). The moving party has the burden of establishing the

20 absence of a material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.

21 Ct. 2548, 91 L.Ed.2d 265 (1986). This can be accomplished either by showing,

22 based on the evidence, that no reasonable trier of fact could rule in favor of the non-

23 moving party at trial or by showing that the non-moving party will be unable to

24 furnish evidence sufficient to support its claims or defenses.

25

26 1 The factors of efficiency, economy, quality of care and beneficiary access to

27

services, as set forth in Section 30(A), are sometimes referred to herein as the "EEQ Factors."

28

1078976.3

9
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 15 of 31 Page ID #:5165

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1 See Celotex, 477 U.S. at 325.

2

If the moving party shows an absence of a material fact, the burden shifts to

3 the non-moving party to go beyond the pleadings and identify facts which show a

4 genuine issue for trial. See id. at 324. Summary judgment must be entered against

5 "a party who fails to make a showing sufficient to establish the existence of essential

6 element to the party's case . . ." See id. at 322.

7

Summary judgment is particularly appropriate in cases involving purely legal

8 questions, such as the proper interpretation of a statute. See Asuncion v. District

9 Director of the United State Immigration & Naturalization Service, 427 F.2d 523, 10 524 (9th Cir. 1970); see also International Ass'n of Machinists and Aerospace 11 Workers, Dist. 776 v. Texas Steel Co., 538 F.2d 1116, 1119 (5th Cir. 1976) ("It is

12 axiomatic that where questions of law alone are involved in a case, summary

13 judgment is appropriate."). Another purely legal question is whether a state statute

14 is preempted by a federal law. See Moreno Roofing Co., Inc. v. Nagle, 99 F.3d 340, 15 342 (9th Cir. 1996); see also Contract Services Network, Inc. v. Aubry, 62 F.3d 294, 16 297 (9th Cir. 1995). With respect to mixed questions of law and fact, such as

17 whether the applicable statutory standard was met, summary judgment is

18 appropriate when the facts will reasonably support only one conclusion. See Mattel, 19 Inc. v. Walking Mountain Productions, 353 F.3d 792, 800 (9th Cir. 1993).

20 V. STANDARD FOR INJUNCTIVE RELIEF

21

As discussed above, Intervenors are seeking to permanently enjoin the

22 implementation of the Ten Percent Rate Reductions. In the Ninth Circuit,

23 permanent injunctive relief is available when the party seeking the injunction

24 succeeds on the merits and demonstrates no adequate remedy at law. See 25 Continental Airlines v. Intra Brokers, Inc., 24 F.3d 1099, 1102 (9th Cir. 1994);

26 Gathright v. City of Portland, 482 F. Supp.2d 1210, 1214 (D. Oregon 2007). Where

27 seeking legal relief in the form of money damages would result in a multiplicity of

1078976.3

28 suits, legal remedies are inadequate. See Continental, 24 F.3d at 1104-1105; 10
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 16 of 31 Page ID #:5166

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1 Koniag, Inc. v. Koncor Forest Resource, 39 F.3d 991, 1000, n. 9 (9th Cir. 1994). In

2 addition, where the party seeking relief demonstrates no triable issues of fact, a

3 permanent injunction may be issued on summary judgment. See Continental, 24

4 F.3d at 1102.

5 VI. LEGAL ARGUMENT

6

Intervenors are entitled to summary judgment on their legal claim and an

7 order from the court permanently enjoining the Ten Percent Rate Reductions as to

8 certain services and requiring Respondent to disgorge any moneys wrongfully

9 withheld from Medi-Cal providers through application of the Ten Percent Rate

10 Reductions beginning July 1, 2008. The present Motion turns on whether the AB 5

11 is preempted by Section 30(A) and therefore invalid and unenforceable. Intervenors

12 will show that Respondent cannot present evidence demonstrating that AB 5 was

13 enacted and implemented in compliance with the requirements of Section 30(A). As

14 this Court and the Ninth Circuit have recognized previously, AB 5 was enacted

15 solely for budgetary reasons, with no consideration by the Legislature or the

16 Department of efficiency, economy, quality of care and the impact of the rate cuts

17 on beneficiary access to services. The Director cannot prove otherwise now.

18

Intervenors will also show that there is no adequate legal remedy available to

19 them because there is no vehicle, other than a permanent injunction in this case, that

20 would allow Medi-Cal providers to obtain permanent relief from the illegal Ten

21 Percent Rate Reductions and, even if there were, an award of equitable relief still

22 would be appropriate in order to prevent a multiplicity of actions.

23

A. Intervenors Have Standing

24

Before turning to the substance of Intervenors' legal claim, it is necessary to

25 establish Intervenors' standing in this case. In Independent Living Ctr. of Southern

26 California v. Shewry, 543 F.3d at 1050, 1064 (9th Cir. 1998) [hereinafter “ILC I”],

27 the Ninth Circuit concluded that Medi-Cal participating providers have Article III

1078976.3

28 standing to challenge Medi-Cal payment rate reductions (indeed, the very same 11
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 17 of 31 Page ID #:5167

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1 reductions at issue here) under the Supremacy Clause. Id.; see also Cal. Pharm. I,

2 563 F.3d at 851-852. Medi-Cal providers suffer an injury-in-fact for Article III

3 standing purposes from the loss of gross income resulting from reimbursement rate

4 changes. ILC I, 542 F.3d at 1065, Cal. Pharm. I, 563 F.3d at 851.

5

Intervenors Dr. Mead, Dr. Mazer, Acacia, and SFMC are Medi-Cal

6 participating providers that have been individually adversely impacted by the rate

7 reductions. See Declaration of Ronald B. Mead, D.D.S. ("Mead Decl."), ¶¶ 5, 8-9,

8 Declaration of Theordore M. Mazer, M.D. ("Mazer Decl."), ¶¶ 6-9; Declaration of

9 Mallory Vega ("Vega Decl."), ¶¶ 3-5, 8; Declaration of Gilbert Simon, M.D., ¶¶ 7-9,

10 12. Each of these Intervenors endured reduced Medi-Cal payments between July 1,

11 2008 and August 18, 2009 due to application of the Ten Percent Rate Reductions.

12 Mead Decl., ¶¶ 8-9; Mazer Decl., ¶¶ 10-11; Vega Decl., ¶ 8, Simon Decl. ¶ 12.

13 Further, if a permanent injunction is not issued in this case, these Intervenors risk

14 additional monetary harm if the Director were to attempt to recover any purported

15 “extra” payments from them.

16

The Sharp Facilities also have standing to challenge the Ten Percent Rate

17 Reductions. Each of these entities provided either outpatient, DP/NF or subacute

18 services to Medicaid beneficiaries during the period between July 1, 2008 and

19 February 28, 2009. See Declaration of Ann Pumpian ("Pumpian Decl."), ¶¶ 4-7.

20 Consequently, all of these facilities received reduced payment for these services

21 during the relevant time period due to the Director's application of the Ten Percent

22 Rate Reductions. Id., ¶¶ 8-9. Since the reductions never were enjoined as to

23 hospital services, the Sharp Facilities collectively lost more than $ 2 million due to

24 the lower Medi-Cal payment they received during the relevant period. Id., ¶¶ 8-9.

25

Intervenors CAMPS and CHA also have standing to pursue this action on

26 behalf of their members. An association has standing in a case when any of its

27 members would have standing in their own right, the interests at stake are germane

1078976.3

28 to the organization’s purpose and the relief requested does not require participation 12
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 18 of 31 Page ID #:5168

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1 of the individual members. See Colwell v. Department of Health and Human

2 Services, 558 F.3d 1112, 1122-1123 (9th Cir. 2009); see also ILC I, 543 F.3d at

3 1065. In this regard, CHA is a trade association representing the interests of

4 hundreds of California hospitals, including "non-contract" hospitals that provide

5 inpatient services to Medi-Cal beneficiaries, as well as hospitals that operate DP/NF

6 and subacute units. See Declaration of C. Duane Dauner ("Dauner Decl."), ¶¶ 3-4.

7 CHA’s mission is to, through various means, establish and maintain a financial and

8 regulatory environment in which hospitals can continue to provide high quality care.

9 Id., ¶ 3. Intervenor CAMPS is a statewide trade association representing DME

10 suppliers. Declaration of Robert J. Achermann (“Achermann Decl.”) ¶ 3. CAMPS'

11 mission is to deliver its members services and products that allow them excel in the

12 provision of service to their patients. The association pursues various activities in

13 furtherance of that mission. Id., ¶ 5.

14

For reasons explained in ILC I, and reiterated above, CHA and CAMPS'

15 individual members could pursue this action in their own right. See ILC I, 543 F.3d

16 at 1065. Individual members of these associations have already suffered reduced

17 Medi-Cal revenue as a result of the Ten Percent Rate Reductions and, in the case of

18 CHA’s members that do not have a contract with the State for inpatient services, are

19 continuing to be harmed by decreased Medi-Cal payments. Dauner Decl, ¶¶ 6-7;

20 Achermann Decl., ¶ 7. CHA and CAMPS have intervened in this action in a

21 representative capacity in an effort to prevent further injury to their members

22 resulting from the Ten Percent Rate Reductions through a broad, injunctive order.

23 Dauner Decl., ¶ 5; Achermann Decl, ¶ 6. As such, the lawsuit, as well as the present

24 motion, are germane to CHA and CAMPS respective purposes and do not require

25 the participation of individual hospitals or DME suppliers.

26 / / /

27 / / /

28 / / /
1078976.3

13
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 19 of 31 Page ID #:5169

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1

B. State Medicaid Provisions That Are Inconsistent With Federal Law

2

Are Invalid Under The Supremacy Clause And Preempted.

3

In ILC I, the Ninth Circuit made clear that Medi-Cal providers may seek to

4 invalidate state Medicaid laws under the Supremacy Clause of the United States

5 Constitution, where the state law is preempted by provisions of the federal Medicaid

6 Act. See generally ILC I, 543 F.3d at 1059 - 1064. As stated in ILC I, under the

7 Supremacy Clause, ". . . injunctive relief is presumptively available to remedy a

8 state’s ongoing violation of federal law." See id. at 1064.

9

Here, Intervenors join in the original Petitioners' claim that AB 5 is preempted

10 because it conflicts with Section 30(A). Under general federal preemption

11 principles, a conflict arises, sufficient for federal preemption, either where

12 "compliance with both federal and state regulations is a physical impossibility, or

13 where state law stands as an obstacle to the accomplishment and execution of the

14 full purposes and objectives of Congress." See Pacific Gas & Elec. Co. v. State

15 Energy Comm'n, 461 U.S. 190, 220 (1983). Case law demonstrates that, where a

16 state law is inconsistent with the requirements of a particular Medicaid Act

17 provision, it is preempted. See ILC II, 572 F.3d at 653; see also Lankford v. 18 Sherman, 451 F.3d 496, 510 (8th Cir. 2006) ("While Medicaid is a system of

19 cooperative federalism, the same analysis applies; once the state voluntarily accepts

20 the conditions implied by Congress, the Supremacy Clause obliges it to comply with

21 federal requirements."); see also Planned Parenthood of Houston & Southeast Texas 22 v. Sanchez, 403 F.3d 324, 336 (5th Cir. 2005) (holding that state standard that was

23 incompatible with federal requirements was preempted). In short, a state law that

24 does not comply with Medicaid Act requirements conflicts with federal law for

25 preemption purposes. Intervenors will show that AB 5 does not meet the

26 requirements of Section 30(A) and therefore is preempted.

27 / / /

28 / / /
1078976.3

14
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 20 of 31 Page ID #:5170

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1

C. The Ten Percent Rate Reductions Violate Section (30)(A)

2

1. The Requirements of Section 30(A)

3

As mentioned, because California participates in the Medicaid program and

4 receives federal funds, it is bound by the Supremacy Clause to comply with the

5 federal statutes and regulations governing that program, including Section (30)(A).

6 See Cal. Pharm. II, 596 F.3d at 1102. Section 30(A) has been interpreted to

7 establish certain minimum requirements that a state must meet with respect to

8 establishing and applying Medicaid payment rates. First, Section 30(A) precludes

9 states from altering Medicaid rates based solely on budgetary concerns. See

10 Orthopaedic II, 103 F.3d at 1499; see also ILC II, 572 F.3d at 651-652. Second, the

11 statute requires that the state body responsible for setting provider payment rates

12 give some consideration to the factors of efficiency, economy, quality of care and

13 beneficiary access to services before making changes to the rates. Cal. Pharm. II,

14 596 F.3d at 1107. Finally, the Ninth Circuit has found Section 30(A) to mandate

15 that Medicaid reimbursement rates be reasonably related to provider costs unless

16 there is some justification not to do so other than purely budgetary reasons.

17 Orthopaedic II, 103 F.3d at 1499; ILC II, 572 F.3d at 652.

18

This court, as well as the Ninth Circuit, already have found, at least

19 preliminarily, that AB 5 was not adopted and implemented in accordance with the

20 requirements of Section 30(A). See Order Granting in Part and Denying In Part

21 Petitioners' Motion for Preliminary Injunction [hereinafter "PI Order"] (Docket No.

22 121) at 10; ILC II, 572 F.3d at 657. Specifically, the court found that the statute was

23 enacted for purely budgetary reasons without consideration of the EEQ Factors. PI

24 Order at 10. The Ninth Circuit affirmed these conclusions. ILC II, 572 F.3d at 657.

25 Although he has had two years to do so at various stages of this case, the Director

26 has failed to come forward with any further evidence that the court’s earlier findings

27 are incorrect.

28
1078976.3

15
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 21 of 31 Page ID #:5171

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1

2. The Rate Reductions Were Adopted For Budgetary Reasons

2

The purpose of AB 5 is set forth succinctly in the statute itself: "This act

3 addresses the fiscal emergency declared by the Governor . . . [t]his act is an urgency

4 statute necessary for the immediate preservation of the public peace, health or safety

5 . . . The facts constituting the necessity are: In order to make statutory changes

6 needed to implement cost containment measures affecting health services." See AB

7 5 §§ 16-17 (emphasis added). The legislative history behind AB 5 is entirely

8 consistent with the statement in the statute itself regarding its purpose.

9

Numerous legislative committee reports, bill analyses and other documents

10 included in the history for AB 5 state that the purpose of the health care program

11 payment reductions were "to implement budget reductions to address the state's

12 fiscal emergency." See, e.g. Assembly Committee on Budget, Bill Analysis, AB 5

13 X3, p. 1 (Feb. 14, 2008). See Declaration of Jan S. Raymond (“Raymond Decl.”) ¶

14 9, Exh. B at 7. Another committee report addresses the Medi-Cal cuts in AB 5

15 specifically and states merely that they were projected to "provide[] a savings of

16 $544.3 million General Fund in 2008-09." Senate Rules Committee, Bill Analysis

17 AB 5 X (Third Reading) at 2 (Raymond Decl. ¶ 9, Exh. B. at 42). There is no

18 indication in any document comprising the legislative history of AB 5 that the State

19 had any other purpose or considered any other impact than saving money.

20

Notably, the Director never has suggested at any time during the history of

21 this case, whether before this Court or the Ninth Circuit, that AB 5 was enacted for

22 any reason other than budgetary savings. As explained in ILC II, the fact that the

23 Ten Percent Rate Reductions were enacted by the Legislature for solely budgetary

24 reasons, by itself, renders the rate reductions in conflict with Section 30(A).

25

3. The Legislature Did Not Consider the EEQ Factors

26

The Ten Percent Rate Reductions also are invalid as a matter of law because

27 the Director cannot present any evidence showing that the Legislature considered

1078976.3

28 any of the EEQ factors before enacting AB 5. The Ninth Circuit made clear in Cal. 16
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 22 of 31 Page ID #:5172

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1 Pharm. II that where the Legislature is “the final body responsible for setting

2 Medicaid reimbursement rates,” it “must study the impact of the contemplated rate

3 reduction on the statutory factors of efficiency, economy, quality of care and access

4 to care prior to setting or adjusting payment rates.” Cal. Pharm. II, 596 F.3d at

5 1107 (emphasis in original). In this regard, there can be no reasonable dispute that

6 the Legislature is the body responsible for the Ten Percent Rate Reductions.

7 Pursuant to AB 5, the Director was statutorily mandated to implement the cuts

8 “notwithstanding any other provision of law.” See Welf. & Inst. Code §

9 14105.19(a); see also Welf. & Inst. Code § 14166.245(b)(1) (“Notwithstanding any

10 other provision of law . . . the amounts paid as interim payments for inpatient

11 hospital services provided on and after July 1, 2008, shall be reduced by 10

12 percent.”). Since it was the Legislature that mandated the rate reductions, Section

13 30(A) placed on obligation on the Legislature to consider the relevant factors before

14 enacting those rate reductions. The Legislature failed to carry out that obligation.

15

Intervenors have looked fruitlessly for any indication that the Legislature

16 considered efficiency, economy, quality of care, and access in enacting the Ten

17 Percent Rate Reductions. Nothing in the documents comprising the legislative

18 history of AB 5 demonstrates any consideration of efficiency, economy, quality of

19 care, or access by the Legislature.

20

As the court is aware, the California Legislative Analysts’ Office ("LAO")

21 prepared a report regarding the health care and social services cuts proposed in

22 Governor's Schwarzenegger's budget proposal for the 2008-09 California fiscal year,

23 some of which were eventually adopted as part of AB 5. The LAO's report appears

24 in the legislative history for AB 5. Although the report includes discussion of what

25 the LAO determined to be the possible impact of the proposed Medi-Cal cuts on

26 beneficiary access to services, the report does not constitute evidence that the

27 Section 30(A) requirements were met with respect to AB 5 for several reasons.

28
1078976.3

17
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 23 of 31 Page ID #:5173

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1

First, as the court noted when it partially granted the original Petitioner's

2 motion for preliminary injunction, the fact the LAO report exists does not show that

3 it was considered by the legislature or the Department. See PI Order at 10, n. 10.

4 The Ninth Circuit echoed this same sentiment in ILC II. ILC II, 572 F.3d at 656

5 (“[T]he State’s own Legislative Analyst warned that the ten percent rate reduction

6 had ‘the potential to negatively impact the operation of the Medi-Cal program . . .

7 Nothing in the record indicates that any other State officer considered . . . these

8 possibilities prior to enacting the cuts.”). The Director presented no evidence during

9 the preliminary injunction proceedings, including the proceedings before the Ninth

10 Circuit, that the Legislature ever reviewed or considered the concerns raised in the

11 LAO report. The Director will not be able to provide such evidence now. If

12 anything, the fact that AB 5 still was enacted despite a strong recommendation from

13 the LAO against payment rate reductions for certain categories of services is a

14 telling indication that the report was not considered. See id.

15

Second, even if it was considered by the Legislature, the LAO report alone

16 does not demonstrate compliance with Section 30(A), as it only includes discussion

17 of one of the factors set forth in the statute – beneficiary access to services. There is

18 nothing in the report indicating that the LAO analyzed issues bearing on efficiency,

19 economy and quality of care. In fact, the LAO recommended further investigation

20 to determine if the then-proposed Medi-Cal rate reductions were efficient and

21 economical. Specifically, the report states that, "[t]he legislature may wish to

22 consider whether a reduction of rates to certain providers would cause a cost-shift

23 toward more expensive provider types." Raymond Decl., ¶ 9, Exh. C at 39. Clearly,

24 if the Ten Percent Rate Reductions result in increased utilization of more expensive

25 types of care, it would not be neither efficient or more economical. See Orthopaedic

26 II, 103 F.3d at 1498. There is no evidence in the legislative history of AB 5

27 demonstrating that the Legislature acted upon the LAO's recommendation.

28
1078976.3

18
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 24 of 31 Page ID #:5174

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1

In addition, the LAO report does not address the relationship between the

2 reduced payment rates and provider costs. Under Orthopaedic II, the consideration

3 of provider costs is an essential component of the requirements of Section 30(A).

4 See ILC II, 572 F.3d at 652. Therefore, the LAO report does not, and cannot,

5 establish that AB 5 was enacted and implemented in accordance with Section 30(A).

6

4. The Legislature Failed To Consider Provider Costs

7

As explained above, in Orthopaedic II, the Ninth Circuit determined that

8 Section 30(A) requires that, before setting Medi-Cal payment rates, the State must

9 determine that such rates bear a reasonable relationship to provider costs. See

10 Orthopaedic II, 103 F.3d at 1496. Further, the State’s evaluation of costs must be

11 based on "responsible cost studies . . . that provide reliable data as a basis for its rate

12 setting." See id. The Ninth Circuit reaffirmed these principles from Orthopaedic in

13 ILC II when affirming this Court’s injunction of the AB 5 rate cuts. ILC II, 572

14 F.3d at 652. This is yet another independent ground on which this Court can find

15 AB 5 preempted by Section 30(A).

16

There is no indication in the legislative history for AB 5 that the Legislature

17 considered any provider costs, whether costs incurred by doctors, dentists, ADHCs,

18 hospitals or DME suppliers, in enacting the Ten Percent Rate Reductions.

19 Similarly, there is no evidence indicating that the Legislature determined that a

20 reasonable relationship exists between Medi-Cal payments under AB 5 and the costs

21 providers actually incur in furnishing such services.

22

5. The Department's Studies Do Not Satisfy Section 30(A)

23

In connection with the preliminary injunction proceedings in this matter, the

24 Director referenced several declarations from Department employees that

25 purportedly show that the Department did conduct after-the-fact “studies” of the

26 adequacy of the reduced reimbursement rates for, among other things, non-contract

27 inpatient hospital services, outpatient hospital services, DP/NF services and

1078976.3

28 subacute services. See, e.g. ILC II, 572 F.3d at 652, n. 9. The Department claimed 19
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 25 of 31 Page ID #:5175

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1 these studies were sufficient under Section 30(A). Such a claim is erroneous.

2

No study that the Department has cited in connection with any phase of this

3 litigation is sufficient to meet the Section 30(A) standard, as established in

4 Orthopaedic II, because there is no evidence that any of those studies was conducted

5 or even considered by the Legislature before AB 5 was enacted and the rate

6 reductions were already a fait accompli. Again, Section 30(A) mandates that the

7 entity actually responsible for setting Medicaid rates consider efficiency, economy,

8 quality of care and access before the rates are adjusted. Cal. Pharm. II, 596 F.3d at

9 1107. The Director has not previously, and cannot now, point to any evidence

10 showing that any rate studies done by the Department were provided to the

11 Legislature before the enactment of AB 5. Indeed, were that the case, these studies

12 more than likely would appear in, or at least be mentioned in, the legislative history

13 behind AB 5. There is no mention of any such studies in the relevant legislative

14 history. After the fact studies designed to justify decisions already made do not

15 satisfy the rule announced in Orthopaedic II. See ILC II, 572 F.3d at 652, n.9

16 (stating that this Court acted within its discretion in rejecting the Director’s “post

17 hoc rationalizations” for the AB 5 cuts). That is all the Director can point to here

18 and therefore cannot prove compliance with Section 30(A).

19

In summary, the Director cannot present an issue of fact as to whether AB 5

20 was enacted in compliance with Section 30(A). At no time during the roughly two

21 year history of this case, which has included numerous motions and requests for

22 rehearing filed by the Director regarding the court's preliminary injunction, has the

23 Director ever been able to present any evidence showing that the Legislature enacted

24 AB 5 for, or based on, anything other than budgetary considerations. There is no

25 reason to believe the Director will be able to present any such evidence now.

26 / / /

27 / / /

28 / / /
1078976.3

20
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 26 of 31 Page ID #:5176

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1 VII. RELIEF REQUESTED

2

Consistent with the ILC II opinion, and with the relief the original Petitioners

3 sought through the FAP, Intervenors are requesting that the court permanently

4 enjoin the Director from further implementing or otherwise applying the Ten

5 Percent Rate Reductions called for by AB 5. For all categories of impacted services,

6 such relief will have both a prospective and retrospective component.

7

The injunction order will prospectively prohibit the Director from subjecting

8 the provider classes represented by the Intervenors from applying the rate reductions

9 to any services provided while the cuts were in effect. Although, as explained

10 above, the majority of the Ten Percent Rate Reductions expired by statute on

11 February 28, 2009, the Director has represented in proceedings arising from this

12 case that, absent a contrary court order, he has the authority to recoup “extra”

13 payments made to providers for previously rendered services that purportedly

14 should otherwise have been subject to the rate cuts. Maxwell-Jolly v. Independent

15 Living Ctr. of Southern California, et al., Supreme Court Case No. 08-1223, Reply

16 in Support of Petition for Certiorari at 9, n. 3 (June 1, 2009) (“The Ninth Circuit’s

17 decision regarding the preliminary injunction will determine whether the state is

18 entitled to recoup those extra payments.”) (RJN, Exh. E); Maxwell-Jolly v.

19 Independent Living Ctr. of Southern California, et al., Supreme Court Case No. 09-

20 958, Reply in Support of Petition for Certiorari at 8 (May 3, 2010) (RNJ, Exh. E). A

21 permanent injunction is necessary to bar the Director from undertaking any

22 recoupment efforts. The injunction also is necessary to prevent the Director from

23 applying the rate reduction to inpatient services rendered by non-contract hospitals, 24 as that component of the Ten Percent Rate Reductions remains in effect.2

25

26

2 On November 18, 2009, the district court in Santa Rosa Memorial Hospital

27

v. Maxwell-Jolly, 2009 WL 3925498 (N.D. Cal. 2009), issued an injunction barring the Director from continuing to enforce the 10 percent non-contract rate reduction

28 (footnote continued)

1078976.3

21
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 27 of 31 Page ID #:5177

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1

In addition to the prospective impact described above, a permanent injunction

2 in this case also will require the Director to disgorge to providers any funds that he

3 wrongfully withheld due to application of the Ten Percent Rate Reductions at any

4 time between July 1, 2008 and the date of the order. For physicians, dentists and 5 ADHCs, the relevant period spans from July 1, 2008 through August 18, 2009.3 For

6 DME suppliers, and with respect to hospital outpatient, DP/NF and subacute

7 services the retroactivity period extends to February 28, 2009. As for hospital

8 inpatient services provided by noncontract facilities, the order require will require a

9 refund of money withheld for services rendered between the original effective date

10 of the rate reduction and the effective date of the court’s permanent injunction.

11

Intervenors are entitled to the relief described above because they are correct

12 on the merits of their claim and because there is no adequate remedy at law.

13 Intervenors prevail on the substance of their legal claim for the reasons stated above.

14 See generally Section VI, supra. Intervenors also meet the other requirements for

15 an injunctive order, as discussed below.

16

17

18 based upon a finding that AB 5 violates federal Medicaid law as shown in ILC II.

19

Notwithstanding that injunction, the Director elected to not apply the ruling in that case to hospitals not specifically named as plaintiffs in that action. See DHCS

20 Medi-Cal Bulletin dated December 22, 2009, attached as Exhibits F to Intervenors'

21

RJN; see also DHCS Medi-Cal Bulletin dated April 22, 2009 (declining to apply Ninth Circuit's order in Cal. Pharm. I to 10 percent reduction for non-contract

22 inpatient services) (Exh. G to RJN).

23

3 As mentioned above, pursuant to this Court’s preliminary injunction order, the Director already has started making payments to some of these provider groups for

24 money that was withheld pursuant to the AB 5 rate cuts between July 1, 2008 and

25

August 18, 2008. In this regard, a permanent injunction requiring the Director to disgorge funds for the this period would not be duplicative of the relief the Court

26 already has ordered because the preliminary injunction will merge with, and be

27

superseded by, the permanent order. See Burbank-Glendale-Pasadena Airport Authority v. City of Los Angeles, 979 F.2d 1338, 1340, n.1 (9th Cir. 1992).

28

1078976.3

22
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 28 of 31 Page ID #:5178

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1

A. There Is No Adequate Remedy At Law

2

With respect to the adequacy of any legal remedies, an injunctive order in this

3 case is the only way that Intervenors and/or their members can obtain relief from the

4 Director's wrongful withholding of Medi-Cal reimbursement pursuant to AB 5. As

5 mentioned above, in ILC II, the Ninth Circuit held that it would not offend sovereign

6 immunity principles for the court to issue an injunctive order with retroactive effect

7 in this case because the Director waived any Eleventh Amendment protection by

8 voluntarily removing the case to federal court and would be subject to such an order

9 were the case litigated in state court. ILC II, 572 F.3d at 660-663. Absent these

10 limited circumstances involving removal by the Director, retroactive relief would

11 not be available in this case either due to operation of the Eleventh Amendment or

12 because there is no federal cause of action pursuant to which the Intervenors could

13 seek retroactive money damages from the State based on an alleged violation of 14 Section 30(A). See, e.g. Sanchez v. Johnson, 416 F.3d 1051, 1068 (9th Cir. 2005).4

15

Further, even assuming there was a remedy at law available to the Intervenors

16 in this case, it still would be appropriate for the court to grant injunctive relief. The

17 Ninth Circuit recognizes that legal relief is inadequate where it necessarily would

18 invite multiple, otherwise needless lawsuits. See Continental Airlines, 24 F.3d at

19 1104. That is the case here because, if the rate cuts are not permanently enjoined, it

20 could result in many Medi-Cal providers pursuing separate suits for legal relief.

21

22

23

24 4 In ILC I, the Ninth Circuit held that Section 30(A) could be enforced against the 25 State pursuant to the Supremacy Clause. In reaching this conclusion, the Court 26 made clear that its holding was limited to claims for injunctive relief under the
Supremacy Clause. ILC I, 543 F.3d at 1057-1062. Parties cannot assert a claim for 27 retrospective damages under the Supremacy Clause. Id. at 1063-1064.

28

1078976.3

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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 29 of 31 Page ID #:5179

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1

B. Intervenors Are Entitled to Retrospective Relief

2

As mentioned, as part of their request for relief, Intervenors are asking the

3 court to order the Department to disgorge any monies that were wrongfully withheld

4 from all classes of impacted providers under AB 5 between while those cuts were in

5 effect and being applied by the Department. Such relief falls squarely within the

6 holding of ILC II. See ILC II, 572 F.3d at 660-663.

7

Although this case already was in federal court at the time the Intervenors

8 joined the case, they are nevertheless entitled to the benefit of the Director’s

9 Eleventh Amendment waiver. The same case that the ILC II court looked to in

10 determining that the State waived its Eleventh Amendment protection makes clear

11 that such waivers are broad. In Embury v. King, the Ninth Circuit explained that

12 when a state defendant voluntarily removes a case to federal court, the state invokes

13 the judicial power of the United States over the entire "suit," not just particular 14 claims. Embury v. King, 361 F.3d 562, 565 (9th Cir. 2004). Once a state submits to

15 federal court jurisdiction, it is subject to the authority of the court, including the

16 court's application of the federal rules. Id. at 565.

17

Based on the foregoing reasoning, the Embury court rejected an argument by

18 the state defendant that it did not waive its immunity as to claims that did not exist

19 at the time of the removal, which were later added to the case through an amended

20 complaint. As stated in Embury:

21

. . . [R]emoval itself affirmatively invokes federal judicial authority and

therefore waives Eleventh Amendment immunity from subsequent

22

exercise of that judicial authority, in this case over claims added in the

amended complaint. The removal is the waiver, regardless of whether .

23

. . the waiver could also have been effected by subsequent events.

24 Id. at 566 (emphasis added); see also In re Regents of the University of California,

25 964 F.2d 1128, 1135 (Fed. Cir. 1992) (rejecting argument by state defendant that

26 waiver of Eleventh Amendment immunity did not apply to consolidation of

27 multidistrict litigation). Accordingly, under Embury, the State waived its Eleventh

1078976.3

28 Amendment immunity as to this entire case, not just to the parties that existed at the 24
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 30 of 31 Page ID #:5180

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1 time of removal. Since the Director voluntarily submitted himself to this Court's

2 jurisdiction and application of the federal rules, the Director's waiver is not impacted

3 by this Court's subsequent decisions to allow participation of the Intervenors 4 pursuant to the Federal Rules of Civil Procedure.5

5

The law on intervention also demonstrates that Intervenors are entitled to the

6 benefit of the State’s forfeiture of its Eleventh Amendment immunity in this case.

7 As a general matter, intervenors enter the suit "with the status of original parties...."

8 United States v. State of Or., 657 F.2d 1009, 1014 (9th Cir. 1981). An intervenor

9 "must take the main suit as he finds it... and must join subject to the proceedings that

10 have occurred prior to his intervention; he cannot unring the bell." Hartley Pen Co.

11 v. Lindy Pen Co., 16 F.R.D. 141, 153 (S.D.Cal. 1954). This case law further

12 supports the view that the Director waived any Eleventh Amendment immunity for

13 the purposes of this case; not just with respect to the original Petitioners.

14 Accordingly, consistent with ILC II, the Eleventh Amendment does not serve as a

15 bar to the retrospective relief Intervenors are seeking.

16 / / /

17 / / /

18 / / /

19 / / /

20 / / /

21 / / /

22

23 5 Notably, the involvement of the Intervenors has not expanded the potential scope 24 of the Director’s liability beyond what is alleged in Petitioners' FAP. Intervenors
simply joined the Supremacy Clause claim Petitioners allege in the FAP. They did 25 not assert any new or additional claims. The FAP seeks to enjoin application of the 26 Ten Percent Rate Reductions as to services furnished by doctors, dentists, hospitals
and other providers. The Intervenors therefore do not include any provider classes 27 not addressed in the FAP.

28

1078976.3

25
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

Case 2:08-cv-03315-CAS-MAN Document 370-1 Filed 05/28/10 Page 31 of 31 Page ID #:5181

HOOPER, LUNDY & BOOKMAN, INC.
1875 CENTURY PARK EAST, SUITE 1600 LOS ANGELES, CALIFORNIA 90067-2517 TEL: (310) 551-8111 • FAX: (310) 551-8181

1 VIII. CONCLUSION

2

For the foregoing reasons, Intervenors respectfully request that the court grant

3 summary judgment in their favor and issue a permanent injunction precluding the

4 Department from applying the Ten Percent Rate Reductions as to physician, dentist,

5 ADHCs, non-contract inpatient hospital, outpatient hospital, DP/NF, subactute and

6 DME services and, attendant to that injunction, requiring the Department to

7 disgorge to any of the impacted provider classes any monies wrongfully withheld

8 while the AB 5 rate cuts were in effect.

9

10 DATED: May 28, 2010

HOOPER, LUNDY & BOOKMAN, INC.

11

12

By:

/s/

JORDAN B. KEVILLE

13

Attorneys for Intervenors

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28
1078976.3

26
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF INTERVENORS' MOTION FOR SUMMARY JUDGMENT

 </s> Case 2:08-cv-03315-CAS-MAN Document 392 Filed 06/17/10 Page 1 of 3 Page ID #:5899

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

CV 08-3315 CAS (MANx)

Date June 17, 2010

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA ET AL V. SANDRA SHEWRY

Present: The Honorable CHRISTINA A. SNYDER

CATHERINE JEANG Deputy Clerk

NOT PRESENT Court Reporter / Recorder

N/A Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

NOT PRESENT

NOT PRESENT

Proceedings: (In Chambers:)

RESPONDENT’S EX PARTE APPLICATION FOR STAY OF THE TRIAL COURT PROCEEDINGS OR, IN THE ALTERNATIVE, FOR AN ORDER SHORTENING TIME FOR HEARING RESPONDENT’S MOTION TO STAY TRIAL COURT PROCEEDINGS CURRENTLY SET FOR JULY 12, 2010 (filed 6/11/10)

I. INTRODUCTION & BACKGROUND

The facts and procedural history of this action are known to the parties and summarized in this Court’s August 18, 2008 order granting in part and denying in part petitioners’ motion for preliminary injunction, and this Court’s November 17, 2008 order granting petitioners’ motion for summary judgment.

On January 22, 2010, this Court issued an order amending this Court’s August 18, 2009 order pursuant to the mandate from the Ninth Circuit Court of Appeals. See Indep. Living Ctr. of S. Cal. v. Maxwell-Jolly, (“ILC II”), 572 F.3d 644, 662-63 (9th Cir. 2009) (affirming in part and reversing in part this Court’s August 18, 2008 order); Indep. Living Ctr. of S. Cal. v. Maxwell-Jolly, (“ILC III”), 590 F.3d 725, 730 (9th Cir. 2009) (denying respondent’s motion to vacate ILC II and ordering the mandate to reissue ). Pursuant to the mandate, this Court vacated the August 27, 2008 order modifying the injunction and amended the August 18, 2008 order to change the effective date to July 1, 2008. Accordingly, this Court ordered “respondent Director, her agents, servants, employees, attorneys, successors, and all those working in concert with her to refrain from enforcing

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Case 2:08-cv-03315-CAS-MAN Document 392 Filed 06/17/10 Page 2 of 3 Page ID #:5900
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

CV 08-3315 CAS (MANx)

Date June 17, 2010

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA ET AL V. SANDRA SHEWRY

Cal. Welf. & Inst. Code § 14105.19(b)(1), including refraining from reducing by ten
percent payments under the Medi-Cal fee-for-service program for physicians, dentists,
optometrists, prescription drugs, adult day health care centers, and clinics for services provided on or after July 1, 2008."1 See Jan. 22 and 29, 2010 orders.

On February 25, 2010, the Court denied respondent’s motion to stay this Court’s January 22, 2010 order pending filing and disposition of respondent’s petition for certiorari to the Supreme Court. On March 17, 2010, the Court denied respondent’s motion to stay further proceedings in the case pending resolution of respondent’s petition for certiorari to the Supreme Court.

On June 11, 2010, respondent filed the instant ex parte application for stay of the trial court proceedings or, in the alternative, for an order shortening time for hearing respondent’s motion to stay trial court proceedings currently set for July 12, 2010. On June 13, 2010, petitioners filed their opposition to the instant ex parte application. Intervenors filed an opposition on June 15, 2010.

II. LEGAL STANDARD

A district court has discretionary power to stay proceedings in its own court. See Landis v. North American Co., 299 U.S. 248, 254 (1936). Accordingly, the court "may, with propriety, find it is efficient for its own docket and the fairest course for the parties to enter a stay of an action before it, pending resolution of independent proceedings which bear upon the case." Leyva v. Certified Grocers of Cal. Ltd., 593 F.2d 857, 863 (9th Cir. 1979). However, case management concerns alone are not necessarily a sufficient ground to stay proceedings. See Dependable Highway Express v. Navigators Ins. Co., 498 F.3d 1059, 1066 (9th Cir. 2007). “‘[I]f there is even a fair possibility that the stay . . . will work damage to someone else,' the stay may be inappropriate absent a showing by the moving party of ‘hardship or inequity.’” Id. (quoting Landis, 299 U.S. at 255). Further, “being required to defend a suit, without more, does not constitute a ‘clear case of hardship or inequity’ within the meaning of Landis.” Lockyer v. Mirant Corp.,

1 On January 29, 2010, the Court issued a minute order amending the January 22,

2010 order to clarify the six categories of services subject to injunction.

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Case 2:08-cv-03315-CAS-MAN Document 392 Filed 06/17/10 Page 3 of 3 Page ID #:5901
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

CV 08-3315 CAS (MANx)

Date June 17, 2010

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA ET AL V. SANDRA SHEWRY

398 F.3d 1098, 1112 (9th Cir. 2005).

III. DISCUSSION
Although the Court previously found that good cause did not exist to stay the instant action, recent events justify an immediate stay pending resolution of respondent’s petition for certiorari to the Supreme Court. First, on May 24, 2010, the Supreme Court invited the Solicitor General to file a brief in the instant case. In addition, the Ninth Circuit stayed the appellate proceedings in the related matter of California Hospital Assoc. v. David Maxwell-Jolly, Case. No. 09-8642 CAS, in light of the pending petitions for certiorari in this matter and California Pharmacists, Ass’n v. David Maxwell-Jolly, Case No. 09-8200.
Accordingly, the Court GRANTS respondent’s ex parte application and hereby orders the instant matter stayed. Within 45 days from the date of this order, or upon the disposition of the petition for certiorari, whichever occurs first, the parties shall file a joint status report.
Because respondent’s Motion to Stay, filed June 7, 2010, seeks the same relief granted herein, the Motion to Stay is hereby DENIED as moot. Petitioner’s and Intervenors’ Motions for Summary Judgment, filed June 7, 2010 and May 28, 2010, respectively, are taken off calendar and the hearing currently set for July 26, 2010, is hereby vacated pending further order of this Court.
IT IS SO ORDERED.

Initials of Preparer

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:

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CMJ

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 </s> Case 2:08-cv-03315-CAS-MAN Document 407 Filed 05/08/12 Page 1 of 4 Page ID #:6260
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

CV 08-3315 CAS (MANx)

Date May 8, 2012

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA; ET AL v. TOBY DOUGLAS

Present: The Honorable CHRISTINA A. SNYDER

CATHERINE JEANG Deputy Clerk

Not Present Court Reporter / Recorder

N/A Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Not Present

Not Present

Proceedings:

(IN CHAMBERS): PETITIONER’S MOTION TO LIFT STAY AND RESTORE CASE TO ACTIVE STATUS (filed April 12, 2012)

PETITIONER’S MOTION FOR SUMMARY JUDGMENT (filed April 12, 2012)

The Court finds these motions appropriate for decision without oral argument. Fed. R. Civ. P. 78; Local Rule 7-15. Accordingly, the hearing date of May 14, 2012, is hereby vacated, and the motions are taken under submission.

I. INTRODUCTION AND BACKGROUND

The facts and procedural history of this action are known to the parties and summarized in this Court’s August 18, 2008 order granting in part and denying in part petitioners’ motion for preliminary injunction, and this Court’s November 17, 2008 order granting petitioners’ motion for summary judgment.

On January 22, 2010, this Court issued an order amending the August 18, 2008 order pursuant to the mandate from the Ninth Circuit Court of Appeals. See Indep. Living Ctr. of S. Cal. v. Maxwell-Jolly, (“ILC II”), 572 F.3d 644, 662-63 (9th Cir. 2009) (affirming in part and reversing in part this Court’s August 18, 2008 order); Indep. Living Ctr. of S. Cal. v. Maxwell-Jolly, (“ILC III”), 590 F.3d 725, 730 (9th Cir. 2009) (denying respondent’s motion to vacate ILC II and ordering the mandate to reissue).

Accordingly, this Court ordered “respondent Director, her agents, servants, employees, attorneys, successors, and all those working in concert with her to refrain

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Case 2:08-cv-03315-CAS-MAN Document 407 Filed 05/08/12 Page 2 of 4 Page ID #:6261
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

CV 08-3315 CAS (MANx)

Date May 8, 2012

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA; ET AL v. TOBY DOUGLAS

from enforcing California Welfare & Institutions Code § 14105.19(b)(1), including refraining from reducing by ten percent payments under the Medi-Cal fee-for-service program for physicians, dentists, optometrists, prescription drugs, adult day health care centers, and clinics for services provided on or after July 1, 2008.”1 See Jan. 22 and 29, 2010 orders.

On June 17, 2010, the Court stayed this case pending resolution of the Director’s petition for certiorari to the Supreme Court. On January 18, 2011, the Supreme Court partially granted review in this case and in two other Ninth Circuit cases (Cal Pharms. Ass’n v. Douglas, No. 09-8200 and Santa Rosa Mem. Hosp. v. Douglas, No. 10-283), limited to the question of whether Medicaid recipients and providers may maintain a private cause of action under the Supremacy Clause to enforce 42 U.S.C. § 1396(a)(30)(A) (“Section 30(A)”) by asserting that the provision preempts a state law that reduces reimbursement rates. The consolidated cases encompassed seven separate Ninth Circuit decisions that either affirmed injunctions of, or ordered enjoined, California statutory enactments that would have reduced the State’s Medicaid expenditures.

After the Supreme Court heard oral argument, the federal agency in charge of administering Medicaid, the Centers for Medicare & Medicaid Services (“CMS”) approved the State Plan Amendments (“SPAs”) that the Department had previously submitted. By virtue of this approval, CMS deemed the state statutes at issue before the Supreme Court to be consistent with federal law. Douglas v. Independent Living Ctr. of S. Cal., Inc., 132 S. Ct. 1204, 1207 (2012).

With regard to the rate reductions at issue in this case, CMS approved the Department’s SPAs for those rate reductions that were never enjoined (e.g., reductions for hospital services and durable medical equipment). CMS also approved SPAs for those periods in which the State had actually implemented rated reductions, even if those rates were later enjoined by this Court or expired (e.g., NEMT services rendered between

1 Toby Douglas is the current director of the California Department of Health Care Services (“DHCS” or the “Department”), the agency charged with administering California’s Medicaid program, Medi-Cal. Director Douglas has been automatically substituted into this action.

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Case 2:08-cv-03315-CAS-MAN Document 407 Filed 05/08/12 Page 3 of 4 Page ID #:6262
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

CV 08-3315 CAS (MANx)

Date May 8, 2012

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA; ET AL v. TOBY DOUGLAS

July 1, 2008 and November 16, 2008). The Department withdrew its request for SPA approval for rate reductions it had never implemented because of the August 1, 2008 preliminary injunction in this case. As a result DHCS does not seek to recoup any backpayments from providers.

On February 22, 2012, in light of CMS’ actions, the Supreme Court vacated the seven Ninth Circuit decisions under review, and remanded the case back to the Ninth Circuit for consideration of the issues “in the first instance.” Douglas, 132 S. Ct. At 1210–11. The Ninth Circuit has not yet considered the issues on remand pursuant to the Supreme Court’s ruling.

Petitioners filed the instant motion to lift the stay and restore the case to the Court’s active case load on April 12, 2012. Petitioners also filed a motion for summary judgment and for permanent injunction of the rate reduction for prescription drugs, which they noticed for the same date as the hearing on the motion to lift the stay. The Director filed his opposition on April 23, 2012. Petitioners filed their reply on April 30, 2012. After considering the parties’ arguments, the Court finds and concludes as follows.

II. LEGAL STANDARD

A district court has discretionary power to stay proceedings in its own court. See Landis v. North American Co., 299 U.S. 248, 254 (1936). Accordingly, the court “may, with propriety, find it is efficient for its own docket and the fairest course for the parties to enter a stay of an action before it, pending resolution of independent proceedings which bear upon the case.” Leyva v. Certified Grocers of Cal. Ltd., 593 F.2d 857, 863 (9th Cir. 1979). “[T]he same court that imposes a stay of litigation has the inherent power and discretion to lift the stay.” Canady v. Erbe Elektromedizin GmbH, 271 F. Supp. 2d 64, 74 (D.D.C. 2002).

III. DISCUSSION

Petitioners argue that the Court stayed the case pending the Supreme Court’s decision, and that the stay should be lifted because the Supreme Court has now acted. Mot. at 3.

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Case 2:08-cv-03315-CAS-MAN Document 407 Filed 05/08/12 Page 4 of 4 Page ID #:6263
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

CV 08-3315 CAS (MANx)

Date May 8, 2012

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA; ET AL v. TOBY DOUGLAS

The Court disagrees. Although the Court initially stayed this action pending a ruling by the Supreme Court, a further stay of this case is necessary to allow the Ninth Circuit to address the foundational legal issues upon which this litigation is based. On remand, the Ninth Circuit will consider whether the Supremacy Clause can be used to enforce Section 30(A) and whether a Supremacy Clause claim survives after SPA approval. The resolution of these questions will at least substantially affect, if not determine, the fate of petitioner’s outstanding summary judgment motion. This is so because if the Supremacy Clause does not provide a right of action in this case, then the petitioners cannot prevail on their claims. Furthermore, the Court finds significant that a continuation of the stay will not cause any harm to petitioners. The Court previously issued a preliminary injunction that bars the State from implementing the payment reductions at issue in this case. Thus, there is no harm to the petitioners that could result from the stay remaining in effect while the Ninth Circuit considers whether the Supremacy Clause can be used to enforce Section 30(A) in this case.2

IV. CONCLUSION

In accordance with the foregoing, the Court DENIES petitioners’ motion to lift the stay. The Court declines to address petitioners’ motion for summary judgment and permanent injunction.

IT IS SO ORDERED.

Initials of Preparer

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:

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CMJ

2 In addition, the stay should be relatively brief given that the questions are already

pending before the Ninth Circuit.

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 </s> 2010 WL 1235762 Only the Westlaw citation is currently available.
This decision was reviewed by West editorial staff and not assigned editorial enhancements.
United States District Court, C.D. California.
INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA et al v. Sandra SHEWRY.
No. CV 08-3315 CAS (MANx). | March 26, 2010.
Opinion
Proceedings: (In Chambers:) PROPOSED INTERVENORS’ RENEWED MOTION TO INTERVENE PURSUANT TO FRCP 24 (filed
03/01/2010)
CHRISTINA A. SNYDER, Judge.
*1 CATHERINE JEANG Deputy Clerk
The Court finds this motion appropriate for decision without oral argument. Fed.R.Civ.P. 78; Local Rule 7-15. Accordingly, the hearing date of March 29, 2010, is hereby vacated, and the matter is hereby taken under submission.
I. INTRODUCTION & BACKGROUND The facts and procedural history of this action are known to the parties and summarized in this Court’s August 18, 2008 order granting in part and denying in part petitioners’ motion for preliminary injunction and this Court’s November 17, 2008 order granting petitioners’ motion for preliminary injunction. On September 15, 2008, the Court granted permission to intervene to Sacramento Family Medical Clinics, Inc.; Theodore M. Mazer, M.D.; Ronald B. Mead, D.D.S.; and Acacia Adult Day Services (“current intervenors”). On January 22, 2010, this Court issued an order amending this Court’s August 18, 2008 order pursuant to the mandate from the Ninth Circuit Court of Appeals. See Indep. Living Ctr. of

S. Cal. v. Maxwell-Jolly, (“ILC II” ), 572 F.3d 644, 66263 (9th Cir.2009) (affirming in part and reversing in part this Court’s August 18, 2008 order); Indep. Living Ctr. of S. Cal. v. Maxwell-Jolly, (“ILC III” ), 590 F.3d 725, 730 (9th Cir.2009) (denying respondent’s motion to vacate ILC II and ordering the mandate to reissue). Pursuant to the mandate, this Court vacated the August 27, 2008 order modifying the injunction and amended the August 18, 2008 order to change the effective date to July 1, 2008. Accordingly, this Court ordered “respondent Director, her agents, servants, employees, attorneys, successors, and all those working in concert with her to refrain from enforcing Cal. Welf. & Inst.Code § 14105.19(b)(1), including refraining from reducing by ten percent payments under the Medi-Cal fee-for-service program for physicians, dentists, optometrists, prescription drugs, adult day health care centers, and clinics for services provided on or after July 1, 2008.”1 See Jan. 22 and 29, 2010 orders.
On October 5, 2009, California Association of Medical Product Suppliers (“CAMPS”), California Hospital Association (“CHA”), Sharp Memorial Hospital, Grossmont Hospital Corporation, Sharp Chula Vista Medical Center, and Sharp Coronado Hospital and Healthcare Center (collectively, “proposed intervenors”) filed the instant renewed motion to intervene.2 On March 8, 2010, respondents filed an opposition. A reply was filed on March 15, 2010. After carefully considering the arguments set forth by both parties, the Court finds and concludes as follows.
II. LEGAL STANDARD Upon compliance with Fed. R. Civ. Proc. 24, a nonparty may be permitted to intervene in the action, which gives the intervenor full party status, including the right to engage in discovery, to participate at trial, and to appeal the judgment. See International Mining & Smelting Co., 325 U.S. 335, 338, 65 S.Ct. 1166, 89 L.Ed. 1649 (1945); United States v. California Mobile Home Park Mgt. Co., 107 F.3d 1374, 1378 (9th Cir.1997).
A. INTERVENTION OF RIGHT *2 Fed. R. Civ. Proc. 24(a) provides as follows:
Intervention of Right. On timely motion, the court must permit anyone to intervene who: (1) is given an unconditional right to intervene by a federal statute; or (2)
1

claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant’s ability to protect its interest, unless existing parties adequately represent that interest.
The Ninth Circuit has adopted a four-part test for applying Rule 24(a)(2):
(1) the applicant must timely move to intervene; (2) the applicant must have a significantly protectable interest relating to the property or transaction that is the subject of the action; (3) the applicant must be situated such that the disposition of the action may impair or impede the party’s ability to protect that interest; and (4) the applicant’s interest must not be adequately represented by existing parties.
Arakaki v. Cayetano, 324 F.3d 1078, 1083 (9th Cir.2003). Each of these elements must be demonstrated in order to provide a non-party with a right to intervene. League of United Latin Am. Citizens v. Wilson, 131 F.3d 1297, 1302 (9th Cir.1997). The rule is construed broadly in favor of applicants for intervention. United States v. Oregon, 839 F.2d 635, 637 (9th Cir.1988).
B. PERMISSIVE INTERVENTION As to permissive intervention, Fed.R.Civ.P. 24(b)(1) provides as follows:
On timely motion, the court may permit anyone to intervene who: (A) is given a conditional right to intervene by a federal statute; or (B) has a claim or defense that shares with the main action a common question of law or fact.
The Ninth Circuit has held that in considering the timeliness of the motion, the Court considers “the stage of the proceedings, the prejudice to existing parties, and the length of and reason for the delay.” League of United Latin Am. Citizens, 131 F.3d at 1308.

III. DISCUSSION
A. INTERVENTION OF RIGHT Proposed intervenor CAMPS represents providers of durable medical equipment (“DME”) who participate in the California Medicaid program, Medi-Cal. Mot. at 8. Proposed intervenor CHA represents hospitals that participate in Medi-Cal. Id. The remaining proposed intervenors, which include Sharp Memorial Hospital, Grossmont Hospital Corporation, Sharp Chula Vista Medical Center, and Sharp Coronado Hospital and Healthcare Center, are owners and operators of hospitals that participate in Medi-Cal. Id. Proposed intervenors contend that they are entitled to intervene as a matter of right because similar to the petitioners and current intervenors in the case, the members of proposed intervenors, as well as the proposed hospital intervenors, have been harmed by the ten percent Medi-Cal rate reduction enacted by Cal. Welf. & Inst.Code § 14105.19(b)(1) and § 14166.245, and Assembly Bill X35 (“AV5”). Id. at 8-10. Further, they contend that unlike the existing petitioners and current intervenors in the case, the proposed intervenors are not among the classes of MediCal providers for which the rate reductions were enjoined by the Court-namely, hospitals or DME providers. Id. A final judgment declining to extend the injunction of the payment rate reductions to DME providers or hospitals, they argue, would clearly impair their interests. Id. at 1112. Proposed intervenors also argue that their interests are not adequately represented by the existing parties because these classes of Medi-Cal providers have already obtained extensive relief in this case from the ten percent rate reductions. Id. at 12-13. In addition, as a result of the Ninth Circuit’s decision in IIC II, proposed intervenors can potentially receive retroactive reimbursement of the amounts they were underpaid as a result of the AB 5 rate cuts. Id. at 13. Because respondent has indicated that he is likely to object to existing petitioners and current intevenors pursuing relief for classes of MediCal providers that are not already represented in the case, proposed intervenors contend that their involvement is necessary to a full and fair resolution of the dispute. Id. at 13-14. Finally, they argue that the motion to intervene is timely.3 Id. at 15-19. Although this Court denied their original motion to intervene out of concerns that their involvement in the case would require respondent to file an extra brief in the then-pending appeal, proposed intervenors contend that all appellate proceedings concerning the preliminary injunction have now been completed and little has transpired since the case was remanded from the Ninth Circuit. Id. at 16. Thus, according to proposed intervenors, allowing them to join the litigation at this stage will not prejudice the existing parties because no evidence has been lost, no settlements have been made, and no issues in the case have been
2

finally adjudicated. Id. at 17. To the contrary, proposed intevernors argue, that allowing them to join in the case will obviate the need for DME providers and hospitals to initiate new federal litigation concerning AB 5. Id. at 1718.
*3 Respondent, however, argues that proposed intervenors’ interests will not be impaired if intervention is denied because five of the six proposed intervenors are members of the same professional and trade associations that are pursuing a virtually identical case in state court (the “CMA action”).4 Opp’n at 1, 9-10. He contends that proposed intervenors are improperly seeking another “bite at the apple” by asking for party status after the Los Angeles Superior Court denied the motion for preliminary injunction in the CMA action. Id. at 1. Respondent further contends that it would be prejudicial to allow them to join this case when they successfully obtained a remand of the CMA action in 2008. Id. Moreover, he argues that proposed intervenors are not entitled to intervene as a matter of right because their motion is untimely. Id. at 49. Respondent contends that permitting them to intervene at this advanced procedural stage of the case will not only unduly delay the matter, it will also severely prejudice respondent because he would be required to expend significant and limited time and resources to defend AB 5 against the same parties that are seeking identical relief in both the state and federal courts. Id. Further, he argues that proposed intervenors have provided no viable reason for their delay in seeking intervention. Id. Finally, respondent argues that proposed intervenors’ interests are adequately represented by the existing parties, as evidenced by the fact that petitioners have submitted proposed intervenors’ declarations in the course of prosecuting their own claims. Id. at 10-12.
Proposed intervenors reply that the proposed intervenors and trade associations involved in the CMA action are, with only one exception, different parties. Reply at 1-2. Further, they point out that proposed intervenor CAMPS is not among the association petitioners in the CMA action, nor is any other association representing medical equipment providers. Id. at 2. Accordingly, they argue that they should not be precluded from seeking relief in this case. Id. at 7. More importantly, proposed intervenors contend that in the time since this Court remanded the CMA action, the Ninth Circuit ruled that provisions of the Medicaid Act may effectively be enforced in federal court through the Supremacy Clause of the United States Constitution. Id. at 8. Given this case law development, proposed intervenors argue that the procedural history of the CMA action cannot be viewed as an instance of forum shopping. Id. As to respondent’s argument that allowing intervention would allow duplicative litigation in the state and federal courts, proposed intervenors argue that this is

inaccurate because petitioners in the CMA action voluntarily dismissed their appeal of the trial court’s adverse ruling. Id. at 9. Finally, they reiterate that their interests are clearly at risk if intervention is denied because the unique procedural posture of the case would enable proposed intervenors to obtain retroactive relief that they would not otherwise able to obtain. Id. at 10-11.
B. PERMISSIVE INTERVENTION *4 In the alternative, proposed intervenors argue that the Court should grant permissive intervention. Respondents reiterate that the motion to intervene is not timely and that if the Court is inclined to permit proposed intervenors entry into this case, then the most this Court should consider doing is granting proposed intervenors amicus status. Opp’n at 13-15.
IV. CONCLUSION The Court finds that given the Ninth Circuit’s recent decisions in ILC II and ILC III, proposed intervenors have timely renewed their motion to intervene. While the existing petitioners and current intervenors share the same ultimate objective with the proposed intervenors-to enjoin the reimbursement rate reductions codified by AB 5, the Court finds that the possibility proposed intervenors could obtain retroactive relief for classes of Medi-Cal providers not currently represented by the existing parties, and not otherwise recoverable in a separate action, demonstrates a significantly protectable interest that would as a practical matter be impaired by disposition of this case. Further, as indicated by the limited holding in the related matter of Santa Rosa Memorial Hosp. v. Maxwell-Jolly, Case No. 08-5173 SC, 2009 WL 3925498 (N.D.Cal. Nov.18, 2009) (enjoining respondent from continuing to apply the ten percent rate reduction only to the hospitals named in the suit), proposed intervenors’ interests in obtaining a final judgment that encompasses relief for DME providers and hospitals may not be adequately represented by the petitioners and current intervenors. Accordingly, the Court concludes that proposed intervenors have shown that they are entitled to intervene as a matter of right under Fed.R.Civ.P. 24(a). Alternatively, the Court finds it appropriate to grant proposed intervenors permissive intervention.
For the foregoing reasons, the Court GRANTS proposed intervenors’ motion to intervene.
IT IS SO ORDERED.
	
  
3

Footnotes

1

On January 29, 2010, the Court issued a minute order amending the January 22, 2010 order to clarify the six categories of services

subject to injunction.

2

On October 20, 2008, the Court denied without prejudice proposed intervenors’ motion to intervene.

3

The Ninth Circuit considers three factors to determine whether a motion to intervene is timely: (1) the stage of the proceeding at

the time the applicant seeks to intervene; (2) the prejudice to the existing parties resulting from the applicant’s delay in seeking

leave to intervene; and (3) the reason for the length of delay involved. County of Orange v. Air California, 799 F.2d 535, 537 (9th

Cir.1986).

4

Proposed intervenor CHA is a petitioner in California Medical Assoc., et al. v. Sandra Shewry, et al., Case No. BC390126, in Los

Angeles County Superior Court (the “CMA action”).

	
  

4

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1160845.8

1 LYNN S. CARMAN (State Bar No. 28860)

MEDICAID DEFENSE FUND 2 404 San Anselmo Ave.

3

San Anselmo, CA 94960 Telephone: (415) 927-4023

4 Facsimile: (415) 256-9632

5

STANLEY L. FRIEDMAN (State Bar No. 120551) 445 S. Figueroa Street, 27th Floor

6 Los Angeles, CA 90071-1631

Telephone: (213) 629-1500 7 Facsimile: (213) 232-4071

8 E-Mail: friedman@friedmanlaw.org

9 LLOYD A. BOOKMAN (State Bar No. 89251) CRAIG J. CANNIZZO (State Bar No. 70379)
10 JORDAN B. KEVILLE (State Bar No. 217868)

11

E-Mail: ccannizzo@health-law.com HOOPER, LUNDY & BOOKMAN, P.C.

12 1875 Century Park East, Suite 1600 Los Angeles, CA 90067-2517

13 Telephone: (310) 551-8103

Facsimile: (310) 551-8181 14
Attorneys for Plaintiffs and Intervenors

15

16

UNITED STATES DISTRICT COURT

17

CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION

18 INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA, INC.,
19 a nonprofit corporation, et al.,

20

Petitioners,

SACRAMENTO FAMILY MEDICAL 21 CLINICS, INC.; et al.,

22 v.

Intervenors,

23

TOBY DOUGLAS, Director of the

24 Department of Health Care Services,

State of California

25

Defendants.

26

27

28

Case No. CV 08-3315 CAS (MANx)
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF JOINT MOTION FOR APPROVAL OF SETTLEMENT AGREEMENT
[Notice of Motion and Joint Motion; Declaration of Craig J. Cannizzo in Support of Joint Motion for Approval of Settlement Agreement; and [Proposed] Order filed concurrently herewith]
Date: September 22, 2014 Time: 10:00 a.m. Crtrm.: 5, Floor 2 Hon. Christina A. Snyder Action Filed: April 22, 2008

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1160845.8

1 CALIFORNIA PHARMACISTS

ASSOCIATION, et al.,

2

Plaintiffs,

3

v.

TOBY DOUGLAS, Director of the

4 California Department of Health Care

Services

5

Defendant.

6

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA, INC.,

7 et al.,

8 v.

Plaintiffs,

9 TOBY DOUGLAS, Director of the

10

Department of Health Care Services, State of California

11

Defendant.

12

CALIFORNIA HOSPITAL ASSOCIATION

13

Plaintiff,

14 v.

15

TOBY DOUGLAS, Director of the Department of Health Care Services,

16

State of California Defendant.

17

Case No. CV 09-722 CAS (MANx)
Hon. Christina A. Snyder, Judge Presiding Action Filed: January 29, 2009
Case No. CV 09-382 CAS (MANx)
Hon. Christina A. Snyder, Judge Presiding Action Filed: January 16, 2009
Case No. CV 09-8642 CAS (MANx)
Hon. Christina A. Snyder, Judge Presiding Action Filed: November 24, 2009

18

19

20

21

22

23

24

25

26

27

28
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1

MEMORANDUM OF POINTS AND AUTHORITIES

2 I. INTRODUCTION

3

Plaintiffs and Intervenors (collectively, “Plaintiffs”), on the one hand, and the

4 Department of Health Care Services (“DHCS” ) and the Director of DHCS,

5 (collectively, “the Department”), on the other, jointly move the Court to approve the

6 Settlement Agreement reached in the above-referenced cases. The Settlement

7 Agreement was reached after six years of complex and exhaustive litigation,

8 including multiple preliminary injunctions entered by this Court, numerous opinions

9 by the Ninth Circuit Court of Appeals, complex regulatory proceedings, and

10 ultimately, a United States Supreme Court decision that vacated most of the Ninth

11 Circuit decisions and remanded the matter for further proceeding. After the

12 Supreme Court’s opinion was issued in February 2012, the parties engaged in

13 continuous negotiations under the supervision of the chief Ninth Circuit mediator.

14 As a result of these efforts, the parties ultimately negotiated a settlement which was

15 executed in April 2014, and which the parties now present to the Court for approval.

16

The settlement was intensively negotiated by all parties and represents a fair

17 and adequate resolution of these cases. Under the terms of the settlement, the

18 parties have already dismissed their appeals from the preliminary injunctions issued

19 in the cases, (§§ III.A.1, and § 1.16); and Plaintiffs agree, when this Agreement

20 becomes effective, to dismiss the within actions with prejudice, (§ III.A.3), subject

21 however to the Court retaining continuing jurisdiction to determine (1) motions for

22 attorneys’ fees by counsel for Plaintiffs, and (2) motions or proceedings by Plaintiffs

23 to enforce the Agreement, up to and including January 1, 2016 (§ III.D.17). In

24 return, under the settlement, the Department has agreed – either by release (§ III.B.2

25 (page 14), or by agreement § III.A.8 (page 13) – to forgo recoupment of any

26 amounts paid out by the Department to Medi-Cal providers, pursuant to the

27 preliminary injunctions previously issued by this Court, except with respect to “opt-

28 out providers.” In other words, when the settlement becomes effective, Plaintiffs

1

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1 will give up their right to seek any further relief, and the state will give up its right

2 to seek recoupment of funds that have already been paid pursuant to the preliminary

3 injunctions, except with respect to “Claimed Excess Payments” for providers that

4 “opt out” of the settlement. This preserves the status quo, and by any measure is

5 fundamentally fair and equitable given the risk, expense, complexity and likely

6 duration of further litigation if the settlement is not approved.

7 II. BACKGROUND

8

A. Original Medi-Cal Rate-Cut Legislation

9

The Court is familiar with the complex procedural and factual history of these

10 actions, and the legislative enactments which they challenge, Assembly Bill X3 5

11 (“2008 AB 5”), Assembly Bill 1183 (“AB 1183”), and Assembly Bill X4 5 (“2009

12 AB 5”).

13

B. Subsequent Legislation Impacting The Rate Cuts

14

The effective dates of certain of the payment reductions in these cases have

15 been impacted or superseded by subsequent legislation.

16

First, the 10% outpatient payment reduction of 2008 AB 5 was superseded on

17 March 1, 2009 by AB 1183, which imposed smaller payment reductions.

18

Second, Senate Bill 90 (“SB 90”), which was enacted effective April 13, 2011

19 eliminated the AB 1183 Reductions as to hospital inpatient services provided by

20 Non-Contracting hospitals, for services rendered on or after April 13, 2011.

21

Another legislative enactment impacting the effective date of the challenged

22 payment reductions is Section 93.5 of Assembly Bill 97 of 2011 (“AB 97”), which

23 authorized the Department to reduce payments for various outpatient services and

24 DP/NF services by ten percent, effective June 1, 2011 (the “AB 97 Reductions”).

25 The instant settlement does not involve actions challenging the AB 97 Reductions.

26

C. The Supreme Court’s February 2012 Ruling And Subsequent

27

Ninth Circuit Mediation Efforts

28

On January 18, 2011, the Supreme Court granted certiorari with respect to the

2

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1 various payment reduction lawsuits. Earlier, on November 18, 2010, the Centers for

2 Medicare & Medicaid Services (“CMS”) had disapproved various State Plan

3 Amendments (“SPAs”) related to the payment reductions, and the Department had

4 requested reconsideration. Oral argument in the Supreme Court was conducted on

5 October 3, 2011. However, following oral argument, CMS approved some of the

6 pending SPAs, and the Department withdrew its request for reconsideration of some

7 of its other SPAs. The parties subsequently submitted letter briefs to the Supreme

8 Court regarding the effect on the applicable cases, if any, of these administrative

9 developments.

10

The Supreme Court issued its decision on February 22, 2012. Douglas v.

11 Indep. Living Ctr. of S. Cal., Inc., 132 S.Ct. 1204 (2012). The Supreme Court held

12 that the SPA decisions of CMS changed the procedural posture of the cases. Id. at

13 1209-10. The Supreme Court further held that, given the complexity of these cases,

14 it would remand the cases back to the Ninth Circuit for further consideration of

15 whether providers could maintain an action under the Supremacy Clause with

16 respect to the payment reductions at issue. Id. at 1211. Thus, the Court vacated the

17 Ninth Circuit decisions that had affirmed the various preliminary injunctions, and

18 remanded the matter to the Ninth Circuit.

19

Following the Supreme Court’s decision, the Plaintiffs in the various cases

20 and the Department then engaged in lengthy settlement negotiations overseen by the

21 chief Ninth Circuit mediator, Claudia Bernard. These mediation efforts were

22 successful, ultimately resulting in execution of the instant proposed settlement on 23 April 28, 2014.1

24

25

26 1 The Settlement Agreement is attached as Exhibit A to the Declaration of Craig J.

27

Cannizzo in Support of Joint Motion for Approval of Settlement Agreement, filed concurrently herewith.

28

3

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1160845.8

1 III. THE PROPOSED SETTLEMENT

2

A. General Provisions

3

First, pursuant to the Settlement Agreement, the parties have dismissed their

4 various appeals in these actions. Then, after both this Court and CMS approves the

5 Settlement, Plaintiffs will dismiss their actions with prejudice, subject to the Court

6 retaining jurisdiction (1) to determine Plaintiffs’ attorneys’ fees motions and (2) to

7 determine any motions by Plaintiffs to enforce the Agreement, up to and including

8 January 1, 2016. In exchange, the Department will agree to forgo recoupment

9 claims against Medi-Cal providers arising out of the preliminary injunctions in these

10 cases, except with respect to “Claimed Excess Payments” for the following: (1) any

11 current or prior hospital member of California Hospital Association (“CHA”), that,

12 after notice sent after the Effective Date of the Settlement, nevertheless elects to opt

13 out of the benefits of the Settlement (as specified in ¶¶ III.A.4 and 5); and (2) any

14 provider that institutes a new suit or fails to dismiss a pending suit or administrative

15 action against the State or Federal government, or officials in respect to the 2008

16 AB 5, 2009 AB 5, or AB 1183 Reductions, and (3) the plaintiff hospitals in the

17 Santa Rosa or North Bay litigation (¶¶ II.19 and III.A.7). Each side is to bear its

18 own costs, except for any Plaintiffs’ attorneys’ fees which may be awarded, if any.

19

Among other things, the agreement provides that the Settling Plaintiffs –

20 which include not only individual providers but also associational plaintiffs who are

21 acting as virtual representatives of the associations’ members – will release state and

22 federal entities “from any and all liability, derivative or otherwise,” for all claims

23 concerning or relating to the payment reductions, “excluding any claims that any

24 individual Medi-Cal provider may have relating exclusively to the accuracy of the

25 computation by DHCS of the reimbursement due to that provider under applicable

26 law.” (§ III.B.1.)

27

In turn, pursuant to § III.B.2, the Department will release the Settling

28 Plaintiffs from liability relating to “DHCS’s Claimed Excess Payments,” meaning

4

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1 payments made while challenged payment reductions were enjoined, but where

2 DHCS ultimately obtained federal approval from CMS for those payment reductions 3 (§ III.A.8).2 In addition, pursuant to the Settlement Agreement, the Department has

4 agreed to forgo recoupment of amounts paid as a result of various preliminary

5 injunctions where the Department subsequently withdrew its request for SPA

6 approvals. This covers various pharmacy and other outpatient provider payments

7 during the period from July 1, 2008 through February 28, 2011, as well as certain

8 hospital payments through December 31, 2010, or February 28, 2011, depending on

9 the provider category. (See fn. 1, supra.)

10

The settlement will not be effective until fully approved by CMS, or, if only

11 partially approved by CMS, the Department decides to nevertheless proceed and not

12 recover monies from providers for the payment reductions for time periods

13 discussed above. The date on which the settlement is effective is known as the

14 “Settlement Effective Date.” (§ II.24.)

15

B. Special Hospital Notice Provisions

16

Under the Settlement Agreement, the hospitals are required to forgo pursuing

17 any further legal relief from the Medi-Cal payment reductions that were challenged

18 in the applicable cases. In contrast with the other portions of these cases involving

19 the outpatient payment reductions, this includes several hospital payment reductions

20 that were enjoined only after they had been implemented for a period of time or

21

22 2This includes, with some exceptions, all payments made as a result of injunctions

23

of the AB 1183 Reductions for services rendered from March 1, 2011 through May 31, 2011, after which the successor legislation, AB 97, became effective. However,

24 for hospital outpatient services and Non-Contract hospital inpatient services, the

25

relevant dates of service are January 1, 2011 through April 12, 2011. Claimed Excess Payments also include payments made to small and rural Non-Contract

26 hospitals for inpatient services while the 2009 AB 5 Reductions were enjoined, for

27

dates of service of January 1, 2011 through April 12, 2011 and for DP/NFs for the period March 1, 2011 through May 31, 2011.

