United States District Court, C.D. California
Lynn Carman, Stanley Friedman, Attorneys Present for Plaintiffs.
Susan Carson, Attorneys Present for Defendants.
CIVIL MINUTES - GENERAL
CHRISTINA A. SNYDER, District Judge.
Proceedings: PETITIONERS' AND INTERVENORS' MOTIONS FOR ATTORNEYS' FEES PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1021.5 (Dkt. Nos. 426, 427, 429)
On April 22, 2008, petitioners filed a verified petition for writ of mandamus in Los Angeles County Superior Court, seeking mandamus and injunctive relief against respondents California Department of Health Care Services (the "Department"); Sandra Shewry, Director of the Department (the "Director"), and Does 1 through 50. Dkt. No. 1. The verified First Amended Petition ("FAP") was filed on May 19, 2008, also in Superior Court. Dkt. No. 6. On May 19, 2008, respondents removed the action to federal court on the basis of federal question jurisdiction. Dkt. No. 1. On September 22, 2014, the Court granted a joint motion for approval of a settlement agreement filed by petitioners, intervenors, and the Director. Dkt. No. 420.
On April 22, 2015, petitioners filed a motion for attorneys' fees pursuant to California Code of Civil Procedure section 1021.5, to be paid to the law offices of Stanley L. Friedman ("Friedman"). Dkt. No. 426. On April 23, 2015, intervenors Acacia Adult Day Services, Theodore M. Mazer, Ronald B. Mead, and Sacramento Family Medical Clinics, Inc. filed a motion for fees to be paid to the law firm of Hooper, Lundy & Bookman, P.C. ("HLB"), under the same statute. Dkt. Nos. 427, 472. That same day, petitioners filed a motion for fees to be paid to Lynn S. Carman ("Carman") pursuant to section 1021.5. Dkt. No. 429. On May 13, 2015, the Director opposed all three motions. Dkt. No. 456. The proponent of each motion filed a reply. Dkt. Nos. 462, 466, 468. On July 6, 2015, the Court held a hearing. After carefully considering the parties' arguments, the Court finds and concludes as follows.
A. Statutory Background
The Medicaid Act authorizes the federal government to distribute funds to the states for the purpose of providing medical assistance to low-income persons who are aged, blind, disabled, or members of families with dependent children. Although the states are not required to participate in Medicaid, those that choose to do so are subject to certain conditions. Armstrong v. Exceptional Child Care Center, Inc., 135 S.Ct. 1378, 1382 (2015). Among these conditions, Section 30(A) of the Medicaid Act requires each participating state to have a Medicaid Plan that will
provide such methods and procedures relating to the utilization of, and the payment for, care and services available under the plan (including but not limited to utilization review plans as provided for in section 1396b(i)(4) of this title) as may be necessary to safeguard against unnecessary utilization of such care and services and to 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....
42 U.S.C. § 1396a(30)(A). California law requires that the Department administer Medi-Cal in accordance with the state plan, applicable state law, and Medi-Cal regulations. Cal. Code Regs. Tit. 22, § 50004(b).
B. The 2008 AB 5 Litigation
In 2008, California faced a budgetary crisis. On February 16, 2008, the California Legislature enacted Assembly Bill X3 5 ("AB 5"). Among other provisions, AB 5 reduced by ten percent Medi-Cal fee-for-service payments for physicians, dentists, pharmacies, adult day healthcare centers, clinics, health systems, and other providers. These cuts were to take effect for services provided on or after July 1, 2008. AB 5 also reduced payments to managed healthcare plans and acute care hospitals not under contract with the Department for inpatient services provided on or after July 1, 2008. Petitioners alleged that these rate reductions violated the Medicaid Act because the Department and the Legislature failed to consider efficiency, economy, and ...