at least the court carmen still a deputy attorney general for the cross appellant jennifer can the director of the department of health care services i'll start with the issues raised on the appeal by the director moved to the appeal statute third plaintiff's claims regarding lack of me the district court erred in stating that plaintiff could proceed in a forced those claims and as such reversal is warranted secondly on january thirtieth two thousand and thirteen for thirteen c m s approve hundred b statute also persuasive on this issue is the supreme court's decision in douglas vs independent living at page twelve twelve ten where it indicates that we're seeing this has taken final in c action district court erred in finding that the state was required to conduct the custody this court in minutes pharmacy care hill that section thirty eight does not require a state to to prove conduct to custody or to follow any particular methodology before imposing rate reduction rather this court held that only substantive results showing that compliance with section thirty a allows the state to enforce the statute here there is documentation indicating that the d h c s in the state assess the impact of the proposed on three forty provider network and the c m approved the state's payment methodology in addition the state so submitted adequate documentation that the modifier a couple with a distancing thing was adequate to cover the cost of providing three forty b drugs to medicaid beneficiaries and this is in the record at pages forty five to ninety five was the status of the affairs you know these think implemented section three forty three forty b statute i'm a submitted a spot october two thousand and nine during that time the state also submitted a litigation the department in the state apply requested that c m s separate the spaz out so that its continued to review the three forty b statute and during that time in two thousand and eleven and two thousand and twelve  statute pursuant to federal guidance the state is responsible for insurance ensuring that providers comply with the double discount requirements at three forty b this data is responsible for accurately reimbursing the three forty the entities and the state is responsible for accurately claiming medicaid rebates from jack manufacturers and that is that the department supplemental search to record a page twenty five and it is the original excerpt the record at page one a one prior to the enactment of the three forty b statute manufacturers were paying double discounts both to the state and to three forty the providers there was a high volume of disputes from manufacturers because of the double discounts which caused an administrative burden on the department three forty providers were incorrectly billing the department and as a result the state was overpaying that at the cost to taxpayers for the three forty the statute here was designed to prevent that the health care foundation's claims fail because number one it's not similarly situated to non three four to be providers they receive discounts of up to sixty percent which non three forty be providers do not  three forty of the providers volunteer to be part of the program because they do receive the deep discounts and so they are not similarly situated the court's consideration of the equal protection claim stop there since there has to really preface before i get into armstrong which really i think is going to be how this court interprets it is going to resolve the thirty a issue i want to clarify the actual facts that led to the district court's injunction and finding that the state violated thirty eight this isn't just a case of the state attempting to here to thirty day in whatever way they saw fit they didn't consider any thirty eight factors at all before in acting this three forty statute that counsel referred to the reason that they didn't do that is because they claimed it did not apply to them or this particular statute the claimed it was not a rate reduction and so there was no analysis done whatsoever and that is the issue or the one of the issues that came up before this court previously on the motion to dismiss they took that position issued in this case they rejected that and said no this statute does in part change the rates there for thirty eight theoretically applies and so the matter went back to the lower court and the fact that no analysis was done by either department of health care services or the state legislature before it ackman of the statute is undisputed the state admits it it's in the record it's one of the it's in the uncontroverted finding of facts that led to the injunction order so that is largely what the district court relied on in deciding that there was a thirty eight violation here and the statute should be enjoined that hasn't changed at all that fact remains undisputed the only thing that has really changed in terms of the way this case sits now since the district court issued its order is armstrong and so in order to determine you know whether armstrong necessarily requires reversal strong dissent the comes down on the side of the thirty eight remaining enforceable what to me armstrong those clearly is established that there is no quote unquote supremacy clause cause of action it eliminates that concept but and the important thing to note with respect to that is they said ok even though there is no supremacy clause cause of action we all meaning all the justices on the supreme court recognize th courts maintain inherent equitable power to enjoin state action that they find violates federal law both the primary opinion the concurrence and the dissent all recognize that so even if something even if there no supremacy clause cause of action which still maintain the power to enjoin state law that conflicts with federal law and that would be what we're relying on now that in this court can affirm the district court judgment using the inherent equitable power that they have to be i'm trying remember the briefs in this case did you make that argument in your brief to this court that there is an actual equitable part i thought you were saying that in the briefs that part three of the opinion or maybe there was a plurality and it didn't control well they relate to one another so we are relying on that so i guess what we are making the argument that it is now the equitable power of the court that we're relying on and we think that we can do that know that's something that i would have to look into further but again the the language in armstrong opinion from in each of the separate elements of that case does say that there is independent of whether you call it a authority and that and of course just prior knowledge of that and just sort of mayor dissent even expands on a further and indicates that you know you could still and force these federal medicaid statutes in federal court even if you're not calling it the supremacy clause cause of action so assuming that the the the and you know at the time this case was brought there was a supremacy the were correct about that equitable power of the court is what happened here still something that isn't forcible and ken can the court sustain this based on our contention that the state no made no effort whatsoever to comply with section thirty eight and that's where justice priors concurrence comes in because i think it's fair to read the scully a portion of the decision as establishing a bright line rule that nothing related to four thirty eight can be enforced but justice pryor doesn't go that far he's very careful in his concurrence to say i wouldn't permit quoque unquote this action or this case but he leaves open the door in several points and says there may be certain rate related cases that can proceed and the courts can grant relief and interest just drawing that distinction focused on the complexity of the rate making decision and second guessing careful state analysis and we don't have that here because again as i said previously the state didn't do anything with respect to thirty eight because they didn't think they had to so this is as justice pryor  in his case one of the easy really making sheep or something along those lines the no court at least this court has never said with respect to thirty that it's ok for the state to do nothing before and that's a significant rain change and that's exactly what happened here and that's why the district court in joined it you have to based on the complaint we have here i mean let's say let's say we read armstrong differently than you do i think that a cli if you would you want to go back and ask us to square playing around hole here with this complaint in all fairness that that is true some degree just because you know the law was one thing like time it was found that even when the injunction was ordered and then you know armstrong did change things but we don't think in a way that necessarily would require amending the complain but perhaps it would be cleaner if you could pick this current complaint that's before or have a different complaint i assume you would prefer a different complaint than the one you have now in light of the change of law which there is no way you could have predicted yes i would presently yes so that's my view of armstrong it's only deference and it's not determinative and there you know the case historically has a number of instances where the courts have looked at policies that have been approved by c m that happened and it was i believe after the managed pharmacy kera case that the state is relying on in art just like in this case the state didn't in adopting the challenge policy didn't conduct any analysis at all because they also in that case but for different reasons said the thirty eight didn't apply and so the court took that into consideration they also took into consideration that c m s eventually approved whatever it was and still held it invalid because they said you know s approval can't validate a complete abdication of the responsibility to consider the thirty eight factors and it eventually overturned and and sustained an injunction of that particular law and we think this case follows the same pattern c m s is determination is not determinative maybe it deserves deference but if it's clear that the state doesn't do anything at all the m s s decision can be  disregarded disregarded but doesn't control the day and this state also suggests and this is something that's discussed in the armstrong decision also in terms of whether thirty  is the secretary or c m s is review authority and the ability to withhold funds is thirteen ninety six c forty two u s c thirteen nine hundred sixty and we didn't get a chance to really brief this extensively because this was raising the apartment's response of very fun to people and we didn't get an opportunity to reply since our last brief was limited to the cross appeal issues but thirty nine sixty has been considered a number of times by a number of courts including this one and no court has ever been willing it's it's not phrased in terms that typically courts have interpreted to mean that congress is intending to supplant the private remedy so private remedies to enforce medicaid actions have long existed along with the secretary's approval decision and it makes sense because the secretary frankly is not always looking at the same things as court should be in assessing compliance with the medicaid act violations i think this case perfect example of it we have a statute that was enacted in two thousand and nine that was actually approved until january twenty fourth teen even even though there was litigation ongoing there was admissions by the state that they do anything to comply with section thirty eight before and acting the state yet c m s nevertheless based largely just on representations from the state that what they did complies with it signed off on it you know four and a half years later  trying to understand the what harm you're trying to remedy here because you're not seeking the right no we're not what well and i was going to get into that as part of the equal protection argument but i think it's important forty drug discount program