28

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1 were never enjoined by this Court, some of which were statutorily eliminated

2 several years later by SB 90 in 2011. Additionally, the association members of

3 CHA are relatively few in number (approximately 450) and are readily identifiable.

4 Because of these unique circumstances that are only applicable to hospital providers,

5 the settlement is structured to provide special notice to hospitals, such that

6 individual hospitals, that are not already an “opt-out provider”, may choose not to

7 accept the benefits of this settlement, and instead opt out and pursue claims on their

8 own if they determine the settlement is not in their best interests.

9

Specifically, within 30 days of the Settlement Effective Date, the CHA is

10 required to send a notice to all current members – and any hospital that was a

11 member during any period on or after July 1, 2008 – advising them of the terms of

12 the settlement (the “CHA Notice”). (§ III.A.4.) Within 45 days of when the CHA

13 Notice is mailed, hospitals may opt out of the settlement by filing their own lawsuit

14 challenging any or all of the payment reductions for any or all hospital services,

15 and/or the federal government’s approval of those reductions. If a hospital opts out,

16 it is not required to release the State from any potential claims, and could seek

17 retroactive relief with respect to the payment reductions. However, any such opt-out

18 hospital would not get the benefit of the settlement, meaning that DHCS will have

19 the right to seek recoupment of any Claimed Excess Payment from the hospital.

20

The CHA Notice must advise the hospitals of (a) the terms of the Settlement;

21 (b) that they may “opt out” by timely filing a lawsuit in their own name; and (c) if a

22 hospital does file such an individual action, then it will lose the benefits of the

23 Settlement, and the Department will have the right to seek recoupment of any

24 payment to that provider that constitutes or constituted a DHCS’ Claimed Excess

25 Payment. (§ III.A.4.) If CHA and DHCS cannot reach agreement on wording of the

26 CHA Notice, any such dispute will be submitted to the Court for resolution. (Id.)

27

C. Retention of Jurisdiction, and Attorneys’ Fees

28

Finally, the settlement also provides (§ III.D.17) that the Court shall retain

6

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1 jurisdiction, after the agreed dismissal of the within actions, with respect to motions

2 or proceedings by any named Plaintiff to enforce the Settlement Agreement; and

3 with respect to any motion for attorneys’ fees by any of the Plaintiffs or Plaintiffs’

4 attorneys. Then, § III.C. provides that attorneys for Plaintiffs may seek an award of

5 fees from the Department and/or the benefitted parties, including hospitals. Any

6 such application must be filed no earlier than the Settlement Effective Date, and no

7 later than 30 days after the Settlement Effective date.

8 IV. THE SETTLEMENT SHOULD BE APPROVED BECAUSE IT IS

9

FUNDAMENTALLY FAIR, ADEQUATE AND REASONABLE

10

In deciding whether to approve a settlement agreement under which the court

11 retains continuing enforcement jurisdiction, the criteria applied is whether it is “fair,

12 adequate, and reasonable, as well as consistent with the public interest.” United

13 States v. Lexington-Fayette Urban County Gov’t, 591 F.3d 484, 489 (6th Cir. 2010).

14 As the Ninth Circuit has noted, “[s]ettlement is the offspring of compromise; the

15 question . . . is not whether the final product could be prettier, smarter or snazzier,

16 but whether it is fair, adequate and free from collusion.” Hanlon v. Chrysler Corp.,

17 150 F.3d 1011, 1027 (9th Cir. 1998); see also Officers for Justice v. Civil Service

18 Comm’n, 688 F.2d 615, 625 (9th Cir. 1982) (“The proposed settlement is not to be

19 judged against hypothetical or speculative measure of what might have been

20 achieved by the negotiators.”).

21

The proposed settlement is the result of years of negotiation between counsel

22 for the Plaintiffs and counsel for the Department. There is no question that the

23 positions of the Plaintiffs and the Department were adverse, and that the settlement

24 is the fruit of arm’s-length negotiations. This is particularly true in light of the fact

25 that the Department is a governmental entity which has defended these actions

26 zealously, and which has dedicated substantial resources to advocating for its

27 position in multiple state and federal fora, up to and including the United States

28 Supreme Court. See Hanlon, 150 F.3d at 1026 (participation of governmental entity

7

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1 weights in favor of approving settlement agreement).

2

The proposed settlement is fundamentally fair, adequate, and reasonable. By

3 this settlement, providers will have secured gains they achieved in the litigation and

4 will avoid the risk that would ensue if these actions were further litigated.

5 V. CONCLUSION

6

For all the above reasons, the parties jointly request that this Court approve

7 the Settlement Agreement, subject to the retention of jurisdiction for the limited

8 purposes described in the [Proposed] Order.

9 DATED: August 19, 2014 10

Respectfully submitted, LYNN S. CARMAN

11

12

By: /s/ LYNN S. CARMAN

13

Attorneys for Petitioners/Plaintiffs

14 DATED: August 19, 2014 15

Respectfully submitted, STANLEY L. FRIEDMAN

16

17 18 19 20 DATED: August 19, 2014 21

By: /s/ STANLEY L. FRIEDMAN
Attorneys for Petitioners/Plaintiffs
Respectfully submitted, HOOPER, LUNDY & BOOKMAN, P.C.

22 23 24 25 DATED: August 19, 2014 26

By: /s/ CRAIG J. CANNIZZO
Attorneys for Plaintiffs/Intervenors Respectfully submitted, OFFICE OF THE ATTORNEY GENERAL

27

By: /s/

SUSAN M. CARSON

28

Supervising Deputy Attorney General

8

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 </s> Case 2:08-cv-03315-CAS-MAN Document 476 Filed 07/06/15 Page 1 of 17 Page ID #:10629
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

‘O’

2:08-cv-03315-CAS(MANx)

Date July 6, 2015

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA, ET AL. v. DAVID MAXWELL-JOLLY, ET AL.

Present: The Honorable CHRISTINA A. SNYDER

Catherine Jeang Deputy Clerk

Laura Elias Court Reporter / Recorder

N/A Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Lynn Carman Stanley Friedman

Susan Carson

Proceedings:

PETITIONERS’ AND INTERVENORS’ MOTIONS FOR ATTORNEYS’ FEES PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1021.5 (Dkt. Nos. 426, 427, 429)

I. INTRODUCTION
On April 22, 2008, petitioners filed a verified petition for writ of mandamus in Los Angeles County Superior Court, seeking mandamus and injunctive relief against respondents California Department of Health Care Services (the “Department”); Sandra Shewry, Director of the Department (the “Director”), and Does 1 through 50.1 Dkt. No. 1. The verified First Amended Petition (“FAP”) was filed on May 19, 2008, also in

1Petitioners are health care advocacy organizations, providers, and recipients under

California’s state-federal Medicaid program, called “Medi-Cal.” Specifically, Mark

Beckwith, Margaret Dowling, and Jason Young are individual Medi-Cal beneficiaries.

FAP ¶¶ 7, 15–17. Independent Living Center of Southern California (“Independent

Living”) is a nonprofit corporation that advocates for people with disabilities. Id. ¶¶ 2,

18. Gray Panthers of Sacramento and Gray Panthers of San Francisco are nonprofit

corporations that advocate health care-related issues for their members, most of whom are

over the age of 50. Id. ¶¶ 3, 4, 10. Gerald Shapiro and Sharon Steen are retail

pharmacists and Medi-Cal service providers. Id. ¶¶ 5, 6. Tran Pharmacy, Inc. is a

pharmacy and Medi-Cal service provider. Id. ¶ 8. Since this litigation began, the

Director in charge of the Department has changed multiple times. These changes are not

material for purposes of the instant motion. On June 1, 2008, petitioners dismissed the

Department, leaving the Director as the only respondent. Dkt. No. 12.

CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 1 of 17

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UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

‘O’

2:08-cv-03315-CAS(MANx)

Date July 6, 2015

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA, ET AL. v. DAVID MAXWELL-JOLLY, ET AL.

Superior Court. Dkt. No. 6. On May 19, 2008, respondents removed the action to federal court on the basis of federal question jurisdiction. Dkt. No. 1. On September 22, 2014, the Court granted a joint motion for approval of a settlement agreement filed by petitioners, intervenors, and the Director. Dkt. No. 420.

On April 22, 2015, petitioners filed a motion for attorneys’ fees pursuant to California Code of Civil Procedure section 1021.5, to be paid to the law offices of Stanley L. Friedman (“Friedman”). Dkt. No. 426. On April 23, 2015, intervenors Acacia Adult Day Services, Theodore M. Mazer, Ronald B. Mead, and Sacramento Family Medical Clinics, Inc. filed a motion for fees to be paid to the law firm of Hooper, Lundy & Bookman, P.C. (“HLB”), under the same statute. Dkt. Nos. 427, 472. That same day, petitioners filed a motion for fees to be paid to Lynn S. Carman (“Carman”) pursuant to section 1021.5. Dkt. No. 429. On May 13, 2015, the Director opposed all three motions. Dkt. No. 456. The proponent of each motion filed a reply. Dkt. Nos. 462, 466, 468. On July 6, 2015, the Court held a hearing. After carefully considering the parties’ arguments, the Court finds and concludes as follows.

II. BACKGROUND
A. Statutory Background
The Medicaid Act authorizes the federal government to distribute funds to the states for the purpose of providing medical assistance to low-income persons who are aged, blind, disabled, or members of families with dependent children. Although the states are not required to participate in Medicaid, those that choose to do so are subject to certain conditions. Armstrong v. Exceptional Child Care Center, Inc., 135 S. Ct. 1378, 1382 (2015). Among these conditions, Section 30(A) of the Medicaid Act requires each participating state to have a Medicaid Plan that will

CV-90 (06/04)

provide such methods and procedures relating to the utilization of, and the payment for, care and services available under the plan (including but not limited to utilization review plans as provided for in section 1396b(i)(4) of this title) as may be necessary to safeguard against unnecessary utilization of such care and services and to assure that payments are consistent
CIVIL MINUTES - GENERAL

Page 2 of 17

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UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

‘O’

2:08-cv-03315-CAS(MANx)

Date July 6, 2015

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA, ET AL. v. DAVID MAXWELL-JOLLY, ET AL.

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 extent that such care and services are available to the general population in the geographic area . . . .

42 U.S.C. § 1396a(30)(A). California law requires that the Department administer MediCal in accordance with the state plan, applicable state law, and Medi-Cal regulations. Cal. Code Regs. Tit. 22, § 50004(b).
B. The 2008 AB 5 Litigation
In 2008, California faced a budgetary crisis. On February 16, 2008, the California Legislature enacted Assembly Bill X3 5 (“AB 5”). Among other provisions, AB 5 reduced by ten percent Medi-Cal fee-for-service payments for physicians, dentists, pharmacies, adult day healthcare centers, clinics, health systems, and other providers. These cuts were to take effect for services provided on or after July 1, 2008. AB 5 also reduced payments to managed healthcare plans and acute care hospitals not under contract with the Department for inpatient services provided on or after July 1, 2008. Petitioners alleged that these rate reductions violated the Medicaid Act because the Department and the Legislature failed to consider efficiency, economy, and quality of care as required by Section 30(A) of that Act, and that the reductions were therefore invalid under the Supremacy Clause of the United States Constitution. See Dkt. No. 121 at 2–4.
On May 30, 2008, petitioners moved to preliminarily enjoin the rate reductions. On June 25, 2008, the Court denied that motion, concluding that petitioners could not enforce Section 30(A) under 42 U.S.C. § 1983 or the Supremacy Clause, and therefore could not show a likelihood of success on the merits. Dkt. No. 47 at 5–10.2 On July 11,

2In May 2008, HLB filed a separate action challenging the AB 5 reductions in Los

Angeles County Superior Court. That action was removed to federal court, but then

remanded to the Superior Court, which denied a motion for a preliminary injunction.

Dkt. No. 428-1 ¶ 34. On August 29, 2008, HLB filed a motion to intervene in the instant

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UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

‘O’

2:08-cv-03315-CAS(MANx)

Date July 6, 2015

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA, ET AL. v. DAVID MAXWELL-JOLLY, ET AL.

2008, however, the Ninth Circuit vacated and remanded, holding that a “plaintiff may bring suit under the Supremacy Clause to enjoin implementation of a state law allegedly preempted by a federal statute, regardless of whether the federal statute at issue confers an express ‘right’ or cause of action on the plaintiff.” Indep. Living Ctr. of S. Cal., Inc. v. Shewry, 543 F.3d 1047, 1048 (9th Cir. 2008).
On August 18, 2008, this Court granted in part petitioners’ motion for a preliminary injunction, finding that the Department had a duty to consider certain factors in reducing Medi-Cal rates and had not shown that it had done so; rather, it appeared that the cuts were imposed solely as a response to California’s fiscal emergency. Dkt. No. 121 at 10. The Court also concluded that petitioners had shown likely irreparable harm through reduced access for Medi-Cal beneficiaries to prescription drugs and services from some (but not all) service provider types at issue. Id. at 11–20. Accordingly, the Court enjoined enforcement of the ten percent reductions for “payments under the MediCal fee-for-service program for physicians, dentists, adult day health care centers, clinics, health systems, and other providers for services provided on or after July 1, 2008,” but denied preliminary relief sought with regard to rate reductions affecting managed care

action on behalf of a medical clinic, a physician, a dentist, an adult day health care center,

and three health care districts. On September 15, 2008, the Court granted that motion as

to all proposed intervenors except the health care districts. Dkt. No. 174. On September

29, 2008, HLB moved to intervene on behalf of additional health care providers and

suppliers, Dkt. No. 188; on October 20, 2008, the Court denied that motion without

prejudice and permitted those parties to participate as amicus curiae, Dkt. No. 207. On

October 5, 2009, HLB filed a renewed motion to intervene on behalf of parties including

the California Hospitals Association (“CHA”), Dkt. No. 279; that motion was renewed

again on March 1, 2010, Dkt. No. 339; and granted on March 26, 2010, Dkt. No. 356.

Lloyd Bookman declares that, even before parties represented by HLB formally

intervened in the AB 5 litigation handled by this Court, HLB attorneys participated in

that litigation by appearing at the hearing for and offering argument in support of

petitioners’ motion for a preliminary injunction, and by preparing declarations that

petitioners relied on as evidence supporting their showing of irreparable harm. Id.

Bookman also declares that HLB attorneys participated in briefing and argument of the

federal AB 5 litigation before the Ninth Circuit. Id. ¶ 35.

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Case 2:08-cv-03315-CAS-MAN Document 476 Filed 07/06/15 Page 5 of 17 Page ID #:10633
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

‘O’

2:08-cv-03315-CAS(MANx)

Date July 6, 2015

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA, ET AL. v. DAVID MAXWELL-JOLLY, ET AL.

plans and payments to non-contract acute care hospitals. Id. at 21–22. On August 27, 2008, the Court modified the relief provided in the August 18, 2008 order to only apply prospectively from the date of that prior order because of the Court’s view that retroactive relief was barred by principles of sovereign immunity. Dkt. No. 135. On September 15, 2008, the Court further modified the injunction “to clarify that its application as to pharmacies is limited to prescription drugs,” and to strike the injunction’s reference to “health systems, and other providers.” Dkt. No. 175.

On July 9, 2009, the Ninth Circuit decided several appeals stemming from the preliminary injunction. See Indep. Living Ctr. of S. Cal., Inc. v. Maxwell-Jolly, 572 F.3d 644 (9th Cir. 2009), vacated and remanded by Douglas v. Indep. Living Ctr. of S. Cal., 132 S. Ct. 1204 (2012). The Ninth Circuit affirmed the issuance of the preliminary injunction, finding that neither the Department nor the Legislature had “studied the impact of the ten percent rate reduction on the statutory factors of efficiency, economy, quality, and access to care prior to enacting AB 5,” or “considered reliable cost studies when adjusting its reimbursement rates,” and affirming the finding that Medi-Cal beneficiaries who could be forced to go without medical care faced a likelihood of irreparable harm. Id. at 652, 657–58. The Ninth Circuit also reversed this Court’s modification of the order to apply only prospectively, finding that the Director had waived sovereign immunity and that the Eleventh Amendment therefore provided no bar to retroactive relief. Id. at 661–63. The Court subsequently amended the preliminary injunction to comport with the Ninth Circuit’s mandate. Dkt. Nos. 323, 328.

On March 15, 2010, petitioners (represented by Carman and Friedman) moved to set aside one-quarter of the approximately $70 million to be reimbursed to providers for AB 5 reductions implemented between July 1, 2008 and August 17, 2008, so that such funds could be available to pay attorneys’ fees. Dkt. No. 351. On April 9, 2010, the Court denied that motion as premature because the case had not been finally adjudicated or settled and “[n]either side ha[d] provided any reason why this Court at the conclusion of the case could not fashion an order requiring the state of California to pay attorneys’ fees based on what is ultimately the value of any judgment or settlement.” Dkt. No. 360 at 2.

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Case 2:08-cv-03315-CAS-MAN Document 476 Filed 07/06/15 Page 6 of 17 Page ID #:10634
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

‘O’

2:08-cv-03315-CAS(MANx)

Date July 6, 2015

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA, ET AL. v. DAVID MAXWELL-JOLLY, ET AL.

C. AB 1183

Assembly Bill 1183 (“AB 1183”) became effective on September 30, 2008, and provided that the ten percent rate reductions previously called for by AB 5 would end on February 28, 2009. Indep. Living Ctr. of S. Cal., Inc. v. Maxwell-Jolly, 590 F.3d 725, 727 (9th Cir. 2009). AB 1183 also enacted new one or five percent Medi-Cal rate reductions, depending on the type of service provider. Id. On January 16, 2009, the pharmacy petitioners from the AB 5 litigation—joined by Managed Pharmacy Care (a California corporation with hundreds of Medi-Cal pharmacy provider members) and represented by Carman and Friedman—filed a lawsuit advancing a similar theory based on Section 30(A) and the Supremacy Clause. On February 27, 2009, the Court preliminarily enjoined the Director from “reducing by five percent payments to pharmacies for prescription drugs . . . provided under the Medi-Cal fee-for-service program.” See Case No. 2:09-cv-00382-CAS-MAN, Dkt. No. 34. The Ninth Circuit affirmed on March 3, 2010. See Indep. Living Ctr. of S. Cal., Inc. v. Maxwell-Jolly, 374 F. App’x 690, 691–92 (9th Cir. 2010), vacated and remanded by Douglas, 132 S. Ct. at 1204. In 2011, as memorialized in Senate Bill 90, the State of California agreed to terminate some of the rate reductions described herein as to prospective payments, and to refrain from seeking certain types of new Medi-Cal cuts through at least June 30, 2012. Dkt. No. 428-1 ¶ 41 & Ex. A.

D. The Supreme Court’s Decision Vacating and Remanding the Ninth Circuit’s Orders Upholding the Preliminary Injunctions

In 2011, the Supreme Court granted certiorari in the instant AB-5 and AB-1183

cases, among others, “to decide whether Medicaid providers and recipients may maintain

a cause of action under the Supremacy Clause to enforce a federal Medicaid law . . . that

in their view conflicts with (and pre-empts) state Medicaid statutes that reduce payments

to providers.” Douglas v. Indep. Living Ctr. of S. Cal., Inc., 132 S. Ct. 1204, 1207

(2012). In its merits opinion, the Supreme Court explained that, prior to oral argument,

the federal agency in charge of administering Medicaid, the Centers for Medicare and

Medicaid Services (“CMS”), had disapproved Medicaid plan amendments submitted by

the Department and designed to implement AB 5 and AB 1183, concluding that those

plans did not satisfy Section 30(A). Id. at 1209. Following oral argument, however,

CMS “reversed course and approved several of California’s statutory amendments to its

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Case 2:08-cv-03315-CAS-MAN Document 476 Filed 07/06/15 Page 7 of 17 Page ID #:10635
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

‘O’

2:08-cv-03315-CAS(MANx)

Date July 6, 2015

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA, ET AL. v. DAVID MAXWELL-JOLLY, ET AL.

plan,” including “a limited retroactive implementation of some of the amendments’ rate reductions.” Id. Although CMS’s about-face did not moot the action, the Court found that the cases had been placed “in a different posture” because CMS’s new position (1) might “change the answer” to whether AB 5 and AB 1183 are consistent with Section 30(A), and (2) might require petitioners to proceed by seeking review of CMS’s determination under the Administrative Procedure Act, rather than pursuing a lawsuit against the State of California under the Supremacy Clause. Id. at 1210. The Court concluded:
In the present posture of these cases, we do not address whether the Ninth Circuit properly recognized a Supremacy Clause action to enforce this federal statute before the agency took final action. To decide whether these cases may proceed directly under the Supremacy Clause now that the agency has acted, it will be necessary to take account, in light of the proceedings that have already taken place, of at least the matters we have set forth above. It must be recognized, furthermore, that the parties have not fully argued this question. Thus, it may be that not all of the considerations that may bear upon the proper resolution of the issue have been presented in the briefs to this Court or in the arguments addressed to and considered by the Court of Appeals. Given the complexity of these cases, rather than ordering reargument, we vacate the Ninth Circuit's judgments and remand the cases, thereby permitting the parties to argue the matter before that Circuit in the first instance.

Id. at 1211.

E. The Settlement Agreement
Following the Supreme Court’s remand order, the parties entered into mediation efforts that eventually bore fruit. See Dkt. No. 409 (Ninth Circuit order granting parties’ joint motion to refer cases to mediation and continue briefing during the pendency of mediation). On August 19, 2014, the parties submitted a joint motion to approve a

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Case 2:08-cv-03315-CAS-MAN Document 476 Filed 07/06/15 Page 8 of 17 Page ID #:10636
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

‘O’

2:08-cv-03315-CAS(MANx)

Date July 6, 2015

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA, ET AL. v. DAVID MAXWELL-JOLLY, ET AL.

Settlement Agreement. Dkt. No. 417. The Court approved the Settlement Agreement on September 22, 2014. Dkt. No. 420.

Pursuant to the Settlement Agreement, the parties agreed to dismiss their pending appeals from the preliminary injunctions issued in these cases, and the petitioners agreed to dismiss their actions with prejudice, subject to this Court’s retention of jurisdiction to hear motions for attorneys’ fees, and to enforce the Settlement Agreement. The Director agreed to forgo efforts to recoup funds paid to Medi-Cal providers as a result of the preliminary injunctions in these cases, except with regard to (1) hospital members of the CHA that choose to opt out of the Settlement Agreement, (2) any provider that institutes a new suit or fails to dismiss a pending action regarding the AB 5 or AB 1183 reductions, and (3) plaintiff hospitals in two specified related cases. In turn, the petitioners agreed to release claims concerning or relating to those payment reductions, excluding individual providers’ claims relating exclusively to computation accuracy. And the Director agreed to release claims for purported overpayments made while challenged rate reductions were enjoined, but for which reductions the Department ultimately obtained CMS approval. Dkt. No. 417-1 at 4–5.
The Settlement Agreement permits petitioners and their attorneys, Carman and Friedman, to file applications within thirty days of the effective date for attorneys’ fees for services performed in litigating the cases described above. Dkt. No. 417-2 Ex. A at 14. The Director retained the right to oppose any such request, and raise “any and all arguments and defenses that it may have to an award of attorneys’ fees and to the amount of such award.” Id. The Settlement Agreement similarly allows intervenors and HLB to seek fees in the AB 5 case, with the Director retaining the right to oppose such effort. Id. at 14–15. The Settlement Agreement also permits “any plaintiffs’ attorney who has appeared in one or more of the Applicable Cases” to seek attorneys’ fees “from Medicaid providers that purportedly obtained a benefit from counsel’s work” (not from the Department or other state entities), and subject to certain other conditions. Id. at 15.3 Except as summarized above, the Settlement Agreement releases the Department from liability for attorneys’ fees.

3HLB’s motion to recover funds from hospitals that purportedly benefitted from

this and related Medi-Cal rate reduction litigation will be discussed in a separate order.

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Case 2:08-cv-03315-CAS-MAN Document 476 Filed 07/06/15 Page 9 of 17 Page ID #:10637
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

‘O’

2:08-cv-03315-CAS(MANx)

Date July 6, 2015

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA, ET AL. v. DAVID MAXWELL-JOLLY, ET AL.

III. ANALYSIS

As stated, each of the three motions discussed herein seeks attorneys’ fees pursuant to California Code of Civil Procedure 1021.5, which provides in relevant part:

Upon motion, a court may award attorneys' fees to a successful party against one or more opposing parties in any action which has resulted in the enforcement of an important right affecting the public interest if: (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any.

Cal. Civ. Proc. Code § 1021.5. This “private attorney general” statute is intended “to encourage suits effectuating a strong public policy by awarding substantial attorneys’ fees . . . to those who successfully bring such suits and thereby bring about benefits to a broad class of citizens.” Woodland Hills Residents Ass’n v. City Council, 23 Cal. 3d 917, 933 (1979) (internal quotation marks and brackets omitted). The Director opposes any award under section 1021.5 on several grounds. First, he submits that section 1021.5 does not apply because this case involved the litigation of federal claims in federal court. Second, he argues that even if section 1021.5 did apply, it would not support an award of attorneys’ fees on the facts of this case. Finally, the Director argues that the fees sought through each motion are excessive. Because the Court agrees with the Director’s first argument, the Court does not reach the remaining contentions.

Since the Supreme Court decided Alyeska Pipeline Service Co. v. Wilderness

Society, 421 U.S. 240 (1975), the general “rule in federal courts has been that, absent an

express statutory command, attorneys’ fees will not be awarded in civil cases.” Home

Sav. Bank, F.S.B. v. Gillam, 952 F.2d 1152, 1162 (9th Cir. 1991) (citing Alyeska

Pipeline, 421 U.S. at 262). The parties dispute whether section 1021.5 is an “express

statutory command” authorizing attorneys’ fees in this case. Petitioners filed the AB 5

litigation in California state court, seeking mandamus relief pursuant to California Code

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Case 2:08-cv-03315-CAS-MAN Document 476 Filed 07/06/15 Page 10 of 17 Page ID #:10638
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

‘O’

2:08-cv-03315-CAS(MANx)

Date July 6, 2015

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA, ET AL. v. DAVID MAXWELL-JOLLY, ET AL.

of Civil Procedure section 1085. See generally FAP. Petitioners claimed that the MediCal reductions were preempted under the Supremacy Clause because they violated (1) the federal Medicaid Act and Social Security Act and (2) the federal Americans with Disabilities Act (“ADA”). Id. ¶¶ 40–59.4 Respondents removed the action to this Court based on federal question jurisdiction, and the parties vigorously litigated the Medicaid Act preemption claim. Dkt. No. 1 ¶ 6. The Director now argues that because the claims upon which the preliminary injunctions were obtained arose under federal constitutional and statutory law, section 1021.5 does not apply in federal court.
“Eligibility for an award of attorneys’ fees and costs on [California] state law claims is a matter of California law.” Pearson v. Green Tree Serv., LLC, No. 13-cv04524-JSC, 2015 WL 632457, at *2 (N.D. Cal. Feb. 13, 2015). Accordingly, federal courts have applied section 1021.5 to award fees where plaintiffs prevailed on state law claims.5 Additionally, as movants stress, California courts have awarded fees under section 1021.5 for the vindication of rights arising under federal law. See Maria P. v. Riles, 43 Cal. 3d 1281, 1293 (1987) (awarding fees under section 1021.5 where lawsuit protected the right to confidentiality of school records “as mandated by federal law” by enjoining inconsistent state law).6 This case, however, presents the issue of whether a

4The FAP also included a separate cause of action seeking an injunction under the ADA.

5See, e.g., Mangold v. Cal. Pub. Utilities Comm’n, 67 F.3d 1470, 1478 (9th Cir. 1995) (affirming award of fees under section 1021.5 where plaintiffs prevailed under both federal and California age discrimination law); Perez v. Safety-Kleen Sys., Inc., No. C 05-5338 PJH, 2010 WL 934100, at *1, 4 (N.D. Cal. Mar. 15, 2010) (awarding fees under section 1021.5 for success on California Labor Code claims); Keith v. Volpe, 644 F. Supp. 1317, 1320–21 (C.D. Cal. 1986) (applying section 1021.5 to award fees where plaintiff succeeded on state housing law claims).

6See also Citizens Against Rent Control v. City of Berkeley, 181 Cal. App. 3d 213,

226 (1986) (First Amendment rights); AFL-CIO v. Am. Fed’n of Labor & Emp’t Dev.

Dep’t, 88 Cal. App. 3d 811, 821–22 (1979) (unemployed workers’ right to prompt

payments under the Social Security Act); Camp v. Swoap, 94 Cal. App. 3d 733, 743–47

(1979) (remanding for consideration of attorneys’ fees under section 1021.5 where state

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Case 2:08-cv-03315-CAS-MAN Document 476 Filed 07/06/15 Page 11 of 17 Page ID #:10639
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

‘O’

2:08-cv-03315-CAS(MANx)

Date July 6, 2015

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA, ET AL. v. DAVID MAXWELL-JOLLY, ET AL.

federal court may award fees under section 1021.5 in connection with substantive claims arising only under federal law.

“In cases within the district courts’ federal-question jurisdiction, state fee-shifting statutes generally are inapplicable.” 10 Fern M. Smith, Moore’s Federal Practice Civil § 54.171 (2015). Nevertheless, as petitioners point out, one district court in this circuit has denied a motion to dismiss a request for attorneys’ fees under section 1021.5 where the right to be vindicated arose under the federal Telephone Consumer Protection Act (“TCPA”). See In re Portfolio Recovery Assocs., LLC Tele. Consumer Protection Act Litig., No. 3:11-md-2295-JAH (BGS), 2014 WL 223557, at *3–4 (S.D. Cal. Jan. 8, 2014). That court noted that the TCPA does not itself authorize fee-shifting, and that no court had previously awarded section 1021.5 fees in a TCPA case. Id. at *3. Nevertheless, the court found “no reason to deny plaintiffs the opportunity, at this early stage of litigation, to seek such an award should plaintiffs prevail.” Id. at *4. Citing some of the cases referenced above, the district court noted that California courts had “awarded attorneys’ fees under section 1021.5 for the vindication of rights arising under federal law.” Id. (emphasis in original).

A greater number of district courts in the Ninth Circuit, however—including two deciding a motion for attorneys’ fees, as opposed to a motion to dismiss—have found section 1021.5 inapplicable to claims arising under federal law. And as explained below, the Court finds these cases to be more consistent with Supreme Court and Ninth Circuit jurisprudence on the law governing the availability of attorneys’ fees for federal claims. In Klein v. City of Laguna Beach, 983 F. Supp. 2d 1162 (C.D. Cal. 2013), the plaintiff challenged municipal regulations that prohibited him from using amplified sound to communicate an anti-abortion message in certain locations. The district court awarded Klein nominal damages on his claims that those regulations violated his federal First Amendment rights, but entered judgment for the defendant city on Klein’s claims under California law. Id. at 1164–65. Klein moved for attorneys’ fees under section 1021.5. The court denied that motion, finding that “California’s fee-shifting statute [was] inapplicable . . . because the Court dismissed all of Mr. Klein’s California law claims” and the plaintiff “prevailed only on pure federal questions.” Id. at 1168–69. The Klein

welfare regulations held incompatible with federal law).

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UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

‘O’

2:08-cv-03315-CAS(MANx)

Date July 6, 2015

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA, ET AL. v. DAVID MAXWELL-JOLLY, ET AL.

court relied on the Ninth Circuit’s statement that “[i]n a pure federal question case brought in federal court, federal law governs attorney fees.” Id. at 1169 (quoting Disability Law Ctr. of Alaska, Inc. v. Anchorage Sch. Dist., 581 F.3d 936, 940 (9th Cir. 2009)). The district court acknowledged that Klein had “cite[d] two California court decisions that arguably applied section 1021.5 to pure federal question cases.” Id. at 1169 n.7 (citing Maria P., 43 Cal. 3d at 1293, and Land v. Anderson, 55 Cal. App. 4th 69, 74 (1997)). “Regardless of whether doing so is appropriate for California courts as a matter of California law,” however, the Klein court found those cases inapplicable because federal district courts “may only exercise supplemental jurisdiction over ‘claims,’ . . . and attorneys’ fees . . . are not an independent claim, but an element of damages.” Id. For these reasons, the district court refused “to apply a state fee-shifting statute to the federal law claims on which Mr. Klein ultimately prevailed.” Id.7
In Yates v. Union Square, No. C 07-4087 JSW, 2008 WL 346418 (N.D. Cal. Feb. 7, 2008), the plaintiff brought federal ADA claims as well as related claims governed by California law. The district court declined to exercise supplemental jurisdiction over the state law claims, reasoning that they presented novel issues of California law that were better left to the state courts. Id. at *2–3. The court then struck a request for attorneys’ fees under section 1021.5 even though the ADA claims were still pending, reasoning: “Because the Court has dismissed the state causes of action, the Court may not grant an award of attorneys’ fees under the California provision.” Id. at *4.
A similar choice of law conclusion was reached in City of San Jose v. San Jose Police Officers’ Ass’n, No. 4:12-cv-02904-LHK, 2013 WL 4805453 (N.D. Cal. Sept. 9, 2013). In that case, a city sought a declaration that a voter-passed ballot measure that adversely affected public employees’ pensions was legal under the Contracts Clause of the United States Constitution and other state and federal laws. Id. at *1. Some of the defendant unions, which had filed motions to dismiss on federal law grounds, were dismissed without prejudice; one of those unions then filed a motion for attorneys’ fees

7Although petitioners attempt to distinguish Klein on the basis that the damages

awarded in that case were “nominal,” the Klein court did not mention the nominal

amount of damages in its discussion of section 1021.5, and squarely held that the statute

was inapplicable because the plaintiff only prevailed on federal claims.

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UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

‘O’

2:08-cv-03315-CAS(MANx)

Date July 6, 2015

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA, ET AL. v. DAVID MAXWELL-JOLLY, ET AL.

pursuant to section 1021.5. Id. at *2. The court denied that motion, reasoning that “state law with respect to attorneys’ fees applies in federal court only where state substantive law governs the underlying action.” Id. (citing Champion Produce, Inc. v. Ruby Robinson Co., 342 F.3d 1016, 1024 (9th Cir. 2003). The court further explained that federal courts apply state attorneys’ fee statutes when “sitting in diversity jurisdiction” or “exercising supplemental jurisdiction over state law claims,” because in such cases “the federal court applies the substantive law of the state to the claim.” Id. In the case before it, however, although the complaint “sought declaratory judgment that [the ballot measure] was lawful under various state laws,” the federal court had not exercised supplemental jurisdiction over the state law claims. Id. at *3. “[B]ecause only federal substantive law ha[d] applied,” the district court concluded that “federal attorneys’ fees law—and not . . . § 1021.5” governed the motion. Id.
The weight of authority within this circuit therefore indicates that section 1021.5 is not applicable to federal law claims in federal court. That conclusion accords with the general rule that “[b]ecause established federal common law disfavors the award of attorney’s fees in federal question cases absent an express congressional directive,” state attorneys’ fee law does not apply to claims based on federal law. Gillam, 952 F.2d at 1162 (reversing district court’s application of Alaska fee statute in action arising under federal law).8 That general rule is grounded in the principle that the Erie doctrine—the reason federal courts apply state substantive law in diversity and supplemental jurisdiction cases—applies . . . to any issue or claim which has its source in state law,” but is “inapplicable to claims or issues created and governed by federal law.” Maternally

8See also Modzelewski v. Resolution Trust Corp., 14 F.3d 1374, 1379 (9th Cir.

1994) (“[S]ince we address federal, not state claims, the federal common law of

attorney’s fees, and not Arizona law, is the relevant authority.”); Disability Law Ctr., 581

F.3d at 941 (explaining that Alaska attorneys’ fee law could apply “in diversity cases . . .

and in federal question cases with supplemental jurisdiction over claims,” but not in a

pure federal question case); Evans v. Skolnik, No. 3:08-cv-00353-RCJ-VPC, 2013 WL

6197111, at *4 (D. Nev. Nov. 26, 2013) (“Federal law governs attorney’s fees in federal-

question cases.”); Castillo v. Frito-Lay, Inc., No. C 05-5209 RJB, 2006 WL 1418868, at

*1 (W.D. Wash. May 26, 2006) (finding state attorneys’ fee statute inapplicable to a

“federal court hearing a case on a federal question”).

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UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

‘O’

2:08-cv-03315-CAS(MANx)

Date July 6, 2015

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA, ET AL. v. DAVID MAXWELL-JOLLY, ET AL.

Yours v. Your Maternity Shop, 234 F.2d 538, 540 n.1 (2d Cir. 1956); see also Int’l Order of Job’s Daughters v. Lindeburg & Co., 633 F.2d 912, 915 (9th Cir. 1980) (“The source of the right sued upon . . . determines whether federal or state law applies.”). The rights and claims that petitioners and intervenors pressed in this litigation were created by federal law: the Supremacy Clause of the United States Constitution, and Section 30(A) of the federal Medicaid Act.9 Therefore, federal law, not section 1021.5, governs whether attorneys’ fees may be awarded. And as the instant motions cite no federal law authority for awarding attorneys’ fees, the Court cannot make such an award.
Movants resist the application of federal law by stressing that some California cases suggest that petitioners and intervenors could have sought fees under section 1021 for the vindication of federal rights had this case been litigated in state court instead of being removed. But that does not change the inapplicability of state fee-shifting statutes to claims arising under federal law in federal court. See Klein, 983 F. Supp. 2d at 1168–69. The Court’s conclusion on this point is reinforced by Gillam, in which the district court had applied Alaska law—which provides for routine recovery of attorneys’ fees in civil cases—to an action to recover severance benefits that had been removed from state to federal court.10 952 F.2d at 1155–56. The Ninth Circuit reversed, explaining that the district court’s “reliance on Alaska law was inappropriate because this was a federal question case and Alaska law directly conflicts with both established federal common law and Supreme Court admonitions against the award of attorney’s fees

9Petitioners argue that their suit arose under California law because it sought mandamus under California Civil Procedure Code section 1085. But section 1085 is a “procedural mechanism,” Kreeft v. City of Oakland, 68 Cal. App. 4th 46, 52 (1998), not a substantive claim. Moreover, it does not apply in federal court. Hill v. County of Sacramento, 466 F. App’x 577, 579 (9th Cir. 2012) (“Cal. Civ. Proc. Code § 1085 authorizes only state courts to issue writs of mandate.”); Shaheen v. Cal. Supreme Court, No. C 02-5308 SI, 2002 WL 31928502, at *1 (N.D. Cal. Dec. 27, 2002) (same).

10The removed case was consolidated with a separate interpleader action filed in

federal court by a different party, but the Ninth Circuit noted that the district court

awarded “attorneys’ fees for both the interpleader and [removed] severance payment

actions,” 952 F.2d at 1156, and reversed entirely the award of fees, id. at 1162–63.

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Case 2:08-cv-03315-CAS-MAN Document 476 Filed 07/06/15 Page 15 of 17 Page ID #:10643
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

‘O’

2:08-cv-03315-CAS(MANx)

Date July 6, 2015

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA, ET AL. v. DAVID MAXWELL-JOLLY, ET AL.

absent specific direction from Congress.” Id. at 1163. The Ninth Circuit also noted that “Alaska has no special interest in the collection of attorneys’ fees in federal question cases litigated in federal court,” because a state has “no unique interest in regulating the behavior of parties in federal court or in promoting the enforcement of federal statutes with a nationwide impact.” Id. at 1163 n.3.

Under Gillam’s logic, it would be error to apply section 1021.5 to the federal claims litigated in this case, even if a California court potentially would have done so. Although this may produce a harsh result in the instant case, where federal courts hear federal claims, “the circumstances under which attorneys’ fees are to be awarded and the range of discretion of the courts in making those matters are for Congress to determine.” Alyeska Pipeline, 421 U.S. at 262; see also Runyon v. McCrary, 427 U.S. 160, 185 (1976) (“[T]he law of the United States, but for a few well-recognized exceptions not present in these cases, has always been that absent explicit congressional authorization, attorneys’ fees are not a recoverable cost of litigation.”); Gillam, 952 F.2d at 1162 (“[E]stablished federal common law disfavors the award of attorney’s fees in federal question cases absent an express congressional directive.”); Design Pallets, Inc. v. Gray Robinson, P.A., 583 F. Supp. 2d 1282, 1286 (M.D. Fla. 2008) (“Congress has rather clearly ‘occupied the field’ concerning the provision of attorneys’ fee awards for federal claims.”). Movants’ position would shift that determination to the states, and cannot be reconciled with Alyeska Pipeline and Gillam.

Movants overread the cases they cite for the broad proposition that “state law governs both a party’s right to fees, as well as the method of calculating fees, in cases that

are removed from state to federal court on federal question grounds.” Dkt. No. 427 at

6–7. In each of the cases cited for that proposition—unlike here—the plaintiffs advanced

state law claims over which the federal court exercised supplemental jurisdiction, so that

the Erie doctrine mandated the application of state attorneys’ fee law to those claims. For

example, in MRO Communications, Inc. v. AT&T Co., 197 F.3d 1276 (9th Cir. 1999), the Ninth Circuit applied a Nevada fee-shifting statute to “state law claims within the district court’s supplemental jurisdiction,” because state attorneys’ fee law applies “[i]n an action involving state law claims.” Id. at 1278, 1282. See also Mangold, 67 F.3d at 1478 (applying state attorneys’ fee law “in the context of pendent jurisdiction.”); Equals Int’l, Ltd. v. Scenic Airlines, 35 F. App’x 532, 534 (9th Cir. 2002) (unpublished) (“[A]t least as to the state law claims, the state fee statute applies.”); Pearson, 2015 WL 632457,

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Case 2:08-cv-03315-CAS-MAN Document 476 Filed 07/06/15 Page 16 of 17 Page ID #:10644
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

‘O’

2:08-cv-03315-CAS(MANx)

Date July 6, 2015

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA, ET AL. v. DAVID MAXWELL-JOLLY, ET AL.

at *2 (“Eligibility for an award of attorneys’ fees and costs on state law claims is a matter of California law.”); Ozkabir v. Scotti, 906 F. Supp. 2d 188, 192 (W.D.N.Y. 2012) (“[I]n an action arising under state law, a federal court applies the law of the relevant state in determining whether to award attorney’s fees.”). Indeed, it is settled that federal courts apply state attorneys’ fee law to pendent state law claims, Crommie v. Cal. Pub. Utilities Comm’n, 840 F. Supp. 719, 721 (N.D. Cal. 1994)—but that is not the situation presented here.11
Intervenors also argue that state substantive law did govern this case, citing the Ninth Circuit’s holding that retroactive relief was available notwithstanding the Eleventh Amendment because, under California law, “an action seeking injunctive relief that requires a state official to disburse funds is not an action against the State.” Indep. Living Ctr. of S. Cal. v. Maxwell-Jolly, 572 F.3d 644, 662–63 (9th Cir. 2009). Intervenors contend that because the scope of relief was affected by California law, it would be “incongruous” to rule section 1021.5 inapplicable on the ground that the substantive claims arise under federal law. Dkt. No. 468 at 5. The application of California law to analyze whether a state entity had waived sovereign immunity from retroactive relief, however, does not change the fact that the substantive rights on which petitioners obtained relief were purely based on federal constitutional and statutory law.

11Intervenors also cite Alyeska Pipeline for the general proposition that “a state

statute requiring an award of attorneys’ fees should be applied in a case removed from the

state courts to the federal courts.” Dkt. No. 427 at 5 (quoting Alyeska Pipeline, 421 U.S.

at 259 n.31). But this language is contained in a footnote that discusses the situation

“when a federal court sits in a diversity case.” Alyeska Pipeline, 421 U.S. at 259 n.31

(emphasis added). That footnote cannot be read to support the application of state

attorneys’ fee law in every removed action, no matter the law governing the claims at

issue. See Jeffrey A. Parness, Choices About Attorney Fee-Shifting Laws: Further

Substance/Procedure Problems Under Erie and Elsewhere, 49 U. Pitt. L. Rev. 393,

412–13 (1988) (explaining that Alyeska Pipelines footnote 31 turned on “differentiations

between federal and state law claims”); see also Gillam, 952 F.2d at 1163 (reversing

application of state attorneys’ fee law to action removed from state court).

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Case 2:08-cv-03315-CAS-MAN Document 476 Filed 07/06/15 Page 17 of 17 Page ID #:10645
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Case No. Title

CIVIL MINUTES - GENERAL

‘O’

2:08-cv-03315-CAS(MANx)

Date July 6, 2015

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA, ET AL. v. DAVID MAXWELL-JOLLY, ET AL.

In sum, because this case involved only federal law claims, section 1021.5 cannot support the requested attorneys’ fees awards. Accordingly, the Court does not address the parties’ arguments as to whether section 1021.5's requirements are satisfied, or whether the fees sought pursuant to section 1021.5 are excessive.
IV. CONCLUSION
In accordance with the foregoing, the Court concludes that California Code of Civil Procedure section 1021.5 cannot support an award of attorneys’ fees in this case. Because the motions described above (Dkt. Nos. 426, 427, and 429) cite no other basis for awarding fees, those motions are DENIED.
IT IS SO ORDERED.

Initials of Preparer

00

:

14

CMJ

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 </s> (MANx),APPEAL,CLOSED,DISCOVERY,MANADR
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA (Western Division − Los Angeles)
CIVIL DOCKET FOR CASE #: 2:08−cv−03315−CAS−MAN

Independent Living Center of Southern California et al v. David Maxwell−Jolly et al Assigned to: Judge Christina A. Snyder Referred to: Magistrate Judge Margaret A. Nagle Related Cases: 2:08−cv−07045−CAS−MAN
2:08−cv−07046−CAS−MAN 2:09−cv−00382−CAS−MAN 2:09−cv−00722−CAS−MAN 2:09−cv−03694−CAS−MAN 2:09−cv−07097−CAS−MAN 2:09−cv−08642−CAS−MAN 2:10−cv−03284−CAS−MAN 2:08−cv−03363−CAS−MAN 2:10−cv−03259−CAS−MAN 2:12−cv−08793−CAS−MAN 2:09−cv−08200−CAS−MAN 2:10−cv−04182−CAS−MAN 2:11−cv−09078−CAS−MAN 2:11−cv−09211−CAS−MAN 2:11−cv−09830−CAS−MAN 2:11−cv−09688−CAS−MAN 2:11−cv−10638−SVW−MAN 2:11−cv−10618−CAS−MAN 2:12−cv−07059−CAS−MAN Case in other court: 9th CCA, 08−56061
9th CCA, 08−56422 9th CCA, 08−56551 9th CCA, 08−56554 9th CCA, 08−56751 9th CCA, 08−57016 9th CCA, 15−56142 9th Circuit, 15−56154 Ninth Circuit, 20−55193 Superior Court State of CA County of Los Angeles, BS114459 Cause: 28:1441 Notice of Removal Movant

Date Filed: 05/19/2008 Date Terminated: 06/01/2011 Jury Demand: None Nature of Suit: 151 Contract: Recovery Medicare Jurisdiction: Federal Question

Catholic Healthcare West TERMINATED: 10/20/2008

represented by Byron J Gross Hooper Lundy & Bookman Watt Plaza 1875 Century Park E, Ste 1600 Los Angeles, CA 90067−2799 310−551−8111 Fax: 310−551−8181 Email: byronjgross@gmail.com LEAD ATTORNEY ATTORNEY TO BE NOTICED

Craig J Cannizzo Hooper, Lundy & Bookman, PC

V.
Petitioner
Independent Living Center of Southern California a nonprofit corporation

101 Montgomery Street, 11th Floor San Francisco, CA 94104 415−875−8500 Fax: 415−986−2571 Email: ccannizzo@health−law.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
Jordan Brian Keville Hooper Lundy & Bookman PC Watt Plaza 1875 Century Park East Suite 1600 Los Angeles, CA 90067−2799 310−551−8111 Fax: 310−551−8181 Email: jkeville@health−law.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
Lloyd Alan Bookman Hooper Lundy and Bookman PC 1875 Century Park East Suite 1600 Los Angeles, CA 90067 310−551−8111 Fax: 310−551−8181 Email: lbookman@health−law.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
Felicia Y Sze Hooper Lundy and Bookman PC 5575 Market Street Suite 2300 San Francisco, CA 94105 415−875−8500 Fax: 415−875−8519 Email: felicia@rshealthlaw.com TERMINATED: 04/15/2019
represented by Lynn S Carman Medicaid Defense Fund 71 Marin Valley Drive Novato, CA 94949 415−312−9707 Fax: None Email: lynnscarman@hotmail.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
Stanley L Friedman Law Offices of Stanley L Friedman 445 South Figueroa Street 27th Floor Los Angeles, CA 90071−1631 213−629−1500 Fax: 213−489−6899 Email: friedman@friedmanlaw.org LEAD ATTORNEY ATTORNEY TO BE NOTICED
Craig J Cannizzo (See above for address) TERMINATED: 10/12/2009

Petitioner Gray Panthers of Sacramento a nonprofit corporation
Petitioner Gray Panthers of San Francisco a nonprofit corporation
Petitioner Gerald Shapiro Pharm. D. doing business as Uptown Pharamacy and Gift Shoppe
Petitioner Sharon Steen doing business as Central Pharmacy
Petitioner

represented by Lynn S Carman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Stanley L Friedman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Craig J Cannizzo (See above for address) TERMINATED: 10/12/2009
represented by Lynn S Carman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Stanley L Friedman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Craig J Cannizzo (See above for address) TERMINATED: 10/12/2009
represented by Lynn S Carman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Stanley L Friedman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Craig J Cannizzo (See above for address) TERMINATED: 10/12/2009
represented by Lynn S Carman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Stanley L Friedman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Craig J Cannizzo (See above for address) TERMINATED: 10/12/2009

Mark Beckwith
Petitioner Margaret Dowling
Petitioner Tran Pharmacy, Inc.
Petitioner Jason Young TERMINATED: 09/15/2009
V. Intervenor Plaintiff Theodore M Mazer M.D.

represented by Lynn S Carman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Stanley L Friedman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Craig J Cannizzo (See above for address)
represented by Lynn S Carman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Stanley L Friedman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Craig J Cannizzo (See above for address)
represented by Lynn S Carman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Stanley L Friedman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Craig J Cannizzo (See above for address) TERMINATED: 10/12/2009
represented by Lynn S Carman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Stanley L Friedman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
represented by Byron J Gross (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Craig J Cannizzo

Intervenor Plaintiff Eastern Plumas Health Care District

(See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Jordan Brian Keville (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Lloyd Alan Bookman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Eric David Chan Hooper Lundy and Bookman PC 1875 Century Park East Suite 1600 Los Angeles, CA 90067−2517 310−551−8158 Fax: 310−551−8181 ATTORNEY TO BE NOTICED
Felicia Y Sze (See above for address) TERMINATED: 04/15/2019
Stanton J Stock Hooper Lundy and Bookman PC 101 West Broadway Suite 1200 San Diego, CA 92101 619−744−7313 Fax: 619−230−0987 Email: sstock@health−law.com ATTORNEY TO BE NOTICED
Stephanie A Gross Hooper Lundy and Bookman PC 575 Market Street Suite 2300 San Francisco, CA 94105 415−875−8509 Fax: 415−875−8519 Email: sgross@health−law.com ATTORNEY TO BE NOTICED
represented by Byron J Gross (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Craig J Cannizzo (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Jordan Brian Keville (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Lloyd Alan Bookman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Intervenor Plaintiff Pioneers Memorial Health Care District
Intervenor Plaintiff Kaweah Delta Health Care District
Intervenor Plaintiff Ronald B Mead D.D.S.

Felicia Y Sze (See above for address) TERMINATED: 04/15/2019
represented by Byron J Gross (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Craig J Cannizzo (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Jordan Brian Keville (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Lloyd Alan Bookman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Felicia Y Sze (See above for address) TERMINATED: 04/15/2019
represented by Byron J Gross (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Craig J Cannizzo (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Jordan Brian Keville (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Lloyd Alan Bookman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Felicia Y Sze (See above for address) TERMINATED: 04/15/2019
represented by Byron J Gross (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Craig J Cannizzo (See above for address)

Intervenor Plaintiff Acacia Adult Day Services

LEAD ATTORNEY ATTORNEY TO BE NOTICED
Jordan Brian Keville (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Lloyd Alan Bookman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Eric David Chan (See above for address) ATTORNEY TO BE NOTICED
Felicia Y Sze (See above for address) TERMINATED: 04/15/2019
Stanton J Stock (See above for address) ATTORNEY TO BE NOTICED
Stephanie A Gross (See above for address) ATTORNEY TO BE NOTICED
represented by Byron J Gross (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Craig J Cannizzo (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Jordan Brian Keville (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Lloyd Alan Bookman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Eric David Chan (See above for address) ATTORNEY TO BE NOTICED
Felicia Y Sze (See above for address) TERMINATED: 04/15/2019
Stanton J Stock (See above for address) ATTORNEY TO BE NOTICED
Stephanie A Gross (See above for address)

Intervenor Plaintiff California Association of Medical Product Suppliers
Intervenor Plaintiff Sharp Memorial Hospital

ATTORNEY TO BE NOTICED
represented by Byron J Gross (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Craig J Cannizzo (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Jordan Brian Keville (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Lloyd Alan Bookman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Felicia Y Sze (See above for address) TERMINATED: 04/15/2019
Sara Ugaz Los Angeles City Attorney's Office Business and Complex Litigation 200 North Main Street City Hall East, 6th Floor Los Angeles, CA 90012 213−978−7564 Fax: 213−978−7011 Email: sara.ugaz@lacity.org TERMINATED: 07/23/2012 ATTORNEY TO BE NOTICED
represented by Byron J Gross (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Craig J Cannizzo (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Jordan Brian Keville (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Lloyd Alan Bookman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Felicia Y Sze (See above for address) TERMINATED: 04/15/2019

Intervenor Plaintiff Grossmont Hospital Corporation
Intervenor Plaintiff Sharp Chula Vista Medical Center
Intervenor Plaintiff Sharp Coronado Hospital and Healthcare Center

represented by Byron J Gross (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Craig J Cannizzo (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Jordan Brian Keville (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Lloyd Alan Bookman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Felicia Y Sze (See above for address) TERMINATED: 04/15/2019
represented by Byron J Gross (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Craig J Cannizzo (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Jordan Brian Keville (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Lloyd Alan Bookman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Felicia Y Sze (See above for address) TERMINATED: 04/15/2019
represented by Byron J Gross (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Craig J Cannizzo (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Jordan Brian Keville

Intervenor Plaintiff California Hospital Association
Intervenor Plaintiff Sacramento Family Medical Clinics, Inc.

(See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Lloyd Alan Bookman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Felicia Y Sze (See above for address) TERMINATED: 04/15/2019
represented by Byron J Gross (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Craig J Cannizzo (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Jordan Brian Keville (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Lloyd Alan Bookman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Felicia Y Sze (See above for address) TERMINATED: 04/15/2019
Sara Ugaz (See above for address) TERMINATED: 07/23/2012 ATTORNEY TO BE NOTICED
represented by Byron J Gross (See above for address) ATTORNEY TO BE NOTICED
Craig J Cannizzo (See above for address) ATTORNEY TO BE NOTICED
Felicia Y Sze (See above for address) TERMINATED: 04/15/2019
Jordan Brian Keville (See above for address) ATTORNEY TO BE NOTICED
Lloyd Alan Bookman (See above for address) ATTORNEY TO BE NOTICED

V.
Respondent
David Maxwell−Jolly Director of the Department of Health Care Services of the State of California Substituted for Sandra Shewry

Stanton J Stock (See above for address) ATTORNEY TO BE NOTICED
represented by Gregory Martin Cribbs CAAG − Office of Attorney General of California 300 S Spring Street Ste 1702 Los Angeles, CA 90013 213−897−2446 Fax: 213−897−2805 Email: gregory.cribbs@doj.ca.gov LEAD ATTORNEY ATTORNEY TO BE NOTICED
Jennifer M Kim CAAG − Office of CA Attorney General California Department of Justice 300 South Spring Street Suite 1702 Los Angeles, CA 90012 213−897−2443 Fax: 213−897−2805 Email: jennifer.kim@doj.ca.gov LEAD ATTORNEY ATTORNEY TO BE NOTICED
Joshua Nathan Sondheimer California Department of Justice Office of the Attorney General 11000 Golden Gate Avenue Suite 11000 San Francisco, CA 94102 415−510−4420 Fax: 415−703−5480 Email: joshua.sondheimer@doj.ca.gov LEAD ATTORNEY
Phillip J Matsumoto Office of the Attorney General 300 South Spring Street 9 North Los Angeles, CA 90013 213−897−2454 Email: phillip.matsumoto@doj.ca.gov TERMINATED: 07/29/2008 LEAD ATTORNEY ATTORNEY TO BE NOTICED
Sara Ugaz (See above for address) TERMINATED: 12/16/2008 LEAD ATTORNEY ATTORNEY TO BE NOTICED
Stanley L Friedman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Tara L Newman CAAG − Office of the Attorney General California Department of Justice 300 South Spring Street Suite 1702

Respondent
California Department of Health Care Services TERMINATED: 06/01/2008

Los Angeles, CA 90013−1230 213−269−6216 Fax: 213−897−2805 Email: tara.newman@doj.ca.gov LEAD ATTORNEY ATTORNEY TO BE NOTICED
Carmen Denise Snuggs CAAG − Office of Attorney General of California 300 South Spring Street Suite 1702 Los Angeles, CA 90013 213−897−2450 Fax: 213−897−2450 Email: carmen.snuggs@doj.ca.gov ATTORNEY TO BE NOTICED
Craig J Cannizzo (See above for address)
Elizabeth Ann Linton CAAG − Office of the Attorney General Department of Justice 1300 I Street Suite 125 Sacramento, CA 95814 916−323−8549 TERMINATED: 04/02/2019
John F Venegas CAAG − Office of Attorney General of California 300 S Spring St, Ste 5000 Los Angeles, CA 90013−1230 213−897−2000 Email: docketinglaawt@doj.ca.gov TERMINATED: 12/16/2008 ATTORNEY TO BE NOTICED
S. Andrew Dhadwal CAAG − Attorney General Office California Department of Justice 300 South Spring Street Suite 1702 Los Angeles, CA 90013 213−897−2463 Email: andrewd@lmwslaw.com ATTORNEY TO BE NOTICED
Susan Marie Carson CAAG − Office of the Attorney General California Department of Justice 455 Golden Gate Avenue Suite 11000 San Francisco, CA 94102 415−703−5580 Fax: 415−703−5480 Email: Susan.Carson@doj.ca.gov ATTORNEY TO BE NOTICED
represented by Carmen Denise Snuggs (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Jennifer M Kim

Respondent Does 1 through 50 Amicus AARP
V. Objector Santa Rosa Memorial Hospital

(See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Phillip J Matsumoto (See above for address) TERMINATED: 07/29/2008 LEAD ATTORNEY ATTORNEY TO BE NOTICED
S. Andrew Dhadwal (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Sara Ugaz (See above for address) TERMINATED: 07/23/2012 LEAD ATTORNEY ATTORNEY TO BE NOTICED
Tara L Newman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Joshua Nathan Sondheimer (See above for address) ATTORNEY TO BE NOTICED
Susan Marie Carson (See above for address) ATTORNEY TO BE NOTICED
represented by Barbara A Jones AARP Foundation Litigation 200 South Los Robles Suite 400 Pasadena, CA 91101 626−585−2628 Fax: 626−583−8538 Email: bjones@aarp.org LEAD ATTORNEY ATTORNEY TO BE NOTICED
Stacy Canan AARP Foundation Litigation 601 E Street NW Washington, DC 20049 202−434−2060 Fax: 202−434−6424 LEAD ATTORNEY ATTORNEY TO BE NOTICED
represented by

V. Intervenor California Medical Transportation Association, Inc. TERMINATED: 10/26/2008
Intervenor California Association for Health Services at Home TERMINATED: 10/26/2008
Intervenor Sacramento Family Medical Clinics, Inc., et al.

Thomas J Weiss Weiss and Zaman 16633 Ventura Boulevard Suite 510 Encino, CA 91436 818−290−3810 Fax: 818−390−3870 Email: tweiss@weisslawla.com ATTORNEY TO BE NOTICED
represented by Lynn S Carman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Stanley L Friedman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Felicia Y Sze (See above for address) TERMINATED: 04/15/2019
Sara Ugaz (See above for address) TERMINATED: 07/23/2012 ATTORNEY TO BE NOTICED
represented by Lynn S Carman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Stanley L Friedman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Felicia Y Sze (See above for address) TERMINATED: 04/15/2019
Sara Ugaz (See above for address) TERMINATED: 07/23/2012 ATTORNEY TO BE NOTICED
represented by Eric David Chan (See above for address) ATTORNEY TO BE NOTICED
Felicia Y Sze (See above for address) TERMINATED: 04/15/2019
Stanton J Stock (See above for address)

ATTORNEY TO BE NOTICED
Stephanie A Gross (See above for address) ATTORNEY TO BE NOTICED

Date Filed 05/19/2008
05/19/2008
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05/28/2008

# Docket Text
1 NOTICE OF REMOVAL from Superior Court of the State of California for the County of Los Angeles, case number BS114459 with conformed copy of summon and verified petition for writ of mandamus. Case assigned to Judge Christina A. Snyder, Discovery to Magistrate Judge Margaret A Nagle. (Filing fee $ 350 PAID.), filed by respondents Sandra Shewry, California Department of Health Care Services.(ghap) (Additional attachment(s) added on 5/29/2008: # 1 Exhibits A − E, # 2 Exhibit F) (ds). (Additional attachment(s) added on 5/29/2008: # 3 Notice of Assignment, # 4 Civil Cover Sheet) (ds). (Entered: 05/23/2008)
NON CONFORMED COPY OF FIRST AMENDED COMPLAINT against defendants Sandra Shewry, California Department of Health Care Services amending Notice of Removal, 1 ,filed by petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Not Filed in State Court submit attached Exhibit D) (ghap) (Entered: 05/23/2008)
3 NOTICE of Interested Parties filed by Respondents Sandra Shewry, California Department of Health Care Services. (ghap) (ds). (Entered: 05/23/2008)
4 CERTIFICATE OF SERVICE filed by respondents Sandra Shewry, California Department of Health Care Services, re Notice of Removal, 1 , Certificate of Interested Parties 3 served on 5/19/08. (ghap) (ds). (Entered: 05/23/2008)
5 NOTICE TO PARTIES OF ADR PILOT PROGRAM filed.(ghap) (Entered: 05/23/2008)
FAX number for Attorneys Phillip J Matsumoto, Tara L Newman, Sara Ugaz is 213−897−2805. (ghap) (Entered: 05/23/2008)
FAX number for Attorney Lynn S Carman is 415−499−1687. (ghap) (Entered: 05/23/2008)
FAX number for Attorney Stanley L Friedman is 213−489−6899. (ghap) (Entered: 05/23/2008)
2 NOTICE of Related Case(s) filed by Respondents Sandra Shewry, California Department of Health Care Services. Related Case(s): 08−03363 (Ugaz, Sara) (Entered: 05/23/2008)
6 NOTICE OF LODGING filed of Conformed Filed Verified First Amended Petition for Writ of Mandamus re Notice of Removal, 1 (Carman, Lynn) (Entered: 05/28/2008)
7 NOTICE of Related Case(s) filed by Petitioner Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. Related Case(s): 2:08−cv−03315 and 2:08−cv−3363 (Carman, Lynn) (Entered: 05/28/2008)
CONFORMED COPY OF VERIFIED FIRST AMENDED PETITION FOR WRIT OF MANDAMUS against Respondents Sandra Shewry, Director of Department of Health Care Services of the State of California, Department of Health Care Services, a department of the State of California, and Does 1 through 50; amending Complaint 1 ; filed by Petitioners Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., and Jason Young. [Filed stamped by Los Angeles Superior Court, Case No. BS 114459, on 5/19/2008] (gk) (Entered: 06/05/2008)

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8 PROOF OF SERVICE Executed Independent Living Center of Southern California, upon Sandra Shewry, Director of Department of Health Care Services of the State of California (Friedman, Stanley) (Entered: 05/29/2008)
9 NOTICE filed by _Plaintifff Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. of Motion for Preliminary Injunction (Carman, Lynn) (Entered: 05/29/2008)
30 ISSUED 20−Day Summons re First Amended Complaint, as to Defendants Sandra Shewry and California Department of Health Care Services. (gk) (Entered: 06/03/2008)
10 NOTICE OF MOTION AND MOTION for Preliminary Injunction re: federal preempted 10% Medicaid payment cuts filed by Plaintiff Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. Motion set for hearing on 6/23/2008 at 10:00 AM before Judge Christina A. Snyder. (Carman, Lynn) (Entered: 05/30/2008)
11 MEMORANDUM in Support of MOTION for Preliminary Injunction re: federal preempted 10% Medicaid payment cuts 10 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 05/30/2008)
12 NOTICE OF DISMISSAL filed by Petitioner Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco pursuant to FRCP 41a(1) Without Prejudice as to California Department of Health Care Services. (Carman, Lynn) (Entered: 06/01/2008)
13 DECLARATION of Joan B. Lee In support of MOTION for Preliminary Injunction re: federal preempted 10% Medicaid payment cuts 10 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 06/01/2008)
14 DECLARATION of Joan B. Lee In Supporrt MOTION for Preliminary Injunction re: federal preempted 10% Medicaid payment cuts 10 EXHIBITS A, B, C TO LEE DECLARATION filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 06/01/2008)
15 DECLARATION of THU−HANG TRAN IN SUPPORT MOTION for Preliminary Injunction re: federal preempted 10% Medicaid payment cuts 10 filed by Petitioners Gerald Shapiro, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Respondent Sandra Shewry. (Attachments: # 1 Exhibit A, B, C TO TRAN DECLARATION)(Carman, Lynn) (Entered: 06/01/2008)
16 DECLARATION of THU−HANGH TRAN In Support MOTION for Preliminary Injunction re: federal preempted 10% Medicaid payment cuts 10 EXHIBITS A, B, C TO TRAN DECLARATION filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 06/01/2008)
17 DECLARATION of Maark Beckwith In Support MOTION for Preliminary Injunction re: federal preempted 10% Medicaid payment cuts 10 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 06/02/2008)
18 DECLARATION of Gerald Shapiro, Phaarm.D In Support MOTION for Preliminary Injunction re: federal preempted 10% Medicaid payment cuts 10 filed by Petitioners

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Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 06/02/2008)
19 DECLARATION of MAARGAARET DOWLING In Support MOTION for Preliminary Injunction re: federal preempted 10% Medicaid payment cuts 10 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 06/02/2008)
20 DECLARATION of SHARON STEEN In Support MOTION for Preliminary Injunction re: federal preempted 10% Medicaid payment cuts 10 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 06/02/2008)
21 DECLARATION of Norma Vescovo In Support MOTION for Preliminary Injunction re: federal preempted 10% Medicaid payment cuts 10 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 06/02/2008)
22 DECLARATION of JASON YOUNG In Support MOTION for Preliminary Injunction re: federal preempted 10% Medicaid payment cuts 10 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 06/02/2008)
23 DECLARATION of Michael LyonL In Support MOTION for Preliminary Injunction re: federal preempted 10% Medicaid payment cuts 10 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Attachments: # 1 Exhibis A, B, C, D, E, F, G, # 2 Declaration)(Carman, Lynn) (Entered: 06/02/2008)
24 DECLARATION of Richard Wilson, CPA In Support MOTION for Preliminary Injunction re: federal preempted 10% Medicaid payment cuts 10 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Attachments: # 1 Exhibits A, B, C, D, E, F, G, # 2 Exhibits A, B, C, D, E, F, G)(Carman, Lynn) (Entered: 06/02/2008)
25 REQUEST FOR JUDICIAL NOTICE re MOTION for Preliminary Injunction re: federal preempted 10% Medicaid payment cuts 10 filed by Plaintiffs Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Attachments: # 1 Exhibit (AB X3 5), # 2 Exhibits B,C,D,E,F, # 3 Exhibits G, H, I, # 4 Ex J (MEYERS STAUFFER REPORT), # 5 Ex K (LEGISLATIVE ANALYST REPORT), # 6 REQUEST FOR JUDICIAL NOTICE)(Carman, Lynn) (Entered: 06/02/2008)
26 NOTICE filed by Plaintiffs Gerald Shapiro, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Sandra Shewry, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. OF ECF FILING OF THREE STUDIES (Carman, Lynn) (Entered: 06/02/2008)
27 REQUEST JUDICIAL NOTICE OF 3 STUDIES re MOTION for Preliminary Injunction re: federal preempted 10% Medicaid payment cuts 10 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 06/02/2008)

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28 DECLARATION of Thu−Hang Tran In Support MOTION for Preliminary Injunction re: federal preempted 10% Medicaid payment cuts 10 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Attachments: # 1 EXHIBITS A, B, C, # 2 EXHIBITS A, B, C)(Carman, Lynn) (Entered: 06/02/2008)
29 NOTICE OF LODGING filed Proposed Order re MOTION for Preliminary Injunction re: federal preempted 10% Medicaid payment cuts 10 (Attachments: # 1 Exhibit, # 2 Document)(Friedman, Stanley) (Entered: 06/02/2008)
31 NOTICE filed by Petitioners Gerald Shapiro, Sharon Steen, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. NOTICE OF ERRATUM AND LODGING OF (CORRECTED) JASON YOUNG DECLARATION (Carman, Lynn) (Entered: 06/05/2008)
32 CERTIFICATE of Interested Parties filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco, identifying THU−HANG TRAN, Pharm.D.. (Carman, Lynn) (Entered: 06/06/2008)
33 EX PARTE APPLICATION FOR ENLARGEMENT OF TIME to File Respondent's Opposition to Petitioner's Motion for Preliminary Injunction filed by Respondents California Department of Health Care Services. (Attachments: # 1 Supplement Memorandum of Points and Authorities in Support, # 2 Declaration Declaration of Matsumoto in Support, # 3 Proposed Order Proposed Order)(Ugaz, Sara) (Entered: 06/12/2008)
34 NOTICE OF DOCUMENTS SERVCED BY LYNN S. CARMAN filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. FOR 6/23/08 HEARING (Carman, Lynn) (Entered: 06/12/2008)
35 MEMORANDUM in Opposition to MOTION for Preliminary Injunction re: federal preempted 10% Medicaid payment cuts 10 filed by Respondents Sandra Shewry, California Department of Health Care Services. (Attachments: # 1 Supplement Request for Judicial Notice in Support of Opposition, # 2 Exhibit Exhibits to Request for Judicial Notice, # 3 Proposed Order on Request for Judicial Notice, # 4 Supplement Objections to Declarations in Motion for Preliminary Injunction)(Ugaz, Sara) (Entered: 06/12/2008)
36 NOTICE OF MOTION AND MOTION to Dismiss Petitioner's First Amended Petition for Writ of Mandamus filed by Respondent Sandra Shewry. Motion set for hearing on 7/14/2008 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 Supplement Request for Judicial Notice in Support of Motion to Dismiss, # 2 Exhibit A to E for Request for Judicial Notice, # 3 Proposed Order Granting Request for Judicial Notice on Motion to Dismiss)(Ugaz, Sara) (Entered: 06/12/2008)
37 EX PARTE APPLICATION to Reschedule Motion to Dismiss and Motion for Preliminary Injunction for CONSOLIDATION of HEARING DATES, EX PARTE APPLICATION for Hearing Motion to Dismiss and Motion for Preliminary Injunction, re MEMORANDUM in Opposition to Motion, 35 , MOTION to Dismiss Petitioner's First Amended Petition for Writ of Mandamus 36 , MOTION for Preliminary Injunction re: federal preempted 10% Medicaid payment cuts 10 , Memorandum in Support of Motion, 11 , filed by Respondent Sandra Shewry. (Attachments: # 1 Supplement Memorandum of Points and Authorities in Support, # 2 Declaration of P Matsumoto in Support, # 3 Proposed Order Granting Ex Parte Application for Consolidation of Hearing Dates)(Ugaz, Sara) (Entered: 06/12/2008)
38 NOTICE OF JUNE 2, 2008 PERSONAL SERVICE OF PRELIMINARY INJUNCTION MOTION PAPERS filed by PETITIONERS Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 06/13/2008)

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39 OBJECTIONS IN OPPOSITION TO re: EX PARTE APPLICATION FOR ENLARGEMENT OF TIME to File Respondent's Opposition to Petitioner's Motion for Preliminary Injunction 33 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 06/13/2008)
40 NOTICE OF LODGING filed OF (PROPOSED) ORDER DENYING, WITHOUT PREJUDICE, f re EX PARTE APPLICATION FOR ENLARGEMENT OF TIME to File Respondent's Opposition to Petitioner's Motion for Preliminary Injunction 33 (Carman, Lynn) (Entered: 06/13/2008)
41 OBJECTIONS IN OPPOSITION TO re: EX PARTE APPLICATION to Reschedule Motion to Dismiss and Motion for Preliminary Injunction for CONSOLIDATION of HEARING DATES EX PARTE APPLICATION for Hearing Motion to Dismiss and Motion for Preliminary Injunction, re MEMORANDUM in Opposition to Motion, 35 , MOTION to Dismiss Petitioner's First Amended Petition for Writ of Mandamus 36 , MOTION for Preliminary Injunct EX PARTE APPLICATION for Hearing Motion to Dismiss and Motion for Preliminary Injunction, re MEMORANDUM in Opposition to Motion, 35 , MOTION to Dismiss Petitioner's First Amended Petition for Writ of Mandamus 36 , MOTION for Preliminary Injunct EX PARTE APPLICATION for Hearing Motion to Dismiss and Motion for Preliminary Injunction, re MEMORANDUM in Opposition to Motion, 35 , MOTION to Dismiss Petitioner's First Amended Petition for Writ of Mandamus 36 , MOTION for Preliminary Injunct 37 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 06/16/2008)
42 NOTICE OF LODGING filed (PROPOSED) ORDER DENYING RESPONDENT'S CONSOLIDATION MOTION re Objections (Motion related), Objections (Motion related), Objections (Motion related), Objections (Motion related), Objections (Motion related) 41 (Carman, Lynn) (Entered: 06/16/2008)
43 REPLY IN SUPPORT OF MOTION for Preliminary Injunction re: federal preempted 10% Medicaid payment cuts 10 FOR 6/23/08 HEARING filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 06/16/2008)
44 ORDER by Judge Christina A. Snyder DENYING Respondent's Ex Parte Application for an Order Consolidating the Hearing Dates of Respondent's Motion to Dismiss and Petitioner's Motion for Preliminary Injunction. 37 (pso) (Entered: 06/19/2008)
45 ORDER by Judge Christina A. Snyder GRANTING Respondent's Ex Parte Application to Allow for Late Filing of Respondent's Opposition to Petitioner's Motion for Preliminary Injunction. 33 . Refer to document for details of the Order. (pso) (Entered: 06/19/2008)
46 MINUTES OF Motion Hearing on Petitioner's Motion for Preliminary Injunction 10 held before Judge Christina A. Snyder. The Court takes petitioner's motion under submission. The Court will issue a final order.Court Reporter: Laura Elias. (cj) (Entered: 06/23/2008)
47 ORDER DENYING PETITIONERS' MOTION FOR A PRELIMINARY INJUNCTION by Judge Christina A. Snyder: The Court hereby DENIES Petitioners' Motion for Preliminary Injunction 10 . See document for details. (gk) (Entered: 06/25/2008)
48 NOTICE OF APPEAL to the 9th CCA filed by PetitionersGerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of San Francisco. Appeal of Order 47 FEE NOT PAID. (Attachments: # 1 Civil Appeals Docketing Statement)(Friedman, Stanley) (Entered: 06/26/2008)
49 NOTICE of Change of Attorney Information for attorney Jennifer M Kim counsel for Respondent Sandra Shewry. Adding Gregory M. Cribbs as attorney as counsel of record for Respondents for the reason indicated in the G−06 Notice. Filed by

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Respondent Shewry, S. (Kim, Jennifer) (Entered: 06/27/2008)
50 NOTIFICATION by Circuit Court of Appellate Docket Number 08−56061, 9th CCA regarding Notice of Appeal to 9th Circuit Court of Appeals, 48 as to Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Jason Young, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (cbr) (Entered: 06/27/2008)
51 NOTICE OF APPEAL NOTIFICATION form issued regarding Notice of Appeal to 9th Circuit Court of Appeals, 48 as to Petitioner Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of San Francisco. (lr) (Entered: 06/27/2008)
52 FILING FEE LETTER issued as to Petitioner Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, re a $5.00 filing fee and a $450.00 docket fee are requried to be paid to the Clerk, U.S. District Court. re Notice of Appeal to 9th Circuit Court of Appeals, 48 (lr) (Entered: 06/27/2008)
Transmission of Notice of Appeal and Docket Sheet to US Court of Appeals re: Notice of Appeal to 9th Circuit Court of Appeals, 48 (lr) (Entered: 06/27/2008)
55 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals, 48 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Independent Living Center of Southern California, Margaret Dowling, Jason Young, Sharon Steen, Gerald Shapiro, CCA # 08−56061. We have reviwed appellants' emergency motion filed on June 27, 2008. We grant appellants' motion to expedite the date of oral argument in this appeal, and deny the balance of appelalnts' motion without prejudice. (cbr) (Entered: 07/07/2008)
53 STIPULATION for Hearing re MOTION to Dismiss Petitioner's First Amended Petition for Writ of Mandamus 36 filed by PETITIONERS Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco.(Carman, Lynn) (Entered: 07/02/2008)
54 NOTICE OF LODGING filed OF PROPOSED ORDER TO CONTINUE DISMISSAL MOTION re MOTION to Dismiss Petitioner's First Amended Petition for Writ of Mandamus 36 (Carman, Lynn) (Entered: 07/02/2008)
56 OPPOSITION TO MO[TION TO DISMISS filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 07/07/2008)
57 APPEAL FEE PAID: re Notice of Appeal to 9th Circuit Court of Appeals, 48 as to Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Gray Panthers of San Francisco; Receipt Number: 109113, Paid in the amount of $455. (lr) (Entered: 07/09/2008)
58 ORDER CONTINUING DISMISSAL MOTION OF RESPONDENT SANDRA SHEWRY FROM 7/14/2008 TO 7/21/2008 by Judge Christina A. Snyder: Upon Stipulation of the parties 53 , IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the hearing of the dismissal motion of the respondent SANDRA SHEWRY, entitled: "Respondent's Notice of Motion and Motion to Dismiss Petitioners' First Amended Petition for Writ of Mandamus, shall be, and is hereby, continued to 7/21/2008 at 10:00 AM before Judge Christina A. Snyder. (gk) (Entered: 07/09/2008)
59 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals, 48 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Independent Living Center of Southern California, Margaret Dowling, Jason Young, Sharon Steen, Gerald Shapiro, CCA # 08−56061. With regard to the oral argument scheduled for 10:00 a.m. on July 11, 2008, the parties areadvised that each party shall have twenty minutes for argument. (cbr) (Entered: 07/10/2008)
60 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents. The following error(s) was found: Proposed Document was not submitted as separate attachment. Proposed Order on page 2. A Notice of Lodging with a Proposed Order

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also filed 7/2/2008, document number 54. Order filed 7/8/2008, document number 58 RE: Stipulation to Continue Hearing of Rule 12(b)(6) Motion of Respondent Sandra Shewrey to 7/21/2008 filed 7/2/2008 53 . In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. (gk) (Entered: 07/10/2008)
64 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals, 48 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Independent Living Center of Southern California, Margaret Dowling, Jason Young, Sharon Steen, Gerald Shapiro, CCA # 08−56061. The district court's order denying appellants' motion for a preliminary injunction is vacated and we remand for further proceedings. We also temporarily enjoin appellee from implementing A.B. 5's ten percent reduction in the reimbursement rate for prescription drugs, until August 11, 2008. If the district court has not ruled by then on appellants' motion for preliminary injunction, appellants may seek further temporary relief from this court. An Opinion will follow. Order received in this district on 7/11/08. (car) (Entered: 07/15/2008)
61 NOTICE OF LODGING filed OF JULY 11, 2008 ORDER IN APPEAL NO. 08−56061 OF U.S. COURT OF APPEALS, NINTH CIRCUIT COURT OF APPEALS ORDER re Order,,, Terminate Hearings,,, Set Motion and R&R Deadlines,, 58 , MOTION to Dismiss Petitioner's First Amended Petition for Writ of Mandamus 36 , Order 47 (Carman, Lynn) (Entered: 07/13/2008)
62 NOTICE OF JULY 11, 2008 ORDER IN APPEAL CASE NO. 08−56061 filed by PETITIONERS Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 07/13/2008)
63 REPLY to opposition of MOTION to Dismiss Petitioner's First Amended Petition for Writ of Mandamus 36 filed by Respondent Sandra Shewry. (Attachments: # 1 Supplement Request for Judicial Notice in Support of Reply)(Kim, Jennifer) (Entered: 07/14/2008)
65 IN CHAMBERS ORDER by Judge Christina A. Snyder: On the Courts own motion, the Court continues respondents motion to dismiss petitioners first amended petition for writ of mandamus filed June 12, 2008 from July 21, 2008 to August 11, 2008 at 10:00 A.M. but, counsel are directed to appear before this Court on July 21, 2008 at 10:00 A.M. for a Status Conference to discuss further briefing as directed by the Ninth Circuit Mandate. 36 (pso) (Entered: 07/16/2008)
66 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals, 48 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Independent Living Center of Southern California, Margaret Dowling, Jason Young, Sharon Steen, Gerald Shapiro, CCA # 08−56061. Because of the urgency of the district court's conducting the preliminary injunction hearing on the merits, this order directs the clerk to issue the mandate forwith. We delete from the order, however, the second and third sentences of the final paragraph that relate to the issuance of the stay; the two sentences commence with "We also" and end with "form this court." The panel retains jurisdiction over the stay request and will reconsider the question of a stay lin light of the motion for reconsideration filed by the appellees. An order as to the stay will issue subsequently. Order received in this district on 7/16/08. (car) (Entered: 07/18/2008)
68 MANDATE of 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals, 48 , CCA # 08−56061. Order denying appellants' motion for a preliminary injunction order is vacated and remand for further proceedings. Mandate received in this district on 7/16/08. (lr) (Entered: 07/22/2008)
67 NOTICE Proposed Schedule filed by All Plaintiffs Independent Living Center of Southern California. (Friedman, Stanley) (Entered: 07/20/2008)
69 MINUTES OF Status Conference held before Judge Christina A. Snyder: Status Conference is held. Court and counsel confer. The hearing on Respondents Motion to Dismiss Petitioners First Amended Petition for Writ of Mandamus (filed 6/12/08) set for August 11, 2008 is continued to August 18, 2008 at 10:00 a.m. Court and counsel further confer regarding Petitioners intent to file a Motion for Preliminary Injunction.

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The Court sets a hearing for the Motion on August 1, 2008 at 2:00 p.m. with the following briefing schedule: Petitioners Motion: file by no later than July 25, 2008; Respondents Opposition: file by no later than July 30, 2008; Petitioners Reply: file by no later than July 31, 2008 Court Reporter: Laura Elias. (pso) (Entered: 07/23/2008)
70 NOTICE of Change of Attorney Information for attorney Carmen Denise Snuggs counsel for Respondent Sandra Shewry. Adding Carmen D. Snuggs as attorney as counsel of record for Respondent/Defendant for the reason indicated in the G−06 Notice. Filed by Attorney for Respondents Carmen D. Snuggs, Deputy Attorney General (Snuggs, Carmen) (Entered: 07/24/2008)
71 NOTICE of Change of Attorney Information for attorney John Venegas counsel for Respondent Sandra Shewry. Adding John F. Venegas as attorney as counsel of record for Respondents for the reason indicated in the G−06 Notice. Filed by Attorney for Respondents John F. Venegas (Venegas, John) (Entered: 07/24/2008)
78 APPLICATION OF NON−RESIDENT ATTORNEY Stacy Canan to appear on behalf of Amicus Curiae AARP, and designating Barbara Jones as local counsel. FEE PAID. Lodged Proposed Order. (gk) (Entered: 07/27/2008)
80 NOTICE OF AARP'S EX PARTE APPLICATION to File Amicus Curiae Brief; Ex Parte Application; Memorandum of Points and Authorities in Support; Declaration of Barbara A. Jones filed by Amicus Curiae AARP.(gk) (Entered: 07/28/2008)
81 DECLARATION OF SERVICE filed by Amicus Curiae AARP re Proposed Amicus Curiae Brief, Notice of Ex Parte Application, Ex Parte Application to File Amicus Curiae Brief 80 , and Proposed Order, served on 7/24/2008. (gk) (Entered: 07/28/2008)
72 NOTICE of Manual Filing filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco of Exhibits (Six Volumes). (Friedman, Stanley) (Entered: 07/25/2008)
73 REQUEST for Preliminary Injunction re: Request for Judicial Notice filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. Request set for hearing on 8/1/2008 at 02:00 PM before Judge Christina A. Snyder. (Friedman, Stanley) (Entered: 07/25/2008)
74 MEMORANDUM in Support Preliminary Injunction filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 07/25/2008)
75 DECLARATION of Pharmacies MOTION for Preliminary Injunction re: federal preempted 10% Medicaid payment cuts 10 filed by Petitioner Jason Young. (Carman, Lynn) (Entered: 07/26/2008)
79 ORDER by Judge Christina A. Snyder granting Application of Non−Resident Attorney Stacy Canan to appear on behalf of Amicus Curiae AARP 78 , and designating Barbara Jones as local counsel. (gk) (Entered: 07/27/2008)
82 ORDER GRANTING AARP'S EX PARTE APPLICATION TO FILE AMICUS CURIAE BRIEF by Judge Christina A. Snyder: Ordered that AARP's Application for Amicus Status 80 is GRANTED. The Court grants AARP amicus status. IT IS FURTHER ORDERED that AARP's amicus curiae proposed brief lodged with the Court on 7/24/2008 is deemed filed as of the date of this Order. (gk) (Entered: 07/28/2008)
83 Amicus Curiae Brief of AARP in Support of Petitioners filed by Amicus AARP. (gk) (Entered: 07/28/2008)
84 DECLARATIONS for Which Judicial Notice is Requested in Support of Preliminary Injunction 73 , Volume One, Declarations 1 through 11, filed by Petitioners Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Gerald Shapiro, Pharm.D., dba Uptown Pharmacy & Gift Shoppe, Sharon Steen, dba Central Pharmacy, Tran Pharmacy, Inc., dba Tran

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Pharmacy, Mark Beckwith, Margaret Dowling, and Jason Young. (gk) (Entered: 07/28/2008)
85 DECLARATIONS for Which Judicial Notice is Requested in Support of Preliminary Injunction 73 , Volume Two, Declarations 12 through 39, filed by Petitioners Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Gerald Shapiro, Pharm.D., dba Uptown Pharmacy & Gift Shoppe, Sharon Steen, dba Central Pharmacy, Tran Pharmacy, Inc., dba Tran Pharmacy, Mark Beckwith, Margaret Dowling, and Jason Young. (gk) (Entered: 07/28/2008)
86 DECLARATIONS for Which Judicial Notice is Requested in Support of Preliminary Injunction 73 , Volume Three, Declarations 40 through 50, filed by Petitioners Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Gerald Shapiro, Pharm.D., dba Uptown Pharmacy & Gift Shoppe, Sharon Steen, dba Central Pharmacy, Tran Pharmacy, Inc., dba Tran Pharmacy, Mark Beckwith, Margaret Dowling, and Jason Young. (gk) Modified on 7/28/2008 (gk). (Entered: 07/28/2008)
87 DECLARATIONS for Which Judicial Notice is Requested in Support of Preliminary Injunction 73 , Volume Four, Declarations 51 through 65, filed by Petitioners Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Gerald Shapiro, Pharm.D., dba Uptown Pharmacy & Gift Shoppe, Sharon Steen, dba Central Pharmacy, Tran Pharmacy, Inc., dba Tran Pharmacy, Mark Beckwith, Margaret Dowling, and Jason Young. (gk) (Entered: 07/28/2008)
88 DECLARATIONS for Which Judicial Notice is Requested in Support of Preliminary Injunction 73 , Volume Five, Declarations 66 through 68, filed by Petitioners Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Gerald Shapiro, Pharm.D., dba Uptown Pharmacy & Gift Shoppe, Sharon Steen, dba Central Pharmacy, Tran Pharmacy, Inc., dba Tran Pharmacy, Mark Beckwith, Margaret Dowling, and Jason Young. (gk) (Entered: 07/28/2008)
89 DECLARATIONS for Which Judicial Notice is Requested in Support of Preliminary Injunction 73 , Volume Six, Declarations 69 through 87, filed by Petitioners Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Gerald Shapiro, Pharm.D., dba Uptown Pharmacy & Gift Shoppe, Sharon Steen, dba Central Pharmacy, Tran Pharmacy, Inc., dba Tran Pharmacy, Mark Beckwith, Margaret Dowling, and Jason Young. (gk) (Entered: 07/28/2008)
76 DECLARATION of THU−HANG TRAN, Pharm.D. IN SUPPORT OF MOTION for Preliminary Injunction re: federal preempted 10% Medicaid payment cuts 10 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 07/26/2008)
77 NOTICE Table filed by PETITIONERS Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 07/26/2008)
93 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals, 48 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Independent Living Center of Southern California, Margaret Dowling, Jason Young, Sharon Steen, Gerald Shapiro, CCA # 08−56061. A hearing on appellants' motion for a preliminary injunction is set for 2:00 p.m. on August 1, 2008, in the Central District Court of California. In light of the pendency of that proceeding and our expectation that, pursuant to our order of July 11, 2008, the district court will act promptly on the question of whether a preliminary injuction shall issue. (cbr) (Entered: 07/30/2008)
90 NOTICE of Change of Attorney Information for attorney Jennifer M Kim counsel for Respondent California Department of Health Care Services. Phillip J. Matsumoto will no longer receive service of documents from the Clerks Office for the reason indicated

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in the G−06 Notice.Phillip J. Matsumoto is no longer attorney of record for the aforementioned party in this case for the reason indicated in the G−06 Notice. Filed by Defendant Department of Health Care Services (Kim, Jennifer) (Entered: 07/29/2008)
91 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents. The following error(s) was found: Memorandum exceeding 10 pages shall contain table of contents, Local Rule 11−8 RE: Petitioners' Supplemental Memorandum in Support of Preliminary Injunction filed 7/25/2008 74 . In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. (gk) (Entered: 07/29/2008)
92 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents. The following error(s) was found: Title page is missing. This filing appears to be the table of contents for the Petitioner's Supplemental Memorandum in Support of Preliminary Injunction filed 7/25/2008, document number 74 RE: Table re Petitioner's Supplemental Memorandum in Support of Preliminary Injunction filed 7/26/1008 77 . In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. (gk) (Entered: 07/29/2008)
94 OPPOSITION to REQUEST for Preliminary Injunction re: Request for Judicial Notice 73 filed by Respondent Sandra Shewry. (Attachments: # 1 RESPONDENT'S OBJECTIONS TO DECLARATIONS FILED UNDER JUDICIAL NOTICE IN SUPPORT OF MOTION FOR PRELIMINARY INJUNCTION, # 2 RESPONDENT'S OBJECTIONS TO PETITIONERS' DOCUMENTS IN SUPPORT OF MOTION FOR PRELIMINARY INJUNCTION, # 3 RESPONDENT'S OPPOSITION TO PETITIONERS' REQUEST FOR JUDICIAL NOTICE OF DECLARATIONS)(Snuggs, Carmen) (Entered: 07/30/2008)
95 MEMORANDUM in Opposition to Petitioners' Supplemental Motion for Preliminary Injunction filed by Respondent Sandra Shewry. (Snuggs, Carmen) (Entered: 07/30/2008)
96 NOTICE of Manual Filing filed by Respondent Sandra Shewry of DECLARATIONS IN SUPPORT OF RESPONDENT'S OPPOSITION TO SUPPLEMENTAL MOTION FOR PRELIMINARY INJUNCTION, VOLS. 1 AND 2. (Venegas, John) (Entered: 07/31/2008)
97 NOTICE of Decision: L.A. County Superior Court Order dated 07/29/08 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Friedman, Stanley) (Entered: 07/31/2008)
98 NOTICE OF MOTION AND MOTION to Strike Declaration of Gorospe filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. Motion set for hearing on 8/1/2008 at 02:00 PM before Judge Christina A. Snyder. (Friedman, Stanley) (Entered: 07/31/2008)
99 NOTICE OF MOTION AND MOTION to Strike Declaration of Hansen filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Sandra Shewry, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. Motion set for hearing on 8/1/2008 at 02:00 PM before Judge Christina A. Snyder. (Friedman, Stanley) (Entered: 07/31/2008)
100 REQUEST FOR JUDICIAL NOTICE filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Friedman, Stanley) (Entered: 07/31/2008)
101 REPLY support of motion REQUEST for Preliminary Injunction re: Request for Judicial Notice 73 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco,

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Respondent Sandra Shewry. (Friedman, Stanley) (Entered: 07/31/2008)
102 REQUEST FOR JUDICIAL NOTICE FOR AUGUST 1, 2008 HEARING filed by PETITIONERS Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 07/31/2008)
103 REQUEST FOR JUDICIAL NOTICE filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Friedman, Stanley) (Entered: 07/31/2008)
104 DECLARATIONS in Support of Respondent's Opposition to Supplemental Motion for Preliminary Injunction 73 , Volume 1 of 2 filed by Respondent Sandra Shewry. (gk) (Entered: 07/31/2008)
105 DECLARATIONS in Support of Respondent's Opposition to Supplemental Motion for Preliminary Injunction 73 , Volume 2 of 2 filed by Respondent Sandra Shewry. (gk) (Entered: 07/31/2008)
116 MINUTES OF Motion Hearing held before Judge Christina A. Snyder: Hearing held and counsel are present. The Court confers with counsel regarding the above−referenced motions and counsel argue. The declaration filed in State Court shall be deemed filed in this Court. The parties shall file a summary forthwith, as stated in Court and on the record. Defense shall lodge the transcripts from the Sacramento proceeding forthwith. The Court takes the above−referenced motions under submission and will issue a final order. 98 73 99 Court Reporter: Laura Elias. (pso) (Entered: 08/06/2008)
106 NOTICE Voluntary Dismissal, Without Prejudice, of Third Cause of Action and Fourth Cause of Action filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. Pursuant to Federal Rule of Civil Procedure 41(a)(1) (Friedman, Stanley) (Entered: 08/03/2008)
107 NOTICE of Filing of Summaries of Declarations filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Friedman, Stanley) (Entered: 08/04/2008)
108 NOTICE BY RESPONDENT OF LODGING DECLARATION OF KEVIN GOROSPE filed by Respondent Sandra Shewry. (Attachments: # 1 RESPONDENT'S NOTICE OF LODGING REPORTER'S TRANSCRIPT OF JULY 3, 2008)(Snuggs, Carmen) (Entered: 08/04/2008)
109 NOTICE OF RESPONDENT'S SUMMARY OF DECLARATIONS FILED BY RESPONDENT IN OPPOSITION TO PETITIONERS' MOTION FOR PRELIMINARY INJUNCTION filed by Respondent Sandra Shewry. (Snuggs, Carmen) (Entered: 08/04/2008)
110 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents. The following error(s) was found: Title page of this document lacks a description of the nature of the document, Local Rule 11−3.8(e) RE: Petitioner's "Request for Judicial Notice for August 1, 2008 Hearing" filed 7/31/2008 102 . In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. (gk) (Entered: 08/04/2008)
111 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents. The following error(s) was found: Incorrect event selected. Correct event is Requests − For Judicial Notice. Response in Opposition to Motion event utilized in docketing this filing RE: Respondent's Request for Judicial Notice in Support of Respondent's Opposition to Supplemental Motion for Preliminary Injunction filed 7/30/2008 94 . In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate.

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(gk) (Entered: 08/04/2008)
112 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents. The following error(s) was found: Title page lacks counsel's name, California bar number, office address, telephone and facsimile numbers and e−mail address, commencing with line 1 at the left margin, pursuant to Local Rule 11−3.8(a) RE: Notice of Manual Filing (G−92) 96 . In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. (gk) (Entered: 08/04/2008)
113 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents. The following error(s) was found: Hearing information not timely. Counsel set motion on calendar for 8/1/2008. Insufficient notice on motion, Local Rule 6−1 RE: Petitioners' Motion to Strike Statements of Gorospe filed 7/31/2008 98 . In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. (gk) (Entered: 08/04/2008)
114 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents. The following error(s) was found: Hearing information is not timely. Counsel set motion on calendar for 8/1/2008. Insufficient notice on motion, Local Rule 6−1 RE: Petitioners' Motion to Strike Statements of Hansen filed 7/31/2008 99 . In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. (gk) (Entered: 08/04/2008)
115 NOTICE of Objection to Late−Filed Declaration of Gorospe filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Friedman, Stanley) (Entered: 08/04/2008)
117 Objection to Reply Memorandum in Support of re: MOTION to Dismiss Petitioner's First Amended Petition for Writ of Mandamus 36 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Friedman, Stanley) (Entered: 08/13/2008)
118 STIPULATION to Continue Motion to Dismiss from August 18, 2008 Re: MOTION to Dismiss Petitioner's First Amended Petition for Writ of Mandamus 36 filed by respondent Sandra Shewry. (Attachments: # 1 Proposed Order Continuing Respondents' Motion to Dismiss)(Venegas, John) (Entered: 08/14/2008)
119 ORDER by Judge Christina A. Snyder CONTINUING RESPONDENTS MOTION TODISMISS, CURRENTLY SET FOR 8/18/08 to 9/15/2008 at 10:00 AM 118 . (pso) (Entered: 08/14/2008)
120 NOTICE PETITIONERS' REQUEST TO STRIKE FALSE STATEMENT OF EVIDENCE filed by PETITIONERS Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 08/15/2008)
121 ORDER GRANTING IN PART AND DENYING IN PART PETITIONERS MOTION FOR PRELIMINARYINJUNCTION by Judge Christina A. Snyder. Denying the parties' various motions to strike as moot. 98 73 99 120 . (rmo) (Entered: 08/19/2008)
122 NOTICE of Request that Petitioners Be Permitted an Opportunity to Respond to Any Motion for Stay Filed By Respondent filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Friedman, Stanley) (Entered: 08/20/2008)
123 EX PARTE APPLICATION for Order to Show Cause re: Contempt of Order of August 18, 2008 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of

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Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Attachments: # 1 Declaration, # 2 Declaration, # 3 Declaration)(Friedman, Stanley) (Entered: 08/22/2008)
124 MINUTES OF IN CHAMBERS ORDER by Judge Christina A. Snyder: The Court is in receipt of Petitioners Notice of, And Ex Parte Request, of Petitioners to Set Hearing Date for Respondent to Show Cause Why: She Should Not be Held in Contempt; A Special Master Should not be Appointed; and Judgment for Permanent Injunction Should Not be Issued; and supporting documents filed August 22, 2008. Any and all oppositions are due on or before August 26, 2008, pursuant to Judge Snyders procedures. The Court sets a hearing on petitioners ex parte application on August 28, 2008 at 2:00 P.M. 123 (cj) (Entered: 08/25/2008)
125 NOTICE OF MOTION AND MOTION to Stay pending Appeal Preliminary Injunction, Order 121 of August 18, 2008 filed by Respondent Sandra Shewry. Motion set for hearing on 9/15/2008 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 Declaration of Ana Matosantos in Support of Motion, # 2 Declaration of Dennis Dworman in Support of Motion, # 3 Declaration of Stan Rosentstein in Support of Motion)(Ugaz, Sara) (Entered: 08/25/2008)
126 Respondent's OPPOSITION in Opposition re: EX PARTE APPLICATION for Order to Show Cause re: Contempt of Order of August 18, 2008 123 filed by Respondent Sandra Shewry. (Attachments: # 1 Declaration of Stan Rosenstein in Support of Opposition, # 2 Declaration of Dennis Dworman in Support of Opposition, # 3 Declaration of John F. Venegas in Support of Opposition)(Ugaz, Sara) (Entered: 08/26/2008)
127 NOTICE OF APPEAL to the 9th CCA filed by RespondentSandra Shewry. Appeal of Preliminary Injunction, Order 121 FEE BILLED. (Ugaz, Sara) Modified on 8/27/2008 (dmap). (Entered: 08/26/2008)
128 NOTICE OF ERRATA filed by Respondent Sandra Shewry. correcting Objection/Opposition (Motion related), Objection/Opposition (Motion related) 126 (Ugaz, Sara) (Entered: 08/26/2008)
129 Respondent's OPPOSITION to Ex Parte in Opposition re: EX PARTE APPLICATION for Order to Show Cause re: Contempt of Order of August 18, 2008 123 filed by Respondent Sandra Shewry. (Attachments: # 1 Declaration of Stan Rosenstein in Support of Opposition to Ex Parte, # 2 Declaration of Dennis Dworman in Support of Opposition to Ex Parte, # 3 Declaration of John F. Venegas in Support of Opposition to Ex Parte)(Ugaz, Sara) (Entered: 08/26/2008)
130 FILING FEE LETTER issued as to Respondent Sandra Shewry, re Notice of Appeal to 9th Circuit Court of Appeals 127 . (dmap) (Entered: 08/27/2008)
Transmission of Notice of Appeal and Docket Sheet to US Court of Appeals re: Notice of Appeal to 9th Circuit Court of Appeals 127 . (dmap) (Entered: 08/27/2008)
131 REPLY IN SUPPORT OF EX PARTE APPLICATION for Order to Show Cause re: Contempt of Order of August 18, 2008 123 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Friedman, Stanley) (Entered: 08/27/2008)
132 NOTICE OF MOTION AND First MOTION to Alter Judgment re Preliminary Injunction, Order 121 . filed by Respondent SANDRA SHEWRY Sandra Shewry. Motion set for hearing on 9/22/2008 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 RESPONDENTS MOTION TO ALTER OR AMEND, ETC., # 2 Declaration OF JOHN VENEGAS PURSUANT TO LOCAL RULE 7−3 IN SUPPORT, # 3 RESPONDENT'S REQUEST FOR JUDICIAL NOTICE)(Snuggs, Carmen) (Entered: 08/27/2008)
135 ORDER by Judge Christina A. Snyder, Modifying Preliminary Injunction. 121 132 . (rmo) ** ORDER VACATED PURSUANT TO CIVIL MINUTES OF 1/22/2010 323 ** Modified on 1/25/2010 (gk). (Entered: 08/29/2008)
133 APPEAL FEE PAID: re Notice of Appeal to 9th Circuit Court of Appeals 127 as to Respondent Sandra Shewry; Receipt Number: 110745 in the amount of $455. (car)

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(Entered: 08/28/2008)
134 MINUTES OF Motion Hearing held before Judge Christina A. Snyder: Status Conference set for 9/5/2008 at 11:00 AM before Judge Christina A. Snyder. The Court advances the Hearing on Respondent's Motion to 9/15/2008 at 10:00 AM before Judge Christina A. Snyder.Court Reporter: Laura Elias. (rmo) (Entered: 08/29/2008)
136 NOTIFICATION by Circuit Court of Appellate Docket Number 08−56422, 9th CCA regarding Notice of Appeal to 9th Circuit Court of Appeals 127 as to Petitioner Sandra Shewry. (cbr) (Entered: 08/29/2008)
151 MOTION to Intervene Pursuant to Federal Rule of Civil Procedure 24 and for Leave to File Brief in Opposition to Motion to Alter or Amend filed by Proposed Petitioners in Intervention Sacramento Family Medical Clinics, Inc., Theodore M. Mazer, M.D., Eastern Plumas Health Care District, Pioneers Memorial Health Care Distirct, Kaweah Delta Health Care District, Ronald B. Mead, D.D.S. and Acacia Adult Day Services. Motion set for hearing on 9/22/2008 at 10:00 AM before Judge Christina A. Snyder. (gk) (Entered: 09/09/2008)
152 MEMORANDUM of Points and Authorities in Support of Motion to Intervene Pursuant to Federal Rule of Civil Procedure 24 151 filed by Proposed Intervenors Sacramento Family Medical Clinics, Inc., Theodore M. Mazer, M.D., Eastern Plumas Health Care District, Pioneers Memorial Health Care District, Kaweah Delta Health Care District, Ronald B. Mead, D.D.S. and Acacia Adult Day Services. (gk) (Entered: 09/09/2008)
153 DECLARATION of Byron J. Gross in Support of Motion to Intervene MOTION Pursuant to Federal Rule of Civil Procedure 24 151 filed by Proposed Intervenors Sacramento Family Medical Clinics, Inc., Theodore M. Mazer, M.D., Eastern Plumas Health Care District, Pioneers Memorial Health Care District, Kaweah Delta Health Care District, Ronald B. Mead, D.D.S. and Acacia Adult Day Services. (gk) (Entered: 09/09/2008)
137 NOTICE of Petitioners' Objections to Rulings in the August 28, 2008 Contempt Proceeding; Request for Rulings in the September 5, 2008 Hearing; and Renewal of Application for Finding of Contempt, and for Sanctions filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Friedman, Stanley) (Entered: 09/02/2008)
138 Opposition re: MOTION to Stay pending Appeal Preliminary Injunction, Order 121 of August 18, 2008 MOTION to Stay pending Appeal Preliminary Injunction, Order 121 of August 18, 2008 125 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Friedman, Stanley) (Entered: 09/02/2008)
139 NOTICE of Petitioners' Supplemental Objections to Failure of the Court to Enforce All of the First Clause of the Ordering Paragraph of the August 18, 2008 Preliminary Injunction filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Friedman, Stanley) (Entered: 09/03/2008)
140 EX PARTE APPLICATION for Order for Cross−Examination of Declarants Filed By the Respondent in this Case; or in the Alternative, for the Court to Ask These Questions of the DHCS Officer Who Reports to the Court on September 5, 2008 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Attachments: # 1 Proposed Order)(Friedman, Stanley) (Entered: 09/03/2008)
141 OPPOSITION in opposition to re: EX PARTE APPLICATION for Order for Cross−Examination of Declarants Filed By the Respondent in this Case; or in the Alternative, for the Court to Ask These Questions of the DHCS Officer Who Reports to the Court on September 5, 2008 140 filed by Respondent Sandra Shewry. (Ugaz,

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Sara) (Entered: 09/04/2008)
142 NOTICE PETITIONERS' OBJECTIONS TO DELETION OF "PHARMACIES" FROM THE INJUNCTION filed by PETITIONERS Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Sandra Shewry, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. WITH QUIDER DECLARATIONui (Attachments: # 1 Declaration)(Carman, Lynn) (Entered: 09/04/2008)
143 STATUS REPORT RESPONDENT'S REPORT OF COMPLIANCE WITH AUGUST 18, 2008 PRELIMINARY INJUNCTION ORDER filed by Respondent Sandra Shewry. (Attachments: # 1 Declaration OF DENNIS DWORMAN RE RESPONDENT'S COMPLIANCE WITH AUGUST 18, 2008 ORDER, # 2 Declaration OF MICHAEL KAUFMANN RE RESPONDENT'S COMPLIANCE WITH AUGUST 18, 2008 ORDER, # 3 Declaration OF STAN ROSENSTEIN RE RESPONDENT'S COMPLIANCE WITH AUGUST 18, 2008 ORDER)(Snuggs, Carmen) (Entered: 09/04/2008)
144 DECLARATION of Andrew Dhadwal re Non−Service of Motion to Intervene filed by Respondent Sandra Shewry. (Kim, Jennifer) (Entered: 09/04/2008)
145 NOTICE DECLARATION OF GEORGE PENNEBAKER filed by PETITIONERS Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Sandra Shewry, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. FOR SEPT. 5, 2008 HEARING (Attachments: # 1 Declaration)(Carman, Lynn) (Entered: 09/04/2008)
146 NOTICE OF EXHIBITS A, B, AND C TO PENNEBAKER DECLARATION filed by PETITIONERS Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Attachments: # 1 Exhibit, # 2 Exhibit)(Carman, Lynn) (Entered: 09/04/2008)
154 EX PARTE APPLICATION for Order Shortening Time for Scheduling of Motion to Intervene and for Leave to File Brief filed by Proposed Intervenors Sacramento Family Medical Clinics, Inc., Theodore M. Mazer, M.D., Eastern Plumas Health Care District, Pioneers Memorial Health Care District, Kaweah Delta Health Care District, Ronald B. Mead, D.D.S. and Acacia Adult Day Services.(gk) (Entered: 09/09/2008)
155 MEMORANDUM of Points and Authorities in Support of Ex Parte Application for Order Shortening Time for Scheduling of Motion to Intervene and for Leave to File Brief 154 filed by Proposed Intervenors Sacramento Family Medical Clinics, Inc., Theodore M. Mazer, M.D., Eastern Plumas Health Care District, Pioneers Memorial Health Care District, Kaweah Delta Health Care District, Ronald B. Mead, D.D.S. and Acacia Adult Day Services. (gk) (Entered: 09/09/2008)
156 DECLARATION of Byron J. Gross Re Ex Parte Notice 154 filed by Proposed Intervenors Sacramento Family Medical Clinics, Inc., Theodore M. Mazer, M.D., Eastern Plumas Health Care District, Pioneers Memorial Health Care District, Kaweah Delta Health Care District, Ronald B. Mead, D.D.S. and Acacia Adult Day Services. (gk) (Entered: 09/09/2008)
157 PROOF OF SERVICE RE EX PARTE DOCUMENTS filed by Proposed Intervenors Sacramento Family Medical Clinics, Inc., Theodore M. Mazer, M.D., Eastern Plumas Health Care District, Pioneers Memorial Health Care District, Kaweah Delta Health Care District, Ronald B. Mead, D.D.S. and Acacia Adult Day Services of Ex Parte Application for Order Shortening Time for Scheduling of Motion to Intervene 154 , Memorandum of Points and Authorities in Support of Ex Parte Application 155 , Declaration of Byron J. Gross 156 , and Proposed Order, served on 9/4/2008. (gk) (Entered: 09/09/2008)
158 PROOF OF SERVICE filed by Proposed Intervenors Sacramento Family Medical Clinics, Inc., Theodore M. Mazer, M.D., Eastern Plumas Health Care District, Pioneers Memorial Health Care District, Kaweah Delta Health Care District, Ronald B. Mead, D.D.S. and Acacia Adult Day Services re Motion to Intervene Pursuant to Federal Rule of Civil Procedure 24 and for Leave to File Brief in Opposition to Motion to Alter or Amend 151 , Memorandum of Points and Authorities in Support of Motion

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152 , Declaration of Byron J. Gross 153 , Certificate and Notice of Interested Parties, and Proposed Complaint in Intervention, served on 9/4/2008. (gk) (Entered: 09/09/2008)
162 MINUTES OF Status Conference held before Judge Christina A. Snyder re: STATES COMPLIANCE WITH THE AUGUST 18, 2008 ORDER. The Court advances the hearing on proposed interveners motion to intervene pursuant to FRCP 24 and for leave to file brief in opposition to motion to alter or amend to September 15, 2008 at 10:00 A.M. If the Court determines the needfor further briefing by the intervener, the Court will advise counsel and reset the hearing on the proposed interveners motion. The Court is in receipt of the Ex Parte Application filed September 4, 2008. Based on the Courts advancement of the proposed interveners motion and deadline to file an opposition, the ex parte application is hereby MOOT. Refer to document for details. 151 , 154 Court Reporter: Laura Elias. (pso) (Entered: 09/10/2008)
147 Opposition to re: First MOTION to Alter Judgment re Preliminary Injunction, Order 121 .First MOTION to Alter Judgment re Preliminary Injunction, Order 121 . 132 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Attachments: # 1 Declaration Cronin, # 2 Declaration Shapiro, # 3 Declaration Missaelides)(Friedman, Stanley) (Entered: 09/07/2008)
148 NOTICE TABLE OF CONTENTS filed by PETITIONERS Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 09/08/2008)
149 NOTICE TABLE OF CONTENTS filed by PETITIONERS Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. WITH TABLE OF AUTHORITIES (Carman, Lynn) (Entered: 09/08/2008)
150 DECLARATION of Gerald Shapiro in opposition to First MOTION to Alter Judgment re Preliminary Injunction, Order 121 .First MOTION to Alter Judgment re Preliminary Injunction, Order 121 . 132 (prior filing inadvertently omitted page one) filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Friedman, Stanley) (Entered: 09/08/2008)
159 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents. The following error(s) was found: Incorrect event selected. Notice (other) event utilized in docketing this filing. Counsel attempts to address several matters with this one filing. The Notice (other) event does not create the appropriate links and does not create a pending matter for review. These papers may be filed with three separate events: (1) Miscellaneous Filings (non−motion) − Objections (non−motion); (2) Requests − Ruling; and (3) Applications − (a) Contempt, (b) Sanctions. Please re−file documents, and notice the Renewal of Application for Finding of Contempt and for Sanctions for a date on the judge's motion calendar RE: Petitioners' Objections to Rulings in the 8/28/2008 Contempt Proceeding; Request for Rulings in the 9/5/2008 Hearing; and Renewal of Application for Fiding of Contempt, and for Sanctions filed 9/2/2008 137 . In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. (gk) (Entered: 09/09/2008)
160 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents. The following error(s) was found: Notice to other parties of ex parte application lacking, Local Rule 7−19.1 RE: Petitioners' Ex Parte Notice of Request to Cross−Examine Declarants Filed By the Respondent in this Case; or in the Alternative, for the Court to Ask These Questions of the DHCS Officer Who Reports to the Court filed 9/3/2008 140 . In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. (gk) (Entered: 09/09/2008)

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161 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents. The following error(s) was found: Incorrect Event Selected 142 . In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. (rmo) (Entered: 09/10/2008)
163 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents. The following error(s) was found: Incorrect event selected. Correct event is Declaration (Motion related). Notice (other) event utilized in docketing this filing RE: Declaration of George Pennebaker in Support of Petitioners' Requests for Snactions, and Further Orders, Against Respondent filed 9/4/2008 145 . In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. (gk) (Entered: 09/10/2008)
164 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents. The following error(s) was found: Title page is missing. This document could have been submitted as a separate PDF attachment to the Declaration of George Pennebaker, document number 145 RE: Notice of Exhibits A, B, and C to Declaration of George Pennebaker filed 9/4/2008 146 . In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. (gk) (Entered: 09/10/2008)
165 REPLY to Petitioners' Opposition to First MOTION to Alter Judgment re Preliminary Injunction, Order 121 .First MOTION to Alter Judgment re Preliminary Injunction, Order 121 . 132 filed by Respondent Sandra Shewry. (Snuggs, Carmen) (Entered: 09/11/2008)
166 OBJECTIONS to Objection/Opposition (Motion related), Objection/Opposition (Motion related), Objection/Opposition (Motion related) 147 Declarations filed by Petitioners in Oppotion to Motion to Amend, Alter filed by Respondent Sandra Shewry. (Snuggs, Carmen) (Entered: 09/11/2008)
167 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents. The following error(s) was found: Brief exceeds 25 pages, Local Rule 11−6; brief exceeding 10 pages shall contain table of contents, Local Rule 11−8 RE: Petitioners' Opposition to Motion to Alter, Amend, and Clarify Preliminary Injunction filed 9/7/2008 147 . In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. (gk) (Entered: 09/11/2008)
168 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents. The following error(s) was found: Title page is missing. This submission is a singular page with the words, "Table of Contents (Cont.)" only RE: "Table of Contents" filed 9/8/2008 148 . In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. (gk) (Entered: 09/11/2008)
169 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents. The following error(s) was found: Title page is missing. It is unclear what filing relates to this two−page "Table of Contents" RE: "Table of Contents" filed 9/8/2008 149 . In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. (gk) (Entered: 09/11/2008)
170 Objection to False Statements of the Record By Respondent, and Request to Strike (1) the False Statements and (2) the Motion to Amend re: First MOTION to Alter Judgment re Preliminary Injunction, Order 121 .First MOTION to Alter Judgment re Preliminary Injunction, Order 121 . 132 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Friedman, Stanley) (Entered: 09/12/2008)
171 Notice of Additional Cases to Be Cited at Oral Argument re: First MOTION to Alter Judgment re Preliminary Injunction, Order 121 .First MOTION to Alter Judgment re Preliminary Injunction, Order 121 . 132 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray

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Panthers of San Francisco. (Friedman, Stanley) (Entered: 09/12/2008)
172 MEMORANDUM in Opposition to Motion to Intervene filed by Respondent Sandra Shewry. (Kim, Jennifer) (Entered: 09/12/2008)
173 STATUS REPORT RESPONDENT'S SUPPLEMENTAL REPORT OF COMPLIANCE WITH AUGUST 18, 2008 PRELIMINARY INJUNCTION ORDER filed by Respondent Sandra Shewry. (Attachments: # 1 Supplemental Declaration of Dennis Dworman re Respondent's Compliance with August 18, 2008 Order, # 2 Supplemental Declaration of Michael Kaufmann re Respondent's Compliance with August 18, 2008 Order)(Snuggs, Carmen) (Entered: 09/12/2008)
174 MINUTES OF Motion Hearing held before Judge Christina A. Snyder RE: Proposed Intervenors Motion to Intervene 151 : A hearing was held on September 15, 2008. After carefully considering the arguments set forth by the parties, the Court finds and concludes as follows. The Court GRANTS the motion to intervene as to proposed intervenors Sacramento Family Medical Clinics, Inc.; Theodore M. Mazer, M.D.; Ronald B. Mead, D.D.S.; and Acacia Adult Day Services. The Court DENIES the motion to intervene as to proposed intervenors Eastern Plumas Health Care District, Pioneers Memorial Health Care District, and Kaweah Delta Health Care District. Refer to document for details of the Order. Court Reporter: Laura Elias. (pso) (Entered: 09/17/2008)
175 MINUTES OF Motion Hearing held before Judge Christina A. Snyder RE: Respondents Motion to Alter or Amend, and Clarify Order Granting in Part Petitioners Motion for Preliminary Injunction 132 . The Court denies respondents request to clarify, alter, or amend the order with regard to clinics, as the record does contain evidence of the effect of the ten percent rate reduction for clinics, and the term clinic is not ambiguous. Refer to document for details of the Order. Ojbections 166 and 170 finding as moot. Court Reporter: Laura Elias. (pso) (Entered: 09/17/2008)
176 MINUTES OF Motion Hearing held before Judge Christina A. Snyder RE: Respondents Motion to Stay the Courts August 18, 2008 Order Pending Appeal 125 . A hearing was held on September 15, 2008. After carefully considering the arguments set forth by the parties, the Court finds and concludes as follows. The Court DENIES respondents motion to stay the Courts August 18, 2008 order pending appeal. Court Reporter: Laura Elias. (pso) (Entered: 09/17/2008)
177 NOTICE OF PRELIMINARY INJUCNTION APPEAL to the 9th CCA filed by petitioners Tran Pharmacy, Inc., Jason Young. Appeal of Order 135 , Preliminary Injunction, Order 121 Filed On: 08/18/2008; Entered On: 08/19/2008; Filing fee $ 455, PAID; RECEIPT NUMBER: 111271. cc: Lynn S. Carman; Edmund G. Brown, Jr. (dmap) (Entered: 09/18/2008)
178 Civil Appeals Docketing Statement received from petitioner Tran Pharmacy, Inc., Jason Young forwarded to 9th CCA. RE: Notice of Appeal to 9th Circuit Court of Appeals, 177 . (dmap) (Entered: 09/18/2008)
180 NOTICE OF PRELIMINIARY INJUNCTION APPEAL to the 9th CCA filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. Appeal of Order 135 , Filed On: 8/27/08; Entered On: 8/29/08; Preliminary Injunction, Order 121 Filed On: 8/18/08; Entered On: 8/19/08; Filing fee $455, Paid. receipt number 111270. cc: Lynn S. Carman; Edmund G. Brown, Jr. (lr) (Entered: 09/18/2008)
181 Civil Appeals Docketing Statement received from Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco forwarded to 9th CCA. RE: Notice of Appeal to 9th Circuit Court of Appeals, 180 (lr) (Entered: 09/18/2008)
368 COMPLAINT IN INTERVENTION against Respondent Sandra Shewry, Director of the Department of Health Care Services of the State of California, filed by Intervenors Sacramento Family Medical Clinics, Inc., Theodore M. Mazer, M.D., Eastern Plumas Health Care District, Pioneers Memorial Health Care District, Kaweah Delta Health Care District, Ronald B. Mead, D.D.S., and Acacia Adult Day Services. (gk) (Entered:

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05/25/2010)
183 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals, 48 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Independent Living Center of Southern California, Margaret Dowling, Jason Young, Sharon Steen, Gerald Shapiro, CCA # 08−56061. We hereby recall the mandate in this case so that we may file an opinion further describing our order of July 11, 2008,and address any additional petitions for panel rehearing or rehearing en banc. (cbr) (Entered: 09/19/2008)
179 NOTICE OF APPEAL NOTIFICATION form issued regarding Notice of Appeal to 9th Circuit Court of Appeals, 177 as to Petitioner Tran Pharmacy, Inc., Jason Young. (lr) (Additional attachment(s) added on 9/18/2008: # 1 A 8 Form) (lr). (Entered: 09/18/2008)
182 NOTICE OF APPEAL NOTIFICATION form issued regarding Notice of Appeal to 9th Circuit Court of Appeals, 180 as to Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (lr) (Entered: 09/18/2008)
Transmission of Notice of Appeal and Docket Sheet to US Court of Appeals re: Notice of Appeal to 9th Circuit Court of Appeals, 180 (lr) (Entered: 09/18/2008)
184 NOTIFICATION by Circuit Court of Appellate Docket Number 08−56551, 9th CCA regarding Notice of Appeal to 9th Circuit Court of Appeals, 177 as to Petitioners Tran Pharmacy, Inc., Jason Young. (cbr) (Entered: 09/19/2008)
185 NOTIFICATION by Circuit Court of Appellate Docket Number 08−56554, 9th CCA regarding Notice of Appeal to 9th Circuit Court of Appeals, 180 as to Petitioner Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (cbr) (Entered: 09/19/2008)
186 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals, 177 filed by Jason Young, Tran Pharmacy, Inc., Notice of Appeal to 9th Circuit Court of Appeals 127 filed by Sandra Shewry, CCA # 08−57422, 08−56551 and 08−56554. Appeal No 08−56422, whichseeks review of the district court's August 18, 2008 order, was filed August 26,2008 and is a preliminary injunction appeal. Appeal No. 08−56551, which seeks review of the district court's August 18, 2008 order, was filed September 15, 2008 and is a preliminay injunction appeal. Appeal No.08−56554, which seeks review of the district court's August 27, 2008 order, was filed September 15, 2008 and is a preliminary injunction appeal. Accordingly, Ninth Circuit Rule 3−3 shall apply to these appeals. The court's records reflect that the notice of appeal in appeal No. 08−56422 was filed during the pendency of a timely filed motion listed in Federal Rule of Appellate Procedure 4(a)(4). The notice of appeal was ineffective until entry of the order disposing of the last such motion outstanding. The record reflects that the district court denied the last post−judgment motion on September 15, 2008; therefore, the notice of appeal in appeal No. 08−56422 became effective on that date. To appeal the district court's ruling on the post−judgment motion, appellants must file an amended notice of appeal within the time prescribed by FRAP 4. The record reflects that the district court modifiedthe injunction on August 27, 2008. To appeal the district court's order modifying the injunction, appellants in appeal No. 08−56422 and 08−56551 must file notices of appeal seeking review of that order. Intervenors − Appellees' request for judicial notice filed in appeal No. 08−56422 is contstrued as a notice of intervenors − appellees' intervenor status in district court. Because the district court granted intervenors − appellees leave to intervene in the district court action, intervenors − appellees are parties here. Appellant's "emergency motion for an order denying intervening parties permission to file a brief" and petitioners − appellees' request that internenors − appellees be designated amicus curiae, both filed in appeal No. 08−56422, are denied as moot. Petitioner − Appellees' request that a prior panel hear appeal No. 08−56422 will be addressed by separate order. If they have not already done so, within 7 calendar days after the filing date of this order, the parties shall make arrangements to obtain form the court reporter an official transcript of proceedings in the district court that will be included in the records on appeal. The briefing schedule established previously in appeal No. 08−56422 is vacated. The

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following briefing schedule shall govern all three appeals: The opening briefs are due not later than October 14, 2008; the answering briefs are due November 12, 2008 or 28 days after service of the opening briefs, whichever is earlier; and the optional reply briefs are due within 14 days after service of the answering briefs. If appellants fail to file timely the opening briefs, the appeals will be dismissed automatically by the Clerk for failure to prosecute. These appeals shall be calendared together. (dmap) (Entered: 09/25/2008)
188 MOTION to Intervene Pursuant to Federal Rule of Civil Procedure 24 filed by Proposed Intervenors California Association of Medical Product Suppliers, Catholic Healthcare West, Sharp Memorial Hospital, Grossmont Hospital Corporation, Sharp Chula Vista Medical Center, and Sharp Coronado Hospital and Healthcare Center. Motion set for hearing on 10/20/2008 at 10:00 AM before Judge Christina A. Snyder. (gk) (Entered: 10/02/2008)
189 MEMORANDUM of Points and Authorities in Support of Motion to Intervene Pursuant to Federal Rule of Civil Procedure 24 188 filed by Proposed Intervenors California Association of Medical Product Suppliers, Catholic Healthcare West, Sharp Memorial Hospital, Grossmont Hospital Corporation, Sharp Chula Vista Medical Center, and Sharp Coronado Hospital and Healthcare Center. (gk) (Entered: 10/02/2008)
190 CERTIFICATE AND NOTICE of Interested Parties filed by Proposed Intervenors California Association of Medical Product Suppliers, Catholic Healthcare West, Sharp Memorial Hospital, Grossmont Hospital Corporation, Sharp Chula Vista Medical Center, and Sharp Coronado Hospital and Healthcare Center. (gk) (Entered: 10/02/2008)
187 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals,, 180 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Gray Panthers of Sacramento, Independent Living Center of Southern California, Margaret Dowling, Jason Young, Sharon Steen, Gerald Shapiro, Notice of Appeal to 9th Circuit Court of Appeals, 48 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Independent Living Center of Southern California, Margaret Dowling, Jason Young, Sharon Steen, Gerald Shapiro, Notice of Appeal to 9th Circuit Court of Appeals, 177 filed by Tran Pharmacy, Inc., Jason Young, Notice of Appeal to 9th Circuit Court of Appeals 127 filed by Sandra Shewry, CCA # 08−56061, 08−56422, 08−56551, 08−56554. Pursuant to the Court's rules, appeal Nos. 08−56422, 08−56551, and 08−56554 will be heard by the panel that decided appeal No. 08−56061. Petitioners−appellants' motion to consolidate appeal Nos. 08−56422, 08−56551, and 08−56554 with appeal No. 08−50561 is denied. Petitioners−appellants' motion for injunctive relief and for costs will be addressed by separate order. Petitioners−appellants' motion to assign preliminary injunction appeal Nos. 08−56422, 08−56551, and 08−56554 to the panel that decided the merits of appeal No. 08−56061 is denied as moot. The briefing schedule established previously in preliminary injunction appeals Nos. 08−56422, 08−56551, and 08−56554 shall remain in effect. Order received in this district on 9/30/08. (lr) (Entered: 10/01/2008)
191 FIRST AMENDED NOTICE OF APPEAL to 9th CIRCUIT filed by Respondent Sandra Shewry. Amending Notice of Appeal to 9th Circuit Court of Appeals 127 Filed On: 08/26/08; Entered On: 08/26/08; (Kim, Jennifer) (Entered: 10/02/2008)
192 Civil Appeals Docketing Statement received from forwarded to 9th CCA. RE: Notice of Appeal to 9th Circuit Court of Appeals 127 and Amended Notice of Preliminary Injunction Appeal 191 (Kim, Jennifer) (Entered: 10/02/2008)
193 MEMORANDUM in Opposition to MOTION to Intervene 188 filed by Respondent Sandra Shewry. (Kim, Jennifer) (Entered: 10/06/2008)
199 REPLY to Respondents' Opposition to Motion to Intervene 188 filed by Proposed Intervenor Parties California Association of Medical Product Suppliers, Catholic Healthcare West, Sharp Memorial Hospital, Grossmont Hospital Corporation, Sharp Chula Vista Medical Center, and Sharp Coronado Hospital and Healthcare Center. (gk) (Entered: 10/15/2008)
194 NOTICE OF MOTION AND MOTION for Leave to LEAVE TO INTERVENE filed by PLAINTIFF INTERVENOR California Medical Transportation Association.

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Motion set for hearing on 11/3/2008 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 PROPOSED INTERVENTION COMPLAINT, # 2 PROPOSED ORDER)(Carman, Lynn) (Entered: 10/13/2008)
195 MEMORANDUM in Support of MOTION for Leave to LEAVE TO INTERVENE 194 filed by Movant California Medical Transportation Association. (Carman, Lynn) (Entered: 10/13/2008)
196 NOTICE OF MOTION AND MOTION for Leave to LEAVE TO INTERVENE filed by INTERVENOR California Association for Health Services at Home. Motion set for hearing on 11/10/2008 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 PROPOSED COMPLAINT IN INTERVENTION, # 2 PROPOSED ORDER)(Carman, Lynn) (Entered: 10/14/2008)
197 MEMORANDUM in Support of MOTION for Leave to LEAVE TO INTERVENE 196 filed by Movant California Association for Health Services at Home. (Carman, Lynn) (Entered: 10/14/2008)
198 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals, 48 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Independent Living Center of Southern California, Margaret Dowling, Jason Young, Sharon Steen, Gerald Shapiro, CCA # 08−56061. Appellants' request for injunctive relief and costs included in the further emergency motion filed on September 24, 2008 is denied. (cbr) (Entered: 10/14/2008)
200 AMENDED NOTICE OF APPEAL to the 9th CCA Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Friedman, Stanley) Modified on 11/19/2008 (lr). (Entered: 10/16/2008)
201 NOTICE OF APPEAL NOTIFICATION form issued regarding Notice of Appeal to 9th Circuit Court of Appeals, 200 as to Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (lr) (Entered: 10/17/2008)
202 FILING FEE LETTER issued as to Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco, re a $5.00 filing fee and a $450.00 docket fee are required to be paid to the Clerk, U.S. District Court. re Notice of Appeal to 9th Circuit Court of Appeals, 200 (lr) (Entered: 10/17/2008)
Transmission of Notice of Appeal and Docket Sheet to US Court of Appeals re: Notice of Appeal to 9th Circuit Court of Appeals, 200 (lr) (Entered: 10/17/2008)
203 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents. The following error(s) was found: Immediately below the docket number shall appear a concise description of the nature of the document, Local Rule 11−3.8(e). RE: MOTION for Leave to LEAVE TO INTERVENE 194 . In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. (rmo) (Entered: 10/17/2008)
204 MEMORANDUM in Opposition to MOTION for Leave to LEAVE TO INTERVENE 194 filed by Respondent Sandra Shewry. (Kim, Jennifer) (Entered: 10/20/2008)
205 NOTICE OF MOTION AND MOTION to Enforce AUG. 18, 2008 INJUNCTION AS AMENDED filed by PETITIONERS Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. Motion set for hearing on 11/10/2008 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 Request Judicial Notice, # 2 Proposed Order)(Carman, Lynn) (Entered: 10/20/2008)
206 MEMORANDUM in Support of MOTION to Enforce AUG. 18, 2008 INJUNCTION AS AMENDED 205 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark

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Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Attachments: # 1 EXHIBIT A − AB 1183)(Carman, Lynn) (Entered: 10/20/2008)
207 MINUTES of Motion Hearing held before Judge Christina A. Snyder re: Proposed Intervenors' Motion to Intervene 188 . For the foregoing reasons, the Court DENIES proposed intervenors' motion to intervene without prejudice. The Court GRANTS proposed intervenors leave toparticipate in the instant action as amicus curiae.Court Reporter: Margaret Babykin. (kpa) (Entered: 10/21/2008)
209 APPEAL FEE PAID: re Notice of Appeal to 9th Circuit Court of Appeals, 200 as to Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco; Receipt Number: 112330, Paid in the amount of $455. (lr) (Entered: 10/23/2008)
210 MINUTES of Status Conference held before Judge Christina A. Snyder. Hearing held on Intervenors' Motion to Intervene Pursuant to FRCP 24 and plaintiff's counsel requested a conference re: scheduling and briefing on CAHSAH's Motion for Leave to Intervene 196 . Due to plaintiffs' counsel's unavailability, Court vacates the November 10, 2008 hearing on CAHSAHs motion and upon completion of the briefing, the Court will take CAHSAHs motion under submission. Oppositions shall be filed on or before October 27, 2008; and Replies shall be filed on or before November 3, 2008.Court Reporter: Margaret Babykin. (kpa) (Entered: 10/23/2008)
208 Amendment to MOTION to Enforce AUG. 18, 2008 INJUNCTION AS AMENDED 205 Amending Date of Hearing to November 17, 2008 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Friedman, Stanley) (Entered: 10/23/2008)
211 STIPULATION to Continue Hearing on Petitioners' Motion to enforce the August 18, 2008 Injunction as Amended from November 10, 2008 to November 17, 2008 Re: Memorandum in Support of Motion, 206 , Amendment (Motion related), Amendment (Motion related) 208 , MOTION to Enforce AUG. 18, 2008 INJUNCTION AS AMENDED 205 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Attachments: # 1 Proposed Order)(Friedman, Stanley) (Entered: 10/26/2008)
212 NOTICE OF WITHDRAWAL OF MOTION TO INTERVENE, WITHOUT PREJUDICE, BY CALIFORNIA MEDICAL TRANSPORTATION ASSOCIATION, INC. re MOTION for Leave to LEAVE TO INTERVENE 194 filed by Intervenor California Medical Transportation Association, Inc.. (Friedman, Stanley) (Entered: 10/26/2008)
213 NOTICE OF WITHDRAWAL OF MOTION TO INTERVENE, WITHOUT PREJUDICE, BY CALIFORNIA ASSOCIATION FOR HEALTH SERVICES AT HOME re MOTION for Leave to LEAVE TO INTERVENE 196 filed by Intervenor California Association for Health Services at Home. (Friedman, Stanley) (Entered: 10/26/2008)
219 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents re: Notice of Withdrawal of Motion to Intervene 213 . The following error(s) was found: Incorrect event selected. Motion Related Document event utilized in docketing this filing. Correct event is Notices − Withdrawal (Document or Motion). Clerk has withdrawn the motion 196 from the judge's pending motion calendar, and has terminated the Proposed Intervenor. In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. (kpa) (Entered: 10/29/2008)
220 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents re: Notice of Withdrawal of Motion to Intervene, Without Prejudice by CA Medical Transporation Association 212 . The following error(s) was found: Incorrect event selected. Motion Related Document event utilized in docketing this filing. Correct event is Notices − Withdrawal (Document or Motion). Clerk has withdrawn the

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motion 194 from the judge's pending motion calendar, and has terminated the Proposed Intervenor. In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. (kpa) (Entered: 10/29/2008)
214 NOTICE of Related Case(s) filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, California Medical Transportation Association, Inc., California Association for Health Services at Home, Gray Panthers of San Francisco. Related Case(s): CV 08−07045−PA (AGRx) and CV 08−07046−ODW (JTLx) (Attachments: # 1 Complaint in Case No. CV 08−07045−PA (AGRx), # 2 Notice of Related Case filed in Case No. CV 08−07045−PA (AGRx), # 3 Complaint in CaseNo. CV 08−07046−ODW (JTLx), # 4 Notice of Related Case filed in Case No. CV 08−07046−ODW (JTLx))(Friedman, Stanley) (Entered: 10/27/2008)
215 NOTICE OF MOTION AND MOTION for Preliminary Injunction re: ENJOIN AB 5 RATE CUT FOR HOME HEALTH SERVICES AND NEMT SERVICES filed by PETITIONERS Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. Motion set for hearing on 11/17/2008 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 MEMORANDUM IN SUPPORT OF PRELIMINARY INJUNCTION, # 2 BARNABY DECLARATION, # 3 SCHEDULE OF DECLARATIONS IN NEMT CASE, # 4 HAFKEN SCHIEL DECLARATION, # 5 SCHEDULE OF DECLARATIONS IN HOME HEALTH SERVICES CASE, # 6 ZARETSKY DECLARATION IN HOME HEALTH SERVICES CASE, # 7 (PROPOSED) ORDER)(Carman, Lynn) (Entered: 10/27/2008)
216 ORDER by Judge Christina A. Snyder on Stipulation to Continue the Hearing on Petitioner's MOTION to Enforce the AUG. 18, 2008 Injunction as Amended 211 , 205 . Motion continued to 11/17/2008 at 10:00 AM before Judge Christina A. Snyder.) (mg) (Entered: 10/28/2008)
217 EX PARTE APPLICATION to Stay Case and the Two New Related Cases or, in the Alt, Continuing Hearing on Petitioners' 3rd Motion for Preliminary Injunction and Extending Time to Respond to Two New Related Cases filed by Respondent Sandra Shewry. (Attachments: # 1 Supplement Memorandum of Points and Authorities in Support, # 2 Declaration of Tara Newman in Support of Ex Parte Application, # 3 Proposed Order)(Kim, Jennifer) (Entered: 10/29/2008)
218 NOTICE OF MOTION AND MOTION to Stay Case or in the Alt for Continuance of Hearing on 3rd Motion for Preliminary Injunction and for Extension of Time to Respond to Two New Complaints; filed concurrently with Docket 217 filed by Respondent Sandra Shewry. Motion set for hearing on 11/24/2008 at 10:00 AM before Judge Christina A. Snyder. (Kim, Jennifer) (Entered: 10/29/2008)
221 Petitioners' Opposition Memorandum to Ex Parte Application filed on October 29, 2008 re: EX PARTE APPLICATION to Stay Case and the Two New Related Cases or, in the Alt, Continuing Hearing on Petitioners' 3rd Motion for Preliminary Injunction and Extending Time to Respond to Two New Related Cases 217 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Friedman, Stanley) (Entered: 10/30/2008)
222 by Intervenors to Respondents' Ex Parte Application for Order Staying Action; Declaration of Byron J. Gross Opposition re: EX PARTE APPLICATION to Stay Case and the Two New Related Cases or, in the Alt, Continuing Hearing on Petitioners' 3rd Motion for Preliminary Injunction and Extending Time to Respond to Two New Related Cases 217 filed by Intervenor Sacramento Family Medical Clinics, Inc.. (Gross, Byron) (Entered: 10/30/2008)
223 NOTIFICATION by Circuit Court of Appellate Docket Number 08−56751, 9th CCA regarding Notice of Appeal to 9th Circuit Court of Appeals, 200 as to Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (cbr) (Entered: 10/30/2008)

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224 NOTICE of Change of Attorney Information for attorney Sundeep Andrew Dhadwal counsel for Respondent Sandra Shewry. Changing Office of the Attorney General to 300 South Spring Street, Suite 1702, Los Angeles, CA 90013. Changing e−mail to andrew.dhadwal@doj.ca.gov. Adding Andrew Dhadwal as attorney as counsel of record for Respondent for the reason indicated in the G−06 Notice. Filed by respondent Shewry, Sandra (Dhadwal, Sundeep) (Entered: 11/03/2008)
225 MEMORANDUM in Opposition to MOTION to Enforce AUG. 18, 2008 INJUNCTION AS AMENDED 205 filed by Respondent Sandra Shewry. (Attachments: # 1 Declaration of Stan Rosenstein in Support of Opposition)(Dhadwal, Sundeep) (Entered: 11/03/2008)
226 MEMORANDUM in Opposition to MOTION for Preliminary Injunction re: ENJOIN AB 5 RATE CUT FOR HOME HEALTH SERVICES AND NEMT SERVICES 215 filed by Respondent Sandra Shewry. (Attachments: # 1 Declaration of Timothy Matsumoto in Support of Opposition, # 2 Supplement Respondent's Objections to Declarations)(Kim, Jennifer) (Entered: 11/03/2008)
227 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals, 48 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Independent Living Center of Southern California, Margaret Dowling, Jason Young, Sharon Steen, Gerald Shapiro, CCA # 08−56061. The panel has voted to deny (1) appellee's petition for panel rehearing and rehearing en banc filed with the court on July 17, 2008; and (2) appellee's petition for panel rehearing and rehearing en banc filed with the court on October 8, 2008. The full court has been advised of the petition for rehearing en banc, and no judge has requested a vote on whether to rehear the matter en banc. Fed. R. App. P. 35. The petition for panel rehearing and rehearing en banc are DENIED. IT IS SO ORDERED. Order received in this district on 11/03/08. (lr) (Entered: 11/04/2008)
228 ORDER RE: RESPONDENT'S EX PARTE APPLICATION FOR ORDER STAYING THE ACTION AND THE TWO NEW RELATED CASES OR, IN THE ALTERNATIVE, CONTINUING HEARING ON PETITIONERS' THIRD MOTION FOR PRELIMINARY INJUNCTION AND EXTENDING TIME TO RESPOND TO THE TWO NEW RELATED CASES by Judge Christina A. Snyder: Respondent Sandra Shewry, Director of the California Department of Health Care Services' Ex Parte Application for Order Staying the Action and the Two New Related Cases or, in the Alternative, Continuing Hearing on Petitioners' Third Motion for Preliminary Injunction and Extending Time to Respond to the Two New Related Cases 217 is GRANTED in part and DENIED in part. The following cases are hereby stayed in their entirety until further order of Court: CV 08−07045 CAS (MANx): California Association for Health Services at Home v. Sandra Shewry; CV 08−07046 CAS (MANx): California Medical Transportation Association v. Sandra Shewry; and CV 08−03315 CAS Independent Living et al v. Sandra Shewry. The Third Motion for Preliminary Injunction 215 shall be heard on 11/17/2008 at 10:00 AM, as originally scheduled. (gk) (Entered: 11/04/2008)
229 NOTICE Petitioners' Notice of Voluntary Dismissal of the Second Cause of Action (Rule 41(a)(1) F.R.C.P.) filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Friedman, Stanley) (Entered: 11/04/2008)
230 RESPONSE IN SUPPORT of MOTION to Enforce AUG. 18, 2008 INJUNCTION AS AMENDED 205 filed by Intervenor Parties Sacramento Family Medical Clinics, Inc., Theodore M Mazer, Ronald B Mead, Acacia Adult Day Services. (Keville, Jordan) (Entered: 11/10/2008)
231 REPLY IN SUPPORT MOTION for Preliminary Injunction re: ENJOIN AB 5 RATE CUT FOR HOME HEALTH SERVICES AND NEMT SERVICES 215 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 11/10/2008)
232 REPLY IN SUPPORT MOTION for Preliminary Injunction re: ENJOIN AB 5 RATE CUT FOR HOME HEALTH SERVICES AND NEMT SERVICES 215 filed by

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Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 11/11/2008)
233 NOTICE REQUEST JUDICIAL NOTICE NEMT SERVICES filed by PETITIONERS Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Attachments: # 1 REQUEST JUDICIAL NOTICE NEMT SERVICES)(Carman, Lynn) (Entered: 11/11/2008)
234 NOTICE REQUEST JUDICIAL NOTICE HOME HEALTH SERVICES filed by PETITIONERS Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Attachments: # 1 REQUEST JUDICIAL NOTICE HOME HEALTH SERVICES)(Carman, Lynn) (Entered: 11/11/2008)
235 MINUTES OF IN CHAMBERS ORDER held before Judge Christina A. Snyder: re: Pursuant to the Order re: Respondents Ex Parte Application filed on November 3, 2008, Respondents Motion to Stay Proceedings or in the Alternative for Continuance of Hearing on Third Motion for Preliminary Injunction and For Extension of Time to Respond to Two New Complaints filed October 29, 2008 and noticed for November 24, 2008 at 10:00 a.m. is thereby MOOT. 217 . (lc) (Entered: 11/13/2008)
236 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents. The following error(s) was found: Incorrect event selected. Correct event is Requests − For Judicial Notice. Notice (other) event utilized in docketing this filing RE: Petitioners' Request for Judicial Notice in re Non−Emergency Medical Transportation Services, in Support of Preliminary Injunction filed 11/11/2008 233 . In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. (gk) (Entered: 11/18/2008)
237 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents. The following error(s) was found: Incorrect event selected. Correct event is Requests − For Judicial Notice. Notice (other) event utilized in docketing this filing RE: Petitioners' Request for Judicial Notice in re Home Health Services, in Support of Preliminary Injunction filed 11/11/2008 234 . In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. (gk) (Entered: 11/18/2008)
238 ORDER GRANTING PETITIONERS' THIRD MOTION FOR PRELIMINARY INJUNCTION by Judge Christina A. Snyder: The Court GRANTS Petitioners' Third Motion for Preliminary Injunction 215 . The Court hereby orders respondent Director, her agents, servants, employees, attorneys, successors, and all those working in concert with her to refrain from enforcing Cal. Welf. & Inst. Code Section 14105.19(b)(1), including refraining from reducing by ten percent payments under the Medi−Cal fee−for−service program for NEMT and home health services provided on or after 11/17/2008. (gk) (Entered: 11/18/2008)
239 MINUTES OF Motion Hearing held before Judge Christina A. Snyder: The Court DENIES Petitioners' Motion to Enforce the 8/18/2008 Preliminary Injunction 205 , with leave to amend. Court Reporter: Laura Elias. (gk) (Entered: 11/18/2008)
240 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals, 200 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Gray Panthers of Sacramento, Independent Living Center of Southern California, Margaret Dowling, Jason Young, Sharon Steen, Gerald Shapiro, CCA # 08−56751. A review of the record indicates that this appeal was opened in error. The notice of appeal filed in the district court on October 16, 2008 was intended as an amended notice of appeal to be filed in pending No. 08−56554. Accordingly, this appeal is closed. The Clerk shall close the file. The notice of appeal will be docketed as an amended notice of appeal in appeal No. 08−56554. The briefing schedule established previously in appeal No. 08−56554 shall remain in effect. Order received in this district on 11/18/08. (lr) (Entered: 11/19/2008)

