Asante v. Cal. Dep't of Health Care Servs.
| Decision Date | 02 April 2018 |
| Docket Number | No. 16-17080, No. 17-15550,No. 16-16866,16-16866 |
| Citation | 886 F.3d 795 |
| Parties | ASANTE, an Oregon nonprofit corporation; Clark County, Nevada; Renown Regional Medical Center, Nevada non profit corporation; Sky Lakes Medical Center, Inc., An Oregon Non Profit Corporation; Southern Hills Medical Center, LLC, A Nevada Limited Liability Company; Sunrise Hospital and Medical Center, LLC, A Delaware Limited Liability Company registered in Nevada; PHC-Fort Mohave, Inc., An Arizona Corporation; Havasu Regional Medical Center, LLC, A Delaware Limited Liability Company registered in Arizona, on behalf of Havasu Regional Medical Center in Lake Havasu City, Arizona ; Valley Health Systems, LLC, A Delaware Limited Liability Company registered in Nevada; Sparks Family Hospital, Inc., A Nevada Corporation; Summerlin Hospital Medical Center, LLC; Yuma Regional Medical Center, An Arizona non Profit Corporation; Sunrise Mountainview Hospital, Inc., A Nevada Corporation; Renown South Meadows Medical Center, Nevada Non Profit Corporation, Plaintiffs-Appellants, v. CALIFORNIA DEPARTMENT OF HEALTH CARE SERVICES; Jennifer Kent, Director of the California Department of Healthcare Services, Defendants-Appellees. Asante, an Oregon nonprofit corporation; Clark County, Nevada; Renown Regional Medical Center, Nevada non profit corporation; Sky Lakes Medical Center, Inc., An Oregon Non Profit Corporation; Southern Hills Medical Center, LLC, A Nevada Limited Liability Company; Sunrise Hospital and Medical Center, LLC, A Delaware Limited Liability Company registered in Nevada; PHC-Fort Mohave, Inc., An Arizona Corporation; Havasu Regional Medical Center, LLC, A Delaware Limited Liability Company registered in Arizona, on behalf of Havasu Regional Medical Center in Lake Havasu City, Arizona ; Valley Health Systems, LLC, A Delaware Limited Liability Company registered in Nevada; Sparks Family Hospital, Inc., A Nevada Corporation; Summerlin Hospital Medical Center, LLC; Yuma Regional Medical Center, An Arizona non Profit Corporation; Sunrise Mountainview Hospital, Inc., A Nevada Corporation; Renown South Meadows Medical Center, Nevada Non Profit Corporation, Plaintiffs-Appellees, v. California Department of Health Care Services; Jennifer Kent, Director of the California Department of Healthcare Services, Defendants-Appellants. Asante, an Oregon nonprofit corporation; Clark County, Nevada; Renown Regional Medical Center, Nevada non profit corporation; Sky Lakes Medical Center, Inc., An Oregon Non Profit Corporation; Southern Hills Medical Center, LLC, A Nevada Limited Liability Company; Sunrise Hospital and Medical Center, LLC, A Delaware Limited Liability Company registered in Nevada; PHC-Fort Mohave, Inc., An Arizona Corporation; Havasu Regional Medical Center, LLC, A Delaware Limited Liability Company registered in Arizona, on behalf of Havasu Regional Medical Center in Lake Havasu City, Arizona ; Valley Health Systems, LLC, A Delaware Limited Liability Company registered in Nevada; Sparks Family Hospital, Inc., A Nevada Corporation; Summerlin Hospital Medical Center, LLC; Yuma Regional Medical Center, An Arizona non Profit Corporation; Sunrise Mountainview Hospital, Inc., A Nevada Corporation; Renown South Meadows Medical Center, Nevada Non Profit Corporation, Plaintiffs-Appellees, v. California Department of Health Care Services; Jennifer Kent, Director of the California Department of Healthcare Services, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Thomas J. Weiss (argued), Los Angeles, California; Michael S. Sorgen, Berkeley, California; Dean L. Johnson, Camano Island, Washington; for Plaintiffs-Appellants/Cross-Appellees.
Joshua Sondheimer (argued), Deputy Attorney General; Susan M. Carson, Supervising Deputy Attorney General; Julie Weng-Gutierrez, Senior Assistant Attorney General; Xavier Becerra, Attorney General; Office of the Attorney General, San Francisco, California; for Defendants-Appellees/Cross-Appellants.
Before: Ferdinand F. Fernandez, M. Margaret McKeown, and Julio M. Fuentes,* Circuit Judges.
