N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT PATR IC K ALLEN, in his offic ia l c a pa c ity a s DIRE C TOR

OF OREGON HEALTH AUTHORITY, a

n a ge nc y of the State of Ore g on, Pla i ntiff-Appe lla nt, v. FAM ILYC A RE, INC ., a

n Ore gon nonprofit c orporat i on,

De fe nda n t-Appe l le e . No. 18-35593 D.C . No. 3:18-c v-00212-M O M EM O R ANDUM *

FAM ILYC A RE, INC ., a

n Ore gon nonprofit c orporat i on,

Pla i ntiff-Appe lla

nt, v. OREGON HEALTH AUTHOR ITY, a n a ge nc y of the State of Ore gon; PATR IC K ALLEN, in his offic i a l c a pa c ity a s Dire c tor of Ore gon He a lth Authority ,

De fe nda n ts-Appe lle e s, Nos. 19-35103 D.C . No. 6:18-c v-00296-M O



# FIL ED APR 30 2020 M OLLY C. DW Y E R, CLERK U. S. CO URT O F APPEALS

* This disposition is not a ppropria te for public at ion a

nd is not pre c e de nt e xc e pt a s provide d

by Ninth C irc uit R

ule 36-3.and

LYNNE SAXTON,

De fe nda n t. FAM ILYC A RE, INC ., a

n Ore gon nonprofit c orporat i on,

Pla i ntiff-Appe lle e , v. PATR IC K ALLEN, in his individua l c a pa c i ty , De fe nda

n t-Appe l la

nt, and OREGON HEALTH AUTHOR ITY, a n a ge nc y of the State of Ore gon; LYNNE SAXTON, De fe nda

n ts. No. 18-35891 D.C . No. 6:18-c v-00296-M O

FAM ILYC A RE, INC ., a

n Ore gon nonprofit c orporat i on,

Pla i ntiff-Appe lle e , v. LYNNE SAXTON, No. 18-36009 D.C . No. 6:18-c v-00296-M O

2De fe nda n t-Appe l la

nt, and PATR IC K ALLEN, in his individua l c a pa c i ty ; OREGON HEALTH AUTHORITY, a

n a ge nc y of the State of Ore g on, De fe nda

n ts. FAM ILYC A RE, INC ., a

n Ore gon nonprofit c orporat i on,

Pla i ntiff-Appe lla

nt, v. LYNNE SAXTON,

De fe nda n t-Appe l le e , and PATR IC K ALLEN, in his individua l c a pa c i ty ; OREGON HEALTH AUTHORITY, a

n a ge nc y of the State of Ore g on, De fe nda

n ts. No. 18-36048 D.C . No. 6:18-c v-00296-M O

Appe a l from

the Unite d

Stat e s Distric t C ourt for the Distric t of Ore gon M i c ha e l W . M osm a

n, Distric t Judge , Pre siding 3Argue d a nd Subm itte d M a

rc h 2, 2020 Portla nd, Ore gon B e fore : W OLLM AN, ** FER NANDEZ, a

nd PAEZ, C irc uit Judge s. The se a ppe a ls a rise out of a

2014 c ontra c t be twe e n Fam ily C are , Inc . (Fa m ily C are ) and the Ore gon He a l th Authority (OHA). Fam ily C a re wa s a C oordina te d C a re Organiz ation (C C O) 1 and pa rtic ipate d in Ore gon’ s M e dic a id 2 program . The c o ntra c t wa s subje c t to fe d e ra l ove rsight by the C e nte rs for M e d ic are & M e dic a id Se rvic e s (C M S), whic h m u st “ re v ie w[] and a

pprove [] a ll of Ore gon[ . s] c ontra c ts with [C C Os] an d re quire s tha t c a pita tion ra t e s . . . be a c tua ria lly sound.” Ore

gon v . C ampbe ll , 438 P.3d 448, 456 (Or. C t . App. 2019).

* * The Honora

ble R oge r L. W o llm a

n , Unite d State s C irc uit Judgefor the U.S. C ourt of Appe a l s for the Eighth C irc uit, sitting by de signa t ion. 1 Se e Or. R e v. Stat. §§ 414.620(1), 414.625(1). Ore gon re c e ive d a de m onstra

tion wa ive r from the fe de ra l gove rnm e nt for its M e dic a id progra m , pursua nt to whic h Ore gon’ s C C Os m e e t the re q uire m e nts of m ana ge d c are orga niz ations (M C Os) unde r fe de ra l la w. Se e 42 U.S.C . §§ 1315(a), 1396b(m)(1)(A); se e also 42 C .F.R . § 438.2 (de fining “ [m ] ana ge d c are orga niz ation (M C O )” ). 2 Se e Planne d Pare nthood Ariz. Inc . v . Be tlac h , 727 F.3d 960, 963 (9th C ir. 2013); se e also 42 U.S.C . § 1315(a ); Or. R e v. Stat . § 413.032(1)(i). 4The distric t c ourt dismisse d c e rta in c la im s a nd gra nte d or de nie d sum

m ary judgm e nt on othe rs. W e hav e jurisdic tion pursua nt to 28 U.S.C . § 1291, 3 the c olla te ra l orde r doc trine , 4 and the doc trine of pe nde nt jurisdic tion. 5 W e a ffirm in pa rt, re ve rse in pa

rt, a nd va c at e in pa

rt. No. 19-35103 The distric t c ourt prope rly grante d sum

m a ry judgm e nt to OHA on Fam ily C are ’ s Ore gon Adm i nistra tive Proc e dure Ac t (APA) 6 c la im s tha t OHA fa ile d to se t a c tua

ria lly sound c a pita tion ra te s in 2017 a

nd 2018. Thepa

rtie s a gre e that Ore gon la

w re q uire s OHA to c om

ply with fe de ra l M e dic a id la

w. S e e , e .g. , Or. R e v. Stat. § 413.071; Or. Adm i n. R . 410-141-3010(7); se e also Adamson v. Or. He alth Auth. , 412 P.3d 1193, 1194, 1196 (Or. C t. App. 2017). As re le va

nt to the c ontra c t at issue he re , 7 fe de ra l la w e xplic itly

re quire s C M S to “ re vie w[] and a pprove [] ” c a

pita tion ra te s “ a s a c tua

ria lly sound,” de sc ribe s the sta nda rds rate s

3 Se e Fe d. R . C iv. P. 54(b). 4 Isay e v a v . Sac rame nto She riff’s De p’t , 872 F.3d 938, 944–45 (9th C ir. 2017).

5 C unningham v . Gate

s , 229 F.3d 1271, 1284–85 (9th C ir. 2000). 6 Or. R e v. Stat. § 183.484(5)(a )–(c ). 7 Se e 42 C .F.R . § 438.3(a ). 5m

ust sa tisfy to qua lify

for a pprova l, 8 and de fine s “ [a ] c tua ria lly sound c a

p ita tion ra te s” to inc lude both C M S a p prova l a nd the c rite ria

C M S use s to be stow tha

t a pprova l . 9 B e c a

use c a pita t ion ra te s c annot be a

pprove d by

C M S unle ss the y

are a c tua ria lly sound, 1 0 C M S c ould not a pprove the m if the y

we re not. 1 1 In light of that truism , in the se c irc um sta nc e s ne ithe r Ore gon nor fe de ra l la w re quire d OHA to do m ore tha

n se e k a nd obta in C M S a

pprova l of the 2017 a

nd 2018 ra

te s. Thus, the distric t c o urt did not err in gra nting sum m ary judgm e nt to OHA a s to Fa m ily C are ’ s Ore gon APA c l a im s . 1 2 Howe v e r, the distric t c ourt e rre d in dismi ssing Fa m ily C are ’ s c ontra c t c la im a ga inst OHA, in which Fam ily C are a lle ge d tha t OHA ha d bre a c he d the im plie d c ove na nt of good fa ith a

nd fa ir de a ling in the ir 2014 c ontra c t, a s am e nde d and e xte nde d, by

pre se nting Fa

m ily C are with unre a sona

ble c a pita t ion ra te s in 2017 a

nd

8 42 C .F.R . § 438.4(b)(1)–(9); s e e also id. at (a ). 9 Id. at (a ). 1 0 Id. at (a )–(b). 1 1 Of c ourse , this doe s not m e an tha t C M S c ould not a

pprove a late r a djustm e nt. Nor would it pre c l ude a prope r a tta c k on a C M S de te rm ination pursua nt to theprovisions of fe de ra l la w. Se e 5 U.S.C . § 706; se e also Douglas v. Inde p. Liv ing C

tr. of S. C al., Inc . , 565 U.S. 606, 614, 132 S. Ct . 1204, 1210, 182 L. Ed. 2d 101 (2012).

1 2 The distric t c ourt prope rly e nte re d judgm e nt on a ll of Fa

m ily C are ’ s Ore gon APA c l a im s , be c a u se a ll sha

re d a c om m on fa c tua l ba sis: OHA’ s purporte d fa ilure to se t rate s tha

t we re a c tua

ria lly sound. 62018. The distric t c ourt de te rm ine d tha t the im plie d c ove n ant of good fa ith a nd fa ir de a ling wa s ina

pplic a ble be c a use e a c h a

nnua l rate -se tting a

m e ndm e nt wa s e sse ntia lly

a ne w c ontra c t. The distric t c ourt fa ile d to prope rly a pply Ore gon la

w 1 3 to inte rpre t the 2014 c ontra c t. It did not ide ntify the c ontra c tua l provision it pe rc e ive d to be dispute d, 1 4 nor did it e xam ine e xtrinsic e vide n c e of the pa rtie s’ inte nt, or a

pply m axim s of c onstruc t ion to re solve the pe rc e ive d am biguity . The distric t c o urt a lso e rre d in fa iling to inte rpre t the c ontra c t a lle ge d in the ope ra tive c om pla i nt— the 2014 c ontra c t, a s a m e nde d a n d e xte nde d—

a s a whole . Thus, we va c ate the dism issa l of Fa m ily C are ’ s c ontra c t c la im and re m and to a llow the distric t c o urt to c onside r the c ontra c t to whic h Fam i ly C are ’ s c l a im a pplie s . No. 18-35593 The distric t c ourt did not err in dism issing OHA’ s de c l ara tory judgm e nt a c tion, whic h

c la im e d tha

t fe de ra l la

w pre e m pte d Fam i ly C are ’ s sta

te la wc l a im s. OHA a rgue s tha t be c a use the fe de ra l re gula

t ory sc he m e gove rning a c tua

ria l soundne ss is so e xte nsive an d spe c ific , C ongre ss inte nde d to fore c lose a ll sta te

1 3 Volt Info. Sc is., Inc . v . Bd. of Trs. of Le land Stanford J u nior Univ . , 489 U.S. 468, 474, 109 S. Ct. 1248, 1253, 103 L. Ed. 2d 488 (1989); se e also Yogman v . Parrott , 937 P.2d 1019, 1021–22 (Or. 1997); Riv e r side Home s, Inc . v . Murray , 214 P.3d 835, 841 (Or. C t. App. 2009).

1 4 Ore gon la

w re quire s c ontra c ts of this ty pe have a five -y e ar te rm . Se e Or. R e v. Stat. § 414.652(2)(a ). Tha t itse l f indic ate s tha

t the y e arly

ra te c ha nge s we re not ne w c ontra c ts a

t a ll. 7a c tion in tha t fie ld. Se e One ok

, Inc . v . Le arje t, Inc . , 575 U.S. 373, 377, 135 S. Ct. 1591, 1595, 191 L. Ed. 2d 511 (2015). W e disa gre e . C ongre ss purpose fully struc ture d M e dic a id a s a c oope ra tive e nde avor be twe e n the fe de ra l gove rnm e nt a nd the g ove rnm e nts of individua l sta te s, 1 5 and tha

t struc ture pla i nly

re quire s sta

te re gula tion; thus, C ongre ss pla inly did not intend to fore c lose sta te a c tion in the M e d ic a id fie ld. Se e N

.Y. State De p’t of Soc . Se rv

s. v . Dublino , 413 U.S. 405, 411 n.9, 93 S. C t. 2507, 2512 n.9, 27 L. Ed. 2d 688 (1973); id. at 421, 93 S. C t. at 2517. W e a lso re

je c t OHA’ s atte m

pt to infe r pre e m

ption from

the c om pre he nsive nature of the fe de ra l re gula

tory sc he m e , whic h is “ virtua lly ta nta m ount to sa

y ing tha t whe ne ve r a

fe de ra l a ge nc y

de c ide s to step into a

fie ld, its re gula

tions will be e xc lusive .” Hillsborough C tv . Automate d Me d. Labs., Inc . , 471 U.S. 707, 717, 105 S. C t. 2371, 2377, 85 L. Ed. 2d 714 (1985); Dublino , 413 U.S. a t 415, 93 S. C t. at 2514. M ore ove r, the Supre m e C ourt’ s de te rm ination in Armstrong v . Ex c e ptional C hild C tr., Inc . , 575 U.S. 320, 323–24, 328, 135 S. C t. 1378, 1382, 1385, 191 L. Ed. 2d 471 (2015), tha

t the M e dic a id Ac t ha d no priva te e n forc e m e n t m e c ha

nism sa y s nothing a

bout a C o ngre ssiona l inte nt to pre c lude a sta te from im posing its own sa nc tions for viola

ting fe de ra l re quire m e nts. Se e Bate s v . Dow Agrosc i e nc e

s

1 5 Planne d Pare n thood, 727 F.3d a t 963. 8LLC , 544 U.S. 431, 441–42, 125 S. C t. 1788, 1797, 161 L. Ed. 2d 687 (2005). The distric t c o urt prope rly

dism isse d OHA’ s de c la

ratory re lie f a c tion. Nos. 18-36009, 18-35891, a nd 18-36048 Pa tric k Alle n a

nd Ly nne Sa xton e a c h a

p p e a l the distric t c o urt’ s de n ia l of qua lifie d im

m unity from Fam ily C are ’ s 42 U.S.C . § 1983 c la im tha t the y re ta lia te d a ga inst it for its c onstitutiona lly -prote c te d

spe e c h. Se e Ashc roft v . Iqbal , 556 U.S. 662, 672, 129 S. C t. 1937, 1946, 173 L. Ed. 2d 868 (2009); Isay e v a , 872 F.3d a t 944–45; se e also How ard v . C i ty of C o os Bay , 871 F.3d 1032, 1044 (9th C i r. 2017). Fa

m ily C are c ross-a

p pe a ls the distric t c ourt’ s pa rtia l grant of qua lifie d im m unity to Saxton. Se e W

oodw ard v . C

ity of Tuc son , 870 F.3d 1154, 1159 (9th C ir. 2017). The distric t c ourt e rre d in de ny ing Alle n qua l ifie d im m unity , a nd it e rre d in gra

nting Sa xton qua lifie d im

m unity in pa rt. An offic i a l should re c e ive qua lifie d im m unity “ unle ss the offic ia l’ s c onduc t viola te d a c le a rly e sta blishe d c onstitutiona

l right.” Pe arson v . C

allahan , 555 U.S. 223, 232, 129 S. C t. 808, 816, 172 L. Ed. 2d 565 (2009). In orde r for Fa m i ly C are to e s ta b lish tha t its First Ame n dm e nt rights we re viola te d,“ [it] m

ust prove that (1) [it] e nga ge d in prote c te d spe e c h; (2) the de fe nda n ts took a n a dve rse . . . a c tion a ga inst [it] ; a

nd (3) [its] spe e c h

wa s a substa n tia l or m o tiva

ting fa c tor for the a dve rse . . . a c tion.” H

ow ard , 871 F.3d a

t 1044 (inte rna l quota

tion m arks om itte d); 9C

lairmont v . Sound Me ntal He alth , 632 F.3d 1091, 1101, 1102–03 (9th C ir. 2011) (a pply ing tha

t te st to a n inde pe n de nt c ontra c t or). In orde r to show tha t its right wa s c le arly

e sta blishe d, Fam i ly C are m

ust de m onstra

t e “ ‘ that e ve ry

re a sona ble offic ia l would ha

ve unde rstood tha

t wha t he is doing viola

te s tha t right.’ ” Mulle nix v . Luna , __ U.S. __, __, 136 S. C t. 305, 308, 193 L. Ed. 2d 255 (2015) (pe r c uriam ). (1) Alle n Fam ily C are argue s tha

t Alle n re ta lia

t e d a ga inst it. W e disa gre e . Assum ing for pre se nt purpose s tha

t a n inde pe nde nt c ontra c tor should be tre ate d a s a

public e m ploy e e in the c onte x t pre se nte d he re , 1 6 Alle n wa s e ntitle d to sum m a ry judgm e nt a s to the 2018 ra

t e -se tt ing be c a

use the re wa s no ge n

uine disputeof m ate ria l fa c t re ga rding whe the r Fam ily C a

re ’ s spe e c h wa s a

substa ntia l or m otiva

ting fa c tor for Alle n’ s c o m

m issioning the

inde pe nde nt re ports a

nd re t a ining thera t e m e thodology . Se e Ellins v . C ity of Sie rra Madre , 710 F.3d 1049, 1056, 1062 (9th C ir. 2013). Fa

m ily C are ’ s spe c ulation a

bout Alle n’ s m otive is insuffic ie nt to show a ge n uine dispute of m ate ria l fa c t. Se e Pratt v . Row land, 65 F.3d 802, 808 (9th C ir. 1995); se e also Matsushita Ele c . Indus. C

o., Ltd. v . Ze nith Radio C orp. , 475 U.S. 574, 586, 106 S. C t. 1348, 1356, 89 L. Ed. 2d 538 (1986); N a t’l Indus., Inc . v .

1 6 Se e C

lairmont , 632 F.3d a

t 1101 10Re

public N at’l Life Ins. C o. , 677 F.2d 1258, 1267 (9th C ir. 1982). B e c a use Fam ily C are fa ile d to a dduc e suffic i e nt e vide nc e tha t Alle n a c te d with a

re ta l iatory m otive , Alle n

wa s e ntitle d to qua lifie d im m unity a s to his ra

t e -se tting c onduc t. Se e K e y se r v . Sac rame nto C

ity Unifie d Sc h. Dist. , 265 F.3d 741, 752–53 (9th C ir. 2001); Pratt , 65 F.3d a

t 808; se e also How ard , 871 F.3d a t 1045 (proximity

in tim e m ust be suc h “ that a

‘ jury logic a lly c ould infe r’ ” a

re ta lia tory m otive ); C

oszalte r v . C ity of Sale m , 320 F.3d 968, 978 (9th C ir. 2003). Alle n wa s like wise e ntitle d to sum m ary judgm e nt a s to his c onduc t in issuing the

purporte d ultim atum

and fa iling to tim

e ly provide the 2018 ra

t e s to Fam ily C are . Fam ily C a

re pre se nte d no e vide nc e tha t Alle n’ s issuing of e sse ntia lly e m pty thre ats during a

ne gotia tion, e ve n if done in re t a lia tion for prote c te d a c tivity , rise s to the le ve l of a

c onstitutiona

l viola tion. C f. Alpha Ene rgy

Sav e rs, Inc . v . Hanse n , 381 F.3d 917, 923, 928 (9th C ir. 2004) (gove rnm e nt a ge nc y worke rs

“ tam p e re d with file s, a l te re d bidding she e ts, m anipula te d the de pa

rtm e n t’ s c om pute r data b a se , a n d e nga g e d in othe r sc he m e s” to dive rt work from a c ontra c tor who ha d e nga ge d in prote c te d spe e c h). And e ve n if Alle n’ s ne gotia tion ta c tic s c ould a

m ount to a

c onstitutiona

l viola tion in c e rta in c onte xts, Fa m i ly C are points to no a

uthority tha t c le a rly e sta blishe d a viola tion in the

pa rtic u la r c irc um s ta nc e s pre se nte d he re : an a ge nc y he a d m aking e m

pty thre ats, or ta

king 11obdura

te and intra

nsige nt (or e v e n ba d fa ith) positions in c ontra c t a m e ndm e nt ne gotia tions with a

sophistic ate d c o ntra c t or tha t wa s re a dy and a

ble to a ggre ssive ly a sse rt a nd prote c t its rights. S

e e K arl v . C ity of Mountlak

e Te rrac e , 678 F.3d 1062, 1073–74 (9th C ir. 2012). Thus, the distric t c ourt should ha

v e grante d

Alle n qua lifie d im

m unity from Fam ily C are ’ s § 1983 c la im . (2) Saxton Fam ily C are a lso brought a § 1983 c la im

a ga inst Sa

xton for spe e c h re ta lia tion, a l le ging tha

t she re t a lia

te d a ga inst it by

c utting its 2017 c ontra c t

ra te s and dispa ra ging it in a

public re lations c a

m p a i gn. As to the2017 re ta lia

tory ra te -se tting, wede c line to c onside r Sa xton’ s argum e nt tha

t she wa s e ntitle d to qua lifie d im m unity be c a use she fa ile d to pre se nt that argum e nt to thedistric t c ourt. Se e Gre ise n v . Hank e n , 925 F.3d 1097, 1115 (9th C ir. 2019); C

raw ford v . Lungre n , 96 F.3d 380, 389 n.6 (9th C ir. 1996). M ore o ve r, we la c k jurisdic tion to re vie wthe distric t c ourt’ s de nia l of Sa xton’ s m otion for sum

m a ry judgm e nt a

rising from

the 2017 ra

te -se tting, a

nd to c onside r any of he r argum e nts on a

ppe a l tha t fa il to vie w the fa c t s in the light m ost favora ble to Fa m i ly C are . Se e Moss v . U.S. Se c r e t Se r v . , 572 F.3d 962, 972–73 (9th C ir. 2009).

12As to thepublic re lations c a m pa ign, we hold tha

t the distric t c ourt e rre d in pa rtia l ly granting Sa

xton qua l ifie d im

m unity be c a use , ta king thefa c ts in thelight m ost fa vora ble to Fa m ily C are , 1 7 it wa s c l e arly e s ta blishe d tha

t Sa xton’ s c onduc t viola te d the C onstitution. At the tim e Sa xton a c te d, a re a sona ble offic ia l would have be e n on notic e tha

t re ta lia t ing a ga inst a

c ontra c tor’ s prote c t e d spe e c h with a c am pa ign tha t im prope rly dispa ra ge d it, while sim

ulta ne ously re duc ing the c ontra c tor’ s c om

pe nsation, viola

te d the c ontra c t or’ s First Am e ndm e nt rights. Se e Gre ise n , 925 F.3d a

t 1113–14; Alle n v . Sc ribne r , 812 F.2d 426, 434 & n.17 (9th C ir.), ame nde d by

828 F.2d 1445 (9th C ir. 1987). Fa m ily C are pre s e nte d suffic ie nt e vide nc e sugge sting tha

t Sa xton re t a lia

te d a ga inst its prote c te d spe e c h by im ple m e nting thec am

pa ign. On this re c ord, whe the r Sa x ton’ s sta te m e nts we re a c c urate or she ha d a be n i gn m otive we re quinte sse ntia l dispute s of fa c t tha t c ould not be re solve d at the sum m ary judgm e nt sta g e . Se e Alle n , 812 F.2d a t 435; se e also O’Brie n v . W

e lty , 818 F.3d 920, 932 (9th C ir. 2016). Thus, the distric t c ourt should ha ve de nie d he r m otion for sum m ary judgm e nt in full. AFFIRM E D in par t and V ACAT E D in par t in No. 19-35103; AFFIRM E D in Nos. 18-35593 and 18-35891; RE V E RSE D in Nos. 18-36009 and 18-36048. The pa

rtie s sha ll be ar the ir own c osts in No. 19-35103.

1 7 Se e Isay e v a , 872 F.3d a t 945. 13