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241 STATUS REPORT − RESPONDENT'S REPORT OF COMPLIANCE WITH NOVEMBER 17, 2008 PRELIMINARY INJUNCTION ORDER filed by Respondent Sandra Shewry. (Dhadwal, S. Andrew) (Entered: 11/24/2008)
242 MANDATE of 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals 48 , CCA # 08−56061. The decision of the district court is REVERSED and REMANDED. Mandate received in this district on 12/05/08. (cbr) (Entered: 12/09/2008)
243 NOTICE OF APPEAL to the 9th CCA filed by Respondent Sandra Shewry. Appeal of Order,,, Preliminary Injunction,, 238 . (Filing Fee NOT PAID.) (Kim, Jennifer) (Entered: 12/16/2008)
244 Civil Appeals Docketing Statement received from Respondent Sandra Shewry forwarded to 9th CCA. RE: Notice of Appeal to 9th Circuit Court of Appeals 243 (Kim, Jennifer) (Entered: 12/16/2008)
245 NOTICE of Change of Attorney Information for attorney Jennifer M Kim counsel for Respondent Sandra Shewry.Sara Ugaz is no longer attorney of record for the aforementioned party in this case for the reason indicated in the G−06 Notice. Filed by Respondent Shewry, S. (Kim, Jennifer) (Entered: 12/16/2008)
246 NOTICE of Change of Attorney Information for attorney Jennifer M Kim counsel for Respondent Sandra Shewry.John F. Venegas is no longer attorney of record for the aforementioned party in this case for the reason indicated in the G−06 Notice. Filed by Respondent Shewry, S. (Kim, Jennifer) (Entered: 12/16/2008)
247 NOTICE OF APPEAL NOTIFICATION form issued regarding Notice of Appeal to 9th Circuit Court of Appeals 243 as to Respondent Sandra Shewry. (car) (Entered: 12/17/2008)
248 FILING FEE LETTER issued as to Respondent Sandra Shewry, re Notice of Appeal to 9th Circuit Court of Appeals 243 (car) (Entered: 12/17/2008)
Transmission of Notice of Appeal and Docket Sheet to US Court of Appeals re: Notice of Appeal to 9th Circuit Court of Appeals 243 (car) (Entered: 12/17/2008)
249 NOTIFICATION by Circuit Court of Appellate Docket Number 08−57016, 9th CCA regarding Notice of Appeal to 9th Circuit Court of Appeals 243 as to Respondent Sandra Shewry. (cbr) (Entered: 12/17/2008)
250 APPEAL FEE PAID: re Notice of Appeal to 9th Circuit Court of Appeals 243 as to Respondent Sandra Shewry; Receipt Number: 114047 in the amount of $455. (car) (Entered: 12/19/2008)
251 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals, 180 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Gray Panthers of Sacramento, Independent Living Center of Southern California, Margaret Dowling, Jason Young, Sharon Steen, Gerald Shapiro, Notice of Appeal to 9th Circuit Court of Appeals, 177 filed by Tran Pharmacy, Inc., Jason Young, Notice of Appeal to 9th Circuit Court of Appeals 127 filed by Sandra Shewry, Notice of Appeal to 9th Circuit Court of Appeals 243 filed by Sandra Shewry, CCA # 08−56422, 08−56551, 08−56554, 08−57016. Oral argument in appeal Nos. 08−56422, 08−56551 and 08−56554 is changed from January 29, 2009, in Pasadena to February 18, 2009, at 10:00 a.m., in San Francisco, so it can be heard on the same calendar as a related appeal, No. 08−57016. The parties are advised that each side shall have 20 minutes for argument. Order received in this district on 12/24/08. (lr) (Entered: 12/29/2008)
252 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals,, 180 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Gray Panthers of Sacramento, Independent Living Center of Southern California, Margaret Dowling, Jason Young, Sharon Steen, Gerald Shapiro, Notice of Appeal to 9th Circuit Court of Appeals, 177 filed by Tran Pharmacy, Inc., Jason Young, Notice of Appeal to 9th Circuit Court of Appeals 127 filed by Sandra Shewry, CCA # 08−56422, 08−56551, 08−56554. Oral argument in appeal Nos. 08−56422, 08−56551 and 08−56554 is changed from January 29, 2009, in Pasadena to February 18, 2009, at 10:00 a.m., in San Francisco, so it can be heard on the same calendar as a related appeal No. 08−57016. (cbr) (Entered: 12/31/2008)

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254 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals,, 180 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Gray Panthers of Sacramento, Independent Living Center of Southern California, Margaret Dowling, Jason Young, Sharon Steen, Gerald Shapiro, Notice of Appeal to 9th Circuit Court of Appeals, 177 filed by Tran Pharmacy, Inc., Jason Young, Notice of Appeal to 9th Circuit Court of Appeals 127 filed by Sandra Shewry, CCA # 08−56422, 08−56551, 08−56554. After filing a notice of appeal in Case No. 08−56551, Petitioners−Appellants Jason Young and Tran Pharmacy voluntarily dismissed the claim underlying that appeal in district court. Petitioner−Appellants' appeal in Case No. 08−56551 is therefore dismissed without prejudice. This order served on the district court shall act as and for the mandate of this court. Mandate received in this district on 1/30/09. (lr) (Entered: 02/03/2009)
253 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals, 48 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Independent Living Center of Southern California, Margaret Dowling, Jason Young, Sharon Steen, Gerald Shapiro, CCA # 08−56061. We hereby recall the mandate in this case so that we may address a motion for change of caption filed by several parties who intervened in the district court action after we issued our July 11, 2008, order vacating the district court's denial of a preliminalry injunction in this case, but before we published an opinion further explaining our order. We construe the motion for change of caption as a motion to intervene after decision, and GRANT that motion. The mandate shall reissue immediately. Order received in this district on 2/02/09. (lr) (Entered: 02/02/2009)
255 MANDATE of 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals, 48 , CCA # 08−56061. The Decision of the District Court is REVERESED and REMANDED. Mandate received in this district on 2/02/09. (lr) (Entered: 02/03/2009)
256 MINUTES OF HEARING ON MANDATE OF THE NINTH CIRCUIT COURT OF APPEALS by Judge Christina A. Snyder: THE COURT REVIEWS the mandate (judgment or order) of the Ninth Circuit Court of Appeals 255 : Reversing and Remanding. The Court sets a Status Conference re: Ninth Circuit Mandate on 3/30/2009 11:00 AM before Judge Christina A. Snyder. Court Reporter: Not Present. (gk) (Entered: 02/25/2009)
257 MINUTES (IN CHAMBERS) by Judge Christina A. Snyder: On February 2, 2009, the Court received the Mandate from the Ninth Circuit Court of Appeal, CCA #08−56061, reversing and remanding the decision of the District Court 255 . On February 24, 2009, the Court set a Status Conference re: Ninth Circuit Mandate on March 30, 2009 at 11:00 a.m. Due to appeals still pending before the Ninth Circuit Court of Appeal, the Court hereby vacates the March 30, 2009 Status Conference re: Ninth Circuit Mandate, to be reset at a later date. (mg) (Entered: 03/18/2009)
258 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals 127 filed by Sandra Shewry, CCA # 08−56422, 08−56554, 08−57016. Due to a recent change in circumstances, Judges Berzon has recused herself from this case effective today, and Judge W. Fletcher has been drawn to replace her on the panel. Order received in this district on 4/28/09. (lr) (Entered: 04/30/2009)
259 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals,, 180 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Gray Panthers of Sacramento, Independent Living Center of Southern California, Margaret Dowling, Jason Young, Sharon Steen, Gerald Shapiro, Notice of Appeal to 9th Circuit Court of Appeals 127 filed by Sandra Shewry, CCA # 08−56422, 08−56554. The order received in this district on 7/9/2009.Pursuant to Ninth Circuit Rule 39−1, it is ordered that Respondent David Maxwell−Jolly shall pay all costs incurred by Petitioners Independent Living Center et al. during these appeals. (lra) (Entered: 07/10/2009)
260 MINUTES OF IN CHAMBERS ORDER held before Judge Christina A. Snyder: Court reviews the Mandate of the Ninth Circuit Court of Appeals Affirming; Reversing and Remanding. Court sets a Status Conference re: Ninth Circuit Mandate on 8/3/2009 at 11:00 AM. (kpa) (Entered: 07/15/2009)
261 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals,, 180 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Gray Panthers of Sacramento, Independent Living Center of Southern California, Margaret

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Dowling, Jason Young, Sharon Steen, Gerald Shapiro, Notice of Appeal to 9th Circuit Court of Appeals 127 filed by Sandra Shewry, CCA # 08−56422, 08−56554. The Director's motion requesting an extension of time to file a petition for rehearing/rehearing en banc is DENIED. Order received in this district on 7/15/09. (lr) (Entered: 07/16/2009)
262 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals, 180 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Gray Panthers of Sacramento, Independent Living Center of Southern California, Margaret Dowling, Jason Young, Sharon Steen, Gerald Shapiro, Notice of Appeal to 9th Circuit Court of Appeals 127 filed by Sandra Shewry, CCA # 08−56422, 08−56554. The Director's motion for reconsideration of this court's denial of his request for thirty and seven−day extensions of time to file a Petition for Rehearing/Petition for Rehearing En Banc is DENIED. Order received in this district on 7/20/09. (lr) (Entered: 07/21/2009)
263 MINUTES OF Status Conference Re Filing and Spreading of 9th Circuit Mandate, CCA #08−56422 held before Judge Christina A. Snyder: The Court orders the 9th Circuit Mandate filed and spread. The Court confers with counsel and orders counsel to meet and confer regarding dates. Thereafter, submit a Stipulation and proposed Order regarding the setting of new dates within two weeks from today's hearing. The Court sets a Status Conference re: Settlement on 9/14/2009 11:00 AM before Judge Christina A. Snyder. Court Reporter: Sandra Becerra. (gk) (Entered: 08/05/2009)
264 STATUS REPORT Petitioners' and Intervenors' Joint Status Report re: Meet and Confer for Pretrial Scheduling filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Intervenor Parties Sacramento Family Medical Clinics, Inc., Theodore M Mazer, Ronald B Mead, Acacia Adult Day Services. (Attachments: # 1 Proposed Order Pretrial Scheduling Order)(Cannizzo, Craig) (Entered: 08/17/2009)
265 STATUS REPORT RESPONDENT'S RESPONSE TO ORDER DATED AUGUST 3, 2009 filed by Respondent Sandra Shewry. (Snuggs, Carmen) (Entered: 08/17/2009)
266 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals, 180 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Gray Panthers of Sacramento, Independent Living Center of Southern California, Margaret Dowling, Jason Young, Sharon Steen, Gerald Shapiro, Notice of Appeal to 9th Circuit Court of Appeals 127 filed by Sandra Shewry, Order 44 , CCA # 08−56422, 08−56554. Petitioners are directed to file a response to Respondent's Petition for Rehearing En Banc, filed with this court on July 23, 2009. The response shall be filed within 21 days of the date of this order. Per Fed. R. App. P. 32(a)(7)(A), the response shall not exceed fifteen pages in length unless it complies with Fed. R. App. P. 32(a)(7)(B)(ii)−(iii) and (C). Order received in this district on 8/17/09. (lr) (Entered: 08/18/2009)
267 ORDER DENYING TRANSFER by the Judicial Panel on Multidistrict Litigation, MDL 2069, that the motion by Plaintiffs in an action in the Northern District of California (3:08−5173), pursuant to 28 U.S.C. Section 1407, for centralization of the six actions listed on Schedule A (attached) is denied. (gk) (Entered: 08/19/2009)
268 SCHEDULING ORDER by Judge Christina A. Snyder. SCHEDULING ORDER1. Final Date for Amending Pleadings: October 23, 2009.2. Factual Discovery Cutoff: August 23, 2010.3. Expert Witness Designation: September 24, 2010.4. Expert Witness Rebuttal: October 22, 2010.5. Expert Witness Discovery Cutoff: November 22, 2010. 6. Dispositive Motion Cutoff: September 24, 2010.7. Pretrial Conference: January 10, 2011 at 11:00 a.m.8. Court Trial: February 1, 2011 at 9:30 a.m. (pp) (Entered: 08/21/2009)
269 MINUTES OF IN CHAMBERS ORDER held before Magistrate Judge Margaret A. Nagle scheduling a Settlement Conference in this matter for 9/16/2009 10:00 AM before Magistrate Judge Margaret A. Nagle. The confidential settlement conference statements are due on or before 9/9/09 (ec) (Entered: 08/27/2009)
270 First STIPULATION to Continue Status Conference re: Settlement from September 14, 2009 to October 19, 2009 Re: Minutes of In Chambers Order/Directive − no proceeding held, Set Hearings,, 269 , Status Conference, Set Hearings,,,, 263 filed by

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Intervenors Sacramento Family Medical Clinics, Inc., Theodore M Mazer, Ronald B Mead, Acacia Adult Day Services. (Attachments: # 1 Proposed Order)(Sze, Felicia) (Entered: 09/04/2009)
ORDER continuing Status Conference re: Settlement to 10/19/2009 at 11:00 a.m. before Judge Christina A. Snyder.(pp) (Entered: 09/09/2009)
271 NOTICE OF DISMISSAL filed by PETITIONER Jason Young pursuant to FRCP 41a(1) OF PETITIONER JASON YOUNG ONLY, as to Jason Young, Sandra Shewry. (Carman, Lynn) (Entered: 09/15/2009)
272 MINUTES OF Settlement Conference held before Magistrate Judge Margaret A. Nagle: there is no settlement at this time. However, the parties are continuing to discuss settlement under Court supervision. The Court schedules a follow−up telephone status conference for Wednesday, September 23, 2009, at 1:30 p.m. before Magistrate Judge Margaret A. Nagle. The Court will initiate the call with counsel. Counsel are directed to contact the Court Clerk at earlene_carson@cacd.uscourts.gov to notify her of the names and telephone numbers of counsel who will be appearing on the telephone conference.Court Recorder: cs. (ec) (Entered: 09/16/2009)
278 MINUTES OF Telephone Conference held before Magistrate Judge Margaret A. Nagle: The Court conducts a follow−up telephone status conference regarding settlement. A further follow−up Telephone Conference is scheduled for 10/8/2009 01:00 PM before Magistrate Judge Margaret A. Nagle. (ec) (Entered: 10/05/2009)
273 NOTICE OF MOTION AND MOTION for Contempt against RESPONDENT DAVID MAXWELL−JOLLY filed by PETITIONERS Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. Motion set for hearing on 10/19/2007 at 10:00 AM before Judge Christina A. Snyder. (Carman, Lynn) (Entered: 09/28/2009)
274 NOTICE OF LODGING OF (PROPSED) ORDER filed by PETITOINERS Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 09/29/2009)
276 MINUTE ORDER (In Chambers) by Judge Christina A. Snyder. Status Conference re: Choice of Settlement Procedure is advanced to 10:00 a.m. on 10/19/2009. (pp) (Entered: 09/30/2009)
275 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents. The following error(s) was found: Case number is incorrect or missing. Document cites case nmber 2:09−CV−03315 CAS (MANx). The correct case number is CV 08−03315 CAS (MANx). Filer erroneously set this matter on calendar for 10/19/2007. Clerk has corrected the hearing date to 10/19/2009 at 10:00 AM RE: Notice of Motion, and Memorandum in Support of Motion to Enforce Preliminary Injunctions filed 9/28/2009 273 . In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. (gk) (Entered: 09/30/2009)
277 NOTICE NOTICE OF WITHDRAWAL OF OCT. 19, 2009 MOTION filed by PETITIONERS Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Carman, Lynn) (Entered: 10/02/2009)
279 NOTICE OF MOTION AND RENEWED MOTION to Intervene Pursuant to Federal Rule of Civil Procedure 24 filed by Proposed Intervenors California Association of Medical Product Suppliers, California Hospital Association, Sharp Memorial Hospital, Grossmont Hospital Corporation, Sharp Chula Vista Medical Center, and Sharp Coronado Hospital and Healthcare Center. Motion set for hearing on 10/26/2009 at 10:00 AM before Judge Christina A. Snyder. (gk) (Entered: 10/08/2009)
280 DECLARATION of Jordan B. Keville in Support of Renewed Motion to Intervene Pursuant to FRCP 24(a) 279 filed by Intervenors Sacramento Family Medical Clinics, Inc., Theodore M. Mazer, M.D., Ronald B. Mead, D.D.S., and Acacia Adult Day Services. (gk) (Entered: 10/08/2009)

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281 MEMORANDUM of Points and Authorities in Support of Renewed Motion to Intervene Pursuant to FRCP 24 279 filed by Proposed Intervenors California Association of Medical Product Suppliers, California Hospital Association, Sharp Memorial Hospital, Grossmont Hos pital Corporation, Sharp Chula Vista Medical Center, and Sharp Coronado Hospital and Healthcare Center. (gk) (Entered: 10/09/2009)
287 MINUTES OF Telephonic Status Conference held before Magistrate Judge Margaret A. Nagle. The Court conducts the status conference off the record.Court Recorder: N/A. (ec) (Entered: 10/13/2009)
282 NOTICE OF MOTION AND MOTION to Enforce AUGUST 2008 INJUNTION filed by PETITIONERS Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Gray Panthers of Sacramento, Gray Panthers of San Francisco. Motion set for hearing on 11/2/2009 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 exhibit a and b, # 2 richard wilson declaration, # 3 EXHIBITS A, B, C, D, # 4 THU−HANG TRAN DECLARATION, # 5 EXHIBIT, # 6 LTYNN ROLSTON DECLARATION, # 7 EXHIBIT, # 8 JOHN CRONIN DECLARATION, # 9 PAUL LOFHOLM DECLARATION, # 10 GERAL SHAPIRO DECLARATIN, # 11 DECLARATIONS)(Carman, Lynn) (Entered: 10/11/2009)
283 REQUEST FOR JUDICIAL NOTICE re MOTION to Enforce AUGUST 2008 INJUNTION 282 FURTHER REQUEST FOR JUDICIAL NOTICE filed by PETITIONERS Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Attachments: # 1 EXHIITS A, B, C, D, E, F, G, H, I, J, K, L, M, N., O, P, Q, and R)(Carman, Lynn) (Entered: 10/12/2009)
284 REQUEST FOR JUDICIAL NOTICE re MOTION to Enforce AUGUST 2008 INJUNTION 282 REQUEST FOR JUDICIAL NOTCE FOR FIRST DATA BANK CASE DOCUMENTS filed by PETITIONERS Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Attachments: # 1 Tab A, # 2 PROOSED SETTLEMENT IN FIRST DATA BANK CASE, # 3 Tab B, # 4 LIST OF 8000 DRUGS IN FIRST DATA BANK SETTLEMENT, # 5 Tab, # 6 ORDER APPROVING SETTLEMENT)(Carman, Lynn) (Entered: 10/12/2009)
285 REQUEST to Continue Hearing from 10−19−09 and 10−26−09 to 11−02−09 filed by Joint Request by Petitioners, Respondent, Intervenors and Proposed Intervenors California Hospital Association, Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Sandra Shewry, Independent Living Center of Southern California, Sacramento Family Medical Clinics, Inc., Theodore M Mazer, Ronald B Mead, Acacia Adult Day Services, Gray Panthers of Sacramento, California Association of Medical Product Suppliers, Sharp Memorial Hospital, Grossmont Hospital Corporation, Sharp Chula Vista Medical Center, Sharp Coronado Hospital and Healthcare Center, Gray Panthers of San Francisco. Request set for hearing on 11/2/2009 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 Proposed Order Proposed Order Continuing Status Conference re Settlement and Hearing on Renewed Motion to Intervene)(Cannizzo, Craig) (Entered: 10/12/2009)
286 NOTICE PETITIONERS filed by PETITIONERS Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. NOTICE OF LODGING OF (PROPOSED) ORDER FOR NOVEMBER 2, 2009 HEARING (Carman, Lynn) (Entered: 10/12/2009)
288 EXPARTE APPLICATION for Extension of Time to File for Order Extending Respondent's Time to Respond to Petitioners' Motion to Enforce Preliminary Injunction, and to Stay and Preliminarily Enjoin Implementation of Payment Cuts Filed October 11, 2009 filed by Respondent Sandra Shewry.(Snuggs, Carmen) (Entered: 10/13/2009)
289 MEMORANDUM of Points and Authorities in Support filed by Respondent Sandra Shewry. of Respondent's Ex Parte Application for Order Extending Respondent's Time to Respond to Petitioners' Motion to Enforce Preliminary Injunction Filed, October 11, 2009 (Snuggs, Carmen) (Entered: 10/13/2009)

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290 DECLARATION of CARMEN D. SNUGGS in Support of Respondent's Ex Parte Application for order Extending Respondent's Time to Respond to Petitioners' Motion to Enforce Preliminary Injunction, and to Stay and Preliminarily Enjoin Implementation of Payment Cuts filed October 11, 2009 filed by Respondent Sandra Shewry. (Snuggs, Carmen) (Entered: 10/13/2009)
291 EXPARTE APPLICATION for Extension of Time to File Order Extending Respondent's Time to Respond to Petitioners' Motion to Enforce Preliminary Injunction, and to Stay and Preliminarily Enjoin Implementation of Payment Cuts filed on October 11, 2009 filed by Respondent Sandra Shewry. (Attachments: # 1 Supplement Memorandum of Points and Authorities in Support of Respondent's Ex Parte Application for Order Extending Respondent's Time to Respond to Petitioners' Motion to Enforce Preliminary Injunction Filed, October 11, 2009, # 2 Declaration Declaration of Carmen D. Snuggs in Support of Respondent's Ex Parte Application for Order Extending Respondent's Time to Respond to Petitioners' Motion to Enforce Preliminary Injunction, and to Stay and Preliminarily Enjoin Implementation of Payment Cuts, # 3 Proposed Order [Proposed] Order Granting Respondent's Ex Parte Application for Order Extending Respondent's Time to Respond to Petitioners' Motion to Enforce Preliminary Injunction filed October 11, 2009)(Snuggs, Carmen) (Entered: 10/13/2009)
292 OPPOSITION Opposition to re: EXPARTE APPLICATION for Extension of Time to File Order Extending Respondent's Time to Respond to Petitioners' Motion to Enforce Preliminary Injunction, and to Stay and Preliminarily Enjoin Implementation of Payment Cuts filed on October 11, 291 , EXPARTE APPLICATION for Extension of Time to File for Order Extending Respondent's Time to Respond to Petitioners' Motion to Enforce Preliminary Injunction, and to Stay and Preliminarily Enjoin Implementation of Payment Cuts Filed October 11 288 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Jason Young, Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Attachments: # 1 Exhibit A, # 2 Supplement)(Friedman, Stanley) (Entered: 10/13/2009)
293 ORDER CONTINUING STATUS CONFERENCE RE: SETTLEMENT AND HEARING ON RENEWED MOTION TO INTERVENE by Judge Christina A. Snyder: Upon the parties' Joint Request to Continue Status Conference Re: Settlement and Hearing on Renewed Motion to Intervene 285 , IT IS HEREBY ORDERED that the Status Conference and the hearing on the Renewed Motion to Intervene will be continued until 11/2/2009 at 10:00 AM. (gk) (Entered: 10/14/2009)
294 MINUTES (IN CHAMBERS) by Judge Christina A. Snyder: The Court grants in part and denies in part Respondent's Ex Parte Application for Order Extending Respondent's Time to Respond to Petitioners' Motion to Enforce Preliminary Injunction, and to Stay and Preliminarily Enjoin Implementation of Payment Cuts and Supporting Documents 288 , 291 , as follow: Respondent shall file an opposition with courtesy copies to chambers on or before 3:00 PM on 10/26/2009; Petitioners' shall file a reply with courtesy copies to chambers on or before 3:00 PM on 10/29/2009; and the hearing on Petitioners' motion 282 shall remain on calendar on 11/2/2009 at 10:00 AM. Court Reporter: Not Present. (gk) (Entered: 10/15/2009)
295 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents. The following error(s) was found: At least two lines of the text of any order or judgment shall appear on the page that has the line provided for the signature of the judge, Local Rule 58−10 RE: Notice of Lodging of Proposed Order filed 10/12/2009 286 . In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. (gk) (Entered: 10/15/2009)
296 REQUEST to Continue Hearing on Renewed Motion to Intervene from 11−02−09 to Off Calendar filed by Joint Request by Petitioners, Respondent and Proposed Intervenors California Hospital Association, Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Sandra Shewry, Independent Living Center of Southern California, Gray Panthers of Sacramento, California Association of Medical Product Suppliers, Sharp Memorial Hospital, Grossmont Hospital Corporation, Sharp Chula Vista Medical Center, Sharp Coronado Hospital and Healthcare Center, Gray Panthers of San Francisco. (Attachments: # 1 Proposed

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Order Order Continuing Hearing on Renewed Motion to Intervene)(Cannizzo, Craig) (Entered: 10/16/2009)
297 ORDER by Judge Christina A. Snyder re REQUEST to Continue Hearing on Renewed Motion to Intervene from 11−02−09 to Off Calendar 296 . It is hereby ordered that the hearing shall be taken off calendar. Refer to document for further details. (pso) (Entered: 10/20/2009)
298 EX PARTE APPLICATION for Temporary Restraining Order as to TO RESTRAIN VIOLATION OF 2 INJUNCTIONS AND TO REQUIRE PUBLIC NOTICE TO BE PUBLISJHED OF PHARMACY PAYMENT CUTS filed by PETITIONERS Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco. (Attachments: # 1 EXHIBITS A AND B, # 2 SUPPLEMENTAL SCHEDUOE OF DECLARATIONS, # 3 SUMMARIES OF PHARMACY DEDCLARATIONS, # 4 (PROPOSED) TRO ORDER)(Carman, Lynn) (Entered: 10/21/2009)
299 MINUTES OF IN CHAMBERS ORDER held before Magistrate Judge Margaret A. Nagle rescheduling the further settlement conference in this matter from 10/21/09 to 11/2/2009 10:00 AM before Magistrate Judge Margaret A. Nagle. (ec) (Entered: 10/21/2009)
300 BY RESPONDENT TO PETITIONER'S EX PARTE APPLICATION FOR A TEMPORARY RESTRAINING ORDER OPPOSITION re: EX PARTE APPLICATION for Temporary Restraining Order as to TO RESTRAIN VIOLATION OF 2 INJUNCTIONS AND TO REQUIRE PUBLIC NOTICE TO BE PUBLISJHED OF PHARMACY PAYMENT CUTS 298 filed by Respondent Sandra Shewry. (Attachments: # 1 Declaration of Carmen D. Snugs in Support of Respondent's Opposition to Ex Parte Application for Temporary Restraining Order)(Snuggs, Carmen) (Entered: 10/22/2009)
301 MINUTES (IN CHAMBERS)ORDER by Judge Christina A. Snyder: The Court is in receipt of Petitioners Ex Parte Application for Temporary Restraining Order and supporting documents filed October 21, 2009 298 . The Court is also in receipt of Respondents Opposition to Petitioners Ex Parte Application for a Temporary Restraining Order and supporting declaration filed October 22, 2009. Upon the Courts review and in light of the hearing on Petitioners motion on November 2, 2009, the Court hereby DENIES Petitioners' Ex Parte Application for Temporary Restraining Order. (jre) (Entered: 10/23/2009)
302 MEMORANDUM in Opposition to MOTION to Enforce AUGUST 2008 INJUNTION 282 filed by Respondent Sandra Shewry. (Attachments: # 1 Declaration of Kevin Gorospe, # 2 Supplement Exhibits A−D page numbers 37−87)(Dhadwal, S. Andrew) (Entered: 10/26/2009)
303 REPLY IN SUPPORT OF MOTION TO ENFORCE AUGUST 18, 2008 INJUNCTION AND TO PROVIDE PUBLIC NOTICE filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Respondent Does. (Attachments: # 1 EXHIBIT A, B, C, D)(Carman, Lynn) (Entered: 10/29/2009)
304 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals,, 180 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Gray Panthers of Sacramento, Independent Living Center of Southern California, Margaret Dowling, Jason Young, Sharon Steen, Gerald Shapiro, Notice of Appeal to 9th Circuit Court of Appeals 127 filed by Sandra Shewry, CCA # 08−56422, 08−56554. The petition for rehearing en banc is DENIED. (cbr) (Entered: 10/30/2009)
306 MANDATE of 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals 243 , CCA # 08−57016. The decision of the District Court is AFFIRMED. Mandate received in this district on 10/29/09. (cbr) (Entered: 11/02/2009)
305 MINUTES (IN CHAMBERS) by Judge Christina A. Snyder: On the Court's own motion, Plaintiffs' Motion to Enforce Preliminary Innunction and, Also, To Stay & Preliminarily Enjoin Implementation of Payment Cuts for Lack of Public Notice as

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Required by 42 CFR 407.205 282 is taken under submission. The Court hereby dispenses with oral argument on the above motion and will decide the motion on the basis of the papers submitted. Furthermore, due Magistrate Nagle presiding over settlement procedures in the above−referenced action, the Court also vacates the Status Conference re: Choice of Settlement Procedure. Therefore, the parties are not to appear before this Court on 11/2/2009 at 10:00 AM. Court Reporter: NOt Present. (gk) (Entered: 10/30/2009)
307 MINUTE ORDER (In Chambers) by Judge Christina A. Snyder re: PLAINTIFFS MOTION TO ENFORCE PRELIMINARY INJUNCTION AND, ALSO, TO STAY AND PRELIMINARILY ENJOIN IMPLEMENTATION OF PAYMENT CUTS FOR LACK OF PUBLIC NOTICE AS REQUIRED BY 42 C.F.R. § 407.205 (filed 10/11/09) 282 . The Court DENIES petitioners motion to enforce the preliminary injunction, with leave to amend, and DENIES petitioners motion to stay and preliminarily enjoin the challenged practices, with leave to amend. (pp) (Entered: 11/03/2009)
308 MINUTES OF Settlement Conference held before Magistrate Judge Margaret A. Nagle. There is no settlement at this time. However, the Court schedules a Telephonic Status Conference re settlement for 11/10/2009 12:30 PM before Magistrate Judge Margaret A. Nagle. The Court will initiate the call with counsel. The Court also schedules a Further Settlement Conference for 12/8/2009 10:00 AM before Magistrate Judge Margaret A. Nagle. Court Recorder: cs. (ec) (Entered: 11/03/2009)
309 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals,, 180 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Gray Panthers of Sacramento, Independent Living Center of Southern California, Margaret Dowling, Jason Young, Sharon Steen, Gerald Shapiro, Notice of Appeal to 9th Circuit Court of Appeals, 48 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Independent Living Center of Southern California, Margaret Dowling, Jason Young, Sharon Steen, Gerald Shapiro, Notice of Appeal to 9th Circuit Court of Appeals 127 filed by Sandra Shewry, Notice of Appeal to 9th Circuit Court of Appeals 243 filed by Sandra Shewry, CCA # 08−57016, 08−56422, 08−56554, 08−56061. The motion of the petitoners−appellees, Independent Living Center of Southern California, Inc., et al(Independent Living), to transfer condsideration of attorney fees on appeal is GRANTED. Independent Living's application for appellate attorney fees is transferred to the district court, pursuant to Ninth Circuit Rule 39−1.8. Order received in this district on 11/06/09. (lr) (Entered: 11/10/2009)
310 MINUTES OF Telephonic Status Conference held before Magistrate Judge Margaret A. Nagle − status conference was conducted off the record.Court Recorder: N/A. (ec) (Entered: 11/12/2009)
311 MINUTES OF IN CHAMBERS ORDER held before Magistrate Judge Margaret A. Nagle rescheduling the Further Settlement Conference in this matter from 12/8/09 to 12/16/2009 10:00 AM before Magistrate Judge Margaret A. Nagle. (ec) (Entered: 11/23/2009)
312 MANDATE of 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals, 180 , Notice of Appeal to 9th Circuit Court of Appeals 127 , CCA # 08−56422, 08−56554. The Decision of the District Court is AFFIRMED in part, REVERSED in part, and REMANDED. Mandate received in this district on 12/03/09. (lr) (Entered: 12/04/2009)
313 MINUTE ORDER (IN CHAMBERS) by Judge Christina A. Snyder Re: Hearing on Mandate of the 9th Circuit Court of Appeals: The Court reviews the mandate of the Ninth Circuit Court of Appeals. The Court sets a Status Conference on January 4, 2010 at 11:00 a.m. (jre) (Entered: 12/15/2009)
314 MINUTES OF IN CHAMBERS ORDER held before Magistrate Judge Margaret A. Nagle scheduling a Telephonic Status Conference for 12/16/2009 10:00 AM before Magistrate Judge Margaret A. Nagle in lieu of the further settlement conference presently scheduled for 12/16/09. The Court will initiate the call with counsel (ec) (Entered: 12/15/2009)
315 MINUTES OF Telephonic Status Conference re settlement held before Magistrate Judge Margaret A. Nagle. The Court schedules a Further Settlement Conference in this

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matter for 1/20/2010 10:00 AM before Magistrate Judge Margaret A. Nagle.Court Recorder: N/A. (ec). Document 316 renumered to 315 due to clerical error (Modified on 12/16/2009) (nhac). (Entered: 12/16/2009)
317 MANDATE of 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals,, 180 , Notice of Appeal to 9th Circuit Court of Appeals 127 , CCA # 08−56422, 08−56554. The Decision of the District Court is AFFIRMED in part, REVERSED in part, and REMANDED. Mandate received in this district on 12/21/09. (lr) (Entered: 12/22/2009)
318 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals,, 180 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Gray Panthers of Sacramento, Independent Living Center of Southern California, Margaret Dowling, Jason Young, Sharon Steen, Gerald Shapiro, Notice of Appeal to 9th Circuit Court of Appeals 127 filed by Sandra Shewry, CCA # 08−56422, 08−56554. The motion submitted on behalf of Appellant/Appellee David Maxwell−Jolly to file an oversized brief is granted. (cbr) (Entered: 12/28/2009)
319 MINUTES OF Status Conference Re Ninth Circuit Mandate (08−56422 and 08−56554) held before Judge Christina A. Snyder: The Court orders the spreading of the mandate. The Court orders a Further Status Conference be set on 3/8/2010 11:00 AM before Judge Christina A. Snyder, and allows counsel until 1/13/2010 to file their response as stated on the record. Court Reporter: Laura Elias. (gk) (Entered: 01/07/2010)
320 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals,, 180 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Gray Panthers of Sacramento, Independent Living Center of Southern California, Margaret Dowling, Jason Young, Sharon Steen, Gerald Shapiro, Notice of Appeal to 9th Circuit Court of Appeals 127 filed by Sandra Shewry, CCA # 08−56422, 08−56554. Order received in this district on 1/6/10. The Motion to Correct and Amend Order or, in the alternative, Petition for Rehearing, filed on behalf of David Maxwell−Jolly, Director of the Department of Health Care Services, State of California, is DENIED. (cbr) (Entered: 01/07/2010)
321 RESPONSE filed by Respondent Sandra Shewry RESPONDENT'S RESPONSE TO COURT'S INQUIRY AT JANUARY 4, 2010 STATUS CONFERENCE (Snuggs, Carmen) (Entered: 01/08/2010)
322 Intervenors' Response to Court's Inquiry at January 4, 2010 Status Conference re Ninth Circuit Mandate re: Response (non−motion) 321 , Status Conference, Set Hearings,, 319 (Keville, Jordan) (Entered: 01/13/2010)
325 MINUTES OF Settlement Conference held before Magistrate Judge Margaret A. Nagle. The settlement conference is conducted off the record. No settlement has been reached at this time. Telephone Conference set for 2/9/2010, 01:00 PM before Magistrate Judge Margaret A. Nagle.Court Recorder: CS 01/20/10. (mz) (Entered: 01/28/2010)
323 MINUTES (In Chambers) Order Amending this Court's 8/18/2008 Order Pursuant to the Ninth Circuit Court of Appeals Mandate Issued 12/21/2009 (08−56422 & 08−56554) by Judge Christina A. Snyder: Pursuant to the mandate from the Ninth Circuit, this Court hereby vacates the 8/27/2008 order modifying the injunction 135 , and amends the 8/18/2008 order granting in part and denying in part petitioners' motion for preliminary injunction 121 to change the effective date to 7/1/2008. Accordingly, the Court hereby orders respondent Director, her agents, servants, employees, attorneys, successors, and all those working in concert with her to refrain from enforcing Cal. Welf. & Inst. Code Section 14105.19(b)(1), including refraining from reducing by ten percent payments under the Medi−Cal fee−for−service program for physicians, dentists, pharmacies, adult day health care centers, clinics, health systems, and other providers for services provided on or after 7/1/2008. Court Reporter: N/A. (gk) (Entered: 01/25/2010)
324 NOTICE OF MOTION AND Amended MOTION to AMEND AND CLARIFY THE JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF filed by Respondent California Department of Health Care Services. Motion set for hearing

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on 2/22/2010 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 Respondent's Notice of Motion, # 2 Declaration DECLARATION OF OF CARMEN)(Snuggs, Carmen) (Entered: 01/27/2010)
326 NOTICE OF MOTION AND MOTION to Stay pending THE COURTS JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION; MEMORANDUM OF POINTS AND AUTHORITIES Minutes of In Chambers Order/Directive − no proceeding held,,,, 323 filed by Respondents Sandra Shewry, California Department of Health Care Services. Motion set for hearing on 2/22/2010 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 Declaration DECLARATION OF MICHELLE MARKS IN SUPPORT OF RESPONDENTS MOTION TO STAY THE COURTS JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION, # 2 Declaration DECLARATION OF TARA L. NEWMAN PURSUANT TO LOCAL RULE 7−3 IN SUPPORT OF RESPONDENTS MOTION TO STAY THE JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION, # 3 Declaration DECLARATION OF DENNIS DWORMAN IN SUPPORT OF RESPONDENTS MOTION TO STAY THE COURTS JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION)(Dhadwal, S. Andrew) (Entered: 01/29/2010)
327 NOTICE OF MOTION re MOTION to Stay pending THE COURTS JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION; MEMORANDUM OF POINTS AND AUTHORITIES Minutes of In Chambers Order/Directive − no proceeding held,,,, 323 MOTION to Stay pending THE COURTS JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION; MEMORANDUM OF POINTS AND AUTHORITIES Minutes of In Chambers Order/Directive − no proceeding held,,,, 323 MOTION to Stay pending THE COURTS JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION; MEMORANDUM OF POINTS AND AUTHORITIES Minutes of In Chambers Order/Directive − no proceeding held,,,, 323 MOTION to Stay pending THE COURTS JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION; MEMORANDUM OF POINTS AND AUTHORITIES Minutes of In Chambers Order/Directive − no proceeding held,,,, 323 326 filed by Respondents Sandra Shewry, California Department of Health Care Services. Motion set for hearing on 2/22/2010 at 10:00 AM before Judge Christina A. Snyder. (Dhadwal, S. Andrew) (Entered: 01/29/2010)
328 MINUTES (IN CHAMBERS) by Judge Christina A. Snyder: Proceedings: Order Re Respondent's 324 Motion to Alter or Amend and Clarify the 1/22/10 Order, Amending the 8/18/08 Injunction 324 . The Court finds this motion appropriate for decision without oral argument. Fed. R. Civ. P. 78; Local Rule 7−15. Accordingly, the hearing date of February 22, 2010, is hereby vacated, and the matter is hereby taken under submission. The Court hereby modifies the third paragraph, set forth at page 2 of its order, as follows: The Court hereby orders respondent Director, her agents, servants, employees, attorneys, successors, and all those working in concert with her to refrain from enforcing Cal. Welf. & Inst. Code § 14105.19(b)(1), including refraining from reducing by ten percent payments under the Medi−Cal fee−for−service program for physicians, dentists, optometrists, prescription drugs, adult day health care centers, and clinics for services provided on or after July 1, 2008. (mg) (Entered: 02/01/2010)
329 Amendment to MOTION to Stay pending THE COURTS JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION; MEMORANDUM OF POINTS AND AUTHORITIES Minutes of In Chambers Order/Directive − no proceeding held,,,, 323 MOTION to Stay pending THE COURTS JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION; MEMORANDUM OF POINTS AND AUTHORITIES Minutes of In Chambers Order/Directive − no proceeding held,,,, 323 MOTION to Stay pending THE COURTS JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION; MEMORANDUM OF POINTS AND AUTHORITIES Minutes of In Chambers Order/Directive − no proceeding held,,,, 323 MOTION to Stay pending THE COURTS JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION; MEMORANDUM OF POINTS AND AUTHORITIES Minutes of In Chambers Order/Directive − no proceeding held,,,, 323 326 filed by Respondents Sandra Shewry, California Department of Health Care Services. (Dhadwal, S. Andrew) (Entered: 02/01/2010)

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330 Opposition Opposition to re: MOTION to Stay pending THE COURTS JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION; MEMORANDUM OF POINTS AND AUTHORITIES Minutes of In Chambers Order/Directive − no proceeding held,,,, 323 MOTION to Stay pending THE COURTS JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION; MEMORANDUM OF POINTS AND AUTHORITIES Minutes of In Chambers Order/Directive − no proceeding held,,,, 323 MOTION to Stay pending THE COURTS JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION; MEMORANDUM OF POINTS AND AUTHORITIES Minutes of In Chambers Order/Directive − no proceeding held,,,, 323 MOTION to Stay pending THE COURTS JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION; MEMORANDUM OF POINTS AND AUTHORITIES Minutes of In Chambers Order/Directive − no proceeding held,,,, 323 326 filed by Petitioners Gerald Shapiro, Sharon Steen, Mark Beckwith, Margaret Dowling, Tran Pharmacy, Inc., Independent Living Center of Southern California, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Intervenor Parties Sacramento Family Medical Clinics, Inc., Theodore M Mazer, Ronald B Mead, Acacia Adult Day Services. (Cannizzo, Craig) (Entered: 02/08/2010)
332 MINUTES OF Telephonic Status Conference held before Magistrate Judge Margaret A. Nagle re settlement.(ec) (Entered: 02/16/2010)
333 MINUTES OF Telephone Conference held before Magistrate Judge Margaret A. Nagle re settlement(ec) (Entered: 02/16/2010)
334 MINUTES OF Telephone Conference held before Magistrate Judge Margaret A. Nagle re settlement (ec) (Entered: 02/16/2010)
331 MINUTES OF IN CHAMBERS ORDER held before Magistrate Judge Margaret A. Nagle scheduling a Further Settlement Conference in this matter for 2/25/2010 10:00 AM before Magistrate Judge Margaret A. Nagle for participation by defendants only. (See order for details) (ec) (Entered: 02/12/2010)
335 REPLY REPLY TO JOINT OPPOSITION TO MOTION TO STAY MOTION to Stay pending THE COURTS JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION; MEMORANDUM OF POINTS AND AUTHORITIES Minutes of In Chambers Order/Directive − no proceeding held,,,, 323 MOTION to Stay pending THE COURTS JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION; MEMORANDUM OF POINTS AND AUTHORITIES Minutes of In Chambers Order/Directive − no proceeding held,,,, 323 MOTION to Stay pending THE COURTS JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION; MEMORANDUM OF POINTS AND AUTHORITIES Minutes of In Chambers Order/Directive − no proceeding held,,,, 323 MOTION to Stay pending THE COURTS JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION; MEMORANDUM OF POINTS AND AUTHORITIES Minutes of In Chambers Order/Directive − no proceeding held,,,, 323 326 filed by Respondent Sandra Shewry. (Snuggs, Carmen) (Entered: 02/16/2010)
336 REQUEST FOR JUDICIAL NOTICE re MOTION to Stay pending THE COURTS JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION; MEMORANDUM OF POINTS AND AUTHORITIES Minutes of In Chambers Order/Directive − no proceeding held,,,, 323 MOTION to Stay pending THE COURTS JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION; MEMORANDUM OF POINTS AND AUTHORITIES Minutes of In Chambers Order/Directive − no proceeding held,,,, 323 MOTION to Stay pending THE COURTS JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION; MEMORANDUM OF POINTS AND AUTHORITIES Minutes of In Chambers Order/Directive − no proceeding held,,,, 323 MOTION to Stay pending THE COURTS JANUARY 22, 2010 ORDER AMENDING THE AUGUST 18, 2008 INJUNCTION; MEMORANDUM OF POINTS AND AUTHORITIES Minutes of In Chambers Order/Directive − no proceeding held,,,, 323 326 filed by Respondent Sandra Shewry. (Snuggs, Carmen) (Entered: 02/24/2010)
337 MINUTES OF Settlement Conference held before Magistrate Judge Margaret A. Nagle. The Court conducts the settlement conference off the record.Court Recorder: N/A. (ec) (Entered: 02/25/2010)

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338 ORDER DENYING RESPONDENTS MOTION TO STAY THE COURT'S 1/22/2010 ORDER AMENDING THE 8/18/2008 INJUNCTION by Judge Christina A. Snyder: The Court DENIES Respondent's Motion to Stay 326 . (gk) (Entered: 02/26/2010)
339 NOTICE OF MOTION AND Renewed MOTION to Intervene filed by Movants Proposed Intervenors California Association of Medical Product Suppliers, California Hospital Association, Sharp Memorial Hospital, Grossmont Hospital Corporation, Sharp Chula Vista Medical Center and Sharp Coronado Hospital and Healthcare Center. Motion set for hearing on 3/29/2010 at 10:00 AM before Judge Christina A. Snyder. (Keville, Jordan) (Entered: 03/01/2010)
340 STATUS REPORT FOR MARCH 8, 2010 HEARING 11 A.M. filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. (Carman, Lynn) (Entered: 03/01/2010)
341 STATUS REPORT RE MARCH 8, 2010 STATUS CONFERENCE filed by Intervenor Plaintiff Intervenors Sacramento Family Medical Clinics, Inc., Theodore M. Mazer, M.D., Ronald B. Mead, D.D.S. and Acacia Adult Day Services. (Gross, Byron) (Entered: 03/03/2010)
342 NOTICE OF MOTION AND MOTION to Stay Case pending Trial Court Proceedings Pending Disposition of Petition of Certiorari filed by Respondents Sandra Shewry. Motion set for hearing on 3/29/2010 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 Proposed Order Granting Respondent's Motion to Stay)(Kim, Jennifer) (Entered: 03/03/2010)
343 EX PARTE APPLICATION to Shorten Time for Hearing to 3/29/10 and Hearing of Respondent's Motion to Stay filed by Respondents Sandra Shewry. (Attachments: # 1 Memorandum in Support of Ex Parte, # 2 Declaration of Carmen D. Snuggs in Support, # 3 Proposed Order Granting Respondent's Ex Parte Application for and Order Shortening Time to Hear Motion to Stay)(Kim, Jennifer) (Entered: 03/03/2010)
344 MINUTES OF IN CHAMBERS ORDER held before Magistrate Judge Margaret A. Nagle scheduling a Further Settlement Conference with defense counsel and defendant's representatives only for 3/26/2010 02:00 PM before Magistrate Judge Margaret A. Nagle. (ec) . (Entered: 03/04/2010)
345 STATUS REPORT FOR THE MARCH 8, 2010 STATUS CONFERENCE filed by Respondent Sandra Shewry. (Snuggs, Carmen) (Entered: 03/04/2010)
346 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents RE: Renewed MOTION to Intervene 339 . The following error(s) was found: Other error(s) with document(s) are specified below: Lacking statement re conference of counsel, pursuant to Local Rule 7−3. Proposed order not submitted pursuant to Local Rule 52−4.1. In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. You need not take any action in response to this notice unless and until the court directs you to do so. (jp) (Entered: 03/05/2010)
347 MINUTES (IN CHAMBERS) by Judge Christina A. Snyder: The Court DENIES Respondent's Ex Parte Application for Order Shortening Time for Notice of Respondent's Motion to Stay the Trial Court Proceedings 343 . Court Reporter: Not Present. (gk) (Entered: 03/05/2010)
348 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents RE: Notice of Motion and Motion to Stay Trial Court Proceedings Pending Disposition of Petition of Certiorari filed 3/3/2010 342 . The following error(s) was found: Hearing information is missing, incorrect, or not timely. Hearing date of 3/29/2010 is untimely pursuant to Local Rule 6−1. Ex Parte Application for Order Shortening Time for Notice was denied on 3/5/2010. In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. You need not take any action in response to this notice unless and until the court directs you to do so. (gk) (Entered: 03/08/2010)
349 OPPOSITION IN OPPOSITION re: Renewed MOTION to Intervene 339 filed by Respondent California Department of Health Care Services. (Dhadwal, S. Andrew)

03/08/2010 03/15/2010
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03/30/2010 04/01/2010

(Entered: 03/08/2010)
350 MINUTES OF Status Conference Re Further Proceedings held before Judge Christina A. Snyder: The Court and counsel confer regarding the status and the progress of the case. A Status Conference is set for 4/1/2010 12:00 PM before Judge Christina A. Snyder. Court Reporter: Laura Elias. (gk) (Entered: 03/10/2010)
351 NOTICE OF MOTION AND MOTION for Order for ORDER TO SET ASIDE RESERVE FOR ATTORNEYS FEES filed by PETITIONERS Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. Motion set for hearing on 4/12/2010 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 Proposed Order PROPOSED ORDER)(Carman, Lynn) (Entered: 03/15/2010)
352 REPLY Renewed MOTION to Intervene 339 filed by Intervenor Proposed Intervenors California Association of Medical Product Suppliers, California Hospital Association, Sharp Memorial Hospital, Grossmont Hospital Corporation, Sharp Chula Vista Medical Center and. (Keville, Jordan) (Entered: 03/15/2010)
353 ORDER by Judge Christina A. Snyder DENYING Respondent's Motion to Stay Trial Court Proceedings Pending Disposition of Petition of Certiorari 342 . (jp) (Entered: 03/18/2010)
354 OPPOSITION TO PETITIONERS' MOTION TO SET ASIDE A RESERVE FOR ATTORNEYS' FEES OPPOSITION re: MOTION for Order for ORDER TO SET ASIDE RESERVE FOR ATTORNEYS FEES 351 filed by Respondent California Department of Health Care Services. (Dhadwal, S. Andrew) (Entered: 03/22/2010)
355 MINUTES OF IN CHAMBERS ORDER held before Magistrate Judge Margaret A. Nagle taking off calendar the further settlement conference/video conference scheduled for Friday, March 26, 2010. (ec) (Entered: 03/25/2010)
356 MINUTES (IN CHAMBERS) by Judge Christina A. Snyder: The Court finds the Proposed Intervenors' Renewed Motion to Intervene Pursuant to FRCP 24 339 appropriate for decision without oral argument. Accordingly, the hearing date of 3/29/2010, is hereby vacated, and the matter is hereby taken under submission. The Court GRANTS proposed intervenors' motion to intervene. Court Reporter: Not Present. (gk) (Entered: 03/26/2010)
362 COMPLAINT IN INTERVENTION against Respondent David Maxwell−Jolly filed by Intervenors California Association of Medical Product Suppliers, California Hospital Association, Sharp Memorial Hospital, Grossmont Hospital Corporation, Sharp Chula Vista Medical Center, and Sharp Coronado Hospital and Healthcare Center.(gk) (Entered: 05/13/2010)
357 REPLY Joint Reply to Opposition to MOTION for Order for ORDER TO SET ASIDE RESERVE FOR ATTORNEYS FEES 351 filed by Intervenor Parties Acacia Adult Day Services, Theodore M Mazer, Ronald B Mead, Proposed Intervenors California Association of Medical Product Suppliers, California Hospital Association, Sharp Memorial Hospital, Grossmont Hospital Corporation, Sharp Chula Vista Medical Center and, Sacramento Family Medical Clinics, Inc., Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. (Cannizzo, Craig) (Entered: 03/29/2010)
358 STATUS REPORT OF COMPLIANCE WITH JANUARY 29, 2010 ORDER AMENDING AUGUST 18, 2008 PRELIMINARY INJUNCTION ORDER; DECLARATIONS OF DENNIS DWORMAN, MICHELLE MARKS, AND JUDITH PHELPS filed by Respondent California Department of Health Care Services. (Snuggs, Carmen) (Entered: 03/30/2010)
359 MINUTES OF Status Conference held before Judge Christina A. Snyder: The Court and counsel confer regarding the status of the case and status report filed on 3/30/2010. In light of the Petitioners' Motion to Set Aside a Reserve for Attorneys Fees filed on 3/15/2010 and scheduled for a hearing on 4/12/2010 at 10:00 AM, Respondents are instructed to withhold making payments until 4/12/2010. Court Reporter: Laura Elias.

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05/24/2010 05/24/2010

(gk) (Entered: 04/02/2010)
360 MINUTE ORDER (IN CHAMBERS) by Judge Christina A. Snyder. The Court finds PETITIONERS MOTION TO SET ASIDE A RESERVE FOR ATTORNEYS FEES (filed 03/15/10) 351 appropriate for decision without oral argument. Fed. R. Civ. P. 78; Local Rule 7−15. Accordingly, the hearing date of April 12, 2010, is hereby vacated. Based on the record before it, the Court finds that the request to set aside a reserve is inconsistent with the mandate from the Ninth Circuit. It appears that the set aside is premature because there has been no final adjudication or settlement of this case. Neither side has provided any reason why this Court at the conclusion of the case could not fashion an order requiring the state of California to pay attorneys fees based on what is ultimately the value of any judgment or settlement. Further, the Court finds that a set aside at this time does not appear to be in the public interest in as much as plaintiffs have previously argued that the proposed recipients of the funds, which they now seek to withhold, will suffer irreparable injury if the moneys are not paid to them as reimbursement for Medi−Cal services already provided. Accordingly, the motion is denied without prejudice. (pp) (Entered: 04/09/2010)
361 STATUS REPORT Supplemental Report of Compliance with January 29, 2010 Order Amending August 18, 2008 Preliminary Injunction Order filed by Respondent Sandra Shewry. (Attachments: # 1 Declaration of Dennis Dworman, # 2 Declaration of Michelle Marks, # 3 Declaration of Maria Enriquez, # 4 Declaration of Toby Douglas)(Dhadwal, S. Andrew) (Entered: 04/09/2010)
DELETION for the following reason: Attorney erroneously added the parties on this case as one party. The parties will be re−enter on the court docket as individual intervenors.(sm) (Entered: 05/13/2010)
PARTY record Proposed Intervenors California Association of Medical Product Suppliers, California Hospital Association, Sharp Memorial Hospital, Grossmont Hospital Corporation, Sharp Chula Vista Medical Center and was deleted for the following reason: Per Operations the party record was added to this case in error on 3/1/10.(jj) (Entered: 05/13/2010)
363 NOTICE OF MOTION AND MOTION for Relief from ORDERS TO REQUIRE (1) FILING OF INTERVENTION COMPLAINT, (2) TO SET HEARING FOR DISMISSAL MOTION; AND (3)TO TERMINATE STAY ORDER re Order, Case Stayed,,,,,,,, 228 , MOTION to Dismiss Petitioner's First Amended Petition for Writ of Mandamus 36 , Motion Hearing, Link Motions to Minutes,,,, 174 filed by PETITIONERS Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. Motion set for hearing on 6/14/2010 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 Exhibit PROPOSED ORDER)(Carman, Lynn) (Entered: 05/17/2010)
364 NOTICE OF NON−OPPOSITION to MOTION for Relief from ORDERS TO REQUIRE (1) FILING OF INTERVENTION COMPLAINT, (2) TO SET HEARING FOR DISMISSAL MOTION; AND (3)TO TERMINATE STAY ORDER re Order, Case Stayed,,,,,,,, 228 , MOTION to Dismiss Petitioner's First Amended Petiti MOTION for Relief from ORDERS TO REQUIRE (1) FILING OF INTERVENTION COMPLAINT, (2) TO SET HEARING FOR DISMISSAL MOTION; AND (3)TO TERMINATE STAY ORDER re Order, Case Stayed,,,,,,,, 228 , MOTION to Dismiss Petitioner's First Amended Petiti MOTION for Relief from ORDERS TO REQUIRE (1) FILING OF INTERVENTION COMPLAINT, (2) TO SET HEARING FOR DISMISSAL MOTION; AND (3)TO TERMINATE STAY ORDER re Order, Case Stayed,,,,,,,, 228 , MOTION to Dismiss Petitioner's First Amended Petiti 363 filed by Respondent David Maxwell−Jolly. (Snuggs, Carmen) (Entered: 05/24/2010)
365 ANSWER to Amended Complaint,, by Respondent to Petitioners' Verified First Amended Petition for Writ of Mandamus filed by Respondent David Maxwell−Jolly.(Snuggs, Carmen) (Entered: 05/24/2010)
366 NOTICE OF MOTION AND MOTION to Withdraw MOTION to Dismiss Petitioner's First Amended Petition for Writ of Mandamus 36 filed by Respondent David Maxwell−Jolly. (Snuggs, Carmen) (Entered: 05/24/2010)

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367 OPPOSITION to MOTION for Relief from ORDERS TO REQUIRE (1) FILING OF INTERVENTION COMPLAINT, (2) TO SET HEARING FOR DISMISSAL MOTION; AND (3)TO TERMINATE STAY ORDER re Order, Case Stayed,,,,,,,, 228 , MOTION to Dismiss Petitioner's First Amended Petiti MOTION for Relief from ORDERS TO REQUIRE (1) FILING OF INTERVENTION COMPLAINT, (2) TO SET HEARING FOR DISMISSAL MOTION; AND (3)TO TERMINATE STAY ORDER re Order, Case Stayed,,,,,,,, 228 , MOTION to Dismiss Petitioner's First Amended Petiti MOTION for Relief from ORDERS TO REQUIRE (1) FILING OF INTERVENTION COMPLAINT, (2) TO SET HEARING FOR DISMISSAL MOTION; AND (3)TO TERMINATE STAY ORDER re Order, Case Stayed,,,,,,,, 228 , MOTION to Dismiss Petitioner's First Amended Petiti 363 filed by Intervenor Sacramento Family Medical Clinics, Inc.. (Keville, Jordan) (Entered: 05/24/2010)
369 MINUTE ORDER (In Chambers) by Judge Christina A. Snyder re: PETITIONERS' MOTIONS AND REQUESTS FOR: 1) ORDER TO REQUIRE INTERVENORS TO FILE THEIR COMPLAINT IN INTERVENTION WITHIN 7 DAYS, OR BE DISMISSED; 2) ORDER SETTING SETTING HEARING DATE FOR RESPONDENT'S MOTION TO DISMISS, [#36]; AND, 3) ORDER TERMINATING THE ORDER [#228] IN RESPECT TO THE WITHIN CASE NO. CV08−3315−CAS INDEPENDENT LIVING CENTER, ET AL., V. SANDRA SHEWRY (filed 5/17/10) 363 . The Court grants in part and denies in part petitioners motion. Specifically, the Court DENIES petitioners first and second requests, and grants their third request. (pp) (Entered: 05/27/2010)
370 NOTICE OF MOTION AND MOTION for Summary Judgment as to Medi−Cal Rate Reduction filed by Intervenors Sacramento Family Medical Clinics, Inc.. Motion set for hearing on 6/19/2010 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 Memorandum Points and Authorities, # 2 Declaration Raymond − Part 1, # 3 Declaration Raymond − Part 2, # 4 Declaration Raymond − Part 3, # 5 Declaration Raymond − Part 4, # 6 Declaration Dauner, # 7 Declaration Mazer, # 8 Declaration Pumpian, # 9 Declaration Achermann, # 10 Declaration Mead, # 11 Declaration Simon, # 12 Declaration Vega, # 13 Declaration Keville, # 14 Proposed Order Granting Summary Judgment, # 15 Proposed Order Judgment, # 16 Supplement Statement of Uncontroverted Facts, # 17 Supplement Request for Judicial Notice)(Keville, Jordan) (Entered: 05/28/2010)
371 NOTICE OF ERRATA filed by INTERVENORS Sacramento Family Medical Clinics, Inc.. (Keville, Jordan) (Entered: 05/28/2010)
372 RESPONDENT'S ANSWER TO COMPLAINT IN INTERVENTION ANSWER to Intervenor Complaint, 362 filed by Respondent David Maxwell−Jolly.(Snuggs, Carmen) (Entered: 06/02/2010)
373 NOTICE OF ERRATA filed by Intervenors Sacramento Family Medical Clinics, Inc.. (Attachments: # 1 Supplement Amended Notice, # 2 Proposed Order Amended [Proposed] Judgment)(Keville, Jordan) (Entered: 06/04/2010)
374 NOTICE OF MOTION AND MOTION to Stay Case pending Trial Court Proceedings Pending Disposition of Petition for Certiorari filed by Respondent David Maxwell−Jolly. Motion set for hearing on 7/12/2010 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 Declaration of Carmen D. Snuggs in Support of Respondent's Motion for Stay Trial Court Proceedings Pending Disposition of Petition for Certiorari, # 2 Proposed Order Granting Respondent's Motion to Stay Trial Court Proceedings Pending Disposition of Petition for Certiorari)(Snuggs, Carmen) (Entered: 06/07/2010)
375 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents RE: Notice of Motion and Motion for Summary Judgment filed 5/28/2010 370 . The following error(s) was found: The separately attached proposed judgment lacks at least two lines of text on the page that has the line provided for the signature of the judge, Local Rule 58−10. Clerk reset the hearing to 7/19/2010 at 10:00 AM. In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. You need not take any action in response to this notice unless and until the court directs you to do so. (gk) (Entered: 06/07/2010)

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06/11/2010 06/11/2010

376 NOTICE OF MOTION AND MOTION for Summary Judgment as to PREEMPTED ACTION TO IMPLEMENT 10% RATE CUT OF AB 5 OR TO RECOUP PRELIMINARY IMNJUNCTION PAYMENTS filed by PETITIONERS Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. Motion set for hearing on 7/26/2010 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 Memorandum MEMORANDUM IN SUPPORT OF SUMMARY JUDGMENHT MOTION, # 2 STATEMENT OF UNCONTROVERTED FACTS AND CONCLUSIONS)(Carman, Lynn) (Entered: 06/07/2010)
377 NOTICE PROPOSED SUMMARY JUDGMENT filed by PETITIONERS Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. (Carman, Lynn) (Entered: 06/08/2010)
378 EX PARTE APPLICATION for Leave to Propound Additional Interrogatories filed by Respondent David Maxwell−Jolly. (Attachments: # 1 Declaration of Andrew Dhadwal, # 2 Exhibit A, # 3 Exhibit B, # 4 Proposed Order Granting Respondent's Ex Parte Motion to Propound Additional Interrogatories)(Dhadwal, S. Andrew) (Entered: 06/09/2010)
379 RESPONDENT'S ANSWER to Intervenor Complaint, 368 filed by Respondent David Maxwell−Jolly.(Snuggs, Carmen) (Entered: 06/09/2010)
380 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents RE: Respondent's Notice of Motion and Motion to Stay Trial Court Proceedings Pending Disposition of Petition for Certiorari filed 6/7/2010 374 . The following error(s) was found: The document formally notices the motion for hearing on 7/5/2010 at 10:00 AM, which is a federal holiday. The filer has set the motion for hearing on 7/12/2010 at 10:00 AM. In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. You need not take any action in response to this notice unless and until the court directs you to do so. (gk) (Entered: 06/09/2010)
381 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents RE: Petitioner's Notice of Motion and Motion for Summary Judgment, and in the Alternative, for Partial Summary Judgment filed 6/7/2010 376 . The following error(s) was found: Local Rule 11−6 Memorandum brief exceeds 25 pages.Local Rule 11−8 Memorandum brief exceeding 10 pages shall contain table of contents. In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. You need not take any action in response to this notice unless and until the court directs you to do so. (gk) (Entered: 06/09/2010)
382 OPPOSITION to EX PARTE APPLICATION for Leave to Propound Additional Interrogatories 378 filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. (Carman, Lynn) (Entered: 06/10/2010)
383 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents RE: Proposed Judgment for Permanent Injunction 377 . The following error(s) was found: Other error(s) with document(s) are specified below. Other error(s) with document(s): This document tendered for the judge's approval should have been submitted as a separate PDF attachment to a Notice of Lodging. In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. You need not take any action in response to this notice unless and until the court directs you to do so. (bm) (Entered: 06/10/2010)
384 OPPOSITION to EX PARTE APPLICATION for Leave to Propound Additional Interrogatories 378 filed by Intervenor Plaintiff Sacramento Family Medical Clinics, Inc.. (Keville, Jordan) (Entered: 06/11/2010)
385 EX PARTE APPLICATION to Stay Case pending Resolution of Respondent's Petition for Certiorari filed by Respondent David Maxwell−Jolly. (Attachments: # 1

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07/30/2010

Memorandum In Support of Respondent's Ex Parte Application for A Stay, # 2 Declaration Of Carmen D. Snuggs, # 3 Proposed Order Granting Respondent's Ex Parte Application to Stay)(Snuggs, Carmen) (Entered: 06/11/2010)
386 NOTICE TABLE OF CONTENTS and TABLE OF AUTHORITIES for PLAINTIFFS' MEMORANDUM IN FOR SUMMARY JUDGMENT filed by PETITIONERS Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. (Carman, Lynn) (Entered: 06/11/2010)
387 NOTICE of Change of address by Lynn S Carman attorney for Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. Changing attorneys address to LYNN S CARMAN: 8 Newbury Lane, Novato, California 94949−8239. Filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. (Carman, Lynn) (Entered: 06/11/2010)
388 OPPOSITION TO re: EX PARTE APPLICATION to Stay Case pending Resolution of Respondent's Petition for Certiorari 385 filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. (Friedman, Stanley) (Entered: 06/13/2010)
389 MINUTES: (IN CHAMBERS) On the Courts own motion, Intervenors Motion for Summary Judgment 370 filed May 28, 2010 and noticed for hearing on July 19, 2010 is hereby continued to July 26, 2010 at 10:00 A.M., to be heard simultaneously with Petitioners Motion for Summary Judgment, Or In The Alternative, For Partial Summary Judgment filed on June 7, 2010 by Judge Christina A. Snyder. (ir) (Entered: 06/15/2010)
390 OPPOSITION to EX PARTE APPLICATION to Stay Case pending Resolution of Respondent's Petition for Certiorari 385 filed by Intervenor Plaintiffs Acacia Adult Day Services, California Association of Medical Product Suppliers, California Hospital Association, Grossmont Hospital Corporation, Theodore M Mazer, Ronald B Mead, Sacramento Family Medical Clinics, Inc., Sharp Chula Vista Medical Center, Sharp Coronado Hospital and Healthcare Center, Sharp Memorial Hospital. (Cannizzo, Craig) (Entered: 06/15/2010)
391 MINUTES (IN CHAMBERS): ORDER by Magistrate Judge Margaret A. Nagle: granting 378 Ex Parte Application for Leave (ec) (Entered: 06/17/2010)
392 MINUTES: (In Chambers) RESPONDENTS EX PARTE APPLICATION FOR STAY OF THE TRIAL COURT PROCEEDINGS OR, IN THE ALTERNATIVE, FOR AN ORDER SHORTENING TIMEFOR HEARING RESPONDENTS MOTION TO STAY TRIAL COURT PROCEEDINGS CURRENTLY SET FOR JULY 12, 2010 (filed 6/11/10): Accordingly, the Court GRANTS respondents ex parte application 385 and hereby orders the instant matter stayed. Within 45 days from the date of this order, or upon the disposition of the petition for certiorari, whichever occurs first, the parties shall file a joint status report. Because respondents Motion to Stay, filed June 7, 2010, seeks the same relief granted herein, the Motion to Stay 374 is hereby DENIED as moot. Petitioners and Intervenors Motions for Summary Judgment 376 370 , filed June 7, 2010 and May 28, 2010, respectively, are taken off calendar and the hearing currently set for July 26, 2010, is hereby vacated pending further order of this Court IT IS SO ORDERED by Judge Christina A. Snyder. (ir) (Entered: 06/17/2010)
393 STATUS REPORT JOINTLY filed by Intervenor Plaintiffs Acacia Adult Day Services, California Association of Medical Product Suppliers, California Hospital Association, Grossmont Hospital Corporation, Theodore M Mazer, Ronald B Mead, Sacramento Family Medical Clinics, Inc., Sharp Chula Vista Medical Center, Sharp Coronado Hospital and Healthcare Center, Sharp Memorial Hospital, Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. (Cannizzo, Craig) (Entered: 07/30/2010)

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04/12/2012 04/12/2012 04/12/2012

394 STATUS REPORT PURSUANT TO THE COURT'S JUNE 17, 2010 ORDER filed by Respondent David Maxwell−Jolly. (Dhadwal, S. Andrew) (Entered: 08/02/2010)
395 MINUTE ORDER IN CHAMBERS by Judge Christina A. Snyder:THE COURT, having granted a stay on June 17, 2010; The Court has received the Joint Status Report of the Petitioners filed July 30, 2010, and Respondents Status Report filed August 2, 2010, pursuant to this Courts Order of June 17, 2010; IT IS ORDERED that counsel shall file a Joint Status Report within 90 days and every quarter thereafter or upon disposition of the petitions for certiorari in relatedactions, whichever occurs first. (lc) (Entered: 12/29/2010)
396 NOTICE filed by Intervenors Acacia Adult Day Services, California Association of Medical Product Suppliers, California Hospital Association, Grossmont Hospital Corporation, Theodore M Mazer, Ronald B Mead, Sacramento Family Medical Clinics, Inc., Sharp Chula Vista Medical Center, Sharp Coronado Hospital and Healthcare Center, Sharp Memorial Hospital. NOTICE OF CHANGE OF FIRM NAME (Cannizzo, Craig) (Entered: 01/31/2011)
397 QUARTERLY REPORT of Joint Status Report filed by Intervenor Plaintiffs Acacia Adult Day Services, California Association of Medical Product Suppliers, California Hospital Association, Grossmont Hospital Corporation, Theodore M Mazer, Ronald B Mead, Sacramento Family Medical Clinics, Inc., Sharp Chula Vista Medical Center, Sharp Coronado Hospital and Healthcare Center, Sharp Memorial Hospital, Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. (Cannizzo, Craig) (Entered: 01/31/2011)
398 STATUS REPORT PURSUANT TO THE COURT'S DECEMBER 28, 2010 ORDER filed by Respondent California Department of Health Care Services. (Attachments: # 1 Exhibit A THRU E TO DECL OF CARMEN D. SNUGGS IN SUPPORT OF STATUS REPORT)(Snuggs, Carmen) (Entered: 02/01/2011)
399 STATUS REPORT (Joint) Pursuant to the Court's December 28, 2010 Order filed by Respondent David Maxwell−Jolly. (Snuggs, Carmen) (Entered: 05/26/2011)
400 MINUTES (IN CHAMBERS) − ORDER REMOVING ACTION FROM THE ACTIVE LIST OF CASES, PURSUANT TO A STAY IN THE ACTION by Judge Christina A. Snyder: THE COURT, having approved a stay in this matter on 6/17/2010; IT IS HEREBY ORDERED that this action is hereby removed from this Court's active caseload until further application by the parties or order of this Court. Counsel shall continue to file quarterly status reports detailing the status of the case until the action has been reactivated on this Court's active caseload or a stipulation for dismissal is filed. This Court retains full jurisdiction over this action and this Order shall not prejudice any party to this action. (Made JS−6. Case Terminated.) Court Reporter: Not Present. (gk) (Entered: 06/02/2011)
401 NOTICE OF MOTION AND MOTION to Lift Stay re Order of June 17, 2010 filed by Petitioners Mark Beckwith, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. Motion set for hearing on 5/14/2012 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 Proposed Order)(Friedman, Stanley) (Entered: 04/12/2012)
402 NOTICE OF MOTION AND MOTION for Summary Judgment filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. Motion set for hearing on 5/14/2012 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 Request for Judicial Notice, # 2 Separate Statement of Uncontroverted Facts and Conclusions of Law, # 3 Proposed Order)(Friedman, Stanley) (Entered: 04/12/2012)
Notice of Electronic Filing re MOTION to Lift Stay re Order of June 17, 2010 401 , MOTION for Summary Judgment 402 e−mailed to andrew.dhadwal@doj.ca.gov bounced due to 5.1.0 − Unknown address error 550−'Mailbox unavailable or access denied. Primary e−mail address corrected. Notice of Electronic Filing resent addressed to andrewd@lmwslaw.com with a request that he update his profile. Pursuant to the General Order and Local Rules it is the attorneys obligation to maintain all personal

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contact information including e−mail address in the CM/ECF system. THERE IS NO PDF DOCUMENT ASSOCIATED WITH THIS ENTRY.(tyw) TEXT ONLY ENTRY (Entered: 04/13/2012)
403 MEMORANDUM in Opposition to MOTION to Lift Stay re Order of June 17, 2010 401 filed by Respondent David Maxwell−Jolly. (Attachments: # 1 Exhibit Request for Judicial Notice)(Linton, Elizabeth) (Entered: 04/23/2012)
404 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals 127 filed by Sandra Shewry, CCA # 08−56422 and 249 CCA #08−57016. The parties are directed to file contemporaneous supplemental briefs in their respective cases concerning the effect of Douglas v. Independent Living Center of Southern California, Inc., 132 S.Ct.1204(2012). Briefs shall be due 45 days from the filing of this order and shall not exceed 30 pages in length. Order received in this district on 4/26/12. (car) Modified on 4/30/2012 (car). (Entered: 04/30/2012)
405 REPLY in support of MOTION to Lift Stay re Order of June 17, 2010 401 , MOTION for Summary Judgment 402 filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. (Friedman, Stanley) (Entered: 04/30/2012)
406 NOTICE of Change of Attorney Information filed by Respondent David Maxwell−Jolly. (Linton, Elizabeth) (Entered: 05/02/2012)
407 MINUTES (IN CHAMBERS) by Judge Christina A. Snyder RE: Petitioner's Motion to Life Stay and Restore Case to Active Status 401 ; and Petitioner's Motion for Summary Judgment 402 . The Court DENIES petitioners' motion to lift the stay. The Court declines to address petitioners' motion for summary judgment and permanent injunction. Court Reporter: Not Present. (gk) (Entered: 05/09/2012)
Notice of Electronic Filing re Notice of Deficiency in Electronically Filed Documents (G−112), Notice of Deficiency in Electronically Filed Documents (G−112) 408 , Order on Motion to Lift Stay on Case, Order on Motion for Summary Judgment,, 407 e−mailed to bgross@health−law.com bounced due to 5.1.0 − Unknown address error 550−'No such user − psmtp. Primary e−mail address corrected. Notice of Electronic Filing resent addressed to gross@healthlaw.org. Pursuant to the General Order and Local Rules it is the attorneys obligation to maintain all personal contact information including e−mail address in the CM/ECF system. THERE IS NO PDF DOCUMENT ASSOCIATED WITH THIS ENTRY.(tyw) TEXT ONLY ENTRY (Entered: 05/15/2012)
408 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents RE: Notice (Other) 406 . The following error(s) was found: Incorrect event selected. The correct event is: Change of Attorney Information G−06. In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. You need not take any action in response to this notice unless and until the court directs you to do so. (lom) (Entered: 05/10/2012)
409 ORDER from 9th CCA filed, CCA # 08−56422, 08−57016, 09−55532, 09−55692. The parties' unanimous joint motion to refer Case Nos. 08−56422, 08−57016, 09−55532, and 09−55692 to mediation, and to continue the supplemental briefing schedule during the pendency of mediation [D.E. 49−1], is hereby GRANTED. Order received in this district on 5/22/12. (car) (Entered: 05/24/2012)
410 Change of Address (Carman, Lynn) (Entered: 07/12/2012)
412 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents RE: Miscellaneous Document 410 . The following error(s) was found: Incorrect event selected. The correct event is: Notice of change of attorney information. In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. You need not take any action in response to this notice unless and until the court directs you to do so. (ak) (Entered: 07/25/2012)

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411 NOTICE of Change of Attorney Information for attorney Sara Ugaz counsel for Intervenor Parties California Association for Health Services at Home, California Medical Transportation Association, Inc., Intervenor Plaintiffs California Association of Medical Product Suppliers, California Hospital Association, Respondent California Department of Health Care Services. SARA UGAZ will no longer receive service of documents from the Clerks Office for the reason indicated in the G−06 Notice. Filed by Defendant SARA UGAZ (Ugaz, Sara) (Entered: 07/23/2012)
413 MINUTES (IN CHAMBERS) STAY OF PROCEEDINGS by Judge Christina A. Snyder: By order dated 7/8/2013, the Court directed the parties in these matters to submit a joint status report. Dkt. #242, in case no. 2:11−CV−09688−CAS(MANx). The joint status report was filed on 7/23/2013. Dkt. #243, in case no. 2:11−CV−09688−CAS(MANx). The Court has reviewed the parties' positions set forth therein, as well as the issues presented by the petition for writ of certiorari now pending in the United States Supreme Court, see Supreme Court Docket No. 13−253. Based on the foregoing, the Court finds that there is good cause to stay the proceedings or, if applicable, to continue the existing stay of the proceedings in the above−entitled cases, pending notification from this Court. The parties are directed to file a joint status report with this Court within 14 days after the Supreme Court has taken any action with respect to the above−referenced petition for writ of certiorari. Court Reporter: Not Present. (gk) (Entered: 11/06/2013)
414 ORDER from 9th CCA filed re: Notice of Appeal to 9th Circuit Court of Appeals, 180 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Gray Panthers of Sacramento, Independent Living Center of Southern California, Margaret Dowling, Jason Young, Sharon Steen, Gerald Shapiro, Notice of Appeal to 9th Circuit Court of Appeals 127 filed by Sandra Shewry, Notice of Appeal to 9th Circuit Court of Appeals 243 filed by Sandra Shewry, CCA # 08−56422, 08−56554 and 08−57016. Pursuant to the parties joint request for dismissal, these appeals are voluntarily dismissed. Fed. R. App. P. 42(b). The parties shall bear their own costs and fees on appeal. A copy of this order shall serve as and for the mandate of this court. Order received in this district on 5/28/14. (mat) (Entered: 05/30/2014)
415 Notice of Electronic Filing re USCA Order 414 e−mailed to Stacy Canana bounced due to invalid/rejected email. The primary e−mail address associated with the attorney record has been deleted. Pursuant to Local Rules it is the attorneys obligation to maintain all personal contact information including e−mail address in the CM/ECF system. THERE IS NO PDF DOCUMENT ASSOCIATED WITH THIS ENTRY. (cbr) TEXT ONLY ENTRY (Entered: 05/30/2014)
416 Notice of Electronic Filing re USCA Order 414 e−mailed to Attorney Byron J Gross at gross@healthlaw.org bounced due to invalid email. Primary e−mail address corrected. Notice of Electronic Filing resent addressed to byronjgross@gmail.com. Pursuant to Local Rules it is the attorneys obligation to maintain all personal contact information including e−mail address in the CM/ECF system. THERE IS NO PDF DOCUMENT ASSOCIATED WITH THIS ENTRY. (ir) TEXT ONLY ENTRY (Entered: 05/30/2014)
417 NOTICE OF MOTION AND Joint MOTION for Settlement Approval of Approval of Settlement Agreement filed by Plaintiffs and Intervenors Acacia Adult Day Services, Mark Beckwith, California Association of Medical Product Suppliers, California Hospital Association, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Grossmont Hospital Corporation, Independent Living Center of Southern California, David Maxwell−Jolly, Theodore M Mazer, Ronald B Mead, Sacramento Family Medical Clinics, Inc., Gerald Shapiro, Sharp Chula Vista Medical Center, Sharp Coronado Hospital and Healthcare Center, Sharp Memorial Hospital, Sharon Steen, Tran Pharmacy, Inc.. Motion set for hearing on 9/22/2014 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 Memorandum Memorandum of Points and Authorities, # 2 Declaration Declaration of Craig J. Cannizzo in Support of Joint Motion for Approval of Settlement Agreement, # 3 Proposed Order Proposed Order Granting Joint Motion for Approval of Settlement Agreement)(Cannizzo, Craig) (Entered: 08/19/2014)
418 Notice of Appearance or Withdrawal of Counsel: for attorney Susan Marie Carson counsel for Respondent David Maxwell−Jolly. Adding Susan M. Carson as attorney as counsel of record for Toby Douglas for the reason indicated in the G−123 Notice.

