Court Opinion

ID: 1040988
Source: CourtListenerOpinion
Date Created: 2013-09-17 17:30:20.180347+00
Date Added: 2024-06-11T15:27:32.937362
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

CALIFORNIA ASSOCIATION OF        No. 10-17574
RURAL HEALTH CLINICS;
AVENAL COMMUNITY                    D.C. No.
HEALTH CENTER,                  2:10-CV-00759-
       Plaintiffs-Appellants,      FCD-EFB

             v.

TOBY DOUGLAS,* Director of
the California Department of
Health Care Services, MARI
CANTWELL,** Chief Deputy
Director for Health Care
Programs of the California
Department of Health Care
Services; CALIFORNIA
DEPARTMENT OF HEALTH
CARE SERVICES,
        Defendants-Appellees.
2 CAL. ASS’N OF RURAL HEALTH CLINICS V. DOUGLAS

 CALIFORNIA ASSOCIATION OF                     No. 10-17622
 RURAL HEALTH CLINICS;
 AVENAL COMMUNITY                                D.C. No.
 HEALTH CENTER,                              2:10-CV-00759-
         Plaintiffs-Appellees,                  FCD-EFB

                  v.
                                            ORDER AND
                       *
 TOBY DOUGLAS, Director of                AMENDED OPINION
 the California Department of
 Health Care Services, MARI
 CANTWELL,** Chief Deputy
 Director for Health Care
 Programs of the California
 Department of Health Care
 Services; CALIFORNIA
 DEPARTMENT OF HEALTH
 CARE SERVICES,
        Defendants-Appellants.

        Appeal from the United States District Court
           for the Eastern District of California
     Frank C. Damrell, Senior District Judge, Presiding

    *
      Pursuant to Federal Rule of Appellate Procedure 43(c)(2), Toby
Douglas is substituted for David Maxwell-Jolly, as Director of the
California Department of Health Care Services.
    **
      Pursuant to Federal Rule of Appellate Procedure 43(c)(2), Mari
Cantwell is substituted for Toby Douglas, as Deputy Director for Health
Care Programs of the California Department of Health Care Services.
    CAL. ASS’N OF RURAL HEALTH CLINICS V. DOUGLAS 3

                  Argued and Submitted
        December 6, 2012—San Francisco, California

                      Filed July 5, 2013
                  Amended September 17, 2013

      Before: Dorothy W. Nelson, A. Wallace Tashima,
           and Mary H. Murguia, Circuit Judges.

                             Order;
                 Opinion by Judge D.W. Nelson

                           SUMMARY***

                            Medicaid Act

    The panel filed an order amending its opinion filed on
July 5, 2013, and denying a petition for panel rehearing and
rehearing en banc in a case challenging the validity under the
Medicaid Act of California legislation that eliminated
coverage for certain healthcare services, including adult
dental, podiatry, optometry, and chiropractic services,
provided by rural health clinics and federally qualified health
centers.

   In the amended opinion, the panel reversed the district
court’s summary judgment in favor of the defendants. The
panel affirmed the district court’s holding that the California
Association of Rural Health Clinics and a federally qualified

  ***
      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 CAL. ASS’N OF RURAL HEALTH CLINICS V. DOUGLAS

health center had a private right of action to bring a claim
pursuant to 42 U.S.C. § 1983 challenging the validity of
California Welfare and Institutions Code § 14131.10.
Following other circuits, the panel held that a private right of
action exists to enforce rights created by 42 U.S.C.
§ 1396a(bb). The panel reversed the district court’s
interpretation of the Medicaid Act and held that § 14131.10
impermissibly eliminated mandatory services from coverage.
The panel held that it did not owe Chevron deference to the
approval granted by the Centers for Medicare and Medicaid
Services after the district court entered judgment. The panel
concluded that the California Department of Health Services’
cross-appeal from the grant of injunctive and declaratory
relief was moot.

                         COUNSEL

Kathryn Ellen Doi (argued), Murphy Austin Adams
Schoenfeld LLP, Sacramento, California, for Plaintiffs-
Appellants–Cross-Appellees.

Susan M. Carson (argued) and Kara Read-Spangler, Deputy
Attorneys General, Office of the California Attorney General,
Sacramento, California, for Defendants-Appellees–Cross-
Appellants.

