Federal Court Accuses Administration and Attorney General’s Office of Lying in Medi-Cal Provider Rate Cut Case

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By Marto Omoto
California Disability Community Action Network

In a major victory for disability and senior advocates, a three judge panel of the US 9th Circuit Court of Appeals on Monday (December 21) issued a stunning and strongly worded rebuke against the Schwarzenegger Administration and Attorney General Jerry Brown accusing their representatives of lying to the court in "clear violation" of California State Bar rules against misleading judges. All attorneys practicing law in the state must be licensed by the California State Bar.

The federal appeals court’s decision Monday was connected to two Medi-Cal provider rate reduction lawsuits (Independent Living Center of Southern California, et al v. David Maxwell Jolly, Director the Department of Health Care Services) originally filed in 2008 on behalf of Medi-Cal recipients and advocacy organizations and several Medi-Cal providers by Lynn Carman, lead attorney with the Medicaid Defense Fund.

Those two lawsuits stopped nearly all of the 10% Medi-Cal provider rate reductions just weeks or months after those cuts went into effect on July 1, 2008. A copy of the December 21, 2009 US 9th Circuit Court of Appeals order can be viewed or downloaded from the CDCAN website at www.cdcan.us

The federal appeals court included its rebuke in their decision Monday that rejected the State’s motion to vacate or withdraw the court’s previous decision it made on July 9, 2009, that upheld federal District Court Judge Christina Synder’s rulings (issued in August and November 2008), in favor of the two Medi-Cal provider rate cut lawsuits.

The Schwarzenegger Administration through its lawyers from the Attorney General’s office, argued that the federal appeals court did not have the authority (jurisdiction) to intervene in the case when it issued its decision in July 2009 because the Legislature passed and the Governor approved budget related legislation that changed the Medi-Cal provider rates effective March 1, 2009.

The 3 judge panel of the 9th US Circuit Court of Appeals said Schwarzenegger Administration officials in the Department of Health Care Services which oversees the state’s Medicaid program (called Medi-Cal), through their lawyers in the Attorney General’s office, lied and misled the court about why the reasons the State delayed for more than a year to make its current arguments in the Medi-Cal provider rate reduction case.

The federal appeals court, in their order today, said that the Department of Health Care Services officials "feigned ignorance" of the facts they had already presented to the US Supreme Court on June 1, 2009. The appeals court, referenced California State Bar rules that make it illegal for attorneys to mislead judges by making false statements, and that the state lawyers were in "…clear violation ... gives us pause about accepting the veracity of future pleadings filed by the attorney general on behalf of the [Department of Health Care Services] director, if not more generally."

Attorney General’s Office Says Issue A "Misunderstanding"

Attorney General Brown's office, in response, said the rebuke by the court was "based on a misunderstanding" that they hoped to clear up in the next few days when it files an explanation to the federal appeals court.

One of the responsibilities of the Attorney General – a state constitutional officer elected by voters – is to defend in court lawsuits against the State, regardless of the party of the Governor.

Jerry Brown, a Democrat and a former governor from 1975-1982, is likely at this point to run unopposed in the 2010 Democratic primary for Governor in June and is leading in the latest recent polls against possible Republican rivals.

Carman Says State Lawyers Have "Consistently Lied"

Carman, an 82 year old attorney from Novato, strongly agreed with the federal appeals court’s unusual rebuke, saying that lawyers from the Attorney General’s office representing the Schwarzenegger Administration have "consistently lied" in their defense of the Medi-Cal provider and other cuts, and that "…in this business you only have your word going for you, and when your word is no good anymore, you are finished with a court."

Court’s Rebuke Could Have Major Impact on Other Cases Impacting Medi-Cal, In-Home Supportive Services and Other Cuts

The unusual rebuke by the federal appeals court against the lawyers and officials representing the Schwarzenegger Administration, could have major repercussions on other cases where lower federal courts have stopped or blocked other cuts to Medi-Cal and other human service programs including In-Home Supportive Services, Adult Day Health. The Schwarzenegger Administration is seeking to reverse those court rulings – in most instances – before the same federal appeals court that said their lawyers and official representatives had misled and lied to the court.

The 9th Circuit Court of Appeals order of December 21, does not impact the rates now being paid to Medi-Cal providers – since previous lower federal court rulings in August and November 2008 stopped the 10% cuts from taking effect, and a later federal district court ruling in March 2009 stopped a 5% reduction from going forward.
However the federal appeal court’s decision does require the State to reimburse many of those providers who had their payments reduced during the period of July 1, 2008 through August 18, 2008 and re-affirmed the federal court’s authority to be involved in the Medi-Cal provider rate reduction case.

The federal appeal court’s decision does not impact a previous lawsuit – also filed by the Medicaid Defense Fund in the summer – that unsuccessfully attempted to stop the permanent elimination of 9 Medi-Cal optional benefits.
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Marty Omoto is Executive Director of the California Disability Community Action Network, a non-partisan link to thousands of Californians with developmental and other disabilities, people with traumatic brain injuries, the blind, the deaf, their families, community organizations and providers, direct care, homecare and other workers, and other advocates to provide information on state and local public policy issues.