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Filed by Defendant Toby Douglas, Director of the Department of Health Care Services, State of California. (Attorney Susan Marie Carson added to party David Maxwell−Jolly(pty:res))(Carson, Susan) (Entered: 08/28/2014)
419 MINUTES OF MOTION FOR APPROVAL OF SETTLEMENT AGREEMENT 417 Hearing held before Judge Christina A. Snyder. The Court confers with counsel. The Court grants the above−referenced motion. The Court will issue the Proposed Order Granting Joint Motion for Approval of Settlement Agreement forthwith. Court Reporter: Laura Elias. (lom) (Entered: 09/25/2014)
420 ORDER GRANTING JOINT MOTION FOR APPROVAL OF SETTLEMENT AGREEMENT 417 by Judge Christina A. Snyder. (lom) (Entered: 09/25/2014)
421 NOTICE filed by Plaintiffs Acacia Adult Day Services, Mark Beckwith, California Association of Medical Product Suppliers, California Hospital Association, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Grossmont Hospital Corporation, Independent Living Center of Southern California, Theodore M Mazer, Ronald B Mead, Sacramento Family Medical Clinics, Inc., Gerald Shapiro, Sharp Chula Vista Medical Center, Sharp Coronado Hospital and Healthcare Center, Sharp Memorial Hospital, Sharon Steen, Tran Pharmacy, Inc.. re Settlement Effective Date (Cannizzo, Craig) (Entered: 03/31/2015)
422 NOTICE of Petitioners/Plaintiffs of Intent to File Motion for Attorneys' Fees filed by Petitioners/Plaintiffs Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc., Jason Young. (Friedman, Stanley) (Entered: 03/31/2015)
423 STIPULATION for Hearing re Motions for Attorneys Fees filed by Intervenors Acacia Adult Day Services, California Association of Medical Product Suppliers, California Hospital Association, Grossmont Hospital Corporation, Theodore M Mazer, Ronald B Mead, Sacramento Family Medical Clinics, Inc., Sharp Chula Vista Medical Center, Sharp Coronado Hospital and Healthcare Center, Sharp Memorial Hospital. (Attachments: # 1 Proposed Order)(Cannizzo, Craig) (Entered: 04/21/2015)
424 Joint EX PARTE APPLICATION to Dismiss Case filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc., Jason Young. (Attachments: # 1 Memorandum, # 2 Declaration, # 3 Proposed Order)(Friedman, Stanley) (Entered: 04/21/2015)
425 NOTICE OF MOTION AND Joint MOTION to Dismiss Case filed by Intervenors Acacia Adult Day Services, California Association of Medical Product Suppliers, California Hospital Association, Grossmont Hospital Corporation, Theodore M Mazer, Ronald B Mead, Sacramento Family Medical Clinics, Inc., Sharp Chula Vista Medical Center, Sharp Coronado Hospital and Healthcare Center, Sharp Memorial Hospital. (Attachments: # 1 Memorandum of Points and Authorities iso Application for Voluntary Dismissal, # 2 Declaration of Craig J. Cannizzo iso Application for Voluntary Dismissal, # 3 Proposed Order Dismissing Action)(Cannizzo, Craig) (Entered: 04/22/2015)
426 NOTICE OF MOTION AND MOTION for Attorney Fees filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc., Jason Young. Motion set for hearing on 6/8/2015 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 Memorandum of Points and Authorities in Support of Attorney Friedmans Motion for an Award of Attorneys Fees and Costs as the Prevailing Party, # 2 Declaration Stanley L. Friedman, Rafael Bernardino, Jr., Ashton R. Watkins and Kevin Gerry, # 3 Exhibit Volume 1 of 5 (Exhibits 1 − 30), # 4 Exhibit Volume 2 of 5 (Exhibits 31 − 80), # 5 Exhibit Volume 3 (Exhibits 81 − 105), # 6 Exhibit Volume 4 of 5 (Exhibits 106 − 112), # 7 Exhibit Volume 5 of 5 (Exhibits 113 − 120), # 8 Proposed Order, # 9 Certificate of Service)(Friedman, Stanley) (Entered: 04/22/2015)
427 NOTICE OF MOTION AND MOTION for Attorney Fees Pursuant to C.C.P Section 1021.5 filed by Intervenor California Hospital Association. Motion set for hearing on 6/8/2015 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1

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Declaration of Lloyd A. Bookman in Support of Motions for Attorneys' Fees, # 2 Declaration of Richard M. Pearl in Support of Motions for Attorneys' Fees, # 3 Declaration of Henry W. Zaretsky in Support of Motions for Attorneys' Fees, # 4 Proposed Order re Intervenor's Motion for Attorneys' Fees)(Keville, Jordan) (Entered: 04/23/2015)
428 NOTICE OF MOTION AND MOTION for Attorney Fees on Common Benefit Doctrine filed by Plaintiffs Plaintiffs and Intervenors. Motion set for hearing on 6/8/2015 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 Declaration of Lloyd A. Bookman, # 2 Declaration of Richard M. Pearl, # 3 Declaration of Henry W. Zaretsky, # 4 Declaration of C. Duane Dauner, # 5 Declaration of Geoffrey Miller, # 6 Proposed Order)(Attorney Jordan Brian Keville added to party Plaintiffs and Intervenors(pty:pla))(Keville, Jordan) (Entered: 04/23/2015)
429 NOTICE OF MOTION AND Second MOTION for Attorney Fees filed by PETITIONERS Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. Motion set for hearing on 6/8/2015 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 Declaration, # 2 Exhibit A, # 3 Exhibit B, # 4 Exhibit C, # 5 Exhibit D)(Carman, Lynn) (Entered: 04/23/2015)
430 MEMORANDUM in Support MOTION FOR ATTORNEYS FEES filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. (Attachments: # 1 Declaration)(Carman, Lynn) (Entered: 04/23/2015)
439 ORDER REGARDING BRIEFING SCHEDULE FOR MOTIONS FOR ATTORNEYS FEES by Judge Christina A. Snyder: Upon Stipulation 423 , the Court hereby orders the following briefing schedule: Filing date for Plaintiffs' Attorneys' Fee motions 426 , 427 , 428 , 429 4/23/2015. Due Date for Defendant's Oppositions to Attorneys' Fee motions 5/13/2015. Due Date for Plaintiffs' Reply Briefs 5/26/2015. Hearing Date on 6/8/2015 at 10:00 AM. (gk) (Entered: 04/24/2015)
440 ORDER ON PETITIONERS' EX PARTE APPLICATION FOR DISMISSAL OF ACTION by Judge Christina A. Snyder: Upon Petitioner's Ex Parte Application 424 , IT IS HEREBY ORDERED that, pursuant to Federal Rule of Civil Procedure 41(a)(2), Case No. CV 08−3315 is hereby dismissed with prejudice, each party to bear its own costs in accordance with Part III.A.3 of the Settlement Agreement of the parties on file herein, with the Court retaining jurisdiction, pursuant to Parts III.A.3 and III.D.17 of the Settlement Agreement, to entertain any application for attorneys' fees as described in Part III.C. of the Settlement Agreement, and for purposes of enforcement of the Settlement Agreement by any parties in the within action, up to and including 1/1/2016. (gk) (Entered: 04/24/2015)
441 ORDER ONPETITIONERS AND INTERVENORSEX PARTE APPLICATION FORDISMISSAL OF ACTIONR by Judge Christina A. Snyder, IT IS HEREBY ORDERED that, pursuant to Federal Rule of Civil Procedure 41(a)(2), Case No. 2:08−cv−03315 is hereby dismissed with prejudice, each party to bear its own costs in accordance with Part III.A.3 of the Settlement Agreement of the parties on file herein, with the Court retaining jurisdiction, pursuant to Parts III.A.3 and III.D.17 of the Settlement Agreement, to entertain any application for attorneys fees as described in Part III.C. of the Settlement Agreement, and forpurposes of enforcement of the Settlement Agreement by any parties in the withinaction, up to and including January 1, 2016. (ab) (Entered: 04/24/2015)
431 DECLARATION of LYNN S. CARMAN IN SUPPORT OF MOTION Second MOTION for Attorney Fees 429 filed by Petitioners Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Gerald Shapiro, Tran Pharmacy, Inc., Intervenor Plaintiff Grossmont Hospital Corporation. (Carman, Lynn) (Entered: 04/24/2015)
432 EXHIBIT EXH IBIT A to Second MOTION for Attorney Fees 429 exhibita TO CARMAN DECLARATION filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living

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Center of Southern California, Sharon Steen, Tran Pharmacy, Inc.. (Carman, Lynn) (Entered: 04/24/2015)
433 EXHIBIT B−1 to Second MOTION for Attorney Fees 429 filed by Petitioner Gerald Shapiro. (Carman, Lynn) (Entered: 04/24/2015)
434 EXHIBIT EXHIBIT B−2 to CARMAN DECLARATION to Second MOTION for Attorney Fees 429 filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen. (Carman, Lynn) (Entered: 04/24/2015)
435 Amendment to Second MOTION for Attorney Fees 429 FURTHER PART OF EXHIBIT B TO CARMAN DECLARATION filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. (Carman, Lynn) (Entered: 04/24/2015)
436 Amendment to Second MOTION for Attorney Fees 429 FURTHER PART OF EXHIBIT B to CARMAN DECLARATION filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. (Carman, Lynn) (Entered: 04/24/2015)
437 Amendment to Second MOTION for Attorney Fees 429 FUTHER PART OF EXHIBIT B to CARMAN DECLARATION filed by Intervenor Plaintiff Acacia Adult Day Services, Petitioners Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. (Carman, Lynn) (Entered: 04/24/2015)
438 Amendment to Second MOTION for Attorney Fees 429 (Proposed) ORDER FOR ATTORNEYS FEES TO LYNN S. CARMAN AND TO MORRISON & FOERSTER, LLP filed by Petitioners Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. (Carman, Lynn) (Entered: 04/24/2015)
442 NOTICE OF ERRATA AND CORRECTION OF ERRATA filed by PETITIONERS Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. (Attachments: # 1 Exhibit 1)(Carman, Lynn) (Entered: 04/27/2015)
443 NOTICE NOTICE OF ERRATA AND CORRECTION OF ERRATA filed by PETITIONERS Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. (Attachments: # 1 Exhibit 1)(Carman, Lynn) (Entered: 04/27/2015)
444 NOTICE OF ERRATA filed by Intervenor Plaintiff California Hospital Association. correcting MOTION for Attorney Fees Pursuant to C.C.P Section 1021.5 427 (Bookman, Lloyd) (Entered: 04/28/2015)
445 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents RE: Petitioners' Memorandum in Support of Attorneys' Fees filed 4/23/2015 430 . The following error(s) was found: Case number is incorrect or missing. Local Rule 11−8 Memorandum/brief exceeding 10 pages shall contain table of contents. In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. You need not take any action in response to this notice unless and until the court directs you to do so. (gk) (Entered: 04/29/2015)
446 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents RE: Exhibits re Motion for Attorneys' Fees filed 4/24/2015 433 , 434 , 435 , 436 , 437 . The following error(s) was found: Case number is incorrect or missing.Title page is missing. In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. You need not take any action in response to this notice unless and until the court directs you to do so. (gk) (Entered: 04/29/2015)

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447 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents RE: Proposed Order Granting Attorneys' Fees to Lynn S. Carman and to Morrison & Foerster, LLP filed 4/24/2015 438 . The following error(s) was found: Case number is incorrect or missing. This document tendered for the judge's approval should have been submitted as a separate PDF attachment to a Notice of Lodging. In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. You need not take any action in response to this notice unless and until the court directs you to do so. (gk) (Entered: 04/29/2015)
448 ORDER by Judge Christina A. Snyder, Having read and considered the Stipulation of the Parties Regarding Briefing Schedule for Motions for Attorneys Fees, the Court hereby orders the following briefing schedule: April 23, 2015 Filing date for Plaintiffs Attorneys Fee motions. May 13, 2015 Due Date for Defendants Oppositions to Attorneys Fee motions. May 25, 2015 Due Date for Plaintiffs Reply Briefs. June 8, 2015 at 11:00 am Hearing Date. (pj) (Entered: 04/30/2015)
449 NOTICE OF CLERICAL ERROR: Due to clerical error Re: Order, 448 . The Order pertains to CV09−00382−CAS(MANx) − Stipulation for Extension of Time to File Opposition Memorandum and Reply Memorandum In Regard to Motions for Attorneys Fees, filed 04/22/15 99 . (pj) (Entered: 04/30/2015)
450 NOTICE OF ERRATA CONCERNING DEDCLARATION OF LYNN S. CARMAN filed by PETITIONERS Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. FOR JUNE 8, 2015 HEARING (Carman, Lynn) (Entered: 04/30/2015)
451 Amendment to Second MOTION for Attorney Fees 429 CORRECTED DECLARATION OF LYNN S. CARMAN filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit CURRICULUM VITAE OF LYNN S. CARMAN, # 3 Exhibit B, # 4 Exhibit PAGES 1 − 9 OF CARMAN TIME SHEET, # 5 Exhibit PAGES 10 − 18 OF CARMAN TIME SHEET, # 6 Exhibit PAGES 19 − 26 OF CARMAN TIME SHEET, # 7 Exhibit PAGES 27 − 37 OF CARMAN TIME SHEET, # 8 Exhibit PAGES 38 − 44 OF CARMAN TIME SHEET)(Carman, Lynn) (Entered: 04/30/2015)
452 NOTICE OF ERRATA IN DOCKETS 429, 430, 438 filed by PETITIONERS Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. CORRECTING CASE NUMBER, AMOUNT OF FEES REQUESTED, AND CASE CITATIONS (Carman, Lynn) (Entered: 05/03/2015)
453 NOTICE OF LODGING filed DOCUMENTATION SHOWING DELIVERY OF NOTICE EXPLAINING SETTLEMENT TERMS TO MEMBERS OF INTERVENOR CHA re Notice (Other),, 421 (Attachments: # 1 Exhibit, # 2 Exhibit, # 3 Exhibit)(Bookman, Lloyd) (Entered: 05/07/2015)
454 EX PARTE APPLICATION to Continue Hearing from June 8, 2015 to June 15, 2015 Re: MOTION for Attorney Fees on Common Benefit Doctrine 428 filed by Intervenor California Hospital Association. (Attachments: # 1 Memorandum of Points and Authorities in Support of Ex Parte Application to Continue Hearing Date, # 2 Declaration of Jordan B. Keville, # 3 Proposed Order re Ex Parte Application to Continue Hearing Date)(Keville, Jordan) (Entered: 05/13/2015)
455 EX PARTE APPLICATION to Continue from June 8, 2015 to June 15, 2015 Re: EX PARTE APPLICATION to Continue Hearing from June 8, 2015 to June 15, 2015 Re: MOTION for Attorney Fees on Common Benefit Doctrine 428 454 filed by Objector Santa Rosa Memorial Hospital.(Attorney Thomas J Weiss added to party Santa Rosa Memorial Hospital(pty:obj))(Weiss, Thomas) (Entered: 05/13/2015)
456 OPPOSITION Opposition re: MOTION for Attorney Fees Pursuant to C.C.P Section 1021.5 427 , MOTION for Attorney Fees on Common Benefit Doctrine 428 , MOTION for Attorney Fees 426 , Second MOTION for Attorney Fees 429 filed by Respondent David Maxwell−Jolly. (Carson, Susan) (Entered: 05/13/2015)

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457 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents RE: EX PARTE APPLICATION to Continue from June 8, 2015 to June 15, 2015 Re: EX PARTE APPLICATION to Continue Hearing from June 8, 2015 to June 15, 2015 Re: MOTION for Attorney Fees on Common Benefit Doctrine 428 454 455 . The following error(s) was found: Incorrect event selected. The correct event is: Declaration (Motion related). In response to this notice the court may order (1) an amended or correct document to be filed (2) the document stricken or (3) take other action as the court deems appropriate. You need not take any action in response to this notice unless and until the court directs you to do so. (kss) (Entered: 05/14/2015)
458 PETITIONERS OPPOSITION re: EX PARTE APPLICATION to Continue Hearing from June 8, 2015 to June 15, 2015 Re: MOTION for Attorney Fees on Common Benefit Doctrine 428 454 filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. (Carman, Lynn) (Entered: 05/14/2015)
459 MINUTES by Judge Christina A. Snyder: The Court grants the Ex Parte Applications to Continue Motions Hearing 454 , 455 , continues the hearing on the motions for attorneys' fees 426 , 427 , 428 and 429 to 6/15/2015 at 10:00 AM. Court Reporter: Not Present. (gk) (Entered: 05/19/2015)
460 EX PARTE APPLICATION to Continue Hearing on Motion for Attorneys' Fees on Common Benefit Doctrine from June 15, 2015 to not less than 7 days from June 15, 2008 but before July 4, 2015 Re: Order on Ex Parte Application to Continue,,, 459 filed by Intervenor California Hospital Association. (Attachments: # 1 Memorandum of Points and Authorities in Support of Ex Parte Application for Continuance, # 2 Declaration of Jordan B. Keville in Support of Ex Parte Application for Continuance, # 3 Proposed Order)(Keville, Jordan) (Entered: 05/22/2015)
461 ORDER ON INTERVENOR CALIFORNIA HOSPITAL ASSOCIATIONS EX PARTE APPLICATION FOR CONTINUANCE OF HEARING DATE ON MOTION FOR ATTORNEYS FEES ON COMMON BENEFIT DOCTRINE by Judge Christina A. Snyder: IT IS HEREBY ORDERED that Intervenor CHAs Ex Parte Application is GRANTED 460 . The Court continues the hearing on all the Motions for Attorneys Fees 426 , 427 , 428 and 429 from June 15, 2015 to July 6, 2015 at 10:00 A.M. (pj) (Entered: 05/22/2015)
462 REPLY in support of MOTION for Attorney Fees 426 for Attorney Stanley L. Friedman, Law Offices of Stanley L. Friedman, filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. (Attachments: # 1 Request for Judicial Notice in Support of Motion for an Award of Attorneys Fees and Costs)(Friedman, Stanley) (Entered: 06/10/2015)
463 OPPOSITION to MOTION for Attorney Fees on Common Benefit Doctrine 428 filed by Objector Santa Rosa Memorial Hospital. (Weiss, Thomas) (Entered: 06/15/2015)
464 DECLARATION of Dean L. Johnson in support of opposition to application for "common benefit" attorney fee recovery MOTION for Attorney Fees on Common Benefit Doctrine 428 filed by Objector Santa Rosa Memorial Hospital. (Weiss, Thomas) (Entered: 06/15/2015)
465 DECLARATION of Thomas J. Weiss in support of opposition to application for "common benefit" attorney fee recovery MOTION for Attorney Fees on Common Benefit Doctrine 428 filed by Objector Santa Rosa Memorial Hospital. (Attachments: # 1 Exhibit, # 2 Exhibit, # 3 Exhibit)(Weiss, Thomas) (Entered: 06/15/2015)
466 REPLY IN SUPPORT OF MOTIONS FOR SEC. 1021.5 ATTORNEYS FEES filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. (Attachments: # 1 Exhibit REQUEST FOR JUDICIAL NOTICE, # 2 Exhibit EXHIBIT A: SETTLEMENT AGREEMENT, # 3 Exhibit EXHIBIT B:CMS DISAPPROVES AB 5, # 4 Exhibit EXHIBIT C: DHCS WAIVES RECOUPMENT)(Carman, Lynn) (Entered: 06/19/2015)

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467 DECLARATION of LYNN S. CARMAN MOTION FOR ATTORNEYS' FEES Second MOTION for Attorney Fees 429 filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Tran Pharmacy, Inc.. (Carman, Lynn) (Entered: 06/21/2015)
468 REPLY IN SUPPORT OF MOTION for Attorney Fees Pursuant to C.C.P Section 1021.5 427 filed by Intervenor Plaintiff California Hospital Association. (Keville, Jordan) (Entered: 06/22/2015)
469 REPLY IN SUPPORT OF MOTION for Attorney Fees on Common Benefit Doctrine 428 filed by Intervenor Plaintiff California Hospital Association. (Attachments: # 1 Declaration [Supplemental] of Lloyd A. Bookman in Support of Motions for Attorneys' Fees, # 2 Declaration [Supplemental] of Henry W. Zaretsky in Support of Motions for Attorneys' Fees, # 3 Declaration of Lois Suder in Support of Motion for Attorneys' Fees, # 4 Declaration of Sue Ann Jaffarian in Support of Motion for Attorneys' Fees)(Keville, Jordan) (Entered: 06/22/2015)
470 EX PARTE APPLICATION to Strike the Declaration of Lynn S. Carman filed on June 21, 2015 Declaration (Motion related), 467 filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. (Attachments: # 1 Declaration of Stanley L. Friedman in Support of ex Parte Application to Strike Declaration, # 2 Evidentiary Objections to the Declaration of Lynn S. Carman, # 3 Proposed Order) (Friedman, Stanley) (Entered: 06/23/2015)
471 OPPOSITION to EX PARTE APPLICATION to Strike the Declaration of Lynn S. Carman filed on June 21, 2015 Declaration (Motion related), 467 470 filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. (Carman, Lynn) (Entered: 06/24/2015)
472 NOTICE OF ERRATA RE DOCKET NOS. 427 AND 468 RE ELECTRONIC FILER(S) OF BRIEF filed by Intervenors Acacia Adult Day Services, Theodore M Mazer, Ronald B Mead, Sacramento Family Medical Clinics, Inc.. (Keville, Jordan) (Entered: 06/25/2015)
473 OPPOSITION to EX PARTE APPLICATION to Strike the Declaration of Lynn S. Carman filed on June 21, 2015 Declaration (Motion related), 467 470 FURTHER OPPOSITION OF LYNN S. CARMAN TO EX PARTE MOTION TO STRIKE CARMAN DECLARATION AND NOTICE THAT ATTORNEY CARMAN WILL REQUEST CONSIDERATION OF COMPILATIONS OF THE RECORD AY JULY 6, 2015 HEARING filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. (Attachments: # 1 Exhibit PART A, # 2 Exhibit TABS 1 − 4, # 3 Exhibit TABS 5 − 8, # 4 Exhibit PART B, # 5 Exhibit TABS 1 − 4, # 6 Exhibit TABS 5 − 8, # 7 Declaration TABS 9 − 12)(Carman, Lynn) (Entered: 07/05/2015)
474 TRANSCRIPT ORDER as to intervenors California Hospital Association Court Reporter. Court will contact Gail Reese at greese@health−law.com with any questions regarding this order. Transcript portion requested: Other: 7/6/15 by Laura Elias. Transcript preparation will not begin until payment has been satisfied with the court reporter/recorder. (Bookman, Lloyd) (Entered: 07/06/2015)
475 TRANSCRIPT ORDER re: Motion for Attorney Fees,, 428 , as to objector Santa Rosa Memorial Hospital Court Reporter. Court will contact Karen Genova at kgenova@weisslawla.com with any questions regarding this order. Transcript portion requested: Other: Motion for Attorney Fees. Transcript preparation will not begin until payment has been satisfied with the court reporter/recorder. (Weiss, Thomas) (Entered: 07/06/2015)
476 MINUTES OF Motion Hearing held before Judge Christina A. Snyder RE: Petitioners' and Intervenors' Motions for Attorneys' Fees Pursuant to California Code of Civil Procedure Section 1021.5 426 , 427 , 429 . The Court concludes that California Code of Civil Procedure section 1021.5 cannot support an award of attorneys' fees in this case. Because the motions described above cite no other basis for awarding fees, those

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motions are DENIED. Court Reporter: Laura Elias. (gk) (Entered: 07/09/2015)
477 MINUTES OF Motion Hearing held before Judge Christina A. Snyder RE: Plaintiffs and Intervenors' Motion for Award of Attorneys' Fees on Common Benefit Doctrine 428 . The Court confers with counsel and counsel argue. The Court takes the above−referenced motion under submission. The Court orders the parties to mediation, as stated in Court and on the record. Court Reporter: Laura Elias. (gk) (Entered: 07/09/2015)
478 NOTICE OF APPEAL to the 9th CCA filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. Appeal of Order on Motion for Order,,,, 360 , Motion Hearing,, Order on Motion for Attorney Fees,,,,, 476 (Appeal fee of $505 receipt number 0973−16148484 paid.) (Friedman, Stanley) (Entered: 07/24/2015)
479 Civil Appeals Docketing Statement received from forwarded to 9th CCA. RE: Notice of Appeal to 9th Circuit Court of Appeals, 478 (Friedman, Stanley) (Entered: 07/24/2015)
483 NOTIFICATION by Circuit Court of Appellate Docket Number 15−56142, 9th CCA regarding Notice of Appeal to 9th Circuit Court of Appeals, 478 as to Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc. (car) (Entered: 07/29/2015)
480 NOTICE OF APPEAL to the 9th CCA filed by Intervenors Sacramento Family Medical Clinics, Inc., et al.. Appeal of Motion Hearing,, Order on Motion for Attorney Fees,,,,, 476 (Appeal fee FEE NOT PAID.) (Attachments: # 1 Representation Statement of Intervenors, # 2 Civil Appeals Docketing Statement of Intervenors)(Keville, Jordan) (Entered: 07/28/2015)
481 REPRESENTATION STATEMENT re Notice of Appeal to 9th Circuit Court of Appeals, 478 . (Friedman, Stanley) (Entered: 07/28/2015)
482 FILING FEE LETTER issued as to Appellant Intervenors Sacramento Family Medical Clinics, Inc., et al., re Notice of Appeal to 9th Circuit Court of Appeals, 480 (mat) (Entered: 07/29/2015)
APPEAL FEE PAID: re Notice of Appeal to 9th Circuit Court of Appeals, 480 as to Intevenors Sacramento Family Medical Clinics, et al.; Receipt Number: LA120981 in the amount of $505. (rsm) (Entered: 07/29/2015)
484 NOTIFICATION by Circuit Court of Appellate Docket Number 15−56154, 9th Circuit regarding Notice of Appeal to 9th Circuit Court of Appeals, 480 as to Appellants Sacramento Family Medical Clinics, Inc., et al.. (mat) (Entered: 07/30/2015)
485 TRANSCRIPT ORDER re: Notice of Appeal to 9th Circuit Court of Appeals, 478 , 9th CCA Assigned Case Number Notice, 483 , as to Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc. Court Reporter. Court will contact Stanley L. Friedman at friedman@friedmanlaw.org with any questions regarding this order. Transcript portion requested: Other: Hearing of July 6, 2015 on Motion for Attorneys' Fees. Transcript preparation will not begin until payment has been satisfied with the court reporter/recorder. (Friedman, Stanley) (Entered: 08/17/2015)
486 (IN CHAMBERS) ORDER REGARDING SETTLEMENT CONFERENCE by Magistrate Judge Jay C. Gandhi. IT IS ORDERED as follows: The parties and their lead trial counsel shall appear for a settlement conference on November 16, 2015 at 10:00 a.m., in Courtroom 6A of the Ronald Reagan Federal Building and U.S. Courthouse, 411 West Fourth Street, 6th Floor, Santa Ana, California 92701. The parties and their lead trial counsel shall keep their schedule clear for the remaining part of the day. No party or counsel shall be excused absent leave from the Judge or until the settlement conference is adjourned. On or before November 9, 2015, each party shall submit a confidential mediation statement (or email) directly to the chambers of the Court at judge_gandhi_mediation@cacd.uscourts.gov. The Statements should not

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be filed with the Clerk of the Court, and they will not be made part of the case file. (kh) (Entered: 09/23/2015)
487 MINUTES OF Settlement Conference held before Magistrate Judge Jay C. Gandhi: The matter came on for a Settlement Conference. The interested parties and their counsel were present. The Court privately caucused with the parties and their lead counsel. The motion for attorneys' fees was resolved and a settlement structure was placed on the record.Court Recorder: CS 11/16/2015. (kh) (Entered: 11/24/2015)
488 TRANSCRIPT for proceedings held on July 6, 2015. Court Reporter/Electronic Court Recorder: Laura Elias, phone number 213−620−0890. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Electronic Court Recorder before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Notice of Intent to Redact due within 7 days of this date. Redaction Request due 1/5/2016. Redacted Transcript Deadline set for 1/15/2016. Release of Transcript Restriction set for 3/14/2016. (Elias, Laura) (Entered: 12/15/2015)
489 NOTICE OF FILING TRANSCRIPT filed for proceedings July 6, 2015 re Transcript 488 THERE IS NO PDF DOCUMENT ASSOCIATED WITH THIS ENTRY. (Elias, Laura) TEXT ONLY ENTRY (Entered: 12/15/2015)
490 OPINION from Ninth Circuit Court of Appeals filed re: Notice of Appeal to 9th Circuit Court of Appeals, 478 , 480 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Gray Panthers of Sacramento, Independent Living Center of Southern California, Margaret Dowling, Jason Young, Sharon Steen, Gerald Shapiro. CCA # 15−56154. REMAND TO DISTRICT COURT to determine whether Appellants should recover attorneys fees and re any fees from retroactive relief obtained in 2010 (lc) Modified on 1/23/2019 (lc). (Entered: 11/26/2018)
491 MINUTE ORDER IN CHAMBERS by Judge Christina A. Snyder:THE COURT REVIEWS the mandate (judgment or order) of the Ninth Circuit Court of Appeals Reversing and Remanding. The Court sets a Status Conference re: Ninth Circuit Mandate on December 3, 2018, at 11:00 A.M. (lc) (Entered: 11/27/2018)
492 SCHEDULING NOTICE VACATED by Judge Christina A. Snyder, re: MINUTE ORDER IN CHAMBERS 491 , previously scheduled for 12/3/2018 at 11:00 AM has been terminated. THERE IS NO PDF DOCUMENT ASSOCIATED WITH THIS ENTRY. (cj) TEXT ONLY ENTRY (Entered: 11/28/2018)
493 ORDER from Ninth Circuit Court of Appeals filed re: Notice of Appeal to 9th Circuit Court of Appeals, 478 filed by Mark Beckwith, Gray Panthers of San Francisco, Tran Pharmacy, Inc., Gray Panthers of Sacramento, Independent Living Center of Southern California, Margaret Dowling, Sharon Steen, Gerald Shapiro, Notice of Appeal to 9th Circuit Court of Appeals, 480 filed by Sacramento Family Medical Clinics, Inc., et al.. CCA # 15−56142, 15−56154. The panel has unanimously voted to deny the petition for panel rehearing en banc. In addition, the motion to transfer consideration of attorneys fees and costs on appeal to the district court filed by Petitioners−Appellants Independent Living Center of Southern California, et al. (dkt. 68) is granted. (car) (Entered: 01/15/2019)
494 MANDATE of Ninth Circuit Court of Appeals filed re: Notice of Appeal to 9th Circuit Court of Appeals, 478 , Notice of Appeal to 9th Circuit Court of Appeals, 480 , CCA # 15−56142. The judgment of this Court, entered November 21, 2018, takes effect thisdate.This constitutes the formal mandate of this Court issued pursuant to Rule41(a) of the Federal Rules of Appellate Procedure. [See USCA Opinion 490 We remand to the district court to determine whether Appellants meet the requirements of § 1021.5 to obtain a fee award, and if so, to calculate that award. We express no opinion as to how the Settlement Agreement may affect such an award and leave that issue to the district court to consider in the first instance on remand. ](mat) (Entered: 01/23/2019)
496 ORDER from Ninth Circuit Court of Appeals filed re: Notice of Appeal to 9th Circuit Court of Appeals, 478 , 480 filed by Sacramento Family Medical Clinics, Inc., et al.. CCA # 15−56154.The motion to transfer consideration of attorneys fees on appeal, filed by Intervenors−Appellants Sacramento Family Medical Clinics, Inc., et al. to the district court, is granted. (lc) Modified on 2/13/2019 (lc). (Entered: 02/13/2019)

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495 Notice of Appearance or Withdrawal of Counsel: for attorney Joshua Nathan Sondheimer counsel for Respondent California Department of Health Care Services. Adding Joshua N. Sondheimer as counsel of record for Jennifer Kent, Director of the California Department of Health Care Services, successor to previously named and substituted DHCS Directors in this action for the reason indicated in the G−123 Notice. Filed by Respondent Jennifer Kent, Director of the California Department of Health Care Services. (Attorney Joshua Nathan Sondheimer added to party California Department of Health Care Services(pty:res))(Sondheimer, Joshua) (Entered: 02/13/2019)
497 MINUTE ORDER IN CHAMBERS by Judge Christina A. Snyder:A RE HEARING ON MANDATE OF THE NINTH CIRCUIT COURT OF APPEALS THE COURT REVIEWS the mandate (judgment or order) of the Ninth Circuit Court of Appeals 494 .The Court sets a Status Conference on March 11, 2019, at 11:00 A.M. (lc) (Entered: 02/13/2019)
498 MINUTES OF STATUS CONFERENCE RE: FILING AND SPREADING OF NINTH CIRCUIT MANDATE 15−56142 AND 15−56154 held before Judge Christina A. Snyder: The Court orders the Ninth Circuit Mandate filed and spread. The Court confers with counsel, as stated in Court and on the record. The Court orders a Joint Report to be filed, along with defendants Declaration re: Status of Funds and what information cannot or wont be provided, no later than March 18, 2019. The Court further orders briefing based on the Ninth Circuits ruling, due on or before April 10, 2019. Court Reporter: Lisa Gonzalez. (lc) (Entered: 03/15/2019)
499 REPORT filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc., Jason Young. (Friedman, Stanley) (Entered: 03/18/2019)
500 SUPPLEMENT to Report, 499 filed by Respondents California Department of Health Care Services, David Maxwell−Jolly. (Sondheimer, Joshua) (Entered: 03/18/2019)
501 DECLARATION of Johanne Medina, Department of Health Care Services Re Disposition of Retroactive Payment Adjustment filed by Respondents California Department of Health Care Services, David Maxwell−Jolly. (Sondheimer, Joshua) (Entered: 03/18/2019)
502 REPORT of Petitioners Response to Respondents Statement re Joint Report and Objections to Filing of Joint Report Without Concurrence filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc., Jason Young. (Friedman, Stanley) (Entered: 03/18/2019)
503 EXHIBIT Filed filed by Respondents California Department of Health Care Services, David Maxwell−Jolly. Exhibit A to Declaration of DHCS Re Disposition of Retroactive Payment Adjustment as to Declaration 501 . (Sondheimer, Joshua) (Entered: 03/18/2019)
504 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents RE: Exhibit (non−trial) 503 by California Department of Health Care Services, David Maxwell−Jolly. The following error(s) was/were found: Title page is missing. Other error(s) with document(s): Every separately filed document must have its own specific formal Title page and its LR−11−3/8 required filer, attorney, court and case information. In response to this notice, the Court may: (1) order an amended or correct document to be filed; (2) order the document stricken; or (3) take other action as the Court deems appropriate. You need not take any action in response to this notice unless and until the Court directs you to do so. (lc) (Entered: 03/19/2019)
505 MINUTE ORDER IN CHAMBERS by Judge Christina A. Snyder: SCHEDULING ORDER.The Court is in receipt of the parties joint report regarding briefing on thepetitioners and intervenors entitlement to attorneys fees and common fund fees. Dkt. 499. The Court has also reviewed the respondents statement regarding the joint report, dkt. 500, and the petitioners response to that statement, dkt. 502. The Court hereby orders the following briefing schedule: April 10, 2019: Deadline for petitioners or intervenors to file any motions forentitlement for common fund/benefit fees against providers and motions for entitlement to attorneys fees pursuant to California Code of

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Civil Procedure (CCP) 1021.5 (amounts, if applicable, will be determined by later motions).May 1, 2019: Deadline for providers (or any party) to file opposition(s) to themotions for entitlement of common fund/benefit fees. Any combined opposition toseparate motions by petitioners and intervenors shall not exceed 35 pages.May 8, 2019: Deadline for respondent to file a combined opposition to the motions for entitlement to attorneys fees pursuant to CCP 1021.5. respondents combined brief shall not exceed 35 pages. May 15, 2019: Deadline for petitioners and intervenors to file replies in support of.their motions for entitlement of common fund/benefit fees. May 22, 2019: Deadline for petitioners and intervenors to file replies in support of their motions for entitlement of attorneys fees pursuant to CCP 1021.5. A hearing is set for June 3, 2019, at 10:00 A.M. (lc) (Entered: 03/22/2019)
506 DECLARATION of Johanne Medina, Department of Health Care Services Supplemental Declaration of DHCS (Johanne Medina) re Disposition of Retroactive Payments filed by Respondents California Department of Health Care Services, David Maxwell−Jolly. (Sondheimer, Joshua) (Entered: 03/29/2019)
507 TRANSCRIPT ORDER as to Respondents California Department of Health Care Services, David Maxwell−Jolly for Court Smart (CS). Court will contact Rowena Manalastas at rowena.manalastas@doj.ca.gov with further instructions regarding this order. Transcript preparation will not begin until payment has been satisfied with the transcription company. (Sondheimer, Joshua) (Entered: 04/02/2019)
508 Notice of Appearance or Withdrawal of Counsel: for attorney Joshua Nathan Sondheimer counsel for Respondents California Department of Health Care Services, David Maxwell−Jolly. Elizabeth Ann Linton is no longer counsel of record for the aforementioned party in this case for the reason indicated in the G−123 Notice. Filed by Attorney for Respondents California Department of Health Care Services; David Maxwell−Jolly. (Attorney Joshua Nathan Sondheimer added to party David Maxwell−Jolly(pty:res))(Sondheimer, Joshua) (Entered: 04/02/2019)
509 Notice of Electronic Filing re Notice of Appearance or Withdrawal of Counsel (G−123),, 508 , Transcript Order Form (G−120), 507 e−mailed to Felicia Sze, felicia@rshealthlaw.com bounced due to 5.4.7 − Delivery expired. The primary e−mail address associated with the attorney record has been deleted. Pursuant to Local Rules it is the attorneys obligation to maintain all personal contact information including e−mail address in the CM/ECF system. THERE IS NO PDF DOCUMENT ASSOCIATED WITH THIS ENTRY. (lmh) TEXT ONLY ENTRY (Entered: 04/03/2019)
510 NOTICE OF MOTION AND MOTION for Attorney Fees filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. Motion set for hearing on 6/3/2019 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 Memorandum Memorandum of Points and Authorities in Support of Petitioners Motion for an Award of Attorneys Fees and Costs to the Prevailing Parties Pursuant to California Code of Civil Procedure §1021.5, # 2 Declaration Declarations of Stanley L. Friedman, Rafael Bernardino, Jr. and Ashton R. Watkins in Support of Petitioners Counsels Motions for Attorneys Fees, # 3 Proposed Order [Proposed] Order Regarding Petitioners Motion for an Award of Attorneys Fees and Costs as the Prevailing Party Pursuant to California Code of Civil Procedure §1021.5) (Friedman, Stanley) (Entered: 04/10/2019)
511 NOTICE OF MOTION AND MOTION for Attorney Fees re Common Fund filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc.. Motion set for hearing on 6/3/2019 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 Memorandum Memorandum of Points and Authorities in Support of Motion for an Award of Common Fund Attorneys Fees and Costs to the Prevailing Party, # 2 Evidentiary Objections in Support of Petitioners Motion for an Award of Common Fund Attorneys Fees and Costs to the Prevailing Party, # 3 Proposed Order [Proposed] Order Regarding Petitioners Motion for an Award of Common Fund Attorneys Fees and Costs) (Friedman, Stanley) (Entered: 04/10/2019)

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512 NOTICE OF MOTION AND MOTION for Attorney Fees PURSUANT TO C.C.P. § 1021.5 AND COMMON BENEFIT DOCTRINE; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF filed by Intervenors Acacia Adult Day Services, Theodore M Mazer, Ronald B Mead, Sacramento Family Medical Clinics, Inc.. Motion set for hearing on 6/3/2019 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 Declaration of Lloyd A. Bookman In Support of Motion for Attorneys' Fees, # 2 Declaration of Craig J. Cannizzo In Support of Motion for Attorneys' Fees) (Cannizzo, Craig) (Entered: 04/10/2019)
513 NOTICE OF LODGING filed Proposed Order re NOTICE OF MOTION AND MOTION for Attorney Fees PURSUANT TO C.C.P. § 1021.5 AND COMMON BENEFIT DOCTRINE; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF 512 (Attachments: # 1 Proposed Order Granting Motion for Entitlement to Attorneys' Fees Pursuant to CCP § 1021.5 and Common Benefit Doctrine)(Cannizzo, Craig) (Entered: 04/11/2019)
514 TRANSCRIPT for proceedings held on 11/16/2015. Court Reporter/Electronic Court Recorder: EXCEPTIONAL REPORTING SERVICES, INC., phone number (361) 949−2988. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Electronic Court Recorder before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Notice of Intent to Redact due within 7 days of this date. Redaction Request due 5/2/2019. Redacted Transcript Deadline set for 5/13/2019. Release of Transcript Restriction set for 7/10/2019. (ls) (Entered: 04/12/2019)
515 NOTICE OF FILING TRANSCRIPT filed for proceedings 11/16/2015 re Transcript 514 THERE IS NO PDF DOCUMENT ASSOCIATED WITH THIS ENTRY. (ls) TEXT ONLY ENTRY (Entered: 04/12/2019)
516 Notice of Appearance or Withdrawal of Counsel: for attorney Felicia Y Sze counsel for Intervenor Plaintiffs Acacia Adult Day Services, California Association of Medical Product Suppliers, California Hospital Association, Eastern Plumas Health Care District, Grossmont Hospital Corporation, Kaweah Delta Health Care District, Theodore M Mazer, Ronald B Mead, Pioneers Memorial Health Care District, Sacramento Family Medical Clinics, Inc., Sharp Chula Vista Medical Center, Sharp Coronado Hospital and Healthcare Center, Sharp Memorial Hospital, Intervenor Parties California Association for Health Services at Home, California Medical Transportation Association, Inc., Sacramento Family Medical Clinics, Inc., et al.. Felicia Y Sze is no longer counsel of record for the aforementioned party in this case for the reason indicated in the G−123 Notice. Filed by Intervenor Acacia Adult Day Services, et al.. (Attorney Felicia Y Sze added to party California Association for Health Services at Home(pty:intv), Attorney Felicia Y Sze added to party California Medical Transportation Association, Inc.(pty:intv), Attorney Felicia Y Sze added to party Sacramento Family Medical Clinics, Inc., et al.(pty:intv))(Sze, Felicia) (Entered: 04/15/2019)
517 NOTICE of Change of Attorney Business or Contact Information: for attorney Felicia Y Sze counsel for Intervenor Plaintiffs Acacia Adult Day Services, California Association of Medical Product Suppliers, California Hospital Association, Eastern Plumas Health Care District, Grossmont Hospital Corporation, Kaweah Delta Health Care District, Theodore M Mazer, Ronald B Mead, Pioneers Memorial Health Care District, Sacramento Family Medical Clinics, Inc., Sharp Chula Vista Medical Center, Sharp Coronado Hospital and Healthcare Center, Sharp Memorial Hospital, Intervenor Parties California Association for Health Services at Home, California Medical Transportation Association, Inc., Sacramento Family Medical Clinics, Inc., et al.. Changing Firm Name to Athene Law, LLP. Changing e−mail to felicia@athenelaw.com. Filed by Intervenor Acacia Adult Day Services, et al.. (Sze, Felicia) (Entered: 04/15/2019)
518 OPPOSITION to NOTICE OF MOTION AND MOTION for Attorney Fees 510 filed by Respondent California Department of Health Care Services. (Attachments: # 1 Declaration of Service)(Attorney Susan Marie Carson added to party California Department of Health Care Services(pty:res))(Carson, Susan) (Entered: 05/01/2019)
519 Objection to and Motion to Strike Declarations Opposition re: NOTICE OF MOTION AND MOTION for Attorney Fees re Common Fund 511 , NOTICE OF MOTION AND MOTION for Attorney Fees 510 , NOTICE OF MOTION AND MOTION for

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Attorney Fees PURSUANT TO C.C.P. § 1021.5 AND COMMON BENEFIT DOCTRINE; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF 512 filed by Respondent California Department of Health Care Services. (Attachments: # 1 Proof of Service)(Carson, Susan) (Entered: 05/08/2019)
520 OPPOSITION to NOTICE OF MOTION AND MOTION for Attorney Fees 510 , NOTICE OF MOTION AND MOTION for Attorney Fees PURSUANT TO C.C.P. § 1021.5 AND COMMON BENEFIT DOCTRINE; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF 512 filed by Respondent California Department of Health Care Services. (Attachments: # 1 Proof of Service)(Carson, Susan) (Entered: 05/08/2019)
521 DECLARATION of Victoria Cavender In Opposition to NOTICE OF MOTION AND MOTION for Attorney Fees 510 , NOTICE OF MOTION AND MOTION for Attorney Fees PURSUANT TO C.C.P. § 1021.5 AND COMMON BENEFIT DOCTRINE; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF 512 filed by Respondents California Department of Health Care Services, David Maxwell−Jolly. (Attachments: # 1 Exhibit A)(Sondheimer, Joshua) (Entered: 05/08/2019)
522 NOTICE OF ERRATA filed by Respondents California Department of Health Care Services, David Maxwell−Jolly. correcting Response in Opposition to Motion, 520 (Sondheimer, Joshua) (Entered: 05/09/2019)
523 OPPOSITION to NOTICE OF MOTION AND MOTION for Attorney Fees 510 , NOTICE OF MOTION AND MOTION for Attorney Fees PURSUANT TO C.C.P. § 1021.5 AND COMMON BENEFIT DOCTRINE; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF 512 Corrected Respondent's Combined Opposition to Motions for Determination of Entitlement to Award of Attorneys' Fees Under California Code of Civil Procedure Section 1021.5 filed by Respondents California Department of Health Care Services, David Maxwell−Jolly. (Sondheimer, Joshua) (Entered: 05/09/2019)
524 REQUEST FOR JUDICIAL NOTICE re NOTICE OF MOTION AND MOTION for Attorney Fees 510 , NOTICE OF MOTION AND MOTION for Attorney Fees PURSUANT TO C.C.P. § 1021.5 AND COMMON BENEFIT DOCTRINE; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF 512 RESPONDENTS REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF OPPOSITION TO MOTIONS FOR DETERMINATION OF ENTITLEMENT TO ATTORNEYS FEES UNDER CCP SECTION 1021.5 filed by Respondents California Department of Health Care Services, David Maxwell−Jolly. (Carson, Susan) (Entered: 05/09/2019)
525 Notice of Appearance or Withdrawal of Counsel: for attorney Craig J Cannizzo counsel for Intervenor Plaintiffs Acacia Adult Day Services, Theodore M Mazer, Ronald B Mead, Sacramento Family Medical Clinics, Inc.. Filed by Intervenors Intervenors Sacramento Family Medical Clinics, Inc., Theodore M. Mazer, M.D., Ronald B. Mead, D.D.S., and Acacia Adult Day Services. (Cannizzo, Craig) (Entered: 05/09/2019)
526 Notice of Appearance or Withdrawal of Counsel: for attorney Craig J Cannizzo counsel for Intervenor Plaintiffs Acacia Adult Day Services, Theodore M Mazer, Ronald B Mead, Sacramento Family Medical Clinics, Inc.. Filed by Intervenors Sacramento Family Medical Clinics, Inc., Theodore M. Mazer, M.D., Ronald B. Mead, D.D.S., and Acacia Adult Day Services. (Cannizzo, Craig) (Entered: 05/09/2019)
527 Notice of Appearance or Withdrawal of Counsel: for attorney Craig J Cannizzo counsel for Intervenor Plaintiffs Acacia Adult Day Services, Theodore M Mazer, Ronald B Mead, Sacramento Family Medical Clinics, Inc.. Filed by Intervenors Sacramento Family Medical Clinics, Inc., Theodore M. Mazer, M.D., Ronald B. Mead, D.D.S., and Acacia Adult Day Services. (Cannizzo, Craig) (Entered: 05/09/2019)
528 REPLY in support of NOTICE OF MOTION AND MOTION for Attorney Fees re Common Fund 511 filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc., Jason Young. (Attachments: # 1 Petitioners Request for Judicial Notice in Support of Their

05/22/2019
05/22/2019 05/24/2019 05/29/2019 06/24/2019 08/06/2019

Reply Memorandum in Support of Motion for an Award of Common Fund Attorneys Fees and Costs to the Prevailing Party)(Friedman, Stanley) (Entered: 05/14/2019)
529 REPLY in support of NOTICE OF MOTION AND MOTION for Attorney Fees 510 Pursuant to California Code of Civil Procedure §1021.5 filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc., Jason Young. (Attachments: # 1 Petitioners Request for Judicial Notice in Support of Motion for an Award of Attorneys Fees and Costs to the Prevailing Parties Pursuant to California Code of Civil Procedure §1021.5, # 2 Declaration of Stanley L. Friedman re Discovery in Support of Reply in Support of Motion for an Award of Attorneys Fees and Costs to the Prevailing Party Pursuant to California Code of Civil Procedure §1021.5, # 3 Evidentiary Objections in Support of Motion for an Award of Attorneys Fees and Costs to the Prevailing Party Pursuant to California Code of Civil Procedure §1021.5, # 4 Petitioners Response to Respondents Evidentiary Objections re Motion for an Award of Attorneys Fees and Costs to the Prevailing Party Pursuant to California Code of Civil Procedure §1021.5)(Friedman, Stanley) (Entered: 05/22/2019)
530 REPLY IN SUPPORT NOTICE OF MOTION AND MOTION for Attorney Fees PURSUANT TO C.C.P. § 1021.5 AND COMMON BENEFIT DOCTRINE; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF 512 filed by Intervenor Plaintiffs Acacia Adult Day Services, Theodore M Mazer, Ronald B Mead, Sacramento Family Medical Clinics, Inc.. (Cannizzo, Craig) (Entered: 05/22/2019)
531 SCHEDULING NOTICE CONTINUED by Judge Christina A. Snyder re: NOTICE OF MOTION AND MOTION for Attorney Fees 510 , NOTICE OF MOTION AND MOTION for Attorney Fees re Common Fund 511 , and NOTICE OF MOTION AND MOTION for Attorney Fees PURSUANT TO C.C.P. § 1021.5 AND COMMON BENEFIT DOCTRINE 512 , previously scheduled for 6/3/2019 at 10:00 AM has been rescheduled. Motions hearing is continued to 6/10/2019 at 10:00 AM before Judge Christina A. Snyder. THERE IS NO PDF DOCUMENT ASSOCIATED WITH THIS ENTRY. (cj) TEXT ONLY ENTRY (Entered: 05/24/2019)
532 SCHEDULING NOTICE CONTINUED by Judge Christina A. Snyder re: NOTICE OF MOTION AND MOTION for Attorney Fees 510 , NOTICE OF MOTION AND MOTION for Attorney Fees re Common Fund 511 , and NOTICE OF MOTION AND MOTION for Attorney Fees PURSUANT TO C.C.P. § 1021.5 AND COMMON BENEFIT DOCTRINE 512 , previously scheduled for 6/10/2019 at 10:00 AM has been rescheduled. Motions hearing is continued to 6/24/2019 at 10:00 AM before Judge Christina A. Snyder. THERE IS NO PDF DOCUMENT ASSOCIATED WITH THIS ENTRY. (cj) TEXT ONLY ENTRY (Entered: 05/29/2019)
533 MINUTES OF Motion Hearing held before Judge Christina A. Snyder: RE PETITIONERS MOTION FOR AN AWARD OF ATTORNEYS FEES AND COSTS TO THE PREVAILING PARTY PURSUANT TO CCCP 1021.5 510 PETITIONERS MOTION FOR AN AWARD OF COMMON FUND ATTORNEYS FEES AND COSTS TO THE PREVAILING PARTY 511 INVERVENORS MOTION FOR ENTITLEMENT TO ATTORNEYS FEES PURSUANT TO CCCP 1021.5 AND COMMON BENEFIT DOCTRINE 512 . Tentative order provided. The Court confers with counsel and counsel argue. The Court takes the above−referenced motions under submission. Court Reporter: Anne Kielwasser. (lc) (Entered: 06/28/2019)
534 MINUTES (IN CHAMBERS) − PETITIONERS' MOTION FOR ATTORNEYS FEES PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1021.5 (Dkt. No. 510 , filed on April 10, 2019); PETITIONERS' MOTION FOR AN AWARD OF COMMON FUND ATTORNEY'S FEES (Dkt. No. 511 , filed on April 10, 2019); INTERVENORS' MOTION FOR ATTORNEYS' FEES PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1021.5 AND COMMON BENEFIT THEORY (Dkt. No. 512 , filed on April 10, 2019) by Judge Christina A. Snyder. In accordance with the foregoing, the Court GRANTS petitioners and intervenors' motions for attorneys' fees under § 1021.5, finding them entitled to a fee award under the statute. The Court will determine the appropriate fee awards after subsequent briefing. The Court DENIES petitioners' motion for an award of common fund attorneys' fees. In light of the Court's conclusion that petitioners and intervenors

08/26/2019 09/09/2019
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are entitled to attorneys' fees under § 1021.5, the Court will direct the parties to submit briefing on the appropriate amount of fees to be awarded. In advance of setting a briefing schedule on this issue, however, the Court first directs the Director to submit briefing, not to exceed five (5) pages, on (1) what, if any, discovery the Director intends to conduct with regard to fees incurred by counsel for petitioners and intervenors, and (2) an estimate of when that discovery could be completed. That briefing is due Monday, August 26, 2019. In the event that petitioners and intervenors seek to respond to that briefing, they may submit briefing, not to exceed five (5) pages, by Monday, September 9, 2019. The Court will then hold a status conference on Monday, September 16, 2019, at which point it will set a briefing schedule on the amount of fees to be awarded under § 1021.5. This briefing will include complete documentation of hours spent, historical and current billing rates of timekeepers, payments already received (including the amounts and the identity of the individuals who made the payments), evidence of customary hourly rates in the community for the services rendered, and argument about the application of any multipliers. IT IS SO ORDERED. (lom) (Entered: 08/07/2019)
535 BRIEF filed by Respondent California Department of Health Care Services, David Maxwell−Jolly. RESPONDENT'S BRIEF REGARDING INTENDED DISCOVERY RELATING TO PETITIONERS' AND INTERVENORS' CLAIMS FOR ATTORNEYS' FEES (Attachments: # 1 Exhibit Exhibit A, # 2 Exhibit Exhibit B)(Sondheimer, Joshua) (Entered: 08/26/2019)
536 BRIEF filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc., Jason Young. Petitioners: (1) Response to Respondent's Brief Regarding Respondent's Proposed Discovery Requests; (2) Requests for Permission to Propound Discovery; (3) Request for Order Pursuant to 28 U.S.C. § 1292(b) to Permit Petitioners to File an Application in the Ninth Circuit Court of Appeals for an Immediate Appeal of the District Courts Interlocutory Orders regarding Order on Motion for Attorney Fees,,,,,,,,,,,,,,,,,,,,,,,,,,,,, 534 . (Friedman, Stanley) (Entered: 09/09/2019)
537 RESPONSE filed by Intervenor Plaintiffs Acacia Adult Day Services, Theodore M Mazer, Ronald B Mead, Sacramento Family Medical Clinics, Inc.to Brief (non−motion non−appeal), 535 Regarding Intended Discovery (Cannizzo, Craig) (Entered: 09/09/2019)
538 MINUTES OF STATUS CONFERENCE held before Judge Christina A. Snyder. Hearing held and counsel are present. The Court confers with counsel, as stated in Court and on the record. Plaintiffs shall respond to the discovery on or before October 31, 2019. Counsel are ordered to meet and confer forthwith. Thereafter, counsel shall providing the Court with their Stipulation and Proposed Order re: Hearing and Briefing no later than September 20, 2019. Court Reporter: Laura Elias. (lom) (Entered: 09/17/2019)
539 STATEMENT REGARDING PROPOSED BRIEFING AND HEARING SCHEDULE ON MOTIONS FOR ATTORNEYS FEES filed by Respondent David Maxwell−Jolly (Attachments: # 1 Proposed Order [PROPOSED] ORDER SETTING BRIEFING AND HEARING SCHEDULE ON MOTIONS FOR ATTORNEYS FEES)(Sondheimer, Joshua) (Entered: 09/20/2019)
540 STATEMENT Proposed Briefing and Hearing Schedule on Motions for Attorneys' Fees filed by Intervenor Plaintiffs Acacia Adult Day Services, Theodore M Mazer, Ronald B Mead, Sacramento Family Medical Clinics, Inc., Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc. (JOINT REPORT OF PETITIONERS AND INTERVENORS) (Attachments: # 1 Proposed Order)(Cannizzo, Craig) (Entered: 09/20/2019)
541 ORDER 540 by Judge Christina A. Snyder: The Court is in receipt of the parties respective reports regarding proposed briefing and hearing schedules on the Petitioners and Intervenors motions for determination of the amounts of attorneys fees to be awarded pursuant to CCP 1021.5. The Court hereby orders the following briefing and hearing schedule: Last day to file Respective motions: November 1, 2019; Hearing date on the motions: December 16, 2019 10:00 AM; Oppositions: November 15, 2019;

10/08/2019 10/28/2019 10/28/2019 10/30/2019 10/30/2019 10/31/2019
11/01/2019
11/01/2019

Reply: November 29, 2019. (lc) (Entered: 09/25/2019)
542 TRANSCRIPT ORDER as to Intervenors Acacia Adult Day Services, Theodore M Mazer, Ronald B Mead, Sacramento Family Medical Clinics, Inc., et al. for Court Reporter. Court will contact Diane DeCarlo at ddecarlo@health−law.com with further instructions regarding this order. Transcript preparation will not begin until payment has been satisfied with the court reporter. (Stock, Stanton) (Entered: 10/08/2019)
543 EX PARTE APPLICATION to Continue Hearing on Motions for Attorneys' Fees from December 16, 2019 to January 6, 2020 filed by Respondent David Maxwell−Jolly. (Attachments: # 1 Memorandum Memorandum of Points & Authorities, # 2 Declaration Declaration of Gary Greenfield, # 3 Declaration Declaration of Joshua Sondheimer, # 4 Proposed Order Proposed Order) (Sondheimer, Joshua) (Entered: 10/28/2019)
544 TRANSCRIPT ORDER as to Respondent David Maxwell−Jolly for Court Reporter. Court will contact Rowena Manalastas at rowena.manalastas@doj.ca.gov with further instructions regarding this order. Transcript preparation will not begin until payment has been satisfied with the court reporter. (Sondheimer, Joshua) (Entered: 10/28/2019)
545 Opposition to Ex Parte Application of Respondent to Continue Hearing on Motions for Attorneys Fees Opposition re: EX PARTE APPLICATION to Continue Hearing on Motions for Attorneys' Fees from December 16, 2019 to January 6, 2020 543 filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc., Jason Young. (Friedman, Stanley) (Entered: 10/30/2019)
546 Opposition to Respondent's Ex Parte Application to Continue Hearing on Motions for Attorneys' Fees Opposition re: EX PARTE APPLICATION to Continue Hearing on Motions for Attorneys' Fees from December 16, 2019 to January 6, 2020 543 filed by Intervenor Plaintiffs Acacia Adult Day Services, Theodore M Mazer, Ronald B Mead, Sacramento Family Medical Clinics, Inc., Intervenor Sacramento Family Medical Clinics, Inc., et al.. (Attorney Stanton J Stock added to party Sacramento Family Medical Clinics, Inc.(pty:intvp))(Stock, Stanton) (Entered: 10/30/2019)
547 SCHEDULING NOTICE GRANTING AND CONTINUING by Judge Christina A. Snyder, re: EX PARTE APPLICATION to Continue Hearing on Motions for Attorneys' Fees 543 . The Court is in receipt of Respondents Ex Parte Application to Continue Hearing on Motions for Attorneys Fees 543 (the Application), as well as plaintiffs and intervenors oppositions thereto 545 546 . The Court finds good cause to GRANT the Application. Respondents opposition to plaintiffs and intervenors motions for attorneys fees shall be due 12/16/2019. If plaintiffs and intervenors wish to submit replies, they shall be due 1/6/2020. The hearing on those motions shall be held 1/13/2020, at 10:00 AM. No further continuances will be entertained. IT IS SO ORDERED THERE IS NO PDF DOCUMENT ASSOCIATED WITH THIS ENTRY. (cj) TEXT ONLY ENTRY (Entered: 10/31/2019)
548 NOTICE OF MOTION AND MOTION for Attorney Fees filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc., Jason Young. Motion set for hearing on 1/13/2020 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 Memorandum Memorandum of Points and Authorities in Support of Petitioners Motion for Attorneys Fees, # 2 Declaration Declarations of Stanley L. Friedman, Rafael Bernardino, Jr., Ashton R. Watkins and Kevin Gerry in Support of Petitioners Motion for Attorneys Fees, # 3 Exhibit Volume One (Exhibits 1− 3), # 4 Exhibit Volume Two (Exhibits 4−25), # 5 Exhibit Volume Three (Exhibits 26−50), # 6 Exhibit Volume Four (Exhibits 51−75), # 7 Exhibit Volume Five (Exhibits 76−100), # 8 Exhibit Volume Six (Exhibits 101−125), # 9 Exhibit Volume Seven (Exhibits 126−148), # 10 Proposed Order) (Friedman, Stanley) (Entered: 11/01/2019)
549 NOTICE OF MOTION AND MOTION for Attorney Fees re Determination of the Amount to be Awarded Pursuant to CCP Section 1021.5 filed by Intervenors Acacia Adult Day Services, Theodore M Mazer, Ronald B Mead, Sacramento Family Medical Clinics, Inc.. Motion set for hearing on 1/13/2020 at 10:00 AM before Judge Christina A. Snyder. (Attachments: # 1 Declaration, # 2 Declaration) (Cannizzo, Craig)

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01/06/2020
01/06/2020 01/10/2020 01/10/2020

(Entered: 11/01/2019)
550 MEMORANDUM in Opposition RESPONDENTS OPPOSITION TO INTERVENORS MOTION FOR DETERMINATION OF AMOUNT OF ATTORNEYS FEES TO BE AWARDED PURSUANT TO CODE OF CIVIL PROCEDURE SECTION 1021.5 filed by Respondent David Maxwell−Jolly. (Sondheimer, Joshua) (Entered: 12/16/2019)
551 MEMORANDUM in Opposition RESPONDENTS OPPOSITION TO PETITIONERS MOTION FOR ATTORNEY FEES filed by Respondent David Maxwell−Jolly. (Carson, Susan) (Entered: 12/16/2019)
552 DECLARATION of Gary Greenfield In Opposition NOTICE OF MOTION AND MOTION for Attorney Fees re Determination of the Amount to be Awarded Pursuant to CCP Section 1021.5 549 , NOTICE OF MOTION AND MOTION for Attorney Fees 548 filed by Respondent David Maxwell−Jolly. (Attachments: # 1 Exhibit EXHIBITS TO DECLARATION OF GARY GREENFIELD IN SUPPORT OF RESPONDENTS OPPOSITIONS TO PETITIONERS AND INTERVENORS MOTIONS FOR DETERMINATION OF AMOUNT OF ATTORNEYS FEES)(Sondheimer, Joshua) (Entered: 12/16/2019)
553 NOTICE NOTICE OF ERRATA REGARDING DECLARATION OF GARY GREENFIELD IN SUPPORT OF RESPONDENTS RESPONDENTS OPPOSITIONS TO PETITIONERS AND INTERVENORS MOTIONS FOR DETERMINATION OF AMOUNT OF ATTORNEYS FEES filed by Respondent David Maxwell−Jolly. (Sondheimer, Joshua) (Entered: 12/17/2019)
554 DECLARATION of Gary Greenfield In Opposition NOTICE OF MOTION AND MOTION for Attorney Fees re Determination of the Amount to be Awarded Pursuant to CCP Section 1021.5 549 , NOTICE OF MOTION AND MOTION for Attorney Fees 548 filed by Respondent David Maxwell−Jolly. (Attachments: # 1 Appendix)(Sondheimer, Joshua) (Entered: 12/17/2019)
555 NOTICE TO FILER OF DEFICIENCIES in Electronically Filed Documents RE: Notice (Other), 553 by Respondent David Maxwell−Jolly. The following error(s) was/were found: Incorrect event selected. Correct event to be used is: Errata. Other error(s) with document(s): Note: To assist in a search for correct events, please use the "SEARCH" option for a "key word" to narrow the selection process. In response to this notice, the Court may: (1) order an amended or correct document to be filed; (2) order the document stricken; or (3) take other action as the Court deems appropriate. You need not take any action in response to this notice unless and until the Court directs you to do so. (lc) (Entered: 12/17/2019)
556 REPLY in support of NOTICE OF MOTION AND MOTION for Attorney Fees 548 filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc., Jason Young. (Attachments: # 1 Evidentiary Objections and Motion to Strike the Declaration of Gary Greenfield in Support of Petitioners Motion for an Award of Attorneys Fees, # 2 Petitioners Request for Judicial Notice in Support of Reply Memorandum in Support of Motion for an Award of Attorneys Fees)(Friedman, Stanley) (Entered: 01/06/2020)
557 REPLY in Support of NOTICE OF MOTION AND MOTION for Attorney Fees re Determination of the Amount to be Awarded Pursuant to CCP Section 1021.5 549 filed by Intervenor Plaintiffs Acacia Adult Day Services, Theodore M Mazer, Ronald B Mead, Sacramento Family Medical Clinics, Inc.. (Attachments: # 1 Declaration of C. Cannizzo ISO Reply to Opposition for Determination of Attys' Fees, # 2 Certificate of Service)(Cannizzo, Craig) (Entered: 01/06/2020)
558 DECLARATION of Craig J. Cannizzo re Reply (Motion related), 557 in Support of Motion for Attorneys Fees filed by Intervenor Plaintiffs Acacia Adult Day Services, Theodore M Mazer, Ronald B Mead, Sacramento Family Medical Clinics, Inc.. (Cannizzo, Craig) (Entered: 01/10/2020)
559 OBJECTION OPPOSITION re: NOTICE OF MOTION AND MOTION for Attorney Fees 548 filed by Respondent David Maxwell−Jolly. (Attachments: # 1 Declaration SUPPLEMENTAL DECLARATION OF GARY GREENFIELD IN SUPPORT OF RESPONDENTS OPPOSITION TO PETITIONERS MOTION FOR ATTORNEYS

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FEES)(Carson, Susan) (Entered: 01/10/2020)
560 MINUTES OF Motion Hearing held before Judge Christina A. Snyder: RE PETITIONERS MOTION FOR ATTORNEYS FEES 548 AND INTERVENORS MOTION FOR DETERMINATION OF THE AMOUNT OF ATTORNEYS FEES TO BE AWARDED 549 . Tentative order provided. The Court confers with counsel and counsel argue. The Court takes the above−referenced motions under submission. Court Reporter: Laura Elias. (lc) (Entered: 01/17/2020)
561 MINUTES (IN CHAMBERS) by Judge Christina A. Snyder: RE PETITIONERS' MOTION FOR ATTORNEYS' FEES 548 , filed on November 1, 2019) AND INTERVENORS' MOTION FOR DETERMINATION OF THE AMOUNT OF ATTORNEYS' FEES TO BE AWARDED PURSUANT TO 1021.5 549 , filed on November 1, 2019. Before the Court are petitioners Independent Living Center of Southern California,Gray Panthers of Sacramento, Gray Panthers of San Francisco, Gerald Shapiro, Uptown Pharmacy & Gift Shoppe, Central Pharmacy, Tran Pharmacy, Inc., Mark Beckwith, Jason Young, and Margaret Dowling's ("petitioners") and intervenors Sacramento Family Medical Clinics, Inc., Theodore M. Mazer, Ronald B. Mead, and Acacia Adult Day Services' ("intervenors") motions for attorneys' fees Court GRANTS the petitioners' and intervenors' motions for attorneys' fees. Intervenors' counsel, HLB, shall recover $4,254,713.88. Petitioners' counsel, the law offices of Stanley L. Friedman, shall recover $2,731,800. (lc) (Entered: 01/27/2020)
562 NOTICE OF APPEAL to the 9th Circuit Court of Appeals filed by Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc., Jason Young. Appeal of Order on Motion for Attorney Fees,,,,,,,,,,,,,,,,,,,,,,,,,,,,, 534 , Status Conference − optional html form, 538 , Order on Motion for Attorney Fees,,,,,,,,, 561 . (Appeal Fee − $505 Fee Paid, Receipt No. ACACDC−25458016.) (Attachments: # 1 Representation Statement)(Friedman, Stanley) (Entered: 02/21/2020)
563 NOTIFICATION from Ninth Circuit Court of Appeals of case number assigned and briefing schedule. Appeal Docket No. 20−55193 assigned to Notice of Appeal to 9th Circuit Court of Appeals,, 562 as to petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc., Jason Young. (lc) (Entered: 02/25/2020)
564 TRANSCRIPT ORDER re: Court of Appeals case number 20−55193, as to Petitioners Mark Beckwith, Margaret Dowling, Gray Panthers of Sacramento, Gray Panthers of San Francisco, Independent Living Center of Southern California, Gerald Shapiro, Sharon Steen, Tran Pharmacy, Inc., Jason Young for Court Reporter. Court will contact Stanley L. Friedman at friedman@friedmanlaw.org with further instructions regarding this order. Transcript preparation will not begin until payment has been satisfied with the court reporter. (Friedman, Stanley) (Entered: 02/26/2020)
565 TRANSCRIPT for proceedings held on 03/11/19 − 11:00 a.m. Court Reporter/Electronic Court Recorder: Lisa M. Gonzalez; csrlisag@aol.com, phone number 213−894−2979. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Electronic Court Recorder before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Notice of Intent to Redact due within 7 days of this date. Redaction Request due 5/11/2020. Redacted Transcript Deadline set for 5/21/2020. Release of Transcript Restriction set for 7/20/2020. (Gonzalez, Lisa) (Entered: 04/20/2020)
566 NOTICE OF FILING TRANSCRIPT filed for proceedings 03/11/19 − 11:00 a.m. re Transcript 565 THERE IS NO PDF DOCUMENT ASSOCIATED WITH THIS ENTRY. (Gonzalez, Lisa) TEXT ONLY ENTRY (Entered: 04/20/2020)
567 TRANSCRIPT for proceedings held on September 16, 2019. Court Reporter/Electronic Court Recorder: Laura Elias, phone number 213−894−0374. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Electronic Court Recorder before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Notice of Intent to Redact due within 7 days of this date. Redaction Request due 5/12/2020. Redacted Transcript Deadline set for 5/22/2020. Release of Transcript Restriction set for

04/21/2020
04/21/2020 07/28/2020 07/30/2020

7/20/2020. (Elias, Laura) (Entered: 04/21/2020)
568 TRANSCRIPT for proceedings held on January 13, 2020. Court Reporter/Electronic Court Recorder: Laura Elias, phone number 213−894−0374. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Electronic Court Recorder before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Notice of Intent to Redact due within 7 days of this date. Redaction Request due 5/12/2020. Redacted Transcript Deadline set for 5/22/2020. Release of Transcript Restriction set for 7/20/2020. (Elias, Laura) (Entered: 04/21/2020)
569 NOTICE OF FILING TRANSCRIPT filed for proceedings September 16, 2019 and January 13, 2020 re Transcript 567 , 568 THERE IS NO PDF DOCUMENT ASSOCIATED WITH THIS ENTRY. (Elias, Laura) TEXT ONLY ENTRY (Entered: 04/21/2020)
570 ORDER from Ninth Circuit Court of Appeals filed. CCA # 20−55193.The opening brief and excerpts of record have been filed. Appellees motion for an extension of time to file the answering brief is granted. The answering brief is due October 29, 2020. The optional reply brief is due within 21 days after service of the answering brief. (lc) (Entered: 07/30/2020)
571 Notice of Electronic Filing re USCA Memorandum/Opinion/Order, 570 e−mailed to Eric Chan bounced due to No longer with firm. The primary e−mail address associated with the attorney record has been deleted. Pursuant to Local Rules it is the attorneys obligation to maintain all personal contact information including e−mail address in the CM/ECF system. THERE IS NO PDF DOCUMENT ASSOCIATED WITH THIS ENTRY. (lmh) TEXT ONLY ENTRY (Entered: 07/30/2020)

 </s> Case 2:08-cv-03315-CAS-MAN Document 490 Filed 11/21/18 Page 1 of 32 Page ID #:10791

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., DBA Uptown Pharmacy and Gift Shoppe; SHARON STEEN, DBA Central Pharmacy; TRAN PHARMACY, INC.; MARK BECKWITH; MARGARET DOWLING,
Petitioners-Appellants,
v.
JENNIFER KENT, Director of Department of Health Care Services of the State of California; DEPARTMENT OF HEALTH CARE SERVICES,
Respondents-Appellees.

