Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_09-cv-02306/USCOURTS-cand-4_09-cv-02306-15/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 42:1396 - Tort Negligence

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

LYDIA DOMINGUEZ, et al.,

Plaintiffs,

 v.

ARNOLD SCHWARZENEGGER, et al.,

Defendants. /

No. C 09-02306 CW

ORDER GRANTING

PLAINTIFFS’

APPLICATION FOR A

TEMPORARY

RESTRAINING ORDER

AND ORDER TO SHOW

CAUSE WHY

PRELIMINARY

INJUNCTION SHOULD

NOT ISSUE

Plaintiffs apply for a temporary restraining order and order

to show cause why a preliminary injunction should not issue to

prohibit Defendants from implementing an In Home Supportive

Services (IHSS) rate reduction in Fresno County from $10.25 to

$8.00 in hourly wages, and from $0.85 to $0.60 in hourly benefit

contributions. State Defendants and Fresno County Defendants both

oppose Plaintiffs’ application for a temporary restraining order

and order to show cause. The matter was heard on June 29, 2010. 

Having considered all of the parties’ papers and oral argument on

the motions, the Court concludes that Plaintiffs have established a

likelihood of success on their claim that State Defendants have

violated the procedural requirements of the Medicaid Act. The

Court also concludes that Plaintiffs will suffer irreparable injury

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in the absence of temporary relief. The balance of equities is in

Plaintiffs’ favor and a temporary restraining order is in the

public interest. Accordingly, the Court grants Plaintiffs’

application for a temporary restraining order and orders Defendants

to show cause why a preliminary injunction should not issue.

BACKGROUND

Over thirty years ago, California established the IHSS program

to provide assistance with the tasks of daily living to low-income

elderly and disabled persons “who cannot safely remain in their

homes or abodes of their own choosing unless these services are

provided.” Cal. Welf. & Inst. Code § 12300(a). IHSS providers

give services such as assistance with bathing, dressing, cooking,

feeding, bowel and bladder care, self-administration of medication

and cleaning. Id. § 12300(b), (c). Over 360,000 IHSS providers

serve over 440,000 individuals in California. As of May 31, 2010,

10,116 IHSS providers serve 12,028 individuals in Fresno. Katz

Decl., Ex. 1. Seventy-two percent of providers in Fresno are

family members of IHSS recipients. Id.

IHSS is administered by the State’s counties. Fifty-six of

California’s fifty-eight counties have established either a public

authority (PA) or a non-profit consortium (NPC) to deliver IHSS

services. Each of these fifty-six counties has created and

maintains a registry from which service providers can be drawn. As

of June 1, 2010, there were 361 persons in the Fresno registry, who

are currently seeking employment as an IHSS provider. Katz Decl.

¶ 4. These PAs and NPCs are considered employers of IHSS providers

for some purposes, including collective bargaining agreements

pertaining to providers’ wages and benefits; however, individual

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1Before the passage of the American Recovery and Reinvestment

Act of 2009, the federal government contributed fifty percent of

the program’s costs. Dominguez v. Schwarzenegger, 595 F.3d 1087,

1091 n.2 (9th Cir. 2010). 

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consumers hire, fire and supervise their own IHSS providers. Id.

§ 12301.6(c)(1). 

Each county establishes the providers’ wages and benefits. 

Thus, the rates paid to IHSS providers vary by county. Because

most IHSS consumers participate in California’s Medicaid program,

the federal government pays for about sixty-two percent of the IHSS

program’s costs.1 See 42 U.S.C. § 1396d(b). The State pays sixtyfive percent and the county pays thirty-five percent of the

remaining thirty-eight percent of the program’s costs. Cal. Welf.

& Inst. Code § 12306. The State’s contribution, however, is

subject to a statutory cap. Currently, the maximum state

contribution is sixty-five percent of the non-federal share of a

wage and benefit package of $12.10 per hour. Id. at § 12306.1(c)-

(d).

Wages and benefits are determined through the collective

bargaining process at the county level. Once these wages and

benefits are decided, they must be submitted to the California

Department of Health Care Services to ensure that they comply with

all applicable state and federal laws. Id. § 12306.1(a)-(b). 

In response to California’s unprecedented budget crisis, on

February 20, 2009, the Governor signed into law California Welfare

and Institutions Code § 12306.1(d)(6). Scheduled to take effect

July 1, 2009, the law would have reduced the State’s maximum

contribution in wages and benefits from sixty-five percent of the

non-federal share of an hourly rate of $12.10 to sixty-five percent

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of the non-federal share of an hourly rate of $10.10. 

On June 4, 2009, Plaintiffs filed this class action complaint

and moved for entry of a preliminary injunction prohibiting State

Defendants from implementing section 12306.1(d)(6) pending a final

decision on the merits. On June 26, 2009, the Court granted

Plaintiffs’ motion and found that they had demonstrated a strong

likelihood of success on their first cause of action, that State

Defendants had violated the federal Medicaid Act by failing to

consider the factors set forth in 42 U.S.C. § 1396a(a)(30)(A)

(Section 30(A)) before enacting section 12306.1(d)(6). The Court

also concluded that, absent immediate injunctive relief, both IHSS

consumers and providers would suffer irreparable harm as a result

of the wage reductions caused by the implementation of section

12306.1(d)(6). 

Thereafter, Fresno County proceeded to reduce IHSS provider

wages for reasons other than section 12306.1(d)(6). Plaintiffs’

instant application for a temporary restraining order concerns this 

attempted reduction. 

The memorandum of understanding which set Fresno’s IHSS

providers’ wages and benefits at a combined rate of $11.10 expired

on September 30, 2009. After months of negotiations between the

Fresno IHSS PA and the Service Employees International Union,

California State Council (SEIU), the parties reached an impasse. 

In mid-April, 2010, Fresno informed the union that it intended to

reduce IHSS wages to $8.00 per hour (the state minimum wage, Cal.

Labor Code § 1182.12) and benefits to $0.60 per hour, effective

July 1, 2010. On May, 25, 2010, the Fresno County Board of

Supervisors approved the rate reduction. The following day, Fresno

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2Plaintiffs object to the Declaration of Rolonda Moen

submitted in support of State Defendants. The objection is

overruled as moot because the Court did not rely on any aspect of

the declaration to which Plaintiffs objected.

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submitted its rate change request to the California Department of

Social Services and the Department of Health Care Services for

approval. On June 24, the State approved Fresno’s rate decrease. 

Romero Decl., Ex. E.2 The State admits that it did not perform any

study assessing the impact of the rate reduction on IHSS consumers

or providers before approving the rate request.

Plaintiffs claim that the twenty percent rate reduction will

severely affect IHSS providers. Many IHSS providers will have to

seek other employment, and many of those that remain in their job

will no longer be able to pay for basic needs such as food, health

care and housing. Howes Decl. ¶ 88; Aguilar Decl. ¶ 4; Bailey

Decl. ¶ 6; Boushele Decl. ¶ 6; M. Garcia Decl. ¶ 5; Jones Decl.

¶ 65; Moreno Decl. ¶ 7; Thao Decl. ¶ 9; Muniz Decl. ¶ 4; Ward Decl.

¶¶ 4-5; Wright Decl. ¶ 5; Maiden Decl. ¶ 4; Singh Decl. ¶ 4. Many

of these providers are family members of IHSS consumers and are

responsible for providing housing, food, medication, and other

necessities for their elderly or disabled relative. Plaintiffs

assert, therefore, that both the providers and IHSS consumers are

likely to suffer serious deprivations. Brown Supp. Decl. ¶ 9;

Cendejas Decl. ¶ 4; Everhardt Decl. ¶ 4; Leon Decl. ¶ 5; Martinez

Decl. ¶ 6; Perez Decl. ¶ 5; Valdez Decl. ¶ 4. 

Plaintiffs also claim that the rate reduction will force many

IHSS consumers into difficult, if not untenable, positions. The

IHSS consumers who lose their providers will either have to find

another provider, attempt to live in their homes without IHSS

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services or enter institutional care. The individuals who can find

new providers at the lower wage will be harmed by the loss of

continuity of care and disruption of relationships that often take

months or years to build. Lee Decl. ¶ 5; Hanlon Decl. ¶ 6; Hopkins

Decl. ¶ 6; Moore Decl. ¶ 6; Steward Decl. ¶ 7. Even before the

rate reduction, IHSS recipients have reported extreme difficulty in

finding adequate providers. For example, at least one recipient

spent weeks in a nursing home until she could secure a provider. 

See eg., Hopkins Decl. ¶ 6. 

Plaintiffs also assert that some consumers will be forced to

enter nursing facilities or other residential institutions because

of their inability to remain in their homes without the help of

IHSS providers. Howes Decl. ¶¶ 4, 76-84; Buckley Decl. ¶ 6; Jones

Decl. ¶ 8; R. Garcia Decl. ¶ 5; Hopkins Decl. ¶¶ 6-7; Moreno Decl.

¶ 8; Bailey Decl. ¶ 8; Miller Supp. Decl. ¶ 6; Moore Decl. ¶ 6;

Gilchrist Decl. ¶ 6; Schnelle Decl. (Dkt. 45) ¶ 5; Altman Decl.

(Dckt. 6) ¶ 6. Plaintiffs claim that the consequences of

institutionalization, which include loss of independence and

reduced quality of care, would be devastating for individuals who

are currently able to live moderately independent lives in their

homes. Miller Supp. Decl. ¶ 5; Wilkins Supp. Decl. ¶ 6; R. Garcia

Decl. ¶ 5; Gilchrist Decl. ¶ 7; Hanlon Decl. ¶ 7; Hopkins Decl.

¶ 7; Vang Decl. ¶ 7; Lee Decl. ¶ 7; Moore Decl. ¶ 7. 

Lastly, Plaintiffs assert that the wage decrease will also

cause the State to incur millions of dollars in increased

institutionalization costs, as well as to lose significant tax

revenues and incur other Medi-Cal expenses. Howes Decl. ¶¶ 9-10;

88-89 & nn.2-3; see also LaPlante Decl. (Dkt. 28) ¶ 8; Altman Decl.

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(Dkt. 6) ¶ 6. 

Fresno County states that it is in dire financial straights

and that it cannot afford to continue to pay IHSS providers wages

and benefits of $11.10 per hour. Over the last four years, the

County has cut 1,504 positions, in addition to a projection of an

addition 369 layoffs for the 2010-2011 fiscal year. Kovacevic

Decl. ¶ 11. Fresno claims that, to maintain the current IHSS

wages, it would be forced to operate at a deficit each month in the

amount of $435,455, which equals $5,225,455 for the year. 

Id. ¶ 12. 

LEGAL STANDARD

“The standard for issuance of a temporary restraining order is

the same as that for issuance of a preliminary injunction.” 

Burgess v. Forbes, 2009 WL 416843, at *2 (N.D. Cal.). To obtain a

preliminary injunction, the moving party must “establish that he is

likely to succeed on the merits, that he is likely to suffer

irreparable harm in the absence of preliminary relief, that the

balance of equities tips in his favor, and that an injunction is in

the public interest.” Winter v. Natural Res. Def. Council, Inc.,

___ U.S. ___, 129 S. Ct. 365, 374 (2008).

DISCUSSION

I. Likelihood of Success on the Merits

To receive federal financial participation in payment for

services that states provide to low income persons who are aged,

blind, disabled or members of families with dependent children,

states must agree to comply with applicable federal Medicaid law. 

Orthopaedic Hosp. v. Belshe, 103 F.3d 1491, 1493 (9th Cir. 1997). 

The Medicaid Act requires a participating state to develop a state

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plan which describes the policy and methods to be used to set

payment rates for each type of service included in the program. 42

C.F.R. § 447.201(b). A provision of the Medicaid Act, 42 U.S.C.

§ 1396a(a)(30)(A) (hereinafter Section 30(A)), requires, in

relevant part, that a state’s Medicaid plan:

provide such methods and procedures relating to the

utilization of, and the payment for, care and services

available under the plan . . . as may be necessary . . . to

assure that payments are consistent with efficiency, economy,

and quality of care and are sufficient to enlist enough

providers so that care and services are available under the

plan at least to the extent that such care and services are

available to the general population in the geographic area.

The Ninth Circuit has noted that “providers’ wages and benefits

. . . are directly correlated to ensuring that services are

consistent with efficiency, economy, and quality of care, and

sufficient to ensure access to services under the IHSS program.” 

Dominguez, 596 F.3d at 1093; see also Orthopaedic Hosp. v. Belshe,

103 F.3d 1491, 1493 (9th Cir. 1997) (“payments for [Medi-Cal]

services must be consistent with efficiency, economy, and quality

of care, and . . . those payments must be sufficient to enlist

enough providers to provide access to Medicaid recipients.”). 

Because State Defendants’ approval of the Fresno rate

reduction “directly affects what Medi-Cal providers are paid for

providing services,” Dominguez, 596 F.3d at 1093 (emphasis in

original), this action requires compliance with Section 30(A). Id.

at 1094 (“The Department [of Social Services] is thus well aware

that prior to approving reimbursement rates established through

collective bargaining, it must determine whether sufficient access

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3Fresno Defendants argue that this portion of Dominguez is

dicta because the primary issue before the court was whether the

State violated Section 30(A) when enacting California Welfare &

Institutions Code § 12306.1(d)(6) without conducting a Section

30(A) analysis. The Ninth Circuit has noted that “‘where a panel

confronts an issue germane to the eventual resolution of the case,

and resolves it after reasoned consideration in a published

opinion, that ruling becomes the law of the circuit, regardless of

whether doing so is necessary in some strict logical sense.’” 

Cetacean Cmty. v. Bush, 386 F.3d 1169, 1173 (quoting United States

v. Johnson, 256 F.3d 895, 914 (9th Cir. 2001) (Kozinski, J.,

concurring)). This is true “regardless of whether it was in some

technical sense ‘necessary’ to [the court’s] disposition of the

case,” so long as the issue was “addressed . . . and decided . . .

in an opinion joined in relevant part by a majority of the panel.” 

Barapind v. Enomoto, 400 F.3d 744, 750-51 (9th Cir. 2005) (en

banc). Here, even if the quoted portions of Dominguez were not

“germane” to the resolution of case, the Court finds them

persuasive. The Ninth Circuit was directly responding to State

Defendants’ argument that Section 30(A) did not apply to it because

counties controlled rate setting. The court held that the State

must ensure compliance with Section 30(A) when approving counties’

proposed rates because of the integral role and oversight the State

plays by approving those rate changes. 

9

to services is available.”).3 Thus, State Defendants’ approval of

the Fresno County rate change request cannot be valid unless State

Defendants “actually considered” an analysis regarding the impact

of the requested change on access and quality of care, prior to

approving the request. California Pharmacists Ass’n v. MaxwellJolly, 563 F.3d 847, 850 (9th Cir. 2009). 

The State cannot abdicate this responsibility by relying on

the fact that, through collective bargaining, the counties

determine IHSS wages and benefits. Martinez v. Schwarzenegger,

2009 WL 1844989, at *5 (N.D. Cal.) (“a county’s role in determining

IHSS wages and benefits does not preclude the State from analyzing

the impact of [a rate reduction] on the Section 30(A) factors prior

to enactment”). Under the Medicaid Act, the State, not the

individual counties, is bound by Section 30(A) as a condition of

Medicaid participation to ensure that rates are consistent with

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quality care and are sufficient to enlist enough providers so that

care and services are available. See 42 C.F.R. § 431.10 (requiring

that single state agency be responsible for administration of

State’s Medicaid program). 

Here, the State does not put forth any evidence that it

considered the Section 30(A) factors before approving the rate

change request submitted by Fresno. Accordingly, the Court

concludes that Plaintiffs have made a strong showing of likelihood

of success on the merits that Defendants violated the procedural

requirements of Section 30(A).

Because the Court concludes that a temporary restraining order

is warranted based on Plaintiffs’ likelihood of success on their

procedural claim, the Court need not determine the likelihood of

Plaintiffs’ success on their claim that Defendants violated the

substantive requirements of Section 30(A) or their claim that

Defendants violated the Americans with Disabilities Act.

II. Irreparable Harm, Balance of Hardships and the Public Interest

IHSS consumers will suffer immediate and irreparable harm

unless the Court issues a temporary restraining order. As the

Court previously recognized when it enjoined section 12306.1(d)(6): 

The wage reductions will cause many IHSS providers to leave

employment, which in turn will leave consumers without IHSS

assistance. The consumers’ quality of life and health-care

will be greatly diminished, which will likely cause great

harm to disabled individuals. For instance, the

declarations submitted by Plaintiffs describe harms ranging

from going hungry and dehydration, to falls and burns, to an

inability ever to leave the home. Institutionalizing

individuals that can comfortably survive in their home with

the help of IHSS providers will “cause Plaintiffs to suffer

injury to their mental and physical health, including a

shortened life, and even death for some Plaintiffs.” 

Crabtree v. Goetz, 2008 WL 5330506, at *30 (M.D. Tenn.).

Prelim. Inj. Order (Dkt. 131) at 10:26-11:10. 

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Similarly, the wage reductions at issue here are likely to

cause many providers to reduce their hours or quit IHSS employment

entirely. Howes Decl. ¶¶ 71-75; Aguilar Decl. ¶ 4; Bailey Decl.

¶ 6; Boushele Decl. ¶ 6; M. Garcia Decl. ¶ 5; Jones Decl. ¶ 6;

Moreno Decl. ¶ 7; Thao Decl. ¶ 9; Muniz Decl. ¶ 4; Ward Decl. ¶ 5;

Wright Decl. ¶ 5; Altman Decl. (Dkt. 6) ¶ 4. This will likely

force IHSS recipients to go without IHSS assistance for some period

of time, or worse, enter a nursing home or other institutional

facility. The quality of these consumers’ lives and health care

will be greatly diminished, causing them irreparable harm. 

IHSS providers will also suffer immediate and irreparable

harm. Although financial injury is generally not adequate to

establish irreparable harm, L.A. Mem’l Coliseum Comm’n v. Nat’l

Football League, 643 F.2d 1197, 1202 (9th Cir. 1980), financial

harm to the IHSS providers is irreparable because retrospective

monetary damages are unavailable due to the State Defendants’

Eleventh Amendment immunity. California Pharmacists, 563 F.3d at

851-52 (“[B]ecause the Hospital Plaintiffs and their members will

be unable to recover damages against the Department even if they

are successful on the merits of their case, they will suffer

irreparable harm if the requested injunction is not granted.”). 

Further, the planned wage reduction “would impact many providers’

ability to afford such basic necessities as food, clothing,

utilities, and rent.” Dominguez, 596 F.3d at 1098; see also Bailey

Decl. ¶ 6, Boushele Decl. ¶ 6; Maiden Decl. ¶ 4; Singh Decl. ¶ 4;

Ward Decl. ¶ 4; Brown Supp. Decl. ¶ 9; Cendejas Decl. ¶ 4;

Everhardt Decl. ¶ 4; Leon Decl. ¶ 5; Martinez Decl. ¶ 6; Perez

Decl. ¶ 5; Valdez Decl. ¶ 4. 

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The balance of hardships and the public interest also weigh in

Plaintiffs’ favor. If the temporary restraining order does not

issue, the State and Fresno Defendants’ sole injury will be the

financial costs associated with continuing to participate under the

current IHSS provider wages. The Court notes that there is

persuasive evidence that the wage cuts would actually cost the

State and Fresno County tens of millions of additional dollars

because in-home care is considerably less expensive than

institutional care and IHHS providers reduce the need for expensive

emergency room visits. Accordingly, the financial loss the State

and Fresno County will suffer if the wage reduction is not

implemented does not outweigh the hardship Plaintiffs would suffer

absent a temporary restraining order. Lastly, the public interest

weighs heavily in favor of granting relief. “It would be tragic,

not only from the standpoint of the individuals involved but also

from the standpoint of society, were poor, elderly, disabled people

to be wrongfully deprived of essential benefits for any period of

time.” Lopez v. Heckler, 713 F.2d 1432, 1437 (9th Cir. 1983). 

III. Bond

Federal Rule of Civil Procedure 65(c) "invests the district

court ‘with discretion as to the amount of security required, if

any.’” Jorgensen v. Cassiday, 320 F.3d 906, 919 (9th Cir. 2003)

(emphasis in original; quoting Barahona-Gomez v. Reno, 167 F.3d

1228, 1237 (9th Cir. 1999)). A district court has the discretion

to dispense with the security requirement where giving security

would effectively deny access to judicial review. See Save Our

Sonoran, Inc. v. Flowers, 408 F.3d 1113, 1126 (9th Cir. 2005)

(citation omitted). Similarly, a district court may waive the bond

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requirement where the plaintiffs are indigent. See Walker v.

Pierce, 665 F. Supp. 831, 844 (N.D. Cal. 1987). The Court waives

the bond requirement for Plaintiffs because many of them are

indigent and to ensure their ability to access the courts on behalf

of themselves and other class members. 

CONCLUSION

For the foregoing reasons, the Court grants Plaintiffs’

application for a temporary restraining order and order to show

cause why a preliminary injunction should not issue. Docket No.

287. As set forth in the separately filed temporary restraining

order, Defendants are enjoined and restrained from implementing

Fresno’s wage and benefits reductions. The Court also grants

Plaintiffs’ motion to exceed the page limit for their reply. 

Docket No. 355.

IT IS SO ORDERED.

Dated: 07/02/10 

CLAUDIA WILKEN

United States District Judge

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