Matthew Sidney Freedus, Feldesman Tucker Leifer Fidell
LLP, Washington, D.C., for Amicus Curiae National
Association of Community Health Centers.
   CAL. ASS’N OF RURAL HEALTH CLINICS V. DOUGLAS 5

Elizabeth Charisse Saviano, Law Offices of Elizabeth C.
Saviano, Oakland, California, for Amici Curiae California
Primary Care Association, San Francisco Community Clinic
Consortium, California Consortium for Urban Indian Health,
Center for Oral Health and Alameda Health Consortium.

                          ORDER

   The opinion filed on July 5, 2013 is amended as follows:

    On page 8 of the slip opinion, the second sentence of the
third paragraph, which reads, “We reverse the district court’s
holding that the Clinics have a private right of action to
challenge the Department’s implementation of the SPA prior
to obtaining approval,” is stricken.

   An amended opinion is filed concurrently with this order.

    With this amendment, the panel unanimously votes to
deny the petition for panel rehearing. Judge Murguia votes
to deny the petition for rehearing en banc, and Judges Nelson
and Tashima so recommend. The full court has been advised
of the petition for rehearing and rehearing en banc, and no
judge has requested a vote on whether to rehear the matter en
banc. Fed. R. App. P. 35.

    The petition for panel rehearing and rehearing en banc is
DENIED. No further petitions for en banc or panel rehearing
shall be entertained.

   IT IS SO ORDERED.
6 CAL. ASS’N OF RURAL HEALTH CLINICS V. DOUGLAS

                         OPINION

D.W. NELSON, Senior Circuit Judge:

    This case concerns a clash of competing interests: the
mission of publicly-funded health clinics to provide a panoply
of medical services to under-served communities on the one
hand, and California’s persistent budget woes on the other.
We must decide whether California legislation that eliminates
coverage for certain healthcare services, including adult
dental, podiatry, optometry and chiropractic services,
conflicts with the Medicaid Act, 42 U.S.C. §§ 1396, et seq.,
and is therefore invalid. We hold that Medicaid prohibits the
limitations adopted by the California legislature and,
accordingly, we reverse and remand.

I. Background

    Title XIX of the Social Security Act, referred to as the
Medicaid Act, is a cooperative federal-state program through
which the federal government provides financial assistance to
states so that they can furnish medical care to low-income
individuals. Wilder v. Va. Hosp. Ass’n, 496 U.S. 498, 502
(1990) (citing 42 U.S.C. § 1396), superseded on other
grounds by statute; 42 C.F.R. § 430.0. Medicaid is jointly
financed by federal and state governments and administered
by the states through state plans approved by the Secretary of
Health and Human Services. 42 U.S.C. § 1396a; 42 C.F.R.
§ 430.0.

    States are not required to participate in Medicaid, but
those states that opt in to the system must comply with both
the statutory requirements imposed by Medicaid and with
regulations promulgated by the Secretary of Health and
   CAL. ASS’N OF RURAL HEALTH CLINICS V. DOUGLAS 7

Human Services. Alaska Dep’t of Health & Soc. Servs. v.
Ctrs. for Medicare & Medicaid Servs., 424 F.3d 931, 935 (9th
Cir. 2005); see also 42 U.S.C. § 1396c; 42 C.F.R. § 430.35.
As part of this requirement, states must cover certain services
in their plans. 42 U.S.C. §§ 1396c, 1396a(a)(10) (cross-
referencing § 1396d(a)(1)–(5), (17), (21) & (28)); 42 C.F.R.
§§ 430.0, 430.35. These services include those provided by
rural health clinics—health centers that provide services in
rural areas with insufficient numbers of healthcare
practitioners, and Federally qualified health centers—health
centers that serve a medically under-served population.
42 U.S.C. §§ 254b(a)(1), 1396d(l)(1)–(2), 1395x(aa)(2), (4).
In addition, each state may opt to cover additional services or
may extend services to populations that may not otherwise be
covered. See id. § 1396d(a). Each state has discretion to
create reasonable standards for determining eligibility for
medical services and the extent of those services, provided
those standards comply with federal law. Schweiker v. Gray
Panthers, 453 U.S. 34, 36–37 (1981).

    California participates in Medicaid through the California
Medical Assistance Program (“Medi-Cal”), which the
California Department of Health Services (“Department”)
administers. Cal. Welf. & Inst. Code §§ 10740, 14000, et
seq. The Department is responsible for establishing and
complying with the state plan and must submit any state plan
amendments (“SPA”) to the Centers for Medicare and
Medicaid Services (“CMS”) for review and approval.
42 U.S.C. § 1396a(a)(5); 42 C.F.R. §§ 430.10, 430.12,
430.14, 431.10. The Department also ensures that Medi-Cal
provides covered services to eligible beneficiaries and
reimburses providers for their services. 42 C.F.R. § 431.10.
8 CAL. ASS’N OF RURAL HEALTH CLINICS V. DOUGLAS

    In February 2009, California found itself in the throes of
a budget crisis. As a cost-cutting measure, the state
legislature passed California Welfare and Institutions Code
§ 14131.10 (“§ 14131.10”), which eliminated certain Medi-
Cal benefits that the state deemed optional, including adult
dental, podiatry, optometry and chiropractic services. The
Department amended California’s state plan accordingly, and
submitted the SPA for approval. In the meantime, the
Department discontinued reimbursement for services listed in
§ 14131.10.

    The California Association of Rural Health Clinics and
the Avenal Community Health Center, a Federally qualified
health center, (collectively, the “Clinics”), challenged the
implementation of § 14131.10 under a federal preemption
theory. The Clinics sought declaratory and injunctive relief
to halt the implementation of § 14131.10, arguing that federal
law prohibits the elimination of coverage of certain services,
including adult dental, podiatry, optometry and chiropractic
services. The Clinics also contended that the Department
violated federal law by failing to obtain approval of the SPA
before discontinuing reimbursement.

    The Department countered that the Clinics did not have
a private right of action to bring either claim, that federal law
permitted the exclusion of the optional services covered by
§ 14131.10, and that the Department was not required to
obtain approval of the amendments to the state plan before
implementing those amendments.

    The district court held that the Clinics had a private right
of action to bring their claims, that § 14131.10 was not in
conflict with Medicaid’s requirements, and that the
Department was required to obtain approval for amendments
   CAL. ASS’N OF RURAL HEALTH CLINICS V. DOUGLAS 9

to the state plan before implementing the changes. The court
therefore granted declaratory relief to the Clinics on the SPA
claim and enjoined further enforcement of § 14131.10
pending CMS’s approval of the SPA.

    After the district court entered judgment, but prior to the
briefing on appeal, CMS approved the Department’s SPA
with a retroactive effective date of July 1, 2009. This timely
appeal followed.

    The Clinics challenge the district court’s holding that
§ 14131.10 is consistent with the Medicaid Act. The
Department cross-appeals, challenging the Clinics’ private
right of action to pursue their claims, as well as the injunctive
relief granted to the Clinics on their SPA claim.

    We have jurisdiction pursuant to 28 U.S.C. § 1291. We
affirm that the Clinics have a private right of action to bring
a claim pursuant to 42 U.S.C. § 1983 challenging the validity
of § 14131.10. But we reverse the district court’s
interpretation of the Medicaid Act and hold that § 14131.10
impermissibly eliminates mandatory services from coverage.

II. Standard of Review

    We review de novo a grant of declaratory relief, a grant
of summary judgment and the district court’s interpretation of
the Medicaid Act. Katie A. v. L.A. Cnty., 481 F.3d 1150,
1157 (9th Cir. 2007); Ablang v. Reno, 52 F.3d 801, 803 (9th
Cir. 1995).
10 CAL. ASS’N OF RURAL HEALTH CLINICS V. DOUGLAS

III.      Discussion

       A. Private Right of Action to Bring § 1983 Claim

    Relying on 42 U.S.C. § 1983, the Clinics challenge
§ 14131.10 as preempted by federal law. The Department
contends that the Clinics do not have a private right of action
to challenge § 14131.10 because Congress did not confer
entitlements on them when it enacted 42 U.S.C. § 1396a(bb),
the Medicaid provision at issue.

    Section 1983 “safeguards certain rights conferred by
federal statutes,” but a § 1983 plaintiff “must assert the
violation of a federal right, not merely a violation of federal
law.” Blessing v. Freestone, 520 U.S. 329, 340 (1997).
Three factors help determine whether a particular statutory
provision gives rise to a federal right.