No. 15-56142
D.C. No. 2:08-cv-03315-
CAS-MAN

Case 2:08-cv-03315-CAS-MAN Document 490 Filed 11/21/18 Page 2 of 32 Page ID #:10792

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SACRAMENTO FAMILY MEDICAL CLINICS, INC.; ACACIA ADULT DAY SERVICES; RONALD B. MEAD, D.D.S.; THEODORE M. MAZER, M.D.,
Intervenors-Appellants,
v.
JENNIFER KENT, Director of Department of Health Care Services of the State of California; DEPARTMENT OF HEALTH CARE SERVICES,
Respondents-Appellees.

No. 15-56154
D.C. No. 2:08-cv-03315-
CAS-MAN
OPINION

Appeal from the United States District Court for the Central District of California
Christina A. Snyder, District Judge, Presiding
Argued and Submitted September 26, 2018 Pasadena, California
Filed November 21, 2018
Before: WILLIAM A. FLETCHER, MILAN D. SMITH, JR., and MORGAN CHRISTEN, Circuit Judges.
Opinion by Judge Milan D. Smith, Jr.; Concurrence by Judge Christen

Case 2:08-cv-03315-CAS-MAN Document 490 Filed 11/21/18 Page 3 of 32 Page ID #:10793

INDEP. LIVING CTR. V. KENT

3

SUMMARY*

Attorneys’ Fees
The panel reversed the district court’s denial of plaintiffs’ request for attorneys’ fees following the settlement of litigation concerning California’s Assembly Bill X3 5, which reduced the Medi-Cal rate of reimbursement for healthcare providers by ten percent.
Plaintiffs sought a writ of mandamus under Cal. Civ. Proc. Code § 1085 on the ground that AB 5 violated Section 30(A) of the Medicaid Act, thereby conflicting with federal law and violating the Supremacy Clause. The Ninth Circuit upheld the district court’s preliminary injunction against enforcement of the ten percent reduction, to apply both prospectively and retroactively. The Supreme Court vacated and remanded in light of the Centers for Medicare & Medicaid Services’ approval of certain plan amendments to implement AB 5. The parties subsequently entered into a settlement agreement in which plaintiffs reserved the right to move for attorneys’ fees. Plaintiffs did so pursuant to Cal. Civ. Proc. Code § 1021.5, and the district court denied their motions.
The panel held that, even though the case was properly removed from state court based on federal question jurisdiction, plaintiffs brought a state-law claim and were therefore permitted to seek attorneys’ fees pursuant to § 1021.5. The panel concluded that plaintiffs’ § 1085 Writ
* This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader.

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was not a federal claim following Armstrong v. Exceptional Child Care Ctr., Inc., 135 S. Ct. 1378 (2015), which held that neither the federal Medicaid statute nor the Constitution provides a cause of action for enforcement of Section 30(A). The panel concluded that the § 1085 Writ endured as a statelaw claim because, under California law, § 1085 Writs may issue to compel state agencies to comply with federal requirements. The panel held that federal common law did not govern the award of fees and preclude an award pursuant to state law. The panel concluded that the Erie doctrine supported allowing plaintiffs to seek fees under § 1021.5. The panel reversed the district court’s holding that plaintiffs were precluded from seeking an award of attorneys’ fees under § 1021.5, and remanded to the district court to determine whether plaintiffs met the requirements of § 1021.5 to obtain a fee award, and if so, to calculate that award.

The panel further held that the district court abused its discretion in denying plaintiffs’ motion to set aside funds for attorneys’ fees following the decision permitting retroactive monetary relief from the Medi-Cal reimbursement reduction. The panel remanded for a determination of whether plaintiffs could recover any fees from the retroactive relief.

Concurring, Judge Christen wrote that she concurred in the result reached by the majority opinion but reached the same conclusion in a different way. Judge Christen wrote that plaintiffs could seek attorneys’ fees under § 1021.5 because the parties’ settlement included a state-law request for declaratory relief under § 1085. Judge Christen agreed that it was an abuse of discretion to deny plaintiffs’ motion to set aside attorneys’ fees from the reimbursement.

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INDEP. LIVING CTR. V. KENT

5

COUNSEL

Erwin Chemerinsky (argued), University of California, Berkeley, School of Law, Berkeley, California; Stanley L. Friedman and Rafael Bernardino, Jr., Law Offices of Stanley L. Friedman, Los Angeles, California; for PetitionersAppellants.

Craig J. Cannizzo (argued), Hooper, Lundy & Bookman, P.C., San Francisco, California; Lloyd A. Bookman and Jordan B. Keville, Hooper, Lundy & Bookman, P.C., Los Angeles, California; for Intervenors-Appellants.

Susan M. Carson (argued), Supervising Deputy Attorney General; Julie Weng-Gutierrez, Senior Assistant Attorney General; Xavier Becerra, Attorney General of California; Office of the Attorney General, San Francisco, California; for Respondents-Appellees.

OPINION
M. SMITH, Circuit Judge:
This case comes before us once again after a decade-long journey within the federal court system. In these final stages of the litigation, Petitioners-Appellants (Independent Living), a group of health care advocacy organizations and medical care providers, and Intervenors-Appellants (Intervenors, and together with Independent Living, Appellants), another group of health care providers and organizations, seek an award of attorneys’ fees from the Director of the California Department of Health Care Services (the Director), and possibly others. We hold that the district court erroneously concluded that Appellants were

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not entitled to seek fees pursuant to California Civil Procedure Code § 1021.5. In addition, we hold that the district court abused its discretion in denying Independent Living’s motion to set aside fees from the retroactive monetary relief obtained in 2010. Accordingly, we remand to the district court to determine whether, in light of our ruling, Appellants meet the requirements to obtain attorneys’ fees pursuant to § 1021.5 and Section III (C)(1)(a) and (b) of the Settlement Agreement (infra), and whether it is possible and appropriate at this stage of the litigation for Independent Living to recoup attorneys’ fees “from Medicaid providers that purportedly obtained a benefit from counsel’s work,” pursuant to Section III (C)(1)(c) of the Settlement Agreement, and that received payments from the Department of Health Care Services (DHCS) as a result of this litigation.
FACTUAL AND PROCEDURAL BACKGROUND
I. Factual Background
The Medicaid Act authorizes the federal government to distribute funds to states for the purpose of providing medical assistance to low-income persons. Participating states are subject to certain conditions. Armstrong v. Exceptional Child Care Ctr., Inc., 135 S. Ct. 1378, 1382 (2015). One such condition is the “equal access” provision (Section 30(A)), which requires that states set provider reimbursement rates that are “sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.” 42 U.S.C. § 1396a(a)(30)(A).
On February 16, 2008, the California legislature enacted Assembly Bill X3 5 (AB 5). AB 5 reduced the Medi-Cal—

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California’s Medicaid program—rate of reimbursement for healthcare providers by ten percent. These cuts took effect on July 1, 2008.

II. Procedural Background
On April 22, 2008, Independent Living filed in Los Angeles County Superior Court a petition for a writ of mandamus against the DHCS and the Director, pursuant to California Code of Civil Procedure § 1085 (the § 1085 Writ). The petition alleged that the ten percent rate reduction enacted pursuant to AB 5 violated Section 30(A), thereby conflicting with federal law, and violating the Supremacy Clause. In addition to the § 1085 Writ, Independent Living sought an injunction preventing the implementation of AB 5, as well as attorneys’ fees pursuant to California’s Private Attorney General Act, Cal. Civ. Proc. Code § 1021.5. On May 19, 2008, the Director removed this action to federal court based on federal question jurisdiction, and Independent Living filed the § 1085 Writ in federal court. On June 1, 2008, Independent Living dismissed the DHCS from its action, leaving only the Director as a defendant.
On June 25, 2008, the district court denied Independent Living’s motion for a preliminary injunction preventing the enforcement of AB 5. We vacated that decision on July 11, 2008, holding that a plaintiff “may bring suit under the Supremacy Clause to enjoin implementation of a state law allegedly preempted by federal statute.” Indep. Living Ctr. of S. Cal. v. Shewry, 543 F.3d 1047, 1049 (9th Cir. 2008) (per curiam); see Indep. Living Ctr. of S. Cal. v. Shewry, 543 F.3d 1050 (9th Cir. 2008) (Shewry).
On August 18, 2008, the district court enjoined enforcement of the ten percent reduction. On August 27, 2008, the court modified its injunction to apply only

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prospectively from the date of the injunction because sovereign immunity purportedly barred retroactive relief.
On appeal, we analyzed whether retroactive application of the injunction violated California’s sovereign immunity. Indep. Living Ctr. of S. Cal. v. Maxwell-Jolly, 572 F.3d 644, 660–63 (9th Cir. 2009), vacated and remanded on other grounds sub nom. Douglas v. Indep. Living Ctr. of S. Cal., 132 S. Ct. 1204 (2012). We first found this retroactive relief would violate California’s sovereign immunity absent the Director’s waiver of that immunity. Id. at 661. We then noted that the Director would have waived sovereign immunity by removing the suit to federal court if California had previously consented to similar suits in state court. Id. Consequently, after reviewing numerous California state court decisions that permitted § 1085 mandamus actions seeking disbursement of unlawfully withheld funds, we held that the Director had waived sovereign immunity. Id. at 663. Therefore, we concluded that the injunction should also have applied retroactively to Medi-Cal payments between the time of AB 5’s implementation and the date of the district court’s injunction (the retroactive period). Id.
On March 15, 2010, Independent Living moved to set aside a portion of the monies paid, or to be paid, to Medicaid providers for the retroactive period to set up a fund from which attorneys’ fees could be paid. The district court dismissed this motion because it believed it was premature and that “[n]either side has provided any reason why [the court] at the conclusion of the case could not fashion an order requiring . . . California to pay attorneys’ fees based on what is ultimately the value of any judgment or settlement.”
In 2011, the United States Supreme Court granted the Director’s petition for a writ of certiorari with respect to the Supremacy Clause issue. Preceding oral argument before

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the Supreme Court, the Centers for Medicare & Medicaid Services (CMS), the federal agency in charge of administering Medicaid, disapproved the Director’s submitted plan amendments to implement AB 5 because they did not satisfy Section 30(A). Douglas, 132 S. Ct. at 1209. However, after oral argument, and before the Supreme Court issued its opinion, CMS approved some of the pending amendments. Id.
The Supreme Court ultimately held that CMS’s decisions regarding the plan amendments changed the procedural posture of the case, and remanded it to our court to consider whether the providers could maintain an action pursuant to the Supremacy Clause. Id. at 1209–11. The Supreme Court thus vacated, but did not reverse, our decision affirming the preliminary injunction.
Following Douglas, the parties resolved this case in mediation, and produced a Settlement Agreement specifying the terms of their concord. In Sections III (C)(1)(a) and (b) of the Settlement Agreement, Appellants reserved the right to move for attorneys’ fees before the district court. The state retained the right to oppose any such request. In addition, Section III (C)(1)(c) of the Settlement Agreement permitted “any plaintiffs’ attorney” who had appeared in one of the listed cases to seek attorneys’ fees “from Medicaid providers that purportedly obtained a benefit from counsel’s work,” but not from “DHCS or any of the State Released Entities.”
Independent Living and Intervenors separately moved for attorneys’ fees pursuant to § 1021.5. The district court denied the motions, reasoning that this case involved only federal law claims, so the district court could not award attorneys’ fees pursuant to a state-law provision like

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§ 1021.5. Independent Living and Intervenors timely appealed, and their consolidated appeals are before us now.
JURISDICTION AND STANDARD OF REVIEW
We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1291. We review a district court’s decision to deny attorneys’ fees for abuse of discretion. Labotest, Inc. v. Bonta, 297 F.3d 892, 894 (9th Cir. 2002). Abuse of discretion occurs if the district court based its decision “on an erroneous legal conclusion or a clearly erroneous finding of fact.” Id. We review de novo whether the district court “applied the correct legal standard in determining entitlement to attorneys’ fees.” Klein v. City of Laguna Beach, 810 F.3d 693, 698 (9th Cir. 2016).
ANALYSIS
I. Availability of Attorneys’ Fees Under § 1021.5
The central question in this appeal is whether Appellants brought a state-law claim or a federal claim, for the answer to that question will determine whether they are entitled to seek attorneys’ fees pursuant to California’s § 1021.5 in federal court. We hold that Appellants brought a state-law claim, and that they are therefore permitted to seek fees pursuant to § 1021.5.
A. Federal Question Jurisdiction
The Director argues that despite Appellants’ only cause of action being the § 1085 Writ, their action involved “solely” federal law, which permitted the federal courts to exercise federal question jurisdiction. However, the fact that the federal courts exercised federal question jurisdiction

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does not automatically determine whether Appellants’ claim was based on federal or state-law.
The Director removed this case based on federal question jurisdiction. With good reason, we originally understood Appellants’ cause of action to constitute a suit pursuant to the Supremacy Clause to enjoin state legislation allegedly preempted by a federal statute (here, the Medicaid Act). Shewry, 543 F.3d at 1062, 1065–66. In so concluding, we relied in part on Shaw v. Delta Air Lines, Inc., in which the Supreme Court observed that a plaintiff bringing such a suit “presents a federal question which the federal courts have jurisdiction under 28 U.S.C. § 1331 to resolve.” 463 U.S. 85, n.14 (1983).
Of course, federal question jurisdiction encompasses more than just federal causes of action. Federal courts have jurisdiction to hear “cases in which a well-pleaded complaint establishes either that federal law creates the cause of action or that the plaintiff’s right to relief necessarily depends on resolution of a substantial question of federal law.” Franchise Tax Bd. v. Constr. Laborers Vacation Tr. for S. Cal., 463 U.S. 1, 27–28 (1983). Where, as here, state law creates the cause of action, federal jurisdiction may also lie if “it appears that some substantial, disputed question of federal law is a necessary element of one of the well-pleaded state claims.” Id. at 13. Quiet title actions, for example, have prompted the exercise of federal question jurisdiction. See, e.g., Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 315–16 (2005) (exercising federal question jurisdiction over a quiet title action that required analysis of the federal notice statute).
In Merrell Dow Pharmaceuticals, Inc. v. Thompson, the Court held that federal question jurisdiction was unavailable over a state tort claim alleging a violation of a federal

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misbranding prohibition, in part because Congress had not provided a private federal cause of action for that violation. 478 U.S. 804, 812 (1986). However, the Court has since noted Merrell Dow did not “convert[] a federal cause of action from a sufficient condition for federal-question jurisdiction into a necessary one.” Grable & Sons, 545 U.S. at 317. Rather, a federal right of action is “evidence relevant to, but not dispositive of” federal question jurisdiction. Id. Federal question jurisdiction over state-law claims will lie if a federal issue is “(1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disturbing the federal-state balance approved by Congress.” Gunn v. Minton, 568 U.S. 251, 258 (2013).
We conclude that the § 1085 Writ meets the requirements of the Gunn/Grable & Sons inquiry, and arises under federal law within the meaning of 28 U.S.C. § 1331. To prevail on the § 1085 Writ, Appellants would necessarily have had to show that AB 5 violated the requirements of Section 30(A). This purported violation was the “central point of dispute.” Gunn, 568 U.S. at 259. While the claim only called for a determination of the validity of California legislation, it more broadly raised the question of whether state legislation conflicted with Medicaid requirements. Given the ubiquitous reliance on Medicaid funding nationwide, the claim therefore had substantial “importance . . . to the federal system as a whole.” Id. at 260. Indeed, the Supreme Court confronted this very issue in Armstrong just three years after its decision in Douglas. Additionally, the role of the Supremacy Clause in this case invokes the essence of the “federal-state balance.” Id. at 258. Therefore, the Director’s removal was proper, as was the court’s exercise of federal question jurisdiction over the § 1085 Writ. However, the exercise of federal question jurisdiction

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did not itself transform the § 1085 Writ into a federal claim. Determination of whether the § 1085 Writ constituted a state-law or a federal claim requires further analysis.

B. State Claim or Federal Claim?
Appellants seek an award of attorneys’ fees pursuant to California Code of Civil Procedure§ 1021.5. The Director argues that fees are unavailable pursuant to § 1021.5 because Appellants’ claim was federal—a conclusion also reached by the district court.
However, during the period between Shewry and this appeal, the Supreme Court in Armstrong considered a suit similar to the one at hand. In that case, health providers sued officials in Idaho’s Department of Health and Welfare, claiming that Idaho violated Section 30(A) of the Medicaid Act by reimbursing providers of habilitation services at impermissible rates. Armstrong, 135 S. Ct. at 1382. We had affirmed the district court’s grant of summary judgment for the providers and stated that the providers had an implied right of action pursuant to the Supremacy Clause. Id. at 1383 (citing Inclusion, Inc. v. Armstrong, 567 F. App’x 496 (2014)). The Supreme Court reversed, holding that the Supremacy Clause is “not the source of any federal rights and certainly does not create a cause of action.” Id. (citation omitted). The Court also determined that the suit against Idaho for enforcement of Section 30(A) of the Medicaid Act could not proceed in equity because Section 30(A) implicitly precluded private enforcement. Id. at 1385. Finally, the Court held that Section 30(A) of the Medicaid Act did not confer a private right of action under federal law. Id. at 1387. Thus, in short order, the Supreme Court determined that neither the federal statute nor the Constitutional provision at issue here provides similar plaintiffs a cause of action. Accordingly, Appellants’ cause of action must be grounded

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in state law, if a cause of action is to exist under the circumstances alleged.
Appellants argue that “the gist of [their] claim was that California breached its contract with the federal government,” and that breach of contract is a claim arising under state law. This argument is meritless. In order to prevail on a contract theory, Appellants would have had to show that, at the least, they were third-party beneficiaries entitled to enforce a valid contract between the federal and state governments—a requirement that might have been impossible to show. See Sanchez v. Johnson, 416 F.3d 1051, 1059 (9th Cir. 2005) (holding that Medicaid providers “are, at best, indirect beneficiaries [of 42 U.S.C. § 1396a(a)(30)(A)] and it would strain common sense to read § 30(A) as creating a ‘right’ enforceable by them”). Regardless, Appellants never attempted or needed to make that showing, because this case was not litigated as an action on a contract. Therefore, in order for Appellants to recover fees under § 1021.5, the § 1085 Writ must stand on its own as a state-law cause of action.1

1 The parties dispute whether a writ under § 1085 is best described as a remedial mechanism or a cause of action under California law; in reality, California courts have employed both descriptors. Compare Kreeft v. City of Oakland, 80 Cal. Rptr. 2d 137, 141 (Cal. Ct. App. 1998) (“Ordinary mandamus is the appropriate procedural mechanism for resolving the dispute in this case. A traditional writ of mandate under Code of Civil Procedure section 1085 is a method for compelling a City to perform a legal, usually ministerial duty.” (citations omitted)) with Lee v. Blue Shield of Cal., 65 Cal. Rptr. 3d 612, 619 (Cal. Ct. App. 2007) (referring to “a cause of action for a writ of mandate,” as well as a “declaratory relief cause of action”); see also Hayes v. County of San Diego, 305 P.3d 252, 257 (Cal. 2013) (ruminating on the precise meaning of “cause of action” under California law). We need not wade into this dilemma, because as will be shown, regardless of whether the

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Although Appellant’s breach-of-contract theory is unavailing, we conclude that in this case the § 1085 Writ endured as a state-law claim. A brief survey of relevant cases clearly shows that California courts have deployed § 1085 much as it was used in this case. Section 1085 provides that “any court may” issue a writ “to any inferior tribunal, corporation, board, or person, to compel the performance of an act which the law specially enjoins, as a duty resulting from an office, trust, or station . . . .” Cal. Civ. Proc. Code. § 1085(a). Therefore, writ relief is available to compel a public agency to perform an act prescribed by law. See, e.g., Berkeley Unified Sch. Dist. v. City of Berkeley, 297 P.2d 710, 715 (Cal. Ct. App. 1956) (mandamus appropriate to direct city auditor to release funds from tax levies for school purposes pursuant to city charter). Writ relief is available even where state action implicates federal issues. See Conlan v. Bonta, 125 Cal. Rptr. 2d 788, 803 (Cal. Ct. App. 2002) (writ of mandate issued to provide Medi-Cal recipient with proper reimbursements under the Medicaid Act). Even more relatedly, in Mission Hospital Regional Medical Center v. Shewry, the California Court of Appeal considered whether the Medicaid Act’s notice and comment requirements applied to the California legislature’s action to freeze the Medicaid rate of reimbursement during the 2004– 2005 fiscal year, after a group of hospitals sought writ relief under § 1085. 85 Cal. Rptr. 3d 639, 642–43, 649 (Cal. Ct. App. 2008). The court agreed with the hospitals, remanding the case to the trial court to issue a writ of mandate enjoining the DHCS from utilizing the freeze provision. Id. at 661.
Particularly pertinent to this case, California courts have previously enforced Section 30(A) by issuing writs of

§ 1085 Writ is a procedural mechanism or a cause of action, its use to enjoin state action is well recognized.

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mandate to the DHCS. See, e.g., Cal. Ass’n for Health Servs. at Home v. State Dep’t of Health Care Servs., 138 Cal. Rptr. 3d 889, 900 (Cal. Ct. App. 2012) (further rate review of Medi-Cal reimbursement rates required in accordance with Section 30(A) and the state plan). However, a recent California appellate court decision called into question the future viability of using § 1085 Writs to enforce Section 30(A) violations. See Santa Rosa Mem’l Hosp., Inc. v. Kent, 236 Cal. Rptr. 3d 199, 207 (Cal. Ct. App. 2018). Relying heavily on the Supreme Court’s decision in Armstrong, the California Court of Appeal held that a § 1085 Writ could not issue where the Medicaid Act did not provide for private enforcement of Section 30(A) and Section 30(A)’s broad standards for rate setting impeded a clear duty to perform. Id. at 206–207. The California Supreme Court has not decided this issue and, arguably, the California Court of Appeal decisions are split. Still, the potential ability of Appellants to prosecute this precise case under § 1085 if they filed again today is largely immaterial to whether they could have properly initiated such a state-court action in 2008.
Ultimately, it is clear that, under California law, § 1085 Writs may issue to compel state agencies to comply with federal requirements. That is the essence of Appellants’ claim. Moreover, a significant portion of Appellants’ success was due to our interpretation of state law. In Maxwell-Jolly, we analyzed California law to determine whether sovereign immunity precluded Appellants’ claim for retroactive relief. We held that it did not, acknowledging, “Under California law, an action seeking injunctive relief that requires a state official to disburse funds is not an action against the State.” Maxwell-Jolly, 572 F.3d at 662. Thus, had the action remained in state court, the Director would “not have enjoyed sovereign immunity” against an order for retroactive payments. Id.

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Accordingly, we conclude that Appellants’ claim pursuant to § 1085 is properly characterized as a state-law cause of action and its removal to federal court does not compel a conclusion otherwise. The overlapping concerns of federal law did not transform the § 1085 Writ into a federal claim, for as Armstrong elucidated, there was simply no federal right of action to be had. Since the § 1085 Writ was a state-law claim, we now turn to whether Appellants were entitled to seek attorneys’ fees pursuant to § 1021.5.
C. State Law Fee Awards in Federal Court
The general rule in federal courts is that “absent statute or enforceable contract, litigants pay their own attorneys’ fees.” Alyeska Pipeline Serv. Co v. Wilderness Soc’y, 421 U.S. 240, 257 (1975). We have stated that in a “pure federal question case” in federal court, federal law governs attorneys’ fees. Disability Law Ctr. of Alaska, Inc. v. Anchorage Sch. Dist., 581 F.3d 936, 940 (9th Cir. 2009). By contrast, “so long as ‘state law does not run counter to a valid federal statute or rule of court . . . state law denying the right to attorney’s fees or giving a right thereto, which reflects a substantial policy of the state, should be followed.’” MRO Commc’ns, Inc. v. Am. Tel. & Tel. Co., 197 F.3d 1276, 1281 (9th Cir. 1999) (quoting Alyeska, 421 U.S. at 259 n.31).
Our previous cases in which we denied plaintiffs an award of fees under state law do not preclude recovery here. In Klein, we denied the plaintiff attorneys’ fees under § 1021.5 because although he pleaded both federal and statelaw claims, he did not prevail on the state-law claims. 810 F.3d at 702.2 In Home Savings Bank, F.S.B. v. Gillam,

2 Incidentally, Klein clearly states “federal courts apply state law for attorneys’ fees to state claims because of the Erie doctrine.” Id. at 701.

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952 F.2d 1152, 1163 (9th Cir. 1991), we reversed the district court’s award of attorneys’ fees based on Alaska law. Gillam concerned the control and disposition of a legal indemnification fund set up by Home Savings Bank (HSB) with the Federal Home Loan Bank Board. Id. at 1154. The conservator of HSB sued Gillam, the former chief executive officer of HSB, to recover severance benefits paid to Gillam upon his resignation and to contest control over the legal indemnification fund. Id. We first held that the conservator had a right of action under the federal Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) to sue Gillam. Id. at 1157 (“FIRREA expressly provides for federal court jurisdiction over actions to which the [conservator] is a party.”). We then held that the district court improperly relied on Alaska law to award attorneys’ fees because the federal common law disfavoring nonstatutory awards of fees directly conflicted with the state rule relied upon by the district court. Id. at 1162.
Similarly, in Bass v. First Pacific Networks, Inc., 219 F.3d 1052 (9th Cir. 2000), we considered whether federal or state law governed the award of attorneys’ fees incurred in filing a motion under Federal Rule of Civil Procedure 65.1 for a supersedeas bond posted under Federal Rule of Civil Procedure 62(d). The plaintiff originally filed in state court alleging state claims and a federal RICO claim. Id. at 1053. After the defendant removed the action to federal court, the district court dismissed the RICO claim but retained supplemental jurisdiction over the state claims. Id. The plaintiffs then filed a motion under Rule 65.1 to enforce a supersedeas bond, which the court granted. Id. at 1054. This court affirmed the district court’s denial of attorneys’ fees under California state law because the bond was “posted pursuant to Rule 62(d) and enforced pursuant to Rule 65.1.” Id. at 1055. The court noted that it had “no opinion” on the

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availability of attorneys’ fees in a removed action seeking judgment “on a surety pursuant to state statute,” as opposed to enforcement of a surety bond issued pursuant to the Federal Rules. Id. at 1056 n.4.
This case presents a different issue than those we confronted in Klein, Gillam, and Bass. Unlike in Klein, Appellants here prevailed on a state-law claim by succeeding on the § 1085 Writ. As determined by the Supreme Court, neither Section 30(A) nor the Constitution provided a federal right of action for Appellants, so there were no independent federal claims in this case. Thus, Gillam and Bass, in which federal provisions provided the right of action or the rule of decision, are inapposite. In short, federal common law does not govern the award of fees here, and an award pursuant to state law would not be improper.
D. Erie
Erie3 principles further persuade us that Appellants are entitled to seek fees pursuant to § 1021.5. As the Supreme Court has noted, nothing in Erie requires a departure from the principle that “a state statute requiring an award of attorneys’ fees should be applied in a case removed from the state courts to the federal courts.” Alyeska Pipeline, 421 U.S. at 259 n.31. Although this footnote referred to diversity jurisdiction cases, we have noted that the Erie doctrine “applies irrespective of whether the source of subject matter jurisdiction is diversity or federal question.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1102 (9th Cir. 2003). Indeed, Erie itself was partially rooted in a desire to prevent the “result of a litigation materially to differ because the suit had been brought in a federal court.” Hanna

3 Erie R. Co. v. Tompkins, 304 U.S. 64 (1938).

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v. Plumer, 380 U.S. 460, 467 (1965). Further, Erie sought to avoid the forum shopping that had arisen after Swift v. Tyson, 41 U.S. 1 (1842). Id.
Because the § 1085 Writ is a state-law cause of action, we look to California law to determine whether attorneys’ fees are available to Appellants under § 1021.5 of the California Code of Civil Procedure. Section 1021.5 is California’s “private attorney general” fee statute. Woodland Hills Residents Ass’n, Inc. v. City Council, 593 P.2d 200, 208 (Cal. 1979). It states, “Upon motion, a court may award attorneys’ fees to a successful party against one or more opposing parties in any action which has resulted in the enforcement of an important right affecting the public interest.” Cal. Civ. Proc. Code § 1021.5. Pursuant to § 1021.5, a court may award attorneys’ fees to a “successful party” in any action that
has resulted in the enforcement of an important right affecting the public interest if: (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any.

Maria P. v. Riles, 743 P.2d 932, 935 (Cal. 1987).
In determining whether a plaintiff is a successful party for purposes of § 1021.5, “the critical fact is the impact of the action, not the manner of its resolution.” Id. at 937. Accordingly, the California Supreme Court has held that a plaintiff securing a preliminary injunction may be awarded

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attorneys’ fees under § 1021.5. Press v. Lucky Stores, Inc., 667 P.2d 704, 710 (1983) (preliminary injunction restraining defendant from denying plaintiffs access to the store premises fulfilled § 1021.5’s requirements for an award of fees).
In Maria P., for example, the plaintiffs sought a preliminary injunction to prevent the school district from denying a student admission to school based on her noncitizen immigration status, and to prevent the school district and State superintendent from complying with California Education Code § 6957, which required the district to report the child’s immigration status to the board of supervisors and Immigration and Naturalization Service. Maria P., 43 Cal. 3d at 934. The trial court issued the preliminary injunction, ruling that Education Code § 6957 conflicted with the federal Family Education Rights and Privacy Act of 1974, and was therefore void under the Supremacy Clause. Id. Between the trial court’s issuance of the preliminary injunction and the plaintiffs’ motion for attorneys’ fees, the California legislature amended the Education Code to delete all reporting requirements. Id. at 935. Due to the legislative amendment, the trial court awarded attorneys’ fees to the plaintiffs based only on their work obtaining the preliminary injunction. Id. The California Court of Appeal reversed the fee award, but the California Supreme Court held that plaintiffs were successful parties because the state’s posture changed as a result of their lawsuit and thus it served the public interest purposes of § 1021.5. Id. at 935, 938.
Similarly, here, Appellants secured a preliminary injunction against the enforcement of California state legislation on the ground that it violated a federal statute. Further, Maria P. establishes that CMS’s subsequent

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approval of California’s amended reimbursement rates does not necessarily preclude Appellants’ recovery of attorneys’ fees. Thus, California law appears to demonstrate Appellants are “successful” parties under § 1021.5 and would have been entitled to move for attorneys’ fees in state court.
Thus, to permit the Director to evade attorneys’ fees by removing this action to federal court would violate the spirit of Erie and its twin aims. As here, when fees would probably be available in state court, to preclude a similar award in federal court would likely lead to forum shopping, among other maladies. Moreover, such a divergent result would foster the very “inequitable administration of the laws” that Erie sought to rectify. Plumer, 380 U.S. at 468. Therefore, we conclude that the district court erred in holding that Appellants were precluded from seeking an award of attorneys’ fees under California Civil Code of Procedure § 1021.5.4
We remand to the district court to determine whether Appellants meet the requirements of § 1021.5 to obtain a fee award, and if so, to calculate that award. We express no opinion as to how the Settlement Agreement may affect such an award and leave that issue to the district court to consider in the first instance on remand.

4 Appellants also argue that the district court erred by not employing the doctrine of judicial estoppel against the Director. In light of our ruling, we find no need to consider this additional argument.

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II. Motion to Set Aside Attorneys’ Fees from the Common Fund
After our decision in Maxwell-Jolly permitted retroactive monetary relief from the Medi-Cal reimbursement reduction, Independent Living moved to set aside 25 percent of the $70 million reimbursement to set up a fund for attorneys’ fees. The district court denied the motion to set aside funds, finding the request “premature” because there had not yet been a final adjudication or settlement, and determining that a set-aside was not in the public interest. Appellants now argue that the district court abused its discretion when it denied their motion to set aside funds. We agree.
“[A] litigant or a lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney’s fee from the fund as a whole.” Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980). The principle justifying this doctrine is that
persons who obtain the benefit of a lawsuit without contributing to its cost are unjustly enriched at the successful litigant’s expense. Jurisdiction over the fund involved in the litigation allows a court to prevent this inequity by assessing attorney’s fees against the entire fund, thus spreading fees proportionately among those benefited by the suit.

Id. (citations omitted). An award of fees from a common fund applies only if “(1) the class of beneficiaries is sufficiently identifiable, (2) the benefits can be accurately traced, and (3) the fee can be shifted with some exactitude to those benefiting.” Paul, Johnson, Alston & Hunt v. Graulty,

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886 F.2d 268, 271 (9th Cir. 1989) (quoting In re Hill, 775 F.2d 1037, 1041 (9th Cir. 1985)). We have referred to the percentage requested by Appellants, 25 percent of the fund, as a standard or benchmark amount. Six (6) Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 1311 (9th Cir. 1990).
We conclude that the district court abused its discretion when it denied Appellants’ motion to set aside funds. First, the retroactive relief obtained satisfied the common fund requirements. The identifiable class of beneficiaries was comprised of Medi-Cal health providers who received reduced reimbursement for services provided between July 1, 2008 and August 18, 2008. Each member of this class had an “undisputed and mathematically ascertainable claim to part of a lump sum judgment recovered on his behalf.” Van Gemert, 444 U.S. at 749.
Second, contrary to the district court’s statement, a final settlement agreement or adjudication on the merits is not a prerequisite to the formation of a common fund. See Reiser v. Del Monte Properties Co., 605 F.2d 1135, 1140 n.4 (9th Cir. 1979) (noting that it is not necessary to an award of attorneys’ fees that a suit be litigated on the merits). We observed that the Supreme Court “has refused to place form over substance, focusing instead on the actual effect of a plaintiff’s suit.” Id. at 1140. The question is thus “whether a plaintiff . . . has conferred a benefit on others.” Id. Here, the procurement of $70 million retroactive relief on behalf of Medi-Cal providers, many of whom were not plaintiffs in the case, undoubtedly conferred a benefit onto them irrespective of a final settlement or adjudication. In finding otherwise, and denying the motion to set aside funds, the district court abused its discretion. See Hill, 775 F.2d at 1040 (holding that a district court abuses its discretion if its

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25

decision is based on an erroneous conclusion of law or if the record contains no evidence on which it rationally could have based its decision).
The Director’s arguments to the contrary are unavailing. She primarily argues that the district court’s denial of Appellants’ motion to set aside funds was not a final judgment, and therefore we lack jurisdiction to review it under 28 U.S.C. § 1291. However, “[a] necessary corollary to the final judgment rule is that a party may appeal interlocutory orders after entry of final judgment because those orders merge into that final judgment.” Am. Ironworks & Erectors, Inc. v. N. Am. Constr. Corp., 248 F.3d 892, 897 (9th Cir. 2001). Appellants could not, and did not, appeal the denial of their motion to set aside funds at the time that decision was made. Appellants were only able to appeal that decision after the district court entered final judgment.
The Director also summarily argues that Appellants cannot appeal the motion to set aside attorneys’ fee because the Settlement Agreement bars this relief. The Settlement Agreement specifies that the released claims either were “asserted” in the various cases between the parties (including this case) or “could have been asserted” in those cases. Yet, any relief that may result from this claim would likely not run against the Director, but rather against the recipients of the $70 million. See Vincent v. Hughes Air W., Inc., 557 F.2d 759, 770 (9th Cir. 1977) (stating the “the original client’s attorney’s fees are not shifted to . . . the adversarylosing party; rather, fees are shifted to third parties, people viewed as beneficiates of the fund in some way”). Furthermore, the Settlement Agreement permitted Appellants to move for attorneys’ fees under the “common benefit” theory provided they sought payment “exclusively and directly from Medicaid providers that purportedly

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obtained a benefit from counsel’s work, and not from [the Director].” Therefore, it is doubtful that the Settlement Agreement serves as a complete bar to this relief, unless the Director were ordered to pay. In any event, determination of the Settlement Agreement’s effects, if any, on this issue are for the district court to ascertain in the first instance.
We remand this issue to the district court acknowledging the potential difficulty or impossibility of reversing its denial of the set aside for attorneys’ fees, given the possible disposition of the funds to the various Medi-Cal providers and that some recipient providers may not still be operating. Nevertheless, the district court is better positioned than we are to determine if any non-disbursed funds remain, or if other funds could be recouped from which to award appropriate attorneys’ fees.
CONCLUSION
We remand to the district court to determine whether Appellants should recover attorneys’ fees under Cal. Civ. P. Code § 1021.5, and, if so, the amount of the award. We also remand for a determination of whether Appellants can recover any fees from the retroactive relief obtained in 2010.

REVERSED and REMANDED.

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CHRISTEN, Circuit Judge, concurring:
I concur in the result reached by the majority opinion. I write separately because I reach the same conclusion in a different way.
1. Attorneys’ Fees Under Cal. Civ. Proc. Code § 1021.5
As the majority explains, in February 2008, the California legislature enacted legislation reducing the Medicaid reimbursement rate for California healthcare providers by ten percent. Several Medicaid providers and recipients (the Appellants here) claimed that the discounted reimbursement rate was so low that it was inconsistent with the mandate in § 30(A) of the Medicaid Act, which requires states to keep the rate high enough to ensure that there are sufficient provider options.1 Appellants’ argument was that the California Legislature’s action ran afoul of the Supremacy Clause.
Appellants petitioned for a Writ of Mandate in state court pursuant to § 1085 of California’s Code of Civil Procedure. They sought to bar the California Department of Health Care Services (“DHCS”) and its director from imposing the discounted reimbursement rate. The Director removed the action to federal court, and after several years of litigation, the parties settled their dispute. Appellants now seek

1 See 42 U.S.C. §1396a(a)(30)(A), under which states accepting federal Medicaid funds must “provide such methods and procedures relating to . . . the payment for, care and services available under the plan . . . and 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 extent that such care and services are available to the general population in the geographic area[.]”

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attorneys’ fees under California’s private attorney general provision, Cal. Civ. Proc. Code § 1021.5.
District courts in our circuit have concluded that “federal courts are without power to issue writs of mandamus to direct state agencies in the performance of their duties.” See, e.g., Robinson v. Cal. Bd. of Prison Terms, 997 F. Supp. 1303, 1308 (C.D. Cal. 1998); Dunlap v. Corbin, 532 F. Supp. 183, 187 (D. Ariz. 1981), aff’d, 673 F.2d 1337 (9th Cir. 1982) (table) (finding federal courts lacked the power to issue a writ of mandamus “directing a state agency to exercise its discretionary power”); see also Clemes v. Del Norte Cty. Unified Sch. Dist., 843 F. Supp. 583, 596 (N.D. Cal. 1994) (concluding district court lacked jurisdiction to issue a state law writ).2 The majority cites to a number of California state court cases to illustrate that writs of mandate are available, including against the DHCS, to compel compliance with § 30(A), ante at 15–16, but that authority does not establish that a federal court is similarly authorized to order relief pursuant to § 1085. Our court has never precisely defined whether and when a federal court may issue a § 1085 Writ of Mandate or injunction, but the State offers no persuasive support for its argument that federal courts cannot provide any relief pursuant to that provision.
Appellants’ basic requested relief did not change when the State removed their case to federal court. Suits with federal and state claims are removed in their entirety—“the entire action may be removed”—and any claims for which the district court lacks jurisdiction must subsequently be remanded. 28 U.S.C. § 1441(c)(1)(B) and (2) (emphasis added). Here, nothing was ever remanded, and as they had

2 Abrogated on unrelated grounds by Maynard v. City of San Jose, 37 F.3d 1396, 1403–04 (9th Cir. 1994), as amended (Nov. 22, 1994).

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done from the beginning, Appellants continued to seek a judgment establishing that California’s imposition of a cut reimbursement rate was unlawful because it conflicted with § 30(A)’s mandate. In other words, they sought both injunctive and declaratory relief.
Appellants were entitled to continue pressing their claim because a petition for a § 1085 Writ necessarily includes a request for a determination and declaration of rights. A court ruling on a § 1085 petition is required to first determine whether the requesting party is, or is not, entitled to the “use and enjoyment of [the] right” at issue. Cal. Civ. Proc. Code § 1085(a). Indeed, California case law recognizes that declaratory relief is the foundation for a § 1085 Writ of Mandate. See, e.g., Beach & Bluff Conservancy v. City of Solana Beach, No. D072304, 2018 WL 5023596, at *1 (Cal. Ct. App. Oct. 17, 2018) (explaining that plaintiff “brought the present action for declaratory relief and traditional mandate under Code of Civil Procedure section 1085”). We need not be concerned with whether the district court could have issued an injunction or a writ of mandate in Appellants’ favor had this case proceeded to judgment because the district court certainly could have entered a declaratory judgment establishing whether the discounted reimbursement rate was inconsistent with § 30(A), and that request for declaratory relief is enough to anchor Appellants’ fees petition.3

3 The State argued that § 1085 is only a procedural mechanism, not a cause of action. But there is no question that requests for declaratory relief can be stand-alone causes of action under California law. See Cal. Civ. Proc. Code § 1060 (allowing a party who desires a declaration of his or her rights or duties with respect to another to ask for such a declaration, either alone or with other relief).

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The majority explains that Armstrong v. Exceptional Child Care Ctr., Inc., essentially foreclosed Appellants’ federal law claims by holding that neither the Supremacy Clause, the Medicaid statute, nor even general principles of equity provide a federal basis for challenging a state’s use of Medicaid funds under § 30(A). 135 S. Ct. 1378, 1383–87 (2015). Armstrong’s limitation may apply to challenges based on state law as well, because the Court held that “the Medicaid Act implicitly precludes private enforcement of § 30(A),” and thus may preempt suits bringing § 30(A) challenges under state law. Id. at 1385. If we were ruling on the merits, Armstrong likely would require dismissal of Appellants’ claims, but the parties settled their dispute before Armstrong was decided and we are tasked only with identifying the nature of the claims the parties resolved. PreArmstrong, California state courts had issued writs of mandate to force compliance with § 30(A), see ante at 15– 16, and Appellants’ insistence that the State had violated § 30(A) presented significant litigation risk to the State. Both parties were aware of this and their settlement was global; it encompassed not only the Appellants’ remaining federal claims but also their state § 1085 claim (or what remained of it).
So what state claim was settled? If nothing else, the settlement included that portion of Appellants’ claim that constituted a request for declaratory relief; that much of the § 1085 claim surely survived. From there, Erie dictates that California’s substantive law on attorneys’ fees applies. Erie R. Co. v. Tompkins, 304 U.S. 64 (1938); ante at 19–22. Just as the State could not escape its waiver of sovereign immunity by removing the case to federal court, Indep. Living Ctr. of S. Cal., Inc. v. Maxwell-Jolly, 572 F.3d 644,

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661–63 (9th Cir. 2009)4, it could not avoid exposure to attorneys’ fees through removal. On remand, the district court must decide whether Appellants’ counsel is eligible for attorneys’ fees pursuant to Cal. Civ. Proc. Code § 1021.5.

2. Motion to Set Aside Attorneys’ Fees

I also agree that it was an abuse of discretion to deny Appellants’ motion to set aside attorneys’ fees from the $70 million reimbursement. Moreover, it is hard to see anything that would prevent the district court from recouping funds to which the Appellants’ attorneys may be entitled, as long as the relief ultimately comes from providers who received a windfall as a result of the earlier reimbursement, and those providers have an opportunity to be heard on any proposed plan for recoupment.

Although we lack jurisdiction over the individual beneficiaries of the original reimbursement fund (i.e., the various medical care providers), the court continues to have jurisdiction over the Director and presumably it will be the Director who will be responsible for reimbursing providers for services yet to be furnished. I see no absolute obstacle to gradually recouping an appropriate fee amount either as part of a fractionally reduced reimbursement payment to the overcompensated providers or through some comparable process. The Director pointed out in her briefing at the time the Appellants moved for a set aside that there are inefficiencies and transaction costs associated with adjusting the department’s automated payouts. However, those difficulties do not appear to be sufficiently onerous to

4 Vacated and remanded on other grounds sub nom. Douglas v. Indep. Living Ctr. of S. Cal., Inc., 132 S. Ct. 1204 (2012).

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warrant denying Appellants’ counsel a fee award to which they may be entitled.

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 </s> No. 09-958

Title:

Toby Douglas, Director, California Department of Health Care Services,

Petitioner

v.

Independent Living Center of Southern California, Inc., et al.

Docketed:

February 17, 2010

Linked with 09A508

Lower Ct:

United States Court of Appeals for the Ninth Circuit

Case Nos.: (08-56422, 08-56554)

Decision Date: July 9, 2009

Rehearing Denied:

October 29, 2009

Rule 12.4

Questions

Presented

~~~Date~~~ ~~~~~~~Proceedings and Orders~~~~~~~~~~~~~~~~~~~~~
Nov 23 2009 Application (09A508) to extend the time to file a petition for a writ of certiorari from December 22, 2009 to February 20, 2010, submitted to Justice Kennedy.
Dec 2 2009 Application (09A508) granted by Justice Kennedy extending the time to file until January 22, 2010.
Jan 8 2010 Application (09A508) to extend further the time from January 22, 2010 to February 20, 2010, submitted to Justice Kennedy.
Jan 8 2010 Application (09A658) to extend the time to file a petition for a writ of certiorari from January 27, 2010 to February 22, 2010, submitted to Justice Kennedy.
Jan 15 2010 Application (09A658) granted by Justice Kennedy extending the time to file until February 22, 2010.
Jan 15 2010 Application (09A508) granted by Justice Kennedy extending the time to file until February 19, 2010.
Feb 16 2010 Petition for a writ of certiorari filed. (Response due March 19, 2010)
Mar 3 2010 Order extending time to file response to petition to and including April 19, 2010, for all respondents.
Mar 19 2010 Brief amici curiae of Michigan, et al. filed.
Apr 19 2010 Brief of respondents Sacramento Family Medical Clinics, Inc., et al. in opposition filed.
Apr 19 2010 Brief of respondents Independent Living Center of Southern California, Inc., et al. in opposition filed.
Apr 30 2010 Reply of petitioner David Maxwell-Jolly, Director, California Department of Health Care Services filed.
May 4 2010 DISTRIBUTED for Conference of May 20, 2010.

May 24 2010 The Solicitor General is invited to file a brief in this case expressing the views of the United States.

Dec 3 2010 Brief amicus curiae of United States filed.

Dec 14 2010 Supplemental brief of petitioner David Maxwell-Jolly, Director, California Department of Health Care Services filed.

Dec 15 2010 DISTRIBUTED for Conference of January 7, 2011.

Jan 10 2011 DISTRIBUTED for Conference of January 14, 2011.

Jan 13 2011 Letter of January 13, 2011, from Acting Solicitor General received. (Distributed)

Jan 18 2011

Petition GRANTED limited to Question 1 presented by the petitions. The petitions for certiorari in No. 09-1158 and No. 10-283 are granted limited to Question 1 presented by the petitions. The cases are consolidated and a total of one hour is allotted for oral argument. VIDED.

Feb 17 2011 The time to file the joint appendix and petitioners' briefs on the merits is extended to and including April 14, 2011. VIDED.

Feb 17 2011 The time to file respondents' briefs on the merits is extended to and including June 24, 2011. VIDED.

Apr 7 2011 The time to file the joint appendix and petitioners' briefs on the merits is further extended to and including May 19, 2011. VIDED.

Apr 7 2011 The time to file respondents' briefs on the merits is further extended to and including July 29, 2011. VIDED.

May 19 2011 Joint appendix filed. VIDED. (Statement of costs filed)

May 19 2011 Brief of petitioner Toby Douglas, Director, California Department of Health Care Services filed. VIDED.

May 25 2011 Brief amici curiae of National Governors Association, et al. filed. VIDED.

May 26 2011 Brief amicus curiae of the United States filed. VIDED.

May 26 2011 Brief amicus curiae of APA Watch filed. VIDED.

May 26 2011 Brief amici curiae of Michigan and 30 Other States filed. VIDED.

Jul 15 2011 CIRCULATED.

Jul 19 2011 SET FOR ARGUMENT ON Monday, October 3, 2011.

Jul 29 2011 Brief of respondents California Pharmacists, et al. filed. VIDED. (Distributed)

Jul 29 2011 Brief of respondents Santa Rosa Memorial Hospital, et al. filed. VIDED. (Distributed)

Jul 29 2011 Brief of respondents Dominguez, et al. filed. VIDED. (Distributed)

Jul 29 2011 Brief of respondents Independent Living Center of Southern California, Inc., et al. filed. VIDED. (Distributed)

Aug 4 2011 Brief amici curiae of National Association of Chain Drug Stores, et al. filed. VIDED. (Distributed)

Aug 5 2011 Brief amicus curiae of Chamber of Commerce of the United States of America filed. VIDED. (Distributed)

Aug 5 2011 Motion of the Solicitor General for leave to participate in oral argument as amicus curiae and for divided argument filed. VIDED.

Aug 5 2011 Brief amici curiae of Members of Congress filed. VIDED. (Distributed)

Aug 5 2011 Brief amici curiae of American Medical Association, et al. filed. VIDED. (Distributed)

Aug 5 2011 Brief amici curiae of American Civil Liberties Union, et al. filed. VIDED. (Distributed)

Aug 5 2011 Brief amici curiae of American Health Care Association, et al. filed. VIDED. (Distributed)

Aug 5 2011 Brief amicus curiae of AARP, et al. filed. (Distributed)

Aug 5 2011 Brief amici curiae of Former HHS Officials filed. VIDED. (Distributed)

Aug 8 2011 Application (11A171) of petitioners for an extension of time to file a reply brief on the merits and to exceed the word limit, submitted to Justice Kennedy. VIDED

Aug 10 2011 Application (11A171) granted by Justice Kennedy of petitioners for an extension of time to file a reply brief on the merits and to exceed the word limit. The reply brief of no more than 9,000 words is to be filed on or before September 6, 2011.

Aug 11 2011 Record received fro U.S.C.A. for 9th Circuit. (1 envelope)

Aug 11 2011 Record from U.S.D.C. for Central District of California is electronic.

Sep 1 2011 Reply of petitioners Toby Douglas, Director, California Department of Health Care Services filed. VIDED. (Distributed)

Sep 27 2011 Motion of the Solicitor General for leave to participate in oral argument as amicus curiae and for divided argument GRANTED. VIDED.

Oct 3 2011

Argued. For petitioner: Karin S. Schwartz, Supervising Deputy Attorney General, San Francisco, Cal.; and Edwin S. Kneedler, Deputy Solicitor General, Department of Justice, Washington, D. C. (for United States, as amicus curiae.) For respondents: Carter G. Phillips, Washington, D. C.)

Oct 28 2011 Letter with attachments received from the Solicitor General. VIDED. (Distributed)

Nov 4 2011

The parties and the Solicitor General are directed to file supplemental briefs addressing the following question: "What should be the effect, if any, of the developments discussed in the letter submitted by the Solicitor General on October 28, 2011, on the proper disposition of this case?" The briefs, in letter format, limited to 10 pages, are to be filed simultaneously with the Clerk and served upon opposing counsel on or before 2 p.m., Friday, November 18, 2011. VIDED.

Nov 18 2011 Supplemental brief of petitioner Toby Douglas, Director, California Department of Health Care Services filed. VIDED. (Distributed)

Nov 18 2011 Supplemental brief of respondents Independent Living Center of Southern California, Inc., et al. filed. VIDED. (Distributed)
Nov 18 2011 Supplemental brief of United States filed. VIDED. (Distributed)
Nov 18 2011 Supplemental brief of respondents' counsel Carter Phillips, Deanne E. Maynard, and Stephen P. Berzon (Distributed). filed. VIDED.
Jan 17 2012 Letter, dated January 17, 2012, received from the Attorney General of California informing the Court of recent preliminary injunctions. (Distributed). VIDED.
Jan 20 2012 Letter, dated January 20,2012, received from counsel for respondents in response to State of California's letter of January 17, 2012 (Distributed). VIDED.
Feb 22 2012 Judgment VACATED and case REMANDED. Breyer, J., delivered the opinion of the Court, in which Kennedy, Ginsburg, Sotomayor, and Kagan, JJ., joined. Roberts, C. J., filed a dissenting opinion, in which Scalia, Thomas, and Alito, JJ., joined.
Mar 26 2012 JUDGMENT ISSUED.

~~Name~~~~~~~~~~~~~~~~~~~~~ ~~~~~~~Address~~~~~~~~~~~~~~~~~~ Attorneys for Petitioner:

Karin S. Schwartz

Supervising Deputy Attorney General

455 Golden Gate Avenue Suite 11000 San Francisco, CA 94102-7004 Karin.Schwartz@doj.ca.gov Party name: Toby Douglas, Director, California Department of Health Care Services Attorneys for Respondents:

Stephen P. Berzon

Altshuler Berzon LLP

Counsel of Record Party name: Dominguez, et al.

177 Post Street, Suite 300 San Francisco, CA 94108 sberzon@altshulerberzon.com

~~Phone~~~ (415) 7031385
(415) 4217151

Lynn S. Carman

Medicaid Defense Fund

Counsel of Record

404 San Anselmo Ave

San Anselmo, CA 94960

lynnscarman@hotmail.com

Party name: Independent Living Center of Southern California, Inc., et al.

Deanne E. Maynard

Morrison & Foerster LLP

Counsel of Record

2000 Pennsylvania Avenue, N.W.

Washington, DC 20006

DMaynard@mofo.com

Party name: California Pharmacists, et al.

Carter G. Phillips

Sidley Austin LLP

Counsel of Record

1501 K Street, N.W.

Washington, DC 20005

cphillips@sidley.com

Party name: Santa Rosa Memorial Hospital, et al.

Craig J. Cannizzo

Hooper, Lundy & Bookman, Inc.

575 Market Street Suite 2300 San Francisco, CA 94105 ccannizzo@health-law.com Party name: Sacramento Family Medical Clinics, Inc., et al. Other:

Frederick R. Ball

Duane Morris LLP

190 South LaSalle Street, Suite 3700 Chicago, IL 60603 FRBall@duanemorris.com Party name: National Association of Chain Drug Stores, et al.

Louis W. Bullock

Bullock Bullock & Blakemore 110 W. Seventh Street, Suite 707

(415) 9274023
(202) 8878740
(202) 7368270
(415) 8758511
(312)-4996720
(918) 5842001

Tulsa, OK 74119 lbullock@bullock-blakemore.com Party name: American Medical Association, et al.

John J. Bursch

Michigan Solicitor General

Michigan Department of Attorney General P.O. Box 30212 Lansing, MI 48909 BurschJ@michigan.gov Party name: Michigan and 30 Other States

(517) 3731124

Douglas Hallward-Driemeier

Ropes & Gray LLP

(202) 5084600

One Metro Center

700 12th Street, NW, Suite 900

Washington, DC 20005

Douglas.Hallward-Driemeier@ropesgray.com

Party name: American Health Care Association, et al.

Lawrence J. Joseph Party name: APA Watch

1250 Connecticut Ave., NW
Suite 200 Washington, DC 20036 lj@larryjoseph.com

(202) 3559452

Edwin S. Kneedler

Deputy Solicitor General

(202) 5142217

United States Department of Justice

950 Pennsylvania Avenue, N.W.

Washington, DC 20530-0001

Party name: Toby Douglas, Director, California Department of Health Care Services v. Independent

Living Center of Southern California, Inc., et al.

Michael W. McConnell

Kirkland & Ellis LLP
655 Fifteenth Street, N.W. Washington, DC 20005

(202) 8795000

michael.mcconnell@kirkland.com Party name: National Governors Association, et al.

Martha Jane Perkins Party name: AARP, et al.

National Health Law Program
101 E. Weaver Street, #G7 Carrboro, NC 27510 perkins@healthlaw.org

(919)-9686308

B. Eric Restuccia Party name: Michigan, et al.

Deputy Solicitor General
Michigan Attorney General's Office P.O. Box 30212 Lansing, MI 48909 restucciae@michigan.gov

(517) 3731124

Paul M. Smith Party name: Members of Congress

Jenner & Block LLP
1099 New York Avenue, N.W. Suite 900 Washington, DC 20001 psmith@jenner.com

(202) 6396000

Alan E. Untereiner

Robbins, Russell, Englert, Orseck, Untereiner (202) 775-

& Sauber LLP

4500

1801 K Street, N.W., Suite 411

Washington, DC 20006

auntereiner@robbinsrussell.com

Party name: Chamber of Commerce of the United States of America

Donald B. Verrilli Jr.

Solicitor General
United States Department of Justice 950 Pennsylvania Avenue, N.W. Washington, DC 20530-0001 SupremeCtBriefs@USDOJ.gov

(202) 5142217

Party name: United States

Stephen I. Vladeck Party name: Former HHS Officials

4801 Massachusetts Ave., N.W.
Washington, DC 20016 svladeck@wcl.american.edu

(202)-2744241

Paul R.Q. Wolfson

Wilmer Cutler Pickering Hale and Dorr LLP

1875 Pennsylvania Avenue, N.W. Washington, DC 20006 paul.wolfson@wilmerhale.com Party name: American Civil Liberties Union, et al.
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 </s> FOR PUBLICATION
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

INDEPENDENT LIVING CENTER OF



SOUTHERN CALIFORNIA, INC., a

nonprofit corporation; G RAY

PANTHER SOF SACRAMENTO, a

nonprofit corporation; G RAY

PANTHERS OF SAN FRANCISCO, a

nonprofit corporation; G ERALD

SHAPIRO, Pharm. D. doing business

as Uptown Pharmacy and Gift

Shoppe; SHARON STEEN doing

business as Central Pharmacy;

MARK BECKWITH; MARGARET

No. 08-56422

 DOWLING; TRAN PHARMACY, INC.,
doing business as Tran Pharmacy;

D.C. No.

JASON YOUNG,

2:08-cv-03315-CAS-

Petitioners-Appellees,

MAN

SACRAMENTO FAMILY MEDICAL CLINICS, INC.; THEODORE MAZER M.D.; RONALD B. M EAD; ACACIA ADULT DAY SERVICES,
Interveners-Appellees,

v.

DAVID MAXWELL-JOLLY, Director of the Department of Health Care Services, State of California,
 Respondent-Appellant.

8989

8990

INDEPENDENT LIVING v. M AXWELL-JOLLY

INDEPENDENT LIVING CENTER OF



SOUTHERN CALIFORNIA, INC., a

nonprofit corporation; G RAY

PANTHERS OF SACRAMENTO, a

nonprofit corporation; G RAY

PANTHERS OF SAN FRANCISCO, a

nonprofit corporation; G ERALD

SHAPIRO, Pharm. D. doing business

as Uptown Pharmacy and Gift

Shoppe; SHARON STEEN doing

business as Central Pharmacy; MARK BECKWITH; MARGARET

No. 08-56554

 DOWLING; TRAN PHARMACY, INC.,
doing business as Tran Pharmacy;

D.C. No. 2:08-cv-03315-CAS-

JASON YOUNG

MAN

Petitioners-Appellants,

OPINION

SACRAMENTO FAMILY MEDICAL

CLINICS, INC.; THEODORE MAZER

M.D.; RONALD B. M EAD; ACACIA

ADULT DAY SERVICES,

Interveners,

v.

DAVID MAXWELL-JOLLY, 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

INDEPENDENT LIVING v. M AXWELL-JOLLY
Argued and Submitted February 18, 2009—San Francisco, California

8991

Filed July 9, 2009

Before: Stephen Reinhardt, William A. Fletcher, and Milan D. Smith, Jr., Circuit Judges.

Opinion by Judge Milan D. Smith, Jr.

INDEPENDENT LIVING v. M AXWELL-JOLLY

8995

COUNSEL
Richard T. Waldow and Jennifer M. Kim, Supervising Deputy Attorneys General, Carmen D. Snuggs, Tara L. Newman, Andrew Dhadwal, and Sara Ugaz, Deputy Attorneys General, Office of the Attorney General of the State of California, Los Angeles, California, for respondent-appellant/appellee David Maxwell-Jolly, Director of the Department of Health Care Services for the State of California.
Lynn S. Carman, Medicaid Defense Fund, Novato, California, and Stanley L. Friedman, Los Angeles, California, for appellees-appellees/appellants Independent Living Center of Southern California, et al.
Craig J. Cannizzo, Felicia Y. Sze, Hooper, Lundy & Bookman, Inc., San Francisco, California, and Lloyd A. Bookman, Byron J. Gross, Jordan B. Reveille, Hooper, Lundy & Bookman, Inc., Los Angeles, California, for interveners Sacramento Family Medical Clinics, Inc. et al.
William A. Gould, Jr., Kevin C. Khasigian, Wilke, Floury, Hoffelt, Gould & Birney, LLP, Sacramento, California, for Amicus Curiae California Optometric Association.
Rochelle Bobroff and Harper Jean Tobin, Washington, DC, for Amicus Curiae National Senior Citizens’ Law Center.
Jane Perkins, Chapel Hill, North Carolina, for Amicus Curiae National Health Law Program, Inc.

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INDEPENDENT LIVING v. M AXWELL-JOLLY

Barbara A. Jones, Pasadena, California, for Amicus Curiae AARP Foundation Litigation.

OPINION
MILAN D. SMITH, JR., Circuit Judge:
Petitioners-Appellees/Appellants (Independent Living), a group of pharmacies, health care providers, senior citizens’ groups, and beneficiaries of the State’s Medicaid program, Medi-Cal,1 seek to enjoin the California Department of Health Care Services (Department) Director, David Maxwell-Jolly (Director)2 from implementing state legislation reducing payments to certain medical service providers under Medi-Cal by ten percent. We hold that the district court did not abuse its discretion in granting Independent Living’s motion for a preliminary injunction, because the Director failed to “rely on responsible cost studies, its own and others, ” Orthopaedic Hosp. v. Belshe, 103 F. 3d 1491, 1496 (9th Cir. 1997), in determining the effect of the rate cuts mandated by AB 5 on the statutory factors of efficiency, economy, quality, and access to care before implementing those cuts. We also hold that the district court’s preliminary injunction should be modified to cover payments for medical services provided on or after July 1, 2008, because the Director waived the State’s sovereign immunity in both state and federal court.
1For simplicity, we attribute to Independent Living generally the collective arguments of Independent Living, Interveners, and Amicus Curiae supporting Independent Living.
2Sandra Shewry served as the Department’s director when this suit was filed and held that position until April 9, 2009, when she was replaced by Mr. Maxwell-Jolly. Because the distinction between the two directors is irrelevant for the purposes of this case, we use the term “Director” to refer to them both.

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FACTUAL AND PROCEDURAL BACKGROUND

On February 16, 2008, the California Assembly passed AB 5, which added §§ 14105.19 and 14166.245 to the California Welfare and Institutions Code. Section 14105.19 reduces payments under the Medi-Cal fee-for-service program to physicians, dentists, pharmacies, adult health care centers, clinics, health systems, and other providers by ten percent. Section 14166.245 similarly reduces payments for inpatient services provided by acute care hospitals not under contract with the State by ten percent. Both of these rate reductions were scheduled to take effect on July 1, 2008.

On April 22, 2008, Independent Living filed a verified petition for a writ of mandamus in Los Angeles County Superior Court, seeking to enjoin the Director from implementing AB 5.3 Independent Living argued that the ten percent rate reduction violates Title XIX of the federal Social Security Act (the Medicaid Act), 42 U.S.C. § 1396 et seq., and is therefore invalid under the Supremacy Clause. 4 Specifically, Independent Living alleged that AB 5 is inconsistent with 42 U.S.C. § 1396(a)(30)(A) (hereafter§ 30(A)), which requires that a state plan

provide such methods and procedures relating to the utilization of, and payment for, care and services available under the plan . . . 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

3Independent Living voluntarily dismissed the Department from suit on June 1, 2008, leaving the Director as the sole Respondent.
4Independent Living also alleged in their complaint that the ten-percent rate reduction both violated and was preempted by the Americans with Disabilities Act of 1990, 42 U.S.C. § 12181 et seq. Independent Living dismissed these claims without prejudice, and they are not before us.

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extent that such care and services are available to the general population in the geographic area.

On May 19, 2008, the Director removed this action to federal court based on federal question jurisdiction. On May 30, 2008, Independent Living filed a motion for a preliminary injunction. The district court heard argument on June 23, 2008. Two days later, the court entered an order denying the motion, holding that Independent Living had not demonstrated a likelihood of success on the merits of their preemption claim because § 30(A) did not create any judicially enforceable “rights.”

Independent Living then sought emergency relief from this court. After full briefing and argument, we vacated the district court’s order, holding that Independent Living could bring suit directly under the Supremacy Clause to enjoin a state law allegedly preempted by federal law. See Indep. Living Ctr. v. Shewry, 543 F.3d 1050 (9th Cir. 2008). We remanded to the district court for reconsideration of Independent Living’s motion for a preliminary injunction.

On remand, the district court issued an order granting in part and denying in part Independent Living’s motion for a preliminary injunction. The district court held that Independent Living had demonstrated a likelihood of success on the merits of its Supremacy Clause claim, as the Director failed to provide any evidence that the Department had considered the impact of the ten percent rate reduction on quality and access to care, as required by § 30(A). The court also held that Independent Living had demonstrated a risk of irreparable injury as to some—but not all—of the challenged Medi-Cal services. The district court thus granted the motion “to the extent that it seeks to enjoin enforcement of Cal. Welf. & Inst. Code § 14105.19(b)(1), which reduces by ten percent payments under the Medi-Cal fee-for-service program for physicians, dentists, pharmacies, adult day health care centers, clinics, health systems, and other providers for services pro-

INDEPENDENT LIVING v. M AXWELL-JOLLY

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vided on or after July 1, 2008. ” The court denied the motion to enjoin enforcement of the rate reductions for managed care plans and non-contract acute care hospitals, as Independent Living had not shown a risk of irreparable injury as to those services.

On August 27, 2008, the Director filed a motion “to alter or amend, and clarify ” the August 18 order. The Director argued that the injunction should apply only to payments for services provided on or after August 18, because requiring full reimbursement for services provided prior to the court’s order would violate the State’s Eleventh Amendment sovereign immunity. The Director also argued that the order was vague and ambiguous and that the Ninth Circuit had yet to rule on the Director’s petition for rehearing and rehearing en banc regarding the Supremacy Clause right of action issue. 5 The district court granted the motion in part the same day, issuing an order in chambers modifying the preliminary injunction to apply only to payments “for services provided on or after August 18, 2008.” Although the order itself did not provide any explanation for the modification, the district court later stated that it was its “intention only to issue an order that would provide for prospective relief, ” and that it agreed with the Director “that the order as it was phrased violates the Eleventh Amendment.” The district court also indicated that it would not grant the Director’s request for a stay and that Independent Living’s request for a contempt citation was premature.6 The district court did not afford Independent Living an

5The Director’s Petition for Panel Rehearing and Petition for Rehearing En Banc was denied on November 3, 2008. On June 22, 2009, the Supreme Court of the United States denied the Director’s Petition for Writ of Certiorari.
6On September 15, 2008, pursuant to the Director’s motion to alter or amend, the district court further modified its August 18, 2008 order to clarify that the order regarding pharmacies applied only to the relief sought, i.e., to rates for prescription drugs, including previously prescription-only prescribed over-the-counter drugs. The district court further struck “health systems, and other providers ” from the order. Finally, the district court clarified that the order did not apply to payments for hospitals, including payments for inpatient services, outpatient services, distinct part nursing facility services, and sub-acute services.

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opportunity to respond to the Director’s argument before issuing its order.

The August 18 order, as modified, generated three appeals, two of which remain before us. In case number 08-56422, the Director appeals the district court’s decision to grant the motion for preliminary injunction in part, arguing primarily that the analysis of AB 5 conducted by the Department was legally sufficient and Independent Living therefore cannot demonstrate a likelihood of success on the merits. 7 In case number 08-56554, Independent Living appeals the district court’s August 27 order modifying the injunction to apply only to payments for services provided on or after August 18, arguing that the earlier order—which would have granted relief for services provided on or after July 1—did not violate the State’s sovereign immunity. 8 We address these arguments in turn.

JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1292(a)(1). We review a district court’s decision to grant or deny a preliminary injunction for abuse of discretion. Sw. Voter Registration Educ. Project v. Shelley , 344 F.3d 914, 918 (9th Cir. 2003). “[A] district court abuses its discretion by basing its decision on either an erroneous legal standard or clearly erroneous factual findings. ” Walczak v. EPL Prolong,

7The Director also argues that Independent Living’s claim is not cognizable under the Supremacy Clause. Because we have already ruled on that issue and the court has denied the Director’s petition for rehearing/rehearing en banc, the issue is now moot.
8Independent Living also initially appealed the district court’s denial of their motion to enjoin the Department from reducing payments to MediCal managed care plans by the “actuarial equivalent” of ten percent. See Case 08-56551. After filing their notice of appeal, Independent Living dismissed the claim underlying their appeal in district court. We granted Independent Living’s motion for dismissal without prejudice in case 0856551 on January 30, 2009.

INDEPENDENT LIVING v. M AXWELL-JOLLY

9001

Inc., 198 F.3d 725, 730 (9th Cir. 1999). “The district court’s interpretation of the underlying legal principles . . . is subject to de novo review, ” Sw. Voter Registration, 344 F.3d at 918, but its factual findings are reviewed for clear error, Walczak, 198 F.3d at 730. Factual findings are clearly erroneous “if the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed. ” Id. (internal citation omitted).

To warrant injunctive relief, a plaintiff “must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest. ” Winter v. Natural Res. Def. Council , 129 S. Ct. 365, 374 (2008); see also Am. Trucking Ass’ns v. City of L.A. , 559 F.3d 1046, 1052 (9th Cir. 2009). “In each case, courts ‘must balance the competing claims of injury and must consider the effect on each party of the granting or withholding of the requested relief.’ ” Winter, 129 S. Ct. at 376 (quoting Amoco Prod. Co. v. Vill. of Gambell, Alaska , 480 U.S. 531, 542 (1987)).

DISCUSSION

I. Independent Living’s Likelihood of Success on the Merits

[1] This is not the first time that we have interpreted the substantive and procedural requirements of § 30(A). In Orthopaedic Hospital v. Belshe, 103 F.3d 1491 (9th Cir. 1997), several hospitals and health care associations alleged that the Department violated § 30(A) by setting provider reimbursement rates “without proper consideration of the effect of hospital costs on the relevant statutory factors [of] efficiency, economy, quality of care, and access. ” Id. at 1492. We interpreted § 30(A) to require the Director to set reimbursement rates that “bear a reasonable relationship to efficient and economical hospitals’ costs of providing quality services, unless

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the Department shows some justification for rates that substantially deviate from such costs. ” Id. at 1496. To meet this statutory requirement, we held that the Director “must rely on responsible cost studies, its own or others’, that provide reliable data as a basis for its rate setting. ” Id.

Under the standards established in Orthopaedic Hospital, it is clear that the Director violated § 30(A) when he implemented the rate reductions mandated by AB 5. The Director failed to provide any evidence that the Department or the legislature studied the impact of the ten percent rate reduction on the statutory factors of efficiency, economy, quality, and access to care prior to enacting AB 5, nor did he demonstrate that the Department considered reliable cost studies when adjusting its reimbursement rates. Several of the declarations submitted by the Director candidly admit that the Department does not maintain information on provider costs for covered services.9 See, e.g., Declaration of Linda Machado at 5 (“[T]here is no established mechanism for obtaining cost data from physicians on the costs they incur for providing each of these [covered] services. Therefore, [the Department] has no data from which it can determine how well Medi-Cal rates

9Moreover, almost all of the declarations provided by the Director rely on past studies, prepared long before AB 5 was contemplated, that simply compiled average provider costs and reimbursement rates without assessing how a ten percent rate reduction might affect the statutory factors of efficiency, economy, quality, and access to care. See, e.g., Declaration of Linda Machado at 1-7 & exs. A & B (discussing various studies from 1997, 1999, and 2000, but not a single study prepared in anticipation of AB 5); Declaration of Jon Chin at 1-6 & ex. B (relying on a DHS report prepared in November 2005); Declaration of Kevin Gorospe at 1-4 (relying almost exclusively on a December 2007 study of pharmaceutical costs prepared by Myers & Stauffer); Declaration of Kevin Gorospe at 1-8 (relying on studies from 2004 and 2007). The district court was well within its discretion in concluding that such post hoc rationalizations fall short of the procedural requirements established in Orthopaedic Hospital. See Ark. Med. Soc’y v. Reynolds, 6 F.3d 519, 530 (8th Cir. 1993) (refusing to rely on speculative evidence that could “only be confirmed by historical data accumulated after the cuts were made ”).

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compensate physician costs. ”); id. at 3 (admitting same lack of cost data for hospital outpatient services); Declaration of Jon Chin at 2 (“DHCS has no available cost data [on covered] dental procedures”). In the absence of such cost data, the Director could not have complied with § 30(A) as interpreted in Orthopaedic Hospital.

Perhaps as a result, the Director’s primary argument on appeal is that the standards established in Orthopaedic Hospital are inapplicable, for several reasons. We address each of them.

A. Action Under the Supremacy Clause

[2] First, the Director argues that Orthopaedic Hospital is inapplicable because the plaintiffs in that case were not asserting a claim of federal preemption directly under the Supremacy Clause. As the Director notes, Orthopaedic Hospital addressed claims brought to enforce the provisions of § 30(A) under 42 U.S.C. § 1983, which provides a remedy for deprivation of any “rights . . . secured by the Constitution and laws” of the United States.10 See Orthopaedic Hosp., 103 F.3d at 1495. In this case, by contrast, Independent Living does not seek direct enforcement of any “rights” created by § 30(A), but rather argues that the ten percent rate reduction conflicts with the federal requirements established in § 30(A). The question is whether this difference in the theory of recovery renders Orthopaedic Hospital’s interpretation of § 30(A) any less persuasive. To answer this question, we turn to basic principles of conflict preemption.

[3] Conflict preemption arises “when compliance with both federal and state regulations is a physical impossibility, or where state law stands as an obstacle to the accomplishment

10Orthopaedic Hospital preceded our subsequent decision in Sanchez v. Johnson, 416 F.3d 1051, 1068 (9th Cir. 2005), which held that § 30(A) does not create any federal “rights” enforceable under § 1983.

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and execution of the full purposes and objectives of Congress.” PG&E Co. v. State Energy Res. Conservation & Dev. Comm’n, 461 U.S. 190, 204 (1983) (internal quotation marks and citations omitted); see also Ting v. AT&T, 319 F.3d 1126, 1136 (9th Cir. 2003). Under this latter strand of so-called “obstruction” preemption, “an aberrant or hostile state rule is preempted to the extent it actually interferes with the ‘methods by which the federal statute was designed to reach [its] goal.’ ” Id. at 1137 (alteration in original) (quoting Int’l Paper Co. v. Ouellette , 479 U.S. 481, 494 (1987)). “Thus, obstruction preemption focuses on both the objective of the federal law and the method chosen by Congress to effectuate that objective, taking into account the law’s text, application, history, and interpretation.” Id.

[4] As the description above makes clear, the first step in any conflict preemption analysis is to determine the purpose of the federal law at issue. See id. at 1138. Orthopaedic Hospital discussed the purpose underlying § 30(A) at length, reading its text and legislative history as demonstrating that “Congress intended payments to be flexible within a range; payments should be no higher than what is required to provide efficient and economical care, but still high enough to provide for quality care and to ensure access to services. ” 103 F.3d at 1497. We held that the Department could not accomplish this purpose in the absence of some determination of “what it costs an efficient hospital economically to provide quality care.” Id. at 1498. Thus, while the Department “need not follow a rigid formula of payments equal to an efficiently and economically operated hospital’s costs regardless of other factors,” § 30(A) required the Department to at least ascertain provider costs when it adjusted reimbursement rates. Id.

[5] The Director has not provided any coherent reason why the purpose underlying § 30(A) would be different for purposes of federal preemption than it was for direct enforcement under § 1983, and we see none. That Independent Living in this case has proceeded under a different cause of action than

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the plaintiffs in Orthopaedic Hospital is therefore an inconsequential distinction. In both cases, the central question is the purpose underlying § 30(A), and as to that question, Orthopaedic Hospital clearly controls.

B. Continuing Validity of Orthopaedic Hospital

Second, the Director argues that our more recent decision in Sanchez, 416 F.3d 1051, “effectively overruled” Orthopaedic Hospital, and that the district court’s analysis of the merits was thus based on legal error. This argument is unavailing. Sanchez did not overrule Orthopaedic Hospital’s interpretation of § 30(A).

[6] Sanchez addressed the narrow question of “whether developmentally disabled recipients of Medicaid funds and their service providers have a private right of action against state officials to compel the enforcement of a federal law governing state disbursement of such funds. ” 416 F.3d at 1053. Applying the Supreme Court’s decision in Gonzaga University v. Doe , 536 U.S. 273 (2002), we held that § 30(A) does not create any federal “rights” enforceable under § 1983. Sanchez, 416 F.3d at 1068. In so holding, we did not reach the substantive requirements of § 30(A), as we were concerned solely with whether the plaintiffs in that case could bring suit in federal court. In fact, Sanchez does not explore the congressional “purpose” underlying § 30(A), the touchstone of federal preemption analysis. If the Sanchez court had any qualms about Orthopaedic Hospital’s substantive interpretation of § 30(A), it did not say so.

[7] More fundamentally, Sanchez cannot be read to have overruled Orthopaedic Hospital, for three reasons. First, Sanchez does not even cite Orthopaedic Hospital, much less overrule its holdings. Second, Sanchez was decided by a three-judge panel that, under our circuit rules, was powerless to overturn one of our prior decisions in the absence of intervening authority, Hart v. Massanari , 266 F.3d 1155, 1171

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(9th Cir. 2001). Third, we affirmed the “continuing vitality” of Orthopaedic Hospital in a published opinion filed one month after Sanchez. See Alaska Dep’t of Health & Soc. Servs. v. Ctrs. for Medicare & Medicaid Servs., 424 F.3d 931, 940 (9th Cir. 2005). In that case, the State argued—much as the Director has here—that subsequent developments rendered Orthopaedic Hospital anachronistic. See id. We were “not persuaded,” and we noted that “the relevant language of § 30(A) remains unchanged since Orthopaedic Hospital, and thus our interpretation of its purpose, and the State’s obligations thereunder, still holds. ” Id. at 940-41.

Aside from his misreading of Sanchez, the Director also argues that Orthopaedic Hospital is no longer good law because its interpretation of § 30(A) “conflicts with the interpretation of the federal agency that Congress vested with authority to enforce and implement ” the statute. By this, the Director apparently means that Orthopaedic Hospital conflicts with the interpretation of § 30(A) presented in an amicus brief filed by the Solicitor General when the Supreme Court asked him to opine on whether our decision in Orthopaedic Hospital was worthy of a grant of certiorari. In the process of recommending denial of certiorari, the Solicitor General opined that requiring states to reimburse medical providers at rates roughly equal to their costs ran counter to the text and legislative history of § 30(A). From this, the Director concludes that a “federal agency” repudiated our interpretation of § 30(A).

[8] Whatever the merits of the Solicitor General’s views, we owe them no deference in this case. Although at one time the Supreme Court suggested that a legal opinion expressed by an agency in the course of litigation may be entitled to deference, Auer v. Robbins, 519 U.S. 452, 461-63 (1997), it subsequently limited such deference to an agency’s interpretation of ambiguities in its own regulations , Christensen v. Harris County, 529 U.S. 576, 586-88 (2000).

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[9] The Director also contends that our holding in Orthopaedic Hospital has been undermined by Congress’s subsequent repeal of the so-called “Boren Amendment,” which required states to set hospital inpatient reimbursement rates that were “reasonable and adequate to meet the costs which must be incurred by efficiently and economically operated facilities.” This argument is not persuasive either, as Orthopaedic Hospital itself expressly distinguished the requirements of the Boren Amendment, previously codified at § 1396a(a)(13)(A), from the “more flexible” requirements of § 30(A). See 103 F.3d at 1499. The fact that Congress repealed the more rigid requirements of the Boren Amendment does not speak to the propriety of our past interpretation of § 30(A). Moreover, we have previously rejected the same argument made by the Director in this case, noting that the repeal of the Boren Amendment, “like its enactment, modified § 13(A) alone; it effected no change to § 30(A).”11 Alaska DHSS, 424 F.3d at 941.

Finally, the Director urges us to reconsider our interpretation of § 30(A) in Orthopaedic Hospital, noting that several courts have disagreed with its reasoning. See, e.g., Rite Aid v. Houstoun, 171 F.3d 842, 851 (3d Cir. 1999) (holding that “section 30(A) requires the state to achieve a certain result but does not impose any particular method or process for getting

11The Director also attempts to graft past judicial interpretation of the Boren Amendment onto this court’s interpretation of § 30(A). The Director argues that because (1) Orthopaedic Hospital described § 30(A)’s requirements as “more flexible” than the Boren Amendment, and (2) courts held that rates covering only 85-95% of provider costs were reasonable under the Boren Amendment, then (3) reimbursement rates within the same “range of reasonableness ” must easily meet the requirements of § 30(A). See Reply Brief 08-56422 at 10-11. This argument is a nonsequitur, as Orthopaedic Hospital described the procedural requirements of § 30(A) as “more flexible” than those of the Boren Amendment, which required “periodic cost reports from hospitals subject to audit by the Department.” See 103 F.3d at 1499. While § 30(A) requires less formalized procedures than the Boren Amendment, it does not follow that § 30(A)’s substantive requirements are also less demanding.

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to that result,” expressly disagreeing with Orthopaedic Hospital); Methodist Hosps., Inc. v. Sullivan , 91 F.3d 1026, 1029-30 (7th Cir. 1996) (holding that “[n]othing in the language of § 1396a(a)(30) . . . requires a state to conduct studies in advance of every modification, ” as the statute merely “requires each state to produce a result”). But see Ark. Med. Soc’y, 6 F.3d at 530 (holding that § 30(A) requires the state to “consider the relevant factors of equal access, efficiency, economy, and quality of care as designated in the statute when setting reimbursement rates”); Minn. Homecare Ass’n v. Gomez, 108 F.3d 917, 918 (8th Cir. 1997) (holding that Medicaid Act “mandates consideration of the equal access factors of efficiency, economy, quality of care and access to services in the process of setting or changing payment rates, ” although “it does not require the State to utilize any prescribed method of analyzing and considering said factors ” and no “formal analysis” is required). Even if we were at liberty to overrule Orthopaedic Hospital, we would nonetheless affirm the district court’s injunction, for several reasons.

[10] First, even those courts that have rejected Orthopaedic Hospital’s procedural requirements have generally recognized that state Medicaid rate reductions may not be based solely on state budgetary concerns. See Rite Aid , 171 F.3d at 856 (“[B]udgetary considerations may not be the sole basis for a rate revision . . . . ”); see also Beno v. Shalala , 30 F.3d 1057, 1069 n.30 (9th Cir. 1994); Amisub (PSL), Inc. v. Colo. Dep’t of Soc. Servs. , 879 F.2d 789, 800-01 (10th Cir. 1989); Ark. Med. Soc’y, 6 F.3d at 531 ( “Abundant persuasive precedent supports the proposition that budgetary considerations cannot be the conclusive factor in decisions regarding Medicaid. ”). But see Am. Soc’y of Consultant Pharmacists v. Garner , 180 F. Supp. 2d 953, 974-75 (N.D. Ill. 2001). In this case, the record supports the district court’s conclusion that “the only reason for imposing the cuts was California’s current fiscal emergency.” The legislation was passed in an emergency session called to “address[ ] the fiscal emergency declared by the Governor.” See Declaration of Stan Rosenstein at 1 (describ-

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ing the ten percent rate reduction as one option at the State’s disposal “for dealing with the fiscal crisis ”). Thus, quite apart from any procedural requirements established by Orthopaedic Hospital, the State’s decision to reduce Medi-Cal reimbursement rates based solely on state budgetary concerns violated federal law.

Second, even if we were in a position to relax the procedural requirements established in Orthopaedic Hospital, the Director’s failure to study the effect of the rate reduction in any meaningful way would still lead us to enjoin implementation of AB 5. Those courts that have criticized Orthopaedic Hospital’s reasoning have not simply rubber-stamped rate reductions imposed by state agencies; rather, reviewing courts typically subject state rate-making to something akin to “arbitrary and capricious ” review. See Rite Aid , 171 F.3d at 853 (requiring the agency’s “process of decision-making ” to be “reasonable and sound”); id. at 857 (holding that the agency’s “11-month period of data gathering, consultation, and review before promulgating the [rate reduction] was not so deficient as to be arbitrary and capricious ”); see also Ark. Med. Soc’y, 6 F.3d at 529-30 (noting that “[r]eview under the arbitrary and capricious standard” is appropriate).

In this case, the State’s own Legislative Analyst warned that the ten percent rate reduction had “the potential to negatively impact the operation of the Medi-Cal Program and the services provided to beneficiaries by limiting access to providers and services,” and on that basis recommended that the legislature “reject the Governor’s proposal to reduce payments for all providers except hospitals. ” Nothing in the record indicates that any other State official considered—let alone studied—these possibilities prior to enacting the cuts. Thus, it is far from clear that the Director would prevail under a different standard, as there is no evidence that the agency’s decision-making process was “reasonable and sound. ”12

12The Director urges us to adopt a standard similar to the Third Circuit’s “reasonable and sound ” decision-making requirement, asserting that he

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Third, those courts that have resisted interpreting § 30(A) to include certain procedural requirements have nonetheless held that § 30(A) imposes substantive obligations on states that elect to participate in Medicaid. See Rite Aid, 171 F.3d at 851 (“Section 30(A) requires the state to achieve a certain result.”); Methodist Hosps., 91 F.3d at 1030 (holding that if rates are inadequate to attract sufficient providers, then “under § 1396a(a)(30), [the state] must raise the price until the market clears”). In this case, Independent Living alleges that at least some medical providers have refused to treat Medi-Cal recipients since the ten percent rate reduction was implemented. See, e.g., Supplemental Declaration of Thu-Hang Tran at 3-5. Even if we were to interpret § 30(A) to mandate a substantive rather than procedural result, the ten percent rate reduction might still conflict with the quality of care and access provisions of § 30(A), as the cuts have apparently forced at least some providers to stop treating Medi-Cal beneficiaries.

The potential difficulties inherent in assessing substantive compliance with the factors laid out in § 30(A) demonstrate

was required—at most—to conduct a “reasonably principled analysis” of the rate reductions under Folden v. Wash. State Dep’t of Soc. & Health Servs., 981 F.2d 1054, 1057 (9th Cir. 1992). We decline to do so, as Folden pre-dates Orthopaedic Hospital and interpreted a separate, now repealed section of the Medicaid Act, § 1396a(a)13(A).
Even if we were to do so, however, we fail to see how adopting Folden’s standard would aid the Director in this case. Folden held that while “states are left considerable latitude ” under the Medicaid Act and are not required to prepare “any special studies or written findings,” state agencies must “engage[ ] in a bona fide fact-finding process ” and base their rates on those findings. Id. Nothing in the record connects the decision to cut Medi-Cal reimbursement rates by ten percent across-the-board to a factfinding process initiated by state officials. To the contrary, the record quite plainly establishes that rates were cut to respond to the fiscal emergency. Thus, even under Folden, the district court did not abuse its discretion in holding that Independent Living was likely to demonstrate that AB 5 frustrates the purpose of § 30(A).

INDEPENDENT LIVING v. M AXWELL-JOLLY

9011

why the more process-oriented view of the statute espoused in Orthopaedic Hospital has much to recommend it. As Judge Levi stated in Clayworth v. Bonta,

[Orthopaedic Hospital’s] approach has substantial practical benefits. The Medicaid Act is clearly intended to give states discretion and flexibility in setting reimbursement rates, within the limits of federal law. The arbitrary and capricious standard[ 13] limits the court’s review of the State’s rate setting and permits the court to defer to the judgment of specialists in a complex regulatory field. Furthermore, it is fair to assume that a rate that is set arbitrarily, without reference to the Section 30(A) requirements, is unlikely to meet the equal access and quality requirements.

295 F. Supp. 2d 1110, 1127 (E.D. Cal. 2003), rev’d, 140 F. App’x 677 (9th Cir. 2005) ( internal citations omitted ). As Judge Levi recognized, the framework established in Orthopaedic Hospital allows reviewing courts to defer to a state agency’s balancing of competing interests, so long as the record created by the agency demonstrates that the State considered the factors mandated by statute. In this sense, the procedural approach is far less intrusive than the “substantive compliance” standard espoused by the Third and Seventh Circuits.

[11] In sum, the Director has not demonstrated that Orthopaedic Hospital has been overruled or undermined in the past twelve years, and a recent decision of this court expressly

13Judge Levi traced the roots of Orthopaedic Hospital’s procedural requirements to the “arbitrary and capricious ” standard of review of agency action. See 295 F. Supp. 2d 1126 & n.18. As noted above, other courts have applied the “arbitrary and capricious” standard even after disclaiming the precise procedural requirements established in Orthopaedic, which specifically mandates consideration of provider costs.

9012

INDEPENDENT LIVING v. M AXWELL-JOLLY

reaffirmed its central holding. Moreover, even if we were not bound by Orthopaedic Hospital, there are compelling reasons to retain Orthopaedic Hospital’s process-oriented focus. The district court thus correctly applied binding precedent to Independent Living’s claims in this case. Its conclusion that Independent Living had demonstrated a likelihood of success on the merits was not an abuse of discretion.

II. Irreparable Harm

[12] The Director also argues that the district court committed clear error by holding that Independent Living had demonstrated a likelihood of irreparable harm. The bulk of the Director’s argument, however, focuses on the alleged harm to the State in light of its current fiscal crisis. 14 The district court clearly considered the hardship to the State but concluded that any such harm was outweighed by the hardships likely to be suffered by Medi-Cal beneficiaries, who would be forced to go without medical care. We have previously held that it is not legal error to conclude, when balancing “the medical or financial hardship to [Medi-Cal recipients] against the financial hardship to the state, ” that the balance of hardships “tipped sharply” in favor of the plaintiffs, see Beltran v. Myers, 677 F.2d 1317, 1322 (9th Cir. 1982), and we reach the same conclusion in this case.

The Director argues that whatever harm Independent Living will suffer if the injunction is reversed, the State will suffer more harm if the injunction is upheld. To support this argument, the Director cites Coalition for Economic Equity v. Wilson for the proposition that the State will be most harmed by losing this appeal. See 122 F.3d 718, 719 (9th Cir. 1997) (stating, in dicta, that “it is clear that a state suffers irreparable injury whenever an enactment of its people or their represen-

14This argument simply reinforces the fact that the driving force behind the rate reduction was the State budget crisis.

INDEPENDENT LIVING v. M AXWELL-JOLLY

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tatives is enjoined ”)); see also New Motor Vehicle Bd. v. Orrin W. Fox Co. , 434 U.S. 1345, 1351 (1977) (same).

[13] As the cited authority suggests, a state may suffer an abstract form of harm whenever one of its acts is enjoined. To the extent that is true, however, it is not dispositive of the balance of harms analysis. If it were, then the rule requiring “balance” of “competing claims of injury, ” Winter, 129 S. Ct. at 376, would be eviscerated. Federal courts instead have the power to enjoin state actions, in part, because those actions sometimes offend federal law provisions, which, like state statutes, are themselves “enactment[s] of its people or their representatives,” Coal. for Econ. Equity , 122 F.3d at 719. Here, Independent Living alleges that allowing AB 5’s implementation would violate the Medicaid Act and the Constitution. If we uphold the injunction and interfere with AB 5’s implementation, then we will have determined that to do otherwise would permit a violation of a federal law which, like AB 5, was produced by a democratic process. Therefore, in assessing the relative harms to the parties, we reject the Director’s suggestion that, merely by enjoining a state legislative act, we create a per se harm trumping all other harms.

[14] The Director also challenges the evidence of irreparable injury provided by certain Independent Living entities, taking issue with the gravity of the economic harms alleged by pharmacists and other medical providers. The Director fails to acknowledge, however, that several of the entities are Medi-Cal recipients. This court has previously held that Medi-Cal recipients may demonstrate a risk of irreparable injury by showing that enforcement of a proposed rule “may deny them needed medical care. ” Beltran, 677 F.2d at 1322. In this case, the district court carefully considered the voluminous evidence presented by the parties, concluding that Independent Living had made such a showing with respect to some medical services and failed to do so with respect to othe1r5s.

15The district court found that the Independent Living failed to demonstrate irreparable harm as to non-contract hospitals and managed care plans. 2008 WL 3891211, at *9-10. Independent Living does not challenge these findings on appeal.

9014

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Aside from restating its own evidence, the Director does not
present any specific reason why the district court’s weighing
of Independent Living’s evidence was erroneous. We therefore refuse to disturb the district court’s factual findings regarding irreparable injury, which we review for clear error.16

III. Balance of Equities and the Public Interest

[15] Finally, the Director contends that the district court erred in its assessment of the public interest. The public interest analysis for the issuance of a preliminary injunction requires us to consider “whether there exists some critical public interest that would be injured by the grant of preliminary relief.” Hybritech Inc. v. Abbott Labs. , 849 F.2d 1446, 1458 (Fed. Cir. 1988). The district court held that, although “there is a public interest in ensuring that the State has enough money to meet its financial obligations,” this interest was outweighed by the public interest “in ensuring access to health care.” The Director argues that, in light of the State budget crisis, the balance of hardships tips in his favor, as the cuts mandated under AB 5 are necessary to help reduce the State budget deficit.

[16] We do not doubt the severity of the fiscal challenges facing the State of California. State budgetary concerns cannot, however, be “the conclusive factor in decisions regarding Medicaid.” Ark. Med. Soc’y , 6 F.3d at 531. A budget crisis does not excuse ongoing violations of federal law, particularly when there are no adequate remedies available other than an injunction. Ala. Nursing Home Ass’n v. Harris , 617 F.2d 388, 396 (5th Cir. 1980) (“Inadequate appropriations do not excuse noncompliance.”); see also Beno v. Shalala , 30 F.3d 1057, 1069 (9th Cir. 1994) (rejecting budget cutting as grounds for waiver of federal AFDC requirements). State budgetary con-

16Independent Living has not appealed that portion of the district court’s order concluding that they failed to demonstrate irreparable injury as to some services. Those findings are therefore not before us.

INDEPENDENT LIVING v. M AXWELL-JOLLY

9015

siderations do not therefore, in social welfare cases, constitute a critical public interest that would be injured by the grant of preliminary relief. In contrast, there is a robust public interest in safeguarding access to health care for those eligible for Medicaid, whom Congress has recognized as “the most needy in the country. ” Scweiker v.. Hogan , 457 U.S. 569, 590, (1982) (quoting H.R. Rep. No. 213 89th Conf. 1st Sess., 66 (1965)). We therefore hold that the district court did not abuse its discretion in concluding that the balance of hardships and the public interest weighed in favor of enjoining implementation of the ten percent rate reduction required by AB 5. See Beltran, 677 F.2d at 1322.

IV. Sovereign Immunity and the Order Modifying the Injunction

On cross-appeal, Independent Living challenges the district court’s August 27, 2008 order modifying its August 18, 2008 order granting Independent Living’s motion for a preliminary injunction. Independent Living principally argues that, in modifying the earlier order to eliminate its retroactive effect, the district court misconstrued the extent of the State’s sovereign immunity.17 Independent Living contends that the State of California has consented to actions in state court for retroactive awards of unlawfully withheld funds. Independent Living further maintains that, by removing this case to federal

17Independent Living also argues that the Director waived the argument that it enjoys sovereign immunity from suit separate from its Eleventh Amendment immunity. It did so, Independent Living maintains, because before the district court, the Director claimed only that it was protected by Eleventh Amendment immunity, not any other form of sovereign immunity. Indeed, sovereign immunity “derives not from the Eleventh Amendment but from the structure of the original Constitution itself. ” Alden v. Maine, 527 U.S. 706, 728 (1999) (citing Idaho v. Coeur d’Alene Tribe of Idaho, 521 U.S. 261, 267-268 (1997)). However, the Supreme Court has also noted that the term “Eleventh Amendment Immunity” is “convenient shorthand . . . for the sovereign immunity of the states. ” Id. at 713. We will not penalize the Director for employing an established semantic convention.

9016

INDEPENDENT LIVING v. M AXWELL-JOLLY

court, the Director waived whatever immunity he had in state court. The Director responds that the district court correctly modified the August 18 order. He contends that requiring a state agency to expend state funds based on past conduct violates state sovereign immunity, which, the Director insists, was never waived in either the state or federal forum.

The doctrine of state sovereign immunity generally prohibits damage suits against states in both state and federal court without their consent. The doctrine comes from the Eleventh Amendment, but its essence “derives . . . from the structure of the original Constitution itself.” Alden, 527 U.S. at 728; see id. at 713 (characterizing sovereign immunity as “a fundamental aspect of the sovereignty which the States enjoyed before ratification of the Constitution, and which they retain today”).

The Supreme Court has held that state sovereign immunity bars citizens of any state from bringing a lawsuit for damages against a state or state agency. Will v. Mich. Dep’t of State Police, 491 U.S. 58, 71 (1989); see also Edelman v. Jordan , 415 U.S. 651, 662-63 (1974); Hans v. Louisiana, 134 U.S. 1, 10 (1890). However, there are three well-established exceptions to this general rule. Two of them— Ex parte Young and state waiver (both explicit consent and implied removal waiver)—are relevant here, and we consider them below. 18

A. The Order’s Validity Under Ex parte Young

Although the Eleventh Amendment expressly prohibits suits against states in both law and equity, a plaintiff may nonetheless maintain a federal action to compel a state offi-

18The other exception is that Congress may validly abrogate a state’s sovereign immunity through legislation passed pursuant to the Fourteenth Amendment. Fitzpatrick v. Bitzer, 427 U.S. 445, 456 (1976) (holding that Congress may abrogate states’ sovereign immunity via legislation enacted pursuant to Fourteenth Amendment).

INDEPENDENT LIVING v. M AXWELL-JOLLY

9017

cial’s prospective compliance with the plaintiff’s federal rights. Ex parte Young, 209 U.S. 123, 156 (1908); id. at 160 (“The State has no power to impart to [its officer] any immunity from responsibility to the supreme authority of the United States.”); see also Quern v. Jordan , 440 U.S. 332, 337 (1979) (citing Young, 209 U.S. 123). The court may order such an injunction even if the state’s compliance will have an “ancillary effect” on the state treasury. Edelman, 415 U.S. at 667-68 (citing Young, 209 U.S. 123). This exception applies only to prospective relief; it does not permit retroactive injunctive relief. Id. at 668.

In this case, the August 18 order constituted retroactive relief under our controlling precedent. In Native Village of Noatak v. Blatchford, we held that, “[i]n requesting an order requiring the Commissioner to perform his ‘legal duty’ to disburse . . . funds ” to him, the plaintiff “essentially seeks an injunction directing the state to pay damages. ” 38 F.3d 1505, 1512 (9th Cir. 1994). What the plaintiff sought, we held, was “precisely the type of retroactive relief that the Supreme Court refused to allow in Edelman,” and therefore his “attempt to characterize its claim as one for prospective relief fail[ed] to avoid the bar of the Eleventh Amendment. ” Id.

In this matter, the August 18 order provided retroactive relief that required the State to pay monetary compensation to affected providers.19 Therefore, under Native Village of Noatak, the retroactive portion of that order does not fall under the Ex parte Young exception to the sovereign immunity doctrine. As a result, the order violated the State’s sover-

19In so deciding, we employ the approach used by the Second, Fourth, and Seventh Circuits, i.e., whether relief is prospective or retrospective in the Medicaid payment context turns on the date of service, not the date of payment. See, e.g., New York City Health & Hosps. Corp. v. Perales , 50 F.3d 129, 137 (2d Cir. 1995); Wisc. Hosp. Ass’n v. Reivitz , 820 F.2d 863, 867 (7th Cir. 1987). Therefore, an order enjoining payment reductions for services that had been delivered before August 18 services is retroactive, even if the Department had not yet tendered payment for the services.

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INDEPENDENT LIVING v. M AXWELL-JOLLY

eign immunity unless the Director waived that immunity— impliedly through removal, explicitly through consent to suit in state court, or through some combination thereof—an issue we now consider.

B. The State’s Waiver of Sovereign Immunity

[17] Even if a plaintiff seeks damages for past conduct, sovereign immunity will not insulate a state from suit in state court, provided the state has previously consented to be sued in state court under like circumstances. See Carey v. Nev. Gaming Control Bd. , 279 F.3d 873, 877 (9th Cir. 2002). While a state’s consent to suit in its own courts does not waive sovereign immunity against suit in federal court, Carey, 279 F.3d at 877 (noting that waiver of sovereign immunity “only gives [the state’s] consent to suits in its own courts ”), a state that consents to suit in state court cannot invoke the sovereign immunity defense after removing the suit to federal court, Embury v. King , 361 F.3d 562, 566 (9th Cir. 2004); Stewart v. North Carolina, 393 F.3d 484, 488 (4th Cir. 2005). As a result, given that the Director removed the case, sovereign immunity will not protect him if the State has previously consented to suits like this one in state court.

Here, Independent Living points to several state authorities it claims constitute such consent. First, it notes that California Code of Civil Procedure § 1085 provides:

A writ of mandate may be issued by any court to any inferior tribunal, corporation, board, or person, to compel the performance of an act which the law specially enjoins, as a duty resulting from an office, trust, or station.

Though it does not explicitly waive sovereign immunity against retroactive disbursements, this provision can be read to sanction judicially ordered fund disbursements generally.

INDEPENDENT LIVING v. M AXWELL-JOLLY

9019

California state courts, some interpreting California Code of Civil Procedure § 1085, have condoned such orders in more explicit terms. Various decisions have interpreted state law to permit mandamus actions seeking disbursement of unlawfully withheld funds. See, e.g., County of L.A. v. Riley , 128 P.2d 537, 543 (Cal. 1942); L.A. County v. State Dep’t of Pub. Health, 158 Cal. App. 2d 425, 443 (1958). Notably, some of these cases have specifically recognized the availability of monetary awards against a state agency or official resulting from unlawfully withheld health and welfare payments. See Mission Reg’l Med. Ctr. v. Shewry , 168 Cal. App. 4th 460, 480 (Cal. Ct. App. 2008) (citing Code of Civil Procedure § 1085); Santa Ana Hosp. Med. Ctr. v. Belshi , 56 Cal. App. 4th 819, 837 (Cal. Ct. App. 1997) (noting that “[a]ctions seeking traditional mandamus to compel a state officer to comply with a mandatory duty to disburse funds do not invade sovereign immunity, even though they involve an incidental monetary award” (citing of Sacramento v. Lackner , 97 Cal. App. 3d 576, 587-88 (Cal. Ct. App. 1979))). In County of Los Angeles v. Riley , the court authorized back payments for needy services against the State and noted that “[t]he rule is well established in this state that where the action is one simply to compel an officer to perform a duty expressly enjoined upon him by law, it may not be considered a suit against the state. ” 128 P.2d at 543 (citing, e.g., Bd. of Dirs. of Woman’s Relief Corps Home Ass’n of Cal. v. Nye , 8 Cal. App. 527 (Cal. Ct. App. 1908)); see also L.A. County v. State Dep’t of Pub. Health , 158 Cal. App.2d at 442-43; id. at 443 (holding that because “the object of the present suits is to compel state officers to disburse funds specifically appropriated for tuberculosis subsidies in the manner provided by the statute,” the order involves “no invasion of state sovereignty and does not fall within the rule precluding suits against the state without its consent ”).

[18] Thus, California has construed the scope of its sovereign immunity as it relates to awards of unlawfully withheld funds more narrowly than have the federal courts. Compare,

9020

INDEPENDENT LIVING v. M AXWELL-JOLLY

e.g., L.A. County , 158 Cal. App.2d at 442-43 with Edelman , 415 U.S. at 668, and Noatak, 38 F.3d at 1512. Under California law, an action seeking injunctive relief that requires a state official to disburse funds is not an action against the State. Thus, it does not implicate the State’s sovereign immunity against liability in its own courts. Had this action remained in state court, the Director would not have enjoyed sovereign immunity against a order directing payment of retroactive benefits.

[19] Under our precedent, because the Director enjoyed no sovereign immunity in state court against a order directing payment of retroactive benefits, it follows that the Director— by removing the case to federal court—waived sovereign immunity in that forum as well. See Embury, 361 F.3d at 566 (citing Lapides v. Board of Regents , 535 U.S. 613, 623-24 (2002)) (holding that, in removing a case to federal court, a state defendant waives its Eleventh Amendment immunity); see also Stewart, 393 F.3d at 488. Embury’s rule is grounded on the Supreme Court’s holding in Lapides, which held that where a state removed a state law defamation action to federal court, it waived its sovereign immunity against the state claim. Id. at 624. Embury extended Lapides’s principle to federal claims.20 361 F.3d at 565-66 (citing Lapides, 535 U.S. at

20The Director argues that Lapides and Embury should essentially be confined to their facts. Under this reading, the rule applies only where a state has already consented to suit in its own state courts and thus, a state defendant removing a case to federal court takes with it whatever sovereign immunity it had in state court. Other courts have endorsed this narrow view of Lapides’s waiver rule. E.g., Stewart, 393 F.3d at 488 (stating that Lapides “does not resolve whether a state that has not consented to suit in its own courts maintains [immunity] upon voluntarily removing a case to federal court”); id. at 490 (construing Lapides to mean that in such an instance, a state does not waive sovereign immunity by removal); see also Watters v. Wash. Metro. Area Transit Auth. , 295 F.3d 36, 42 n.13 (D.C. Cir. 2002) (noting that “[a]s the [states] have not waived immunity from attorney’s liens in their own courts, the narrow holding of Lapides does not apply to this case, ” and the defendant’s removal did not waive its sovereign immunity). While our Embury holding strongly suggests a broader interpretation of Lapides, our conclusion that the Director consented to suit in state court renders the issue moot for the purpose of this case.

INDEPENDENT LIVING v. M AXWELL-JOLLY

9021

620, 623-24). Under Embury, the Director, having waived state court immunity, also waived federal court sovereign immunity by voluntarily removing the action. Because the Director lacked sovereign immunity against retroactive orders, the district court’s August 18 order should have applied retroactively. As a result, by basing its order on an erroneous legal standard, the district court erred in eliminating the injunction’s retroactive effect. We hold that the district court’s injunction should extend to all services covered by that injunction and provided on or after July 1, 2008.

C. Other Claims of Error Regarding the August 27, 2008 Order

Independent Living also contends that the district court’s August 27, 2008 order violated their right to due process, namely, their property right in the judgment reflected in the court’s August 18, 2008 order. They also allege that, in modifying the August 18 order, the district court abused its discretion under Federal Rule of Civil Procedure 59(e). Based on our conclusion that the August 27, 2008 order erroneously construed the State’s sovereign immunity, we do not reach these claims.

CONCLUSION

The district court properly applied this court’s prior decision in Orthopaedic Hospital to hold that Independent Living has demonstrated a likelihood of success on the merits. Moreover, the district court did not abuse its discretion in determining that the balance of hardships tips sharply in Independent Living’s favor, as the ten percent rate reduction threatens access to much-needed medical care. We therefore affirm the district court’s order granting in part Independent Living’s motion for a preliminary injunction.

However, the district court’s subsequent order modifying the injunction to apply only to payments for services provided

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INDEPENDENT LIVING v. M AXWELL-JOLLY

on or after August 18 was based on an erroneous legal standard. The State of California has waived its sovereign immunity against mandamus actions in state courts seeking reimbursement of unlawfully withheld funds, and the Director, by voluntarily removing this case to federal court, waived the State’s sovereign immunity in federal court. We therefore reverse the district court’s August 18 order modifying the injunction and remand to the district court for further proceedings consistent with this opinion.

AFFIRMED in part, REVERSED in part, and REMANDED.

 </s> FOR PUBLICATION
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

INDEPENDENT LIVING CENTER OF



SOUTHERN CALIFORNIA, INC., a

nonprofit corporation; G RAY

PANTHERS OF SACRAMENTO, a

nonprofit corporation; G RAY

PANTHERS OF SAN FRANCISCO, a

nonprofit corporation; G ERALD

SHAPIRO, PHARM. D. doing business

as UPTOWN PHARMACY AND GIFT

No. 08-56061

SHOPPE; SHARON STEEN doing business as C ENTRAL PHARMACY; MARK BECKWITH; MARGARET

 D.C. No. 2:08-cv-03315-CASMAN

DOWLING; TRAN PHARMACY, INC.,

doing business as T RAN 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

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INDEPENDENT LIVING CENTER v. S HEWRY Opinion by Judge Berzon

INDEPENDENT LIVING CENTER v. S HEWRY

13029

COUNSEL
Lynn S. Carman and Stanley L. Friedman (argued) for Independent Living Center of Southern California, et al., petitioners-appellants.
Edmund G. Brown, Jr., Attorney General of the State of California; 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. S HEWRY 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 service 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 Supremacy Clause.2 Although ILC sought preliminary relief, the district 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

1Petitioner-appellants include the Independent Living Center of Southern California, a non-profit corporation providing services to over 8,000 disabled individuals annually; Gray Panthers of Sacramento and San Francisco, 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 medical and pharmacy services under Medi-Cal; Margaret Dowling, a paraplegic 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 program; and Tran Pharmacy, Inc., a California corporation operating a retail pharmacy in Garden Grove. Independent Living Center, the Gray Panthers, and the pharmacy petitioners also sued to assert the interests of their respective patients and members. We refer to petitioner-appellants collectively as “petitioners,” “Independent Living Center,” or “ILC.”
2The 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. C ONST. art. VI, cl. 2.

INDEPENDENT LIVING CENTER v. S HEWRY

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 program, enacted by Congress pursuant to its powers under the Spending Clause, see U.S. CONST. art. I, § 8, cl. 1, that “ ‘directs federal funding to states to assist them in providing medical 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 medical 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. S HEWRY

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 highquality medical care (the “quality of care provision”) and sufficient to enlist enough providers to ensure that medical services 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 February 16, 2008, during a special session convened by the Governor to address the state’s budget deficit, reduces payments to medical providers participating in the state’s Medi-Cal program 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 providers 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 provided 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.

ILC filed this suit in California state court seeking to enjoin implementation of AB 5 on April 22, 2008, maintaining that the ten-percent rate reduction violates both the “quality of care” and “access to care” provisions of § 30(A) and is therefore invalid under the federal Constitution’s Supremacy Clause, as it conflicts with governing federal law. The com-

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plaint alleged that even prior to passage of AB 5, a substantial percentage of medical care providers — 45% of primary care providers and 50% of specialists — were unwilling to participate in the Medi-Cal program due to low reimbursement rates; that 90% of dentists refused to accept Medi-Cal patients; and that Medi-Cal’s reimbursement rates for prescription drugs allowed pharmacies to “uniformly earn less than a 10% net profit.” By further reducing already-low reimbursement rates, ILC argued, AB 5 would drive even more primary care physicians, specialists, dentists, and pharmacies out of the Medi-Cal program and force existing providers to reduce services. As a result, ILC contended, Medi-Cal recipients would be “denied quality medical services and access to quality medical services, ” in violation of § 30(A). ILC also maintained that nothing in the legislative history of AB 5 demonstrated that the legislature had considered whether reduced payments would be consistent with efficiency, economy, and quality of care, or whether such payments would be sufficient to enlist an adequate network of health care providers. Rather, the sole purpose cited in the legislation was to “address[ ] the fiscal emergency declared by the Governor ” and “implement cost containment measures affecting health services, at the earliest possible time. ” ILC therefore requested a peremptory writ of mandate or injunction to prevent the Department of Health Care Services3 and its Director, Sandra Shewry ( “the Director”), from implementing AB 5. 4

C.

The state defendants removed the suit to federal court, where ILC filed a motion for preliminary injunction. The dis-

3ILC voluntarily dismissed the Department from suit on June 1, 2008, leaving the Director as the sole defendant.
4ILC also alleged in its complaint that the ten-percent rate reduction both violated and was preempted by the Americans with Disabilities Act of 1990 ( “ADA”), 42 U.S.C. § 12181 et seq. ILC voluntarily dismissed these claims without prejudice.

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trict court denied relief, holding that although it was “acutely cognizant of the potential adverse consequences of the ten percent rate reduction,” ILC had “no likelihood of succeeding on the merits ” because they “do not have any federal rights under § 30(A).”

In reaching this conclusion, the district court relied heavily on this court’s decision in Sanchez v. Johnson , which held that § 30(A) does not “create an individual right that either Medicaid recipients or providers would be able to enforce under [42 U.S.C.] § 1983.” 416 F.3d 1051, 1062 (9th Cir. 2005). Although the district court acknowledged that ILC in this case filed suit under 28 U.S.C. § 1331 and the Supremacy Clause rather than under § 1983, the court viewed this as a distinction without a difference, reasoning that the Supremacy Clause — like § 30(A) — “ ‘is not a source of any federal rights.’ ” Golden State Transit Corp. v. City of Los Angeles , 493 U.S. 103, 107 (1989) (quoting Chapman v. Houston Welfare Rights Org., 441 U.S. 600, 613 (1979)). In the absence of any “right,” the district court concluded, ILC almost surely had failed to state a claim for injunctive relief.

In so ruling, the district court rebuffed ILC’s argument that it was entitled to seek purely injunctive relief — which is all it is seeking — on the basis of federal preemption under the doctrine recognized in Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983). Shaw held that “[a] plaintiff who seeks injunctive relief from state regulation, on the ground that such regulation is pre-empted by a federal statute which, by virtue of the Supremacy Clause . . . , must prevail, thus presents a federal question which the federal courts have jurisdiction under 28 U.S.C. § 1331 to resolve. ” Id. at 96 n.14. The district court held Shaw and its progeny — which, as we shall see, are legion — inapplicable to ILC’s claims, holding that Shaw preemption claims have been permitted in only three “circumstances”: (1) “where the plaintiff claims that a state law requires him to act in violation of federal law;” (2) “where the plaintiff contends that his conduct will be restricted by a state

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law that is preempted by federal law; ” and (3) “where state

law interferes with federally created rights. ” The court con-

cluded that ILC’s claims did not fall under any of these three

categories, as “AB 5 neither compels nor restricts petitioners

own conduct” and “§ 30(A) does not give rise to a federally

created right.” ILC’s claims thus fell outside the

Shaw

Supremacy Clause doctrine, rendering its probability of suc-

cess on the merits “low, if not wholly lacking. ”

ILC immediately sought emergency relief in this court. We granted ILC’s motion to expedite oral argument, but denied the balance of its emergency motion. We heard argument on July 11, 2008, and issued an order the same day reversing the district court’s decision and remanding for consideration of the merits of ILC’s motion for preliminary injunction. 5 This opinion more fully sets forth the rationale for our July 11 order.

II.

We review a district court’s denial of a preliminary injunction for abuse of discretion. The Lands Council v. McNair , ___ F.3d ___, 2008 WL 2640001, at *3 (9th Cir. 2008) (en banc). “A district court abuses its discretion in denying a request for a preliminary injunction if it ‘base[s] its decision on an erroneous legal standard or clearly erroneous findings of facts.’ ” Id. (quoting Earth Island Inst. v. U.S. Forest Serv., 442 F.3d 1147, 1156 (9th Cir. 2006)) (alteration in original). We therefore review the district court’s legal rulings de novo and its findings of fact for clear error. Id.; see also Perfect 10, Inc. v. Amazon.com, Inc. , 508 F.3d 1146, 1157 (9th Cir. 2007).

5The district court heard argument on the merits of ILC’s motion for a preliminary injunction on August 1, 2008, and subsequently entered an order granting ILC’s motion in part. See Indep. Living Ctr. v. Shewry , No. CV 08-3315 (C.D. Cal. Aug. 18, 2008), appeal filed, No. 08-56422 (9th Cir. 2008).

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[1] In this case, the district court denied ILC’s motion for a preliminary injunction based solely on its legal ruling that ILC could not bring suit under the Shaw Supremacy Clause doctrine. The only issue before this court is thus whether ILC may maintain a valid cause of action to enjoin implementation of AB 5 on the basis of federal preemption.

A.

[2] The Supreme Court has repeatedly entertained claims for injunctive relief based on federal preemption, without requiring that the standards for bringing suit under § 1983 be met, and without intimating that such claims must fit into one of three categories or “circumstances” in order to be cognizable. In City of Burbank v. Lockheed Air Terminal, Inc. , 411 U.S. 624 (1973), for example, the Court enjoined a city ordinance prohibiting jet aircraft from taking off between 11 p.m. and 7 a.m. Id. at 625-26. Plaintiffs, the owner and operator of a private airport, filed suit under the Supremacy Clause, arguing that the Federal Aviation Act preempted the city’s ordinance. Id. at 626-27. As the Court noted, the Act permitted the federal government “ ‘to possess and exercise complete and exclusive national sovereignty in the airspace of the United States,’ ” id. at 626-27 (quoting 49 U.S.C. § 1508(a)), displacing both state and local regulation of airspace and — presumably — any private “right” to occupy airspace at a given time or place. Without questioning plaintiffs’ authority to bring suit, the Court proceeded directly to the merits of their claim for injunctive relief, holding the city’s ordinance preempted under the Supremacy Clause. See id. at 633, 640.

[3] In Ray v. Atlantic Richfield Co. , 435 U.S. 151 (1978), the Court proceeded along much the same path. Ray involved a claim for injunctive relief brought by the operators of an oil refinery and tanker vessels, who argued that the State of Washington’s Tanker Law, which regulated the design, size, and movement of oil tankers in Puget Sound, was preempted by the federal Ports and Waterways Safety Act (PWSA). Id.

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at 154-56. Without comment on plaintiffs’ authority to bring suit under the Supremacy Clause, the Court once again proceeded straight to the preemption analysis. See id. at 157. Indeed, none of the Court’s seminal preemption cases casts any doubt on the presumptive availability of declaratory and injunctive relief under the Supremacy Clause; to the contrary, the Court has consistently assumed — without comment — that the Supremacy Clause provides a cause of action to enjoin implementation of allegedly unlawful state legislation. See Gade v. Nat’l Solid Wastes Mgmt. Ass’n , 505 U.S. 88 (1992); Pac. Gas & Elec. Co. v. State Energy Res. Conservation & Dev. Comm’n, 461 U.S. 190 (1983); Fla. Lime & Avocado Growers, Inc. v. Paul , 373 U.S. 132 (1963); see also RICHARD H. FALLON, DANIEL J. MELTZER, & DAVID L. SHAPIRO, HART & W ECHSLER’S THE FEDERAL COURTS & T HE FEDERAL SYSTEM 903 (5th ed. 2003) (describing “the rule that there is an implied right of action to enjoin state or local regulation that is preempted by a federal statutory or constitutional provision” as “well-established”).

[4] Perhaps the most well-known in this line of cases is Shaw v. Delta Air Lines , Inc. Shaw involved the claims of several large employers, who brought suit against the Acting Commissioner of the New York State Division of Human Rights, arguing that the State’s Human Rights and Disability Benefits Laws — which required employers to treat pregnancy no differently than any other non-occupational disability — were preempted by the federal Employee Retirement Income Security Act (“ERISA”). 463 U.S. at 92. ERISA does not confer any express cause of action on employers to challenge state benefits laws in federal court, 6 but the Court —

6Section 502(a) of the Act expressly allows participants, beneficiaries, and fiduciaries of a covered employee benefits plan, as well as the Secretary of Labor, to maintain a cause of action under ERISA. See 29 U.S.C. § 1132(a). The same provision, however, is silent as to employers, and has generally been interpreted to mean that an employer cannot maintain an action directly under ERISA. See, e.g., DeMarco v. C & L Masonry, Inc. ,

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much as it had in City of Burbank and Ray — reached the merits of the preemption claims anyway, holding that the state legislation was preempted only insofar as it prohibited practices that were otherwise lawful under ERISA. Id. at 108-09. In an oft-cited footnote, the Court emphasized that its decision in Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1 (1983), decided the same day, “does not call into question the lower courts’ jurisdiction to decide these cases.”7 463 U.S. at 96 n.14. Rather, the Court reaffirmed the general rule that a plaintiff seeking to enjoin state law based on federal preemption maintains a valid federal cause of action. As the Court explained,

It is beyond dispute that federal courts have jurisdic-
tion over suits to enjoin state officials from interfering with federal rights.[ 8] A plaintiff who seeks

891 F.2d 1236, 1240-41 (6th Cir. 1989); Tuvia Convalescent Ctr., Inc. v. Nat’l Union of Hosp. & Health Care Employees, 717 F.2d 726, 729-30 (2d Cir. 1983). But see Associated Builders & Contractors v. Carpenters Vacation & Holiday Trust Fund , 700 F.2d 1269, 1278 (9th Cir. 1983) (allowing suits by employers in narrow circumstances).
7Franchise Tax Board applied the “well-pleaded complaint rule” to hold that federal courts lacked jurisdiction to hear cases in which a defendant asserted ERISA preemption as a defense to an action brought by state tax authorities to enforce its levies against funds held in ERISA-covered employee benefit plans. 463 U.S. at 28. Shaw distinguished Franchise Tax Board by noting that the Tax Board sought a declaration that state laws were not preempted, whereas the employers in Shaw presented an affirmative claim that the state laws at issue were preempted. See Shaw, 463 U.S. at 96 n.14.
8Although Shaw utilized the term “federal rights,” it did so before that term had taken on the added significance attributed to it in more recent cases such as Gonzaga University v. Doe , 536 U.S. 273 (2002), discussed below. Shaw’s description of ERISA makes clear that the Court did not view the statute as creating any substantive “rights” in employers. To the contrary, the Court described ERISA as “a comprehensive statute designed to promote the interests of employees and their beneficiaries in employee benefit plans,” 463 U.S. at 90 (emphasis added), and noted that the statute itself “does not mandate that employers provide any particular benefits, ” id. at 91.

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injunctive relief from state regulation, on the ground that such regulation is pre-empted by a federal statute which, by virtue of the Supremacy Clause of the Constitution, must prevail, thus presents a federal question which the federal courts have jurisdiction under 28 U.S.C. § 1331 to resolve.

Id. (internal citations omitted). The Court concluded by noting that it “frequently has resolved pre-emption disputes in a similar jurisdictional posture,” citing, inter alia, Ray and Florida Lime & Avocado Growers . Id. Thus, Shaw did not give rise to some unique line of “Shaw preemption” cases, but merely reaffirmed the traditional rule that injunctive relief is presumptively available in federal court to enjoin state officers from implementing a law allegedly preempted under the Supremacy Clause.9 See Lawrence County v. Lead-Deadwood Sch. Dist. No. 40-1, 469 U.S. 256, 259 n.6 (1985) (describing Shaw as “reaffirming the general rule ” that a plaintiff asserting preemption under the Supremacy Clause has stated a federal claim for injunctive relief).

B.

[5] Contrary to the district court’s conclusion that “Shaw preemption claims” have been permitted in only three “circumstances,” we know of no authority limiting Shaw in this manner, nor has the Director cited any. In fact, the Supreme Court recently reaffirmed Shaw’s holding, maintaining that it had “no doubt” as to the authority of private parties to seek

9Indeed, Shaw itself traced the roots of the doctrine to Ex parte Young, 209 U.S. 123 (1908), decided seventy-five years earlier . See 463 U.S. at 96 n.14. In Young, the Court found “ample justification” in the case law to support its conclusion that “individuals who, as officers of the state, are clothed with some duty in regard to the enforcement of the laws of the state, and who threaten and are about to commence proceedings . . . to enforce against parties affected an unconstitutional act, violating the Federal Constitution, may be enjoined by a Federal court of equity from such action.” 209 U.S. at 155-56.

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injunctive relief on the basis of federal preemption under 28 U.S.C. § 1331 and the Supremacy Clause. See Verizon Md. Inc. v. Pub. Serv. Comm’n , 535 U.S. 635, 642-43 (2002).

Nor are we certain on what grounds the district court concluded that ILC lacked a valid cause of action in this case. The first two of the district court’s three “circumstances” — whether the challenged statute “restricts” or “compels” petitioners’ own conduct — appear to reflect traditional standing doctrine, which requires a litigant to “demonstrate that it has suffered a concrete and particularized injury that is either actual or imminent, that the injury is fairly traceable to the defendant, and that it is likely that a favorable decision will redress that injury.” Massachusetts v. E.P.A., 127 S. Ct. 1438, 1453 (2007). We address ILC’s standing to bring suit separately below, as that inquiry raises questions apart from whether the Supremacy Clause provides a valid cause of action to seek injunctive relief on the basis of federal preemption.

The parties have proceeded on the assumption that the district court denied relief because ILC lacked any judicially enforceable “rights” under the federal statute. 10 The Director

10As noted above, the district court also concluded that the Supremacy Clause itself does not give rise to any federal “right” to legal relief. In reaching this conclusion, however, the district court relied on a series of cases holding that the Supremacy Clause does not give rise to rights enforceable under § 1983, an altogether separate remedial scheme. See Golden State Transit Corp., 493 U.S. at 107-08 ( “Given the variety of situations in which preemption claims may be asserted, in state court and in federal court, it would obviously be incorrect to assume that a federal right of action pursuant to § 1983 exists every time a federal rule of law preempts state regulatory authority. Conversely, the fact that a federal statute has preempted certain state action does not preclude the possibility that the same federal statute may create a federal right for which § 1983 provides a remedy.” (emphasis added)); Chapman, 441 U.S. at 612-15 (holding that the Supremacy Clause “is not a source of any federal rights ” falling under 28 U.S.C. § 1343(3), the jurisdictional counterpart to § 1983). We explore the distinction between claims for relief under § 1983 and claims for injunctive relief on the basis of federal preemption more fully in Part B3 below.

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specifically urges this court to deny ILC relief “because [§ 30(A)] does not confer a private right of enforcement upon petitioners, which is the necessary predicate to seeking relief under the Supremacy Clause.” Were we to accept it, this argument would work a fundamental change in Supremacy Clause jurisprudence. We decline to do so, and thus join several other circuits in holding that a plaintiff seeking injunctive relief under the Supremacy Clause on the basis of federal preemption need not assert a federally created “right,” in the sense that term has been recently used in suits brought under § 1983, but need only satisfy traditional standing requirements.

1.

[6] Although the Director asserts that the express conferral of a “private right of enforcement” on petitioners is a “necessary predicate” to a claim for injunctive relief under the Supremacy Clause, the well-established rule in both this court and in other circuits is precisely the opposite. In Bud Antle, Inc. v. Barbosa, 45 F.3d 1261 (9th Cir. 1994), we addressed a claim for injunctive relief brought by a large agricultural employer, who sought to enjoin the California Agricultural Relations Board (ALRB) from adjudicating various unfair labor practice charges. Id. at 1264. The employer argued that the ALRB proceedings were preempted by the National Labor Relations Act (NLRA), and were therefore invalid. Id. We held that a private party may bring an action in a federal district court seeking to enjoin allegedly unlawful state conduct, noting the “general rule that a private party may seek declaratory and injunctive relief against the enforcement of a state statutory scheme on the ground of federal preemption. ” Id. at 1269-71 (citing Shaw). We reached this conclusion “[e]ven in the absence of an explicit statutory provision establishing a cause of action, ” id. at 1269, and regardless of whether the NLRA conferred a federal “right” on employers, see id. at 1271 n.13 (finding it unnecessary to apply the four-factor test set forth in Cort v. Ash, 422 U.S. 66 (1975)).

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Our holding in Bud Antle is consistent with established practice in the other circuits, which have universally affirmed the right of private parties to seek injunctive relief under the Supremacy Clause regardless of whether the allegedly preemptive statute confers any federal “right” or cause of action. As the Tenth Circuit explained,

A federal statutory right or right of action is not required where a party seeks to enjoin the enforcement of a regulation on the grounds that the local ordinance is preempted by federal law. A party may bring a claim under the Supremacy Clause that a local enactment is preempted even if the federal law at issue does not create a private right of action.

Qwest Corp. v. City of Santa Fe , 380 F.3d 1258, 1266 (10th Cir. 2004) (internal citations omitted); see also Local Union No. 12004 v. Massachusetts , 377 F.3d 64, 75 (1st Cir. 2004) (holding that “in suits against state officials for declaratory and injunctive relief, a plaintiff may invoke the jurisdiction of the federal courts by asserting a claim of preemption, even absent an explicit statutory cause of action ”); Ill. Ass’n of Mortgage Brokers v. Office of Banks & Real Estate , 308 F.3d 762, 765 (7th Cir. 2002); St. Thomas - St. John Hotel & Tourism Ass’n v. Virgin Islands , 218 F.3d 232, 241 (3d Cir. 2000) (holding that “a state or territorial law can be unenforceable as preempted by federal law even when the federal law secures no individual substantive rights for the party arguing preemption”); Village of Westfield v. Welch’s , 170 F.3d 116, 124 n.4 (2d Cir. 1999) (holding that a cause of action under the Supremacy Clause “do[es] not depend on the existence of a private right of action under the [preempting statute] ”); Burgio & Campofelice, Inc. v. N.Y. State Dep’t of Labor , 107 F.3d 1000, 1005-07 (2nd Cir. 1997) (holding that plaintiff could assert ERISA preemption under the Supremacy Clause, even though it was “beyond dispute” that plaintiff fell outside ERISA’s express enforcement provisions); First Nat’l Bank of E. Ark. v. Taylor , 907 F.2d 775, 776 n.3 (8th Cir. 1990).

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[7] The Director acknowledges these general principles but argues for a different result in this case, based on the specific statutory provision at issue. The Director provides little, if any, justification for treating a claim of preemption under a federal statute passed pursuant to Congress’s spending power differently from a claim of preemption under any of the federal statutes discussed above. But even if she had, this argument has also been flatly rejected by the Supreme Court and the other circuits that have addressed the question.

