Court Opinion

ID: 5451739
Source: CourtListenerOpinion
Date Created: 2022-01-08 18:45:03.82421+00
Date Added: 2024-06-11T08:32:25.444311
License: Public Domain

McCOMB, J.
I dissent. I would reverse the judgment of the trial court. Our government is divided into three branches: Legislative, Executive and Judicial, and this court should not invade the powers of the legislative or executive branches of the government, which in my opinion has been done by the majority opinion in the instant case. It is not the business of this court to pronounce policy. Self-restraint is of the essence of the judiciary. Our Constitution does not authorize the court to sit in judgment on the wisdom of the actions of the legislative or executive brandies of the government.
The superior court entered judgment enjoining defendants from implementing certain emergency regulations, the net effect of which was to reduce the level of services provided under the Medi-Cal Program, effective September 1, 1967. The emergency regulations represented the Administrator’s decision as to how outgo under the Medi-Cal Program should be brought into balance with the monies which had been appropriated by the 1967 Legislature.
The superior court agreed that outgo had to be balanced with the available funds but held nevertheless that the Administrator had gone beyond the authority granted to him by the Legislature when he carried out the quasi-legislative duty of adopting the challenged regulations.
The issue presented is whether defendants’ emergency regulations are valid. An examination of the legislative and administrative background may prove helpful in evaluating the issue and considering the applicable law.

Legislative and Achninistralive Background

A. The Decision to Provide Mainstream Medical Care for the Poor—The Mecli-Cal Program.
In 1965 the United States Congress enacted Public Law 89-97. the Social Security Amendments of 1965. This law added title XIX to the Social Security Act and contained the provisions of what is now referred to as the Federal Medicaid Program. Title XIX broadened the provisions of the Kerr-Mills Program for the aged, extended its provisions to additional needy persons, and allowed the states to combine within a single uniform program various medical services for the needy previously authorized b3 five separate titles of the Social Security Act. Title XIX extended the advantages of an *763expanded medical assistance program to the aged who are indigent, and to needy individuals in programs for dependent children, to the blind, and to the permanently and totally disabled. In addition, title XIX contained provisions allowing coverage of persons who would qualify under the named programs if in sufficient financial need. These latter provisions have been described as the most far-reaching provisions of the new legislation insofar as they are designed to bring the benefits of modern medical care to all needy people, a group referred to herein as the medically indigent or medically needy as defined in subdivisions (b) and (c) of section 14005 of the Welfare and Institutions Code.1
California’s Medi-Cal Program, as contained in chapters 7 and 8 of division 9 of the Welfare and Institutions Code, section 14000 et seq., was adopted by the 1965 Second Extraordinary Session of the Legislature and constitutes California’s effort to take advantage of the provisions of title XIX. This was an emergency measure effective November 15, 1965, which became operative on March 1, 1966. The measure repealed the prior provisions relating to medical care for public assistance recipients and medical care for the aged. It established in their place a program of basic and extended health benefits for public assistance recipients and medically indigent persons.
At the time this legislation was adopted, the Legislature did not have sufficient information with which to gauge the extent or scope of the program it was approving in principle, nor did it have adequate data upon which to make a sound estimate of the probable costs of the program. The Legislature’s general intent, however, was clear. It wished to establish a broad program of medical services that would capture as much of the federal matching funds available as possible, without exceeding the state and county funds that had been made available for this purpose in the immediately preceding year. (§ 14010.)
The Legislature also indicated its purpose and intentions when it adopted the program. Thus, section 14000 provides; “The purpose of this chapter is to afford basic health care and related remedial or preventive services to recipients of public assistance and to medically indigent aged and other persons, including related social services which are necessary *764for those receiving health care under this chapter and Chapter 8 (commencing with Section 14500).
“The intent of the Legislature is to provide, to the extent practicable, through the provisions of this chapter, for basic health care for those aged and other persons, including family-persons who lack sufficient annual income to meet the costs of health care, and whose other assets are so limited that their application toward the costs of such care would jeopardize the person or family’s future minimum self-maintenance and security. It is intended that whenever possible and feasible: “ (a) After December 31, 1966, such care shall, to the extent feasible, be provided through a system of prepaid health care or contracts with carriers;
“(b) The means employed shall be such as to allow eligible persons to secure basic health care in the same manner employed by the public generally, and without discrimination or segregation based purely on their economic disability.
“(c) The benefits available under this chapter shall not duplicate those provided under other federal or state laws or under other contractual or legal entitlements of the person or persons receiving them.
“(d) In the administration of this part and in establishing the means to be used, the department shall give due consideration to the appropriate organization and to the ready accessibility and availability of the facilities and resources for basic health care and extended health services to persons eligible under this chapter and Chapter 8.
“It is also the intent of the Legislature that, except in accordance with the provisions of Section 14010, and as necessary to secure federal approval of a plan under Title 19 of the Federal Social Security Act, until January 1, 1967, care shall, to the extent feasible, be limited to persons and families who would, had they chosen to apply, have been considered as medically indigent and eligible for medical or other assistance under the state programs in effect in December 1965. ’’
The concept set forth in section 14000, subdivision (b), expresses the legislative intent to provide “mainstream” medical care to the poor. In other words, the program is intended to provide medical care comparable to that made available to those economically able to pay for average, competent medical care. The Legislature also indicated its intent that the scope and duration of health services provided under the Medi-Cal Program should at least be equivalent to the level provided in 1964-1965 under the then existing public *765assistance programs. (§ 14000.1). It indicated an intent that county hospitals integrate their services “with those of other hospitals into a system of community service which offers free choice of hospitals to those requiring hospital care” in order to ‘1 eliminate discrimination or segregation based on economic disability.” (§ 14000.2; see, also §§ 14006.5, 14104, 14105.)
B. Fiscal Implications of the Above Decision and the 1967 Fiscal Crisis.
By the spring of 1967, if not earlier, it was fully apparent that the cost of the Medi-Cal Program was far exceeding the state funds appropriated for the program. Committees of the 1967 Legislature held hearings on this financial problem. These hearings resulted in legislation (specifically chapter 1421) designed to furnish guidelines for reductions in the program.
Chapter 1421, Statutes of 1967, was an urgency measure that became effective on August 25, 1967. The measure did many things—all in an obvious response to the fiscal crisis faced by the Medi-Cal Program:
1. It added section 14103.7, which provides: “The Administrator of the Health and Welfare Agency, when reducing services under this chapter and Chapter 8 of this part in order to maintain the program within the fiscal limits fixed by the Legislature shall, to the extent feasible, make proportionate reductions in all services, rather than eliminating any service or services entirely. ’ ’
2. It added section 14120, which requires the establishment of a monthly schedule of anticipated billings, and, within the framework of that schedule, requires the Health and Welfare Agency Administrator to institute program reductions whenever the total exceeded by 10 percent the amount scheduled to have been paid by that time, and to modify the usual and customary physicians’ fees whenever such fees exceed by 10 percent the amount scheduled for that segment of the program.
3. By amending the next to last sentence of section 14157, the Legislature closed the appropriations for the current fiscal year at $305 million. This limitation is made explicit by the provisions of section 4 of the bill, which provides: ‘ ‘ Expenditures from state sources under the medical assistance program for the fiscal year 1967-1968 shall not exceed three hundred five million dollars ($305,000,000), except that with the approval of the Director of Finance additional amounts may *766be expended if they are obtained by transfer from other sources as authorized by the Legislature. ’ ’
4. By adding section 14158, the measure requires the institution of normal budgetary procedures for 1968-1969 and following years instead of prior continuing appropriations.
5. By section 5, the measure requires the Health and Welfare Administrator to report to the Legislature not later than January 31, 1968, showing total program costs, total program reductions and other data.
6. The measure also implements a modified accrual accounting system in which expenditures in a given fiscal year are evidenced by billings received rather than obligations incurred. Such a system will permit bills incurred but not yet received by June 30, 1968 (estimated to amount to $53 million in this fiscal year) to be charged against the revenue of the succeeding rather than the current fiscal year.
Thus, it seems apparent that the purpose of the 1967 legislation, as contained in chapter 1421, differed significantly in both its tone and objectives, from the initial legislation adopted in 1965 establishing the program. The original legislation had as its objective the rapid establishment, development and expansion of the program designed to provide mainstream medical care to the poor. The 1967 legislation was designed to solve a fiscal crisis by providing guides for program cuts.
The 1967 emergency regulations that were adopted eliminated some types of physicians’ services that had previously been provided to public assistance recipients; for example, psychiatric services (other than in-patient care) and eye refractions (except as necessary following extraction of the lens of the eye). The regulations also eliminated certain services in those cases where defendants determined that a proportionate reduction in such services had been demonstrated to be totally impracticable (and therefore not feasible) or else so at variance with a logical offering of medical care as to render such reductions untenable.
As indicated above, the ultimate issue herein is the validity of the emergency regulations. The Legislature intended that the Administrator rely upon his intimate knowledge of the program and adopt regulations designed to balance expenditures with available funds. In my opinion, the law does not require the Administrator to eliminate entire groups of persons (i.e., the medically needy) from the Medi-Cal Program *767before it permits reducing the level of services available to all.
The emergency regulations involved herein were adopted by the Administrator in accord with the provisions of the California Administrative Procedure Act. (Gov. Code, § 11370 et seq.) There is no procedural question presented; rather, the question is the substantive one of the propriety of the Administrator’s quasi-legislative action in adopting the emergency regulations which he did adopt.
When courts review quasi-legislative administrative action, they are limited to determining whether the quasi-legislator has taken action which was " arbitrary, capricious, or entirely lacking in evidentiary support, or whether he has failed to follow the procedure and give the notices required by law.” (Brock v. Superior Court, 109 Cal.App.2d 594, 605 [8] [241 P.2d 283].)