Nineteen hospitals1 located outside of the State of California but near the California border with their respective states brought this action against the California Department of Health Services and against its director, Jennifer Kent, in her official capacity (collectively "the Department"). The Department supervises2 administration of the Medi-Cal3 program. California participates in federal Medicaid4 through the Medi-Cal program.5 The Hospitals asserted that when the Department adopted certain Medi-Cal policies related to Medi-Cal reimbursement to out-of-state hospitals it violated the Commerce Clause of the United States Constitution.6 The district court held that the Department had violated the dormant (or negative) Commerce Clause, but denied the Hospitals' claim for retroactive monetary relief. In No. 16-16866, the Hospitals appealed the denial of retroactive relief, and in No. 16-17080 the Department cross-appealed the determination that its policies violated the dormant Commerce Clause. Also, in No. 17-15550, the Department appealed the grant of attorney's fees to the Hospitals. See 42 U.S.C. § 1988(b). If the Department was acting as a market participant in this regard, it was exempt from dormant Commerce Clause restrictions. It was so acting. Thus, we reverse.
The Hospitals filed a complaint in the Superior Court of the State of California on June 12, 2014, alleging that portions of the Department's reimbursement methodologies violated the dormant Commerce Clause.7 The Department removed the action to the United States District Court for the Northern District of California. Thereafter, the parties filed cross-motions for summary judgment, and the district court granted a partial summary judgment to the Hospitals. Specifically, the district court held that certain of the Department's reimbursement policies regarding out-of-state hospitals violated the dormant Commerce Clause.
After the district court issued its summary judgment ruling, the parties met and conferred and the court issued another order entitled "Order Re Outstanding Provisions" which clarified and resolved several of the issues the court had raised in its summary judgment order and enumerated steps that the Department was required to take in order to ensure that its reimbursement methodologies complied with the dormant Commerce Clause. The district court later denied the Hospitals' request for retroactive monetary relief under California Civil Procedure Code section 1085 for certain reimbursements incurred between July 1, 2013, (the date on which the Department implemented its current methodology) and December 21, 2015 (the date on which the district court issued its summary judgment order).
The Hospitals then filed a premature appeal to this court that was dismissed. Following that, the Department filed a motion for reconsideration of the summary judgment order on the grounds that the Hospitals had waived the federal claims and were relying solely on California Civil Procedure Code section 1085, which did not provide a basis for relief. In response, the Hospitals sought leave to file an amended complaint to add a civil rights claim as a basis for their constitutional and statutory claims. See 42 U.S.C. § 1983. The district court granted the Hospitals' motion to file an amended complaint. The court also granted the Department's motion for reconsideration and clarified that the Hospitals were not entitled to any relief under section 1085. The Hospitals moved for an award of attorney's fees. See 42 U.S.C. § 1988(b). The district court granted the Hospitals' motion and awarded them fees. These appeals ensued.
The district court had jurisdiction pursuant to 28 U.S.C. §§ 1331, 1343, 1367. We have jurisdiction pursuant to 28 U.S.C. § 1291.
"We review de novo a district court's grant of summary judgment." Martinez v. City of Los Angeles , 141 F.3d 1373, 1378 (9th Cir. 1998). "We also review constitutional claims de novo ." Engquist v. Or. Dep't of Agric. , 478 F.3d 985, 992 (9th Cir. 2007). In addition, we review questions of federal and state law de novo. Churchill v. F/V Fjord (In re McLinn) , 739 F.2d 1395, 1398, 1403 (9th Cir. 1984) (en banc). If there is no state supreme court decision on a state law issue, we look "to other state-court decisions, well-reasoned decisions from other jurisdictions, and any other available authority to determine the applicable state law." Burns v. Int'l Ins. Co. , 929 F.2d 1422, 1424 (9th Cir. 1991). State appeals court decisions on state law issues "provide guidance and instruction and are not to be disregarded in the absence of convincing indications that the state supreme court would hold otherwise." Id.
While the parties have raised a number of other issues,8 if the Department was a market participant, none of the other issues has any relevance to the disposition of these appeals because each one is premised on a determination that the Department was acting as a regulator rather than as a market participant. As we will explain, the premise is itself invalid.
The Commerce Clause provides that Congress shall have the power "[t]o regulate Commerce ... among the several States." U.S. Const. art. I, § 8, cl. 3. "Though phrased as a grant of regulatory power to Congress, the Clause has long been understood to have a 'negative' aspect that denies the States the power unjustifiably to discriminate against or burden the interstate flow of articles of commerce." Or. Waste Sys., Inc. v. Dep't of Envtl. Quality of State of Or. , 511 U.S. 93, 98, 114 S.Ct. 1345, 1349, 128 L.Ed.2d 13 (1994). This concept—known as the dormant Commerce Clause—"is driven by concern about economic protectionism—that is, regulatory measures designed to benefit in-state economic interests by burdening out-of-state...
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