In Pharmaceutical Research & Manufacturers of America (“PhRMA”) v. Concannon, 249 F.3d 66 (1st Cir. 2001), aff’d sub nom. PhRMA v. Walsh , 538 U.S. 644 (2003), a pharmaceutical manufacturers trade group challenged a Maine statute designed to lower prescription drug prices for low-income residents by essentially requiring manufacturers to issue rebates.11 Id. at 71-72. PhRMA argued, inter alia, that Maine’s statute was preempted by the federal Medicaid Act under the Supremacy Clause, and moved for injunctive relief to prevent implementation of the program. Id. at 72. In response, the defendants contended that PhRMA could not bring suit in this manner, as the Medicaid Act was not intended to confer any private right on pharmaceutical manufacturers. Id. at 73. The First Circuit rejected the defendants’ argument, explaining that “PhRMA has not asserted an action to enforce rights under the Medicaid statute . . . but rather a preemption-based challenge under the Supremacy Clause. In this type of action, it is the interests protected by the Supremacy Clause, not by the preempting statute, that are at issue. ” Id. Citing a decision from the Third Circuit, the court noted:

11To ensure pharmaceutical companies’ participation in the program, the statute subjected all drugs produced by manufacturers refusing to offer rebates to “prior authorization requirements,” meaning that the drug could not be prescribed to a Medicaid beneficiary unless the state Medicaid administrator specifically approved the prescription. See id. at 71-72.

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We know of no governing authority to the effect that the federal statutory provision which allegedly preempts enforcement of local legislation by conflict must confer a right on the party that argues in favor of preemption. On the contrary, a state or territorial law can be unenforceable as preempted by federal law even when the federal law secures no individual substantive rights for the party arguing preemption.

Id. (quoting St. Thomas - St. John Hotel & Tourism Ass’n , 218 F.3d at 241). The court thus concluded — in stark contrast to the Director’s position in this case — that “regardless of whether the Medicaid statute’s relevant provisions were designed to benefit PhRMA, PhRMA can invoke the statute’s preemptive force.” Id.

Although the First Circuit permitted PhRMA to bring suit, the court ultimately held that Maine’s statute was not preempted by federal law because there was no conflict between its requirements and those of the Medicaid Act. See id. at 7479. PhRMA successfully petitioned the Supreme Court for certiorari, and the state defendants renewed their claim that PhRMA lacked any federal right to bring suit. Like the Director in our case, defendants argued that “[the Supremacy Clause] does not, by its own force, protect or regulate any interests,” and that PhRMA must therefore “look to the allegedly preempting federal statute to find an interest to support standing.” Brief for Respondents at 13-17, PhRMA v. Walsh, 538 U.S. 644 (2003) (No. 01-188). PhRMA took issue with this claim in its reply brief, noting that the Supreme Court and the lower federal courts had “decided innumerable cases in which parties claiming to be injured by a state law have challenged it as preempted by federal law ” and that the Court had never held “that a party directly claiming a Supremacy Clause violation must demonstrate an enforceable right under the preemptive federal law. ” Reply Brief of Petitioner at 2-3, PhRMA v. Walsh, 538 U.S. 644 (2003) (No. 01-188).

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Not acceding to the defendants’ argument that PhRMA lacked a cause of action under the Supremacy Clause, seven Justices reached the merits of PhRMA’s claim for injunctive relief. See PhRMA v. Walsh , 538 U.S. at 668 (Stevens, J., joined by Souter, J., and Ginsburg, J.); id. at 671 (Breyer, J.); id. at 684 (O’Connor, J., joined by Rehnquist, C.J., and Kennedy, J.). Only Justices Scalia and Thomas would have denied PhRMA’s ability to bring suit for preemption, although they ultimately concurred in the Court’s judgment that Maine’s statute was likely not preempted by the federal Medicaid Act. See id. at 675 (Scalia, J., concurring in judgment); id. at 67583 (Thomas, J., concurring in judgment). 12 Faced with arguments similar to those presented by the Director in this case, the Court necessarily assumed — albeit implicitly — that a private party seeking to enjoin implementation of a state law allegedly preempted by the federal Medicaid Act may bring suit for injunctive relief directly under the Supremacy Clause.

Although the Supreme Court’s decision in Walsh affirmed PhRMA’s ability to bring suit under the Supremacy Clause sub silentio, two circuits have expressly relied on Walsh to permit suits for injunctive relief. In PhRMA v. Thompson, 362 F.3d 817 (D.C. Cir. 2004), the D.C. Circuit addressed a similar challenge to Michigan’s “Best Practices Initiative,” which was designed — much like Maine’s statute — to provide lowcost prescription drug coverage to state residents. Id. at 819. Citing Justice Thomas’s opinion in Walsh, the defendants argued that there were “serious questions as to whether third parties may sue to enforce Spending Clause legislation —

12Justices Scalia would have held that PhRMA could not bring suit, because “the remedy for the State’s failure to comply with the obligations it has agreed to undertake under the Medicaid Act is set forth in the Act itself: termination of funding. ” See id. at 675 (Scalia, J., concurring in judgment). Justice Thomas argued that the broad discretion conferred by statute on the Secretary of Health and Human Services defeated any preemption claim, and doubted whether “Spending Clause legislation can be enforced by third parties in the absence of a private right of action. ” See id. at 675-83 (Thomas, J., concurring in judgment).

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through pre-emption or otherwise. ” Id. at 819 n.3. The D.C. Circuit rejected defendants’ argument, holding that by reaching the merits of PhRMA’s preemption claim in Walsh, the Supreme Court implicitly affirmed PhRMA’s authority to bring suit for injunctive relief under the Supremacy Clause. Id.

In Planned Parenthood of Houston v. Sanchez , 403 F.3d 324 (5th Cir. 2005), the Fifth Circuit relied in part on the Supreme Court’s decision in Walsh to permit a claim for injunctive relief under the federal Social Security and Public Health Services Acts. Id. at 331-32. Several local branches of Planned Parenthood claimed that a Texas statute known as “Rider 8,” which restricted the distribution of public funds for family planning services to contractors who pledged not to perform, or to contract with any individual or entity that performed, any elective abortion procedures, was preempted by federal law.13 Id. at 328. Plaintiffs argued , inter alia, that the state statute violated the Supremacy Clause by imposing eligibility requirements that were inconsistent with those imposed under the federal funding statutes. Id.

In assessing plaintiff’s claims for injunctive relief, the Fifth Circuit began by noting that “[i]t is well-established that the federal courts have jurisdiction under 28 U.S.C. § 1331 over a preemption claim seeking injunctive and declaratory relief. ” Id. at 331 (citing Shaw). The court then cited Walsh and Thompson for the principle that “asserting the preemptive force of federal Spending Clause legislation ” itself states a claim for relief, even if “[Planned Parenthood was] not seeking to vindicate any right or to enforce any duty running to them.” Id. at 331-32. After a thorough canvassing of preemption cases, see id. at 331-34 & nn. 25, 27-28, 37, 46-47, the court had “little difficulty . . . holding that [Planned Parent-

13Texas accepted federal funds for family planning services by voluntarily participating in a number of federal programs, including the Public Health Services Act and the Social Security Act. Id. at 327.

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hood had] an implied right of action to assert a preemption claim seeking injunctive and declaratory relief. ” Id. at 335.

[8] We find the reasoning of the D.C. and Fifth Circuits persuasive.14 For more than a century, federal courts have entertained suits seeking to enjoin state officials from implementing state legislation allegedly preempted by federal law, and we see no reason to depart from the general rule in this case, or in this category of cases. We therefore join several other circuits in holding that a party may seek injunctive relief under the Supremacy Clause regardless of whether the federal statute at issue confers any substantive rights on would-be plaintiffs.

3.

[9] The reasoning adopted by the other circuits is also helpful in identifying the fundamental flaw with the Director’s position. By maintaining that ILC cannot proceed unless it can demonstrate that AB 5 interferes with some federally created right, the Director essentially asks us to apply the test for determining whether a plaintiff may seek relief under 42

14The district court stated that ILC’s reliance on Concannon was misplaced because plaintiffs in that case had “established a concrete injury in fact” — standing language, as we shall see — whereas “[h]ere, § 30(A) does not give petitioners any right to Medi-Cal funds.” In fact, Concannon expressly permitted PhRMA to bring suit for injunctive relief in the absence of any statutory right to Medicaid funds. See 249 F.3d at 73. The pharmaceutical manufacturers bringing suit in Concannon had no greater “right” to Medicaid funds than the pharmacies and health care providers in this case, and ILC has adequately alleged injury-in-fact. See Part II-C, infra.
Similarly, there is no viable distinction for present purposes between the restrictions on Planned Parenthood’s activities imposed by the statute at issue in Planned Parenthood v. Sanchez and the impact of AB 5 on the Medi-Cal providers in this case. AB 5 allegedly prevents petitioners from providing services to Medi-Cal beneficiaries unless they are willing to do so at a financial loss, and thus assuredly “restricts” petitioners’ provision of professional services.

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U.S.C. § 1983, which provides a remedy for “the deprivation of any rights, privileges, or immunities secured by the Constitution and laws.”15 The Supreme Court has interpreted the text of § 1983 to require a plaintiff to show the deprivation of “an unambiguously conferred right” in order to support a cause of action brought under § 1983. Gonzaga Univ. v. Doe, 536 U.S. 273, 283 (2002). But both the Supreme Court and the courts of appeal have consistently rejected attempts to extend this analysis to claims for purely prospective injunctive relief under the Supremacy Clause, rendering the “rights” requirement inapplicable to ILC’s claims in this case.

The Eighth Circuit’s decision in Lankford v. Sherman, 451 F.3d 496 (8th Cir. 2006), is instructive. In response to severe “budget constraints,” the Missouri state legislature amended its state Medicaid plan to eliminate coverage for durable medical equipment (“DME”) for most categorically-needy Medicaid recipients. Id. at 500-01. Plaintiffs, a group of adult Medicaid recipients, brought suit under both § 1983 and the Supremacy Clause to enjoin state regulations implementing the amendment, arguing that the cuts violated certain provisions of the federal Medicaid Act. Id. at 500-02. Like the Director in our case, the defendant argued “that there is no individualized federal right to reasonable Medicaid standards.” Id. at 507. The court agreed with the defendant as to the § 1983 claim, holding that “[r]ather than focusing on an individualized entitlement to medical services, the reasonablestandards provision [of the Medicaid Act] focuses on the aggregate practices of the states in establishing reasonable Medicaid services.” Id. at 509. The court noted, however, that the § 1983 issue was not dispositive, as plaintiffs had also

15Section 1983 provides: “Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State, . . . subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress . . . . ” 42 U.S.C. § 1983.

INDEPENDENT LIVING CENTER v. S HEWRY

13049

brought suit under the Supremacy Clause. “Preemption claims are analyzed under a different test than section 1983 claims, affording plaintiffs an alternative theory for relief when a state law conflicts with a federal statute or regulation. ” Id. The lack of any federally created “right” under the Medicaid Act was inconsequential to the Supremacy Clause analysis, and plaintiffs’ preemption claim was remanded for consideration on the merits. Id. at 513.

The Fifth Circuit reached a similar conclusion in Planned

Parenthood v. Sanchez . As noted above, plaintiffs sought to

enjoin implementation of Texas’s Rider 8, which required

recipients of federal funds to cut all ties with any organization

performing elective abortions. Sanchez, 403 F.3d at 328.

Advancing the same arguments asserted by the Director in our

case, the Texas Department of Health contended that to seek

injunctive relief, “plaintiffs must meet the requirements for an

action under § 1983, as recently enunciated in Gonzaga Uni-

versity v. Doe,” namely, that the federal statutes at issue con-

fer privately enforceable “rights.” Id. at 335. The Fifth Circuit

flatly rejected this argument, finding that it

“mischarac-

terize[d]” Planned Parenthood’s claim:

Appellees are not asking the courts to enforce their “right” under § 1983 to secure enforcement of [the Public Health Safety Act], as TDH asserts. Rather, Appellees’ Supremacy Clause argument is fundamentally different: they argue that Rider 8 imposes conditions on the receipt of federal funds that are incompatible with [the Act]. Therefore, we need not be concerned that the Supremacy Clause does not of its own force create rights enforceable under § 1983.

Id. The court then noted that “Gonzaga, by its terms, applies only to § 1983 claims. . . . The Supremacy Clause claim advanced here . . . is not based on a claim of right under [the Act], nor is it a claim for damages; it is a preemption claim. The Gonzaga Court gave no indication that it intended to alter

13050

INDEPENDENT LIVING CENTER v. S HEWRY

its prior practice regarding such claims. ” Id. The court therefore concluded that a claim of preemption under the Supremacy Clause “does not require a showing, as per Gonzaga, that a § 1983 action would also be proper. ” Id.; see also Local Union No. 12004, 377 F.3d at 75-76 (distinguishing between claims brought under § 1983 and claims for injunctive relief under the Supremacy Clause); Qwest, 380 F.3d at 1266 & n.5 (same); Burgio & Campofelice , 107 F.3d at 1005-07 & n.2 (same).

For the reasons identified by the Fifth Circuit in Planned Parenthood v. Sanchez , the Director’s heavy reliance on our decision in Sanchez v. Johnson , 416 F.3d 1051 (9th Cir. 2005), is misplaced. Johnson merely applied Gonzaga to a claim seeking to enforce the substantive provisions of § 30(A) of the Medicaid Act brought under § 1983. We held that the quality of care and access provisions of § 30(A) do not give rise to the type of unambiguously conferred “rights” required under Gonzaga. See id. at 1055-60. But our decision in Johnson had nothing to say about a claim for injunctive relief brought under the Supremacy Clause.

[10] Indeed, even as the Supreme Court has tightened the requirements for seeking damages under § 1983, it has consistently reaffirmed the availability of injunctive relief to prevent state officials from implementing state legislation allegedly preempted by federal law. In Green v. Mansour, 474 U.S. 64 (1985), two classes of plaintiffs alleged that the State of Michigan’s method of calculating benefits under the federal Aid to Families With Dependent Children (AFDC) program violated federal law. Id. at 65. While the suits were pending in federal district court, the State altered its program to comply with recent congressional amendments. Id. at 65-66. These changes mooted plaintiffs’ claims for prospective relief, since it was “undisputed that respondent’s calculations thereafter have conformed to federal law. ” Id. at 65. Plaintiffs nonetheless sought “notice relief” and a declaration that Michigan’s prior conduct violated federal law. Id.

INDEPENDENT LIVING CENTER v. S HEWRY

13051

The Court denied relief, holding that plaintiffs’ requests for notice and declaratory relief constituted claims for retrospective damages and were thus barred by state sovereign immunity under the Eleventh Amendment. Id. at 71-74. All nine justices agreed, however, that injunctive relief would have been available under the Supremacy Clause if changes to the state program had not mooted plaintiffs’ prospective claims. See id. at 68; id. at 77 (Brennan, J., dissenting). Writing for the majority, then-Justice Rehnquist noted that “the availability of prospective relief of the sort awarded in Ex parte Young gives life to the Supremacy Clause. Remedies designed to end a continuing violation of federal law are necessary to vindicate the federal interest in assuring the supremacy of that law.” Id. at 68.

[11] The Director’s arguments fail to honor this distinction, broadly asserting instead that because § 30(A) of the Medicaid Act does not confer any substantive “rights,” ILC is not entitled to relief of any kind, whether prospective or retrospective. Green cautioned against conflating claims for prospective and retrospective relief in precisely this manner, recognizing that a state’s interest in continuing to flout binding federal law is illegitimate. 474 U.S. at 68; see also Idaho v. Coeur d’Alene Tribe , 521 U.S. 261, 281 (1997) ( “An allegation of an ongoing violation of federal law where the requested relief is prospective is ordinarily sufficient ” to seek injunctive relief under Ex parte Young). We therefore adhere to the general rule that injunctive relief is presumptively available to remedy a state’s ongoing violation of federal law.

C.

[12] Because it held that ILC could not bring suit under the Supremacy Clause, the district court did not technically reach petitioners’ standing to bring suit. As noted above, however, the first and second prongs of the district court’s Shaw analysis — which focused on whether AB 5 “restricts” or “compels” petitioners’ conduct — appear to reflect the traditional

13052

INDEPENDENT LIVING CENTER v. S HEWRY

requirement that a litigant demonstrate an injury-in-fact to establish Article III standing. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). On appeal, the Director expressly “does not allege that the named Petitioners do not have standing to bring this action on their own behalf, ” but rather argues simply that “Petitioners cannot state a claim for relief under the Supremacy Clause. ”16 We nonetheless recognize our “independent obligation” to examine our own jurisdiction, see FW/PBS, Inc. v. City of Dallas , 493 U.S. 215, 230-31 (1990), and therefore briefly address ILC’s Article III standing.17

[13] To satisfy Article III standing requirements, a plaintiff must demonstrate three elements:

First, the plaintiff must have suffered an injury in fact — an invasion of a legally protected interest which is (a) concrete and particularized; and (b)

16Although the Director does not contest petitioners’ standing, she does argue that the interests protected by § 30(A) are not judicially enforceable because § 30(A) concerns “overall methodology” and “merely requires states to consider various factors in setting reimbursement rates. ” We express no opinion regarding the correct interpretation of the substantive provisions of § 30(A), as such arguments are properly addressed to the merits of petitioners’ preemption claim. See Wilder v. Va. Hosp. Ass’n , 496 U.S. 498, 519 (1990) ( “That [the statutory provision at issue] gives the States substantial discretion in choosing among reasonable methods of calculating rates may affect the standard under which a court reviews whether the rates comply with the [statute], but it does not render the [statute] unenforceable by a court. ”); Orthopaedic Hosp., 103 F.3d at 14961500 (interpreting the substantive provisions of § 30(A)).
17Unlike the Article III standing inquiry, whether ILC maintains prudential standing “is not a jurisdictional limitation on our review. ” See Bd. of Natural Res. v. Brown , 992 F.2d 937, 945-46 (9th Cir. 1993). By failing to articulate any argument challenging ILC’s prudential standing, the Director has waived that argument. Id. at 946; Greenwood v. F.A.A. , 28 F.3d 971, 977 (9th Cir. 1994) ( “We review only issues which are argued specifically and distinctly in a party’s opening brief. We will not manufacture arguments for an appellant, and a bare assertion does not preserve a claim . . . . ” (internal citation omitted)).

INDEPENDENT LIVING CENTER v. S HEWRY

13053

actual or imminent, not conjectural or hypothetical. Second, there must be a causal connection between the injury and the conduct complained of — the injury has to be fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before the court. Third, it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.

Lujan, 504 U.S. at 560-61 (internal citations and quotation marks omitted). “The general rule applicable to federal court suits with multiple plaintiffs is that once the court determines that one of the plaintiffs has standing, it need not decide the standing of the others. ” Leonard v. Clark , 12 F.3d 885, 888 (9th Cir. 1993). In this case, we have no doubt that several of the petitioners, at least, have standing to challenge the implementation of AB 5.

[14] Petitioners include independent pharmacies and health care providers participating in the State’s Medi-Cal program that, according to their complaint, will be “directly injured, by loss of gross income, ” when the ten-percent rate reduction takes effect. The Supreme Court “repeatedly has recognized that such [direct economic] injuries establish the threshold requirements” of Article III standing. Craig v. Boren , 429 U.S. 190, 194-95 (1976). Moreover, this injury is directly traceable to the Director’s implementation of AB 5, and would certainly be redressed by a favorable decision of this court enjoining the ten-percent rate reduction.

[15] Petitioners also include several individual Medi-Cal beneficiaries, who “will be injured or put at risk of injury by implementation of the 10% provider payments cuts ” because those cuts will reduce “quality services, and access to quality services.” This injury, like the injury to medical providers discussed above, is the direct result of the Director’s implementation of AB 5, and would certainly be remedied by a decision

13054

INDEPENDENT LIVING CENTER v. S HEWRY

granting injunctive relief. Such an injury “to those individuals most directly affected by the administration of [a state welfare] program” is sufficient to allow petitioners to seek injunctive relief in federal court. Rosado v. Wyman, 397 U.S. 397, 420 (1970).

Conclusion

Under well-established law of the Supreme Court, this court, and the other circuits, a private party may bring suit under the Supremacy Clause to enjoin implementation of state legislation allegedly preempted by federal law. In this case, ILC alleges that the cuts mandated by AB 5 violate the substantive provisions of the federal Medicaid Act, and are therefore unlawful. They do not seek to enforce any substantive “right” conferred by statute; instead, they argue that the cuts mandated by AB 5 are themselves unenforceable, because they exceed the scope of the State’s discretion under the Act and violate federal standards. As AB 5 is causing injury to one or more of the plaintiffs and the other requirements of Article III standing are met, no more is required to allow this suit to go forward.

We express no opinion on the merits of ILC’s preemption claim. Rather, we simply reaffirm over a century’s worth of precedent and hold that ILC maintains a valid cause of action under the Supremacy Clause to assert such a claim for injunctive relief. The district court’s opinion is therefore REVERSED and REMANDED for further proceedings consistent with this opinion.

 </s> NOT FOR PUBLICATION UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

FILED
AUG 07 2009
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA, INC., a nonprofit corporation; et al.,
Petitioners - Appellees,
SACRAMENTO FAMILY MEDICAL CLINICS, INC.; et al.,
Interveners - Appellees,
v.
DAVID MAXWELL-JOLLY, Director of the Department of Health Care Services, State of California; et al.,
Respondent - Appellants.

No. 08-57016 D.C. No. 2:08-cv-03315-CASMAN
MEMORANDUM *

Appeal from the United States District Court for the Central District of California
Christina A. Snyder, District Judge, Presiding
Argued and Submitted April 28, 2009 San Francisco, California
Before: REINHARDT, W. FLETCHER, and M. SMITH, Circuit Judges.
* This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3.

Petitioners-Appellees Independent Living Center of Southern California, Inc., et al. sought a preliminary injunction in the district court seeking to enjoin AB 5’s ten percent Medi-Cal reimbursement rate reduction as to non-emergency medical transportation (NEMT) services and home health services. As the facts and procedural history are familiar to the parties, we do not recite them here except as necessary to explain our disposition.
The district court enjoined the Director “from reducing by ten percent payments under the Medi-Cal fee-for-service program for NEMT and home health services provided on or after November 17, 2008.”1 The Director timely appealed.
On appeal, the Director admits that the State did not evaluate whether reduced payments to NEMT providers and home health agencies would comply with the Orthopaedic Hospital v. Belshe, 103 F.3d 1491 (9th Cir. 1997), court’s interpretation of 42 U.S.C. § 1396(a)(30)(A)’s efficiency, economy, and quality provision. The Director argues that the State was not required to do so because
1 Petitioners requested an injunction for services provided on or after October 27, 2008, the date they filed their motion. Citing state sovereign immunity, the district court declined to provide “retroactive relief.” Although this holding was error, see Indep. Living Ctr. of S. Cal. v. Maxwell-Jolly, Nos. 08-56422, 08-56554, slip op. 8989, 9015–21 (9th Cir. July 9, 2009), Petitioners did not appeal the November 17, 2008 order. The effective date of the injunction is therefore not before us.
2

“that interpretation has been rejected by the federal agency responsible for administering the program and the other federal circuits that have considered it.” For the reasons discussed in Independent Living Center, slip op. at 9001–12, Orthopaedic Hospital is controlling authority. The State’s failure to evaluate the effect of the reduced payments in accordance with the standards set forth in Orthopaedic Hospital renders the cuts unlawful under § 1396(a)(30)(A).
The Director’s argument that Petitioners failed to show irreparable harm also fails. The district court examined the declarations submitted by petitioners at length, noting that at least ten declarants stated that the rate reductions would force—or, in some cases, were already forcing—NEMT and home health-care agencies to reduce the geographic area served, decline to take new Medi-Cal patients, or stop treating Medi-Cal patients altogether. The district court’s conclusion that Petitioners would suffer irreparable harm was not clear error. See id. at 9012–14.
The district court also did not abuse its discretion in determining that the balance of hardships tipped decidedly in Petitioners’ favor. See id. at 9014–15; Beltran v. Myers, 677 F.2d 1317, 1322 (9th Cir. 1982).
For these reasons and those we provided in Independent Living Center, slip op. 8989, we affirm the district court’s grant of a preliminary injunction.
AFFIRMED.
3

 </s> FOR PUBLICATION
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

INDEPENDENT LIVING CENTER OF



SOUTHERN CALIFORNIA, INC., a

nonprofit corporation; G RAY

PANTHERS OF SACRAMENTO, a

nonprofit corporation; G RAY

PANTHERS OF SAN FRANCISCO, a

nonprofit corporation; G ERALD

SHAPIRO, Pharm. D. doing business

as Uptown Pharmacy and Gift Shoppe; SHARON STEEN doing

No. 08-56422

business as Central Pharmacy; MARK BECKWITH; MARGARET



D.C. No.

2:08-cv-03315-CAS-

DOWLING; TRAN PHARMACY, INC.,

MAN

doing business as Tran Pharmacy;

JASON YOUNG,

Petitioners-Appellees,

v.

DAVID MAXWELL-JOLLY, Director of the Department of Health Care Services, State of California,
 Respondent-Appellant.

16647

16648

INDEPENDENT LIVING v. M AXWELL-JOLLY

INDEPENDENT LIVING CENTER OF



SOUTHERN CALIFORNIA, INC., a

nonprofit corporation; G RAY

PANTHERS OF SACRAMENTO, a

nonprofit corporation; G RAY

PANTHERS OF SAN FRANCISCO, a

nonprofit corporation; G ERALD

SHAPIRO, Pharm. D. doing business

as Uptown Pharmacy and Gift

No. 08-56554

Shoppe; SHARON STEEN doing business as Central Pharmacy; MARK BECKWITH; MARGARET DOWLING; TRAN PHARMACY, INC., doing business as Tran Pharmacy;

 D.C. No. 2:08-cv-03315-CASMAN
ORDER

JASON YOUNG,

Petitioners-Appellants,

v.

DAVID MAXWELL-JOLLY, Director of the Department of Health Care Services, State of California,
 Respondent-Appellee.

Filed December 21, 2009
Before: Stephen Reinhardt, William A. Fletcher, and Milan D. Smith, Jr., Circuit Judges.

ORDER
On July 9, 2009, we handed down an opinion arising out of these two consolidated cases. See Independent Living Center of S. Cal. v. Maxwell-Jolly , 572 F.3d 644 (9th Cir. 2009) (Independent Living). Now, nearly five months later, Appel-

INDEPENDENT LIVING v. M AXWELL-JOLLY

16649

lant/Appellee the California Department of Health Care Services Director, David Maxwell-Jolly (Director) moves to vacate that opinion. Despite his earlier vigorous prosecution of the appeal, the Director has changed his view, and now argues that we lacked jurisdiction to decide the appeal he helped advance because the underlying preliminary injunction entered by the district court became moot due to a change in California law. We hereby recall the mandate in this case so we may address the Director’s motion, and we deny the motion because we hold that the district court’s damages award ensured that both parties retained an interest in the case despite the passage of AB 1183.

BACKGROUND

In Independent Living, we addressed an issue raised by AB 5, which added §§ 14105.19 and 14166.245 to the California Welfare and Institutions Code. These sections combined to reduce payments under California’s Medi-Cal fee-for-service program to various health care providers by ten percent. Id. at 649. The cuts were scheduled to take effect on July 1, 2008. Id. We held that in implementing the rate reductions mandated by AB 5, the Director violated 42 U.S.C. § 1396(a)(30)(A) (hereafter § 30(A)). Id. at 652. We also held that the Appellees/Appellants (Independent Living) were entitled to retroactive relief, in the form of monetary damages, because the state had waived sovereign immunity. Id. at 662.

The Director now advises us that AB 1183 became effective on September 30, 2008, and amended § 14105.19(b)(1) to provide that the ten percent rate reductions previously called for in AB 5 would end on February 28, 2009. AB 1183 also added § 14105.191, which provided for either one percent or five percent rate reductions, depending on the service provider. AB 1183 is the subject of ongoing litigation, including at least three appeals soon to be argued before our court based on similar § 30(A) claims.

16650

INDEPENDENT LIVING v. M AXWELL-JOLLY DISCUSSION

Our jurisdiction depends on the existence of a “case or controversy” under Article III of the Constitution. Public Utils. Comm’n v. FERC , 100 F.3d 1451, 1458 (9th Cir. 1996). A claim that has lost its character as a live controversy is considered moot, and thus we lack jurisdiction to consider it. Rosemere Neighborhood Ass’n v. EPA , 581 F.3d 1169, 117273 (9th Cir. 2009). Whether a live controversy exists depends on whether we can grant effective relief “in the event that [we] decide[ ] the matter on the merits. ” NASD Dispute Resolution, Inc. v. Judicial Council of Cal., 488 F.3d 1065, 1068 (9th Cir. 2007); see also Public Utils. Comm’n , 100 F.3d at 1458 (“The court must be able to grant effective relief, or it lacks jurisdiction and must dismiss the appeal. ”).

In addition, we have noted the “significant difference

between a request to dismiss a case or proceeding for moot-

ness prior to the time an appellate court has rendered its deci-

sion on the merits and a request made after that time.

”

Armster v. United States District Court , 806 F.2d 1347, 1355

(9th Cir. 1987). Accordingly, we have concluded that dismiss-

ing an appeal after rendering our decision is an exercise

within our discretion. See id.; accord Mfrs. Hanover Trust Co.

v. Yanakas, 11 F.3d 381, 384 (2d Cir. 1993) (denying a joint

motion to vacate where the parties sought vacatur of an appel-

late court decision rather than a district court judgment and

the motion was not made while the appeal was pending).

Adherence to such principles is particularly important in cases involving government actors. Our holding in Armster, in which we refused mandamus to vacate an earlier decision on the ground of mootness allegedly caused by a change in the government’s position, underscores this point. As we explained in that opinion:

In the case of the government, heads of administrative agencies and other public officials could as a

INDEPENDENT LIVING v. M AXWELL-JOLLY

16651

matter of course cause the withdrawal of decisions establishing unfavorable precedents or vindicating individual rights by complying with those decisions before the mandate issues. Such a result would be inconsistent with the manner in which our system of checks and balances is intended to operate.

806 F.2d at 1355-56. The same would apply to any change in the government’s position, including legislative or executive branch changes, regardless of their cause, and regardless of whether the mandate had issued, as well as to any change in circumstances resulting from such governmental action.

The Director argues that AB 1183 rendered the appeal in these cases moot, because at the time we entered our decision, there was “nothing to enjoin.” According to the Director, this controversy involved only injunctive relief, which was settled when the ten percent rate reductions ended on February 28, 2009. We disagree.

In Independent Living, we held that the injunction entered by the district court constituted retroactive relief “requir[ing] the State to pay monetary compensation to affected providers.” 572 F.3d at 660-61. On August 18, 2008, the district court enjoined enforcement of the rate reductions for services provided on or after July 1, 2008. Id. at 650. On August 27, the district court amended that order because it believed that its August 18 order violated the state’s Eleventh Amendment sovereign immunity since it did not provide for only prospective injunctive relief. Id. at 650. We reversed the district court’s August 27 order, id. at 662, concluding that even though the district court’s order provided for retroactive relief, and did not fall under the Ex parte Young exception to sovereign immunity for prospective injunctive relief, id. at 661, since the Director had waived sovereign immunity, Independent Living was entitled to money damages for the Director’s past conduct, “extend[ing] to all services covered by that injunction and provided on or after July 1, 2008, ” id. at 663;

16652

INDEPENDENT LIVING v. M AXWELL-JOLLY

see id. at 661 (“Even if a plaintiff seeks damages for past conduct, sovereign immunity will not insulate a state from suit in state court, provided the state has previously consented to be sued in state court under like circumstances. ”).

Accordingly, the Director’s reliance on Bunker Ltd. Partnership v. United States, 820 F.2d 308, 311 (9th Cir. 1987) is misplaced. In Bunker we held that “[w]here intervening legislation has settled a controversy involving only injunctive or declaratory relief, the controversy has become moot. ” Id. (emphasis added). This was not such a case. See Richmond v. J.A. Croson Co., 488 U.S. 469, 478 n.1 (1989) (case not rendered moot where plaintiff argued it was entitled to damages pursuant to expired ordinance); Alvarez v. Smith , 558 U.S. ___, No. 08-351, Slip Op. at 5 (2009) (case rendered moot where plaintiffs sought “only declaratory and injunctive relief, not damages“) (emphasis added). The district court’s damages award ensured that both parties retained an interest in the case despite the passage of AB 1183, which merely provided that the ten percent rate reductions would not continue past February 28, 2009. Cf. New England Health Care Employees Union v. Mount Sinai Hosp. , 65 F.3d 1024 (2d Cir. 1995) (district court’s injunction of enforcement of Connecticut health care statute not mooted by passage of new law where the state had an interest in recouping over $1 million it was enjoined from collecting). Thus, both parties had a “ ‘concrete interest in the outcome of the litigation.’ ” Id. (quoting Firefighters Local Union No. 1784 v. Stotts , 467 U.S. 561, 571 (1984)).

Furthermore, “[a]lthough we are only permitted to interpret the old statutory provision that is before us, if the new statutory provision has manifestly not changed the law, a controversy arising under the old statutory provision will be capable of repetition under the new one. If so, the controversy is not moot.” Bunker Ltd., 820 F.3d at 312; accord Nat’l Ass’n of Neighborhood Health Centers, Inc. v. Mathews, 551 F.2d 321, 339 (D.C. Cir. 1976) (rejecting mootness where “the new statute, in pertinent part, appears quite similar to the old one ”

INDEPENDENT LIVING v. M AXWELL-JOLLY

16653

(footnote omitted)). While we express no view as to the ongoing litigation with respect to AB 1183, the very existence of that litigation is further evidence that this controversy is “capable of repetition. ” In fact, Independent Living has challenged the new law on essentially the same legal theory. Thus, whatever changes the Director has undertaken with respect to § 14105.191 do not convince us that the controversy arising under § 141015.19 is moot.

While it is clear that this case was not moot at the time of our decision, we feel constrained to comment on the circumstances surrounding the Director’s bringing this “new” law to our attention. AB 1183 became effective on September 30, 2008, yet the Director waited more than a year to file the instant motion. Though we heard argument in Independent Living on February 18, 2009, just ten days before the new rate reductions were to end, the Director said nothing about the pending termination. The Director now “regrets” the delay in bringing this issue to our attention and asserts that counsel did not become aware of it until preparing a “potential” petition for certiorari in the United States Supreme Court. This explanation is belied by the record of proceedings in this case. On June 1, 2009, over a month before we issued our opinion in this case, the Director filed his reply brief in the Supreme Court seeking a petition for certiorari respecting our earlier decision in Independent Living Center of S. Cal., Inc. v. Shewry, 543 F.3d 1050 (9th Cir. 2008). We are particularly troubled by a footnote contained in that brief. It provides:

The case is not moot. After the Ninth Circuit’s order on July 11, 2008, the district court enjoined some of the reductions mandated by AB 5. See Independent Living Ctr. of S. Cal. v. Shewry , No. CV 08-3315 CAS, 2008 WL 3891211 (C.D. Cal. Aug. 18, 2008). Petitioner’s appeal of the district court’s order is pending in the Ninth Circuit. As respondents note, a subsequent enactment (AB 1183) amended California Welfare and Institutions Code § 14105.19 to sun-

16654

INDEPENDENT LIVING v. M AXWELL-JOLLY

set the reductions on February 28, 2009, and enacted a new set of smaller reductions to take their place, see id. § 14105.191. While that makes respondents’ claim for injunctive relief moot, the appeal presents a live controversy because the injunction forced the state to pay providers hundreds of millions of dollars more in Medi-Cal reimbursements than the state would have had to pay had AB 5 remained in full force. The Ninth Circuit’s decision regarding the preliminary injunction will determine whether the state is entitled to recoup those extra payments. And a decision by this Court that respondents lacked a private cause of action would likewise mean that AB 5 was improperly enjoined, thereby entitling the state to recoup those monies the state was wrongly forced to pay.

(emphasis added). Not only has the Director now taken the

exact opposite position regarding mootness, he has feigned

ignorance of precisely the facts described in the above foot-

note. The California Rules of Professional Conduct prohibit

members of the bar from misleading the judiciary through any

false statement of fact or law. C

ALIFORNIA RULES OF

PROFESSIONAL CONDUCT R. 5-200 (2009). We find the Direc-

tor’s representation through the Attorney General that he only

recently became aware of, in his words, the “jurisdictional

problem” created by AB 1183, to be a clear violation of Rule

5-200, and gives us pause about accepting the veracity of

future pleadings filed by the Attorney General on behalf of

the Director, if not more generally.

Granting the Director’s motion would not be a wise exercise of our discretion. Both our decision in Armster and the Second Circuit’s decision in Manufacturers Hanover identified the abuses that would result from vacating an appellate court decision following its issuance. While both cases involved conduct occurring after the appeals had been decided, their underlying concerns are applicable here. See

INDEPENDENT LIVING v. M AXWELL-JOLLY

16655

Mfrs. Hanover Trust Co. , 11 F.3d at 384 (reasoning that vacating an appellate court’s judgment “would allow the parties to obtain an advisory opinion of the court of appeals in a case in which there . . . may no longer be, any genuine case or controversy”); Armster, 806 F.2d at 1355 (explaining that vacating the decision would deprive the petitioners of a decision “that adjudicated properly presented questions concerning their specific constitutional rights ”). Vacating the opinion would neither be in the public interest, nor would it be fair to the parties to the litigation. However, because we hold that this case was not rendered moot, we deny the Director’s motion on that basis. The mandate shall reissue immediately.

DENIED.

 </s> Douglas v. Independent Living Center of Southern California, Inc., 132 S.Ct. 1204 (2012)

132 S.Ct. 1204 Supreme Court of the United States
Toby DOUGLAS, Director, California Department of Health Care Services, Petitioner v.
INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA, INC., et al. Toby Douglas, Director, California Department of
Health Care Services, Petitioner v.
California Pharmacists Association et al. Toby Douglas, Director, California Department of
Health Care Services, Petitioner v.
Santa Rosa Memorial Hospital et al.
Nos. 09–958, 09–1158, 10–283. | Argued Oct. 3, 2011. | Decided Feb. 22, 2012.
Synopsis Background: Medicaid providers and beneficiaries brought five lawsuits against state officials under the Supremacy Clause to enforce a federal Medicaid law that allegedly conflicted with, and pre-empted, state Medicaid statutes that reduced payments to providers. The United States District Court for the Central District of California, Christina A. Synder, J., 2008 WL 3891211, 630 F.Supp.2d 1144, 603 F.Supp.2d 1230, 2009 WL 1844989, and the United States District Court for the Northern District of California, Samuel Conti, J., 2009 WL 3925498, granted in part and denied in part plaintiffs’ motions for preliminary injunctions against the state officials. On appeal, the United States Court of Appeals for the Ninth Circuit, 572 F.3d 644, 342 Fed.Appx. 306, 596 F.3d 1098, 563 F.3d 847, 374 Fed.Appx. 690, 596 F.3d 1087, 380 Fed.Appx. 656, ruled in favor of the plaintiffs. Certiorari was granted.
[Holding:] The Supreme Court, Justice Breyer, held that changed circumstances warranted remand for determination as to whether challenges to state Medicaid statutes could proceed.
Vacated and remanded.
Chief Justice Roberts filed a dissenting opinion, in which Justice Scalia, Justice Thomas, and Justice Alito joined.

West Codenotes

Negative Treatment Vacated West’s Ann.Cal.Welf. & Inst.Code §§ 14105.19, 14166.245, 12306.1(d)(6)
*1205 Syllabus*

*

The syllabus constitutes no part of the opinion of the

Court but has been prepared by the Reporter of

Decisions for the convenience of the reader. See United

States v. Detroit Timber & Lumber Co., 200 U.S. 321,

337, 26 S.Ct. 282, 50 L.Ed. 499.

Medicaid is a cooperative federal-state program that provides medical care to needy individuals. To qualify for federal funds, a State must submit its Medicaid plan and any amendments to the federal agency that administers the program, the Centers for Medicare & Medicaid Services (CMS). Before approving a plan or amendments, CMS conducts a review to determine whether they comply with federal requirements. Federal law requires state plans or amendments to “assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers” to make Medicaid “care and services” available. 42 U.S.C. § 1396a(a)(30)(A).
After California enacted three statutes reducing the State’s payments to various Medicaid providers, the State submitted plan amendments to CMS. Before the agency finished its review, Medicaid providers and beneficiaries sought, in a series of cases, to enjoin the rate reductions on the ground that they were pre-empted by federal Medicaid law. In seven decisions, *1206 the Ninth Circuit ultimately affirmed or ordered preliminary injunctions preventing the State from implementing its statutes. The court (1) held that the providers and beneficiaries could bring a Supremacy Clause action; (2) essentially accepted their claim that the State did not show that its amended plan would provide sufficient services; (3) held that the amendments thus conflicted with § 1396a(a)(30)(A); and (4) held that the federal statute pre-empted the new state laws. In the meantime, agency officials disapproved the amendments, and California sought further administrative review. The cases were in this posture when the Court granted certiorari to decide whether respondents could mount a Supremacy Clause challenge. After oral argument, CMS approved several of the State’s amendments, and the State withdrew its requests for approval of the remainder.
Held: The judgments are vacated and the cases are remanded, thereby permitting the parties to argue before
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Douglas v. Independent Living Center of Southern California, Inc., 132 S.Ct. 1204 (2012)

the Ninth Circuit in the first instance the question whether respondents may maintain Supremacy Clause actions now that CMS has approved the state statutes. Pp. 1209 – 1211.
(a) CMS’ approval does not make these cases moot, but it does put them in a different posture, since the federal agency charged with administering Medicaid has now found that the rate reductions comply with federal law. That decision does not change the substantive question whether California’s statutes are consistent with federal law, but it may change the answer. It may also require respondents to seek review of CMS’ determination under the Administrative Procedure Act (APA) rather than in a Supremacy Clause action against California. The APA would likely permit respondents to obtain an authoritative judicial determination of the merits of their legal claim. And their basic challenge now presents the kind of legal question ordinarily calling for APA review. The Medicaid Act commits to a federal agency the power to administer a federal program, and the agency has exercised that authority. As CMS is comparatively expert in the statute’s subject matter, its decision carries weight. And § 1396a(a)(30)(A)’s broad and general language suggests that CMS’ expertise is relevant in determining the provision’s application. Finally, to allow a Supremacy Clause action to proceed once CMS has reached a decision threatens potential inconsistency or confusion. The Ninth Circuit declined to give weight to the Federal Government’s interpretation of the federal law, but courts are ordinarily required to apply deference standards to agency decisionmaking. The parties suggest no reasons why such standards should not be applied here or why, now that CMS has acted, a court should reach a different result in an APA action than in a Supremacy Clause action. That would make the Supremacy Clause challenge at best redundant. Permitting it to continue would seem inefficient, for the federal agency is not a participant in the action, which will decide whether agency-approved state rates violate federal law. Pp. 1209 – 1211.
(b) Given the present posture of the cases, the Court does not address whether the Ninth Circuit properly recognized a Supremacy Clause action to enforce the federal law before the agency took final action. To decide whether these cases may proceed under the Supremacy Clause now that the agency has acted, it will be necessary on remand to consider at least the matters addressed by this Court. P. 1211.
No. 09–958, 572 F.3d 644 (first judgment), 342 Fed.Appx. 306 (second judgment), No. 09–1158, 596 F.3d 1098, 563 F.3d 847, 374 Fed.Appx. 690, *1207 596 F.3d 1087, and No. 10–283, 380 Fed.Appx. 656, vacated and remanded.

BREYER, J., delivered the opinion of the Court, in which KENNEDY, GINSBURG, SOTOMAYOR, and KAGAN, JJ., joined. ROBERTS, C.J., filed a dissenting opinion, in which SCALIA, THOMAS, and ALITO, JJ., joined.
Attorneys and Law Firms
Karin S. Schwartz, San Francisco, CA, for Petitioners.
Edwin S. Kneedler, for the United States, as amicus curiae, by special leave of the Court, supporting the Petitioners.
Carter G. Phillips, Washington, DC, for Respondents.
Kamala D. Harris, Attorney General of California, Manuel M. Medeiros, State Solicitor General, David S. Chaney, Chief Assistant Attorney General, Douglas M. Press, Julie Weng–Gutierrez, Senior Assistant Attorneys General, Richard T. Waldow, Karin S. Schwartz, Counsel of Record, Susan M. Carson, Jennifer M. Kim, Supervising Deputy Attorneys General, Gregory D. Brown, Carmen Snuggs, Deputy Attorneys General, San Francisco, CA, Dan Schweitzer, of Counsel, Washington, DC, for Petitioners.
Michael S. Sorgen, Law Offices of Michael S. Sorgen, San Francisco, CA, Dean L. Johnson, Dean L. Johnson, Inc., Carlsbad, CA, Carter G. Phillips, Counsel of Record, Eric A. Shumsky, Quin M. Sorenson, Lowell J. Schiller, Amy L. Hanke, Joshua J. Fougere, Lyndsay N. Huot, Sidley Austin LLP, Washington, DC, for Respondents Santa Rosa Memorial Hospital, et al.
Craig J. Cannizzo, Lloyd A. Bookman, Jordan B. Keville, Felicia Y. Sze, Hooper, Lundy & Bookman, P.C., Los Angeles, CA, Deanne E. Maynard, Counsel of Record, Seth M. Galanter, Nicholas George Miranda, Morrison & Foerster LLP, Washington, DC, for Intervenor Respondents and California Pharmacists Respondents.
Stephen P. Berzon, Counsel of Record, Scott A. Kronland, Stacey M. Leyton, Matthew J. Murray, Altshuler Berzon LLP, San Francisco, CA, for Dominguez Respondents.
Stanley L. Friedman, Los Angeles, CA, Lynn S. Carman, Counsel of Record, Novate, CA, for Respondents Independent Living Center of Southern California, Inc., et al.
Opinion
Justice BREYER delivered the opinion of the Court.
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We granted certiorari in these cases to decide whether Medicaid providers and recipients may maintain a cause of action under the Supremacy Clause to enforce a federal Medicaid law—a federal law that, in their view, conflicts with (and pre-empts) state Medicaid statutes that reduce payments to providers. Since we granted certiorari, however, the relevant circumstances have changed. The federal agency in charge of administering Medicaid, the Centers for Medicare & Medicaid Services (CMS), has now approved the state statutes as consistent with the federal law. In light of the changed circumstances, we believe that the question before us now is whether, once the agency has approved the state statutes, groups of Medicaid providers and beneficiaries may still maintain a Supremacy Clause action asserting that the state statutes are inconsistent with the federal Medicaid law. For the reasons set *1208 forth below, we vacate the Ninth Circuit’s judgments and remand these cases for proceedings consistent with this opinion.
I
A
Medicaid is a cooperative federal-state program that provides medical care to needy individuals. To qualify for federal funds, States must submit to a federal agency (CMS, a division of the Department of Health and Human Services) a state Medicaid plan that details the nature and scope of the State’s Medicaid program. It must also submit any amendments to the plan that it may make from time to time. And it must receive the agency’s approval of the plan and any amendments. Before granting approval, the agency reviews the State’s plan and amendments to determine whether they comply with the statutory and regulatory requirements governing the Medicaid program. See 42 U.S.C. §§ 1316(a)(1), (b), 1396a(a), (b); 42 CFR § 430.10 et seq. (2010); Wilder v. Virginia Hospital Assn., 496 U.S. 498, 502, 110 S.Ct. 2510, 110 L.Ed.2d 455 (1990). And the agency’s director has specified that the agency will not provide federal funds for any state plan amendment until the agency approves the amendment. See Letter from Timothy M. Westmoreland, Director, Center for Medicaid & State Operations, Health Care Financing Admin., U.S. Dept. of Health and Human Servs., to State Medicaid Director (Jan. 2, 2001), online at http://www.cms.gov/SMDL/downloads/SMD010201.pdf (as visited Feb. 17, 2012, and available in Clerk of Court’s case file).

The federal statutory provision relevant here says that a State’s Medicaid plan and amendments must:
“provide such methods and procedures relating to the utilization of, and the payment for, care and services available under the plan ... as may be necessary to safeguard against unnecessary utilization of such care and services and 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 extent that such care and services are available to the general population in the geographic area.” 42 U.S.C. § 1396a(a)(30)(A) (emphasis added).
B
In 2008 and 2009, the California Legislature passed three statutes changing that State’s Medicaid plan. The first statute, enacted in February 2008, reduced by 10% payments that the State makes to various Medicaid providers, such as physicians, pharmacies, and clinics. See 2007–2008 Cal. Sess. Laws, 3d Extraordinary Sess. ch. 3, §§ 14, 15. The second statute, enacted in September 2008, replaced the 10% rate reductions with a more modest set of cuts. See 2008 Cal. Sess. Laws ch. 758, §§ 45, 57. And the last statute, enacted in February 2009, placed a cap on the State’s maximum contribution to wages and benefits paid by counties to providers of in-home supportive services. See 2009–2010 Cal. Sess. Laws, 3d Extraordinary Sess. ch. 13, § 9.
In September and December 2008, the State submitted to the federal agency a series of plan amendments designed to implement most of the reductions contained in these bills. Before the agency finished reviewing the amendments, however, groups of Medicaid providers and beneficiaries filed a series of lawsuits seeking to enjoin the rate reductions on the ground that they conflicted with, and therefore were pre-empted by, federal Medicaid law, in particular the statutory provision that we have just set forth. *1209 They argued that California’s Medicaid plan amendments were inconsistent with the federal provision because the State had failed to study whether the rate reductions would be consistent with the statutory factors of efficiency, economy, quality, and access to care. In effect, they argued that California had not shown that its Medicaid plan, as amended, would “enlist enough providers” to make Medicaid “care and services” sufficiently available. 42 U.S.C. § 1396a(a)(30)(A).
The consolidated cases before us encompass five lawsuits
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Douglas v. Independent Living Center of Southern California, Inc., 132 S.Ct. 1204 (2012)

brought by Medicaid providers and beneficiaries against state officials. Those cases produced seven decisions of the Court of Appeals for the Ninth Circuit. See 572 F.3d 644 (2009); 342 Fed.Appx. 306 (2009); 596 F.3d 1098 (2010); 563 F.3d 847 (2009); 374 Fed.Appx. 690 (2010); 596 F.3d 1087 (2010); and 380 Fed.Appx. 656 (2010). The decisions ultimately affirmed or ordered preliminary injunctions that prevented the State from implementing its statutes. They (1) held that the Medicaid providers and beneficiaries could directly bring an action based on the Supremacy Clause; (2) essentially accepted the claim that the State had not demonstrated that its Medicaid plan, as amended, would provide sufficient services; (3) held that the amendments consequently conflicted with the statutory provision we have quoted; and (4) held that, given the Constitution’s Supremacy Clause, the federal statute must prevail. That is to say, the federal statute pre-empted the State’s new laws.
In the meantime, the federal agency was also reviewing the same state statutes to determine whether they satisfied the same federal statutory conditions. In November 2010, agency officials concluded that they did not satisfy those conditions, and the officials disapproved the amendments. California then exercised its right to further administrative review within the agency. The cases were in this posture when we granted certiorari to decide whether respondents could mount a Supremacy Clause challenge to the state statutes and obtain a court injunction preventing California from implementing its statutes.
About a month after we heard oral argument, the federal agency reversed course and approved several of California’s statutory amendments to its plan. See Letter from Donald M. Berwick, Administrator, CMS, to Toby Douglas, Director, Cal. Dept. of Health Care Servs. (Oct. 27, 2011); Letter from Larry Reed, Director, Division of Pharmacy, Disabled and Elderly Health Programs Group, CMS, to Toby Douglas, Director, Cal. Dept. of Health Care Servs. (Oct. 27, 2011). In doing so, the agency also approved a limited retroactive implementation of some of the amendments’ rate reductions. The State, in turn, withdrew its requests for approval of the remaining amendments, in effect agreeing (with one exception) that it would not seek to implement any unapproved reduction. See Letter from Michael E. Kilpatrick, Assistant Chief Counsel, Cal. Dept. of Health Care Servs., to Benjamin R. Cohen, Director, Office of Hearings, CMS (Oct. 27, 2011). (The exception consists of one statute for which California has submitted no amendment and which, by its own terms, cannot take effect unless and until this litigation is complete, see 2010 Cal. Sess. Laws ch. 725, § 25.)

II
All parties agree that the agency’s approval of the enjoined rate reductions does not make these cases moot. For one thing, the providers and beneficiaries continue to believe that the reductions violate the federal provision, the agency’s view to the contrary notwithstanding. For another, *1210 federal-court injunctions remain in place, forbidding California to implement the agency-approved rate reductions. And, in light of the agency’s action, California may well ask the lower courts to set those injunctions aside.
While the cases are not moot, they are now in a different posture. The federal agency charged with administering the Medicaid program has determined that the challenged rate reductions comply with federal law. That agency decision does not change the underlying substantive question, namely whether California’s statutes are consistent with a specific federal statutory provision (requiring that reimbursement rates be “sufficient to enlist enough providers”). But it may change the answer. And it may require respondents now to proceed by seeking review of the agency determination under the Administrative Procedure Act (APA), 5 U.S.C. § 701 et seq., rather than in an action against California under the Supremacy Clause.
For one thing, the APA would likely permit respondents to obtain an authoritative judicial determination of the merits of their legal claim. The Act provides for judicial review of final agency action. § 704. It permits any person adversely affected or aggrieved by agency action to obtain judicial review of the lawfulness of that action. § 702. And it requires a reviewing court to set aside agency action found to be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” § 706(2)(A).
For another thing, respondents’ basic challenge now presents the kind of legal question that ordinarily calls for APA review. The Medicaid Act commits to the federal agency the power to administer a federal program. And here the agency has acted under this grant of authority. That decision carries weight. After all, the agency is comparatively expert in the statute’s subject matter. And the language of the particular provision at issue here is broad and general, suggesting that the agency’s expertise is relevant in determining its application.
Finally, to allow a Supremacy Clause action to proceed once the agency has reached a decision threatens potential inconsistency or confusion. In these cases, for example, the Ninth Circuit, in sustaining respondents’ challenges, declined to give weight to the Federal Government’s
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interpretation of the federal statutory language. (That view was expressed in an amicus curiae brief that the United States submitted in prior litigation.) See Independent Living Center of Southern Cal., Inc. v. Maxwell–Jolly, 572 F.3d 644, 654 (C.A.9 2009) (referring to the United States’ certiorari-stage invitation brief in Belshe v. Orthopaedic Hospital, 522 U.S. 1044, 118 S.Ct. 684, 139 L.Ed.2d 632 (1998) (denying writ of certiorari)). And the District Court decisions that underlie injunctions that now forbid California to implement its laws may rest upon similar analysis.
[1] But ordinarily review of agency action requires courts to apply certain standards of deference to agency decisionmaking. See National Cable & Telecommunications Assn. v. Brand X Internet Services, 545 U.S. 967, 125 S.Ct. 2688, 162 L.Ed.2d 820 (2005) (describing deference reviewing courts must show); Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) (same). And the parties have not suggested reasons why courts should not now (in the changed posture of these cases) apply those ordinary standards of deference.
Nor have the parties suggested reasons why, once the agency has taken final action, *1211 a court should reach a different result in a case like this one, depending upon whether the case proceeds in a Supremacy Clause action rather than under the APA for review of an agency decision. Indeed, to permit a difference in result here would subject the States to conflicting interpretations of federal law by several different courts (and the agency), thereby threatening to defeat the uniformity that Congress intended by centralizing administration of the federal program in the agency and to make superfluous or to undermine traditional APA review. Cf. Astra USA, Inc. v. Santa Clara County, 563 U.S. ––––, ––––, 131 S.Ct. 1342, 1345, 179 L.Ed.2d 457 (2011) (noting that the treatment of lawsuits that are “in substance one and the same” “must be the same, ‘[n]o matter the clothing in which [plaintiffs] dress their claims’ ”) (quoting Tenet v. Doe, 544 U.S. 1, 8, 125 S.Ct. 1230, 161 L.Ed.2d 82 (2005)). If the two kinds of actions should reach the same result, the Supremacy Clause challenge is at best redundant. And to permit the continuation of the action in that form would seem to be inefficient, for the agency is not a participant in the pending litigation below, litigation that will decide whether the agency-approved state rates violate the federal statute.
III

[2] In the present posture of these cases, we do not address whether the Ninth Circuit properly recognized a Supremacy Clause action to enforce this federal statute before the agency took final action. To decide whether these cases may proceed directly under the Supremacy Clause now that the agency has acted, it will be necessary to take account, in light of the proceedings that have already taken place, of at least the matters we have set forth above. It must be recognized, furthermore, that the parties have not fully argued this question. Thus, it may be that not all of the considerations that may bear upon the proper resolution of the issue have been presented in the briefs to this Court or in the arguments addressed to and considered by the Court of Appeals. Given the complexity of these cases, rather than ordering reargument, we vacate the Ninth Circuit’s judgments and remand the cases, thereby permitting the parties to argue the matter before that Circuit in the first instance.
It is so ordered.
Chief Justice ROBERTS, with whom Justice SCALIA, Justice THOMAS, and Justice ALITO join, dissenting.
The Medicaid Act established a collaborative federal-state program to assist the poor, elderly, and disabled in obtaining medical care. The Act is Spending Clause legislation; in exchange for federal funds a State agrees to abide by specified rules in implementing the program. One of those rules is set forth in § 30(A) of the Act, which requires States to meet particular criteria in establishing Medicaid reimbursement rates for those providing services under the Act. 42 U.S.C. § 1396a(a)(30)(A). In 2008 and 2009, California enacted legislation reducing the rates at which it would compensate some providers. Certain providers and individuals receiving Medicaid benefits thought the new reimbursement rates did not comply with the criteria set forth in § 30(A). They sued the State to prevent the new rates from going into effect.
But those plaintiffs faced a significant problem: Nothing in the Medicaid Act allows providers or beneficiaries (or anyone else, for that matter) to sue to enforce § 30(A). The Act instead vests responsibility for enforcement with a federal agency, the Centers for Medicare & Medicaid Services (CMS). See, e.g., *1212 42 U.S.C. § 1316(a)(1). That is settled law in the Ninth Circuit. See Sanchez v. Johnson, 416 F.3d 1051, 1058–1062 (2005) (“[T]he flexible, administrative standards embodied in [§ 30(A) ] do not reflect a Congressional intent to provide a private remedy for their violation”). And it is the law in virtually every other circuit as well. See, e.g., Long Term Care Pharmacy Alliance v. Ferguson, 362 F.3d 50, 57–59
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(C.A.1 2004) (holding that it would be inconsistent with this Court’s precedent to find that § 30(A) creates rights enforceable by private parties). The respondents have never argued the contrary. Thus, as this case comes to us, the federal rule is that Medicaid reimbursement rates must meet certain criteria, but private parties have no statutory right to sue to enforce those requirements in court.
The providers and beneficiaries sought to overcome that difficulty by arguing that they could proceed against the State directly under the Supremacy Clause of the Constitution, even if they could not do so under the Act. They contended that the new state reimbursement rates were inconsistent with the requirements of § 30(A). The Supremacy Clause provides that a federal statute such as § 30(A) preempts contrary state law. Therefore, the providers and beneficiaries claimed, they could sue to enforce the Supremacy Clause, which requires striking down the state law and giving effect to § 30(A). The Ninth Circuit agreed with this argument and blocked the new state reimbursement rates.
During briefing and argument in this case, the parties have debated broad questions, such as whether and when constitutional provisions as a general matter are directly enforceable. It is not necessary to consider these larger issues. It is not even necessary to decide whether the Supremacy Clause can ever provide a private cause of action. The question presented in the certiorari petitions is narrow: “Whether Medicaid recipients and providers may maintain a cause of action under the Supremacy Clause to enforce [§ 30(A) ] by asserting that the provision preempts a state law reducing reimbursement rates.” To decide this case, it is enough to conclude that the Supremacy Clause does not provide a cause of action to enforce the requirements of § 30(A) when Congress, in establishing those requirements, elected not to provide such a cause of action in the statute itself.
The Supremacy Clause operates differently than other constitutional provisions. For example, if Congress says in a law that certain provisions do not give rise to a taking without just compensation, that obviously does not resolve a claim under the Takings Clause that they do. The Supremacy Clause, on the other hand, is “not a source of any federal rights.” Chapman v. Houston Welfare Rights Organization, 441 U.S. 600, 613, 99 S.Ct. 1905, 60 L.Ed.2d 508 (1979); accord, Dennis v. Higgins, 498 U.S. 439, 450, 111 S.Ct. 865, 112 L.Ed.2d 969 (1991) (contrasting, in this regard, the Supremacy Clause and the Commerce Clause). The purpose of the Supremacy Clause is instead to ensure that, in a conflict with state law, whatever Congress says goes. See The Federalist, No. 33, p. 205 (C. Rossiter ed.1961) (A. Hamilton) (the Supremacy Clause “only declares a truth

which flows immediately and necessarily from the institution of a federal government”).
Thus, if Congress does not intend for a statute to supply a cause of action for its enforcement, it makes no sense to claim that the Supremacy Clause itself must provide one. Saying that there is a private right of action under the Supremacy Clause would substantively change the federal rule established by Congress in the *1213 Medicaid Act. That is not a proper role for the Supremacy Clause, which simply ensures that the rule established by Congress controls.
Indeed, to say that there is a federal statutory right enforceable under the Supremacy Clause, when there is no such right under the pertinent statute itself, would effect a complete end-run around this Court’s implied right of action and 42 U.S.C. § 1983 jurisprudence. We have emphasized that “where the text and structure of a statute provide no indication that Congress intends to create new individual rights, there is no basis for a private suit, whether under § 1983 or under an implied right of action.” Gonzaga Univ. v. Doe, 536 U.S. 273, 286, 122 S.Ct. 2268, 153 L.Ed.2d 309 (2002). This body of law would serve no purpose if a plaintiff could overcome the absence of a statutory right of action simply by invoking a right of action under the Supremacy Clause to the exact same effect. Cf. Astra USA, Inc. v. Santa Clara County, 563 U.S. ––––, ––––, 131 S.Ct. 1342, 1348, 179 L.Ed.2d 457 (2011) (rejecting contention that contract incorporating statutory terms could be enforced in private action when statute itself could not be; “[t]he absence of a private right to enforce the statutory ceiling price obligations would be rendered meaningless if [contracting] entities could overcome that obstacle by suing to enforce the contract’s ceiling price obligations instead”).
The providers and beneficiaries argue, however, that the traditional exercise of equity jurisdiction supports finding a direct cause of action in the Supremacy Clause. This contention fails for the same reason. It is a longstanding maxim that “[e]quity follows the law.” 1 J. Pomeroy, Treatise on Equity Jurisprudence § 425 (3d ed.1905). A court of equity may not “create a remedy in violation of law, or even without the authority of law.” Rees v. Watertown, 19 Wall. 107, 122, 22 L.Ed. 72 (1874). Here the law established by Congress is that there is no remedy available to private parties to enforce the federal rules against the State. For a court to reach a contrary conclusion under its general equitable powers would raise the most serious concerns regarding both the separation of powers (Congress, not the Judiciary, decides whether there is a private right of action to enforce a federal statute) and federalism (the States under the Spending
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Clause agree only to conditions clearly specified by Congress, not any implied on an ad hoc basis by the courts).
This is not to say that federal courts lack equitable powers to enforce the supremacy of federal law when such action gives effect to the federal rule, rather than contravening it. The providers and beneficiaries rely heavily on cases of this kind, most prominently Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908). Those cases, however, present quite different questions involving “the pre-emptive assertion in equity of a defense that would otherwise have been available in the State’s enforcement proceedings at law.” Virginia Office for Protection and Advocacy v. Stewart, 563 U.S. ––––, ––––, 131 S.Ct. 1632, 1642, 179 L.Ed.2d 675 (2011) (KENNEDY, J., concurring). Nothing of that sort is at issue here; the respondents are not subject to or threatened with any enforcement proceeding like the one in Ex parte Young. They simply seek a private cause of action Congress chose not to provide.
* * *
The Court decides not to decide the question on which we granted certiorari but instead to send the cases back to the Court of Appeals, because of the recent action by CMS approving California’s new reimbursement rates. But the CMS approvals have no impact on the question *1214 before this Court. If, as I believe, there is no private right of action under the Supremacy Clause to enforce § 30(A), that is the end of the matter. If, on the other hand, the Court believes that there is such a cause of action, but that CMS’s recent rate approvals may have an effect on that action going forward, then the Court should say just that and then remand to the Ninth Circuit for consideration of the effect of the agency approvals.
I am not sure what a remand without answering the preliminary question is meant to accomplish. The majority claims that the agency’s recent action “may change the [lower courts’] answer” to the question whether the particular state rates violate § 30(A). Ante, at 1210. But that fact-specific question is not the one before us; we chose not to grant certiorari on the question whether California’s rates complied with § 30(A), limiting our grant to the cause of action question. 562 U.S. ––––, 131 S.Ct. 992, 178 L.Ed.2d 824 (2011).
The majority also asserts that the lower courts must “decide whether these cases may proceed directly under the Supremacy Clause now that the agency has acted.” Ante, at 1211. The majority contends that the parties have not “fully argued this question.” Ibid. But the agency proceedings that ultimately led to the CMS approvals

were well underway when this Court granted certiorari. The parties debated the import of the parallel administrative proceedings in their initial briefs and at oral argument. See, e.g., Brief for Petitioner 28–29 (“Private lawsuits ... interfere with ... CMS’s own enforcement procedures,” as is “vividly demonstrated in the present cases”); Brief for Respondents Santa Rosa Memorial Hospital et al. in No. 10–283, p. 46 (“This case vividly illustrates why the [administrative] enforcement scheme ... cannot substitute for a constitutional preemption claim”). No party—nor the United States as amicus curiae—argued that any action by CMS would affect the answer to the question we granted certiorari to review. See, e.g., Tr. of Oral Arg. 53–54 (counsel for respondents) (arguing that, “to be sure,” there would be a cause of action under the Supremacy Clause even after the agency took action on the challenged rates).
Once the CMS approvals were issued, this Court directed the parties to file supplemental briefs to address “the effect, if any, of the [CMS approvals] on the proper disposition of this case.” 565 U.S. ––––, 131 S.Ct. 992, 178 L.Ed.2d 824 (2011). Again, no one argued on supplemental briefing that the CMS approvals affected the answer to the question before this Court. See, e.g., Supp. Letter Brief for Certain Respondents 6 (“The CMS findings do not directly resolve whether the Constitution supports a right of action”); Supp. Letter Brief for Petitioner 6 (agreeing that “if a preemption cause of action may be stated here against the State, [CMS] approval may affect its merits but not its existence”). It seems odd, then, to claim that the parties have not had the opportunity to fully address the impact of the agency action on the question that we granted certiorari to review: whether the Ninth Circuit correctly recognized a private cause of action under the Supremacy Clause to enforce § 30(A).
So what is the Court of Appeals to do on remand? It could change its view and decide that there is no cause of action directly under the Supremacy Clause to enforce § 30(A). The majority itself provides a compelling list of reasons for such a result: “The Medicaid Act commits to the federal agency the power to administer a federal program”; “the agency is comparatively expert in the statute’s subject matter”; “the language of the particular *1215 provision at issue here is broad and general, suggesting that the agency’s expertise is relevant”; and APA review would provide “an authoritative judicial determination.” Ante, at 1210. Allowing for both Supremacy Clause actions and agency enforcement “threatens potential inconsistency or confusion,” and imperils “the uniformity that Congress intended by centralizing administration of the federal program in the agency.” Ante, at 1210 – 1211; see Gonzaga, 536 U.S., at
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Douglas v. Independent Living Center of Southern California, Inc., 132 S.Ct. 1204 (2012)

291–293, 122 S.Ct. 2268 (BREYER, J., concurring in judgment) (explaining that Congress often means to preclude a private right of action in statutes where it employs an administrative enforcement scheme that achieves “expertise, uniformity, widespread consultation, and resulting administrative guidance,” while “avoid[ing] the comparative risk of inconsistent interpretations and misincentives that can arise out of an occasional inappropriate application of the statute in a private action for damages”).
The majority acknowledges, in light of all this, that the Supremacy Clause challenge appears “at best redundant,” and that “continuation of the action in that form would seem to be inefficient.” Ante, at 1211. Still, according to the majority, the Court of Appeals on remand could determine that the Supremacy Clause action may be brought but then must abate “now that the agency has acted,” ibid.—as everyone knew the agency would. A Court concerned with “inefficien[cy]” should not find that result very palatable, and the majority cites no precedent for a cause of action that fades away once a federal agency has acted. Such a scenario would also create a bizarre rush to the courthouse, as litigants seek to file and have their Supremacy Clause causes of action decided before the agency has time to arrive at final agency action reviewable in court.

Or perhaps the suits should continue in a different “form,” by which I understand the Court to suggest that they should morph into APA actions. The APA judicial review provisions, however, seem to stand in the way of such a transformation. To convert the litigation into an APA suit, the current defendant (the State) would need to be dismissed and the agency (which is not currently a party at all) would have to be sued in its stead. 5 U.S.C. §§ 701–706. Given that APA actions also feature—among other things—different standards of review, different records, and different potential remedies, it is difficult to see what would be left of the original Supremacy Clause suit. Or, again, why one should have been permitted in the first place, when agency review was provided by statute, and the parties were able to and did participate fully in that process.
I would dispel all these difficulties by simply holding what the logic of the majority’s own opinion suggests: When Congress did not intend to provide a private right of action to enforce a statute enacted under the Spending Clause, the Supremacy Clause does not supply one of its own force. The Ninth Circuit’s decisions to the contrary should be reversed.
	
  

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[CONTENT] 2008 | 2009 | the California Legislature | three | State | Medicaid ||| Title XIX | 42 | U.S.C. | § | 1396 ||| The Medicaid Act | the federal Department of Health and Human Services Centers for Medicare | Medicaid Services | CMS ||| September and December 2008 | California | CMS | Legislature | three ||| CMS ||| The Independent Living Center of Southern California | two | the Gray Panthers | Medicaid | the State of California | Medicaid | Medi-Cal ||| Medicaid ||| the Los Angeles County Superior Court | April 22, 2008 | U.S. | District Court | the Central District | California | May 19, 2008 |||  ||| California | Medicaid | 61% | Medicare ||| Medi-Cal | only 55% | less than 50% | Medi-Cal ||| ten percent ||| the Medicaid Act | CMS | State | Medi-Cal ||| California | State | Medi-Cal | 42 U. S. C. § ||| the Medicaid Act | the Supremacy Clause of |||  ||| Americans | ADA ||| May 30, 2008 | the District Court ||| June 25th | Court | Christina A. Snyder | the Medicaid Act ||| Independent Living Center of Southern California v. Shewry | 2008 | 4298223 | 2008 ||| the Ninth Circuit Court of Appeals | July 11, 2008 ||| Independent Living Center of Southern California v. Shewry | 543 | 9th Cir. 2008 ||| the Ninth Circuit's | August 18, 2008 | Snyder ||| Court | July 1, 2008 ||| Independent Living Center of Southern California v. Shewry | 2008 | 2008 ||| August 27, 2008 | Court | July 1 and August 18, 2008 ||| November 17, 2008 | Snyder ||| July 9, 2009 | the Ninth Circuit | Milan D. Smith Jr. ||| Independent Living Center of Southern California | Maxwell-Jolly | 572 | 644 | 9th Cir. 2009 ||| March 26, 2010 | Snyder ||| Independent Living Center of Southern California v. Shewry | 2010 | 1235762 | 2010 ||| February 10, 2010 | the United States Supreme Court | the Ninth Circuit | the Supremacy Clause of ||| The Supreme Court | January 18, 2011 | four | 131 | S.Ct | 992 | 2011 ||| four | California Pharmacists Association | Maxwell-Jolly | Clearinghouse | Managed Pharmacy Care | Maxwell-Jolly | Dominguez v. Schwarzenegger | DR | Santa Rosa Memorial Hospital | 3:08 ||| June 1, 2011 | Snyder | District Court | the Supreme Court ||| the Supreme Court | October 3, 2011 ||| the Supreme Court | CMS | California | Medicaid ||| February 22, 2012 | the Supreme Court | the Supremacy Clause | Title XIX ||| the Supreme Court | the Ninth Circuit Court's | the Ninth Circuit | CMS ||| Douglas v. Independent Living Center of Southern California | 132 | 1204 | 2012 ||| April 12, 2012 | the District Court ||| Court | the Ninth Circuit Court ||| Independent Living Center of Southern California | Douglas | 2012 | 1622346 | 2012 ||| the Supreme Court’s ||| May 22, 2012 | the Ninth Circuit ||| The District Court | July 23, 2013 ||| November 5, 2013 | the District Court | the United States Supreme Court | Pharmacy Care | Sebelius | S.Ct ||| 13 ||| 19 | the District Court ||| the Ninth Circuit | May 28, 2014 ||| August 14, 2014 | Snyder | September 22, 2014 |||  |||  ||| The District Court | January 1, 2016 ||| the District Court ||| Medi-Cal ||| Medi-Cal ||| the Settlement Agreement |||  |||  ||| the Settlement Agreement | April 22, 2015 ||| three | the next day ||| April 23, 2015 | Snyder | the Settlement Agreement ||| Snyder ||| July 24 and 28, 2015 | the Ninth Circuit ||| November 21, 2018 | the Ninth Circuit ||| 2010 ||| Milan Smith Jr. | Medi-Cal ||| January 14, 2019 | the Ninth Circuit Court |||  ||| April 10, 2019 |||  ||| June 24, 2019 ||| August 6, 2019 ||| August | September 2019 ||| January 13, 2020 ||| January 24, 2020 | Snyder ||| 4,254,713.88 | 2,731,800 ||| 2020 WL | 418947 ||| the Ninth Circuit | 20-55193 | February 21, 2020 ||| June 30, 2020 |||  ||| July 2020 | Ninth Circuit [SUMMARY] In 2008 and 2009, the California Legislature passed three statutes modifying the State's Medicaid plan, reducing payments made to health providers.  Under 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. In September and December 2008, California submitted amendment proposals to CMS that incorporated most of the rate reductions the Legislature had already included in the three statutes. This suit, and several others seeking injunctions to prevent the rate reductions, was filed before CMS had completed its review of the amendments.

The Independent Living Center of Southern California (a disability advocacy group), two branches of the Gray Panthers (a healthcare and anti-ageism advocacy organization), individual Medicaid benefit recipients, and several pharmacies and pharmacists (collectively, "the petitioners") filed this suit as a petition for writ of mandamus to compel the State of California not to implement the reductions to its Medicaid program ("Medi-Cal"). The providers argued that if the cutbacks were approved, the state would not provide the level of care required under Medicaid.  The case was originally filed in the Los Angeles County Superior Court on April 22, 2008, but was removed to federal U.S. District Court for the Central District of California on May 19, 2008. The defendants had requested the removal to federal court; the removal was granted because the case involved questions of federal law.

According to the plaintiffs' Petition for Mandamus, prior to the rate reduction, California Medicaid rates for physicians were 61% or less of what Medicare paid for the same services. The plaintiffs claimed that "as a result of the low Medi-Cal rates, only 55% of primary care physicians and less than 50% of specialists [were] willing to participate in the Medi-Cal program." They argued that a ten percent reduction in the fee-for-service rate would reduce physician participation to even lower levels.  The plaintiffs alleged that the rate reductions violated the Medicaid Act, because they had not been approved by CMS and because the State had failed to study the potential effects of the rate reductions on the quality of and level of access to care available to Medi-Cal recipients. Plaintiffs argued that California had not shown that, were the rate reductions to go into effect, the State would be able to enlist enough providers as to make Medi-Cal services sufficiently available to benefit recipients, as required by 42 U. S. C. §1396a(a)(30)(A). The plaintiffs alleged that because these rate reductions violated the Medicaid Act, they were therefore preempted by federal law due to the Supremacy Clause of the U.S. Constitution. The plaintiffs sought declaratory and injunctive relief, asking the court to find that the rate reduction was a violation of federal law and to prevent its enforcement. They also maintained that the rate reduction was prohibited by the Americans with Disabilities Act (“ADA”).

On May 30, 2008, the petitioners filed a motion for a preliminary injunction that would prevent the rate reductions from coming into effect until further review by the District Court. On June 25th, the Court (Judge Christina A. Snyder) denied this motion, finding that the petitioners’ case had no likelihood of succeeding because the Medicaid Act did not expressly create an individual right that could be the basis of a cause of action and therefore the petitioners probably did not have standing to bring their suit. Independent Living Center of Southern California v. Shewry, 2008 WL 4298223 (C.D. Cal. 2008). The petitioners appealed this decision to the Ninth Circuit Court of Appeals, which vacated the lower court's decision on July 11, 2008, finding that the Supremacy Clause could serve as the basis for their action. Independent Living Center of Southern California v. Shewry, 543 F.3d 1047 (9th Cir. 2008). 

In light of the Ninth Circuit's order, on August 18, 2008, District Judge Snyder granted in part and denied in part the petitioners' motion for a preliminary injunction, finding that their Supremacy Clause case was likely to succeed on its merits. The Court therefore issued a preliminary injunction against the implementation of the Medi-Cal fee-for-service rate reductions for physicians, dentists, pharmacies, adult day health care centers, clinics, and health systems for services provided on or after July 1, 2008. Independent Living Center of Southern California v. Shewry, 2008 WL 3891211 (C.D. Cal. 2008).  On August 27, 2008, the Court issued an order modifying this injunction, so that it did not retroactively apply to the period between July 1 and August 18, 2008. On November 17, 2008, Judge Snyder granted the petitioners' motion for a preliminary injunction against the rate reductions for non-emergency medical transportation services and for in-home health services. On July 9, 2009, the Ninth Circuit (Judge Milan D. Smith Jr.) affirmed the ruling establishing the injunction, and reversed the modification. Independent Living Center of Southern California v. Maxwell-Jolly, 572 F.3d 644 (9th Cir. 2009).

Back in the district court, on March 26, 2010, Judge Snyder granted a motion to allow several outside groups to join the case as intervenor plaintiffs, who raised issues similar to those of the original petitioners. Independent Living Center of Southern California v. Shewry, 2010 WL 1235762 (C.D. Cal. 2010). 

On February 10, 2010, the defendants sought review in the United States Supreme Court of the decision of the Ninth Circuit holding that the Supremacy Clause of the U.S. Constitution could serve as a basis for a cause of action in this case. The Supreme Court granted certiorari review on January 18, 2011, consolidating this case with four others that raised the same issue, 131 S.Ct. 992 (2011). These four cases were California Pharmacists Association v. Maxwell-Jolly (Clearinghouse case code PB-CA-0020), Managed Pharmacy Care v. Maxwell-Jolly (PB-CA-0019), Dominguez v. Schwarzenegger (DR-CA-0031), and Santa Rosa Memorial Hospital v. Shewry (Docket #: 3:08-cv-05173-SC). On June 1, 2011, Judge Snyder issued an order removing this action from the list of active District Court cases pending the decision of the Supreme Court.

Oral argument before the Supreme Court took place on October 3, 2011.  After oral argument, while the cases were pending in the Supreme Court, CMS approved California's amendments to its Medicaid plan.  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 Title XIX against a state. Instead, the Supreme Court vacated the Ninth Circuit Court's decision and remanded the case to the Ninth Circuit for reconsideration, with instructions to take into account CMS's approval of the amendments. Douglas v. Independent Living Center of Southern California, 132 S. Ct. 1204 (2012).

On April 12, 2012, the petitioners moved to have the stay lifted in the District Court. The Court denied this motion because issues that would be determinative of the outcome of the case were still awaiting adjudication at the Ninth Circuit Court. Independent Living Center of Southern California v. Douglas, 2012 WL 1622346 (C.D. Cal. 2012). Following the Supreme Court’s ruling, the parties entered into mediation efforts.  On May 22, 2012, the parties' unanimous joint motion to enter mediation, and to stay the supplemental briefing schedule during the pendancy of mediation was granted by the Ninth Circuit.

The District Court directed the parties to submit a joint status report, which was filed on July 23, 2013.  On November 5, 2013, the District Court reviewed the parties' positions from the joint status report, as well as issues presented in a certiorari petition pending in the United States Supreme Court in a totally different case (brought by other parties against the same defendant, involving some but not all the same issues)(Managed Pharmacy Care v. Sebelius, S.Ct. Docket 13-253).  In this and another 19 similar cases, the District Court stayed or continued an existing stay of the proceedings.  

The parties then settled, and filed a joint request for dismissal of several appeals in the Ninth Circuit; this was granted on May 28, 2014.  Back in the district court, on August 14, 2014 the parties filed a Joint Motion for Approval of Settlement Agreement; Judge Snyder granted the motion on September 22, 2014.

In the settlement, all parties agreed to dismiss any remaining pending appeals pursuant to the original preliminary injunction. The petitioners also agreed to dismiss the entire case with prejudice.  The District Court retained jurisdiction to decide the plaintiffs’ motions for attorneys' fees, and also to determine any of the plaintiffs’ motions to enforce the Agreement up to January 1, 2016.  Each side would bear its own costs, outside of any plaintiffs’ attorneys’ fees that the District Court decided to award.  Since fee-for-service delivery systems are where health care providers are paid for each service, the preliminary injunction against rate reductions for Medi-Cal cost the defendants money. Due to this, the defendants had filed claims against Medi-Cal providers in order to recoup these funds. In the Settlement Agreement, the defendants agreed to forego these claims outside of a few specified exceptions.   

The plaintiffs also agreed to release state and federal entities from liability for claims concerning payment reductions, unless the claims related to the accuracy of reimbursement.  In return, the defendants agreed to release the plaintiff from liability for claims of “excess payment”, including payments made while the preliminary injunction was in effect, but where the rate reductions ultimately received federal approval.  

After the Settlement Agreement was approved, pursuant to its terms, on April 22, 2015, the petitioners and intervenors filed to dismiss the case and made a motion for attorneys’ fees and costs as the prevailing party. They also brought three other motions for attorneys’ fees and costs the next day.  On April 23, 2015, Judge Snyder, considering application, ordered that this case be dismissed with prejudice, and that each party bear its own costs in accordance with the Settlement Agreement. Judge Snyder declined to grant any attorneys' fees.

On July 24 and 28, 2015, the plaintiff and intervenors appealed to the Ninth Circuit this order denying fees. On November 21, 2018, the Ninth Circuit vacated and remanded this case to the district court to determine whether the appellants (plaintiff and intervenors) should recover attorneys’ fees, and, if so, the amount of the award. The court also remanded for a determination of whether appellants can recover any fees from the relief obtained in 2010. Judge Milan Smith Jr., writing for the majority, found that the district court abused its discretion in denying plaintiffs’ motion to set aside funds for attorneys’ fees following the decision permitting retroactive monetary relief from the Medi-Cal reimbursement reduction. On January 14, 2019, the Ninth Circuit Court also denied the plaintiff and intervenors' petition for rehearing en banc.

The case is still ongoing in the district court to determine the payment of attorney's fees. On April 10, 2019 the plaintiffs and the intervenors filed motions for attorney's fees.  The defendants opposed these motions.  A hearing on the motion for attorney's fees was held on June 24, 2019.  On August 6, 2019, the court denied the motion.  The court ordered additional briefing on the issue, which was submitted by both parties in August and September 2019.  Oral argument was held on January 13, 2020.

On January 24, 2020, Judge Snyder granted the motion for attorney's fees.  The court awarded the intervenor's counsel $4,254,713.88, and awarded the plaintiff's counsel $2,731,800. 2020 WL 418947.

The plaintiff's appealed the decision on attorney's fees to the Ninth Circuit (Appeal Docket No. 20-55193 ) on February 21, 2020.  The plaintiff-appellants filed their opening briefs on June 30, 2020.  The defendant-appelles have not yet filed a brief in opposition.  As of July 2020, the Ninth Circuit appeal remains ongoing.