Blog

The Douglas Cases

October 21, 2011

By Barbara Haubrich-Hass, ACP/CAS

Due to the California budget crisis, state legislature passed a law reducing reimbursement rates by 10 percent for a variety of Medicaid providers.  Because Medicaid reimbursement is historically lower than private insurance, Medicaid providers and beneficiaries argue that the rate reductions would cause medical providers to drop out of the program.  In the Douglas cases (cited below), providers are suing the state of California alleging that the reduced Medicaid reimbursement rates dropped to such an extent that they cannot provide the services mandated by federal Medicaid law.  At issue before the Supreme Court is not whether this claim is true or false, but whether the parties have the right to bring the claim at all.

On October 3, 2011, the U.S. Supreme Court heard opening arguments for three cases:  Douglas v. Independent Living Center of South California [U.S. No. 09-958]; Douglas v. California Pharmacists Association [U.S. No. 09-1158]; and Douglas v. Santa Rosa Memorial Hospital [U.S. No. 10-283].  Jointly, these cases raise the issue of whether the U.S. Constitution guarantees private individuals the right to seek judicial intervention to stop state actions that violate federal law.  In general, under the U.S. Constitution’s supremacy clause, when both federal and state law applies to a situation, the federal law preempts the state law. 

If the court rules that the Medicaid beneficiaries and providers have established the right to seek judicial intervention, the Supreme Court will then decide whether California’s proposed rate reductions violate the equal access provisions of the Medicaid Act.  Additionally, if the court decides in favor of the beneficiaries and providers, they can proceed with their request for injunctive relief asking the federal court to prevent implementation of the rate reductions pending a resolution of the lawsuit.

On the other hand, if the Supreme Court rules in favor of the California Medicaid agency, the beneficiaries and providers will not be able to bring lawsuits to enforce the Medicaid Act’s equal access provision leaving their only course of enforcement through the state Medicaid plan administrative approval process.

Much is at stake.  One thing is true…any way you look at it, no one wins.