California Pharmacists Ass'n v. Maxwell-Jolly

Decision Date06 April 2009
Docket NumberNo. 09-55365.,09-55365.
Citation563 F.3d 847
PartiesCALIFORNIA PHARMACISTS ASSOCIATION; California Medical Association; California Dental Association; California Association for Adult Day Services; Marin Apothecary, Inc. dba Ross Valley Pharmacy; South Sacramento Pharmacy; Farmacia Remedies, Inc.; Acacia Adult Day Services; Fey Garcia; Charles Gallagher, Plaintiffs, and California Hospital Association; Sharp Memorial Hospital; Grossmont Hospital Corporation; Sharp Chula Vista Medical Center; Sharp Coronado Hospital and Healthcare Center, Plaintiffs-Appellants, v. David MAXWELL-JOLLY, Director of the Department of Health Care Services, State of California, Defendant-Appellee.
CourtU.S. Court of Appeals — Ninth Circuit

Jordan Brian Keville, Esquire, Lloyd A. Bookman, Esquire, Hooper, Lundy & Bookman, Los Angeles, CA, Felicia Y. Sze, Hooper, Lundy & Bookman, Inc., San Francisco, CA, for Plaintiffs and Plaintiffs-Appellants.

Gregory Martin Cribbs, Esquire, Randall R. Murphy, Esquire, Jennifer M. Kim, Office of the Attorney General, Los Angeles, CA, Shannon Michelle Chambers, Office of the California Attorney General, Sacramento, CA, for Defendant-Appellee.

Before: STEPHEN REINHARDT, MARSHA S. BERZON, and MILAN D. SMITH, JR., Circuit Judges.

ORDER

Plaintiffs-Appellants, the California Pharmacists Association, et al., filed this suit to challenge the Medi-Cal reimbursement rate reductions to various providers as set forth in AB 1183. A group of the plaintiffs, the Hospital Plaintiffs, which comprises the California Hospital Association and some individual hospitals, filed a motion in the district court for a preliminary injunction to enjoin the defendant from reducing Medi-Cal fee-for-service rates to hospitals,1 arguing that AB 1183 was enacted in violation of § 1396a(a)(30)(A) of Title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq. ((a)(30)(A)). The district court denied the preliminary injunction. The Hospital Plaintiffs filed an Emergency Motion Pursuant to Circuit Rule 27-3 for Preliminary Injunction Pending Appeal.

We review the denial of a preliminary injunction for abuse of discretion. Earth Island Inst. v. U.S. Forest Serv., 442 F.3d 1147, 1156 (9th Cir.2006). 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 fact." Id. (citation omitted). It also does so if in reaching its decision it makes a material error of law. We review conclusions of law de novo and findings of fact for clear error. Id.

Plaintiffs seeking a preliminary injunction in a case in which the public interest is involved must establish that they are likely to succeed on the merits, that they are likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in their favor, and that an injunction is in the public interest. Winter v. Natural Res. Def. Council, Inc., ___ U.S. ___, 129 S.Ct. 365, 376, 172 L.Ed.2d 249 (2008). When deciding whether to issue a stay, including a stay of a state action that the district court has declined to enjoin, we consider: (1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies. See Humane Soc'y of U.S. v. Gutierrez, 527 F.3d 788, 789-90 (9th Cir.2008).

In this case, the district court found that the Hospital Plaintiffs were likely to succeed on the merits, but that they failed to demonstrate irreparable harm. We address these issues in turn, and, in view of the time-urgency and the irreparability of the harm, also consider the other Winter factors which necessarily follow.

I. Likelihood of Success on the Merits

In Orthopaedic Hospital v. Belshe, 103 F.3d 1491 (9th Cir.1997), we held that 42 U.S.C. § 1396a(a)(30)(A) requires the state to consider efficiency, economy, quality of care, and access before setting Medi-Cal reimbursement rates. Id. at 1496. The district court concluded that the Hospital Plaintiffs have shown a likelihood of success on the merits under Orthopaedic because the Legislature did not consider any such factors before passing the rate cuts in AB 1183. The court ruled that although the Department of Health Care Services (the Department) had performed some studies after AB 1183's passage, those post-hoc studies failed to meet the requirements of Orthopaedic, 103 F.3d at 1496. It noted that AB 1183 gives the Department no discretion to alter the rate cuts based on the Department's own analysis, and, therefore, the cuts were not "based on" the Department's consideration of the relevant factors, but instead constituted a post-hoc rationalization for a legislative decision that had already been made. Cal. Pharmacists Ass'n v. Jolly, No. 09-722, slip op. at 9-11 (C.D.Cal. Mar. 9, 2009). Moreover, the district court determined that, although the state Legislative Analyst Office issued a report analyzing the proposed cuts, there was no evidence the legislature actually considered the report before enacting AB 1183. Id. at 10 n. 8.

We conclude that the district court did not abuse its discretion in concluding that the Hospital Plaintiffs demonstrated a likelihood of success on the merits. Indeed, the Hospital Plaintiffs made a strong showing of such likelihood.

II. Irreparable Harm

The Hospital Plaintiffs must also show a likelihood of irreparable harm. See Winter, 129 S.Ct. at 375.

A. Harm

We first address the type of harm we may consider in the irreparable harm analysis. The Department argues that only harm to Medi-Cal beneficiaries is relevant to this motion, while the Hospital Plaintiffs assert that harm to Medi-Cal service providers is also relevant, and that they need show only the latter type of harm, in this case harm to themselves or their members, in order to obtain injunctive relief. The Hospital Plaintiffs further claim that they or their members will lose considerable revenue between the effective date of AB 1183 and the date their claims can be reviewed on the merits if injunctive relief is denied.

We agree with the Hospital Plaintiffs. In Independent Living Center v. Shewry (ILC), we held 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 recently been used in suits brought under § 1983, but need only satisfy traditional standing requirements." 543 F.3d 1050, 1058 (9th Cir.2008). We rejected the contention that federal statutes enacted pursuant to Congress's spending power, such as the one here at issue, are excluded from this principle, id. at 1059-62, and concluded that the health care providers in that case (which at that point did not include hospitals) had standing because:

[A]ccording to their complaint, [they] 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.... Moreover, this injury is directly traceable to the Director's implementation of AB 5 [the statute at issue in that case], and would certainly be redressed by a favorable decision of this court enjoining the ten-percent rate reduction.

Id. at 1065. Notably, ILC did not indicate that the service providers had standing to assert the interests of the beneficiary plaintiffs as third parties, as, for example, the medical service providers do in cases concerning the constitutional rights of patients. See, e.g., Eisenstadt v. Baird, 405 U.S. 438, 92 S.Ct. 1029, 31 L.Ed.2d 349 (1972). A cause of action based on the Supremacy Clause obviates the need for reliance on third-party rights because the cause of action is one to enforce the proper constitutional structural relationship between the state and federal governments and therefore is not rights-based. In contrast, a case brought to enforce the Due Process or Equal Protection Clauses is rights based, and requires that the rights of someone be advanced, even if not the rights of the plaintiffs who have been injured.

Consistent with this understanding, in the various precedents cited throughout the ILC opinion in which plaintiffs brought cases directly under the Supremacy Clause, the interests asserted were basically economic, and there was no inquiry into whether the plaintiffs asserting the economic injury were in any sense intended beneficiaries of the federal statute on which the Supremacy Clause cause of action was premised. For example, in Bud Antle, Inc. v. Barbosa, one of the cases upon which we relied in ILC, we held that employers could sue to enjoin a California statute as preempted by the National Labor Relations Act (NLRA) "regardless of whether the NLRA conferred a federal `right' on employers." 45 F.3d 1261, 1271 n. 13 (9th Cir.1994). It was for that very reason that we concluded the § 1983 cases were inapposite, and that Sanchez v. Johnson, 416 F.3d 1051 (9th Cir.2005), did not preclude the plaintiffs' suit. Essentially, the line of cases on which we relied held that private parties could enforce the structural relationship between the federal and state governments so long as they had Article III standing as, essentially, private enforcers of the Supremacy Clause; the specific relationship of those parties to the federal statute on which the Supremacy Clause cause of action is premised does not matter.

Given these underpinnings of ILC, there is little basis on which to import an "intended beneficiary" concept back into the case for purposes of determining irreparable injury. Applying this determination to the present motion, it is clear that AB 1183 harms the Hospital Plaintiffs and their...

To continue reading

Request your trial
176 cases
  • Rojas v. Countywide Corp., CASE NO. CV F 12-1393 LJO JLT
    • United States
    • U.S. District Court — Eastern District of California
    • 21 Septiembre 2012
    ..."possibility of irreparable harm" test). "Typically, monetary harm does not constitute irreparable harm." Cal Pharmacists Ass'n v. Maxwell-Jolly, 563 F.3d 847, 851 (9th Cir. 2009). "Economic damages are not traditionally considered irreparable because the injury can later be remedied by a d......
  • Aurora World Inc. v. Ty Inc.
    • United States
    • U.S. District Court — Central District of California
    • 15 Diciembre 2009
    ...it “will not usually support injunctive relief.” American Trucking, 559 F.3d at 1057. See also California Pharmacists Association v. Maxwell-Jolly, 563 F.3d 847, 851-52 (9th Cir.2009) (“Typically, monetary harm does not constitute irreparable harm.... Economic damages are not traditionally ......
  • Applied Underwriters, Inc. v. Lara
    • United States
    • U.S. District Court — Eastern District of California
    • 30 Marzo 2021
    ..."irreparable" because they will be unable to recover money damages in this case. (See Pls.’ Opp'n at 79.) Cal. Pharmacists Ass'n v. Maxwell-Jolly, 563 F.3d 847, 852 (9th Cir. 2009), cited by plaintiffs, was a preliminary injunction case, not a Younger abstention case. Plaintiffs offer no ba......
  • CREDIT BUREAU CONNECTION INC. v. PARDINI
    • United States
    • U.S. District Court — Eastern District of California
    • 2 Agosto 2010
    ...“possibility of irreparable harm” test). “Typically, monetary harm does not constitute irreparable harm.” Cal. Pharmacists Ass'n v. Maxwell-Jolly, 563 F.3d 847, 851 (9th Cir.2009). “Economic damages are not traditionally considered irreparable because the injury can later be remedied by a d......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT