Managed Pharmacy Care v. Kathleen Sebelius

In the four cases giving rise to these eleven consolidated appeals, Kathleen Se-belius, Secretary of the Department of Health and Human Services (“HHS”), and Toby Douglas, Director of the California Department of Health Care Services (“DHCS”), appeal the district court’s grant of preliminary injunctions in favor of various providers and beneficiaries of MediCal, California’s Medicaid program (“Plaintiffs”). The injunctions prohibit the Director and DHCS from implementing reimbursement rate reductions authorized by the California legislature and approved by the Secretary. The injunctions also stay the Secretary’s approval. Plaintiffs cross-appeal the court’s modification of its orders to allow the rate reductions as to Medi-Cal services provided before the injunctions took effect.

Plaintiffs assert claims against the Secretary under the Administrative Procedures Act (“APA”) and against the Director under the Supremacy Clause of the United States Constitution, claiming that the reimbursement rate reductions do not comply with 42 U.S.C. § 1396a(a)(30)(A) (hereafter “§ 30(A)”). In support of their claims, Plaintiffs rely primarily on our decision in Orthopaedic Hospital v.…