California Pharmacists Associa v. David Maxwell-Jolly ( 2010 )


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  •                   FOR PUBLICATION
    UNITED STATES COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    CALIFORNIA PHARMACISTS                 
    ASSOCIATION; CALIFORNIA MEDICAL
    ASSOCIATION; CALIFORNIA DENTAL
    ASSOCIATION; CALIFORNIA HOSPITAL
    ASSOCIATION; CALIFORNIA
    ASSOCIATION FOR ADULT DAY
    SERVICES; MARIN APOTHECARY, INC.,
    DBA Ross Valley Pharmacy;
    SOUTH SACRAMENTO PHARMACY;
    FARMACIA REMEDIOS, INC.; ACACIA               No. 09-55532
    ADULT DAY SERVICES; SHARP                        D.C. No.
    MEMORIAL HOSPITAL; GROSSMONT
    HOSPITAL CORPORATION; SHARP
       2:09-cv-00722-CAS-
    MAN
    CHULA VISTA MEDICAL CENTER;
    SHARP CORONADO HOSPITAL AND                     OPINION
    HEALTHCARE CENTER; FEY GARCIA;
    CHARLES GALLAGHER,
    Plaintiffs-Appellees,
    v.
    DAVID MAXWELL-JOLLY, Director of
    The California Department of
    Health Care Services,
    Defendant-Appellant.
    
    Appeal from the United States District Court
    for the Central District of California
    Christina A. Snyder, District Judge, Presiding
    Argued and Submitted
    January 19, 2010—Pasadena, California
    Filed March 3, 2010
    3331
    3332        CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY
    Before: Stephen Reinhardt, William A. Fletcher and
    Milan D. Smith, Jr., Circuit Judges.
    Opinion by Judge Milan D. Smith, Jr.
    CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY         3335
    COUNSEL
    Edmund G. Brown Jr., Attorney General of California, Jenni-
    fer M. Kim, Shannon M. Chambers and Randall R. Murphy,
    Supervising Deputy Attorneys General, and Gregory M.
    Cribbs, Deputy Attorney General, Los Angeles, California,
    for defendant-appellant David Maxwell-Jolly.
    Lloyd A. Bookman, Byron J. Gross, and Jordan B. Keville,
    Hooper, Lundy & Bookman, Inc., Los Angeles, California,
    for plaintiffs-appellees California Pharmacists Association, et
    al.
    OPINION
    MILAN D. SMITH, JR., Circuit Judge:
    We are once again asked to consider whether the California
    Department of Health Care Services (Department) Director,
    David Maxwell-Jolly (Director), should be enjoined from
    implementing state legislation reducing payments to certain
    3336          CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY
    medical service providers. In this latest set of appeals,
    Plaintiffs-Appellees (California Pharmacists), a group of adult
    day health care centers (ADHCs), hospitals, pharmacies, and
    beneficiaries of the State’s Medicaid program, Medi-Cal,
    challenge a five percent reduction in those payments.1 We
    affirm, and hold that the district court did not abuse its discre-
    tion in granting California Pharmacists’s motion for a prelimi-
    nary injunction because the State failed to “stud[y] the impact
    of the [five] percent rate reduction on the statutory factors of
    efficiency, economy, quality, and access to care” prior to
    implementing the rate reductions. Indep. Living Ctr. of S.
    Cal., Inc. v. Maxwell-Jolly, 
    572 F.3d 644
    , 652 (9th Cir. 2009)
    (Independent Living II).
    FACTUAL AND PROCEDURAL BACKGROUND
    I.       Medicaid and Medi-Cal
    Under Title XIX of the Social Security Act (the Medicaid
    Act), 42 U.S.C. § 1396 et seq., the federal government pro-
    vides funds to participating states to “enabl[e] each State, as
    far as practicable . . . to furnish . . . medical assistance on
    behalf of families with dependent children and of aged, blind,
    or disabled individuals, whose income and resources are
    insufficient to meet the costs of necessary medical services.”
    42 U.S.C. § 1396-1. “Medicaid is a cooperative federal-state
    program that directs federal funding to states to assist them in
    providing medical assistance to low-income individuals.”
    Katie A. ex rel. Ludin v. Los Angeles County, 
    481 F.3d 1150
    ,
    1153-54 (9th Cir. 2007). As we have stated many times, it is
    the states that choose whether to participate in Medicaid.
    Should a state choose to participate in the Medicaid program,
    it must comply with federal Medicaid law. 
    Id. California has
    chosen to participate in the program.
    1
    Here we deal only with providers and beneficiaries of ADHCs. Mirror-
    ing the analysis of today’s holdings, we address the challenges to AB 1183
    with respect to pharmacy and hospital providers, as well as their beneficia-
    ries, in two separate, concurrently filed memorandum dispositions.
    CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY             3337
    To receive federal funds, states must administer their pro-
    grams in compliance with individual “State plans for medical
    assistance,” which require approval by the federal Secretary
    of Health and Human Services. 42 U.S.C. § 1396-1. The State
    plan must “[s]pecify a single State agency established or des-
    ignated to administer or supervise the administration of the
    plan.” 42 C.F.R. § 431.10. The Defendant-Appellee’s agency,
    the Department, “is the state agency responsible for the
    administration of California’s version of Medicaid, the Medi-
    Cal program.” Orthopaedic Hosp. v. Belshe, 
    103 F.3d 1491
    ,
    1493 (9th Cir. 1997) (Orthopaedic II).
    The Medicaid Act provides detailed requirements for state
    plans. See 42 U.S.C. § 1396a(a)(1)-(73). One of those provi-
    sions is § 1396a(a)(30)(A) (hereafter § 30(A)), the provision
    at issue in this appeal. Under § 30(A), a state plan must:
    provide such methods and procedures relating to . . .
    the payment for . . . care and services . . . as may be
    necessary . . . to assure that payments are consistent
    with efficiency, economy, and quality of care and are
    sufficient to enlist enough providers so that care and
    services are available under the plan at least to the
    extent that such care and services are available to the
    general population in the geographic area.
    
