Sierra Med. Servs. Alliance v. Kent
| Decision Date | 06 March 2018 |
| Docket Number | No. 14-56483,14-56483 |
| Citation | 883 F.3d 1216 |
| Parties | SIERRA MEDICAL SERVICES ALLIANCE; Care Flight; Riggs Ambulance Service, Inc. ; Schaefer Ambulance Service, Inc.; American Ambulance of Visalia ; Desert Ambulance Service ; San Luis Ambulance Service, Inc.; First Responder Emergency Medical Services–Sacramento, Inc.; First Responder Emergency Medical Services, Inc. ; Imperial Ambulance Services, Inc.; Sierra Lifestar, Inc., DBA Lifestar Ambulance; Del Norte Ambulance, Inc.; Piner's Ambulance, Inc.; American Legion Post 108 Ambulance Service; Progressive Ambulance, Inc., DBA Liberty Ambulance; Hall Ambulance Service, Inc.; City Ambulance of Eureka, Inc.; Patterson District Ambulance ; K.W.P.H. Enterprises, DBA American Ambulance; Community Ambulance Services, Inc. ; Sierra Ambulance Service, Inc. ; Care Ambulance Service, Inc.; Delano Ambulance Service, Inc.; Kern Emergency Medical Transportation Corporation, DBA Kern Ambulance; Westmed Ambulance, Inc.; California Ambulance Association; Regional Emergency Medical Services Authority; Metro West Ambulance Service, Inc., Plaintiffs–Appellants, v. Jennifer KENT, Director of the Department of Health Care Services of the State of California, Defendant–Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Michael K. Hagemann (argued), and Kevin R. Warren, M.K. Hagemann P.C., Century City, California, for Plaintiffs–Appellants.
Hadara R. Stanton (argued), Deputy Attorney General; Susan M. Carson, Supervising Deputy Attorney General; Julie Weng–Gutierrez, Senior Assistant Attorney General; Office of the Attorney General, San Francisco, California; for Defendant–Appellee.
Before: Stephen Reinhardt, Ronald Lee Gilman,* and Kim McLane Wardlaw, Circuit Judges.
California law requires ambulance companies to provide emergency medical transportation irrespective of a patient's ability to pay. To at least partially offset the cost of providing such transportation, California has an established reimbursement rate for those companies voluntarily enrolled as providers with the state's Medicaid program (Medi–Cal) when they transport Medi–Cal patients. The relevant reimbursement rate is set by California's Department of Health Care Services (DHCS) pursuant to state statutes and regulations that have been approved by the Centers for Medicare and Medicaid Services (CMS), the federal agency that administers the Medicaid Program on behalf of the Department of Health and Human Services.
At the heart of this case is the Plaintiffs' complaint that private ambulance companies receive only 20 cents in reimbursement for every dollar that they spend to transport Medi–Cal patients, a shortfall that they contend violates their constitutional rights. After discovery, DHCS moved for summary judgment, which the district court granted on all counts. The court held that the Plaintiffs had failed to produce sufficient evidence to sustain any of their claims. For the reasons set forth below, we AFFIRM the judgment of the district court.
1. Federal Medicaid program
Medicaid is a state-administered program financed jointly by the federal and state governments that provides healthcare coverage to low-income Americans. See 42 U.S.C. §§ 1396 et seq. The percentage of the program's costs that the federal government covers varies by state, with poorer states receiving a greater share of federal dollars. See 42 U.S.C. § 1396d(b). For the fiscal years in question, California bore half the cost of covering its Medicaid population. See 80 Fed. Reg. 73,781, tbl. 1 (Nov. 25, 2015). A state can satisfy its share of Medicaid spending both through direct appropriations to state and local Medicaid agencies and by certified Medicaid expenditures incurred by other state and local agencies. 42 C.F.R. § 433.51(a), (b).
In exchange for receiving their allotment of federal funds, states design and administer Medicaid State Plans that must comply with federal Medicaid law. See 42 U.S.C. § 1396a. CMS can remedy a state's noncompliance with federal Medicaid law by withholding future funding. 42 U.S.C. § 1396c ; Armstrong v. Exceptional Child Ctr., Inc. , ––– U.S. ––––, 135 S.Ct. 1378, 1385, 191 L.Ed.2d 471 (2015) ().
2. Medi–Cal
Entities that enroll as Medi–Cal providers are entitled to reimbursement for the services that they provide to the program's beneficiaries. Cal. Welf. & Inst. Code § 14019.3(c), (g). The Medi–Cal statute stipulates that "payment received from the state in accordance with Medi–Cal fee structures shall constitute payment in full" for services provided. Id. § 14019.3(d). And when providers enroll in the program, they must sign a Medi–Cal Provider Agreement that contains a condition to the same effect. Cal. Welf. & Inst. Code § 14043.2(a) ; Cal. Code Regs. tit. 22, §§ 51000.45, 51200(a), 51501(b) ; DHCS, Medi–Cal Provider Agreement (DHCS 6208) 5–6 (2017), http://files.medi-cal.ca.gov/pubsdoco/Publications/masters-other/provappsenroll/02enrollment_DHCS6208.pdf ("[P]ayment received from DHCS in accordance with Medi–Cal fee structures shall constitute payment in full ....").
DHCS administers Medi–Cal, and its responsibilities include setting reimbursement rates for covered services. Cal. Welf. & Inst. Code §§ 10740, 14105(a). In 2003, the agency adopted Attachment 4.19-B to California's State Plan, which sets forth a "methodology" for DHCS to "establish[ ] payment rates." State Plan Under Title XIX of Social Security Act: California, attach. 4.19-B, at 1, http://www.dhcs.ca.gov/formsandpubs/laws/Documents/State_Plan_Attachment_4.19B_1–5.pdf. The procedures set forth in Attachment 4.19-B require DHCS to "develop[ ] ... an evidentiary base or rate study" to guide its rate setting, to solicit public input by "present[ing] ... the proposed rate at a public hearing," and to determine a final reimbursement rate "based on" the aforementioned evidence and public input. Id.
3. Reimbursement for emergency ground-transportation services
Ambulance companies that operate in California must provide emergency services to any "person ... in danger of loss of life[ ] or serious injury or illness" regardless of his or her ability to pay. Cal. Health & Safety Code § 1317(a), (d). Those ambulance companies that are enrolled as Medi–Cal providers are entitled to at least partial reimbursement—$118.20 for a one-way ride—for the services that they provide when they transport patients who are insured through Medi–Cal. Cal. Welf. & Inst. Code §§ 14019.3(c), (g), 14132(i) ; Cal. Code Regs. tit. 22, § 51527. According to the Plaintiffs, that reimbursement accounts for only 20% of the actual cost that they incur to transport Medi–Cal beneficiaries, causing them $60 million in annual losses.
DHCS has not promulgated new reimbursement rates for medical-transportation services since adopting Attachment 4.19-B in 2003. Instead, reimbursement rates that predate the Attachment remain in effect. See Cal. Code. Regs. tit. 22, § 51527. DHCS adopted those reimbursement rates in 1984 and has amended them several times, most recently in 2002. Id. As required by California's Administrative Procedure Act, DHCS held public hearings and provided an opportunity for public comment before enacting § 51527 and each amendment thereto. Cal. Govt. Code §§ 11346.45, .6. One of the Plaintiffs in this case—the California Ambulance Association—participated in those hearings. (A more extensive discussion of the regulation's history is found in Sierra Med. Servs. All. v. Douglas , No. B220443, 2011 WL 985520, at *2–*3 (Cal. Ct. App. Mar. 22, 2011) (unpublished).)
California makes supplemental reimbursement available to publicly owned providers of emergency-medical ground transportation (e.g. , local fire departments) for up to the actual cost incurred to transport Medi–Cal beneficiaries, but not to private providers like the Plaintiffs. Cal. Welf. & Inst. Code § 14105.94. Recently, California adopted an additional supplemental-reimbursement program (without repealing the existing one) that is available to both private and public providers of emergency-medical transportation. See id. §§ 14129–14129.7.
The Plaintiffs filed this action in the United States District Court for the Central District of California. The operative complaint alleges violation of the Fifth Amendment's Takings Clause, the Fourteenth Amendment's Due Process Clause, the Commerce Clause, and the Contract Clause of the United States Constitution. Plaintiffs also allege that the reimbursement program violates the Equal Protection Clause of the Fourteenth Amendment because public providers of emergency-transportation services are eligible for supplemental Medi–Cal reimbursement that is unavailable to private ambulance companies.
Three of the Plaintiffs were involved in a prior state court action, which was on appeal when this case was filed. See Sierra Med. Servs. All. , 2011 WL 985520, at *1, *3. The district court held that those plaintiffs could assert only an equal protection claim, because the remaining claims were barred by res judicata. Those Plaintiffs have not appealed that ruling.
DHCS filed its motion for summary judgment in this case after the close of discovery, along with a request (to which the Plaintiffs objected) that the court take judicial notice of several items, including excerpts of California's State Medicaid Plan, state legislation and legislative documents, materials from DHCS's website, administrative records from the public hearings surrounding the adoption and amendment of the Medi–Cal reimbursement rate for medical-transportation services, and the California Court of Appeal's unpublished decision in the related case of Sierra Medical Services Alliance v. Douglas .
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