Supreme Court: California pharms can challenge Medicaid cuts

California pharmacists are claiming victory after the U.S. Supreme Court sent 3 cases back to the Ninth Circuit Court of Appeals in Los Angeles. The cases involved injunctions halting Medicaid reimbursement cuts to pharmacies and other providers in California.

In 2008, the California legislature voted to cut reimbursements by 10% under Medi-Cal, the state Medicaid program. The state enacted another 5% cut in 2009. The Medicaid Defense Fund (MDF) obtained injunctions to block both cuts, arguing that California had not obtained approval for the cuts from the Centers for Medicare and Medicaid Services (CMS) as required by the Medicaid statute.

California argued that the MDF coalition of pharmacies, adult day health centers, dentists, optometrists, clinics, home health agencies, and non-emergency medical transporters, has no standing to sue to enforce Medicaid regulations. The state said that only CMS can enforce Medicaid rules and regulations.

MDF lead attorney Lynn Carman argued that because federal law supersedes state law, private organizations and citizens are entitled to sue to enforce the supremacy of federal rights over state rights. The Ninth Circuit Court of Appeals previously supported the MDF’s arguments.

CMS eventually approved a scaled-back reimbursement cut of 5% for the months of March through May, 2011, but the cut was blocked by the earlier Court of Appeals injunction. The Supreme Court vacated the injunction and ordered the Ninth Circuit to hear the case on its merits by a 5-4 vote.

Writing for the majority, Justice Stephen Breyer noted that the parties have never fully argued the issue of federal supremacy. He also wrote that because CMS eventually approved 1 of the 3 sets of reimbursement cuts, the MDF may need to seek redress under the Administrative Procedure Act and request review of the CMS approval.

However, writing the dissent, Chief Justice John Roberts argued that "nothing in the Medicaid Act allows providers or beneficiaries, or anyone else for that matter, to sue to enforce" the law.

Carman disputes that assertion.

“MDF has won 3 successive cases before the Court of Appeals on this issue and we will win this appeal, too,” he said. “The whole claim is that we cannot sue the state to prevent the state from violating federal law. If we can’t sue the state, this isn’t the United States we all grew up in.”