Connell

Summary

Federal Medicaid law barred California’s Department of Health Services (DHS)—as the “single agency” designated to administer federally funded Medicaid/Medi-Cal payments for medical services for the poor and indigent—from delegating to the state Controller the audit of claims by medical service providers, and the withholding of alleged overpayments.

Facts and Proceedings in Trial Court

Appellant Doctor’s Medical Laboratory, Inc. (hereafter Doctor’s) is a now-defunct firm which formerly provided doctors with laboratory analysis of specimens of blood, urine, and the like. A large portion of Doctor’s income was derived from Medi-Cal patients. Medi-Cal is a State of California program to subsidize medical care for the poor and indigent. Doctor’s brought this action to compel respondent Connell, Controller of California, to release approximately $3 million which Doctor’s claimed was due for services to Medi-Cal patients.

Medi-Cal payments to patients are funded with federal moneys provided under the Medicaid legislation. To obtain federal moneys the states must comply with the federal statutory and regulatory requirements of Medicaid. (42 U.S.C. § 1396a(a); Wilder…