The Arc of California, et al v. Douglas, et al
Filing
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ORDER signed by Chief Judge Morrison C. England, Jr. on 8/31/2015 ORDERING 186 Defendants' Motion to Vacate is DENIED with the exception that the language quoted in the preceding paragraph from the Court's 2/13/2015 Memorandum and Order is hereby stricken. (Reader, L)
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UNITED STATES DISTRICT COURT
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EASTERN DISTRICT OF CALIFORNIA
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THE ARC OF CALIFORNIA; UNITED
CEREBRAL PALSY ASSOCIATION
OF SAN DIEGO,
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Plaintiffs,
No. 2:11-cv-02545-MCE-CKD
ORDER
v.
TOBY DOUGLAS, in his official
capacity as Director of the California
Department of Health Care Services;
CALIFORNIA DEPARTMENT OF
HEALTH CARE SERVICES; TERRI
DELGADILLO, in her official capacity
as Director of the California
Department of Developmental
Services; CALIFORNIA
DEPARTMENT OF
DEVELOPMENTAL SERVICES; and
DOES 1-100, inclusive,
Defendants.
Plaintiffs the ARC of California (“ARC”) and the Cerebral Palsy Association of San
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Diego (“CPA”) (collectively “Plaintiffs”) challenge several changes the State of California
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implemented with respect to how it pays for services provided to developmentally
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disabled individuals under the federally funded Medicaid program. ARC is a statewide
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organization comprised of individuals with intellectual and developmental disabilities,
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their families, and their home and community-based service providers. CPA is a non1
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profit organization serving the needs of individuals with cerebral palsy in San Diego and
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is affiliated with the national cerebral palsy association. Defendants California
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Department of Health Care Services and the California Department of Developmental
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Services (collectively “Defendants” or “the State”) are both involved in administering the
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provision of support to disabled individuals.
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On October 10, 2014, Plaintiffs moved for partial summary judgment as to their
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First Claim.1 In their First Claim, Plaintiffs allege that Defendants violated the provisions
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of the Medicaid Act, 42 U.S.C. § 1396(a)(30)(A) (“Section 30(A)”), by reducing certain
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payments to the providers of community-based services to the disabled. Plaintiffs
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contend that because Defendants’ reimbursement reductions failed to comply with the
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Medicaid requirements, they were patently invalid and accordingly had to be enjoined.
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Specifically, Plaintiffs sought to enjoin California from continuing to enforce certain
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mandatory unpaid holidays for providers by way of a “uniform holiday schedule.” Plaintiff
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further sought to prevent the State from continuing to implement its so-called “half day
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billing” rule, which prevents providers from being reimbursed for a full day of services
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should a client elect to leave early for whatever reason.
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By Memorandum and Order filed February 13, 2015 (ECF No. 185), Plaintiffs’
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partial motion for summary judgment was granted. The Court reasoned that the Ninth
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Circuit’s decision in ARC of California v. Douglas, et al., 757 F.3d 975 (9th Cir. 2014)
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(which overruled a previous decision reached in this matter) mandated a permanent
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injunction preventing Defendants’ reimbursement practices from remaining in effect.
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It is undisputed that Defendants failed to appeal the Court’s decision and that the
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Court’s ruling consequently became final on or about March 16, 2015. Despite that
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failure to appeal, Defendants filed the instant Motion to Vacate (ECF No. 186) on April
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15, 2015. Defendants seek to vacate the permanent injunction and partial summary
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While Plaintiffs allege various claims under both federal and state law, the present Motion
pertains only to Plaintiffs’ Medicaid Act claims as set forth in the First Claim for Relief.
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judgment in Plaintiffs’ favor, and go so far as to ask the Court to dismiss the Medicaid
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Act claim upon which Plaintiffs were granted summary judgment.
