Sierra Medical Services Alliance; Care Flight; Riggs Ambulance Service, Inc.; Schaefer Ambulance Service, Inc.; American Ambulance of Visalia; Desert Ambulance Service; San Luis Ambulance Service, Inc.; First Responder Emergency Medical Services-Sacramento, Inc.; First Responder Emergency Medical Services, Inc.; Imperial Ambulance Services, Inc.; Sierra Lifestar, Inc., DBA Lifestar Ambulance; Del Norte Ambulance, Inc.; Piner's Ambulance, Inc.; American Legion Post 108 Ambulance Service; Progressive Ambulance, Inc., DBA Liberty Ambulance; Hall Ambulance Service, Inc.; City Ambulance of Eureka, Inc.; Patterson District Ambulance; K.W.P.H. Enterprises, DBA American Ambulance; Community Ambulance Services, Inc.; Sierra Ambulance Service, Inc.; Care Ambulance Service, Inc.; Delano Ambulance Service, Inc.; Kern Emergency Medical Transportation Corporation, DBA Kern Ambulance; Westmed Ambulance, Inc.; California Ambulance Association; Regional Emergency Medical Services Authority; Metro West Ambulance Service, Inc., Plaintiffs-Appellants,
Jennifer Kent, Director of the Department of Health Care Services of the State of California, Defendant-Appellee.
and Submitted November 7, 2017 Pasadena, California
from the United States District Court for the Central
District of California D.C. No. 2:10-cv-04182-CAS-MAN
Christina A. Snyder, District Judge, Presiding
Michael K. Hagemann (argued), and Kevin R. Warren, M.K.
Hagemann P.C., Century City, California, for
R. Stanton (argued), Deputy Attorney General; Susan M.
Carson, Supervising Deputy Attorney General; Julie
Weng-Gutierrez, Senior Assistant Attorney General; Office of
the Attorney General, San Francisco, California; for
Before: Stephen Reinhardt, Ronald Lee Gilman, [*] and Kim McLane
Wardlaw, Circuit Judges.
panel affirmed the district court's summary judgment in
favor of the Director of the California Department of Health
Care Services in an action brought by private ambulance
companies, challenging the reimbursement rate for their
transportation of patients covered by Medi-Cal, the
California Medicaid program.
reimbursement rate is set by DHCS pursuant to state statutes
and regulations that have been approved by the Centers for
Medicare and Medicaid Services, the federal agency that
administers the Medicaid program on behalf of the Department
of Health and Human Services. The ambulance companies alleged
that their constitutional rights were violated because they
received only 20 cents in reimbursement for every dollar that
they spent to transport Medi-Cal patients.
panel affirmed the district court's summary judgment on
the ambulance companies' claim under the Takings Clause.
The panel held that the ambulance companies lacked a
constitutionally protected property interest in a particular
reimbursement rate, but the mandatory-care provision of Cal.
Health & Safety Code § 1317(d) implicated a
constitutionally protected property right. The panel held
that § 1317(d) did not effect a regulatory taking
because, under the Penn Central test, the ambulance
companies did not establish that the statute had more than a
negligible economic impact on them, nor that it interfered
with their investment-backed expectations, and they did not
provide evidence as to the character of the government action
panel held that the ambulance companies did not establish a
due process claim regarding DHCS's failure to ensure that
Medi-Cal reimbursement rates kept pace with their costs
because they lacked a constitutionally protected interest in
any particular reimbursement rate. Under the rational-basis
standard, the ambulance companies did not establish an equal
protection violation regarding a supplemental-reimbursement
program that favors public over private providers. The
ambulance companies also did not establish a claim under the
Contract Clause or the Dormant Commerce Clause.
panel held that there was no procedural error in the district
court's grant of summary judgment, and it declined to
address claims omitted from the operative complaint.
GILMAN, CIRCUIT JUDGE
law requires ambulance companies to provide emergency medical
transportation irrespective of a patient's ability to
pay. To at least partially offset the cost of providing such
transportation, California has an established reimbursement
rate for those companies voluntarily enrolled as providers
with the state's Medicaid program (Medi-Cal) when they
transport Medi-Cal patients. The relevant reimbursement rate
is set by California's Department of Health Care Services
(DHCS) pursuant to state statutes and regulations that have
been approved by the Centers for Medicare and Medicaid
Services (CMS), the federal agency that administers the
Medicaid Program on behalf of the Department of Health and
heart of this case is the Plaintiffs' complaint that
private ambulance companies receive only 20 cents in
reimbursement for every dollar that they spend to transport
Medi-Cal patients, a shortfall that they contend violates
their constitutional rights. After discovery, DHCS moved for
summary judgment, which the district court granted on all
counts. The court held that the Plaintiffs had failed to
produce sufficient evidence to sustain any of their claims.
For the reasons set forth below, we AFFIRM
the judgment of the district court.
Federal Medicaid program
is a state-administered program financed jointly by the
federal and state governments that provides healthcare
coverage to low-income Americans. See 42 U.S.C.
§§ 1396 et seq. The percentage of the
program's costs that the federal government covers varies
by state, with poorer states receiving a greater share of
federal dollars. See 42 U.S.C. § 1396d(b). For
the fiscal years in question, California bore half the cost
of covering its Medicaid population. See 80 Fed.
Reg. 73,781, tbl. 1 (Nov. 25, 2015). A state can satisfy its
share of Medicaid spending both through direct appropriations
to state and local Medicaid agencies and by certified
Medicaid expenditures incurred by other state and local
agencies. 42 C.F.R. § 433.51(a), (b).
exchange for receiving their allotment of federal funds,
states design and administer Medicaid State Plans that must
comply with federal Medicaid law. See 42 U.S.C.
§ 1396a. CMS can remedy a state's noncompliance with
federal Medicaid law by withholding future funding. 42 U.S.C.
§ 1396c; Armstrong v. Exceptional Child Ctr.,
Inc., 135 S.Ct. 1378, 1385 (2015) ("[T]he sole
remedy Congress provided for a State's failure to comply
with Medicaid's requirements . . . is the withholding of
Medicaid funds by the Secretary of Health and Human
that enroll as Medi-Cal providers are entitled to
reimbursement for the services that they provide to the
program's beneficiaries. Cal. Welf. & Inst. Code
§ 14019.3(c), (g). The Medi-Cal statute stipulates that
"payment received from the state in accordance with
Medi-Cal fee structures shall constitute payment in
full" for services provided. Id. §
14019.3(d). And when providers enroll in the program, they
must sign a Medi-Cal Provider Agreement that contains a
condition to the same effect. Cal. Welf. & Inst. Code
§ 14043.2(a); Cal. Code Regs. tit. 22, §§
51000.45, 51200(a), 51501(b); DHCS, Medi-Cal Provider
Agreement (DHCS 6208) 5-6 (2017),