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California Association of Rural Health Clinics v. Douglas

United States District Court, Eastern District of California

November 5, 2014

CALIFORNIA ASSOCIATION OF RURAL HEALTH CLINICS and AVENAL COMMUNITY HEALTH CENTER, Plaintiffs,
v.
TOBY DOUGLAS, Director of the California Department of Health Care Services; MARI CANTWELL, Chief Deputy Director for Health Care Programs of the California Department of Health Care Services; and the CALIFORNIA DEPARTMENT OF HEALTH CARE SERVICES, Defendants.

ORDER

Troy L. Nunley United States District Judge

This matter is before the Court pursuant to a Ninth Circuit reversal and remand. (ECF No. 44.) Plaintiffs California Association of Rural Health Clinics and the Avenal Community Health Center (collectively the “Clinics”) also filed a motion for attorneys’ fees. (ECF No. 51.) Defendants did not oppose the attorneys’ fees motion. For the reasons stated below, Plaintiffs’ motion for attorneys’ fees (ECF No. 51) is GRANTED IN PART and DENIED IN PART.

I. FACTUAL BACKGROUND

Federal law requires States participating in the Medicaid program to reimburse Federally Qualified Health Centers (“FQHCs”) and Rural Health Centers (“RHCs”) for “physicians’ services.” 42 U.S.C. § 1396d(a)(2). Physicians are defined as medical doctors, doctors of osteopathy, dentists, podiatrists, optometrists, and chiropractors.[1] 42 U.S.C. § 1395x(r). California’s Medicaid Program (Medi-Cal) reimburses FQHCs and RHCs for the “core services”[2]these physicians provide. As a cost-cutting measure, the California legislature adopted California Welfare and Institutions Code Section 14131.10 (“§ 14131.10”) on February 19, 2009. The legislation eliminated “optional benefits” from Medi-Cal coverage. These benefits include adult dental, podiatric, optometric, and chiropractic services.

The issue in this case was whether the exclusion of optional services pursuant to § 14131.10 applies to the “core services” provided by FQHCs and RHCs. The California Department of Health Care Services (“Department”) contended that the exclusion does apply. The Department is responsible for establishing and complying with the state plan, and must submit any proposed amendments to the state plan to the Centers for Medicare and Medicaid Services (“CMS”) for approval. However, the Department did not seek approval to amend the state plan in this case. It discontinued reimbursement for adult dental, chiropractic, optometric, and podiatric services to FQHCs and RHCs before CMS could approve the changes.

Plaintiffs argued that federal Medicaid law prohibits the elimination of adult dental, podiatry, optometry, and chiropractic services from coverage at FQHCs and RHCs. The Clinics also contended that Department violated federal law by failing to obtain approval from the CMS to amend its state Medicaid plan before excluding the services listed in § 14131.10.

II. PROCEDURAL HISTORY

The Clinics brought a 42 U.S.C. § 1983 claim against the Department and its agents. (ECF No. 8.) Plaintiffs sought declaratory and injunctive relief to prevent further implementation of § 14131.10.

Section 14131.10 excludes coverage under the Medi-Cal program for adult dental, chiropractic, optometric, and podiatric services. The Court issued an Order and Judgment on October 20, 2010, granting in part and denying in part Plaintiffs’ motion for summary judgment. (ECF No. 28.)

On September 26, 2013, the Court of Appeals for the Ninth Circuit issued a formal mandate.[3] (ECF No. 45.) The mandate affirmed that Plaintiffs have a private right of action to bring a 42 U.S.C. § 1983 claim challenging the validity of § 14131.10, but reversed the district court’s interpretation of the Medicaid Act and remanded the case to this Court. This case was subsequently reassigned to the undersigned September 27, 2013. (ECF No. 47.)

III. THE NINTH CIRCUIT’S OPINION

The Ninth Circuit determined that Congress intended to confer on the Clinics a private right of action to challenge § 14131.10. (See ECF No. 44 at 14 (“Because the language contained in 42 U.S.C. § 1396a(bb)(1) is not general or administrative but contains specific rights-creating language, it reflects Congress’s intent to create new rights enforceable under § 1983 . . . in clear and unambiguous terms); see also 42 U.S.C. § 1396a(bb).) The Ninth Circuit thus affirmed the district court’s holding that the Clinics had a private right of action to bring a § 1983 claim to enforce the Medicaid Act. (ECF No. 44 at 14.)

The Ninth Circuit, however, reversed the district court’s interpretation of the Medicaid Act. The appellate court determined that it does not owe deference to CMS’s approval of the state plan amendment because Congress clearly outlines the types of services states must cover for FQHCs and RHCs in the text of the Medicaid statute. (ECF No. 44 at 14.) The Ninth Circuit determined that because the portion of the Medicaid statute defining FQHC and RHC services[4]imports Medicare’s general definition of “physician, ” the Medicare definition should be used in defining “physicians’ services” in the context of FQHCs and RHCs. (ECF No. 44 at 20.) The expansive Medicare definition of “physician” includes not only doctors of medicine and osteopathy, but dentists, podiatrists, optometrists, and chiropractors. See 42 U.S.C. § 1395x(r)(1)-(5). Consequently, the “physicians’ services” for which the Clinics must be reimbursed includes services by dentists, podiatrists, optometrists, and chiropractors. The Ninth Circuit held that Medicaid imposes on participating states an obligation to cover these services at FQHCs and RHCs. (ECF No. 44 at 20.) Thus, § 14131.10 impermissibly eliminates services performed by dentists, podiatrists, optometrists, and chiropractors at FQHCs and RHCs from Medi-Cal coverage. Accordingly, the Ninth Circuit reversed the district court’s grant of summary judgment in favor of Defendants and held federal Medicaid law preempts discontinuing reimbursement for these services. (ECF No. 44 at 4.)

The Ninth Circuit reversed and remanded the case back to this Court on the issue of attorneys’ fees. Plaintiffs move for attorneys’ fees (ECF No. 51) and requests this Court retain jurisdiction over any issues arising from the implementation of the judgment. (ECF No. 57 at 6.) For the reasons below, Plaintiffs’ Motion for Attorneys’ Fees (ECF No. 51) is GRANTED IN PART and DENIED IN ...


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