(CN) – The 9th Circuit blocked the state of California from cutting Medi-Cal reimbursement rates for hospitals by 5 percent, a budget cut aimed at saving the state $80 million a year.
The California Pharmacists Association and several hospitals challenged the rate cuts established in AB 1183, claiming the bill was enacted in violation of the Social Security Act.
Lloyd Bookman, a lawyer for the hospital association, told SFGate reporters that the 5 percent reduction would cost hospitals about $80 million a year in state funds and $120 million in federal aid.
A federal judge said the hospitals were likely to succeed on the merits, but declined to issue an injunction, citing the plaintiffs’ failure to demonstrate “irreparable harm.”
But a three-judge panel of the 9th Circuit took a different view and granted the injunction.
“[W]e are persuaded that because the Hospital Plaintiffs and their members will be unable to recover damages against the Department even if they are successful on the merits of their case, they will suffer irreparable harm if the injunction is not granted,” the judges concluded.