California Medical Transportation Association Inc v. Toby Douglas et al

Filing 79

MINUTE ORDER (IN CHAMBERS) by Judge Christina A. Snyder re Plaintiffs' Motion for Contempt 65 : The Court finds this motion appropriate for decision without oral argument. Fed. R. Civ. P. 78; Local Rule 7-15. Accordingly, the hearing date of 3/26/2012 is hereby vacated, and the matter is taken under submission. The Court DENIES plaintiffs' motion for contempt Motion for Contempt. See document for further details. (smom)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 11-9830 CAS (MANx)

Title

CALIFORNIA MEDICAL TRANSPORTATION ASSOCIATION; ET
AL. v. TOBY DOUGLAS; ET AL.

Present: The Honorable

Date

March 21, 2012

CHRISTINA A. SNYDER

CATHERINE JEANG
Deputy Clerk

Not Present
Court Reporter / Recorder

N/A
Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Not Present

Not Present

Proceedings:

(In Chambers:) PLAINTIFFS’ MOTION FOR CONTEMPT
(filed 02/27/12)

The Court finds this motion appropriate for decision without oral argument. Fed.
R. Civ. P. 78; Local Rule 7-15. Accordingly, the hearing date of March 26, 2012, is
hereby vacated, and the matter is taken under submission.
I.

INTRODUCTION AND BACKGROUND

On November 29, 2011, plaintiff California Medical Transportation Association,
Inc. (“CMTA”) filed the instant action against Toby Douglas, Director of the California
Department of Health Care Services (the “Director”) and Kathleen Sebelius, Secretary of
the U.S. Department of Health and Human Services (the “Secretary”). Plaintiffs filed
their First Amended Complaint (“FAC”) on December 29, 2011. The FAC adds GMD
Transportation, Inc. and Lonny Slocum as plaintiffs.
The California Department of Health Care Services (“DHCS”) is a California
agency charged with the administration of California’s Medicaid program, Medi-Cal.
The Secretary is responsible for administering the Medicaid program at the federal level.
Through her designated agent, the Centers for Medicare and Medicaid Services (“CMS”),
the Secretary is responsible for reviewing and approving policy changes that states make
to their Medicaid programs.
Plaintiff CMTA is a trade association representing the interests of non-emergency
medical transportation (“NEMT”) providers in the State of California. Plaintiff GMD
Transportation, Inc. (“GMD”) is an NEMT provider participating in the Medi-Cal
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 11-9830 CAS (MANx)

Date

March 21, 2012

Title

CALIFORNIA MEDICAL TRANSPORTATION ASSOCIATION; ET
AL. v. TOBY DOUGLAS; ET AL.

program, providing approximately 2,500 NEMT rides per month. Plaintiff Lonny
Slocum (“Slocum”) is a Medi-Cal beneficiary with significant health difficulties
including high blood pressure, congestive heart failure, kidney failure, and chronic
obstructive pulmonary disease. Slocum requires dialysis three times per week and is
confined to a wheel chair. He uses NEMT services to get to his treatments.
On March 25, 2011, California Governor Edmund G. Brown Jr. signed into law
Assembly Bill 97 (“AB 97”), the health budget trailer bill for California fiscal year
2011–2012. AB 97 enacted significant payment reductions for many classes of services
provided under the Medi-Cal program. Most significantly for the purposes of the instant
action, AB 97 enacted California Welfare and Institutions Code § 14105.192, which
authorizes the Director to reduce the Medi-Cal payment rates for various services,
including NEMT, effective June 1, 2011. Pursuant to Welfare and Institutions Code §
14105.192(n), the Director is required to seek any federal approvals necessary prior to
implementing the rate reduction.
DHCS submitted proposed State Plan Amendment (“SPA”) 11-009 to CMS on
June 30, 2011, seeking federal approval of the rate reduction and incorporation of that
reduction into California’s Medi-Cal State Plan. On September 27, 2011, CMS issued a
letter to DHCS requesting additional information concerning the proposed rate reduction.
This Request for Additional Information (“RAI”) focused on the impact of the rate
reduction on access to services. DHCS responded with an “Access Analysis” and a plan
for monitoring access. On October 27, 2011, in a letter from the Associate Regional
Administrator of the Division of Medicaid & Children’s Health Operations, CMS
provided notice to the Director and DHCS that it had approved the SPA.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 11-9830 CAS (MANx)

Date

March 21, 2012

Title

CALIFORNIA MEDICAL TRANSPORTATION ASSOCIATION; ET
AL. v. TOBY DOUGLAS; ET AL.

