Supreme Court takes on states' plans to cut Medicaid payments

McClatchy NewspapersJanuary 18, 2011 

WASHINGTON — The Supreme Court agreed Tuesday to review California's controversial proposals to cut Medicaid reimbursements to physicians, dentists, pharmacies, health clinics and other medical providers.

The court's decision to hear three combined California legal challenges is good news for Democratic Gov. Jerry Brown, who wants to enact budget cuts similar to those that courts have previously struck down. Potentially, hundreds of millions of dollars in proposed savings are at stake.

"The fact that the court agreed to hear these cases is a big and important step for California," Elizabeth Ashford, a spokeswoman for Brown, said Tuesday night.

The court's decision also could please 22 states that have sided with California, including Florida, Idaho and South Carolina. California and the other states want to restrict the kinds of private lawsuits that can be filed over public benefits.

The Ninth Circuit of Court of Appeals previously rejected California's proposed reimbursement cuts, initially put forward under Brown's Republican predecessor, Arnold Schwarzenegger.

The Supreme Court's decision issued without comment Tuesday means at least four of the nine justices question the Ninth Circuit's reasoning. The impending review by a conservative-dominated high court worries the medical professionals and patient advocates opposed to the reimbursement reductions.

"The whole thing is just shocking," said Lynn Carman, the chief counsel for the Medicaid Defense Fund. "I am shocked that the issue is even before the Supreme Court."

The California Legislature in 2008 initially adopted a 10 percent reduction in reimbursements by Medi-Cal, which is California's Medicaid program. The cuts were blocked in court.

In his proposed spending plan, Brown adopted some of the same reimbursement proposals in a bid to close a $25 billion budget gap. Cutting reimbursements would save $709 million in the fiscal year that begins July 1, according to Brown's budget.

The cases brought by the Independent Living Center of Southern California, the California Pharmacists Association and Santa Rosa Memorial Hospital raise substantially the same legal question. This question to be solved by the Supreme Court doesn't involve California's authority to impose cuts, or the wisdom of the budget cuts.

Rather, the court will rule on whether Medicaid beneficiaries and physicians have the right to sue over the proposed reimbursement reductions.

Though it sounds acutely technical, this argument over legal standing is crucial because it determines who can challenge government decisions and who's shut out of court. Chief Justice John Roberts Jr. and other Supreme Court conservatives have repeatedly adopted a narrow view of legal standing in other cases.

"Review is warranted to prevent nullification of over 30 years of court precedent establishing limitations on private suits against the states," said Brown, a onetime California governor who was serving as state attorney general when he argued in a legal brief last year.

The Obama administration, at the Supreme Court's invitation, had likewise argued as a policy matter against the ability of Medicaid beneficiaries to sue under certain conditions.

"Nearly every court of appeals to consider the issue has held that neither providers nor beneficiaries have a cause of action," the U.S. solicitor general's office argued.

The Obama administration had nonetheless urged for other reasons that the court not to hear the California challenges, an admonition the Roberts-led court brushed aside.

The court consolidated the three California cases into one, hour-long oral argument to be heard later this year. No date was set for the argument, which potentially could occur during the term that begins in October.

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