Federal Judge Halts Cuts to California Medicaid

(CN) - Several California health care entities that challenged cuts in the state's Medicaid program won a federal injunction against the director of the Department of Health Care Services.

After Gov. Jerry Brown signed a health budget bill into law in March, challengers claimed that the government failed to consider "the impact that the rate reductions would have on access to and quality of pharmacy services."

Five pharmacies that participate in the Medi-Cal fee-for-service program joined forces in the suit with a pharmacy organization, an independent-living home, the state association of independent-living centers and a Medi-Cal beneficiary.

U.S. District Judge Christina Synder in Los Angeles granted the "extraordinary remedy" of a preliminary injunction in favor of the plaintiffs on Wednesday.

The judge found no evidence that U.S. Secretary of Health and Human Services Kathleen Sebelius reviewed cost data before submitting the plan to the Center for Medicare and Medicaid Services.

"Instead, the language of [the state law] makes clear that the only reason for imposing the rate reductions was California's ongoing fiscal emergency," Snyder wrote, citing 9th Circuit case law holding that Medicaid rate reductions cannot be based only on state budget concerns.

The court noted that the plaintiffs would likely succeed on their claims and face irreparable harm by the rate reductions.

"While the court is mindful of the state's fiscal crisis, the court believes that the balance of the equities and the public interest strongly favor the issuance of an injunction," Snyder wrote.

Citing a 9th Circuit decision, she added that "there is a robust public interest in safeguarding access to health care for those eligible for Medicaid."

Also on Wednesday, Judge Snyder granted a separate injunction for the California Hospital Association and five individual Medi-Cal beneficiaries.

That injunction restrains Toby Douglas, director of the California Department of Health Care Services, from applying rate reductions "for skilled nursing services rendered by distinct part hospital units."

In both cases, Judge Snyder stayed Sebelius' approval of the reductions.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit