The Ninth Circuit held that California could make cuts to the Medi-Cal Health Care program and vacated all injunctions against California. The opinion can be accessed here. As the three-judge panel stated,
Medicaid, as a voluntary program, does not create property rights.
In 2011, plaintiffs (a Medi-Cal beneficiary, 5 pharmacies, a pharmacy organization, an independent living center, and a CA association of independent living centers) sued California and the U.S. Dep’t of Health and Human Services to block the cuts under the Medicaid Act. The district court granted injunctions against California, blocking the enactment of the cuts. The Ninth Circuit, on appeal, vacated these injunctions.
The Ninth Circuit stated that Chevron U.S.A v. Natural Resources Defense Council requires deference to Sebelius’ interpretation of California’s amendment to its Medicaid plan – called a state plan amendment. The Ninth Circuit stated,
Considering all the evidence of Chevron-esque delegation in these cases, we hold that the balance tips to the side of deference – both to the secretary’s implicit interpretation that states are not required to follow any specific methodology in submitting SPAs [state plan amendment] and to its explicit determination that the SPAs at issue comply with federal law.
The decision notes that Medicaid “is a colossal undertaking,” with joint funding from the U.S. government and the states.
Congress explicitly granted the secretary authority to determine whether a state’s Medicaid plan complies with federal law.
The secretary understands the [Medicaid] Act and is especially cognizant of the all-important yet sometimes competing interests of efficiency, economy, quality of care, and beneficiary access.
The Ninth Circuit also concluded that plaintiffs’ claims that California violated the supremacy clause was unlikely to prevail under Douglas v. Independent Living Center (2012). The Court explained,
Even assuming that the supremacy clause provides a private right of action – the secretary has reasonably determined that the state’s reimbursement rates comply with § 30(A) [of the Medicaid Act].