Case: Managed Pharmacy Care v. Maxwell-Jolly

On January 1, 2009, multiple fee-for-service medical providers, including independent pharmacies and an independent living center, filed this action in the Central District of California against the Director of the Department of Health Care Services of the State of California. The Medicaid Defense Fund and private counsel represented the plaintiffs in this action, the Attorney General of California represented the defendant. The plaintiffs sought to enjoin the Director from implementing state legislation reducing by 5% the reimbursement rates to providers of Pharmacy services to beneficiaries of California's Medi-Cal fee-for-service program. The legislation challenged in this action was put in place to replace a previous bill that would have reduced reimbursement rates by 10%. This previous bill had been partially enjoined by the Central District of California on August 18, 2008 in the related action, Independent Living Center of Southern California, Inc. v. Shewry (PB-CA-0016).

The plaintiffs in the current action argued that the five percent rate reduction violated Title XIX of the federal Social Security Act (the Medicaid Act), 42 U.S.C. § 1396 et seq., and was therefore invalid under the Supremacy Clause. The plaintiff sought declaratory judgment under 42 U.S.C. § 2201.

On February 2, 2009, the plaintiffs filed a motion for preliminary injunction. On February 27, 2009, in Managed Pharmacy Care v. Maxwell-Jolly, 603 F.Supp.2d 1230 (C.D. Cal. 2009), the Central District of California (Judge Christina A. Snyder) issued an order granting the plaintiffs' motion for preliminary injunction. Judge Snyder found that the five percent rate reduction would likely cause irreparable harm to the medical providers as it would force them to distribute medicine at a loss. The balance of hardships also tipped decidedly in the Plaintiffs' favor. The Director then appealed the preliminary injunction to the Ninth Circuit. On March 25, 2010, in Indep. Living Ctr. Of S. Cal., Inc. v. Maxwell-Jolly, 374 Fed. Appx. 690 (9th Cir. 2010), the Ninth Circuit affirmed the order of the district court.

On June 1, 2011, Judge Snyder issued an order removing the case from the Court's active caseload until further application by the parties or order of the Court. Counsel was to file joint reports every quarter until the action was reactivated or a stipulation for dismissal was filed. The first of these joint status reports was filed on July 7, 2011.

Cases related to this case include Independent Living Center of Southern California, Inc. v. Shewry (PB-CA-0016), California Association for Health Services at Home v. Shewry (PB-CA-0017), California Medical Transportation Association, Inc. v. Shewry (PB-CA-0018), California Pharmacists Association v. Maxwell-Jolly (PB-CA-0020), California Medical Association v. Shewry (PB-CA-0021), California Hospital Association v. Maxwell-Jolly (PB-CA-0022), Sierra Medical Services Alliance v. Maxwell-Jolly (PB-CA-0023), National Association of Chain Drug Stores v. Schwarzenegger (PB-CA-0024), California Hospital Association v. Maxwell-Jolly (PB-CA-0025), Development Services Network v. Maxwell-Jolly (PB-CA-0026), California Association of Health Facilities v. Maxwell-Jolly (PB-CA-0027), and California Pharmacists Association v. Maxwell-Jolly (PB-CA-0028).