    Id. § 1396a(a)(30)(A).
    Thus, a state plan must establish health
    care provider reimbursement rates that are, among other
    things: (1) “consistent with high-quality medical care” (qual-
    ity of care); and (2) “sufficient to enlist enough providers to
    ensure that medical services are generally available to Medic-
    aid recipients” (access to care). Indep. Living Ctr. of S. Cal.,
    Inc. v. Shewry, 
    543 F.3d 1050
    , 1053 (9th Cir. 2008) (Indepen-
    dent Living I).
    II.   Assembly Bill 5
    On February 16, 2008, the California legislature enacted
    Assembly Bill X3 5 (AB 5) in special session. See 
    2008 Cal. 3338
          CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY
    Legis. Serv. 3rd Ex. Sess. Ch. 3. AB 5 reduced by ten percent
    payments under the Medi-Cal fee-for-service program for
    physicians, dentists, pharmacies, ADHCs, clinics, health sys-
    tems, and other providers for services provided on or after
    July 1, 2008. Cal. Welf. & Inst. Code § 14105.19(b)(1). Sec-
    tion 14105.19 of the California Welfare & Institutions Code
    also reduced payments to managed health care plans by the
    actuarial equivalent of the ten percent payment reduction. 
    Id. § 14105.19(b)(3).
    Finally, AB 5 reduced payments to acute
    care hospitals not under contract with the Department for
    inpatient services. 
    Id. § 14166.245(c).
    Under AB 5, these cuts
    were scheduled to take effect on July 1, 2008.
    In Independent Living II, a group of pharmacies, health
    care providers, senior citizens’ groups, and Medi-Cal benefi-
    ciaries brought an action under the Supremacy Clause, alleg-
    ing that AB 5 conflicted with the requirements of § 30(A). We
    agreed, and held that under Orthopaedic II § 30(A) requires
    the Director to set provider reimbursement rates that “ ‘bear
    a reasonable relationship to efficient and economical hospi-
    tals’ costs of providing quality services, unless the Depart-
    ment shows some justification for rates that substantially
    deviate from such costs.’ ” Indep. Living 
    II, 572 F.3d at 651
    (quoting Orthopaedic 
    II, 103 F.3d at 1496
    ). We explained that
    Orthopaedic II interpreted § 30(A) to require the Director to
    “ ‘rely on responsible cost studies, its own or others’, that pro-
    vide reliable data as a basis for its rate setting.’ ” 
    Id. at 652
    (quoting Orthopaedic 
    II, 103 F.3d at 1496
    ). However, prior to
    enacting AB 5,
    [t]he Director failed to provide any evidence that the
    Department or the legislature studied the impact of
    the ten percent rate reduction on the statutory factors
    of efficiency, economy, quality, and access to care
    . . . , nor did [the Director] demonstrate that the
    Department considered reliable cost studies when
    adjusting its reimbursement rates.
    CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY          3339
    
    Id. III. Assembly
    Bill 1183
    On September 16, 2008, the California legislature passed
    Assembly Bill 1183 (AB 1183), which became effective on
    September 30, 2008. See Cal. Legis. Serv. Ch. 758. AB 1183
    amended § 14105.19(b)(1) to provide that the ten percent rate
    reductions previously called for in AB 5 would end on Febru-
    ary 28, 2009. 
    Id. AB 1183
    also added § 14105.191 and
    amended § 14166.245 of the California Welfare & Institutions
    Code, for either one percent, five percent, or ten percent rate
    reductions, depending on provider type. See Cal. Welf. & Inst.
    Code §§ 14105.191, 14166.245.
    On January 29, 2009, California Pharmacists challenged
    the AB 1183 Medi-Cal reimbursement rate reductions. Cali-
    fornia Pharmacists sought to enjoin the Director from imple-
    menting AB 1183’s five percent reduction in payments to
    ADHCs. ADHCs provide an alternative to institutional care,
    responding to the State’s need “to establish and to continue a
    community-based system of quality adult day health care
    which will enable elderly persons or adults with disabilities to
    maintain maximum independence.” Cal. Health & Safety
    Code § 1570.2. Though recognizing the need for custodial
    care, the California legislature has concluded that “overreli-
    ance on [custodial] care has proven to be a costly panacea in
    both financial and human terms, often traumatic, and destruc-
    tive of continuing family relationships and the capacity for
    independent living.” 
    Id. The district
    court granted the preliminary injunction. It held
    that California Pharmacists had demonstrated a likelihood of
    success on the merits for three reasons. First, the legislative
    history showed no indication that the legislature considered
    § 30(A) prior to passage of AB 1183. Second, since the
    Department was given no discretion to alter the rate reduc-
    tions imposed by the legislature, any analysis that the Depart-
    3340       CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY
    ment completed in February 2009, and thus after the
    reductions were enacted, did not satisfy the requirements of
    Orthopaedic II. And third, any analysis conducted by the
    Department was inadequate because the Department relied on
    costs incurred at intermediate care facilities (NF-As), which
    the district court considered to be an inadequate proxy for
    ADHC costs. The district court also held that California Phar-
    macists had demonstrated a risk of irreparable harm and that
    the balance of equities and public interest weighed in favor of
    injunctive relief. The Director timely appealed.
    The Director raises three issues on appeal. First, the Direc-
    tor argues that the district court erred in holding that the legis-
    lature itself was required to conduct cost studies or analyses
    prior to enactment of AB 1183 to determine whether the pro-
    posed rate reductions complied with the efficiency, economy,
    and quality of care provisions of § 30(A). Second, the Direc-
    tor contends that even if the legislature was required to con-
    duct the relevant analysis, the district court committed clear
    error in concluding that the legislature did not adequately con-
    sider the § 30(A) factors prior to enacting AB 1183. Third, the
    Director argues that the district court erred in concluding that
    California Pharmacists had met their burden of demonstrating
    irreparable harm with respect to reduced reimbursement rates
    under AB 1183.
    JURISDICTION AND STANDARD OF REVIEW
    We have jurisdiction over this appeal pursuant to 28 U.S.C.
    § 1292(a)(1). A district court’s decision to grant or deny a
    preliminary injunction is reviewed for abuse of discretion.
    Indep. Living 
    II, 572 F.3d at 651
    . We recently restated our
    two-part test used to determine whether a district court has
    abused its discretion. First, we “determine de novo whether
    the trial court identified the correct legal rule to apply to the
    relief requested.” United States v. Hinkson, 
    585 F.3d 1247
    ,
    1262 (9th Cir. 2009) (en banc). If the trial court did not iden-
    tify the correct legal rule, it abused its discretion. 
    Id. at 1262.
                CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY             3341
    Second, we must determine if the district court’s “application
    of the correct legal standard was (1) ‘illogical,’ (2) ‘implausi-
    ble,’ or (3) without ‘support in inferences that may be drawn
    from the facts in the record.’ ” 
    Id. (quoting Anderson
    v. City
    of Bessemer City, 
    470 U.S. 564
    , 577 (1985)).
    In granting a request for a preliminary injunction, a district
    court abuses its discretion if it “base[s] its decision on an erro-
    neous legal standard or clearly erroneous findings of fact.”
    Earth Island Inst. v. U.S. Forest Serv., 
    442 F.3d 1147
    , 1156
    (9th Cir. 2006), abrogated on other grounds by Winter v. Nat-
    ural Res. Def. Council, Inc., 
    129 S. Ct. 365
    (2008). We
    review conclusions of law de novo and findings of fact for
    clear error. 
    Id. Under this
    standard, “[a]s long as the district
    court got the law right, it will not be reversed simply because
    the appellate court would have arrived at a different result if
    it had applied the law to the facts of the case.” 
    Id. (internal quotation
    marks omitted).
    DISCUSSION
    [1] In seeking a preliminary injunction in a case in which
    the public interest is involved, a plaintiff must overcome four
    hurdles. Thus, California Pharmacists must show that: (1)
    they are likely to succeed on the merits; (2) they are likely to
    suffer irreparable harm in the absence of preliminary relief;
    (3) the balance of equities tips in their favor; and (4) an
    injunction is in the public interest. Cal. Pharms. Ass’n v.
    Maxwell-Jolly, 
    563 F.3d 847
    , 849 (9th Cir. 2009) (citing Win-
    
