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9th Cir. Considers Class Bid for Attorney Fees

(CN) - A class that won an early grant of summary judgment in a dispute over copayments to Arizona's Medicaid program, only to lose the case later, still deserves to receive attorney fees, an attorney for the class argued Thursday before the Ninth Circuit.

In 2012, a class action claimed Arizona was forcing adults without minor children to pay copayments exceeding the "nominal" co-pays authorized by the federal Medicaid Act.

According to the class, Arizona's Medicaid program - Arizona Health Care Cost Containment System - approved "mandatory and heightened" copayments as part of a demonstration project for beneficiaries who do not have a minor child living with them.

The project, which was approved for five years on Oct. 21, 2011, also expanded the number of people covered under AHCCS.

U.S. District Court Judge David Campbell found for the class in February 2013, ruling that then-Secretary of Health and Human Services Kathleen Sebelius violated the Administrative Procedure Act by failing to consider and address plaintiffs' evidence.

Campbell ordered Sebelius to find whether the project was an experimental pilot or demonstration project, if the copayments would help the project, and the length of the project.

In April 2013, Sebelius reaffirmed the project, and Campbell later found in her favor.

Campbell denied the class attorney fees in January 2014, ruling that under the 2007 U.S. Supreme Court decision in Sole v. Wyner "a plaintiff who gains a preliminary injunction after an abbreviated hearing, but is denied a permanent injunction after a dispositive adjudication on the merits, does not qualify as a 'prevailing party'" eligible for attorney fees.

Richard Rothschild, of the Western Center on Law and Poverty and an attorney for plaintiffs, argued Thursday that since plaintiffs' won summary judgment in 2013, they should receive attorney fees even if Campbell later found for Sebelius.

"That victory pushed plaintiffs well above the low threshold for the prevailing party status," Rothschild said.

U.S. Circuit Judge M. Margaret McKeown questioned whether the federal court's retention of jurisdiction in the case affected whether plaintiffs should have received attorney fees.

"You are the prevailing party under your theory, but I think what we have to wrestle with is what the retention of jurisdiction means here," McKeown said.

"The question of whether a plaintiff is a prevailing party ... is not a formulistic one," Rothschild. "It's a practical inquiry."

Sushma Soni, an attorney for the U.S. Department of Justice, argued that the plaintiffs' failure to appeal any decision by Campbell until he denied them attorney fees is indication that they should not be granted an award.

"The district court made a final determination of the claim against the secretary, went point by point through all the plaintiffs' arguments ... and rejected them," Soni said.

McKeown asked Soni whether Rothschild's argument that plaintiffs were the prevailing party was valid.

"What we have here is a determination that is arbitrary and capricious," McKeown said. "The secretary goes back and does it right ... why isn't that procedural victory from a prevailing party?"

"For one thing your honor, they never asked for a remand," Soni answered.

U.S. Circuit Judges Richard Tallman and Kim McLane Wardlaw also participated in the hearing.

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