Cal. Ass'n of Rural Health Clinics v. Douglas

• Decision Date: 17 September 2013
• Docket Number: Nos. 10–17574,10–17622.,s. 10–17574
• Citation: 738 F.3d 1007
• Parties: CALIFORNIA ASSOCIATION OF RURAL HEALTH CLINICS; Avenal Community Health Center, Plaintiffs–Appellants, v. Toby DOUGLAS, Director of The California Department of Health Care Services, Mari Cantwell, Chief Deputy Director for Health Care Programs of the California Department of Health Care Services; California Department of Health Care Services, Defendants–Appellees. California Association of Rural Health Clinics; Avenal Community Health Center, Plaintiffs–Appellees, v. Toby Douglas,<SUP>*</SUP> Director of The California Department of Health Care Services, Mari Cantwell,<SUP>**</SUP> Chief Deputy Director for Health Care Programs of the California Department of Health Care Services; California Department of Health Care Services, Defendants–Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

738 F.3d 1007

CALIFORNIA ASSOCIATION OF RURAL HEALTH CLINICS; Avenal Community Health Center, Plaintiffs–Appellants,

v.Toby DOUGLAS,^* Director of The California Department of Health Care Services, Mari Cantwell,^** Chief Deputy Director for Health Care Programs of the California Department of Health Care Services; California Department of Health Care Services, Defendants–Appellees.

California Association of Rural Health Clinics; Avenal Community Health Center, Plaintiffs–Appellees,

v.Toby Douglas,^* Director of The California Department of Health Care Services, Mari Cantwell,^** Chief Deputy Director for Health Care Programs of the California Department of Health Care Services; California Department of Health Care Services, Defendants–Appellants.

Nos. 10–17574, 10–17622.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Dec. 6, 2012.

Filed July 5, 2013.

Amended Sept. 17, 2013.

Kathryn Ellen Doi (argued), Murphy Austin Adams Schoenfeld LLP, Sacramento, CA, for Plaintiffs–Appellants–Cross–Appellees.

Susan M. Carson (argued) and Kara Read–Spangler, Deputy Attorneys General, Office of the California Attorney General, Sacramento, CA, for Defendants–Appellees–Cross–Appellants.

Matthew Sidney Freedus, Feldesman Tucker Leifer Fidell LLP, Washington, D.C., for Amicus Curiae National Association of Community Health Centers.

Elizabeth Charisse Saviano, Law Offices of Elizabeth C. Saviano, Oakland, CA, for Amici Curiae California Primary Care Association, San Francisco Community Clinic Consortium, California Consortium for Urban Indian Health, Center for Oral Health and Alameda Health Consortium.

Appeal from the United States District Court for the Eastern District of California, Frank C. Damrell, Senior District Judge, Presiding. D.C. No. 2:10–CV–00759–FCD–EFB.

Before: DOROTHY W. NELSON, A. WALLACE TASHIMA, and MARY H. MURGUIA, Circuit Judges.

ORDER

The opinion filed on July 5, 2013 is amended as follows:

On page 8 of the slip opinion, the second sentence of the third paragraph, which reads, “We reverse the district court's holding that the Clinics have a private right of action to challenge the Department's implementation of the SPA prior to obtaining approval,” is stricken.

An amended opinion is filed concurrently with this order.

With this amendment, the panel unanimously votes to deny the petition for panel rehearing. Judge Murguia votes to deny the petition for rehearing en banc, and Judges Nelson and Tashima so recommend. The full court has been advised of the petition for rehearing and 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 is DENIED. No further petitions for en banc or panel rehearing shall be entertained.

IT IS SO ORDERED.

OPINION

D.W. NELSON, Senior Circuit Judge:

This case concerns a clash of competing interests: the mission of publicly-funded health clinics to provide a panoply of medical services to under-served communities on the one hand, and California's persistent budget woes on the other. We must decide whether California legislation that eliminates coverage for certain healthcare services, including adult dental, podiatry, optometry and chiropractic services, conflicts with the Medicaid Act, 42 U.S.C. §§ 1396, et seq., and is therefore invalid. We hold that Medicaid prohibits the limitations adopted by the California legislature and, accordingly, we reverse and remand.

I. Background

Title XIX of the Social Security Act, referred to as the Medicaid Act, is a cooperative federal-state program through which the federal government provides financial assistance to states so that they can furnish medical care to low-income individuals. Wilder v. Va. Hosp. Ass'n, 496 U.S. 498, 502, 110 S.Ct. 2510, 110 L.Ed.2d 455 (1990) (citing 42 U.S.C. § 1396), superseded on other grounds by statute;42 C.F.R. § 430.0. Medicaid is jointly financed by federal and state governments and administered by the states through state plans approved by the Secretary of Health and Human Services. 42 U.S.C. § 1396a; 42 C.F.R. § 430.0.

States are not required to participate in Medicaid, but those states that opt in to the system must comply with both the statutory requirements imposed by Medicaid and with regulations promulgated by the Secretary of Health and Human Services. Alaska Dep't of Health & Soc. Servs. v. Ctrs. for Medicare & Medicaid Servs., 424 F.3d 931, 935 (9th Cir.2005); see also42 U.S.C. § 1396c; 42 C.F.R. § 430.35. As part of this requirement, states must cover certain services in their plans. 42 U.S.C. §§ 1396c, 1396a(a)(10) (cross-referencing § 1396d(a)(1)-(5), (17), (21) & (28)); 42 C.F.R. §§ 430.0, 430.35. These services include those provided by rural health clinics—health centers that provide services in rural areas with insufficient numbers of healthcare practitioners, and Federally qualified health centers—health centers that serve a medically under-served population. 42 U.S.C. §§ 254b(a)(1), 1396d( l )(1)-(2), 1395x(aa)(2), (4). In addition, each state may opt to cover additional services or may extend services to populations that may not otherwise be covered. See id. § 1396d(a). Each state has discretion to create reasonable standards for determining eligibility for medical services and the extent of those services, provided those standards comply with federal law. Schweiker v. Gray Panthers, 453 U.S. 34, 36–37, 101 S.Ct. 2633, 69 L.Ed.2d 460 (1981).

California participates in Medicaid through the California Medical Assistance Program (“Medi–Cal”), which the California Department of Health Services (“Department”) administers. Cal. Welf. & Inst.Code §§ 10740, 14000, et seq. The Department is responsible for establishing and complying with the state plan and must submit any state plan amendments (“SPA”) to the Centers for Medicare and Medicaid Services (“CMS”) for review and approval. 42 U.S.C. § 1396a(a)(5); 42 C.F.R. §§ 430.10, 430.12, 430.14, 431.10. The Department also ensures that Medi–Cal provides covered services to eligible beneficiaries and reimburses providers for their services. 42 C.F.R. § 431.10.

In February 2009, California found itself in the throes of a budget crisis. As a cost-cutting measure, the state legislature passed California Welfare and Institutions Code § 14131.10 (“ § 14131.10”), which eliminated certain Medi–Cal benefits that the state deemed optional, including adult dental, podiatry, optometry and chiropractic services. The Department amended California's state plan accordingly, and submitted the SPA for approval. In the meantime, the Department discontinued reimbursement for services listed in § 14131.10.

The California Association of Rural Health Clinics and the Avenal Community Health Center, a Federally qualified health center, (collectively, the “Clinics”), challenged the implementation of § 14131.10 under a federal preemption theory. The Clinics sought declaratory and injunctive relief to halt the implementation of § 14131.10, arguing that federal law prohibits the elimination of coverage of certain services, including adult dental, podiatry, optometry and chiropractic services. The Clinics also contended that the Department violated federal law by failing to obtain approval of the SPA before discontinuing reimbursement.

The Department countered that the Clinics did not have a private right of action to bring either claim, that federal law permitted the exclusion of the optional services covered by § 14131.10, and that the Department was not required to obtain approval of the amendments to the state plan before implementing those amendments.

The district court held that the Clinics had a private right of action to bring their claims, that § 14131.10 was not in conflict with Medicaid's requirements, and that the Department was required to obtain approval for amendments to the state plan before implementing the changes. The court therefore granted declaratory relief to the Clinics on the SPA claim and enjoined further enforcement of § 14131.10 pending CMS's approval of the SPA.

After the district court entered judgment, but prior to the briefing on appeal, CMS approved the Department's SPA with a retroactive effective date of July 1, 2009. This timely appeal followed.

The Clinics challenge the district court's holding that § 14131.10 is consistent with the Medicaid Act. The Department cross-appeals, challenging the Clinics' private right of action to pursue their claims, as well as the injunctive relief granted to the Clinics on their SPA claim.

We have jurisdiction pursuant to 28 U.S.C. § 1291. We affirm that the Clinics have a private right of action to bring a claim pursuant to 42 U.S.C. § 1983 challenging the validity of § 14131.10. But we reverse the district court's interpretation of the Medicaid Act and hold that § 14131.10 impermissibly eliminates mandatory services from coverage.

II. Standard of Review

We review de novo a grant of declaratory relief, a grant of summary judgment and the district court's interpretation of the Medicaid Act. Katie A. v. L.A. Cnty., 481 F.3d 1150, 1157 (9th Cir.2007); Ablang v. Reno, 52 F.3d 801, 803 (9th Cir.1995).

III. DiscussionA. Private Right of Action to Bring § 1983 Claim

Relying on 42 U.S.C. § 1983, the Clinics challenge § 14131.10 as preempted by federal law. The Department contends that the Clinics do not have a private right of action to challenge § 14131.10 because Congress did not confer entitlements on them when it enacted 42 U.S.C. § 1396a(bb), the Medicaid provision at issue.

Section 1983 “safeguards certain rights conferred by federal statutes,” but a § 1983 plaintiff “must assert the violation of a federal right, not merely a violation of federal law.” Blessing v. Freestone, 520 U.S. 329, 340, 117 S.Ct. 1353, 137 L.Ed.2d 569 (1997). Three factors help determine whether a particular statutory provision gives rise to a federal right.

First, Congress must have intended that the...