    ter, 129 S. Ct. at 376
    ); see also Am. Trucking Ass’ns, Inc. v.
    City of Los Angeles, 
    559 F.3d 1046
    , 1052 (9th Cir. 2009).
    I.    Likelihood of Success on the Merits
    [2] In Orthopaedic II, we held that § 30(A) requires
    the Director [to] set hospital outpatient reimburse-
    ment rates that bear a reasonable relationship to effi-
    3342      CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY
    cient and economical hospitals’ costs of providing
    quality services, unless the Department shows some
    justification for rates that substantially deviate from
    such costs. To do this, the Department must rely on
    responsible cost studies, its own or others’, that pro-
    vide reliable data as a basis for its rate 
    setting. 103 F.3d at 1496
    .
    We address the Director’s arguments in turn.
    A.   The Body Responsible for Complying with § 30(A)
    First, the Director argues that Orthopaedic II did not hold
    that rate setting must be based upon pre-enactment legislative
    studies undertaken and completed by the legislature itself
    prior to legislative action authorizing a state department to
    implement rate reductions. According to the Director, at issue
    in Orthopaedic II were statutorily mandated rate changes not
    unlike those set pursuant to AB 1183. However, despite those
    enactments, we focused solely on the Department’s actions,
    rather than on the legislature’s, and thus only the Department
    is required to consider the § 30(A) factors. We disagree.
    In Orthopaedic II, none of the disputed rate-settings was
    actually set by the legislature. See Orthopaedic Hosp. v.
    Kizer, No. 90-4209, 
    1992 WL 345652
    (C.D. Cal. Oct. 5,
    1992) (Orthopaedic I). To the contrary, the legislative enact-
    ments granted the Director broad discretion to set the applica-
    ble rates in the face of general governing criteria. See, e.g.,
    Orthopaedic I, 
    1992 WL 345652
    , at *7 (describing that reim-
    bursement rates for rural hospitals were to “be set at a level
    which will provide incentives for rural hospitals to focus on
    the provision of outpatient services and . . . reduce the finan-
    cial losses incurred by the facilities”); 
    id. at *8
    (describing
    that for delivery services rates the Department “shall elimi-
    nate the Medi-Cal reimbursement differential for obstetrical
    services” by equalizing reimbursement for Caesarean and
    CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY          3343
    non-Cesarean section deliveries); 
    id. at *9
    (statute required
    the Department to amend the method for reimbursing dispro-
    portionate share hospitals for outpatient services, to which the
    “Department responded by developing a new payment meth-
    odology”). Since the Director set the challenged rates, Ortho-
    paedic II addressed whether the Medicaid Act “requires the
    Department to consider the costs hospitals incur in delivering
    services when setting specific payment rates under [§ 
    30(A)].” 103 F.3d at 1496
    (emphases added). Looking to the clear lan-
    guage in the statute, we noted that § 30(A) “provides that pay-
    ments for services must be consistent with efficiency,
    economy, and quality of care, and that those payments must
    be sufficient to enlist enough providers to provide access to
    Medicaid recipients.” 
    Id. We reasoned
    that costs were an inte-
    gral factor to be considered in the payment calculus, since
    “[t]he Department cannot know that it is setting rates that are
    consistent with [§ 30(A)’s relevant factors] without consider-
    ing the costs of providing such services.” 
    Id. (emphasis added).
    Thus, we held that “payments for hospital outpatient
    services must bear a reasonable relationship to the costs of
    providing quality of care incurred by efficiently and economi-
    cally operated hospitals.” 
    Id. [3] Unlike
    the statutes at issue in Orthopaedic II, the State
    has taken a different approach to setting rates under AB 1183.
    Under AB 1183, the legislature mandated that the Director
    reduce provider payments by a fixed percentage. See, e.g.,
    Cal. Welf. & Inst. Code § 14105.191(b)(2) (“[P]ayments to
    the following classes of providers shall be reduced by 5 per-
    cent for Medi-Cal fee-for-service benefits[.]”). Thus, the
    Director is misguided in arguing that our focus on the Depart-
    ment in Orthopaedic II absolves the legislature of the same
    requirements when it sets rates. In other words, in Orthopae-
    dic II, there was no question that the Department set reim-
    bursement rates. Those rates provided payments for the
    medical service at issue under the State’s plan—there, hospi-
    tal outpatient services. We had no reason to focus on what the
    State legislature considered before rates were set since the
    3344       CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY
    legislature was one step removed from the regulations pro-
    mulgated by the Department. As noted, the legislature merely
    outlined broad goals for the Department, a process separate
    and distinct from determining the effect of a specific rate
    reduction on the statutory factors of efficiency, economy,
    quality, and access to care. Yet if the legislature elects to by-
    pass the Department, and set rates itself, it must engage in the
    same principled analysis we required of the Director in Ortho-
    paedic II.
    Moreover, in Orthopaedic I, the Director made the inverse
    of the argument he asserts here. There, he argued that in
    enacting the governing statutes, the legislature considered the
    relevant § 30(A) factors, thus excusing the Department’s need
    to do the same when it set rates based on the legislature’s
    commands. See Orthopaedic I, 
    1992 WL 345652
    , at *7-11.
    The district court rejected this argument, holding first that the
    statutes did not “purport to establish any specific payment
    rates,” 
    id. at 7,
    and second that even if the legislature had con-
    sidered the relevant factors, that did not “relieve the Depart-
    ment of the obligation to further consider [the relevant
    factors] in exercising what discretion it had in implementing
    the legislature’s general mandate,” 
    id. at 9.
    In addition, the
    court noted, “nor is there adequate evidence in the record
    demonstrating that the state legislature at any time considered
    [the relevant factors] in connection with the equalization of
    rates.” 
    Id. The district
    court explained:
    In sum, if there was evidence both that (1) in setting
    the challenging rates, the Department had merely in
    rote fashion been implementing a precisely-crafted
    statutory enactment that did not permit the Depart-
    ment to exercise any significant discretion whatso-
    ever, and further, that (2) the legislature in enacting
    the statute had expressly considered “efficiency,
    economy, and quality of care,” the Court might agree
    that the Department need not have considered “effi-
    CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY          3345
    ciency, economy, and quality of care,” at all. But
    there is convincing evidence of neither.
    
    Id. Thus, we
    are not telling the State something new.
    Indeed, we find no distinction between the method by
    which rates were set under either AB 1183 or AB 5. Under
    AB 5, the California legislature enacted a statutorily man-
    dated across-the-board rate reduction. In holding that the
    Director violated § 30(A) when he implemented AB 5’s rate
    reductions, we held “[t]he Director failed to provide any evi-
    dence that the Department or the legislature studied the
    impact of the ten percent rate reduction on the statutory fac-
    tors . . . prior to enacting AB 5.” Indep. Living 
    II, 572 F.3d at 652
    (emphases added). We noted several times our concern
    with the context in which the legislation was passed, and
    focused on what State officials failed to consider prior to
    enactment. See 
    id. at 655-56
    (holding that the State’s decision
    to pass legislation reducing Medi-Cal reimbursement rates for
    purely budgetary concerns violated federal law); 
    id. at 656
    (concluding that the State’s Legislative Analyst was the only
    “State official” to have “considered—let alone studied” the
    impact of the rate reduction on services provided to Medi-Cal
    beneficiaries); 
    id. at n.12
    (“Nothing in the record connects the
    decision to cut Medi-Cal reimbursement rates by ten percent
    across-the-board to a factfinding process initiated by state
    officials.”). Such an approach is consistent with that of our
    sister circuits, where in the context of legislative, as opposed
    to agency, rate-setting, they too have focused on ensuring that
    the legislative body had information before it so that it could
    properly consider efficiency, economy, quality of care, and
    access to services before enacting rates. See Minn. Homecare
    Ass’n, Inc. v. Gomez, 
    108 F.3d 917
    , 918 (8th Cir. 1997) (hold-
    ing that although the agency did not provide any formal
    § 30(A) analysis to the legislature, lobbyists “actively partici-
    pated in the . . . legislative session” such that the legislature
    adequately considered § 30(A) when it raised reimbursement
    rates); cf. Ark. Med. Soc’y, Inc. v. Reynolds, 
    6 F.3d 519
    , 530
    3346         CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY
    (8th Cir. 1993) (refusing to consider evidence offered during
    agency hearings regarding the effect of rate cuts on accessibil-
    ity because it “could only be confirmed by historical data
    accumulated after the cuts were made”).2
    [4] In sum, we find nothing remarkable in holding that the
    final body responsible for setting Medicaid reimbursement
    rates must study the impact of the contemplated rate reduction
    on the statutory factors of efficiency, economy, quality of
    care, and access to care prior to setting or adjusting payment
    rates. We emphasize that the State need not follow “any pre-
    scribed method of analyzing and considering [the § 30(A)]
    factors.” Minn. Homecare 
    Ass’n, 108 F.3d at 918
    ; Orthopae-
    dic 
    II, 103 F.3d at 1498
    (refusing to impose a “rigid formula”
    for the Department to follow). But as we stated in Orthopae-
    dic II, “Congress intended payments to be flexible within a
    range; payments should be no higher than what is required to
    provide efficient and economical care, but still high enough
    to provide for quality care and to ensure access to 
    services.” 103 F.3d at 1497
    . The only way to ensure that Congress’s
    intent is realized is for the State to study the impact of the
    contemplated rate change on the statutory factors prior to set-
    ting rates. Thus, in no way do we mean to suggest that the
    State is proscribed from setting or adjusting reimbursement
    rates. We simply reaffirm that if it does so, it must comply
    with federal law.
    2
    The Director’s reliance on Folden v. Wash. State Dep’t of Soc. &
    Health Servs., 
    981 F.2d 1054
    (9th Cir. 1992), is also misplaced. In Folden,
    the owners of fourteen nursing home care facilities challenged Washing-
    ton state Medicaid payments under a now repealed section of the Medicaid
    Act known as the Boren 
    Amendment. 981 F.2d at 1056
    . We have numer-
    ous times rejected the Director’s attempt to “graft past judicial interpreta-
    tion of the Boren Amendment onto this court’s interpretation of § 30(A).”
    Indep. Living 
    II, 572 F.3d at 654-56
    & nn.11-12; Alaska Dep’t of Health
    and Soc. Servs. v. Ctrs. for Medicare and Medicaid Servs., 
    424 F.3d 931
    ,
    940-41 (9th Cir. 2005).
    CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY          3347
    B.   Legislative Consideration Prior to Setting Rates
    Having determined that the State legislature was required
    to study the impact of the five percent rate reduction on the
    statutory factors of efficiency, economy, quality, and access
    to care prior to enacting AB 1183, we next consider whether
    it did so. The Director argues that even though the legislature
    was not required to do so, the district court committed clear
    error in concluding that the legislature did not adequately con-
    sider the § 30(A) factors prior to implementing AB 1183.
    In support of his argument, the Director submits the decla-
    ration of the Department’s Deputy Director for Legislative
    and Governmental Affairs. The Deputy Director states that in
    May 2008, the Senate and Assembly proposals were released
    in public hearings held by the Senate and Assembly Budget
    Committees. According to the Deputy Director, Department
    employees “provid[ed] information, technical assistance, and
    responses to numerous inquiries to legislative staff members
    concerning the various 5% and 1% rate reductions that were
    included in AB 1183.” The Director also references the May
    30, 2008, agenda released by the Assembly Budget Subcom-
    mitee No. 1 on Health and Human Services. That agenda lists
    certain “items to be heard” including proposed actions to
    “Maintain Essential Health Care Services and Eligibility,”
    such as “Restore 10% provider rate cut for physicians and
    other healthcare providers” and “Partially restore long-term
    care rate reductions enacted in AB 5 X 3 (reduce cut from
    10% to 5%).” The only proposed action that includes a dis-
    cussion relevant to ADHCs explains that individuals with
    developmental disabilities living in Intermediate Care Facili-
    ties are eligible for ADHC services, and that such clarification
    in a trailer bill is necessary so that the State’s Department of
    Developmental Services will no longer have to “fund these
    ADHC services at 100 percent General Fund cost.”
    Next, the Director points to the California Senate Commit-
    tee on Budget and Fiscal Review for May 30, 2008, which
    3348       CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY
    includes recommendations for modification of several rate
    reductions or elimination of services. With respect to ADHC
    services, one entry contains the same description of the pro-
    posed trailer bill needed to clarify that individuals with devel-
    opmental disabilities in Intermediate Care Facilities are
    eligible for participation in the ADHC Program. The other
    entry relevant to ADHCs is a brief explanation of the Depart-
    ment’s request for an increase in funds for ADHC services
    due to an increase in enrollees.
    The Director also points to the June 11, 2008, Subcommit-
    tee 3 Health, Human Services, Labor, and Veterans Affairs
    Major Action Report. That Report notes certain of the Depart-
    ment’s “Highlights for the Medi-Cal Program.” The Deputy
    Director calls particular attention to the entry that indicates
    that the 2008-09 budget bill “Provided a partial restoration to
    the rates reimbursed under Medi-Cal by providing a 5 percent
    across-the-board restoration to the 10 percent reduction as
    proposed by the Governor and taken in Special Session
    through [AB 5]. In the Medi-Cal Program, this resulted in an
    increase of about $597 million ($302 million General Fund).”
    The Report also noted adoption of the ADHC proposals set
    forth above.
    The Director further points to the Budget Conference Com-
    mittee 2008 Action List dated July 9, 2008, which shows
    seven items that the Assembly and Senate voted on, ulti-
    mately contained in AB 1183, such as “Partial Restoration of
    Medi-Cal Fee-For-Service Provider Payments” and “Partial
    Restoration of Medi-Cal Pharmacy Rate.” The Director
    argues that this Action List illustrates “that the Assembly and
    Senate voted on the very Medi-Cal rate reduction language
    that was ultimately contained in AB 1183.” The July 2008
    Summary Overview Budget Conference Committee Report
    summarizes many of the rate reductions enacted as part of AB
    1183. Finally, the Director refers to the State’s Legislative
    Analyst Office’s analysis of the 2008-09 Budget, which
    includes recommendations from the State’s Legislative Ana-
    CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY             3349
    lyst concerning the Governor’s proposed reductions to pro-
    vider reimbursement.
    [5] The district court explicitly mentioned the legislative
    history described above (with the exception of the Legislative
    Analyst Office’s analysis), and determined that it does not
    show that there was consideration of the § 30(A) factors. We
    agree, since the legislative history nowhere mentions any of
    the § 30(A) factors, see Orthopaedic I, 
    1992 WL 345652
    , at
    *8 (“Tellingly—although not dispositively the terms ‘effi-
    ciency,’ ‘economy,’ and ‘equality [sic] of care’ appear
    nowhere in these documents.”), and is concerned solely with
    budgetary matters, see Indep. Living 
    II, 572 F.3d at 659
    (“State budgetary concerns cannot . . . be the conclusive fac-
    tor in decisions regarding Medicaid.” (internal quotation
    marks omitted)). Indeed, the legislative history contains no
    indication that, in adjusting rates under AB 1183, the State
    “ ‘rel[ied] on responsible cost studies, its own or others’, that
    provide reliable data as a basis for its rate setting.’ ” 
    Id. at 652
    (quoting Orthopaedic 
    II, 103 F.3d at 1496
    ). The Legislative
    Analyst Office’s analysis of the 2008-09 Budget appears to be
    the very same report we referenced in Independent Living II.
    See 
    id. at 656
    . It discusses the Governor’s proposal of a ten
    percent provider rate reduction, which the State’s own Legis-
    lative Analyst recommended rejecting for all providers except
    hospitals because those rate reductions had “the potential to
    negatively impact the operation of the Medi-Cal Program and
    the services provided to beneficiaries by limiting access to
    providers and services.” It is hardly clear error for the district
    court to have failed to mention a report conducted without
    regard to the specific rate reductions before it. Accordingly,
    we will not disrupt the district court’s factual findings, as they
    are not clearly erroneous.
    C.   The Department’s Analysis
    The Director also argues that the district court erred in fail-
    ing to consider the analysis conducted by the Department,
    3350       CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY
    completed after the law’s enactment. In rejecting the Depart-
    ment’s analysis, the district court held that AB 1183 did not
    provide the Department with any discretion, citing Cal. Welf.
    & Inst. Code § 14105.191(a), which provides that
    “[n]otwithstanding any other provision of law, in order to
    implement changes in the level of funding for health care ser-
    vices, the director shall reduce provider payments.” (emphasis
    added). The district court reasoned that since the Department
    was not given any authority to alter the rate reduction
    imposed by the legislature, the Department’s post hoc analy-
    sis does not satisfy the requirements of Orthopaedic II. The
    district court went on to hold that even if a post hoc analysis
    was sufficient, the Department relied on an inadequate proxy
    for ADHC costs when it considered data for NF-As.
    [6] To satisfy § 30(A), any analysis of reimbursement rates
    on the statutory factors of efficiency, economy, quality, and
    access to care, must have the potential to influence the rate-
    setting process. See Indep. Living 
    II, 572 F.3d at 652
    n.9
    (holding that the district court did not abuse its discretion in
    concluding that post hoc rationalizations of the disputed reim-
    bursement rates do not satisfy the procedural requirements of
    Orthopaedic II); see also Orthopaedic 
    II, 103 F.3d at 1499
    (“[T]he Department must consider hospitals’ costs based on
    reliable information when setting reimbursement rates . . . .”
    (emphases added)); Ark. Med. 
    Soc’y, 6 F.3d at 530
    . Yet the
    Department’s analysis of AB 1183 with respect to ADHCs
    was issued on February 24, 2009, more than five months after
    the legislature enacted AB 1183, but prior to the cuts’ imple-
    mentation. Therefore, for the Department’s analysis to have
    the requisite potential effect, the Director would have to have
    discretion regarding implementation of the rates.
    In his reply brief, and for the first time in this litigation, the
    Director argues that the Department’s post-enactment study is
    sufficient because the Department retained discretion under
    AB 1183 not to implement the reductions before March 1,
    2009. Thus, the Director argues, the Department’s February
    CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY                    3351
    24, 2009, analysis would still be meaningful because the
    Director had authority to affect rates by deciding not to imple-
    ment them.3 Although the Director has clearly waived this
    argument by failing to raise it in his opening brief, see Indep.
    Towers of Wash. v. Washington, 
    350 F.3d 925
    , 929 (9th Cir.
    2003), we nevertheless consider and reject the Director’s
    argument on the merits.
    The Director argues that if the Department determined that
    the reduced payments for any services would not comply with
    the relevant § 30(A) factors, the Department retained the discre-
    3
    The Director’s argument that he has discretion regarding the rates is
    drawn from a footnote in the district court’s analysis in Orthopaedic I.
    There, the Director argued that legislative consideration of the § 30(A)
    factors excused the Department from again having to consider § 30(A). In
    rejecting that argument, the district court noted that the relevant statutory
    enactments “gave the Department fairly wide discretion in implementing
    the basic changes outlined in the statute.” Orthopaedic I, 
    1992 WL 345652
    , at *9. To buttress that conclusion, the district court pointed out
    that under the Medicaid Act, the “ultimate responsibility” for administra-
    tion of a state’s Medicaid program is entrusted to a “single state agency.”
    
