Neighbors Sue California Over Medi-Cal

SAN FRANCISCO (CN) - Eighteen out-of-state hospitals claim California illegally excluded them from "billions of dollars" in Medi-Cal payments for treating California patients. The federal lawsuit challenges A.B. 1653, which takes effect Sept. 1. and prohibits hospitals in other states from receiving "hospital provider tax money ... despite their treatment of Medi-Cal patients."

California will implement A.B. 1653 on Wednesday, eliminating the need for federal approval to distribute hospital provider tax (HPT) money.

"Under AB 1653, the state will be able to distribute all of the HPT monies on or after September 1, 2010," according to the 18 hospitals in Oregon, Arizona and Nevada. This will prevent them from Medi-Cal reimbursements to which they are entitled, and will "preclude the court from reviewing the constitutionality and legality of the HPT program."

The hospitals filed a $2 billion lawsuit against California in March 2010, challenging AB 1383, but a federal judge found that the suit "was not ripe for review." The payment issues raised by AB 1383 have been superseded by passage of AB 1653, according to the complaint.

The plaintiffs say that barring out-of-state hospitals from receiving reimbursements for treating low-income California patients violates the U.S. Constitution's Commerce Clause and the 14th Amendment, the hospitals claim.

"The HPT discriminates against out-of-state hospitals because in-state hospitals can obtain supplemental Medi-Cal funds while out-of-state hospitals cannot, even though both provide services to Med-Cal patients," the complaint state.

The hospitals want AB 1653 declared void and invalid, and California enjoined from distributing any money under the law. They are represented by Michael Sorgen.

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