to dispense drugs that were purchased with the discount to medicare patients so that's what we refer to as the carbon requirement in addition to that are in tandem with that it also says that it's if you so we're only going to pay you three for to be providers your acquisition cost plus a small dispensing fee so it both requires them to to i guess pass through the discount to the state and limits the amount of the inverse and they get and we are challenging both aspects of that statute and the harm comes in the fact that the three forty be covered energies to get th discount are being effectively forced to provide these drugs to medicare beneficiaries at a much lower rate than private entities who aren't eligible for the i don't know and that part of it i october of two thousand and nine and you again no harm during that period well that's what harvey trying to remedy i guess is what i'm trying is already in litigation and injunction was already in place before they actually got to to remedy that issue on the delayed approval oh honestly i would even though that was part of the district court order i think we under cases like arc if a court finds that a state failed to comply with thirty day the they still have the power to enjoin the statute if the law was violated the approval doesn't  that's r thirty eight claim but there's a separate claim that they can't implement the statute without federal approval but they have that now they have that now so i would just say we can disregard that piece of the plane and focus on the thirty  'm aware that there is a proposition but i don't i couldn't answer the question whether it relates to it directly because it's rather similar question and i wonder whether that was going to move it may and health care if it foundation is very active politically and in trying to get advocating for the people that they service so what would you notify since we are close to this remarkable election yes absolutely do that so i guess i have a few more minutes to turn to the legal to the equal protection claim and i have already touched on some things a little bit but before before getting to that i think what i want to touch on that i think is a little buried in the brief since there are so many issues in this case is the actual reason the three forty statute was enacted in the first place  whole point of the statute is to give certain safety net providers access to these discounted drugs so they can take that savings and use it for other things like expanding services improving quality etc i mean that's the whole goal of the statute and it doesn't just apply to parties like itself confit foundation that treats its patients it applies the black one clinics community clinics hospitals are treated disproportionate share of low income patients and congresses idea was well let's give these guys some savings on drugs so they can use that to meet the needs of all these needy for very sick patients at cetera so that's the backdrop for all of this and what the state's statute does and again there's two parts of it there's the carbon part and the reimbursement part it basically co ops the savings for the state and deprives these  what else is this on the reimbursement piece of of the statute that requires that they are only reimbursed at cost plus a dispensing fee the state has offered no justification for that in my opinion and this i think is supported by the record other than saving money and saving money this court has recognized is not a legitimate reason for drawing a discriminatory classification all these administrative ease rationales that goes to the carving piece when they dispense the same drug to the same patient and just one last thing on the similarly situated this court is already ruled on that issue the statement the same argument in their motion to dismiss that big by virtue of the fact that proven at this court level and the district court accepted it courts in considering it for protection arguments in medical cases have looked at do the providers render the same to the two classes run of the same type services same case he said that there may be instances where the court can easily determine whether it's a non complex break setting case and and give the injunctive relief but he said he there is no easy way to tell that in the beginning and for that reason no cases are entitled to an equitable relief and counting he joined part three of the majority page and he did he joins part he joined part one two and three and that four and three is the part where they say there is no private right of action with respect to the arc decision that cases distinguishable here because even though the state in the ark decision did not do was custody our friend the reason why the court struck down that those statues is because  decision doesn't apply here they also made it an argument that they're being discriminated against because the large chain pharmacies dispense the same drugs to the same medical beneficiaries and that may be true but they are not purchasing the drugs at the three forty the price and so they are not getting the upfront discount they're paying more they're getting reimbursed for more of confrontation and other three forty the entities are paying less they're getting reimbursed less and the federal guidance that the state has issued to the state by the federal government requires the department and the state to pay three four to be entities their acquisition cost plus the difference in dispensing fee so that's how that is determined in terms of this horrible in this case was here in the ninth circuit the first time it did not hold that health care foundation is similarly situated to other two nine three forty the providers it just it was reviewing the court's decision the motion to dismiss and didn't make any decisions on the merits it just simply help that aids healthcare foundation have possibly pled and equal protection claim and made no determination as to whether it was some similarly situated or not you know let's the court  us because of the ballot measure will be delighted thank you