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Defendants base their argument on a decision from the United States Supreme
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Court filed on March 31, 2015, fifteen days after this Court granted partial summary
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judgment as to Plaintiffs’ Medicaid Act claim. That decision, Armstrong v. Exceptional
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Child Ctr., Inc., 135 S. Ct. 1378 (2014), held that the Supremacy Clause of the United
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States Constitution does not confer a private right of action to compel compliance with
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Section 30(A) of the Medicaid Act, and that federal courts therefore lack jurisdiction to
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issue an injunction compelling such compliance. The Court reasoned that “[t]he sheer
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complexity associated with enforcing § 30(A), coupled with the express provision of an
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administrative remedy, § 1396, shows that the Medicaid Act precludes private
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enforcement of § 30(A) in the courts.” Id. at 1385. Under Federal Rule of Civil
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Procedure 60(b)(5) and (6)2, Defendants urge the Court to vacate the partial summary
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judgment and permanent injunction on grounds that this Court’s previous decision was
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accordingly “not based on good law.” Defs.’ Mot., 3: 4-5.
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Plaintiffs concede that had Defendants timely appealed the Court’s February 13,
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2015 Memorandum and Order, and had the appeal remained pending at the time the
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Supreme Court decided Armstrong, the Ninth Circuit “would have been obligated to
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reverse.” Pls.’ Opp’n at 7: 21-23. But it is just as undisputed that Defendants elected
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not to appeal, and that the Armstrong decision was not filed until two weeks after the
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time to appeal this Court’s decision had expired. As Plaintiffs point out, Defendants
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were well aware that Armstrong was pending before the United States Supreme Court.
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In fact, Defendants went so far as to file a request to stay this case pending a decision in
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Armstrong. See ECF No. 185 at 10:18-11:12.
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Under the doctrine of law of the case, final orders and judgments are generally
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final and binding on the parties thereto, and the doctrines of res judicata and collateral
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All further references to “Rule” or “Rules” are to the Federal Rules of Civil Procedure unless
otherwise noted.
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estoppel attach to such decisions. See, e.g., Arizona v. California, 460 U.S. 605 (1983).
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The Ninth Circuit recognizes a heavy presumption as to the finality of orders. See, e.g.,
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Flores v. Arizona, 516 F.3d 1140, 1163 (9th Cir. 2008). For example, a party seeking to
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vacate or modify a final order or injunction under Rule 60(b)(6) (one of the subsections
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relied upon by Defendants in seeking relief herein) must demonstrate “extraordinary
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circumstances” that would justify doing so. See, e.g., Liljeberg v. Health Servs. Corp.,
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486 U.S. 847, 863 n.11 (1988). A change in law subsequent to a decision does not
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necessarily constitute such an extraordinary circumstance. See Phelps v. Alamedia, 569
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F.3d 1120, 1135-36 (9th Cir. 2009). Moreover, a Rule 60(b) motion to vacate is not a
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substitute for an appeal. De Fillippis v. United States, 567 F.3d 341, 342 (1981), citing
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Ackermann v. United States, 340 U.S. 193, 198 (1950).
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The Motion to Vacate plainly fails as to the Court’s decision finding that existing
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reimbursement practices violated the Medicaid Act and that the so-called “uniform
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holiday schedule” and “half-day billing rule” therefore had to be enjoined. When the
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Court issued its Order precluding the implementation of those existing practices, it had
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jurisdiction and legal authority to do so. The decision from the Supreme Court to the
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contrary came after the deadline to appeal passed and the Order became final.
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The Court’s ability to preclude any other similar reimbursement practices in the
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future may, however, be precluded by Armstrong. Orders having explicit prospective
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application can be altered under Rule 60 as a result of subsequent changes in law that
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make such prospective application improper. Agostini v. Felton, 521 U.S. 203, 239
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(1997).
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In its February 13, 2015 Memorandum and Order, in addition to enjoining the
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existing reimbursement practices, the Court went on to provide as follows: “The State is
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further enjoined from making any future changes to payments [received] by providers
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without complying that the requirements of [§ 30(A)] and demonstrating that approval
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has been obtained from the Center for Medicaid Services.” ECF No. 185 at 11:24-27.
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To the extent that this language operates to enjoin practices allegedly running afoul of
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Section 30(A) on a prospective basis, it is clear the Court lacks jurisdiction to do so.
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Thus, the cited language from the Order is improper and should be stricken.
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Accordingly, Defendants’ Motion to Vacate (ECF No. 186) is DENIED with the
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exception that the language quoted in the preceding paragraph from the Court’s
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February 13, 2015 Memorandum and Order is hereby stricken.
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IT IS SO ORDERED.
Dated: August 31, 2015
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