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ARC of California v. Douglas

United States District Court, E.D. California

March 28, 2018

TOBY DOUGLAS, in his official capacity as Director of the California Department of Health Care Services; CALIFORNIA DEPARTMENT OF HEALTH CARE SERVICES; TERRI DELGADILLO, in her official capacity as Director of the California Department of Developmental Services; CALIFORNIA DEPARTMENT OF DEVELOPMENTAL SERVICES; and DOES 1-100, inclusive, Defendants.



         Plaintiffs ARC of California (“ARC”) and the Cerebral Palsy Association of San Diego (“CPA”) (collectively “Plaintiffs”) brought suit against the California Department of Health Care Services (“DHCS”) and the California Department of Developmental Services (“DDS”).[1] ARC is a statewide organization comprised of individuals with intellectual and developmental disabilities, their families, and their home and community-based service providers. CPA is a non-profit organization serving the needs of individuals with cerebral palsy in San Diego and is affiliated with the National Cerebral Palsy Association. Defendants DHCS and DDS are both involved in administering the provision of support to disabled individuals.

         Plaintiffs challenge several of the State of California's implemented changes affecting how it pays for services provided to developmentally disabled individuals under the federally funded Medicaid program. Plaintiffs' original causes of action included claims under Section 30(A) of the Medicaid Act, but in 2015 the Supreme Court determined that Section 30(A) of the Medicaid Act does not confer a private right of action. Armstrong v. Exceptional Child Ctr., Inc., 135 S.Ct. 1378 (2015). Therefore, by Order filed August 29, 2016, (ECF No. 208), this Court dismissed Plaintiffs' Section 30(A) claims as moot. Plaintiffs have several claims remaining against the State, specifically under the Americans with Disabilities Act, the Rehabilitation Act, and Cal. Gov. Code § 11135. Presently before the Court is the State's Motion for Summary Judgment as to those remaining claims. ECF No. 229. For the following reasons, the State's Motion is GRANTED in part and DENIED in part.[2]


         In California, the DHCS is the state agency responsible for administering the federal Medicaid program, known as Medi-Cal. The DDS, however, is responsible for coordinating the provision of services for individuals with developmental disabilities for those covered under the Medicaid Home & Community-Based Services (“HCBS”) waiver, as well as under California's Lanterman Act, Cal. Welf. & Inst. Code §§ 4500, et seq., which provides for similar services and supports at the state's own expense. DDS is accordingly charged with monitoring the 21 regional centers in California who contract out services for compliance with both federal and state law and to ensure that high quality services and supports are being provided. Id. at §§ 4434(a)-(b), 4500.5(d), 4501. DDS is further charged with promoting uniformity and cost-effectiveness in the operation of regional centers. Ass'n for Retarded Citizens v. Dept. of Developmental Servs., 38 Cal.3d 384, 389 (1985).

         Plaintiffs' lawsuit challenges four bills, as enacted by the California Legislature since 2009, which operate to reduce or freeze rates to HCBS providers. The first two bills made percentage reductions in provider rates. Using payment levels from 2003, the Legislature initially enacted a three percent reduction from those rates effective February 1, 2009, through June 30, 2010. That reduction, along with an additional 1.25 percent cut, was ultimately extended through June 30, 2012. After June 30, 2012, the reimbursement reduction was decreased to only 1.25 percent, where it remained until June 30, 2013, at which time it expired entirely and was not reenacted. Any challenge to this percentage reduction claim is consequently now moot. ARC of California v. Douglas, et al, 757 F.3d 975, 982 (9th Cir. 2014).

         The third bill, as codified at California Welfare & Institutions Code § 4692, enumerates14 unpaid holidays over the course of each year for which vendors are not reimbursed for many services. That bill has been termed as the “uniform holiday schedule.” Fourth and finally, the so-called “half-day billing rule” limits regional centers to payment for only a half day if a patient was present less than 65 percent of a program day. See Cal. Welf. & Inst. Code § 4690.6. The State maintains that those reductions apply to all disabled individuals irrespective of whether they qualify for services under the HCBS waiver or under California's Lanterman Act.

         This case was initially stayed pending the outcome of the Supreme Court's grant of certiorari in Douglas v. Independent Living Center of Southern California, Inc., 132 S.Ct. 1204 (2012). Once that stay was lifted, Plaintiffs moved for a preliminary injunction on various grounds, including allegations that the State's billing reductions violated the Medicaid Act. Defendants concurrently moved to dismiss Plaintiffs' Medicaid Act claims on grounds that those claims lacked merit. This Court denied both motions in separate orders issued on July 1, 2013. ECF Nos. 119, 120. Plaintiffs appealed the Court's preliminary injunction ruling on July 29, 2013, and by its decision filed June 30, 2014, the Ninth Circuit reversed and remanded for further proceedings. ARC of California, 757 F.3d 975. Thereafter, on October 10, 2014, in light of the Ninth Circuit's ruling, Plaintiffs filed a motion for partial summary judgment as to their Medicaid Act claim, which the Court granted. ECF No. 172.

         Following the Supreme Court's Armstrong decision finding that Section 30(A) of the Medicaid Act does not confer a private right of action, Defendants filed a Motion for Reconsideration (ECF No. 194) and a Request for Leave to File Motion for Summary Judgment (ECF No. 199). The Court granted Defendants' Motion for Reconsideration, vacating its prior order (ECF No. 172) granting partial summary judgment and permanent injunction in its entirety. ECF No. 208. Plaintiffs' Medicaid Act claim, which constituted the first claim in Plaintiffs' Complaint, was then dismissed in its entirety.

         Plaintiffs' claims under the Rehabilitation Act of 1973, the Americans with Disability Act, Cal. Gov. Code §§ 11135 and 11139, and 28 U.S.C. § 2201, remain pending. Having granted Defendants' request to file an additional motion for summary judgment. Defendants subsequently filed the present Motion on July 6, 2017. ECF No. 229. Plaintiffs filed an opposition to Defendants' Motion (ECF No. 230) and Defendants filed a subsequent reply (ECF No. 231).


         The Federal Rules of Civil Procedure provide for summary judgment when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). One of the principal purposes of Rule 56 is to dispose of factually unsupported claims or defenses. Celotex, 477 U.S. at 325.

         Rule 56 also allows a court to grant summary judgment on part of a claim or defense, known as partial summary judgment. See Fed.R.Civ.P. 56(a) (“A party may move for summary judgment, identifying each claim or defense-or the part of each claim or defense-on which summary judgment is sought.”); see also Allstate Ins. Co. v. Madan, 889 F.Supp. 374, 378-79 (C.D. Cal. 1995). The standard that applies to a motion for partial summary judgment is the same as that which applies to a motion for summary judgment. See Fed.R.Civ.P. 56(a); State of Cal. ex rel. Cal. Dep't of Toxic Substances Control v. Campbell, 138 F.3d 772, 780 (9th Cir. 1998) (applying summary judgment standard to motion for summary adjudication).

         In a summary judgment motion, the moving party always bears the initial responsibility of informing the court of the basis for the motion and identifying the portions in the record “which it believes demonstrate the absence of a genuine issue of material fact.” Celotex, 477 U.S. at 323. If the moving party meets its initial responsibility, the burden then shifts to the opposing party to establish that a genuine issue as to any material fact actually does exist. Matsushita ...

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