Court Opinion

ID: 857241
Source: CourtListenerOpinion
Date Created: 2013-04-04 17:05:48.960439+00
Date Added: 2024-06-11T09:06:35.103340
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

NORTH EAST MEDICAL SERVICES,            No. 11-16795
INC.,
              Plaintiff-Appellant,         D.C. No.
                                        3:10-cv-02433-
                 v.                           RS

CALIFORNIA DEPARTMENT OF
HEALTH CARE SERVICES, HEALTH
AND HUMAN SERVICES AGENCY ,
STATE OF CALIFORNIA ; DAVID
MAXWELL-JOLLY , Director of
California Department of Health
Care Services, Health and Human
Services Agency, State of California;
THE STATE OF CALIFORNIA ,
               Defendants-Appellees.

LA CLINICA DE LA RAZA , INC.,           No. 11-16796
                Plaintiff-Appellant,
                                           D.C. No.
                 v.                     3:10-cv-04605-
                                              RS
CALIFORNIA DEPARTMENT OF
HEALTH CARE SERVICES, HEALTH
AND HUMAN SERVICES AGENCY ,               OPINION
STATE OF CALIFORNIA ; DAVID
MAXWELL-JOLLY , Director of
California Department of Health
2          NORTH EAST MED . SVCS. V . CAL. DHCS

 Care Services, Health and Human
 Services Agency, State of California;
 THE STATE OF CALIFORNIA ,
                Defendants-Appellees.

        Appeals from the United States District Court
           for the Northern District of California
         Richard Seeborg, District Judge, Presiding

                   Argued and Submitted
        February 13, 2013—San Francisco, California

                        Filed April 4, 2013

        Before: Jerome Farris, Sidney R. Thomas, and
              N. Randy Smith, Circuit Judges.

                  Opinion by Judge N.R. Smith

                           SUMMARY*

              Eleventh Amendment / Medicare

    The panel affirmed in part and reversed in part the
dismissal, on the basis of Eleventh Amendment immunity, of
two federally funded healthcare clinics’ actions alleging that
the California Department of Health Care Services incorrectly

  *
    This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
         NORTH EAST MED . SVCS. V . CAL. DHCS               3

calculated payments for Medicaid-covered pharmacy services
provided to “dual-eligible” Medicare beneficiaries who also
receive Medicaid.

    Affirming in part, the panel held that where the clinics
had already paid money to California, they could not avoid
the Eleventh Amendment’s general bar to seeking money
damages from a state simply by alleging that California was
not entitled to the payments. The panel rejected the argument
that the Eleventh Amendment did not bar the clinics’ claims
because they brought suit as agents of the federal government
to protect a federal interest in the grant funds they claimed
California wrongfully seized. The panel also rejected the
argument that the clinics sought only the return of improperly
seized property.

    The panel reversed the dismissal of claims alleging
prospective relief and remanded to allow the district court to
assess whether the clinics may proceed with those claims
pursuant to the Ex parte Young doctrine.

                        COUNSEL

James L. Feldesman (argued) and Marisa B. Guevara,
Feldesman Tucker Leifer Fidell LLP, Washington, D.C., for
Plaintiffs-Appellants.

Joshua Sondheimer, Deputy Attorney General, San Francisco,
California, for Defendants-Appellees.
4               NORTH EAST MED . SVCS. V . CAL. DHCS

                                  OPINION

N.R. SMITH, Circuit Judge:

    Where North East Medical Services, Inc. (“NEMS”) and
La Clínica de la Raza, Inc. (“La Clínica,” and, together with
NEMS, the “Centers”)1 have already paid money to the
California Department of Health Care Services
(“California”), they may not avoid the Eleventh
Amendment’s general bar to seeking money damages from a
state simply by alleging that California was not entitled to the
payments. The Centers’ claims must fall within a recognized
Eleventh Amendment exception. See Edelman v. Jordan,
415 U.S. 651, 667–69 (1974); Ford Motor Co. v. Dep’t of
Treasury of Ind., 323 U.S. 459, 463–64 (1945), abrogated on
other grounds by Lapides v. Bd. of Regents of Univ. Sys. of
Ga., 535 U.S. 613 (2002); Taylor v. Westly, 402 F.3d 924,
929–30 (9th Cir. 2005). Accordingly, we affirm the district
court’s dismissal of the Centers’ claims seeking
reimbursement for money already paid to California.
However, we reverse the district court’s dismissal of the
Centers’ claims alleging genuine prospective relief and
remand to allow the district court to assess whether the
Centers may proceed with those claims pursuant to the Ex
parte Young, 209 U.S. 123 (1908), doctrine.

              FACTS AND PROCEDURAL HISTORY

    The Centers provide medical services to the poor,
uninsured, or otherwise medically underserved. The Centers
receive funds from a number of sources. Federal grants under
Section 330 of the Public Health Service Act, 42 U.S.C.

    1
        The Centers’ cases are consolidated for the purpose of this opinion.
          NORTH EAST MED . SVCS. V . CAL. DHCS                5

§ 254b (“Section 330 grants”) serve as an important source of
funds for these healthcare clinics. In addition, the Centers
receive payment from individual patients and patients’
insurers, including Medicaid.

    Medicaid is a joint Federal-State program that provides
money for health care services to certain needy and
underprivileged populations. Participating states administer
the Medicaid program, and the Centers must provide services
to Medicaid patients to be eligible for the Section 330 grants.
See 42 U.S.C. § 254b(k)(3)(E). Section 330 also requires the
Centers to “make every reasonable effort to collect
appropriate reimbursement for its costs” of providing services
to Medicaid patients. See 42 U.S.C. § 254b(k)(3)(F).

    The Centers’ complaints in these cases chronicle a long
history of tension between Section 330 grantees (like the
Centers) and state Medicaid programs. Before 1989, state
Medicaid programs often under-reimbursed federally funded
health centers. Because state underpayment forced Section
330 grantees to use federal Section 330 grant funds to cover
Medicaid expenses, Section 330 grants began to function as
a de facto subsidy of state Medicaid programs.

    In 1989, Congress attempted to remedy the problem.
First, Congress created a new designation called a “Federally
Qualified Health Center” (“FQHC”). See Omnibus Budget
Reconciliation Act of 1989, Pub. L. No. 101-239, Title VI,
§ 6404 (codified at 42 U.S.C. § 1396d). The Centers argue
that Congress mandated that state Medicaid programs pay
100 percent of the FQHCs’ reasonable costs. To meet this
mandate, state Medicaid programs currently pay FQHCs a
fixed, per-visit fee for services provided to Medicaid patients.
The fee is based on a formula intended to approximate the
6         NORTH EAST MED . SVCS. V . CAL. DHCS

FQHCs’ actual costs. This calculation method saves state
Medicaid programs and FQHCs from the administrative
burden of calculating each FQHC’s actual costs each year.

    The dispute in this case arises from California’s
implementation of a change to Medicare in 2006. In 2006,
Congress made available (under “Part D” of the Medicare
statute) the Medicare Prescription Drug Benefit to Medicare
beneficiaries. Some Medicare beneficiaries also receive
Medicaid and are known as “dual-eligibles.” The Part D
legislation shifted the responsibility for payment of dual-
eligibles’ prescription drug costs from state Medicaid
programs to the new, federal Medicare Part D Program. See
42 U.S.C. § 1396u-5(d)(1).

     The Centers argue that California mishandled the shift in
payment responsibility. They allege that California should
have calculated how much of the per-visit rate would be
attributable to dual-eligibles’ prescription costs. Then by
subtracting only that portion from the per-visit rate, the
Centers claim the per-visit rate would remain an accurate
reflection of the Centers’ actual costs. However, California
determined that subtracting only dual-eligibles’ prescription
drug costs was inconsistent with state law and would be
“administratively burdensome.” Instead, California gave the
Centers two options. First, the Centers could choose not to
bill California for the per-visit rate for Medicaid services and
reduce the per-visit rate by subtracting the cost of all
pharmacy services (not just the services to dual-eligibles).
California would then pay the Centers for Medicaid-covered
pharmacy services to non dual-eligibles on a different, fee-
for-service basis. The Centers refer to this as “Option 1.” In
the alternative, the Centers could elect to keep their per-visit
rate the same but pay over to California any payments that the
          NORTH EAST MED . SVCS. V . CAL. DHCS                  7

Centers received from Part D at the end of each fiscal year
(“Option 2”).

    While the Centers claim that both options are inconsistent
with federal law, they both initially chose Option 2. NEMS
paid California its Medicare Part D payments for fiscal years
2006 and 2007. To date, NEMS has made no payments for
fiscal year 2008. Instead, NEMS omitted Part D payments
from its 2008 year-end reconciliation report to California,
even though Option 2 required such payment. In 2009,
NEMS changed course and elected Option 1. NEMS
conceded in both its briefing and at oral argument that it
suffers no ongoing harm since proceeding under Option 1.

    La Clínica provides in-house pharmacy services at only
two of its twenty-five locations. La Clínica chose Option 2
after weighing the administrative burden of both options.
Unlike NEMS, La Clínica continues to proceed under
Option 2.

    The Centers brought suit for declaratory and injunctive
relief. Among other things, the Centers urge the federal
courts to declare unlawful California’s “seizure” of the
Centers’ Medicare Part D funds, in excess of what would be
owed under the per-visit rate for the Centers’ expenses. The
Centers also seek reimbursement for all amounts previously
paid to California under Medicare Part D, interest, and
attorney’s fees. For NEMS, this includes payments made for
fiscal years 2006 and 2007, and La Clínica seeks
reimbursement for all payments to date.

    California moved to dismiss the Centers’ complaints for
lack of subject matter jurisdiction, failure to state a claim, and
failure to exhaust administrative remedies. In a written order,
8         NORTH EAST MED . SVCS. V . CAL. DHCS

the district court dismissed the Centers’ complaints under the
Eleventh Amendment. The court reasoned:

       In essence, plaintiffs are saying that they
       themselves spent monies given to them by the
       federal government under Section 330 when
       they should not have found it necessary to do
       so. While that might mean, if correct, that
       California received a subsidy to its Medi-Cal
       program in a metaphorical sense, the money
       that California should have paid—the money
       plaintiffs seek to recover in this action—is
       still California’s money, that would have to be
       paid from its coffers.

The district court declined to reach whether the Centers failed
to state a claim or exhaust administrative remedies.

                STANDARD OF REVIEW

   We review “de novo dismissals on the basis of Eleventh
Amendment immunity.” Cholla Ready Mix, Inc. v. Civish,
382 F.3d 969, 973 (9th Cir. 2004).

                       DISCUSSION

    In general, the Eleventh Amendment shields
nonconsenting states from suits for monetary damages
brought by private individuals in federal court. See Taylor,
402 F.3d at 929; Beentjes v. Placer Cnty. Air Pollution
Control Dist., 397 F.3d 775, 777 (9th Cir. 2005). The
Eleventh Amendment also bars “declaratory judgments
against the state governments that would have the practical
effect of requiring the state treasury to pay money to
          NORTH EAST MED . SVCS. V . CAL. DHCS                 9

claimants.” Taylor, 402 F.3d at 929–30. However, there are
exceptions to this general bar. See id. at 930. First,
“Congress, using its authority to enforce by legislation the
provisions of the . . . Fourteenth Amendment, can ‘abrogate’
Eleventh Amendment state governmental immunity by
expressing its intent to do so with sufficient clarity.” Id. at
930. Second, we have held that the Eleventh Amendment
does not bar a suit for the return of property that the State of
California has seized and holds in trust pursuant to that state’s
unique escheat scheme. Suever v. Connell, 439 F.3d 1142,
1146–47 (9th Cir. 2006); Taylor, 402 F.3d at 936. Finally,
under Ex parte Young, the Eleventh Amendment generally
does not bar suits for prospective, non-monetary relief against
state officers. See Agua Caliente Band of Cahuilla Indians v.
Hardin, 223 F.3d 1041, 1045 (9th Cir. 2000).

    Here, the Centers claim that they are entitled to
reimbursement for money they paid to California under the
allegedly unlawful Option 2. NEMS seeks to recover monies
paid in fiscal years 2006 and 2007, and La Clínica seeks
reimbursement for all Part D payments it has made to
California to date. While the Centers couch these claims as
injunctive and declaratory, the claims actually seek
retroactive monetary relief barred by the Eleventh
Amendment. See Edelman, 415 U.S. at 665–67.

    Some of the Centers’ claims arguably seek genuine
prospective relief. NEMS claims that the state will
eventually demand payment of NEMS’s Part D revenues for
fiscal year 2008—that California will, in the future, enforce
Option 2 and want payment from NEMS. Similarly, La
Clínica may be entitled to injunctive relief to bar California’s
prospective application of Option 2 to La Clínica.
10         NORTH EAST MED . SVCS. V . CAL. DHCS

1. The Eleventh Amendment bars the Centers’ claims
   for money damages.

    The Centers advance two main arguments that the
Eleventh Amendment does not bar their claims for money
damages against California. First, they argue that they bring
suit as agents of the federal government to protect a federal
interest in the grant funds they claim California wrongfully
seized under Option 2 (the “Disputed Funds”). Second, they
argue that the Eleventh Amendment does not bar suit under
Taylor and Suever. The Centers contend that they may bring
suit, because recovery of the Disputed Funds would require
California merely to return the Centers’ funds that California
improperly seized.

    We reject each of these arguments. With respect to the
Centers’ “federal interest” theory, the Centers’ argument fails
for two reasons. First, the statutes the Centers cite do not
abrogate the Eleventh Amendment and, thus, fail to meet the
well-settled abrogation exception.2 See Douglas v. Cal. Dep’t
of Youth Auth., 271 F.3d 812, 818 (9th Cir. 2001), amended
by 271 F.3d 910; Taylor, 402 F.3d 924 at 930. Second, there
is no authority for a stand-alone “federal interest” exception.
With respect to the Centers’ Taylor argument, Taylor and
Suever are distinguishable, and the Centers’ claims do not
bring this case within Taylor’s extremely narrow Eleventh
Amendment “exception.”

     2
    To support their federal interest theory, the Centers cite various
Medicaid provisions, e.g., 42 U.S.C. § 254b(k)(3)(F)–(G) and federal
appropriations statutes, e.g., 31 U.S.C. §§ 1301(a), 1341(a)(1). The
Centers also cite 42 U.S.C. §§ 1983, 1985, and the Supremacy Clause as
authorizing the remedy they seek.
          NORTH EAST MED . SVCS. V . CAL. DHCS                11

    A. The Centers’ “federal interest theory” does not
       defeat application of the Eleventh Amendment.

    Courts conduct a two-part inquiry to determine whether
Congress validly abrogated the state’s sovereign immunity.
Douglas, 271 F.3d at 818. First, the court decides whether
“Congress unequivocally expressed its intent to abrogate the
states’ immunity in the legislation itself.” Id. (internal
quotation marks omitted). If so, the court must determine
whether Congress acted “pursuant to a valid grant of
constitutional authority under § 5 of the Fourteenth
Amendment.” Id.

    Here, none of the statutes the Centers claim support their
“federal interest” theory abrogated California’s Eleventh
Amendment immunity. The closest the Centers come to
statutory authorization for this suit is in their charge to “make
every reasonable effort” to collect the reimbursements owed
them. See 42 U.S.C. § 254b(k)(3)(F). However, this
language falls far short of the “clear statement” that our cases
require to demonstrate Congress’s intent to abrogate. See,
e.g., Townsend v. Univ. of Alaska, 543 F.3d 478, 484 (9th Cir.
2008); Pittman v. Or., Emp’t Dep’t, 509 F.3d 1065, 1072 (9th
Cir. 2007). Accordingly, because the statutes upon which the
Centers rely do not abrogate California’s sovereign immunity,
the Centers cannot obtain monetary relief. See Holley v. Cal.
Dep’t of Corr., 599 F.3d 1108, 1111 (9th Cir. 2010) (“The
Eleventh Amendment bars [a suit for money damages] unless
Congress has abrogated state sovereign immunity under its
power to enforce the Fourteenth Amendment or a state has
waived it.”); Hibbs v. Dep’t of Human Res., 273 F.3d 844,
850 (9th Cir. 2001) (same).
12        NORTH EAST MED . SVCS. V . CAL. DHCS

    The Centers attempt to avoid this result by denying that
they seek a federal interest “exception” to the Eleventh
Amendment. Instead, the Centers argue that, because they
seek to vindicate a federal interest in Section 330 grant funds,
the Eleventh Amendment does not apply as a threshold
matter. This argument fails. The Eleventh Amendment
clearly bars the remedy they seek—a monetary award paid
from the state treasury to a private party. See Edelman,
415 U.S. at 667–69.

    None of the authorities the Centers cite persuade us that
the Eleventh Amendment does not apply. Nor do they
persuade us to recognize (even if we could) a stand-alone
federal interest exception. For example, the Centers contend
that Hans v. Louisiana, 134 U.S. 1 (1890), which extended
the Eleventh Amendment to suits brought by a state’s own
“citizen,” dealt only with private parties advancing their own,
private claims. While this may be true, 134 U.S. at 1, nothing
in Hans provides a right to money damages against a state
any time the litigation furthers a federal interest. Similarly,
the Centers may not rely on McCulloch v. Maryland, 17 U.S.
(4 Wheat) 316 (1819), and other Supremacy Clause cases.
These cases do not establish a specific right to represent the
federal interest and to recover money from a state.

    Finally, the Centers rely on the complicated statutory
framework underlying the Section 330 grants, Medicare
reimbursement, and federal appropriations. Again, the
Centers point to federal law that requires them to “make
every reasonable effort” to collect the reimbursements owed
them. However, these statutes do not authorize the Centers
to sue on behalf of the federal government. Elsewhere,
federal law makes clear that “[e]xcept as otherwise authorized
by law, the conduct of litigation in which the United States,
            NORTH EAST MED . SVCS. V . CAL. DHCS                       13

an agency, or officer thereof is a party, or is interested . . . is
reserved to officers of the Department of Justice, under the
direction of the Attorney General.” 28 U.S.C. § 516.
Congress has authorized private parties to bring suit on the
United States’ behalf in some limited circumstances. See,
e.g., 28 U.S.C. §§ 49, 515, 591–99; 31 U.S.C. §§ 3729–3733.
The statutes and other materials the Centers cite do not
demonstrate that this is such a circumstance.

    The Supreme Court rejected an argument similar to the
Centers’ in Edelman, 415 U.S. at 678. In Edelman, the Court
held that a group of would-be disability beneficiaries could
not recover retroactive payment of benefits. Id. at 653, 678.
The majority rejected the dissent’s argument that § 1983 and
an amalgamation of other federal statutes and regulations
indicated “that Congress intended a cause of action for public
aid recipients . . . .” Id. at 674–75. The majority concluded
that § 1983 did not create a right of action for money
damages in that case. Id. at 675–77. The Court reasoned, in
part, that although private parties may sue a state under
§ 1983 in some cases, “a federal court’s remedial power,
consistent with the Eleventh Amendment, is necessarily
limited to prospective injunctive relief [under Ex parte
Young] . . . .” Id. at 677. Accordingly, the federal courts are
powerless to make “a retroactive award which requires the
payment of funds from the state treasury.” Id. As such, we
reject the Centers’ similar argument under Edelman.3 See

   3
     The Centers also cite several out-of-circuit cases to support their
argument that they assert a federal interest in federal funds. E.g.,
Kauffman v. Anglo-Am. Sch. of Sofia, 28 F.3d 1223 (D.C. Cir. 1994); In
re Joliet-Will Cnty. Cmty. Action Agency, 847 F.2d 430 (7th Cir. 1988);
Palmiter v. Action, Inc., 733 F.2d 1244 (7th Cir. 1984); and Henry v. First
Nat’l Bank of Clarksdale, 595 F.2d 291 (5th Cir. 1979).
14          NORTH EAST MED . SVCS. V . CAL. DHCS

also Windward Partners v. Ariyoshi, 693 F.2d 928, 929 (9th
Cir. 1982) (“[S]ection 1983 does not abrogate or ‘override’
the sovereign immunity of the states under the eleventh
amendment.” (citing Quern v. Jordan, 440 U.S. 332 (1979)).
Thus, the Centers’ “federal interest” argument does not fall
within the Eleventh Amendment’s abrogation exception, and
we decline the Centers’ invitation to create a stand alone
exception from whole cloth.

     B. The Eleventh Amendment bars the Centers’
        claims, even though they argue they seek only the
        return of improperly seized property.

    In certain cases, the Eleventh Amendment does not bar a
suit to recover property in a state’s possession, or funds held
by the state arising from the sale of seized property. See
Suever, 439 F.3d at 1146–47; Taylor, 402 F.3d at 925, 929,
934–35. In Taylor, we held that property owners could
recover money held in the California state escheat fund. State
law allowed California to seize “unclaimed property” after
three years of inactivity by the property owner. 402 F.3d at
927. The unclaimed property was then subject to “a custodial
escheat system,” requiring the state Controller to “‘safeguard
and conserve’ unclaimed property in a trust fund for the
interests of all parties having an interest in the property.” Id.

     These cases are readily distinguishable from this case. None of those
cases implicated the Eleventh Amendment, because they did not involve
a private citizen’s attempt to sue a state. Rather, they were attempts to
bring suit against a federal instrumentality, Kauffman, 28 F.3d at 1224–25,
or to obtain funds from federally funded organizations, Joliet-Will,
847 F.2d at 431; Palmiter, 733 F.2d at 1245; Henry, 595 F.2d at 295.
Accordingly, these cases do not persuade us that the Centers may allege
a federal interest in money in order to recover it from a state in derogation
of the Eleventh Amendment.
           NORTH EAST MED . SVCS. V . CAL. DHCS                      15

at 930 (quoting Cal. Civ. Proc. Code §§ 1300(c), (d)). Even
funds under the State Treasurer’s control (i.e., general state
funds) would be subject to the unclaimed property trust. Id.
at 931.

    We concluded that the property owners’ claims were
permissible, because they sought only the return of their own
property, or the proceeds from the sale of their property.4 We
reasoned that funds held in California’s unclaimed property
trust were like cars held in an impound lot. Id. at 931. We
observed that “[t]he State of California’s sovereign immunity
applies to the state’s money. Money that the state holds in
custody for the benefit of private individuals is not the state’s
money, any more than towed cars are the state’s cars.” Id. at
932. Even proceeds transferred to the state’s general fund
were still subject to the trust under state law—demonstrating
that the funds still belonged to the individuals, not the state.
Id. at 931; see also Suever, 439 F.3d at 1147 (“Taylor held
that the Eleventh Amendment did not apply to funds that
[were] escheated, but not permanently escheated, because the
State held such funds in custodial trust for the benefit of
property owners—the funds were not State funds.”).

    In this case, we conclude that Suever and Taylor do not
control, because this is not a suit for return of the Centers’
property. The Centers argue that the funds they seek “are no
different than the property sought by the plaintiffs in Suever
and Taylor.” However, unlike in Suever and Taylor,
California did not receive the Disputed Funds pursuant to a
unique statutory regime. There is no California state law

 4
   W e interpreted United States v. Lee, 106 U.S. 196 (1882), and Malone
v. Bowdoin, 369 U.S. 643 (1962), to allow a suit for return of the
unclaimed property. Taylor, 402 F.3d at 933.
16          NORTH EAST MED . SVCS. V . CAL. DHCS

requiring the state to hold the Disputed Funds in a custodial
trust. Any monetary award to the Centers would necessarily
come from the state treasury.

     Again, we are constrained by Edelman. In Edelman, the
district court found an Illinois regulation inconsistent with
federal law and ordered retroactive payment of benefits
withheld under the invalidated state regulation. 415 U.S. at
655–56. The Supreme Court rejected the plaintiffs’ claims to
retroactive payment of benefits. The Court reasoned that
plaintiffs’ claims were “measured in terms of a monetary loss
resulting from a past breach of a legal duty on the part of the
defendant state officials.” Id. at 668. The Court further
reasoned: “The funds to satisfy the award in this case must
inevitably come from the general revenues of the State of
Illinois, and thus the award resembles far more closely the
monetary award against the State itself than it does the
prospective injunctive relief awarded in Ex parte Young.” Id.
at 665 (internal citation omitted).

    Here, like the claim at issue in Edelman, the Centers
specifically pray for monetary relief measured in terms of
their loss resulting from California’s alleged violation of
federal law under Option 2.5 Edelman makes clear that the

 5
   The Centers acknowledge that the issue is essentially one of statutory
interpretation. In other words, the Centers argue that California
misinterprets, and thereby violates, federal law through its implementation
of Part D. As such, the Centers’ claims are more similar to the claim at
issue in Edelman, than to the property owners’ claims in Suever and
Taylor. In Edelman, the district court even concluded that the state
regulation at issue violated federal law. The Centers (at least implicitly)
ask us to reach the same conclusion. However, even if such a violation
exists, the Eleventh Amendment bars the retroactive, monetary remedy
sought.
         NORTH EAST MED . SVCS. V . CAL. DHCS              17

Eleventh Amendment bars a monetary award to recompense
such loss. The same is true here even though the Centers
previously held the Disputed Funds. See Ford Motor,
323 U.S. at 463–64 (holding that Eleventh Amendment bars
suit by taxpayer to obtain funds taxpayer paid pursuant to an
allegedly unconstitutional exaction); Cardenas v. Anzai,
311 F.3d 929, 938 (9th Cir. 2002) (holding that Eleventh
Amendment did not bar a claim for prospective relief,
“emphasiz[ing] that the plaintiffs do not seek a recovery of
funds previously paid to the state”); Big Horn Cnty. Elec. Co-
op., Inc. v. Adams, 219 F.3d 944, 954 (9th Cir. 2000) (“The
Supreme Court has recognized that a retrospective award of
taxes is barred by sovereign immunity.”).

    In sum, Suever and Taylor do not control. The Centers do
not seek the return of their own property seized pursuant to a
unique statutory scheme. No provision of state law provides
that the “seized” Disputed Funds are held in trust like the
seized property in Suever and Taylor. Thus, because the
cases and statutes cited by the Centers do not bring their
claims under a recognized exception to the Eleventh
Amendment, their claims for retroactive monetary relief are
barred.

2. The Centers may seek genuine prospective relief.

    While both Centers maintain that they seek prospective
relief in addition to any claim for reimbursement, their
grounds for prospective relief differ. As discussed above,
NEMS cannot obtain monetary relief for funds it paid to
California in fiscal years 2006 and 2007. Further, NEMS
conceded in its briefing and at oral argument that it has
suffered no ongoing harm since it elected to proceed under
Option 1 in 2009. However, NEMS has not paid California
18          NORTH EAST MED . SVCS. V . CAL. DHCS

for the Part D payments California claims it owes for fiscal
year 2008. While California has not demanded payment, it
has maintained that it is entitled to it. This leaves open the
possibility that California will prospectively apply Option 2
to NEMS for fiscal year 2008 when California tries to extract
payment from NEMS in the future.

    La Clínica continues to pay Medicare Part D payments
over to California under Option 2. As such, it argues that it
is entitled to declaratory and injunctive relief barring any
future attempt by California to collect La Clínica’s Part D
payments.

    The Centers brought their respective grounds for
prospective relief to the district court’s attention in pleadings
and at oral argument on the motion to dismiss their
complaints.      However, the district court apparently
overlooked this aspect of their claims. “In determining
whether the doctrine of Ex parte Young avoids an Eleventh
Amendment bar to suit, a court need only conduct a
‘straightforward inquiry into whether [the] complaint alleges
an ongoing violation of federal law and seeks relief properly
characterized as prospective.’” Verizon Md., Inc. v. Public
Serv. Comm’n of Md., 535 U.S. 635, 645 (2002) (alteration in
original) (quoting Idaho v. Coeur d’Alene Tribe of Idaho,
521 U.S. 261, 296 (1997) (O’Connor, J., concurring)). There
is no indication in the district court’s opinion that it made this
inquiry.6 Thus, we reverse the district court’s order on this
portion of the Centers’ claims. We remand to allow the

 6
   The district court stated the Centers “expressly acknowledge that they
are not suffering any current financial injury.” But La Clínica has, in fact,
alleged ongoing financial injury, and the court did not address NEMS’s
argument about fiscal year 2008.
          NORTH EAST MED . SVCS. V . CAL. DHCS                   19

district court to assess Ex parte Young’s application to: (1)
NEMS’s claim to injunctive relief for fiscal year 2008, and
(2) La Clínica’s claims arising from prospective application
of Option 2. See Suever, 439 F.3d at 1148 (“[W]e leave it to
the district court upon remand to determine which types of
requested relief are permissibly prospective . . . .”).

                        CONCLUSION

    The Eleventh Amendment bars the Centers’ claims for
retroactive monetary relief. We affirm the district court’s
dismissal of the Centers’ claims to the extent that they seek
money damages. However, we reverse the district court and
remand to allow the district court to assess Ex parte Young’s
application to the Centers’ remaining claims.7

    AFFIRMED in part; REVERSED and REMANDED in
part. Each party shall bear its own costs on appeal.

   7
    W e decline to address for the first time on appeal California’s
argument that the Centers were required to exhaust administrative
remedies and failed to do so.