    Id. at n.14
    (quoting 42 C.F.R. § 431.10). As a result, the district court con-
    cluded that under federal law, the state agency has the “final say in what
    payment rates to set, notwithstanding a legislature’s efforts to provide
    broad guidelines for the agency.” 
    Id. (emphasis added).
    The court found
    it particularly relevant that the California legislature directed the Depart-
    ment to “seek federal approval for this section, if necessary.” 
    Id. (citing California
    Senate Bill 2563) (internal quotation marks omitted). The court
    also noted that subsection (a) under the Medi-Cal enabling statute grants
    the Department “extremely broad authority” to “comply with legislative
    budgetary enactments” only to the extent that those enactments comply
    with federal law. 
    Id. As we
    have described, there are a number of notable differences
    between the legislative enactments at issue in Orthopaedic I and AB 1183,
    thus raising the question of whether, under AB 1183, the Director had the
    “final say in what payment rates to set.” 
    Id. However, because
    we reject
    the Director’s argument for the reasons set forth below, we do not decide
    whether differences between AB 1183 and the legislative enactments at
    issue in Orthopaedic I are dispositive of the Director’s discretion in this
    case.
    3352         CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY
    tion4 not to implement those reductions. As a result, the legis-
    lature made implementation of the rate reductions dependent
    on whether the Department determined that they complied
    with federal law.5
    The Director relies on § 14105.191(i), which states:
    The department shall promptly seek any necessary
    federal approvals for the implementation of this sec-
    tion. To the extent that federal financial participation
    is not available with respect to any payment that is
    reduced or limited pursuant to this section, the direc-
    tor may elect not to implement that reduction or lim-
    itation.
    Cal. Welf. & Inst. Code § 14105.191(i). The Director also
    points to the Medi-Cal enabling statute, Cal. Welf. & Inst.
    Code § 14105(a):
    The director shall prescribe the policies to be fol-
    lowed in the administration of this chapter, may limit
    the rates of payment for health care services, and
    4
    At oral argument the Director conceded that he did not have authority
    to change the rates set by the legislature, but, he argued, he could exercise
    a veto power based on a determination that the rates did not comply with
    the statutory factors in § 30(A). We need not decide whether the type of
    discretion contemplated by § 14105(a) of the California Welfare & Institu-
    tions Code is different from that under § 14105.191(i). That is, that the
    Director may “limit the rates,” or “adopt regulations setting rates” under
    § 14105(a) would seem to provide for a different type of discretion than
    deciding simply not to implement the rates as set. However, because we
    hold that the Director did not retain any discretion to act once rates had
    been set, we do not discuss the distinction, if any, between the discretion
    contemplated by § 14105(a) as opposed to § 14105.191(i).
    5
    We need not decide whether a study completed after rates have been
    set complies with § 30(A) where the Department has discretion not to
    implement the rates. For purposes of our analysis only, we assume such
    a study would suffice, but do not so hold because we find that the Director
    did not retain any discretion in this case.
    CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY             3353
    shall adopt any rules and regulations as are necessary
    for carrying out, but are not inconsistent with, the
    provisions thereof.
    Subsection (a) goes on to provide:
    In order to implement expeditiously the budgeting
    decisions of the Legislature, the director shall, to the
    extent permitted by federal law, adopt regulations
    setting rates that reflect these budgeting decisions
    within one month after the enactment of the Budget
    Act and of any other appropriation that changes the
    level of funding for Medi-Cal services.
    Cal. Welf. & Inst. Code § 14105(a).
    [7] The Director’s is not the most natural reading of the
    statute. Section 14105.191(i) does not clearly invest the
    Director with the discretion not to implement the legislature’s
    rate reductions. Rather, it first directs the Department to “seek
    any necessary federal approvals” to implement the rate reduc-
    tions. Cal. Welf. & Inst. Code § 14105.191(i). Only then does
    it permit the Director not to implement any reduction “[t]o the
    extent that federal financial participation is not available.” 
    Id. (emphasis added).
    Thus, the most natural reading would seem
    to be one of budgetary concern; if federal money is not avail-
    able for any particular payment reduction, the Director may
    choose to save the State money by not implementing the
    reduction. Such a reading comports with the budgetary nature
    of AB 1183’s legislative history. See Ariz. State Bd. For
    Charter Sch. v. U.S. Dep’t of Educ., 
    464 F.3d 1003
    , 1008 (9th
    Cir. 2006) (“When a natural reading of the statute[ ] leads to
    a rational, common-sense result, an alteration of meaning is
    not only unnecessary, but also extrajudicial.”).
    [8] The Director asks that we read into the statutory text a
    process by which the Department could first analyze the
    impact of the five percent payment reduction on the § 30(A)
    3354      CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY
    factors and then elect to implement the reduction based on
    that analysis. However, regardless of whether any such pro-
    cess was contemplated in the statute, the record clearly dem-
    onstrates that no process of the kind the Director envisions
    took place. First, on September 30, 2008, the Department sub-
    mitted its State Plan Amendment, incorporating AB 1183’s
    rate reductions. In its State Plan Amendment, the Department
    stated that it had “determined that payments will continue to
    comply with any upper spending limits contained in Part 447
    that were adopted to implement the ‘efficiency, economy, and
    quality of care’ provision of [§ 30(A)]. Beneficiaries will con-
    tinue to have access to covered services as required by Part
    447.” Yet the Department did not issue a § 30(A) analysis
    until February 24, 2009 and produced nothing that would
    indicate that it studied the impact of AB 1183 on efficiency,
    economy, quality, and access to care prior to September 30,
    2008. The State Plan Amendment also does not mention the
    Department’s discretion not to implement the rate reductions
    based on federal participation.
    In addition, on February 13, 2009, the State published
    notice in the California Regulatory Notice Register that “Sec-
    tion 14105.191 of the [Welfare and Institutions] Code is
    reducing the payments that would otherwise be paid for [adult
    day health care services] under the current rate methodology
    from 10 percent to 5 percent for dates of service on or after
    March 1, 2009. The State’s Notice further provided that the
    Department
    is mandated by state law to implement the above
    change in reimbursement. [The Department] has
    considered the impact of this reimbursement on pro-
    viders and Medi-Cal beneficiaries. [The Depart-
    ment’s] assessment is that reimbursement will
    continue to compensate a high percentage of costs
    incurred for these facility services and that Medi-Cal
    beneficiaries will continue to have access to these
    services consistent with [§ 30(A)].
    CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY          3355
    As with the State Plan Amendment, the Notice pre-dates any
    analysis issued by the Department, yet definitively announces
    payment reductions from ten to five percent. Moreover, the
    Notice states that the Department “is mandated” to implement
    the rates, further undermining the Director’s reading of
    § 14105.191(i).
    [9] In sum, the Director’s argument that he retained discre-
    tion not to implement AB 1183’s rate reductions is not sup-
    ported by the record. The Department’s February 24 analysis
    issued well after decisions had been made to reduce payments
    by five percent, and nothing in the record indicates that the
    Department retained the discretion not to implement the rate
    reductions based on a § 30(A) analysis. To comply with
    § 30(A), the State must study the impact of the contemplated
    rate reduction on the statutory factors of efficiency, economy,
    quality, and access to care prior to legislative enactment or in
    a manner that allows meaningful consideration of such input
    prior to implementation. Here, the State did neither.
    [10] In addition, regardless of whether the Director
    retained the discretion to act in the manner he posits, we agree
    with the district court that the Department’s analysis was
    insufficient. Reviewing for clear error, we hold that the dis-
    trict court did not abuse its discretion in finding that the
    Department’s reliance on NF-A rather than ADHC data was
    inadequate. The Department looked to the average costs of
    only six NF-A facilities, with widely varied costs, as a proxy
    for the 313 ADHCs in the Medi-Cal program. In its ADHC
    analysis, completed in February 2009, the Department
    explained that it had “just begun the process of auditing the
    costs of ADHCs for purposes of establishing rates under the
    new costs based methodology that is scheduled to go into
    effect on August 1, 2010[,]” and therefore, “in order to assess
    how ADHC reimbursement compares to the costs that may be
    incurred by an ADHC in providing ADHC services to Medi-
    Cal recipients,” it used as a proxy how Medi-Cal reimburse-
    ment compares to NF-A costs. The Director concedes that a
    3356        CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY
    prospective cost reimbursement methodology for ADHCs is
    “still more than one year away.” In the meantime, nothing in
    the record indicates that the district court clearly erred in con-
    cluding that the Department’s use of NF-A costs was an inad-
    equate proxy for ADHC costs. Cf. Orthopaedic 
    II, 103 F.3d at 1500
    (holding that the Department violated § 30(A) when
    readopting reimbursement rates for hospitals’ costs by not
    considering hospitals’ costs when reevaluating its rates).
    Accordingly, it was not an abuse of discretion for the district
    court to have rejected the Department’s analysis.
    II.    Irreparable Harm
    The Director also argues that the district court erred in
    holding that California Pharmacists demonstrated a likelihood
    of irreparable harm. After reviewing the evidence, the district
    court held that “the evidence submitted by plaintiffs indi-
    cate[s] that Medi-Cal beneficiaries are at risk of losing access
    to ADHC services due to the AB 1183 rate reduction.” The
    Director argues that in determining whether California Phar-
    macists have shown a likelihood of irreparable harm, the dis-
    trict court was required to compare Medi-Cal beneficiaries’
    access to ADHC services to that of the general population’s.
    Once again, under § 30(A), each state’s Medicaid plan
    must be
    sufficient to enlist enough providers so that care and
    services are available under the plan at least to the
    extent that such care and services are available to the
    general population in the geographic area.
    42 U.S.C. § 1396a(a)(30)(A). This is referred to as the “equal
    access to care provision,” Orthopaedic 
    II, 103 F.3d at 1498
    ,
    and requires that a state plan establish reimbursement rates
    sufficient to enlist enough providers to ensure that medical
    services are generally available to Medicaid recipients, 
    id. at 1497.
    The Director argues that the district court erred in fail-
    CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY          3357
    ing to apply the equal access to care provision in the context
    of plaintiffs’ claims of irreparable injury. In other words, the
    Director argues that there can be no finding of irreparable
    harm where “care and services are available under the plan at
    least to the extent that such care and services are available to
    the general population in the geographic area.” § 30(A).
    According to the Director, applying this standard here, the
    evidence before the district court established that ADHC ser-
    vices are not generally available to the general population and
    thus California Pharmacists made no showing of irreparable
    injury.
    In Independent Living II, we discussed the distinction
    between § 30(A)’s procedural and substantive requirements.
    We considered the “potential difficulties inherent in assessing
    substantive compliance with the factors laid out in § 30(A),”
    which made more attractive, by comparison, the “process-
    oriented view of the statute espoused in Orthopaedic [II].”
    Indep. Living 
    II, 572 F.3d at 657
    . While explaining that there
    is a difference between substantive and procedural compli-
    ance with § 30(A), 
    id. at 656
    , we also explained their interde-
    pendence, since “it is fair to assume that a rate that is set
    arbitrarily, without reference to the Section 30(A) require-
    ments, is unlikely to meet the equal access and quality
    requirements,” 
    id. at 657
    (internal quotation marks omitted).
    We reaffirmed Orthopaedic II’s requirement that states com-
    ply with the procedural components of § 30(A) by setting pro-
    vider reimbursement rates only after consideration of the
    relevant statutory factors of efficiency, economy, quality, and
    access to care. 
    Id. [11] The
    Director’s approach to the irreparable harm anal-
    ysis conflates § 30(A)’s procedural and substantive require-
    ments. We do not require plaintiffs to show the State has
    committed a substantive violation of § 30(A)’s access provi-
    sion when they can show that the State did not comply with
    § 30(A)’s procedural components. In other words, showing a
    procedural violation of the statute—that is, the State’s failure
    3358       CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY
    to consider the impact of the contemplated rate on the statu-
    tory factors set forth in § 30(A)—may demonstrate a likeli-
    hood of success on the merits that the setting of provider
    reimbursement rates conflicts with § 30(A). Determining
    whether plaintiffs have made a sufficient showing of irrepara-
    ble harm is a separate inquiry, which does not turn on the
    State’s substantive compliance with § 30(A). Rather, to show
    a risk of irreparable harm, plaintiffs may show either, as Med-
    icaid beneficiaries, “that enforcement of a proposed rule ‘may
    deny them needed medical care[,]’ ” Indep. Living 
    II, 572 F.3d at 658
    (quoting Beltran v. Myers, 
    677 F.2d 1317
    , 1322
    (9th Cir. 1982)), or, as Medicaid providers, that they will lose
    considerable revenue through the reduction in payments that
    they will be unable to recover due to the State’s Eleventh
    Amendment sovereign immunity, Cal. Pharms. 
    Ass’n, 563 F.3d at 850-52
    .
    [12] Requiring a substantive violation of the equal access
    to care provision in order to meet the irreparable injury prong
    would also run afoul of our Supremacy Clause jurisprudence.
    In California Pharmacists, we held that in an action brought
    under the Supremacy Clause, a finding of irreparable harm
    does not turn on “whether the plaintiffs asserting the eco-
    nomic injury were in any sense intended beneficiaries of the
    federal statute on which the Supremacy Clause cause of
    action was premised.” 
    Id. at 851.
    Because “[a] cause of action
    based on the Supremacy Clause obviates the need for reliance
    on third-party rights,” private parties bringing a Supremacy
    Clause cause of action can “enforce the structural relationship
    between the federal and state governments so long as they
    ha[ve] Article III standing as, essentially, private enforcers of
    the Supremacy Clause.” 
    Id. Thus, as
    stated above, plaintiffs
    need only show harm to Medi-Cal service providers or their
    members in order to obtain injunctive relief. 
    Id. at 850.
    The
    Director’s more narrow approach would allow injunctive
    relief only where plaintiffs are able to show that Medi-Cal
    beneficiaries have worse access to care and services than that
    available to the general population.
    CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY          3359
    [13] Finally, we have stated that even if § 30(A) imposes
    a substantive requirement, a rate reduction might still conflict
    with the statute if at least some providers stop treating Medi-
    Cal beneficiaries. Indep. Living 
    II, 572 F.3d at 656-57
    . The
    Director concedes that here, the evidence indicates that at
    least some ADHC Medi-Cal providers would stop treating
    beneficiaries due to AB 1183. Thus, even if we were to
    require a substantive violation of the statute to support a find-
    ing of irreparable harm, we would find that violation here.
    [14] Therefore, we reject the Director’s argument that
    there can be no finding of irreparable harm unless the plain-
    tiffs show a substantive violation of § 30(A)’s access to care
    provision. The Director makes no serious attempt to dispute
    the district court’s factual finding that, in light of the evi-
    dence, “Medi-Cal beneficiaries are at risk of losing access to
    ADHC services due to the AB 1183 rate reduction.” Upon our
    review of the evidence, we do not find the district court’s con-
    clusion to be clearly erroneous. Accordingly, the district court
    did not abuse its discretion in finding that California Pharma-
    cists established sufficient irreparable harm to warrant a pre-
    liminary injunction.
    III.   Balance of Equities and the Public Interest
    Finally, the Director argues that because of the State’s
    deepening fiscal crisis, a preliminary injunction should not
    issue. The Director insists that the legislature be allowed to
    exercise “its considered judgment” in a manner that serves the
    best interests of both Medi-Cal recipients and the State as a
    whole, and that injunctions against payment reductions have
    forced the State to eliminate many optional Medi-Cal ser-
    vices. The district court recognized the State’s interest in
    meeting its financial obligations but held that the State’s
    financial woes were outweighed by the public’s interest in
    access to health care, particularly because “nothing . . . pre-
    vents [the State] from imposing a rate reduction after . . .
    3360       CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY
    appropriately consider[ing] and appl[ying] the relevant fac-
    tors.”
    [15] “The public interest analysis for the issuance of a pre-
    liminary injunction requires us to consider ‘whether there
    exists some critical public interest that would be injured by
    the grant of preliminary relief.’ ” Indep. Living 
    II, 572 F.3d at 659
    (quoting Hybritech Inc. v. Abbott Labs., 
    849 F.2d 1446
    ,
    1458 (Fed. Cir. 1988)). We have held that “there is a robust
    public interest in safeguarding access to health care for those
    eligible for Medicaid, whom Congress has recognized as ‘the
    most needy in the country.’ ” 
    Id. (quoting Schweiker
    v.
    Hogan, 
    457 U.S. 569
    , 590 (1982)). We continue to recognize
    this important public interest in the context of social welfare
    cases. As the district court stated, the State is free to exercise
    its “considered judgment” and reduce Medi-Cal reimburse-
    ment rates. Yet it may not do so for purely budgetary reasons,
    Ark. Med. 
    Soc’y, 6 F.3d at 531
    , nor may it do so in a manner
    that violates federal law, Indep. Living 
    II, 572 F.3d at 659
    .
    Accordingly, we hold that the district court did not abuse its
    discretion in concluding that the balance of hardships and the
    public interest weighed in favor of enjoining implementation
    of the five percent rate reduction required by AB 1183.
    CONCLUSION
    We have now handed down multiple decisions instructing
    the State on § 30(A)’s procedural requirements. We trust that
    the State now understands that in order for it to comply with
    § 30(A)’s “requirement that payments for services must be
    consistent with efficiency, economy, and quality of care, and
    sufficient to ensure access,” Orthopaedic 
    II, 103 F.3d at 1500
    ,
    it must: (1) “rely on responsible cost studies, its own or oth-
    ers’, that provide reliable data as a basis for its rate setting,”
    
