9th Circuit Seeks Clarity in Calif. Medicaid Case

SAN FRANCISCO (CN) - The 9th Circuit ordered the California Association of Rural Health Clinics and the state Department of Health Care Services to clarify their positions in a case challenging the elimination of Medi-Cal reimbursement for certain optional Medicaid benefits.

At oral argument, supervising Deputy Attorney General Susan Carson argued that the suit brought by California Association of Rural Health Clinics and the Avenal Community Health Center ought to be dismissed and a new lawsuit filed against the federal Center for Medicaid Services for determining that the state is not required to reimburse clinics for "optional" dental, orthopedic and chiropractic services.

"The landscape has changed," she said. "The appellants are using the wrong vehicle. There must be an action against CMS under the Administrative Procedures Act."

Carson said the agency's approval letter should be enough to dismiss the case.

"Do we have anything to show us CMS' reasoning in reaching that result?" asked Judge Wallace Tashima. "It's like we just got a ruling from the Supreme Court that just says affirmed."

Carson admitted she did not, and said, "The problem is CMS is not here. CMS should be here."

Carson said regardless of the reasoning, the court is required to give the federal agency's approval letter "Chevron deference," a doctrine of administrative law that calls for courts to defer to government agencies' interpretations of statutes when they are charged with enforcing them. "Congress specifically gave them the authority," she said. "They're the experts."

Kathryn Doi, attorney for the clinics, contended that the agency's perfunctory, one-page approval letter was insufficient and shouldn't be considered determinative.

"That kind of letter is certainly not entitled to Chevron deference," she said. Tashima interrupted, laughing. "Anyway, you're going to brief all that," he said.

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