This problem of the scope of review when an administrative regulation is challenged has been presented to the California appellate courts in a number of different cases. (See, e.g., Pitts v. Perluss, 58 Cal.2d 824 [27 Cal.Rptr. 19, 377 P.2d 83] ; Ray v. Parker, 15 Cal.2d 275 [101 P.2d 665] ; Brock v. Superior Court, supra, 109 Cal.App.2d 594 [241 P.2d 283] ; VitaPharmacals, Inc. v. Board of Pharmacy, 110 Cal.App.2d 826 [243 P.2d 890].)
In Bay v. Parker, supra, this court discussed generally the problem of judicial review of quasi-legislative acts and, after reviewing numerous federal cases, concluded that due process requirements were satisfied and that the order was valid. The rule as to the scope of review was stated as follows: “. . .In an action of this character challenging proceedings and hearings of the type here involved, it is not for the courts to weigh the evidence and data adduced before and considered by the director preliminary to his issuance of the several orders here challenged. Under the circumstances here present, judicial interference should occur only when it can be said that administrative action has been arbitrary and capricious. (Citations.) ” (15 Cal.2d at 310-311 [23].)
In Pitts v. Perluss, supra, this court discussed the reasons for the rule and succinctly summarized it by stating: ‘‘We confront a situation here which graphically illustrates the wisdom of the general rule that the court should not substitute its judgment for that of an administrative agency which acts in a quasi-legislative capacity. All of the parties to this litigation recognize the intricate and technical nature of the *768subject matter as well as the expertise and full technical knowledge which its administration requires. It would be presumptuous of a court to claim such skill; it will not, therefore, superimpose its own policy judgment upon the agency in the absence of an arbitrary and capricious decision.
“The decisions do not sustain the insurers’ contention that in determining the validity of the regulation this court should exercise its independent judgment and reweigh the proffered evidence. While such a test may apply to the review of the adjudicatory or quasi-judicial rulings of certain agencies (Code Civ. Proc., § 1094.5) it does not pertain to the review of regulations rendered by an agency in its quasi-legislative capacity. As to the quasi-legislative acts of administrative agencies, ‘judicial review is limited to an examination of the proceedings before the officer to determine whether his action has been arbitrary, capricious, or entirely lacking in evidentiary support, or whether he has failed to follow the procedure and give the notices required by law.’ (Citations.) ” (58 Cal.2d at 832-833.)
The same reasoning and rule are equally applicable here. The regulations are a reasonable attempt to carry out the legislative mandate to balance expenditures with available funds. In order to arrive at a combination of actions which would best carry out the legislative direction to balance program benefits with available funds, a wide variety of alternatives was examined. Furthermore, the Administrator had to consider not only the fiscal crisis but also the following points:
1. Time was of the essence, as each day added to the severity of the necessary cuts; reductions had to produce savings during 1967-1968;
2. Presently available staff at state, county, and fiscal intermediary levels had to suffice for carrying out actions;
3. Attempts to effect “proportionate” percentage reductions had to be considered in the light of the legislatively expressed purpose to achieve a program that was medically and remedially reasonable; and
4. The “Basie Five”2 costs had to be limited since by themselves they exceeded available funds.
In his testimony Mr. Mulder outlined some of the relevant *769factors that were considered in arriving at decisions concerning the form and scope of the program reductions finally-decided upon. Also helpful is the affidavit of Mr. Stewart (the Deputy Director of the Office of Health Care Services) which has attached to it an exhibit and a document entitled “MediCal Fiscal and Expenditure Program Summary 1967-68 Fiscal Year.” This latter document constituted the agenda submitted to the Health Review and Program Council at its August 4 and 11 special meetings. Although Mr. Stewart’s affidavit, as well as Exhibit A attached to that affidavit, was prepared subsequent to the hearing in the superior court, the materials are not after-the-fact rationalizations. Rather, ■Exhibit A is a summary of the various factors that were previously considered by the Administrator and were in the MediCal Program Summary considered by the Health Review and Program Council a month prior to the court hearing in this matter.
Exhibit A and the agenda submitted to the Health Review and Program Council contain materials which discuss the possible alternative program cuts that were considered and indicate the many possible ways in which reductions could have been achieved. The affidavit and the exhibits thereto plainly indicate that there were sound reasons for reducing the program in the manner reflected by the emergency regulations rather than in some other manner. In Mr. Stewart’s affidavit he discussed the feasibility of proportional cuts and outlined various reasons for the conclusion that such cuts were not feasible. For example, a uniform percentage cut would need to be so deep that it would effectively eliminate some services; a reduction in nursing home care or hospital care by 26 percent (which would have been approximately the percentage reduction required on an across-the-board basis) would in effect deny such services; and an across-the-board reduction in physicians’ fees was “not considered compatible with continued participation of an adequate number of physicians.” It was concluded that “to effect proportionate cuts, deeper inroads would have to be made in physicians’ and out-patient clinic services than just the elimination of non-emergent [sic] surgery and psychiatric care. Without question preventive medical services would have to be disallowed. To reduce hospital and nursing home care proportionately, i.e., 25 to 30 percent, arbitrary, absolute, and unreasonable limits would have to be set on length of stay, either generally or by diagnosis, but in *770either ease without flexibility to meet the needs of the individual patient. . . . Obviously, there is no way of arranging to allow for 25 percent of necessary laboratory and x-ray services other than through a deductible [plan] or [by requiring] co-payment which welfare recipients could not afford. ”
Mr. Stewart refers to the fact that a proportionate reduction in some services could only result in ridiculous situations. “There can be nothing ‘feasible’ in any eye examination without the needed eyeglasses, and 75 percent of a pair of eyeglasses is difficult to provide. The same applies to hearing examinations and hearing aids, to tooth extractions and dentures, and to therapy evaluation and therapy services. ’ ’
Thus, the Administrator concluded that “ [w]here only a partial cut could be made—such as, home health care, dental care, podiatry, transportation, and drugs—it was done in order to provide as medically feasible a program as was possible. ’ ’
It is apparent from the above and from the statistical presentation that no combination of actions affecting services was found to be adequate to reduce costs without also reducing the Basie Five services. Moreover, actions affecting caseload or the number of persons covered, including the elimination of the medically needy group, were examined and discarded as being contrary to the best interests of the state as a whole.
All the above-mentioned alternatives were presented to the Health Review and Program Council at special meetings held on August 4 and 11, 1967. Testimony was also received from many organizations and individuals. After reviewing and weighing all these considerations the Health Review and Program Council and the Office of Health Care Services staff recommended that the September 1, 1967, emergency regulations be adopted as the most reasonable and humanitarian method of balancing expenditures with the available funds.
The challengers did suggest alternative means of cutting expenditures by restrictions on physicians ’ fees and by imposing a requirement of hospitalization in county hospitals. As indicated above, one of the alternatives considered by the Administrator and his staff was a fixed fee schedule for physicians’ services. However, it was concluded that this would be disadvantageous in that it would reduce participation of physicians and impair present medical society controls of utilization and quality. Similarly, insofar as the county hospital alternative was concerned, the record reflects consideration of this point and some of the problems involved such as (a) the *771inadequate number of county hospital beds, (b) the problem of providing hospitalization in locations where county hospitals did not exist, and (c) the fact that a requirement of county hospitalization would represent a major change from the mainstream medical concept embodied in section 14000. The suggestions made by plaintiffs constitute alternatives that were considered and rejected by defendants as infeasible.
In the light of the record the Administrator was amply justified in exercising his discretion and accepting the judgment of his professional staff. Accordingly, his actions and the regulations cannot reasonably be characterized as arbitrary, capricious, or without support in the record. The trial court itself refused to make such a finding when it rejected defendants’ proposed Conclusion of Law.
In the absence of such a finding, such regulation is valid and proper. This does not mean the regulations should be held to be perfect or that their substance need be approved by this court. In Pitts v. Perluss, supra, 58 Cal.2d at page 846, we stated: “Against the backdrop of the legislation and the director’s execution of its policies, the regulation was neither arbitrary nor capricious. We are not called upon to decide whether the provision was perfect; neither do we hold that a better one could not have been fashioned. We do not deal in absolutes or in alternatives; we merely hold the regulation before us does not transgress the pertinent legal limitation. ’ ’
The requirement that services be reduced proportionately, if feasible, does not change the scope of judicial review as discussed above. Moreover proportionate reductions were not shown to be feasible.
The first of the grounds used to hold the regulations invalid turns on section 14103.7 (added by eh. 1421, Stats. 1967, supra) which reads:
“The Administrator of the Health and Welfare Agency, when reducing services under this chapter and Chapter 8 of this part in order to maintain the program within the fiscal limits fixed by the Legislature, shall, to the extent feasible, make proportionate reductions in all services, rather than eliminating any service or services entirely. ’ ’
Since it is conceded that the Administrator did not make proportionate reductions in all services, the question presented is whether the above section indicates a legislative intent to restrict the Administrator and, if it does, to what extent the section restricts his discretion. The answer to the question turns on the meaning of the phrase “to the extent feasible.” *772The trial court, in its memorandum opinion, stated “ [i] n this context ‘feasible’ would seem to mean ‘capable of being done’ and ‘suitable.’ (Eandom House Dictionary (1966) 520).” The Legislature used the phrase “to the extent feasible”- to embody the concept of being practicable; workable; and viable rather than remotely possible.
The term “feasibility” has acquired a generally understood meaning in legislative and governmental administrative areas. It connotes a weighing of all relevant facts with a view towards determining whether a particular objective can be successfully accomplished by alternative methods. It implies rejection of methods which are unworkable, excessively costly, or which would not result in a viable program.
The question is whether the particular alternative method of cost reduction is reasonably likely to carry out the legislative intent and purpose. The Legislature used the phrase “to the extent feasible” to channel the Administrator’s efforts but not to restrict his expertise and discretion and certainly not to eliminate them completely. Thus, the phrase was simply designed to indicate a preference for partial reductions in all services rather than the arbitrary elimination of many services. To read the phrase as putting a more onerous burden on the Administrator is an attempt to change the generally recognized standard or scope of review in cases such as this. The authorities cited above set forth the proper scope of review, and the test on review is not changed simply because the Legislature has used the phrase “to the extent feasible” rather than a phrase such as “to the extent he determines practicable after the exercise of his expertise and discretion. ’ ’
The real vice inherent in this question of “feasibility” is the opportunity it presents for changing the scope of review by rephrasing the issue. Instead of determining whether the Administrator resolved an extremely difficult problem in a not unreasonable manner after exercising the discretion vested in him by law and the expertise that his staff acquired through years of experience, the trial court converted the issue from the review of a quasi-legislative action to an exercise in determining what words mean, thus allowing the court to second-guess the Administrator.
As previously discussed, the possibility of making proportionate cuts was considered by the Administrator, and such reductions were rejected only after careful deliberation. This exercise of discretion should not be- rejected through an erroneous interpretation of the meaning of the term “feasible” *773¡.ny more than it should be found to be arbitrary or capricious. It has already been demonstrated that the Administrator’s action was not arbitrary or capricious.
Compounding the error in interpreting the term “feasible” was the court's error in placing on the Administrator the burden of proof as to the question of the feasibility of proportionate cuts. This second error facilitated the process whereby the court substituted its judgment for that of the Administrator.
In its memorandum opinion the court stated “an adequate basis has not been given to it [by the Administrator] for it [the court] to be able to hold that the proportionate reductions in services directed by the Legislature are not feasible. ’ ’ Counsel for defendants repeatedly asked the court to clearly indicate the burden of proof with respect to the question of demonstrating the nonfeasibility of proportionate reductions in services. The trial court opened the hearing with extensive references to Pitts v. Perluss, supra, 58 Cal.2d 824, and closed the hearing with references to the views of Justice Frankfurter, all to the effect that courts should not interfere with the discretion given to trained administrators and should not act as “a super-administrator in trying to determine the wisdom of a particular policy.” The court continually indicated that it would not substitute its judgment of feasibility for that of the Administrator and gave continued assurance of its knowledge of these statutes (Evid. Code, § 644) that provide that regulations are presumed valid and that official conduct is presumed to have been properly performed. Yet in its memorandum opinion the court plainly treated the ease as one in which the burden of proof was on the Administrator. When this was made evident at the hearing on the settlement of findings of fact and conclusions of law, the trial court recognized that it had misled the parties and candidly admitted its error in its findings.
After a careful review of the transcript of the September 6 hearing, the court stated “the court did not indicate that the Administrator had the burden of explanation and in fact indicated that the plaintiffs liad such a burden.” The court thereupon proposed and eventually signed the following finding of fact:
“The Administrator did not provide explanations convincing to the court of the lack of feasibility of proportionate reductions in service. The court did indicate to the parties at *774the hearing that the burden of proof in this regard rested on the plaintiffs.” (Italics added.)
The effect of shifting the burden of proof to defendants permitted the court to substitute its judgment for that of the Administrator on the question of the feasibility of proportionate reductions in services. In doing this, the trial court abused its discretion and committed reversible error.
Irrespective of the error of improperly placing the burden of proof on defendants, plaintiffs did have the burden of proof and failed to meet or sustain that burden. The burden of proof was not on the Administrator to show the nonfeasibility of proportionate reductions. The burden was on the plaintiffs to show the feasibility of proportionate reductions. (This is so even though defendants may have had superior knowledge of the workings of the program.) By law this burden was assumed by plaintiffs and by law remained with them. Plaintiffs sought to evade and avoid this burden of proof by simply presenting the regulations and pointing out that certain services were eliminated rather than proportionately reduced.
Plaintiffs did not demonstrate that the Administrator’s determination that it was not feasible to proportionately reduce services (and that the elimination of some services was then necessary) constituted an arbitrary and capricious abuse of the discretion vested in him by the Legislature.
The trial court recognized that plaintiffs had not met this burden of proof and plainly and pointedly refused to find that “defendants’ determination that proportionate reductions were not feasible was arbitrary, capricious and constituted an abuse of discretion.” It rejected a proposed conclusion of law to that effect.
The next problem is whether the law requires the elimination of the medically needy from the program before any reductions are permitted in the minimum coverage provided to recipients of public assistance. The trial court held that the medically needy had to be eliminated before services were cut. It relied on section 14105, the last paragraph of which provides:
“Notwithstanding the provisions of the preceding paragraph, and in accordance with the intent of this chapter and Chapter 8 (commencing with Section 14500), the director, with respect to medically indigent persons, may limit, by appropriate classifications, the number of medically indigent persons eligible, and may limit the scope and kinds of basic health care and extended health services to which such per*775sons are entitled, to the extent necessary to operate programs under this part within the limits of appropriated funds. When and if necessary, such action shall be taken by the director with the advice of the Health Review and Program Council and in ways consistent with the requirements of the Federal Social Security Act. ’' In other words, the section provides that if there are insufficient funds, certain groups of people may be removed from the program.
The 1967 statute (chapter 1421, supra) unquestionably provided insufficient funds to maintain the Medi-Cal Program at previous levels. Cuts in the program were obviously required. Chapter 1421 constituted a conscious legislative attempt to give direction to the Administrator on how to make the necessary program cuts. The important part of chapter 1421 is the Legislature’s adoption of section 14103.7, which provides for reducing services (proportionately, if feasible), rather than persons.
Thus, the conflict. The earlier statute, section 14105, says eliminate people. The latter enactment, section 14103.7, says reduce or eliminate services. The Administrator had to resolve this conflict and develop regulations which would meet the fiscal problem. He did so by examining the expressions of legislative intent and he interpreted the more recent provisions of section 14103.7 as having been intended by the Legislature to modify the earlier provisions of section 14105. Accordingly, he reduced services rather than totally removing the medically indigent from the Medi-Cal Program. Logic, as well as consistency, supports the Administrator’s interpretation and the applicability of section 14103.7.
Even if there is no conflict between sections 14105 and 14103.7, the problem of whether persons should be eliminated rests on an interpretation of the last paragraph of section 14105, which says the elimination of persons is discretionary rather than mandatory. That is, it provides that if fiscal limitations require, the director may limit the scope and kinds of health care services to be made available to the medically indigent. The paragraph does not require the director to take such action. Thus, the first sentence of the paragraph repeatedly uses the word “may,” indicating a legislative intent to confer discretion upon the director. Other more expressive words could have been found had the Legislature intended to direct that he remove the medically indigent, regardless of other considerations, at the first sign of fiscal difficulties. Moreover, in this connection the first sentence of the last para*776graph should be compared with the last sentence of the last paragraph. Thus, in the last sentence the word “shall” is used when the Legislature directs that the director must secure the advice of the Health Review and Program Council if he exercises the discretion granted to him by the first sentence of the paragraph. This usage of the terms “may” and “shall” within the same paragraph evidences a carefully expressed legislative intent to grant discretion to the Administrator insofar as the elimination of medically indigent persons is concerned, but to not give the Administrator any discretion insofar as securing the advice of the Council.
Finally, as previously noted, the record demonstrates that the Administrator did consider eliminating the medically needy and rejected that alternative only after a careful weighing of all the available facts and after a full consideration of the fiscal problem and its legislative history. The effects of eliminating the medically needy were set forth in great detail in the Medi-Cal Fiscal and Expenditure Program Summary which was attached to Exhibit A as a part of Mr. Stewart’s affidavit. It was recognized that “the elimination of that group (over 160,000 persons) would have resulted in an annual cost reduction to the Medi-Cal Program of about $145 million. ’ ’
Mr. Mulder in his testimony continued: “[B]ut, at the same time, to the extent that this group of individuals would be in need of basic services such as hospitalization and physicians’ services and x-ray and laboratory services and nursing home services, they would still have a continued need for these services; still they would have a continuing inability to completely pay for the services, and therefore would rely for the services upon county government, under the provisions of the indigent statutes, which, therefore, would have the effect of losing all federal money that is now being obtained by providing these services through the Medi-Cal program and placing the burden upon the local tax rates without relief from the Medi-Cal program, because the Legislature has closed the relief to counties for the hospital system at the amount of $44,000,000 for the current fiscal term. ’ ’
With the adoption of the Medi-Cal Program in 1966, the counties feared an enormous expansion of county costs. As a pre-condition to their providing legislative support to the enactment of this program, their representatives insisted on inclusion within the program of guarantees that would limit their health care costs. The administration and the Legisla*777ture agreed. That understanding was embodied in section 14150.1. In addition, the State agreed to provide $44 million in general fund revenues to assist the counties in providing health care to non-Medi-Cal beneficiaries. This latter provision, referred to by Mr. Mulder, is found in section 14150.2 (added by ch. 104, Stats. 1967).
The administrator, in his deliberations, was well aware that with the advent of both the Medi-Care and Medi-Cal Programs, counties had expanded their health care services, had instituted new, substantial and on-going programs involving large expenditures and had taken important steps to transform county hospitals into general hospitals. The Administrator knew of these factors and desired to forestall and prevent, if possible, any violation of what he deemed to be assurances that had been made to the counties of the legislative intent to stabilize county and state costs (as contained in §§ 14150.1 and 14150.2) and did not wish to reverse the trend towards the establishment of county hospitals as general hospitals as a part of the realization of the “mainstream concept” embodied in sections 14000, subdivision (b), and 14000.2.
The Administrator not only believed that the elimination of the medically needy would violate these principles but would also cause an increase in state costs in mental institutions, thus violating that portion of section 14150.2 which provides that “In no case shall the administrator approve any plan which increases costs to the state above the limit on expenditures specified in subdivision (c) of this section.”
In addition, the Administrator of course recognized the cruel irony that would result in depriving the very group which has managed to maintain itself on meager resources without the aid of public assistance of the free choice of physicians offered in the mainstream of medical care while affording this wide range of services to recipients of public assistance.
The provisions of the Medi-Cal Program taken as a whole plainly require the Administrator to be concerned with the impact of health care costs upon the entire California popula: tion, not merely upon the Health Care Deposit Fund. After considering all of these factors he concluded that the loss of federal sharing funds plus the shift of fiscal liability to the counties’ tax resources, together with a marked retreat from the mainstream medical care concept, would result in a situation not consistent with the overall legislative objectives and purposes. Accordingly, he concluded that in resolving the *778contradictory guidelines contained in sections 14103.7 and 14105, namely, the conflict between eliminating services and eliminating persons, greater weight and attention should properly be placed on the more recent expression of legislative intent, not only because it was more recent but also because it was part of a legislative measure specifically tailored and designed to guide the Administrator in making reductions in the program.
Furthermore, even if there was no implied modification or repeal of section 14105, still that section confers discretion upon the Administrator, which he exercised in a sound and logical manner.
The Legislature did not direct that certain services, i.e., the ‘1 Basic Five” or ‘Minimum Coverage,” be provided regardless of the fiscal situation. Services may be reduced before eliminating the medically indigent from the program, and the Administrator’s decisions concerning the cuts and services were neither arbitrary nor capricious. The further issue of whether the terms “minimum coverage” or “basic five” services encompass the full gamut of all services that are available in physicians’ offices, hospitals and nursing homes depends upon the interpretation of sections 14105, 14053 and 14056 plus chapter 1421, supra. The fourth paragraph of section 14105 provides that:
“In establishing the scope of services to be provided, the director shall provide for recipients [of public assistance] at least for a minimum coverage as defined in Section 14056, and insofar as possible shall include other health care and related remedial or preventive services giving priority to those services which are considered to have the greatest value in preventing or reducing the likelihood of future high cost medical services. ’ ’
Section 14056 reads: “ 'Minimum coverage ’ means care or coverage specified in paragraphs (1), (2), (3), (4), and (5) of Section 14053.”
The minimum coverage referred to in section 14056 thus constitutes the first five items in section 14053, which reads:
“ 'Health care and related remedial or preventive service’ means:
“1. Inpatient hospital services (other than services in a medical institution for tuberculosis or mental diseases) in and by a medical institution or facility operated by, or licensed by, the United States, one of the several states, a political subdivision of a state, the State Department of Public Health, *779or exempt from such licensure pursuant to subdivision (c) of Section 1415 of the Health and Safety Code.
"2. Outpatient hospital services.
‘"3. Laboratory and X-ray services.
“4. Skilled nursing home services (other than services in a medical institution for tuberculosis or mental diseases), as defined for the purpose of securing federal approval of a plan under Title XIX of the Federal Social Security Act, to persons 21 years of age or older.
“5. Physicians’ services, whether furnished in the office, the patient’s home, a hospital, or a skilled nursing home, or elsewhere.
"6. Medical care, or any other type of remedial care recognized under the laws of this state, furnished by licensed practitioners within the scope of their practice as defined by the laws of this state. Other remedial care shall include, without being limited to, treatment by prayer or healing by spiritual means in the practice of any church or religious denomination insofar as these can be encompassed by federal participation under an approved plan.
‘7. Home health care services.
“8. Private duty nursing services.
1 ‘ 9. Outpatient clinic services.
“10. Dental services.
‘11. Physical therapy and related services.
‘112. Prescribed drugs, dentures, and prosthetic devices ; and eye glasses prescribed by a physician skilled in the diseases of the eye or by an optometrist, whichever the individual may select.
“13. Other diagnostic, screening, preventive, or rehabilitative services.
“14. Inpatient hospital services and skilled nursing home services for individuals 65 years of age or over in an institution for tuberculosis or mental diseases except that basic health care shall not include any of the care and services specified in paragraphs 1 through 14 for any person who is an inmate of a public custodial or correctional institution or any person who has not attained 65 years of age and is a patient in a medical institution for tuberculosis or mental diseases.
“15. Except that such term shall not include
“a. Any care or services for any individual who is an inmate of a public institution (except as a patient in a medical institution) ; or
“b. Any care or services for any individual who has not *780attained 65 years of age and who is a patient in an institution for tuberculosis or mental diseases. ’ ’
Section 14053 is a part of a group of statutory definitions. It sets forth a listing of a practically unlimited range of health care services that might conceivably be provided if facilities and funds were unlimited. This listing of categories of health care and related services lacks any clear cut definition of the various categories of service. It simply consists of a grouping of very broad categories of medical care. Although unquestionably some services in each of the first five categories should be available, neither section 14053 nor any other statute prescribes the specific quantities or typ/es of such services that are required. Certainly the scope of services within the categories constituting the minimum coverage to public assistance recipients can be and has in fact been expanded when funds were available. Conversely, when funds are in short supply the scope of services should be able to contract. Neither the expansion nor the contraction requires any change in the statutory language.
Although the Basic Five services are recognized as constituting the foundation of a sound medical program, the Administrator has long recognized that such services have never been unrestricted and that the minimum adequate standard of care (which is essentially what the Basie Five services are designed to provide) must be interpreted with reference to available funds. Recognizing that all previous services could not be financed in toto with available funds, the Administrator determined that it was necessary to further restrict some of the services falling within the first five categories that had previously been provided to recipients of public assistance, such as, the providing of in-patient psychiatric care and eye refractions except following eye surgery.
The emergency regulations represent additional limitations on what is covered within certain of the Basic Five services but they do not constitute a denial or illegal reduction of the Basic Five services.
It would seem that if the Administrator’s original regulations concerning what is covered by the Basic Five could not be changed regardless of the fiscal situation, then in effect the Legislature has created a conflict by virtue of appropriating insufficient money to pay for the Basic Five services. The Legislature intended, to allow such reasonable definitional adjustments in the Basic Five as were necessary to meet the fiscal problem and did not intend to forever freeze into the *781law either the definitions of the Basie Five services which were adopted by the Administrator immediately subsequent to the adoption of the law setting forth the Basic Five services nor the definitions of the Basic Five services which were in effect on August 31, 1967, immediately prior to the adoption of the regulations in question.
However, the trial court held that the law (and particularly sections 14105, 14056 and 14053) does not permit any reduction in the so-called “minimum coverage” provided to recipients of public assistance. The problem with this position is that it rests on the unartieulated assumption that the term “minimum coverage” constitutes a sort of inviolate package from which nothing can be removed without violating the law and on the assumption that there is a fixed and immutable definition of each of the services included in the term. No such definition has been found.
It could be contended that when the Legislature adopted section 14053 it also adopted the subsequent administrative rulings which set forth the specific services that would be provided as a part of the “minimum coverage” and that any subsequent change or diminution in coverage would somehow violate the definitions so incorporated. This, however, is plainly contrary to the general tenor and purpose not only of the 1967 amendments to the law but to the entire health care law. It is apparent that several of the Basic Five services and especially physicians’ services could be defined in any number of ways. No one apparently has ever contended that physicians’ services must necessarily, and by legislative mandate, be considered to include every possible service which can be rendered by a physician at any time or place. For example, if, on August 31, 1967, cosmetic surgery was previously authorized under the regulations, would this mean that thereafter the Administrator could not, without violating the law, deny cosmetic surgery to recipients of public assistance regardless of the availability of funds ? Certainly cosmetic surgery would involve either “inpatient hospital services” or “outpatient hospital services” and “physicians’ services,” all of which are included in the Basic Five. Yet cosmetic surgery has never been provided to Medi-Cal beneficiaries. (See 22 Cal.Admin. Code, § 41305(a) (2) as it read prior to its amendment effective September 1,1967.)
Lacking a clear statement of the scope of the term “minimum coverage,” a holding that the regulations illegally reduced minimum coverage is obviously lacking in logic.
*782In Ehrenreich v. Shelton, 213 Cal.App.2d 376, 379 [28 Cal.Rptr. 855], the court said: “In a number of cases, however, it has been held that where the record reflects that in arriving at the result of which appellant complains, the trial court relied upon erroneous reasoning and except for that reliance would probably not have reached such result, then a judgment may properly be reversed. ’ ’
In the absence of a clear legislative definition, which does not exist, or a commonly accepted professional definition, the Administrator was by necessary implication given the authority to adopt definitions in light of the program objectives, medical practice, the utilization of mainstream medical care generally, and the legislatively imposed fiscal limitations. The Administrator did, by his regulations, determine what services could be allowed as the Basic Five. The discussion above shows that his definitions and limitations were reasonable ; certainly they were not arbitrary or capricious or entirely lacking in evidentiary support. Therefore, the restrictions on the Basic Five should be upheld.
The scope of judicial review is whether the quasi-legislative action of the Administrator has been proved to be arbitrary or capricious. This has not been done in the instant case. On the contrary, the record demonstrates that the emergency regulations were reasonable, valid and proper. Mr. Spencer Williams, Administrator of the Health and Welfare Agency, has exercised in a careful and excellent manner the powers conferred upon him by the legislative branch of the government.
I would reverse the judgment of the superior court and direct it to hold defendants’ regulations valid.

 All section references herein are to the Welfare and Institutions Code except as hereinafter noted.

 The ‘ ‘ Basie Five ’ ’ are the first five items listed in section 14053. They are physicians’ services, hospital inpatient services, hospital out-patient services, nursing home care, and laboratory and X-ray services. They are also sometimes referred to as the “minimum coverage” because of the provisions of section 14056.