Santa Rosa Memorial Hospital, Inc. v. Kent (July 31, 2018, A151588) __ Cal.App.5th __ [2018 WL 3629142]
A group of hospitals filed petitions for writ of mandate against Director of the California Department of Health Care Services (DHCS), seeking to void the DHCS’s implementation of state legislation that reduced the Medicaid reimbursement rate to hospitals that were not under negotiated rate contracts with the state, and an award of nearly $100 million in additional reimbursements. After the legislation was enacted, the DHCS published notices explaining the reductions and submitted state plan amendments incorporating them to the federal agency responsible for administering Medicaid, the Centers for Medicare & Medicaid Services (CMS), which approved the amendments. The hospitals’ writ petitions argued that the DHCS violated sections 13(A) and 30(A) of the Medicare Act (42 U.S.C. §§1396a(a)(13)(A) & (a)(30)(A)), which set out the procedural and substantive requirements that a state must follow when establishing reimbursement rates. The trial court denied writ relief.
The Court of Appeal affirmed. First, the court held that it had no jurisdiction to consider the hospitals’ challenges to the DHCS’s implementation of rates approved by the CMS based on the substantive requirements of section 30(A). Rather, such challenges must be brought exclusively in administrative proceedings against the CMA, followed by judicial review of that agency’s final determination under the Administrative Procedures Act. The court explained that, while a writ of mandate may compel performance of a ministerial duty, section 30(A) prescribes standards that are “so broad and nonspecific that they are ‘judicially unadministrable.’ ” The court then held that, although the hospitals could obtain writ relief for violations of the procedural requirements of section (13)(A), no such violation occurred here. The court rejected the hospitals’ contention that section 13(A) was violated because they had inadequate notice of the state legislation that approved the reduced reimbursement rates, explaining that section 13(A) permits notice of statutory rate changes after enactment of the legislation but prior to the effective date of the rate change by the DHCS, which is what occurred here.
Prepared by H. Thomas Watson and Peder K. Batalden, Horvitz & Levy, LLP
California Society for Healthcare Attorneys
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