FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

SIERRA MEDICAL SERVICES 

ALLIANCE; CARE FLIGHT; RIGGS 

AMBULANCE SERVICE, INC.;

SCHAEFER AMBULANCE SERVICE,

INC.; AMERICAN AMBULANCE OF 

VISALIA; DESERT AMBULANCE 

SERVICE; SAN LUIS AMBULANCE 

SERVICE, INC.; FIRST RESPONDER 

EMERGENCY MEDICAL SERVICESSACRAMENTO, INC.; FIRST 

RESPONDER EMERGENCY MEDICAL 

SERVICES, INC.; IMPERIAL 

AMBULANCE SERVICES, INC.; SIERRA 

LIFESTAR, INC., DBA Lifestar 

Ambulance; DEL NORTE 

AMBULANCE, INC.; PINER’S 

AMBULANCE, INC.; AMERICAN 

LEGION POST 108 AMBULANCE 

SERVICE; PROGRESSIVE AMBULANCE,

INC., DBA Liberty Ambulance; 

HALL AMBULANCE SERVICE, INC.;

CITY AMBULANCE OF EUREKA, INC.;

PATTERSON DISTRICT AMBULANCE;

K.W.P.H. ENTERPRISES, DBA 

American Ambulance; COMMUNITY 

AMBULANCE SERVICES, INC.; SIERRA 

AMBULANCE SERVICE, INC.; CARE 

AMBULANCE SERVICE, INC.; DELANO 

AMBULANCE SERVICE, INC.; KERN 

EMERGENCY MEDICAL 

No. 14-56483

D.C. No.

2:10-cv-04182-

CAS-MAN

OPINION
2 SIERRA MED. SERVS. ALLIANCE V. KENT

TRANSPORTATION CORPORATION, 

DBA Kern Ambulance; WESTMED 

AMBULANCE, INC.; CALIFORNIA 

AMBULANCE ASSOCIATION;

REGIONAL EMERGENCY MEDICAL 

SERVICES AUTHORITY; METRO WEST 

AMBULANCE SERVICE, INC.,

Plaintiffs-Appellants,

v.

JENNIFER KENT, Director of the 

Department of Health Care Services 

of the State of California,

Defendant-Appellee.

Appeal from the United States District Court

for the Central District of California

Christina A. Snyder, District Judge, Presiding

Argued and Submitted November 7, 2017

Pasadena, California

Filed March 6, 2018

Before: Stephen Reinhardt, Ronald Lee Gilman,

*

and Kim McLane Wardlaw, Circuit Judges.

Opinion by Judge Gilman

 * The Honorable Ronald Lee Gilman, United States Circuit Judge 

for the U.S. Court of Appeals for the Sixth Circuit, sitting by designation.
SIERRA MED. SERVS. ALLIANCE V. KENT 3

SUMMARY**

Medicaid

The panel affirmed the district court’s summary 

judgment in favor of the Director of the California 

Department of Health Care Services in an action brought by 

private ambulance companies, challenging the 

reimbursement rate for their transportation of patients

covered by Medi-Cal, the California Medicaid program.

The reimbursement rate is set by DHCS pursuant to state 

statutes and regulations that have been approved by the 

Centers for Medicare and Medicaid Services, the federal 

agency that administers the Medicaid program on behalf of 

the Department of Health and Human Services. The 

ambulance companies alleged that their constitutional rights 

were violated because they received only 20 cents in 

reimbursement for every dollar that they spent to transport 

Medi-Cal patients.

The panel affirmed the district court’s summary 

judgment on the ambulance companies’ claim under the 

Takings Clause. The panel held that the ambulance 

companies lacked a constitutionally protected property 

interest in a particular reimbursement rate, but the 

mandatory-care provision of Cal. Health & Safety Code 

§ 1317(d) implicated a constitutionally protected property 

right. The panel held that § 1317(d) did not effect a 

regulatory taking because, under the Penn Central test, the 

ambulance companies did not establish that the statute had 

 ** This summary constitutes no part of the opinion of the court. It 

has been prepared by court staff for the convenience of the reader.
4 SIERRA MED. SERVS. ALLIANCE V. KENT

more than a negligible economic impact on them, nor that it 

interfered with their investment-backed expectations, and 

they did not provide evidence as to the character of the 

government action at issue.

The panel held that the ambulance companies did not 

establish a due process claim regarding DHCS’s failure to 

ensure that Medi-Cal reimbursement rates kept pace with 

their costs because they lacked a constitutionally protected 

interest in any particular reimbursement rate. Under the 

rational-basis standard, the ambulance companies did not 

establish an equal protection violation regarding a 

supplemental-reimbursement program that favors public 

over private providers. The ambulance companies also did 

not establish a claim under the Contract Clause or the 

Dormant Commerce Clause.

The panel held that there was no procedural error in the 

district court’s grant of summary judgment, and it declined 

to address claims omitted from the operative complaint.

COUNSEL

Michael K. Hagemann (argued), and Kevin R. Warren, M.K. 

Hagemann P.C., Century City, California, for PlaintiffsAppellants.

Hadara R. Stanton (argued), Deputy Attorney General; 

Susan M. Carson, Supervising Deputy Attorney General; 

Julie Weng-Gutierrez, Senior Assistant Attorney General; 

Office of the Attorney General, San Francisco, California;

for Defendant-Appellee.
SIERRA MED. SERVS. ALLIANCE V. KENT 5

OPINION

GILMAN, Circuit Judge:

California law requires ambulance companies to provide 

emergency medical transportation irrespective of a patient’s 

ability to pay. To at least partially offset the cost of 

providing such transportation, California has an established 

reimbursement rate for those companies voluntarily enrolled 

as providers with the state’s Medicaid program (Medi-Cal) 

when they transport Medi-Cal patients. The relevant 

reimbursement rate is set by California’s Department of 

Health Care Services (DHCS) pursuant to state statutes and 

regulations that have been approved by the Centers for 

Medicare and Medicaid Services (CMS), the federal agency 

that administers the Medicaid Program on behalf of the 

Department of Health and Human Services.

At the heart of this case is the Plaintiffs’ complaint that 

private ambulance companies receive only 20 cents in 

reimbursement for every dollar that they spend to transport 

Medi-Cal patients, a shortfall that they contend violates their 

constitutional rights. After discovery, DHCS moved for 

summary judgment, which the district court granted on all 

counts. The court held that the Plaintiffs had failed to 

produce sufficient evidence to sustain any of their claims. 

For the reasons set forth below, we AFFIRM the judgment 

of the district court.
6 SIERRA MED. SERVS. ALLIANCE V. KENT

I. BACKGROUND

A. Factual background

1. Federal Medicaid program

Medicaid is a state-administered program financed 

jointly by the federal and state governments that provides 

healthcare coverage to low-income Americans. See

42 U.S.C. §§ 1396 et seq. The percentage of the program’s 

costs that the federal government covers varies by state, with 

poorer states receiving a greater share of federal dollars. See 

42 U.S.C. § 1396d(b). For the fiscal years in question, 

California bore half the cost of covering its Medicaid 

population. See 80 Fed. Reg. 73,781, tbl. 1 (Nov. 25, 2015). 

A state can satisfy its share of Medicaid spending both 

through direct appropriations to state and local Medicaid 

agencies and by certified Medicaid expenditures incurred by 

other state and local agencies. 42 C.F.R. § 433.51(a), (b).

In exchange for receiving their allotment of federal 

funds, states design and administer Medicaid State Plans that 

must comply with federal Medicaid law. See 42 U.S.C. 

§ 1396a. CMS can remedy a state’s noncompliance with 

federal Medicaid law by withholding future funding. 

42 U.S.C. § 1396c; Armstrong v. Exceptional Child Ctr., 

Inc., 135 S. Ct. 1378, 1385 (2015) (“[T]he sole remedy 

Congress provided for a State’s failure to comply with 

Medicaid’s requirements . . . is the withholding of Medicaid 

funds by the Secretary of Health and Human Services.”).

2. Medi-Cal

Entities that enroll as Medi-Cal providers are entitled to 

reimbursement for the services that they provide to the 

program’s beneficiaries. Cal. Welf. & Inst. Code 
SIERRA MED. SERVS. ALLIANCE V. KENT 7

§ 14019.3(c), (g). The Medi-Cal statute stipulates that 

“payment received from the state in accordance with MediCal fee structures shall constitute payment in full” for 

services provided. Id. § 14019.3(d). And when providers 

enroll in the program, they must sign a Medi-Cal Provider 

Agreement that contains a condition to the same effect. Cal. 

Welf. & Inst. Code § 14043.2(a); Cal. Code Regs. tit. 22, 

§§ 51000.45, 51200(a), 51501(b); DHCS, Medi-Cal

Provider Agreement (DHCS 6208) 5-6 (2017),

http://files.medi-cal.ca.gov/pubsdoco/Publications/

masters-other/provappsenroll/02enrollment_DHCS6208.pdf

(“[P]ayment received from DHCS in accordance with MediCal fee structures shall constitute payment in full . . . .”).

DHCS administers Medi-Cal, and its responsibilities 

include setting reimbursement rates for covered services. 

Cal. Welf. & Inst. Code §§ 10740, 14105(a). In 2003, the 

agency adopted Attachment 4.19-B to California’s State 

Plan, which sets forth a “methodology” for DHCS to 

“establish[] payment rates.” State Plan Under Title XIX of 

Social Security Act: California, attach. 4.19-B, at 1, 

http://www.dhcs.ca.gov/formsandpubs/laws/Documents/Sta

te_Plan_Attachment_4.19B_1–5.pdf. The procedures set 

forth in Attachment 4.19-B require DHCS to “develop[] . . .

an evidentiary base or rate study” to guide its rate setting, to 

solicit public input by “present[ing] . . . the proposed rate at 

a public hearing,” and to determine a final reimbursement 

rate “based on” the aforementioned evidence and public 

input. Id.

3. Reimbursement for emergency groundtransportation services

Ambulance companies that operate in California must 

provide emergency services to any “person . . . in danger of 

loss of life[] or serious injury or illness” regardless of his or 
8 SIERRA MED. SERVS. ALLIANCE V. KENT

her ability to pay. Cal. Health & Safety Code § 1317(a), (d). 

Those ambulance companies that are enrolled as Medi-Cal 

providers are entitled to at least partial reimbursement—

$118.20 for a one-way ride—for the services that they 

provide when they transport patients who are insured 

through Medi-Cal. Cal. Welf. & Inst. Code §§ 14019.3(c), 

(g), 14132(i); Cal. Code Regs. tit. 22, § 51527. According 

to the Plaintiffs, that reimbursement accounts for only 20% 

of the actual cost that they incur to transport Medi-Cal 

beneficiaries, causing them $60 million in annual losses.

DHCS has not promulgated new reimbursement rates for 

medical-transportation services since adopting Attachment 

4.19-B in 2003. Instead, reimbursement rates that predate 

the Attachment remain in effect. See Cal. Code. Regs. tit. 

22, § 51527. DHCS adopted those reimbursement rates in 

1984 and has amended them several times, most recently in 

2002. Id. As required by California’s Administrative 

Procedure Act, DHCS held public hearings and provided an 

opportunity for public comment before enacting § 51527 

and each amendment thereto. Cal. Govt. Code

§§ 11346.45, .6. One of the Plaintiffs in this case—the 

California Ambulance Association—participated in those 

hearings. (A more extensive discussion of the regulation’s 

history is found in Sierra Med. Servs. All. v. Douglas, No. 

B220443, 2011 WL 985520, at *2–*3 (Cal. Ct. App. Mar. 

22, 2011) (unpublished).)

California makes supplemental reimbursement available 

to publicly owned providers of emergency-medical ground 

transportation (e.g., local fire departments) for up to the 

actual cost incurred to transport Medi-Cal beneficiaries, but 

not to private providers like the Plaintiffs. Cal. Welf. & Inst. 

Code § 14105.94. Recently, California adopted an 

additional supplemental-reimbursement program (without 
SIERRA MED. SERVS. ALLIANCE V. KENT 9

repealing the existing one) that is available to both private 

and public providers of emergency-medical transportation. 

See id. §§ 14129–14129.7.

B. Procedural background

The Plaintiffs filed this action in the United States 

District Court for the Central District of California. The 

operative complaint alleges violation of the Fifth 

Amendment’s Takings Clause, the Fourteenth 

Amendment’s Due Process Clause, the Commerce Clause, 

and the Contract Clause of the United States Constitution. 

Plaintiffs also allege that the reimbursement program 

violates the Equal Protection Clause of the Fourteenth 

Amendment because public providers of emergencytransportation services are eligible for supplemental MediCal reimbursement that is unavailable to private ambulance 

companies.

Three of the Plaintiffs were involved in a prior state court 

action, which was on appeal when this case was filed. See 

Sierra Med. Servs. All., 2011 WL 985520, at *1, *3. The 

district court held that those plaintiffs could assert only an 

equal protection claim, because the remaining claims were

barred by res judicata. Those Plaintiffs have not appealed 

that ruling.

DHCS filed its motion for summary judgment in this 

case after the close of discovery, along with a request (to 

which the Plaintiffs objected) that the court take judicial 

notice of several items, including excerpts of California’s 

State Medicaid Plan, state legislation and legislative 

documents, materials from DHCS’s website, administrative 

records from the public hearings surrounding the adoption 

and amendment of the Medi-Cal reimbursement rate for 

medical-transportation services, and the California Court of 
10 SIERRA MED. SERVS. ALLIANCE V. KENT

Appeal’s unpublished decision in the related case of Sierra 

Medical Services Alliance v. Douglas.

The Plaintiffs opposed DHCS’s motion for summary 

judgment, but, before the motion was fully briefed, the 

district court stayed proceedings in light of the Supreme 

Court’s consideration of a petition for writ of certiorari in 

another case challenging Medi-Cal’s reimbursement rates. 

See Managed Pharmacy Care v. Sebelius, 716 F.3d 1235 

(9th Cir. 2013), cert. denied, 134 S. Ct. 900 (2014) (mem.). 

After the Supreme Court denied certiorari in that case, the 

district court lifted its stay, reopened discovery for a fourmonth period, and granted the Plaintiffs permission to file a 

second opposition to DHCS’s motion for summary 

judgment, which they did after conducting additional 

discovery. After hearing argument, the district court granted 

DHCS’s motion.

II. ANALYSIS

A. Standard of review

We review de novo a district court’s grant of summary

judgment. Smith v. Clark Cty. Sch. Dist., 727 F.3d 950, 954 

(9th Cir. 2013). “Summary judgment is appropriate only if, 

taking the evidence and all reasonable inferences drawn 

therefrom in the light most favorable to the non-moving 

party, there are no genuine issues of material fact and the 

moving party is entitled to judgment as a matter of law.” 

Furnace v. Sullivan, 705 F.3d 1021, 1026 (9th Cir. 2013) 

(quoting Torres v. City of Madera, 648 F.3d 1119, 1123 (9th 

Cir. 2011)). A genuine dispute of material fact exists “if the 

evidence is such that a reasonable jury could return a verdict 

for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 

477 U.S. 242, 248 (1986). Where, as here, the party moving 

for summary judgment is not the party that bears the burden 
SIERRA MED. SERVS. ALLIANCE V. KENT 11

of proof at trial, it may secure summary judgment by 

“‘showing’—that is, pointing out to the district court—that 

there is an absence of evidence to support the nonmoving 

party’s case.” See Celotex Corp. v. Catrett, 477 U.S. 317, 

325 (1986).

B. Preliminary matters

At the outset, we will briefly address two procedural 

issues raised by the Plaintiffs on appeal. First, the Plaintiffs 

argue that the district court erred by entering judgment for 

DHCS on purely legal grounds instead of sifting through 

what the Plaintiffs contend are contrary factual assertions. 

The Plaintiffs, however, apparently misapprehend the nature 

of Rule 56 of the Federal Rules of Civil Procedure. That 

Rule “mandates the entry of summary judgment, after 

adequate time for discovery and upon motion, against a party 

who fails to make a showing sufficient to establish existence 

of an element to that party’s case, and on which that party 

will bear the burden of proof at trial.” Celotex, 477 U.S. at 

322.

This litigation languished in the federal district court for 

five years, and not one, but two discovery deadlines elapsed 

before the court rendered judgment on DHCS’s motion. If, 

as the court found and as DHCS argues on appeal, the record 

lacks evidence upon which the Plaintiffs can sustain their 

claims, then the court properly entered judgment for DHCS.

Second, the Plaintiffs object to DHCS’s submission of 

several public records in conjunction with its motion for 

summary judgment. But the district court’s opinion does not 

refer to any of those records, and most of them are readily 

accessible on government websites. The exceptions are the 

California Court of Appeal’s unpublished opinion in Sierra 

Medical Services Alliance v. Douglas and the exhibits from 
12 SIERRA MED. SERVS. ALLIANCE V. KENT

the parties’ Joint Appendix in that case. There is no basis 

for the Plaintiffs to credibly claim that they were unfamiliar 

with the latter two items, however, because three of the 

Plaintiffs were themselves parties to the state-court case.

C. Claims not raised below

We also note that the Plaintiffs raise two substantive 

claims on appeal that do not appear in their amended 

complaint, which means that the district court had no 

opportunity to render judgment on those claims. One of 

these is the Plaintiffs’ renewal of the Supremacy Clause 

claim that they quite intentionally excluded from their 

operative, first amended complaint. As stated in their 

motion to amend, the Plaintiffs amended their initial 

complaint based on the “belie[f] that their Constitutional 

claims were stronger than their section (a)(3)(A)/Supremacy 

Clause claim.”

The Plaintiffs waived a Supremacy Clause claim by 

omitting it from the operative complaint. See Lacey v. 

Maricopa County, 693 F.3d 896, 928 (9th Cir. 2012) 

(holding that “claims [that are] voluntarily dismissed” are 

“waived if not repled” in an amended complaint”). And 

even if the Plaintiffs could renew their Supremacy Clause 

claim, the Supreme Court’s relatively recent decision in 

Armstrong v. Exceptional Child Center, Inc., 135 S. Ct. 1378 

(2015), defeats it. Id. at 1383 (“[T]he Supremacy Clause is 

not the ‘source of any federal rights,’ and certainly does not 

create a cause of action.” (quoting Golden State Transit 

Corp. v. Los Angeles, 493 U.S. 103, 107 (1989))).

Also absent from the Plaintiffs’ operative complaint is 

the argument that several different sections of the Medicaid 

statute allow for private causes of action. One of the 

sections—42 U.S.C. § 1396a(a)(30)(A)—was the statutory 
SIERRA MED. SERVS. ALLIANCE V. KENT 13

basis for their abandoned Supremacy Clause claim. The 

Plaintiffs have never before asserted claims based on the 

other Medicaid provisions, and therefore, in the absence of 

exceptional circumstances not present here, they are 

precluded from raising those provisions for the first time on 

appeal. Fed. Ins. Co. v. Union Pac. R.R. Co., 651 F.3d 1175, 

1178 (9th Cir. 2011).

D. Takings Clause

Of the claims that do appear in the Plaintiffs’ amended 

complaint, the most plausible is their Takings Clause claim, 

which we will now address. The Fifth Amendment’s 

Takings Clause prohibits the taking of “private property . . .

for public use, without just compensation.” U.S. Const. 

amend. V. A Takings Clause claim requires proof that the 

plaintiff “possesses a ‘property interest’ that is 

constitutionally protected.” Turnacliff v. Westly, 546 F.3d 

1113, 1118 (9th Cir. 2008) (quoting Schneider v. Cal. Dep’t 

of Corr., 151 F.3d 1194, 1198 (9th Cir. 1998)).

The district court held that the Plaintiffs lack a 

constitutionally protected property interest. In doing so, it 

relied on Managed Pharmacy Care v. Sebelius, 716 F.3d 

1235 (9th Cir. 2013), in which this court held that “[b]ecause 

participation in Medicaid is voluntary, . . . providers do not 

have a property interest in a particular reimbursement rate.” 

Id. at 1252.

The Plaintiffs respond by arguing that “[e]ven if . . .

[they] don’t have a property right in Medicaid 

reimbursement rates, . . . their ambulances, equipment, 

wages, supplies, insurance, goodwill, and ambulatoryservice and employment contracts . . . are also property 

rights at issue.” But, as the district court noted, the MediCal program does not compel the Plaintiffs to furnish those 
14 SIERRA MED. SERVS. ALLIANCE V. KENT

resources for public use. The program provides 

compensation at predetermined rates only to those providers 

that voluntarily choose to participate.

A separate statute, however, requires providers to render 

their emergency services “without first questioning the 

patient or any other person as to his or her ability to pay.” 

Cal. Health & Safety Code § 1317(d). This mandatory-care 

provision does not stipulate what, if any, compensation that 

providers are entitled to receive when they render services to 

Medi-Cal patients or to anyone else. It states only that “after 

the services are rendered,” “the patient or his or her legally 

responsible relative or guardian shall execute an agreement 

to pay” for the services “or otherwise supply insurance or 

credit information.” Id.

The district court did not analyze whether § 1317(d) 

effects a taking because it held that the Plaintiffs did not 

“identify, much less assert a takings claim against, the statute 

or regulation which obligates them to provide” emergencytransportation services without respect to the patient’s ability 

to pay. To the contrary, however, the Plaintiffs do reference 

the mandatory-care provision, albeit obliquely, in their 

amended complaint by alleging that they

are required by law to respond to all 

emergency calls and provide emergency 

treatment and transportation to every MediCal client that requests emergency assistance. 

[They] cannot choose to decline to treat or 

transport . . . Medi-Cal clients or even 

identify them prior to treatment or transport 

[in order] to have the option of declining to 

treat or transport them.
SIERRA MED. SERVS. ALLIANCE V. KENT 15

And the Plaintiffs’ appellate briefing refers to the 

compulsory effect of § 1317(d) on several occasions. These 

references to the mandatory-care provision are sufficient to 

show that the Plaintiffs intended to rely upon § 1317(d) as 

part of their Takings Clause claim.

The district court also read Managed Pharmacy Care for 

the proposition that “providers cannot state a takings claim 

even when they are under a legal obligation to provide care.” 

But Managed Pharmacy Care’s holding is narrower and 

more nuanced. The provision at issue in that case prohibits 

nursing facilities that are enrolled as Medi-Cal providers 

from withdrawing from the program until all of their 

“Medi-Cal patients . . . are: (1) transferred to another 

facility; (2) appropriately discharged; or (3) lose 

entitlements to Medi-Cal benefits.” California Hospital 

Association v. Douglas, No. CV 11-9078 CAS (MANx), 

2011 WL 6820229 at *10 & n.18 (C.D. Cal. Dec. 28, 2011), 

rev’d sub nom. Managed Pharmacy Care v. Sebelius, 716 

F.3d 1235 (9th Cir. 2013). By contrast, § 1317(d) applies to 

all emergency-medical-transportation providers, whether or 

not they enroll as Medi-Cal providers. And if the Plaintiffs 

unenrolled as Medi-Cal providers, the provision would 

continue to apply to them indefinitely, not for just a 

transitional period of time. Those material differences, 

along with the Plaintiffs’ property interest in their 

ambulances, equipment, wages, supplies, insurance, 

goodwill, and ambulatory-service and employment 

contracts, rather than the reimbursement rate per se, make 

Managed Pharmacy Care inapposite. Accordingly, the 

district court erred in concluding that the Plaintiffs lack a 

constitutionally protected property right upon which 

California law intrudes.
16 SIERRA MED. SERVS. ALLIANCE V. KENT

Because of our determination that §1317(d) implicates 

the Plaintiffs’ constitutionally protected property, we must 

next examine whether the provision effects a taking. “The 

paradigmatic taking requiring just compensation is a direct 

government appropriation or physical invasion of private 

property.” Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 537 

(2005). But a so-called “regulatory taking” can also occur 

where “government regulation of private property . . . [is] so 

onerous that its effect is tantamount to a direct appropriation 

or ouster.” Id. If § 1317(d) effects a taking, it is a regulatory 

one because DHCS does not directly appropriate the 

Plaintiffs’ ambulances or other personal property through 

the mandatory-care provision. DHCS instead regulates how 

the Plaintiffs can use their property.

Although real property is the traditional realm of takings 

law, the Fifth Amendment also protects against the taking of 

personal property without just compensation. Horne v. 

Dep’t of Agric., 135 S. Ct. 2419, 2426 (2015) (“Nothing in 

the text or history of the Takings Clause, or our precedents, 

suggests that the rule is any different when it comes to 

appropriation of personal property.”). And voluntary 

participation in a market that is subject to regulation does not 

defeat a takings claim. See id. at 2430–31 (holding that 

raisin farmers’ voluntary decision to participate in the raisin 

market did not defeat their takings claim against the 

Department of Agriculture’s raisin-reserve requirement). 

Accordingly, § 1317(d) has the potential to effect a 

regulatory taking even though the Plaintiffs could avoid the 

regulation by simply ceasing to operate as ambulance 

companies.

The Supreme Court has set forth an “ad hoc, factual 

inquir[y]” for determining whether a regulation amounts to 

a taking. Penn Centr. Transp. Co. v. City of New York, 
SIERRA MED. SERVS. ALLIANCE V. KENT 17

438 U.S. 104, 124 (1978). This inquiry analyzes (1) “[t]he 

economic impact of the regulation on the claimant,” (2) “the 

extent to which the regulation has interfered with distinct 

investment-backed expectations,” and (3) “the character of 

the government action.” Id. California’s mandatory-care 

provision constitutes a temporary restriction on Plaintiffs’ 

use of their property, so this balancing test applies. See 

Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 

419, 435 n.12 (1982).

This presents an insurmountable obstacle to the Plaintiffs 

because they failed to produce sufficient evidence in support 

of their takings claim under Penn Central. Starting with the 

economic-impact factor, the record simply shows that the 

Plaintiffs operate at a loss when they serve Medi-Cal 

patients. But evidence of red ink generated by serving this 

one segment of California’s population tells us nothing about 

the overall economic impact of § 1317(d). When pressed on 

this point at oral argument, counsel was unable to identify 

any relevant record evidence. Due to the record’s 

deficiencies, we have no way of knowing the losses that the 

Plaintiffs in the present case incur as a result of § 1317(d).

Section 1317(d) might in fact have no more than a 

negligible effect on the Plaintiffs’ bottom line, depending on 

the amount of revenue that the Plaintiffs recoup by 

transporting non-Medi-Cal patients. In the analogous case 

of Franklin Memorial Hospital v. Harvey, 575 F.3d 121 (1st 

Cir. 2009), for example, a hospital brought a Takings Clause 

challenge to a Maine regulation that required it to provide 

free, medically necessary, inpatient- and outpatient-hospital 

services to residents whose incomes are at or below 150% of 

the federal poverty level. Id. at 123–24 (citing Me. Code R. 

§§ 1.01(A), 1.02(C)). Although the regulation caused the 

hospital to provide free care at an annual cost of hundreds of 
18 SIERRA MED. SERVS. ALLIANCE V. KENT

thousands of dollars, the First Circuit concluded that the 

regulation did not amount to a regulatory taking, id. at 129, 

and noted that the amount of free care that the hospital 

actually provided pursuant to the regulation equaled only 

0.51% of the hospital’s gross revenue, id. at 124.

The record is similarly lacking when it comes to the 

Plaintiffs’ investment-backed expectations, the second Penn 

Central factor. They have not identified any distinct 

expectations that they had when they entered the emergencytransportation market, let alone provided evidence that 

§ 1317(d) has interfered with those expectations. Nor have 

the Plaintiffs provided evidence or raised any arguments as 

to the the character of the government action, the third Penn 

Central factor.

Section 1317(d) also does not fit into either category of 

per se regulatory takings identified by the Supreme Court. It 

does not require the Plaintiffs “to sacrifice all economically 

beneficial uses” of their property, Lucas v. S.C. Coastal 

Council, 505 U.S. 1003, 1019–20 (1992) (emphasis in 

original), because neither § 1317(d) nor Medi-Cal places any 

limit on the rates that the Plaintiffs can charge to 

non-Medi-Cal patients. And it does not constitute 

“permanent physical occupation authorized by 

government,” Loretto v. Teleprompter Manhattan CATV 

Corp., 458 U.S. 419, 422, 426 (1982), because the Plaintiffs 

also transport non-Medi-Cal patients.

In sum, the Plaintiffs have not carried their burden of 

producing evidence upon which “a reasonable jury could 

return a verdict” in their favor. See Anderson v. Liberty 

Lobby, Inc., 477 U.S. 242, 248 (1986). The district court 

therefore did not err in entering judgment in DHCS’s favor 

on the Takings Clause claim.
SIERRA MED. SERVS. ALLIANCE V. KENT 19

E. Due Process Clause

Unlike the Plaintiffs’ Takings Clause claim, which 

involves a statutory provision separate and apart from the 

Medi-Cal statutes and regulations, the Plaintiffs’ procedural 

and substantive due process claims are directed exclusively 

at DHCS’s failure to ensure that Medi-Cal reimbursement 

rates have kept pace with the Plaintiffs’ costs.

Due process claims, like Takings Clause claims, require 

a “showing of a liberty or property interest protected by the 

Constitution.” Wedges/Ledges of Cal., Inc. v. City of 

Phoenix, 24 F.3d 56, 62 (9th Cir. 1994). As discussed above, 

the Plaintiffs voluntarily participate in Medi-Cal and 

therefore have no constitutionally protected interest in any 

particular Medi-Cal reimbursement rate (as opposed to a 

constitutionally protected interest in their ambulances and 

other personal property). See Managed Pharmacy Care v. 

Sebelius, 716 F.3d 1235, 1252 (9th Cir. 2013). Their due 

process claims are therefore without merit.

F. Equal Protection Clause

The Plaintiffs concede that their Equal Protection claim 

must be analyzed under a rational-basis standard. (Although 

California’s adoption of a new program in 2017 that offers 

supplemental reimbursement for the transportation of MediCal patients, see Cal. Welf. & Inst. Code §§ 14129 14129.7, 

could muddle this analysis, the new program appears to 

complement rather than replace the supplementalreimbursement program that is the focus of the Plaintiffs’ 

equal protection claim. See id. § 14105.94.) And DHCS has 

offered a perfectly reasonable justification for a 

supplemental-reimbursement program that favors public 

over private providers: payments to public providers count 

toward the state’s share of Medicaid dollars, whereas 
20 SIERRA MED. SERVS. ALLIANCE V. KENT

payments to private providers do not. See 42 C.F.R. 

§ 433.51(a), (b). Steering more Medi-Cal spending toward 

public providers is therefore in the state’s fiscal interest. 

Accordingly, the supplemental-reimbursement program 

survives rational-basis review. See FCC v. Beach 

Commc’ns, Inc., 508 U.S. 307, 313 (1993) (“[A] statutory 

classification that neither proceeds along suspect lines nor 

infringes fundamental constitutional rights must be upheld 

against equal protection challenge if there is any reasonably

conceivable state of facts that could provide a rational basis 

for the classification.”).

G. Contract Clause

A Contract Clause claim requires proof that (1) a 

contractual relationship with the state exists, (2) “a change 

in law” has occurred that “impairs that contractual 

relationship,” and (3) “the impairment is substantial.” Univ. 

of Haw. Prof’l Assembly v. Cayetano, 183 F.3d 1096, 1101–

02 (9th Cir. 1999) (quoting Seltzer v. Cochrane, 104 F.3d 

234, 236 (9th Cir. 1996)). The Plaintiffs allege that DHCS’s 

failure to issue updated reimbursement rates substantially 

impairs their contracts with cities, counties, and special 

districts that name them as the exclusive or semi-exclusive 

providers of emergency-medical-transportation services for 

the localities.

But this is an objection to legislative inaction, not to a 

“change in law.” See id. at 1101 (quoting Selzter, 104 F.3d 

at 236). Moreover, the Plaintiffs have identified no explicit 

or even implicit term in their contracts with localities that 

DHCS has substantially impaired. Their Contract Clause 

claim therefore fails.
SIERRA MED. SERVS. ALLIANCE V. KENT 21

H. Dormant Commerce Clause

This brings us to the Plaintiffs’ final cause of action, the 

one based on the so-called Dormant Commerce Clause, an 

implicit aspect of the Commerce Clause that “denies the 

States the power unjustifiably to discriminate against or 

burden the interstate flow of articles of commerce.” Rocky 

Mountain Farmers Union v. Corey, 730 F.3d 1070, 1087 

(9th Cir. 2013) (quoting Or. Waste Sys., Inc. v. Dep’t of 

Envtl. Quality of State of Or., 511 U.S. 93, 98 (1994)). On 

appeal, the Plaintiffs argue for the first time that the 

supplemental reimbursements available to public providers 

discriminate against out-of-state private providers, which 

they never pleaded in their amended complaint. And even if 

their amended complaint had alleged that the supplementalreimbursement program violates the Dormant Commerce 

Clause, the relevant comparison would be between in-state 

and out-of-state public providers. Because none of the 

Plaintiffs are out-of-state public providers, they have no 

standing to challenge the supplemental reimbursements on 

Dormant Commerce Clause grounds. See Warth v. Seldin, 

422 U.S. 490, 499 (1975) (“[T]he plaintiff generally must 

assert his own legal rights and interests, and cannot rest his 

claim to relief on the legal rights or interests of third 

parties.”). Accordingly, their Dormant Commerce Clause 

claim is without merit.

III. CONCLUSION

For all of the reasons set forth above, we AFFIRM the 

judgment of the district court.