FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

EDUARDO J. GUZMAN, M.D., 

Plaintiff-Appellant, No. 08-55326

v. D.C. No.  08-CV-00769- SANDRA SHEWRY, Director of the

California State Department of MMM

Health Care Services, OPINION

Defendant-Appellee. 

Appeal from the United States District Court

for the Central District of California

Margaret M. Morrow, District Judge, Presiding

Argued and Submitted

June 4, 2008—Pasadena, California

Filed September 23, 2008

Before: David R. Thompson, Diarmuid F. O’Scannlain, and

Richard C. Tallman, Circuit Judges.

Opinion by Judge O’Scannlain

13355
COUNSEL

Patric Hooper, Hooper, Lundy & Bookman, Inc., Los Angeles, California, argued the cause for the plaintiff-appellant and

filed briefs. 

Janet E. Burns, Deputy Attorney General, State of California,

Los Angeles, California, argued the cause for the defendantappellee and filed a brief; Phillip J. Matsumoto, Deputy Attorney General, Richard T. Waldow, Supervising Attorney General, Douglas M. Press, Senior Assistant Attorney General,

and Edmund G. Brown, Jr., Attorney General for the State of

California, were on the brief. 

GUZMAN v. SHEWRY 13359
OPINION

O’SCANNLAIN, Circuit Judge: 

We must decide whether a district court abused its discretion in denying a physician a preliminary injunction to halt his

temporary suspension from California’s Medi-Cal program

based on his claims that such suspension violates federal

Medicaid law and is prohibited by the Due Process Clause of

the Fourteenth Amendment.

I

A

Medicaid is a cooperative federal-state program that authorizes the United States Government to provide funds to participating states to administer medical assistance to individuals

“whose income and resources are insufficient to meet the

costs of necessary medical services.” 42 U.S.C. § 1396. The

program operates by authorizing the Federal Government to

pay a percentage of the costs a state incurs for patient care,

and, in return, the state complies with certain federal requirements. See 42 U.S.C. § 1396a. Administration of the program

is entrusted to the Secretary of Health and Human Services

(“HHS”), who also has the authority to promulgate regulations under the Medicaid Act. California participates in Medicaid through the California Medical Assistance Program

(“Medi-Cal”), and has designated its Department of Health

Care Services (“DHCS” or the “Department”)1 as the agency

responsible for its administration. See id. § 1396a(a)(5); Cal.

Welf. & Inst. Code §§ 10720, 14000. 

1As of July 1, 2007, the duties of the California Department of Health

Services were modified and the agency was renamed the Department of

Health Care Services. See Cal. Health & Safety Code § 20. Hereinafter,

this opinion shall refer to the agency by its current name, DHCS. 

13360 GUZMAN v. SHEWRY
B

Dr. Eduardo J. Guzman, M.D., is an obstetrician/

gynecologist who provides services through Medi-Cal. Sometime in 2006, DHCS opened an investigation into certain

claims Guzman had submitted to Medi-Cal for payment. On

August 30, 2006, after several searches of his offices in Downey and Norwalk, California, DHCS filed an Accusation

against Guzman alleging that he had imported large quantities

of intrauterine devices (“IUDs”) from Mexico that had not

been approved by the Food and Drug Administration (“FDA”)

for use in this country; that he had inserted such devices into

his patients, Medi-Cal beneficiaries; and that he had billed

Medi-Cal for his services, fraudulently claiming that the

devices used were FDA-approved. The Accusation notified

Guzman that DHCS would seek permanently to suspend him

from the Medi-Cal program as a result of these allegations.

See Cal. Welf. & Inst. Code § 14123. Some time later, the

California Attorney General’s Office filed felony criminal

charges against Guzman arising from the same alleged conduct.2

DHCS scheduled an administrative hearing on the Accusation for August 2007, but Guzman requested that it be postponed until the criminal proceedings against him were

concluded.3 DHCS granted the request. Nevertheless, on January 22, 2008, DHCS sent Guzman a letter informing him that

he would be suspended temporarily from participating in

Medi-Cal because of the pending criminal proceedings

against him. The letter stated that the suspension would take

2The felony complaint filed in California Superior Court charged Guzman with two counts of grand theft, in violation of California Penal Code

section 487(a) and California Welfare and Institutions Code section

14107(b)(4)(A); three counts of making false or fraudulent claims, in violation of California Penal Code sections 550(a)(5), (6), and (7); and two

counts of delivering a misbranded drug or device, in violation of California Health and Safety Code sections 111440 and 111450. 

3As of the date of oral argument, no trial date in the criminal case had

yet been set and no hearing on the Accusation had yet been held. 

GUZMAN v. SHEWRY 13361
effect on February 6, 2008, and would continue until MediCal determined that he was “no longer under investigation” or

until “after legal proceedings related to the alleged fraud or

abuses are completed.” Once enforced, the suspension would

prohibit Guzman from billing Medi-Cal for any services rendered.4

As the letter explained, California law entitled Guzman to

appeal the temporary suspension. DHCS concedes, however,

that such appeal is limited to the question of whether a provider is, in fact, under investigation for fraud or abuse. Thus,

Guzman would not have been able to contest the underlying

allegations against him in such an appeal. In addition, the letter explained that Guzman also had the right to “request a

meeting with [DHCS] representatives” if he believed the

information on which Medi-Cal was relying was erroneous.

See Cal. Welf. & Inst. Code § 14123.05. It is not clear

whether Guzman would have been able to challenge the validity of the underlying fraud allegations at such a meeting. In

any event, Guzman decided not to avail himself of either procedure. 

C

On February 5, 2008, Guzman filed a complaint against

DHCS in the district court under 42 U.S.C. § 1983 seeking a

preliminary injunction to halt the temporary suspension. Guzman asserted that a preliminary injunction was necessary

because his suspension would irreparably harm his patients,

his practice, and his reputation.5 Although a California statute

4To obtain reimbursement for services provided through Medi-Cal, a

medical professional must enroll in the Medi-Cal program and receive a

“provider number.” Cal. Code Regs. tit. 22, §§ 51000.7, 51000.20. The

letter informed Guzman that all provider numbers assigned to him would

be “temporarily suspend[ed] and deactivat[ed].” 

5

In addition to the loss of revenue from his Medi-Cal patients, Guzman

noted that he was under contractual obligations to report any such suspen13362 GUZMAN v. SHEWRY
authorizes such suspension, Cal. Welf. & Inst. Code

§ 14043.36(a), Guzman argued that the statute was preempted

by federal law, and that he was entitled to a pre-suspension

hearing either by federal Medicaid statutes and regulations or,

in the alternative, the Due Process Clause of the Fourteenth

Amendment. 

DHCS agreed to delay enforcement of the suspension for

one month, allowing the district court sufficient time to rule

on Guzman’s expedited motion for a preliminary injunction.

On March 4, 2008, the district court denied the motion, concluding that Guzman would not likely be able to show that

California Welfare and Institutions Code section 14043.36(a)

was preempted by federal law, or that he had a statutory or

constitutional right to a pre-suspension hearing. Nevertheless,

the district court granted a limited stay allowing Guzman to

file an emergency motion in this court to enjoin the suspension pending appeal. On March 5, 2008, a motions panel of

this court denied the motion, but expedited the briefing schedule and the date of oral argument. This timely appeal followed. 

II

“Our review of the denial of a preliminary injunction is

limited and deferential.” Wildwest Inst. v. Bull, 472 F.3d 587,

589 (9th Cir. 2006) (internal quotation marks omitted). “We

ask only whether the district court has abused its discretion.”

Id. In such cases, the scope of our review is “generally limited

to whether the district court [1] employed the proper preliminary injunction standard and [2] whether the court correctly

sion to the hospitals with which he is affiliated and to the independent

physicians’ associations of which he is a member. Guzman predicted that

the hospitals would suspend or revoke his staff privileges and that the

associations would terminate his membership, actions that would preclude

him from receiving payments from private insurance companies that represent his non-Medi-Cal patients. 

GUZMAN v. SHEWRY 13363
apprehended the underlying legal issues in the case.” Earth

Island Inst. v. U.S. Forest Serv., 351 F.3d 1291, 1298 (9th Cir.

2003). In other words, “[a]s long as the district court got the

law right, it will not be reversed simply because the appellate

court would have arrived at a different result if it had applied

the law to the facts of the case.” Wildwest Inst., 472 F.3d at

590. 

A district court may grant a preliminary injunction under

two sets of circumstances. In the first case, “ ‘a plaintiff must

show (1) a strong likelihood of success on the merits, (2) the

possibility of irreparable injury to plaintiff if preliminary

relief is not granted, (3) a balance of hardships favoring the

plaintiff, and (4) advancement of the public interest (in certain

cases).’ ” Natural Res. Def. Council, Inc. v. Winter, 518 F.3d

658, 677 (9th Cir. 2008) (quoting Freecycle Network, Inc. v.

Oey, 505 F.3d 898, 902 (9th Cir. 2007)). In the second case,

“a court may grant the injunction if the plaintiff demonstrates

either a combination of probable success on the merits and the

possibility of irreparable injury or that serious questions are

raised and the balance of hardships tips sharply in his favor.”

Id. (emphasis added) (quoting Freecycle, 505 F.3d at 902). 

The district court articulated this standard and, in applying

it, held that Guzman had failed to show a likelihood of success on the merits. Thus, the court declined to consider the

possibility that Guzman would suffer irreparable injury. Such

action was a valid exercise of the court’s discretion. As we

have held previously, before a preliminary injunction is

granted, at “ ‘an irreducible minimum, the moving party must

demonstrate a fair chance of success on the merits, or questions serious enough to require litigation.’ ” Dep’t of Parks &

Recreation v. Bazaar Del Mundo Inc., 448 F.3d 1118, 1124

(9th Cir. 2006) (quoting Arcamuzi v. Cont’l Airlines, Inc., 819

F.2d 935, 937 (9th Cir. 1987)). Thus, we must decide whether

the district court correctly apprehended the law underlying

Guzman’s claims in concluding that he was unlikely to prevail. We now consider each of those claims in turn. 

13364 GUZMAN v. SHEWRY
III

A

We begin with Guzman’s claim that California Welfare and

Institutions Code section 14043.36(a) is preempted by federal

law. “Under the Supremacy Clause, U.S. Const., art. VI, cl.

2, state laws that interfere with, or are contrary to the laws of

congress, made in pursuance of the constitution are invalid.”

Wis. Pub. Intervenor v. Mortier, 501 U.S. 597, 604 (1991)

(internal quotation marks and citation omitted). Guzman

argues that California Welfare and Institutions Code section

14043.36(a) runs afoul of this provision because it conflicts

with, and is therefore preempted by, federal Medicaid law. In

preemption cases, we begin with the presumption that the

“historic police powers of the States” are not superseded by

federal law unless such result was the “clear and manifest purpose of Congress.” Medtronic, Inc. v. Lohr, 518 U.S. 470, 485

(1996) (internal quotation marks and citation omitted). 

Section 14043.36(a) states that

[i]f it is discovered that a provider is under investigation by the department or any state, local, or federal

government law enforcement agency for fraud or

abuse, that provider shall be subject to temporary

suspension from the Medi-Cal program, which shall

include temporary deactivation of the provider’s

number, including all business addresses used by the

provider to obtain reimbursement from the Medi-Cal

program. 

Id. Guzman argues that this statute is preempted because federal law prohibits states from suspending providers from a

state health care program simply because the provider is

“under investigation” for fraud or abuse. 

GUZMAN v. SHEWRY 13365
B

[1] Medicaid, by definition, is a cooperative federal-state

medical benefits assistance program. See 42 U.S.C. § 1396a.

As we have stated before, because such program “exemplifies

what is often referred to as cooperative federalism,” “the case

for federal preemption becomes a less persuasive one.” Wash.

Dep’t of Soc. & Health Servs. v. Bowen, 815 F.2d 549, 557

(9th Cir. 1987) (internal quotation marks and citations omitted). The Medicaid statutes contain no “explicit pre-emptive

language” limiting the grounds upon which a state may suspend a provider from a state health care program.6

See Mortier, 501 U.S. at 605. Thus, we must determine whether the

federal Medicaid scheme is “ ‘so pervasive as to make reasonable the inference that Congress left no room for the States to

supplement it,’ ” id. (quoting Rice v. Santa Fe Elevator Corp.,

331 U.S. 218, 230 (1947)), or whether compliance with the

California statute “ ‘stands as an obstacle to the accomplishment and execution of the full purposes and objectives of

Congress,’ ” id. (quoting Hines v. Davidowitz, 312 U.S. 52,

67 (1941)). 

C

[2] Section 1128 of the Social Security Act lists certain

grounds upon which the Secretary of HHS must exclude providers from a federal health care program; the Act also lists

certain other grounds upon which the Secretary may do so in

his discretion. See 42 U.S.C. § 1320a-7. In listing the discretionary grounds for suspension, one subsection of the Act

explains that the Secretary may exclude or suspend “[a]ny

individual or entity which has been suspended or excluded

from participation . . . [in] a State health care program, for

6The Social Security Act requires states to exclude providers from state

health care plans if directed to do so by the Secretary of HHS, 42 U.S.C.

§ 1396a(a)(39), but it does not expressly prohibit states from excluding or

suspending providers in other circumstances. 

13366 GUZMAN v. SHEWRY
reasons bearing on the individual’s or entity’s professional

competence, professional performance, or financial integrity.”

Id. § 1320a-7(b)(5). This provision plainly contemplates that

states have the authority to suspend or to exclude providers

from state health care programs for reasons other than those

upon which the Secretary of HHS has authority to act. Were

such not the case, this subsection would not vest the Secretary

with any authority not already provided elsewhere in the statute, and its inclusion would be redundant. See Spencer

Enters., Inc. v. United States, 345 F.3d 683, 691 (9th Cir.

2003) (“[I]t is . . . a ‘cardinal rule of statutory interpretation

that no provision should be construed to be entirely redundant.’ ” (quoting Kungys v. United States, 485 U.S. 759, 778

(1988))); see also Clark v. Capital Credit & Collection Servs.,

Inc., 460 F.3d 1162, 1175 (9th Cir. 2006) (same). 

[3] The applicable Medicare regulations confirm this view.

The regulation describing “State-Initiated Exclusions from

Medicaid” provides that “a State may exclude an individual

or entity from participation in the Medicaid program for any

reason for which the Secretary could exclude that individual

or entity.” 42 C.F.R. § 1002.2(a). Next, it instructs that “nothing [in the regulations] should be construed to limit a State’s

own authority to exclude an individual or entity from Medicaid for any reason or period authorized by State law.” Id.

§ 1002.2(b). Thus, not only does the applicable federal statute

fail to prohibit states from suspending providers from state

health care programs for reasons other than those upon which

the Secretary of HHS may act, the governing regulation specifically instructs that states have such authority. 

[4] Accordingly, nothing in the federal Medicaid statutes or

regulations prevents a state from suspending a provider temporarily from a state health care program on the basis of an

ongoing investigation for fraud or abuse, as California Welfare and Institutions Code section 14043.36(a) permits. Thus,

we agree with the district court that Guzman is unlikely to

GUZMAN v. SHEWRY 13367
prevail on the merits of his claim that such statute is preempted by federal law. 

IV

Even if California Welfare and Institutions Code section

14043.36(a) is not preempted, Guzman argues that federal

Medicaid law entitles him to a hearing before his temporary

suspension from the Medi-Cal program is imposed. Guzman

seeks to enforce such purported right through 42 U.S.C.

§ 1983. 

[5] Section 1983 creates a cause of action against any person who, under color of state law, deprives “any citizen of the

United States . . . of any rights, privileges, or immunities

secured by the Constitution and laws” of the United States. Id.

Although this statute enables plaintiffs to enforce federal statutory rights, Maine v. Thiboutot, 448 U.S. 1, 4-5 (1980), it

“does not provide an avenue for relief every time a state actor

violates a federal law,” City of Rancho Palos Verdes v.

Abrams, 544 U.S. 113, 119 (2005). Thus, to demonstrate that

he is entitled to a pre-suspension hearing under federal Medicaid law, Guzman must establish that a federal statute unambiguously entitles him to such a right. After all, “[t]he

Supreme Court has held that only violations of rights, not

laws, give rise to § 1983 actions.” Save Our Valley v. Sound

Transit, 335 F.3d 932, 936 (9th Cir. 2003) (citing Gonzaga

Univ. v. Doe, 536 U.S. 273, 285 (2002); Blessing v. Freestone, 520 U.S. 329, 340 (1997)). 

A

[6] Guzman contends that he is afforded the right to a presuspension hearing by several Medicaid statutes and regulations. First, he points to the Social Security Act, which

requires the Secretary of HHS to afford “reasonable notice

and opportunity for a hearing” to any provider excluded from

any federal health care program. 42 U.S.C. § 1320a-7(f)(1).

13368 GUZMAN v. SHEWRY
Yet by its plain terms, such provision applies only to exclusions imposed by the Secretary himself; it does not govern

state exclusion procedures. Accordingly, the provision does

not control Guzman’s state-initiated temporary suspension. 

B

Second, Guzman points to the federal regulations that set

forth the requirements for “State-Initiated Exclusions from

Medicaid,” 42 C.F.R. §§ 1002.1-.230. One such regulation

requires the relevant state agency to “have administrative procedures in place that enable it to exclude an individual or

entity for any reason for which the Secretary could exclude

such individual or entity.” Id. § 1002.210. Another regulation

provides that the state agency must give the individual or

entity “the opportunity to submit documents and written argument against” such exclusion and “any additional appeals

rights that would otherwise be available under procedures

established by the State.” Id. § 1002.213. 

[7] By their express terms, such regulations do not apply to

Guzman’s temporary suspension from Medi-Cal because they

set forth only those procedures which a state must follow in

excluding providers for reasons upon which the Secretary of

HHS could act. DHCS seeks temporarily to suspend Guzman

from Medi-Cal because he is under investigation for fraud and

abuse, as it has the authority to do under California Welfare

and Institutions Code section 14043.36(a). The Secretary of

HHS has no similar authority. Accordingly, a suspension

under section 14043.36(a) is not controlled by §§ 1002.1-.230.7

7Even if it were, Guzman’s likelihood of success on the merits would

remain insubstantial. Guzman was notified of his temporary suspension

before it was enforced, and California law entitled him to file a written

appeal, Cal. Welf. & Inst. Code § 14043.65, and a meeting with DHCS

officials, id. § 14123.05. Moreover, California law gives Guzman the right

to an in-person hearing before his suspension becomes permanent. Id.

§ 14123. Indeed, a hearing already would have taken place but for Guzman’s request that DHCS postpone proceedings pending the resolution of

his criminal trial. 

GUZMAN v. SHEWRY 13369
C

Guzman points to one final source of his right to a presuspension hearing, 42 C.F.R. § 431.54(f). Consistent with

Medicaid’s purpose of providing health care to the indigent in

quantity and quality equivalent to the standard of care available to the general population, federal law requires state

health care plans to provide that “any individual eligible for

medical assistance . . . may obtain such assistance from any

institution . . . or person . . . qualified to perform the service

or services required . . . , who undertakes to provide him such

services.” 42 U.S.C. § 1396a(a)(23). This mandate is sometimes referred to as the “freedom of choice” principle. See

Ball v. Rodgers, 492 F.3d 1094, 1098 n.4 (9th Cir. 2007). 

In the Omnibus Budget Reconciliation Act of 1981, Pub. L.

No. 97-35, 95 Stat. 357, Congress cabined such principle by

creating exceptions to § 1396a(a)(23) allowing states to “lock

in” certain beneficiaries who utilize Medicaid services “at a

frequency or amount not medically necessary” by limiting the

number of providers from whom they may obtain medical services. 42 U.S.C. § 1396n(a)(2)(A) (1982). Similarly, the Act

allowed states to “lock out” certain providers from state

health care programs upon a finding that the provider furnished medical services “at a frequency or amount not medically necessary” or “of a quality which does not meet

professionally recognized standards of health care.” Id.

§ 1396n(a)(2)(B). 

[8] In 1983, HHS promulgated regulations to implement

these exceptions, stating that, consistent with the Act, “a State

shall not be deemed to be out of compliance with [the freedom of choice provision]” if it has “elected any of the exceptions set forth in [the regulation],” including subsection (f),

which provides as follows:

Lock-out of providers. If a Medicaid agency finds

that a Medicaid provider has abused the Medicaid

13370 GUZMAN v. SHEWRY
program, the agency may restrict the provider,

through suspension or otherwise, from participating

in the program for a reasonable period of time. 

Before imposing any restriction, the agency must

meet the following conditions: 

(1) Give the provider notice and opportunity for a

hearing, in accordance with procedures established

by the agency. 

(2) Find that in a significant number or proportion

of cases, the provider has: 

(i) Furnished Medicaid services at a frequency or amount not medically necessary,

as determined in accordance with utilization guidelines established by the agency;

or 

(ii) Furnished Medicaid services of a quality that does not meet professionally recognized standards of health care. 

(3) Notify CMS and the general public of the

restriction and its duration. 

(4) Ensure that the restrictions do not result in denying recipients reasonable access (taking into account

geographic location: and reasonable travel time) to

Medicaid services of adequate quality, including

emergency services. 

42 C.F.R. § 431.54(f). 

Notably, such regulation is placed among the exceptions to

the freedom of choice provision, see id. § 431.54

(“Exceptions to certain State plan requirements”), rather than

GUZMAN v. SHEWRY 13371
those setting forth the procedural safeguards that must be followed when states exclude providers from state health care

programs. See id. §§ 1002.1-.230 (“State-Initiated Exclusions

from Medicaid”). Yet reading this provision in isolation, Guzman argues that it vests him with a right to the remedies set

forth in the regulation prior to the enforcement of his temporary suspension. 

Guzman is correct that his temporary suspension from

Medi-Cal is a “restriction” on his participation in such program because the effect of the suspension is to prevent him

from billing Medi-Cal for the costs of any services rendered.

See supra at 13361-62 & n.3. Moreover, DHCS has never

made any finding that Guzman has furnished unnecessary or

inadequate medical services, as section 431.54(f)(2) appears

to require in order for a state to avoid infringing upon the

freedom of Medicaid recipients to choose among providers. 

[9] Yet even if subsection (f) were designed to entitle Guzman to the remedies it describes, Guzman must demonstrate

that a federal statute vests him with such a right. As we held

in Save Our Valley, “agency regulations cannot independently

create rights enforceable through § 1983.” 335 F.3d at 939;

see also Alexander v. Sandoval, 532 U.S. 275, 291 (2001)

(“Language in a regulation may invoke a private right of

action that Congress through statutory text created, but it may

not create a right that Congress has not.”); Gonzaga, 536 U.S.

at 290 (“[I]f Congress wishes to create new rights enforceable

under § 1983, it must do so in clear and unambiguous terms

. . . .”). 

In determining whether Congress intended to create a federal right in a particular statutory provision, we examine three

factors. “First, Congress must have intended that the provision

in question benefit the plaintiff.” Blessing, 520 U.S. at 340. In

answering this initial inquiry, we must determine whether the

statute creates an “individual entitlement,” Gonzaga, 536 U.S.

at 287, that is “unambiguously conferred,” id. at 283 (internal

13372 GUZMAN v. SHEWRY
quotation marks omitted), by the use of “rights-creating language,” id. at 284 n.3. See Harris v. Olszewski, 442 F.3d 456,

461 (6th Cir. 2006) (applying Gonzaga to this prong of the

Blessing test). 

[10] Here, our analysis need not proceed further than this

first step of the Blessing test because there is no federal statute that references any of the procedures set forth in subsection (f).8

 Although subsection (f) was promulgated to

implement the exceptions to the freedom of choice provision

set forth in the Omnibus Budget Reconciliation Act of 1981,

including the provider “lock-out” exception, 42 U.S.C.

§ 1396n(a)(2)(B) (repealed 1987), Congress decided to repeal

such provision in 1987. See Medicare and Medicaid Patient

and Program Protection Act of 1987, Pub. L. No. 100-93, sec.

8(h), § 1915(a)(2), 101 Stat. 680, 694. Thus, whatever the

effect of HHS’s decision to retain the implementing regulation after the repeal of the statute, Guzman cannot contend

that such regulation entitles him to a right enforceable in the

§ 1983 claim he has brought here. 

As we have stated in the past, “the Supreme Court’s Sandoval and Gonzaga decisions, taken together, compel the conclusion . . . that agency regulations cannot independently

create rights enforceable through § 1983.” Save Our Valley,

335 F.3d at 939. Such conclusion “should surprise no one, as

it results directly from the broader, venerated constitutional

law principle that Congress, rather than the executive, is the

lawmaker in our democracy.” Id.

[11] Accordingly, Guzman is unlikely to succeed on the

merits of his claim that he has an enforceable federal right to

8The second factor of the test asks whether “the right assertedly protected by the statute is not so vague and amorphous that its enforcement

would strain judicial competence.” Blessing, 520 U.S. at 340-41 (internal

quotation marks omitted). The final factor asks whether the statute “unambiguously impose[s] a binding obligation on the States.” Id. at 341. 

GUZMAN v. SHEWRY 13373
a hearing prior to the imposition of his temporary suspension

from the Medi-Cal program. 

V

[12] Finally, Guzman argues that even if he is not entitled

to a pre-suspension hearing under federal Medicaid law, the

Fourteenth Amendment of the United States Constitution

affords him such a remedy. The Fourteenth Amendment protects against governmental deprivations of “life, liberty, or

property” without due process of law. U.S. Const. amend.

XIV. To state a cognizable due process claim, Guzman must

have a “recognized liberty or property interest at stake.”

Schroeder v. McDonald, 55 F.3d 454, 462 (9th Cir. 1995). We

have previously held that a provider such as Guzman does

“not possess a property interest in continued participation in

Medicare, Medicaid, or the federally-funded state health care

programs.” Erickson v. United States ex rel. Dep’t of Health

& Human Servs., 67 F.3d 858, 862 (9th Cir. 1995). Thus,

under our precedent, Guzman must demonstrate that he possesses a liberty interest that will be jeopardized by his temporary suspension from Medi-Cal. 

[13] The liberty guaranteed by the Fourteenth Amendment

is necessarily broad. See Bd. of Regents v. Roth, 408 U.S. 564,

572 (1972). To that end, Guzman argues that DHCS’s failure

to provide him with a pre-suspension hearing deprived him of

three protected liberty interests: (1) his right to contract with

the state; (2) his interest in pursuing the occupation of his

choice; and (3) his reputation for honesty and morality.

Although all three interests are protected under the Fourteenth

Amendment, Guzman must first demonstrate that he was

actually deprived of at least one of these interests before he

can establish that he is entitled to relief. See Cleveland Bd. of

Educ. v. Loudermill, 470 U.S. 532, 541 (1985). 

13374 GUZMAN v. SHEWRY
A

[14] Guzman argues that because his temporary suspension

denies him the ability to receive reimbursement for treating

Medi-Cal patients, he has been deprived of his right to contract with the state. In support of such assertion, Guzman

relies on the D.C. Circuit’s decision in Trifax Corp. v. District

of Columbia, 314 F.3d 641 (D.C. Cir. 2003), which indicates

that “formally debarring a corporation from government contract bidding constitutes a deprivation of liberty that triggers

the procedural guarantees of the Due Process Clause.” Id. at

643. However, Guzman’s reliance on such authority is misplaced. Participation in the Medi-Cal program entitles Guzman to reimbursement for treating patients who receive MediCal benefits; it does not involve bidding on government contracts.9

 As the Seventh Circuit explained in Medley v. City of

Milwaukee, 969 F.2d 312 (7th Cir. 1992), there is no authority

for the proposition that a private party, such as Guzman, has

a “liberty interest in . . . participation in a government assistance program designed to provide benefits for a third party.”

Id. at 317. Accordingly, we must conclude that DHCS’s

action does not deprive Guzman of his interest in contracting

with the state.

B

Guzman next argues that his temporary suspension denies

him his liberty interest in pursuing the occupation of his

choice. The Supreme Court has not defined the boundaries of

an individual’s right to pursue his chosen profession, but it

has stated that there is “some generalized due process right to

choose one’s field of private employment.” Conn v. Gabbert,

526 U.S. 286, 291-92 (1999). The Court has emphasized,

however, that all cases recognizing such a right have “deal[t]

with a complete prohibition on the right to engage in a calling,

9Accordingly, we need not determine whether to incorporate Trifax’s

holding into our jurisprudence. 

GUZMAN v. SHEWRY 13375
and not [a] sort of brief interruption.” Id. at 292 (emphasis

added). Indeed, the liberty interest in pursuing one’s chosen

profession has been recognized only in cases where (1) a

plaintiff challenges the rationality of government regulations

on entry into a particular profession, see, e.g., Schware v. Bd.

of Bar Exam’rs, 353 U.S. 232 (1957), or (2) a state seeks permanently to bar an individual from public employment, see,

e.g., Roth, 408 U.S. at 573. 

[15] Guzman’s claim does not fall into either of these two

recognized categories. With respect to the first, DHCS has

temporarily suspended Guzman from Medi-Cal, thereby preventing him from receiving reimbursement for treating MediCal patients. DHCS has not, however, revoked or suspended

his license to practice medicine. Thus, Guzman’s case is distinguishable from those in which plaintiffs have challenged

the rationality of a state-imposed barrier to entering a particular profession, such as a testing or licensing requirement. See,

e.g., Schware, 353 U.S. at 247 (recognizing the liberty interest

of an individual denied the right to sit for a state bar exam).

[16] As to the second category, Guzman is not a public

employee, nor has DHCS’s decision to suspend him deprived

him of future public employment. Consequently, the suspension did not impose a complete bar on his ability to become

a public employee. See Cafeteria & Rest. Workers Union,

Local 473 v. McElroy, 367 U.S. 886, 895-96 (1961) (concluding that an employment decision to bar a cook from working

at a particular military base did not violate the cook’s due process rights because she “remained entirely free to obtain

employment . . . with any other employer”); Llamas v. Butte

Cmty. Coll. Dist., 238 F.3d 1123, 1126, 1128 (9th Cir. 2001)

(concluding that a janitor fired from his job and “barred from

all future employment with the District” was not deprived of

his liberty interest in pursuing the occupation of his choice

because he had “not been banned from pursuing a janitorial

position [or other public employment] elsewhere”). 

13376 GUZMAN v. SHEWRY
[17] In sum, Guzman’s temporary suspension from the

Medi-Cal program does not exclude him from the medical

profession, nor does it deprive him of, or prevent him from

applying for, public employment. Accordingly, Guzman has

not been deprived of a protected liberty interest in pursuing

the occupation of his choice.

C

Finally, Guzman contends that the Due Process Clause

entitles him to a pre-suspension hearing because the grounds

on which the suspension is based harm his reputation. A person’s liberty interest is implicated if the government levels a

charge against him that “impairs his reputation for honesty or

morality.” Erickson, 67 F.3d at 862 (citing Vanelli v. Reynolds Sch. Dist. No. 7, 667 F.2d 773, 777 (9th Cir. 1982)).

DHCS’s suspension of Guzman triggers such an interest

because it is predicated on the fact that he is under investigation for “fraud and abuse,” an allegation that impacts his reputation for honesty. See Cox v. Roskelley, 359 F.3d 1105, 1113

(9th Cir. 2004) (concluding that a termination letter which

alleged that a plaintiff had overcharged for services rendered

“could impair [plaintiff’s] reputation for honesty or morality”). 

Thus, Guzman can establish that he has a protected liberty

interest at stake if he can satisfy the test we set forth in

Vanelli: he must demonstrate that (1) “ ‘the accuracy of the

charge is contested,’ ” (2) “ ‘there is some public disclosure

of the charge,’ ” and (3) the charge is “ ‘made in connection

with the termination of employment or the alteration of some

right or status recognized by [ ] law.’ ” Erickson, 67 F.3d at

862 (alteration in original) (quoting Vanelli, 667 F.2d at 777-

78). 

[18] Applying Vanelli, we note initially that Guzman contests the accuracy of the charges against him. Ultimately,

however, Guzman’s likelihood of success on the merits of this

GUZMAN v. SHEWRY 13377
claim turns on whether he can demonstrate a “public disclosure” of DHCS’s charges against him under the second prong

of the Vanelli test.

1

With respect to this second prong, Guzman first argues that

federal regulations require DHCS to report his suspension to

the Healthcare Integrity and Protection Data Bank

(“HIPDB”), and that such reporting would constitute “public

disclosure” sufficient to deprive him of a protected liberty

interest. The HIPDB is a public database, maintained by HHS

under authority provided by the Social Security Act, which

records certain “final adverse actions” taken against health

care providers. See 42 U.S.C. § 1320a-7e(a). Information in

this database is available on request to federal and state government agencies, health plans, health care practitioners and

providers, and persons requesting statistical information. See

45 C.F.R. § 61.12(a). Because members of the public can

access information in the HIPDB, DHCS’s reporting of Guzman’s suspension to the HIPDB would constitute publication

that deprives him of a protected liberty interest. See Cox, 359

F.3d at 1108-12 (concluding that a termination letter, which

set forth allegations of a public employee’s incompetent and

unethical behavior, was “published” the moment it was placed

in the employee’s publicly accessible personnel file). 

Federal regulations provide that “Federal and State Government agencies must report health care providers, suppliers, or

practitioners excluded from participating in Federal or State

health care programs” for inclusion in the HIPDB. 45 C.F.R.

§ 61.10(a) (emphasis added). In addition, “exclusion” is

defined for reporting purposes as “a temporary or permanent

debarment of an individual or entity from participation in any

Federal or State health-related program.” Id. § 61.3. The

report to the HIPDB must include, among other things, “[a]

narrative description of the acts . . . upon which the reported

action was based.” Id. § 61.10(b)(4)(i). 

13378 GUZMAN v. SHEWRY
Guzman argues that his temporary suspension is an “exclusion,” which DHCS must report to the HIPDB, thereby publishing its charges against him. In response, DHCS contends

that its policy is to report only “final” actions to the HIPDB.

DHCS believes that the temporary suspension it imposed on

Guzman under California Welfare and Institutions Code section 14043.36(a) is not a “final action” and thus need not be

reported.10

[19] The district court agreed with Guzman that DHCS’s

policy of not reporting temporary suspensions appears to conflict with the plain language of the regulations. See 45 C.F.R.

§§ 61.3, 61.10. Nevertheless, the court concluded that because

DHCS has an established policy of not reporting such suspensions, Guzman’s fear of disclosure was merely speculative.

As the district court explained, 

Guzman concedes that, as a matter of policy,

DH[C]S does not report temporary suspensions to

the HIPDB. He fears, however, that because that policy apparently violates federal regulations, DH[C]S

may ultimately be forced to report the suspension.

Guzman adduces no evidence that there will likely

be a change in DH[C]S’s policy during the pendency

of this litigation. Specifically, he presents no evidence that the policy has been challenged by federal

Medicaid authorities or third parties, or that DH[C]S

for some other reason will not continue to adhere to

it for the foreseeable future. 

10We deny DHCS’s motion requesting that we take judicial notice of a

letter from the Chief Counsel of the Office of Inspector General (“OIG”),

to DHCS that explains how OIG defines final adverse actions for HIPDB

reporting purposes. Judicial notice may be taken of any fact “not subject

to reasonable dispute in that it is . . . capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201. Whatever OIG’s stated policy may be, one

may reasonably dispute whether the OIG’s description of the policy is

consistent with the manner in which it is applied. Accordingly, we decline

to take judicial notice of such document. 

GUZMAN v. SHEWRY 13379
Absent such evidence, Guzman’s speculative,

unsupported fear that the charges will be reported

does not provide a sufficient basis upon which to

conclude that he is likely to succeed on the merits of

his procedural due process claim. 

After DHCS stipulated that it would comply with such an

order, the district court directed DHCS to provide Guzman

with at least ten days’ notice of any change in its reporting

policy. This order remains in effect until the administrative

hearing on DHCS’s charges against Guzman is concluded

and, if notice is given prior to or during such hearing, the district court’s order provides that Guzman may renew his

motion for a preliminary injunction. 

[20] We cannot conclude that the district court abused its

discretion in the treatment of this claim. The record establishes that DHCS has not reported Guzman’s suspension to

the HIPDB, and Guzman offers no evidence that DHCS is

likely to change its policy in the future. Moreover, DHCS has

been ordered to notify Guzman of any change in its policy, at

which time Guzman could renew his motion for a preliminary

injunction. 

[21] Accordingly, based on the present record, we conclude

that Guzman is not likely to succeed in proving that DHCS

will publicly disclose the charges against him. 

2

[22] In the alternative, Guzman also asserts that he is under

contractual obligations with several independent physicians’

associations to disclose his temporary suspension and that he

is required to report the suspension to most of the hospitals at

which he has staff privileges. Guzman’s argument that his

own disclosure of the suspension deprives him of a protected

liberty interest is foreclosed by our decision in Llamas. In that

case, we rejected the claim of a terminated public employee

13380 GUZMAN v. SHEWRY
that his liberty interest would be implicated if he responded

truthfully regarding such termination on a civil service job

application he planned to file in the future. 238 F.3d at 1125-

30. We explained that “to allow the potentially stigmatized

party to satisfy the publication prong by disseminating the

details surrounding his termination would contradict the purposes of the publication requirement as made clear in . . .

Supreme Court precedent.” Id. at 1131 (citing Bishop v.

Wood, 326 U.S. 341, 349 (1976)). 

[23] Guzman points to no authority for the proposition that

the contracts that obligate him to self-report his suspension

are sufficient to constitute public disclosure for purposes of a

due process claim, and we are aware of none.11 Accordingly,

we conclude that Guzman’s private obligations to report

DHCS’s action do not satisfy the public disclosure prong of

the Vanelli test. 

[24] Having determined that Guzman is unable to demonstrate that the nature of the charges against him will be publically disclosed, we need not consider whether the charges

have been made in connection with the alteration of a protected right or status.12 See Erickson, 67 F.3d at 862. Accord11Guzman cites Merritt v. Mackey, 827 F.2d 1368 (9th Cir. 1987), for

the proposition that liability may exist where the state actor indirectly

causes a private party to deprive another private party of a protected interest. In Merritt, we held that an employee of a nonprofit drug and alcohol

rehabilitation center stated a claim under § 1983 that he was deprived of

his property interest in continued employment when state and federal

agents intentionally coerced the nonprofit to fire him by conditioning further funding on his termination. Id. at 1371. Such circumstances are not

present here, however, as DHCS played no role in Guzman’s decision to

enter the private contracts that require reporting. 

12In Erickson, we held that health care providers’ exclusion from Medicare, Medicaid, and certain federally funded health care programs by the

Secretary of HHS on account of their fraud-related convictions altered

their legal “status” as program participants and consequently deprived

them of a protected liberty interest. 67 F.3d at 863. We do not address

whether Erickson should be extended to address situations, such as Guzman’s, where a party has been suspended during the pendency of an investigation. 

GUZMAN v. SHEWRY 13381
ingly, we conclude that Guzman is unlikely to succeed in

establishing a violation of his rights under the Fourteenth

Amendment. 

VI

For the foregoing reasons, the district court’s decision is 

AFFIRMED. 

13382 GUZMAN v. SHEWRY