Developmental Servs. Network v. Douglas
Decision Date | 30 November 2011 |
Docket Number | Nos. 11–55851,11–55852.,s. 11–55851 |
Parties | DEVELOPMENTAL SERVICES NETWORK; United Cerebral Palsy/Spastic Children's Foundation of Los Angeles and Ventura Counties, Plaintiff–Appellee, v. Toby DOUGLAS,* Director of the Department of Health Care Services, State of California; California Department of Health Care Services, Defendants–Appellants.California Association of Health Facilities, Plaintiff–Appellee, v. Toby Douglas, Director of the Department of Health Care Services, State of California, Defendant–Appellant. |
Court | U.S. Court of Appeals — Ninth Circuit |
OPINION TEXT STARTS HERE
Kenneth K. Wang, Office of the Attorney General of California, Los Angeles, CA, and Tracey L. Angelopoulos, Office of the Attorney General of California, San Diego, CA, for the defendants-appellants.
Jordan B. Keville and Craig Cannizzo, Hooper, Lundy & Bookman, P.C., San Francisco, CA, for the plaintiffs-appellees.
Appeal from the United States District Court for the Central District of California, Christina A. Snyder, District Judge, Presiding. D.C. Nos. 2:10–cv–03284–CAS–MAN, 2:10–cv–03259–CAS–MAN.Before: FERDINAND F. FERNANDEZ and CONSUELO M. CALLAHAN, Circuit Judges, and RALPH R. ERICKSON,** District Judge.
Toby Douglas, the Director of the California Department of Health Care Services,1 appeals the district court's preliminary injunction precluding enforcement of California Welfare and Institutions Code § 14105.191(f), which amended California's Medicaid Plan and set provider reimbursement rates for the 2009–2010 rate year, and for each year thereafter. The Developmental Services Network and the United Cerebral Palsy/Spastic Children's Foundation of Los Angeles and Ventura County, and the California Association of Health Facilities 2 challenged the law under 42 U.S.C. § 1983 and the Supremacy Clause 3 because the State did not obtain federal approval of its State Plan Amendment (“SPA”) prior to implementing the rate changes. The State argues that the district court abused its discretion in ordering the preliminary injunction because the Providers have not shown a likelihood of success on the merits, or irreparable harm, or that the balance of equities and the public interest warrant an injunction. We vacate the preliminary injunction and remand.
The Providers are trade associations representing, among other facilities, intermediate care facilities for the mentally retarded and for the developmentally disabled, and free standing pediatric subacute facilities. The Providers filed suit in federal district court on April 30, 2011. They alleged that the State's implementation of Welfare and Institutions Code § 14105.191(f), which limited reimbursement rates under California's Medicaid program, violated federal law. The section amended the State's Medicaid Plan so that the reimbursement rates “for services rendered during the 2009–10 rate year and each rate year thereafter, shall not exceed the reimbursement rates that were applicable to those classes of providers in the 2008–09 rate year.” Cal. Welf. & Inst.Code § 14105.191(f). The Providers argued, along with other claims, that implementation of the statute was unlawful because it violated 42 U.S.C. § 1396a(a)(30)(A)'s requirement that the State consider quality of care in setting Medicaid payment rates 4 and because the State implemented the section before obtaining federal approval 5 of what amounted to an amendment of the State Medicaid Plan.6 The district court then stayed the Providers' cases on June 24, 2010, after the Supreme Court had granted certiorari in two Ninth Circuit cases 7 to consider whether a private party may sue under the Supremacy Clause to enforce 42 U.S.C. § 1396a(a)(30)(A). On March 28, 2011, the district court lifted the stay. The court then granted the motion for a preliminary injunction. It concluded that it was likely that the Providers would succeed on the merits of their 42 U.S.C. § 1983 claim that the State had unlawfully failed to obtain federal approval of the SPA effected by section 14105.191(f) prior to implementing it. In addition, the district court determined that the Providers were likely to suffer irreparable harm, and that the balance of hardships and the public interest weighed in favor of granting the injunction.8 After its motion for reconsideration was denied, the State timely appealed.
The district court had jurisdiction pursuant to 28 U.S.C. § 1331. We have jurisdiction pursuant to 28 U.S.C. § 1292(a)(1).
We review the grant of a preliminary injunction for abuse of discretion. Am. Trucking Ass'ns, Inc. v. City of L.A., 559 F.3d 1046, 1052 (9th Cir.2009). Our review is “limited and deferential, and [w]e do not review the underlying merits of the case.” Id. (internal quotation marks omitted). “Nevertheless, a district court necessarily abuses its discretion when it bases its decision on an erroneous legal standard or on clearly erroneous findings of fact.” Id. (internal quotation marks omitted).
“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.” Cal. Pharmacists Ass'n v. Maxwell–Jolly, 563 F.3d 847, 849 (9th Cir.2009). We have glossed that standard by adding that there is a “sliding scale” 9 approach which allows a plaintiff to obtain an injunction where he has only shown “ ‘serious questions going to the merits' and a balance of hardships that tips sharply towards the plaintiff ... so long as the plaintiff also shows that there is a likelihood of irreparable injury and that the injunction is in the public interest.” Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir.2011). Nevertheless, if a plaintiff fails to show that he has some chance on the merits, that ends the matter. Global Horizons, Inc. v. U.S. Dep't of Labor, 510 F.3d 1054, 1058 (9th Cir.2007).
Here the State attacks the district court's decision on all four parts of the preliminary injunction test and on other bases as well. We, however, will only consider whether the Providers can succeed on the merits, for, as we will show, our conclusion on that ground requires that we vacate the preliminary injunction and remand for further proceedings. While we agree with the district court that the State was required to obtain approval of the amendment wrought in its Medicaid Plan by section 14105.191(f)'s provisions, we disagree with its determination that the Providers have a cause of action pursuant to 42 U.S.C. § 1983.
“Medicaid is a cooperative federal-state program through which the Federal Government provides financial assistance to States so that they may furnish medical care to needy individuals.” Wilder v. Va. Hosp. Ass'n, 496 U.S. 498, 502, 110 S.Ct. 2510, 2513, 110 L.Ed.2d 455 (1990). “To qualify for federal assistance, a State must submit to the Secretary [of the Department of Health and Human Services] and have approved a ‘plan for medical assistance,’ § 1396a(a)” that complies with statutory requirements. Id. If CMS determines that a state plan or plan amendment does not comply with those requirements, it may deny the state federal funds. 42 C.F.R. §§ 430.15, 430.18; see also San Lazaro Ass'n, Inc. v. Connell, 286 F.3d 1088, 1092 (9th Cir.2002).
The State argues that although it must obtain approval before its Medicaid plan goes into effect, it may make and implement material amendments to the plan before the amendments are approved, even though it is undoubtedly required to submit an SPA to CMS. See 42 C.F.R. § 430.12. We disagree with that counterintuitive and banausic argument.
We say counterintuitive because it would be surprising if a state were required to adhere to a complex list of requirements 10 in order to obtain approval of a plan in the first place, but then, perhaps immediately after approval, materially change that plan to its heart's content without first having the changes themselves approved. For example, despite the fact that a plan must “assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area,” 11 the State suggests that if it adopted changes that did not meet those requirements, even though it must submit an SPA, it could implement the changes forthwith. We suppose that the law could have been written that way, but we question why it would have been. As it turns out, we have previously held that it was not.
Our first foray into this area was over twenty-five years ago. See Wash. State Health Facilities Ass'n v. Wash. Dep't of Soc. & Health Servs., 698 F.2d 964 (9th Cir.1982) (per curiam). We were then faced with a claim that a state could enforce a state regulation which conflicted with the approved Medicaid plan before it obtained approval of the amendment. Id. at 964–65. We would have none of it. We held:
We previously have held that proper [DHHS] evaluation and approval is a prerequisite to enforcement of a state Medicaid plan. In addition, federal regulations specify the procedures a state must follow if it wishes to amend provisions of its federally approved plan. Accordingly, we find without merit appellants' contention that [the state] may enforce changes in its method of reimbursing nursing care facilities without receiving federal approval.
Id. at 965 ( ).
Nor was that our only visit to this territory. In 1993, a state, again,...
To continue reading
Request your trial-
Cal. Ass'n of Rural Health Clinics v. Douglas
...v. Wash. Dep't of Soc. & Health Servs., 698 F.2d 964 (9th Cir.1982) (per curiam), abrogated on other grounds by Dev. Serv. Network v. Douglas, 666 F.3d 540, 545–46 (9th Cir.2011). In that case we decided that the Medicaid Act did in fact confer a private right of action on the provider to e......
-
Cal. Ass'n of Rural Health Clinics v. Douglas
...v. Wash. Dep't of Soc. & Health Servs., 698 F.2d 964 (9th Cir.1982) (per curiam), abrogated on other grounds by Dev. Serv. Network v. Douglas, 666 F.3d 540, 545–46 (9th Cir.2011). In that case we decided that the Medicaid Act did in fact confer a private right of action on the provider to e......
-
Asante v. Cal. Dep't of Health Care Servs.
...for hospitals and nursing facilities relative to the adequacy of the rates they receive.” Likewise in Developmental Servs. Network v. Douglas , 666 F.3d 540, 543 (9th Cir.2011), the providers claimed that the Department violated 42 U.S.C. § 1396a(a)(30)(A) by limiting reimbursement rates un......
-
Wood v. Ryan
...on the merits and that Wood had failed to present “serious questions” going to the claim's merits. See Developmental Servs. Network v. Douglas, 666 F.3d 540, 544 (9th Cir.2011) (“Nevertheless, if a plaintiff fails to show that he has some chance on the merits, that ends the matter.”). Wood ......