Date Set, Plaintiffs Get Support in High Court Medi-Cal Case

by George Lauer, California Healthline Features Editor

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When the U.S. Supreme Court begins its 2011-2012 term Oct. 3, the first case on the docket will pose the question: Do Californians have the right to sue government agencies and officials over Medicaid cutbacks?

The case, a consolidation of several similar cases, stems from lawsuits filed in 2008 challenging a 10% cut in payments to Medi-Cal providers approved by the Legislature and Republican Gov. Arnold Schwarzenegger. Medi-Cal is California's Medicaid program.

The plaintiffs -- including the California Pharmacists Association, Independent Living Center of Southern California, Santa Rosa Memorial Hospital and 34 other hospitals -- contend that a 10% reduction in Medi-Cal reimbursements for dentists, health clinics, pharmacies, physicians and other medical providers would negatively affect Medi-Cal beneficiaries' access to care and would conflict with the federal Medicaid Act.

The 9th U.S. Circuit Court of Appeals agreed and ruled against the state in several cases. California officials appealed to the U.S. Supreme Court, arguing that health care providers and beneficiaries do not have the right to sue a state for allegedly violating federal Medicaid rules.

The Supreme Court agreed to hear the case in January and last week set the date for oral arguments. The issue before the court does not directly address California's authority to impose cuts. Justices are expected to deal only with the question of whether Medi-Cal beneficiaries and providers have the right to sue.

The court's ruling, expected in the spring (about 18 months after the appeal was made and almost three years after the initial suits were filed) could have major implications on several fronts. Many states, including California, are attempting to bridge budget gaps with reductions in Medicaid spending. A ruling against California could open litigation flood gates in many parts of the country.

On the other side of the issue, patients and health care providers say if they have no recourse through the courts, access to care will suffer.

Picking Sides

Both sides have garnered support along the way.

So far, 22 states have sided with California, saying in a joint amicus brief that each state government must be able to control Medicaid spending without fear of legal reprisal.

The Obama administration, in a move denounced by many patient advocates, also supported California's position in a brief filed earlier this summer. In the brief, the Justice Department said federal officials -- not patients or providers -- should decide when Medicaid cuts go too deep.

In addition to the initial litigants, the plaintiffs' side has grown to include many individuals, hospitals, clinics and organizations, including the California Medical Association, which contributed to a brief filed by plaintiffs Friday.

"We've been part of this effort from the beginning," said Francisco Silva, general counsel for CMA. 

"The state has tried to implement these cuts without federal approval and in violation of federal law. The law requires the state to study and consider the impact that cuts like this will have on patients' access to care," Silva said. 

"If the Supreme Court rejects the right to sue, it could be devastating for patients, especially where patients don't have access to care," Silva said.

John Roth -- CEO of the California Pharmacists Association, one of the original litigants -- welcomed the participation of CMA and other groups.

"Most of the provider community has marshaled together to come forth in support of this action," Roth said. "CMA is part of a coalition of folks participating in the process -- particularly the briefing process.

"We especially appreciate the support of the physician community in what may be a very significant case," Roth said.

Deadline for Supporting Briefs This Week

The deadline for amicus briefs is Friday. Briefs already filed and those in before this week's deadline will play a large part in the court's decision. Oral arguments are scheduled to last for one hour only -- 30 minutes for each side.

Plaintiffs and their attorneys predicted that several individuals and organizations would file briefs in support of the right to sue. The American Medical Association, the U.S. Chamber of Commerce, AARP, the National Health Law Program, members of Congress and former HHS secretaries are among those expected to file amicus briefs in support of individuals' right to sue, according to plaintiffs and plaintiffs' attorneys.

"One of the things that hasn't been focused on is that these cutbacks mean a cost shift to everyone," CMA attorney Silva said. "It means if a Medi-Cal patient can't get care, he or she can end up in the [emergency department], which costs more and creates access problems for everyone, including the counties and the private insurance companies.

"That's why you're seeing groups like the U.S. Chamber get involved. This has far-reaching impacts," Silva said.

'Not a Complicated Case'

Dean Johnson, an attorney representing Santa Rosa Memorial Hospital and 34 other hospitals in the case, said the issue is simple.

"It all revolves around the supremacy clause that federal law pre-empts state law," Johnson said. "It's not a really complicated case. [The Department of Health Care Services] is trying to make it out to be really complicated but it isn't."

Officials at DHCS, which oversees Medi-Cal, declined to comment for this story.

Johnson, a San Diego attorney specializing in Medi-Cal cases, predicts his side will prevail.

"I think we're going to probably win it. I don't think the Supreme Court is going to come up with a novel interpretation of the supremacy clause," Johnson said.


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