9th Cir. Upholds Medicaid Claims under Supremacy Clause

The Ninth Circuit held that healthcare providers and beneficiaries can sue to enforce the Medicaid Act against the States without regard to the availability of a cause of action under 42 U.S.C. § 1983. Indep. Living Ctr. of So. Calif. v. Shewry, (Jul. 14, 2008) (No. 08-56061).

In a short order, the court stated: “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 whether the federal statute at issue confers an express ‘right’ or cause of action on the plaintiff.” The court also temporarily enjoined a 10% cut in Medi-Cal payments with respect to pharmacists, pending a decision on remand. The court the plaintiff’s claim under 42 U.S.C. § 1396a(a)(30)(A) was “at least a question serious enough to require litigation.”

 

          Along with the Fifth and Eighth Circuit decisions cited below, this decision is a major victory for Medicaid enforcement, and for the enforcement of similar laws. It unequivocally affirms, once again, that plaintiffs need not rely only on the increasingly restricted cause of action under § 1983.

 

          The case is one of two challenging the Medi-Cal cuts, the other being Calif. Medical Ass’n v. Shewry, No. BC390126 (Sup. Ct. Cal. L.A. Cty.). Both cases were filed in state court; the state sought removal in both but prevailed only in Independent Living Center. In this case, providers and beneficiaries allege that the cuts will violate both (30)(A) (known as the Equal Access Provision) and the Americans with Disabilities Act. The legislature enacted the cuts in February on solely budgetary grounds, and they were set to go into effect this month.

 

          The district court dismissed the (30)(A) claim, holding that the plaintiffs’ probability of success “low, if not wholly lacking,” because they may not seek injunctive relief in the absence of “some individual federal right that arises under [the Medicaid Act].” (N.D. Cal. Jun. 25, 2008; No. 2:08-cv-033.) The panel rejected this error, citing a string of cases that are recommended reading for anyone litigating under federal laws without their own cause of action:

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, 45 1 F.3d 496, 509-10 (8^th Cir. 2006); Planned Parenthood of Houston & Se. Tex. v. Sanchez, 403 F.3d 324, 33 1-35 (5th Cir. 2005) [summary here]; 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, 21 8 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 panel said it would issue an opinion “in due course, further explaining this holding.”

 

          The panel also found “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.” The court also found “some support [in the record] for the conclusion that the ten percent reduction will force some pharmacies to stop dispensing pharmaceuticals to Medi-Cal patients” in violation of (30)(A). The court enjoined the cuts with regard to prescription drugs until August 11, stating that if the district court had not ruled by then, the plaintiffs could again appeal.

 

            The court left cuts for other medical services in place for now, saying plaintiffs had presented “only speculative evidence” regarding these services. The decision does not address the ADA claim, the merits of which will also be considered on remand.