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August 19, 2008

Medi-Cal patients, advocates and providers won a round in court today
as a 10% cut to Medi-Cal providers (doctors, clinics, pharmacies, and adult
day health centers) was judged in vilolation of Federal Medicaid requrements,
and was enjoined against by a Los Angeles Judge.

Read San Franciso Chronicle story
Read Sacramento Bee story

The following is a statement by Lynn Carman, attorney for the Medicaid Defense Fund,
lead attorney for the suit which was brought by various patients and organizations, including
the San Francisco and Sacramento Gray Panthers.




Sept. 5, 2008

28 Newport Landing Dr.Novato, CA  94949

Telephone: 415-927-4023



Medicaid Defense Fund today proclaimed victory in the contempt proceedings it filed against Sandra Shewry, Director of the state’s Medi-Cal program, to force her to comply with an August 18, 2008 preliminary injunction, of the U.S. District Court in Los Angeles, which had ordered Medi-Cal to cease implementing the 10% cut in payments to Medi-Cal providers enacted by the Legislature effective for services on and after July 1, 2008

Lynn S. Carman, chief counsel of  MDF, said that Shewry yesterday filed a compliance report which federal judge Christina S. Snyder had ordered, last Friday, to be filed for a continued hearing today in the contempt proceedings. 

The Director’s report included declarations from Stan Rosenstein, chief  of the Medi-Cal program, and Dennis Dworman, regional general manager for Electronic Data Systems (EDS) which processes and pays Medi-Cal provider claims.

In his declaration Dworman  stated to the court that:

“EDS believes that by September 5, 2008, the system will be modified to stop the ten percent reduction with respect to all claims processed on or after that date with a date of service on or after August 18, 2008,” for physicians, pharmacies, optometrists, and adult day care health centers.

Michael Kaufman, of Delta Dental, which processes and pays dental claims in the Medi-Cal program, told the court in his declaration that the ten percent payment reduction for dentists is expected to be stopped byDelta Dental by close of business on September 9, 2008.

Shewry, Rosenstein and the EDS and Delta Dental  spokesmen said that once the 100% rate is restored for prospective payments, that EDS and Delta Dental will then commence the process of repaying providers the deducted 10% amounts, for periods between August 18, 2008, the injunction was issued by federal Judge Christina A. Snyder in Los Angeles, and the dates that payments were recommenced to be paid at 100%. This will take several months, they said. (Medicaid Defense Fund is appealing retroactive payments not being made for payments since July 1, when the cuts started.)

Shewry’s papers filed yesterday claimed that the injunction does not cover  MediCal providers, other than physicians, pharmacies, dentists, optometrists, and adult day care health centers. 

Attorney Carman said that this part of the objections of the State to the injunction will probably be continued to be heard at a September 15 hearing before Judge Snyder, which had previously been set to consider and rule on this claim of the State.

Carman said, “Unless we had filed the contempt proceedings, and Judge Snyder  held up the jail keys and rattled them at last week’s hearing, the State would never have complied with the order, no matter how many Medi-Cal beneficiaries died, suffered, or were forced in institutions just to be able to survive from day to day.” 

Lynn S. Carman
Chief Counsel
Medicaid Defense Fund
Telephone: 415-927-4023


The case is: Independent Living Center of Southern California, Inc., v. Sandra Shewry, Director of California Dept. of Health Care Services, (2:08-cv-03315 in the District Court in Los Angeles; Appeal No. 08-56061 in the Ninth Circuit).

Lynn S. Carman, chief counsel for Medicaid Defense Fund which filed the lawsuit, said the plaintiffs could not have won without the united support of beneficiaries, providers, pharmacy groups such as Managed Care Pharmacy, California Pharmacists Association (CPhA), Vietnamese American Pharmacy Association, California Korean Pharmacists Association; the Leader group in Sacramento; the California Disability Community Action Network (CDCAN); and Pharmacists Planning Services, Inc., of San Rafael.

He said these groups and the:

California Medical Association, (CMA)

California Assn. for Adult Day Care Services, (CAADCS)

California Assn. of Public Hospitals and Health Systems, (CAPHHS)

California Dental Association, (CDA)

contributed expert opinions and hundreds of provider declarations and support which Medicaid Defense Fund could not have obtainedby itself.

Also, in addition to oral argument by Lynn S. Carman of MDF, Judge Snyder took the unusual step of permitting attorney Craig J. Cannizzo of the leading healthcare law firm of Hooper Lundy & Bookman, (415-875-8500), to provide additional oral argument, on behalf of CPhA, CPhA, CMA, CAADCS, CAPHHS, and CDA as amicus curiae, at the August 1, 2008 rehearing of the case.

AARP, by Barbara Jones (, filed an amicus curiae brief in the trial court.

Rochelle Bobroff, of National Senior Citizens Law Center in Washington, DC, (202-289-6976,, was of counsel in the case in the Ninth Circuit, as an expert on Supremacy Clause law.

Without her work in the case on the issue of right of persons to sue under the Supremacy Clause, the appeal could not have been won, as it was, on July 11, 2008.

Contact persons for the California groups, known to MDF, are:

Gary Ellis, CEO

Pharmacy Managed Care


Lynn Rolston, CEO

California Pharmacists Association

cell: 916-425-0010

office: 916-779-1400

Marty Omoto, Director


Thu-Hang Tran, Pharm.D

Vietnamese American Pharmacy Association

cell: 714-251-0673

Martin Kim

California Korean Pharmacists Association

Fred Mayer

Pharmacists Planning Services, Inc.


Contact persons who were plaintiffs or attorneys for the plaintiffs in the

Norma Vescovo

CEO of the Plaintiff, Independent Living Center of Southern California, (in Van Nuys)

cell: 818-389-9079

Plaintiff Gerald Shapiro, Pharm.D.

Owner of Uptown Pharmacy in Los Angeles


Plaintiff Sharon Steen

Co-owner of Central Pharmacy in Santa Monica


Michael Lyon

Co-Convenor of the plaintiff, Gray Panthers of San Francisco

cell 415-215-7575

Plaintiff Margaret Dowling

paraplegic Medi-Cal recipient, healthcare leader,

of Pittsburg


Plaintiff Mark Beckwith

quadriplegic Medi-Cal recipient, of Berkeley


except, do not call except until after 10 a.m.)

Thu-Hang Tran, Pharm.D.

President, Vietnamese American Pharmacy

Association, -- owner of the plaintiff Tran Pharmacy, in Garden Grove.

(cell) 714-251-0673.

Stanley L. Friedman

Co-counsel for plaintiffs. Made the oral argument to win the appeal on July 11, 2008.

213-629-1500;         cell 310-729-5500;

Lynn S. Carman

Lead counsel for plaintiffs



Judge Snyder in her June 25, 2008 decision had ruled that Medi-Cal beneficiaries and providers had no standing under the Supremacy Clause to object to the Medi-Cal provider payment cuts in question.

The Ninth Circuit Emergency Panel, consisting of Circuit Judges Reinhardt, Berzon, and M. Smith, ruled in a July 11, 2008 decision that the plaintiffs did have standing to sue to enjoin Sandra Shewry, Director of California Dept. of Health Services (which administers Medi-Cal), from implementing the 10% payment cut).

Carman said the July 11 decision by the Emergency Panel was crucial, because if Medi-Cal beneficiaries and providers have no standing to sue under the Supremacy Clause, then, there is noone to sue to stop the Legislature and the Governor from destroying the Medi-Cal program by reducing provider rates so low that no Medi-Cal beneficiary can obtain treatment and medicine, from any practitioner.

Carman said the evidence was that the reduced pharmacy rates were so low that pharmacies were not even reimbursed what it cost them to acquire the drug ingredient for prescriptions, leaving no choice to pharmacies except to quit business altogether, drop the Medi-Cal program, or only fill those very few prescriptions remaining which do not entail a financial loss to dispense.

He said the evidence was uncontradicted that because of nearly the lowest payment rates in the country, most California doctors will not accept Medi-Cal patients, or if they already have some Medi-Cal patients, will not accept new ones.

He said: "We now expect the longest no-State-Budget period in the history of California, due to the fact that a few disabled Medi-Cal beneficiaries, providers and benefit organizations have stood on their rights and taken away one of the Governor’s pet projects to reduce the Budget Deficit, -- i.e., terminate medicine and medical benefits for the frailest, sickest, and elderly of our society, while preserving and increasing spending for prisons and huge salaries for the upper echelon of State Government."


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