#101-2011 – MAY 07, 2011 – SATURDAY
CALIFORNIA DISABILITY COMMUNITY ACTION NETWORK: Advocacy Without Borders: One Community – Accountability With Action - California Disability Community Action Network Disability Rights News goes out to over 55,000 people with disabilities, mental health needs, seniors, traumatic brain & other injuries, veterans with disabilities and mental health needs, their families, workers, community organizations, including those in Asian/Pacific Islander, Latino, African American communities, policy makers and others across California.
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State Budget Crisis
FEDERAL JUDGE STOPS CALIFORNIA FROM IMPLEMENTING 2009 MEDI-CAL RATE FREEZE FOR INTERMEDIATE CARE FACILTIES FOR DEVELOPMENTALLY DISABLED & FREESTANDING PEDIATRIC SUBACUTE FACILTIES
Federal Judge Says State Violated Federal Law and Previous Higher Court Decisions That Requires State to Obtain Federal Approval Before Freezing Rates
SACRAMENTO, CALIF (CDCAN) [Last Updated 05/07/2011 01:45 PM] - A federal district court judge in Los Angeles issued a ruling Friday (May 6) that stops and reverses the State’s implementation of a 2009 Medi-Cal rate freeze for intermediate care facilities for the developmentally disabled (ICF/DD), intermediate care facilities for the mentally retarded (ICF/MR) and freestanding pediatric subacute facilities (FSP facilities) finding that the freeze violated federal law because the State did not receive prior approval from the federal government to implement it. A copy of the 17 page final ruling by Federal District Court Judge Christina Synder is attached to this CDCAN Report as a pdf file saved as a document (which persons who are blind or sight impaired should be able to read using a screen reading device) titled: “20110505-FinalOrder-PreliminaryInjunction-DSN et al v DHCS and CAHF v. DHCS – Medi-Cal Rate Freeze.pdf”
While the Department of Health Care Services, now headed by Toby Douglas, under the Brown Administration, has not issued any official response, it is likely the State will appeal the ruling to the US 9th Circuit Court of Appeals. Judge Synder however refused the State’s request (or motion) to delay (“stay”) her order until that appeal is filed and decided by the higher court. That means her order is in effect as of May 5th – the date of her order (even though it was released on May 6th) unless a higher court reverses it.
The ruling impacts thousands of people with developmental disabilities and others who reside in those facilities across the state, and the community organizations their staff and support workers who run them.
Rate Freeze Was Part of 2009-2010 State Budget Revised July 2009
The rate freeze for those three types of Medi-Cal providers – along with other long term care facilities - was imposed as part of the 2009-2010 State Budget as revised in July 2009. That budget provision froze rates for those three types of providers at what it was during the 2008-2009 State budget year and the Judge’s order only impacts those providers, as named in the two lawsuits.
The rate freeze for those three types of long term care facilities was in budget related legislation, ABx4 5 (called budget trailer bill because it follows or trails the main State budget bill – the “x4” stands for the 4th extraordinary or special session of the Legislature that year), passed by State Senate 29 to 11 on July 23, 2009, and then by the Assembly by a vote of 57 to 20 and signed by then Governor Arnold Schwarzenegger on July 28, 2009.
Despite State Budget Crisis Federal Court Says “Not In the Public Interest” To Allow the State “To Continue To Violate Requirements of Federal Law”
Judge Synder acknowledged the State’s immense and on-going budget crisis, but wrote in her ruling that it was not in the public interest to continue to allow the State to violate federal laws.
In making her ruling, Judge Synder said that while the court was “…mindful of the difficulty facing the State of California in light of its fiscal crisis” the US 9th Circuit Court of Appeals in a case filed by the Novato, California-based Medicaid Defense Fund on behalf of Medi-Cal pharmacy providers and the Independent Living Center of Southern California, has held that the public interest would not be injured by granting a preliminary injunction in cases dealing with social or human services and that “…it would not be equitable or in the public's interest to allow the state to continue to violate the requirements of federal law, especially when there are no adequate remedies available to compensate the [plaintiffs – those filing the lawsuit] for the irreparable harm that would be caused by the continuing violation.”
The Judge’s ruling is one of several rulings by her and other federal district court judges on many other lawsuits that were filed against the State in recent years stopping a number of budget reductions citing various violations of federal laws.
Impact of the Court’s Ruling
It appears the ruling by the federal district court will do the following:
1. Stop immediately further implementation and reverse the State’s freeze of rates for intermediate care facilities for the developmentally disabled, intermediate care facilities for the mentally retarded and freestanding pediatric subacute facilities.
2. Require that the State would need to adjust (or increase) the rates for those providers as required under State law before the freeze was imposed in 2009.
The order by Judge Synder dated May 5th but released May 6th, however does not cover or impact a permanent rate reduction on the intermediate care facilities (and other long term care facilities) that Governor Brown proposed in January and that the Legislature approved and the Governor signed into law) in March as part of the 2011-2012 State Budget.