Plaintiffs allege that CMS’s approval of the SPA was in violation of 42 U.S.C.
§ 1396a(a)(30)(A) (“Section 30(A)”),1 the Supremacy Clause,2 and the Due Process
Clause of the 14th Amendment to the U.S. Constitution.3 FAC ¶ 42. Plaintiffs further
allege that the Secretary’s approval of the SPA violated the Administrative Procedure Act
(“APA”), 5 U.S.C. § 701 et seq. because the Secretary failed to consider certain factors
including the impact of the rate reduction on access to and quality of NEMT services. Id.
¶ 47.
On January 10, 2012, the Court issued an order granting a preliminary injunction.
That order stated, in pertinent part:
Defendant Toby Douglas, Director of the California Department of Health Care
Services, his employees, his agents, and others acting in concert with him shall be,
and hereby are, enjoined and restrained from violating federal law by
implementing or otherwise applying the reduction on Medi-Cal reimbursement for
non-emergency medical transportation services on or after June 1, 2011, pursuant
to Assembly Bill 97 enacted by the California Legislature in March 2011, as
codified at California Welfare and Institutions Code § 14105.192.
Dkt. No. 42 at 21–22.

1

Section 30(A) states in pertinent part that a State plan for medical assistance must:

provide such methods and procedures relating to the utilization of, and the payment
for, care and services available under the plan . . . to assure that payments are
consistent with efficiency, economy, and quality of care and are sufficient to enlist
enough providers so that care and services are available under the plan at least to
the extent that such care and services are available to the general population in the
geographic area.
2

U.S. Const. art. VI, cl. 2.

3

U.S. Const. amend. XIV.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 11-9830 CAS (MANx)

Date

March 21, 2012

Title

CALIFORNIA MEDICAL TRANSPORTATION ASSOCIATION; ET
AL. v. TOBY DOUGLAS; ET AL.

At oral argument in the related case California Medical Association v. Douglas,
No. CV 11-9688 CAS (MANx), the Director argued that the Court cannot enjoin the
implementation of the challenged rate reduction for services rendered between June 1,
2011 and the date of the Court’s order because such an injunction would violate
California’s Eleventh Amendment immunity. The Court found this argument persuasive,
holding:
Insofar as the Director has not yet reimbursed providers for services rendered
between June 1, 2011, and the date of this order, the Court finds and concludes that
an injunction restraining the implementation of the rate reduction would be
contrary to the State’s Eleventh Amendment immunity. In this respect, the Court
is guided by the Ninth Circuit’s explanation that “whether relief is prospective or
retrospective in the Medicaid payment context turns on the date of service, not the
date of payment.” ILC II, 572 F.3d at 661 n.19. Under this definition, an
injunction precluding the Director from reducing payments for services already
rendered would constitute a retrospective award of damages in violation of the
Eleventh Amendment.
On January 31, 2012, the Court ordered plaintiffs to show cause why the
preliminary injunction should not be modified to exclude reimbursements not yet paid by
the Director for services provided between June 1, 2011, and January 10, 2012. On
March 8, 2012, the Court modified its preliminary injunction in this case to exclude
coverage of services rendered between June 1, 2011, and January 10, 2012.
Plaintiffs filed the instant motion for contempt against Toby Douglas on February
27, 2012. The Director filed his opposition on March 12, 2012. Plaintiffs replied on
March 19, 2012. After considering the parties’ arguments, the Court finds and concludes
as follows.
II.

DISCUSSION

Plaintiffs argue that the Director is in contempt of the Court’s preliminary
injunction order because DHCS improperly applied the rate reduction to three
checkwrites that occurred on January 10, 17, and 24, 2012. Mot. at 6.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 11-9830 CAS (MANx)

Date

March 21, 2012

Title

CALIFORNIA MEDICAL TRANSPORTATION ASSOCIATION; ET
AL. v. TOBY DOUGLAS; ET AL.

In opposition, the Director argues, inter alia, that he should not be held in
contempt because the checkwrites at issue concerned services rendered between June 1,
2011 and January 10, 2012. Because the Court modified its injunction to exclude
coverage of such services, the Director argues that his application of the rate reduction to
those checkwrites did not violate the Court’s injunction. Opp’n at 10–11.
The Court agrees with the Director that he should not be held in contempt. Based
on the Court’s modification of the January 10, 2012 injunction to exclude coverage of
services provided between June 1, 2011 and January 10, 2012 for which reimbursements
were not yet paid, the Director’s application of the rate reduction to the checkwrites at
issue was not in violation of the Court’s injunction.
III.

Conclusion

In accordance with the foregoing, the Court DENIES plaintiffs’ motion for
contempt.
IT IS SO ORDERED.
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Initials of Preparer

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CMJ

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