Cal.Ct.App.: Medicaid Act can be enforced in state court

A California appellate held that provisions of the federal Medicaid Act can be enforce in state court via a writ of mandate.

The state's intermediate appeals court held that 42 U.S.C. § 1396a(a)(13)(A)’s notice and comment requirements for reimbursement rates may be enforced through the state-court writ, and suggested in dicta that § 1396a(a)(30)(A) (the “equal access” provision) could also be enforced in this manner. Mission Hospital Reg’l Med. Ctr. v. Shewry, --- Cal.Rptr.3d ---, 2008 WL 4927432 (Cal. App. 3 Dist. Nov. 19, 2008) (No. 054868).

            This case is a challenge to a reimbursement rate freeze enacted by the California legislature for the 2004-05 fiscal year. Section 13(A) imposes notice and comment requirements for such rates, while § 30(A) requires states to make substantive findings regarding the adequacy of rates. The court noted that federal case law on the enforcement of § 13(A) through 42 U.S.C. § 1983 is mixed. Compare Amer. Soc. of Consultant Pharmacists v. Concannon, 214 F.Supp.2d 23 (D.Me. 2002) (enforceable), with In re NYAHSA Litigation, 318 F.Supp.2d 30 (N.D.N.Y. 2004), aff’d per curiam, 444 F.3d 147 (1st Cir. 2006) (unenforceable). It also noted that § 30(A) suits have been rejected under § 1983, but permitted under the Supremacy Clause. Compare Sanchez v. Johnson, 416 F.3d 1051 (9th Cir. 2005), with Ind. Liv. Ctr. S. Calif. v. Shewry, 543 F.3d 1050 (9th Cir. 2008) (summary here).

 

          The court stated unequivocally that “a party who may not have standing to enforce the Medicaid Act under section 1983 … may still be entitled to enforce the act by means of a writ of mandate under Code of Civil Procedure section 1085 if he is a beneficially interested party under … section 1086.” The court faulted the state for “equat[ing]” the requirements for a writ of mandate with the requirements of § 1983. California’s § 1085, said the court, “creates a broad right” – indeed, “so broad [that] even citizen or taxpayer standing may be sufficient to obtain relief in mandamus.” All a party needs is to show that they have “some special interest to be served…over and above the interest held in common with the public at large.” The plaintiff hospitals easily met this standard due to their interest in compensation for Medicaid services.

 

            The court said that the remaining requirement for the writ – the existence of a clear “ministerial duty” – “goes to the merits” of the plaintiffs’ claims. The court went on to resolve the merits, finding that the ’04-05 rate freeze violated § 13(A). The court reviewed at length precedents recognizing that when rate changes are enacted legislatively rather than administratively, the legislative process normally constitutes a sufficient “public process” to satisfy § 13(A). The court noted, however, that this exception applied only “so long as notice was published before the measure became effective.” The court emphasized under the Supremacy Clause, federal statutes can trump the self-chosen processes of state legislatures. Here, the legislative process violated § 13(A) because the rate freeze was passed in a hasty and non-transparent way, with only three days elapsing between its insertion in a bill and its final enactment.

 

          Because it enjoined the rate hike under § 13(A), the court did not reach § 30(A). However, the court stated that “our reasoning on the application of section (13)(A) would also require the application of section (30)(A) to the adoption of [the rate freeze].” This suggests that § 30(A) is also enforceable through a writ of mandate.