Aids Healthcare Foundation v. David Maxwell-Jolly

MEMORANDUM

AIDS Healthcare Foundation (AHF), which is a so-called 340B entity (a safety-net provider) appeals from the district court’s dismissal of its complaint with prejudice against The Director of the California Department of Healthcare Services (hereafter the State). We affirm in part, reverse in part, and remand.

(1) AHF alleged equal protection claims in its first and second causes of action. AHF asserts that the district court erred when it dismissed the causes of action. We agree. We recognize that rational basis review applies to our consideration of these constitutional claims. Courts are reluctant to overturn a statute when that level of review applies, but, rather, presume that the statute is valid. Nevertheless, AHF has plausibly pled that the California statute in question here violates its right to equal protection because the reimbursement regime it imposes on AHF does not rationally distinguish between AHF and other similarly situated providers of medications to patients who are covered by Medi-Cal. Moreover, the State does not point us to, nor do we on this record intuit, a rational basis for that distinction. We do not posit that no rational basis can be…