Cuts to California Home Care Still Face Challenge

(CN) - Developmentally disabled Californians may still have a case against the state for cutting home- and community-based care, the 9th Circuit ruled Monday.

Arc of California and the United Cerebral Palsy Association of San Diego have spent the last three years challenging three money-saving cuts to services.

In addition to a 3 percent reduction in services that the state Legislature enacted in 2009, the challengers have also sought to cancel a 14-day annual service blackout and a "half-day billing rule."

The case stalled for a year after the state won a stay pending a Supreme Court decision on whether Medicaid providers and recipients have standing under the supremacy clause.

U.S. District Judge Morrison England in Sacramento eventually refused to issue a preliminary injunction, simultaneously dismissing Arc's claims under the Medicaid Act. He reasoned that the cuts were legal because the state's waivers had been approved by the Centers for Medicare & Medicaid Services.

By the time the 9th Circuit took up the issue last year, the 3 percent cut in services had expired.

A three-judge appeals panel on Monday found that portion of the case moot, but revived Arc's claims as to the cuts that have not expired.

The lower court misread the Medicaid Act when it gave the Centers for Medicare & Medicaid Services so much deference, the court found. That move also ignored the fact that California "did nothing whatever to study the likely effects of its uniform holiday schedule or half-day billing rule on the 'efficiency, economy, and quality of care' or the availability of service providers, before enacting and implementing those rules," Judge Marsha Berzon wrote for the court.

"We conclude that California's total abdication of its obligations under Section 30(A) indicates that Arc is likely to prevail on the merits of its challenges under the Medicaid Act to the uniform holiday schedule and half-day billing rule," Berzon added. "The District Court abused its discretion in determining otherwise, and so in assessing Arc's likelihood of success on the merits."

Finding that "impact" of the two remaining service cuts "was not the focus of the preliminary injunction proceeding," the court declined to rule on that issue.

The appellate panel remanded the case to Sacramento.

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