    id. at 1496;
    and (2) study the impact of the contemplated rate
    change(s) on the statutory factors prior to setting rates, or in
    a manner that allows those studies to have a meaningful
    impact on rates before they are finalized. Because the State
    CALIFORNIA PHARMACISTS v. MAXWELL-JOLLY      3361
    did neither with respect to AB 1183, we affirm the district
    court’s order granting California Pharmacists’s motion for a
    preliminary injunction.
    AFFIRMED.
    

Document Info

Docket Number: 09-55532

Filed Date: 3/3/2010

Precedential Status: Precedential

Modified Date: 10/14/2015

Authorities (18)

Schweiker v. Hogan , 102 S. Ct. 2597 ( 1982 )

39-socsecrepser-594-medicare-medicaid-guide-p-40961-henry-b-folden , 981 F.2d 1054 ( 1992 )

alaska-department-of-health-and-social-services-v-centers-for-medicare-and , 424 F.3d 931 ( 2005 )

42-socsecrepser-362-medicaremedicaid-guide-p-41659-arkansas-medical , 6 F.3d 519 ( 1993 )

antonia-beltran-and-enosinsio-manahan-individually-and-on-behalf-of-all , 677 F.2d 1317 ( 1982 )

Winter v. Natural Resources Defense Council, Inc. , 129 S. Ct. 365 ( 2008 )

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Arizona State Board for Charter Schools v. U.S. Department ... , 464 F.3d 1003 ( 2006 )

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United States v. Hinkson , 585 F.3d 1247 ( 2009 )

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Independent Living Center of Southern California, Inc. v. ... , 543 F.3d 1050 ( 2008 )

American Trucking Associations, Inc. v. City of Los Angeles , 559 F.3d 1046 ( 2009 )

Independent Living Center of Southern California, Inc. v. ... , 572 F.3d 644 ( 2009 )

Anderson v. City of Bessemer City , 105 S. Ct. 1504 ( 1985 )

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