A notice from the Department of Health Care Services to providers impacted is expected to be posted or sent out soon [CDCAN will issue a report when it does]
Two Separate Lawsuits Filed and Then Combined
The ruling applied to two separate cases, filed originally in April 2010, that the federal court combined or consolidated because each covered the same issues and similar providers impacted by the rate freeze (the consolidated both cases on June 15, 2010):
· California Association of Health Facilities vs. David Maxwell-Jolly, et al [Case No. CV 10-3259 CAS (MANx) and
· Developmental Services Network and UCP of Los Angeles and Ventura Counties vs. David Maxwell-Jolly [Case No. CV 10-3284 CAS (MANx)
The name “David Maxwell-Jolly” refers to the person who was director of the Department of Health Care Services – the state agency that oversees the State’s Medicaid program (called “Medi-Cal”).
Judge Had Put A Hold On Both Cases Last Year
· Last year the judge put a hold on both cases because at that time the US Supreme Court announced it would take up several Medicaid related cases (including two major ones dealing with Medi-Cal provider rate reductions filed by the Novato, California-based Medicaid Defense Fund on behalf of the Independent Living Center of Southern California, and another dealing with stopping the State’s cut of its funding for In-Home Supportive Services worker wages) that it will hear in the fall of 2011 and decide sometime in 2012.
· The organizations filing both lawsuits (plaintiffs) filed a motion earlier this year requesting that the judge remove the hold (or “stay”) and to rule on the two cases dealing with the Medi-Cal rate freezes to ICF/DDs, ICF/MRs and the freestanding pediatric subacute facilities arguing that the rulings by the US 9th Circuit Court of Appeal – that ruled against the State of California in the Medicaid cases that the US Supreme Court will hear this coming fall – remains in force until if and when the US Supreme Court over rules it.
· Judge Synder agreed and allowed the to cases to move forward together, and then issued her ruling on Friday (May 6th).
What the Two Lawsuits Claimed and Asked For
The two lawsuits asked the federal district court to stop the State from implementing the rate freeze for the following three reasons:
Claim that State Violated “Quality of Care” and “Equal Access” In Federal Law
· The two lawsuits claimed that the State, in approving and implementing the rate freeze violated a provision of the federal Medicaid Act [42 USC Section 1396a(a)(30(A) – referred to as Section 30(A)] because neither the Department of Health Care Services nor the California Legislature considered the “quality of care” and “equal access” requirements of that provision, or whether reimbursement rates are reasonably related to provider costs, before its implementation.
· Judge Synder did not rule on this argument saying it would be “…imprudent to resolve the present motions under Section 30(A)” while the issue is waiting to be resolved by the US Supreme Court. She did note in her ruling however that “For now, suffice it to say that plaintiffs’ claims under Section 30(A) present a “serious question going to the merits” – meaning those filing the two lawsuits raise a compelling argument, even though she would not rule on that part of their lawsuit.
Claim That State Violated Federal Law & Previous Higher Court Decisions on Implementing Freeze Before Getting Federal Approval
· The two lawsuits claimed that the State in passing and implementing the rate freeze violated federal law and a previous ruling by the US 9th Circuit Court of Appeals – an issue not part of the cases that the US Supreme Court will hear – because the Department of Health Care Services implemented the rate freeze through an amendment to the State’s Medicaid State Plan without prior approval from the federal government.
· On this point Judge Synder agreed with those filing the two lawsuits and is the basis for her ruling that, as of May 5th (the actual date of her order] stopped the State from implementing the rate freeze that went into effect in 2009.
Claim That State Was In Violation With “Public Process” Provision of Federal Law
· The two lawsuits claimed that the State in approving and implementing the rate freeze was in violation of the public process provisions under federal law [42 USC Section 1396(a)(13(A)] sometimes referred to as “Section 13(A)”.
· Judge Synder declined to rule on this claim by those filing the two lawsuits because she believed they “…have demonstrated a likelihood of success on the merits” of their other claim that the State was in violation of federal law and court decisions in implementing the rate freeze through a State Plan Amendment before getting approval from the federal government.
· Essentially the Judge felt this claim was not necessary for her to issue her order to stop the State from implementing the free.
The Federal Judge’s Order
Federal District Court Judge Synder issued the following order from her 17 page ruling:
· “…the Court hereby GRANTS plaintiffs’ [California Association of Health Facilities, and the Developmental Services Network and UCP of Los Angeles and Ventura Counties] motions for preliminary injunction.”
· “The Court hereby ORDERS the Director [of the California Department of Health Care Services], his agents, servants, employees, attorneys, successors, and all those working in concert with him to refrain from enforcing Cal. Welf. & Inst. Code § 14105.191(f), including refraining from effectively freezing at 2008–2009 levels the Medi-Cal reimbursement rates for services provided by intermediate care facilities for the developmentally disabled and the mentally retarded, and freestanding pediatric subacute facilities during the 2009–2010 rate year and each rate year thereafter.”
· “At oral argument, the Director orally moved for a stay of the preliminary injunction pending the Director’s emergency appeal of this order. In deciding whether to issue a stay pending appeal, the Court considers “(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies…The Court finds that the relevant factors do not weigh in favor of granting the Director’s motion.”
· “Most importantly, there is no evidence that the Director will suffer irreparable injury absent a stay, and issuance of a stay would substantially injure plaintiffs because their members would continue to lose considerable revenue that cannot be recouped retroactively in federal court. Accordingly, the Court DENIES the Director’s motion for a stay pending appeal.”
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