Supreme Court sends California Medicaid case back to 9th Circuit

February 22, 2012
Supreme Court sends California Medicaid case back to 9th Circuit
By Michael Doyle | McClatchy Newspapers

WASHINGTON — The Supreme Court on Wednesday kept alive the possibility that California doctors, pharmacists and senior citizens can challenge the state's Medicaid cuts.

But in a narrow rendered decision, the closely divided court did not definitively side with the doctors. Instead, citing the “complexity” of the cases and some changed circumstances, justices ordered more arguments before a lower appellate court.

“It may be that not all of the considerations that may bear upon resolution of the issue have been presented,” Justice Stephen Breyer wrote for the majority.

The 5-4 decision kicks the California Medicaid reimbursement cases back to the 9th Circuit Court of Appeals, which had previously sided with the doctors, pharmacists and senior citizens. It is a blow to the Supreme Court’s conservative dissenters, who had sought to stop the reimbursement legal challenge in its tracks.

“Nothing in the Medicaid Act allows providers or beneficiaries, or anyone else for that matter, to sue to enforce (the law),” Chief Justice John Roberts, Jr. wrote for the dissenters, adding that the Constitution likewise provides “no private right of action.”

The ruling complicates California’s ongoing budget battle, which is being waged on several fronts.

California spends more than $41 billion a year on the Medicaid program, which the state operates under the name Medi-Cal. It serves more than 7 million low-income Californians and consumes about 13 percent of the state's budget.

Faced with what the state's attorneys described as a "devastating, ongoing and deepening financial crisis," the California Legislature approved reimbursement cuts in 2008 and 2009 of between 1 and 10 percent.

The California Pharmacists Association, Santa Rosa Memorial Hospital and the Independent Living Center of Southern California all challenged the state's cuts, joined by unions and organizations that include the Gray Panthers of Sacramento.

The 9th U.S. Circuit Court of Appeals blocked the reductions from taking effect.

Customarily, private parties can sue to enforce a federal law only if Congress has explicitly authorized them to. The Medicaid law doesn't include such authority.

"Congress has not created a cause of action for the private parties," Deputy Solicitor General Edwin S. Kneedler noted in oral argument last October, echoing California's argument.

The medical professionals, though, argued that they have the power to sue under the supremacy clause of the Constitution, which declares that congressional acts are the "supreme law of the land.”. Under this reasoning, the California laws imposing reimbursement cuts violated the 1965 Medicaid law's requirement that state payments remain "consistent with efficiency, economy and quality of care" and be "sufficient" for medical professionals.

The Obama administration approved some of the state’s proposed cuts in October, including a 10 percent reduction in reimbursements for pharmacists and laboratory work, after the Supreme Court argument.

Breyer, citing these “changed circumstances,” said the question is now whether supremacy clause challenge can proceed once federal authorities have gone ahead and approved the reimbursement cuts.

“The providers and beneficiaries continue to believe that the reductions violate the federal provision, the agency’s view to the contrary notwithstanding,” Breyer wrote.

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