Supreme Court lets providers continue suing to stop Medi-Cal cuts

A years-long legal fight over cuts in California’s multibillion-dollar healthcare program for the poor took another twist Wednesday as the U.S. Supreme Court kicked the case back to a lower court.

The high court’s 5-4 decision allows medical providers to continue suing to stop the cuts, which would lower reimbursement rates for doctors who participate in the state’s Medi-Cal program.

But it did not affirm the lower court’s decision to block the reductions, leaving the state another opportunity to argue for the right to implement them to help balance its depleted budget. For now, the state will continue paying the higher reimbursement rate as it evaluates the justices’ action, according to officials in Gov. Jerry Brown’s Department of Finance.

Without a ruling for one side or the other, both sides claimed victory.


“This is an important decision, recognizing the authority of states to better manage their health services programs,” said Jim Humes, Brown’s executive secretary for legal affairs, in a statement.

James Hay, president of the California Medical Assn., called the court’s decision a “win for physicians and their patients.”

“The state cannot continue to propose sweeping cuts to programs for California’s poorest and most vulnerable patients,” he said in a statement.

Medi-Cal is one of California’s biggest expenses. The state is spending $15.4 billion this year to provide healthcare to 7.6 million needy residents.

As state officials have struggled to pare spending, they have cut Medi-Cal repeatedly. But because it is part of the federal Medicaid program, those actions have led to drawn-out fights with the federal government and the court system.

When the state reduced rates for Medi-Cal doctors in 2008, advocates sued, saying the rates were so low they would drive away providers and violate the Medicaid Act’s promise that poor patients would have access to quality care.

The 9th Circuit Court of Appeals, based in San Francisco, blocked the cuts. But the Obama administration ultimately approved them, leading to contradicting messages from the two branches of government.

Citing the administration’s decision, the Supreme Court held off on a final ruling in the pending case and sent it back to the 9th Circuit. The justices said it is still an open question whether advocates can claim that the cuts violate federal law if a federal agency has approved them.

The decision split the court’s liberal and conservative wings.

The four conservatives, led by Chief Justice John G. Roberts Jr., wanted to close the door to all lawsuits protesting cuts in Medicaid.

Roberts said Congress created the Medicaid Act as a cooperative agreement between Washington and the states, meaning decisions on spending should be decided by federal and state officials, not through lawsuits brought by others.