          First, Congress must have intended that
          the provision in question benefit the plaintiff.
          Second, the plaintiff must demonstrate that
          the right assertedly protected by the statute
          is not so vague and amorphous that
          its enforcement would strain judicial
          competence.       Third, the statute must
          unambiguously impose a binding obligation
          on the States. In other words, the provision
          giving rise to the asserted right must be
          couched in mandatory, rather than precatory,
          terms.

Id. at 340–41 (citations and quotations omitted). The
question is “whether or not Congress intended to confer
individual rights upon a class of beneficiaries” with “rights-
      CAL. ASS’N OF RURAL HEALTH CLINICS V. DOUGLAS 11

creating language.” Gonzaga Univ. v. Doe, 536 U.S. 273,
285, 287 (2002) (citations and quotations omitted).

    Whether the Clinics have a private right of action under
§ 1983 to challenge § 14131.10 is a novel issue in this
circuit.1 We do not write on an entirely blank slate, however.
In 1982, we upheld an injunction that prevented the
Washington State Department of Social and Health Services
from enforcing a state regulation that conflicted with the
federally approved Washington State Medicaid Plan. Wash.
State Health Facilities Ass’n v. Wash. Dep’t of Soc. & Health
Servs., 698 F.2d 964 (9th Cir. 1982) (per curiam), abrogated
on other grounds by Dev. Serv. Network v. Douglas, 666 F.3d
540, 545–46 (9th Cir. 2011). In that case we decided that the
Medicaid Act did in fact confer a private right of action on
the provider to enforce rights created by 42 U.S.C.
§ 1396a(a)(13)(E), which concerned the method for
reimbursing nursing care facilities that accept Medicaid
patients. Id. at 965 & n.4.

    We made the same assumption in Oregon Association of
Homes for the Aging, Inc. v. State of Oregon, 5 F.3d 1239,
1240, 1244 (9th Cir. 1993). There, we held that a temporary
rule reclassifying nursing services, which had the effect of
reducing significantly the rate of reimbursement provided for
those services, was invalid because the state did not submit
the change for federal approval. Id. at 1244. The opinion did

  1
    Several other circuits have held that a private right of action exists to
enforce rights created by 42 U.S.C. § 1396a(bb), the very provision before
us. See, e.g., Concilio de Salud Integral de Loiza, Inc. v. Perez-Perdomo,
551 F.3d 10, 17–18 (1st Cir. 2008); Pee Dee Health Care, P.A. v. Sanford,
509 F.3d 204, 210–12 (4th Cir. 2007); Rio Grande Cmty. Health Ctr., Inc.
v. Rullan, 397 F.3d 56, 74–75 & n.12 (1st Cir. 2005).
12 CAL. ASS’N OF RURAL HEALTH CLINICS V. DOUGLAS

not discuss, but instead assumed, that a private right of action
existed under § 1983 to challenge the state’s failure to submit
amendments to the state plan for federal approval before
implementing those changes as required by 42 U.S.C.
§ 1396a(a). Id. at 1240, 1244.

    And in Exeter Memorial Hospital Association v. Belshe
(Exeter II), we adopted the district court’s opinion, which
noted that the parties agreed that a § 1983 action was
available to challenge the state’s failure to obtain approval of
amendments to a state plan before implementing those
changes under the now-repealed Boren Amendment.
145 F.3d 1106, 1108 (9th Cir. 1998), abrogated on other
grounds by Dev. Serv. Network, 666 F.3d at 546.

    Although we held in Developmental Services Network v.
Douglas, 666 F.3d at 540, that Medicaid providers did not
have a private right of action, there we considered a different
provision of the Medicaid Act than the one now before us. In
that case, we had to decide whether Medicaid providers had
a private right of action to challenge California legislation
setting provider reimbursement rates. Id. at 542–43. The
providers argued that the California provision conflicted with
42 U.S.C. § 1396a(a)(30)(A), a provision that required the
state to consider the quality of care provided in setting
Medicaid payment rates. Id. at 543. We held that the
providers did not have a private right of action because “no
provision appear[ed] to unambiguously confer a right upon
the Providers” and because the statutory provision requiring
the submission of state plan amendments to federal
authorities “appear[ed] to be a general or administrative
provision rather than one which confers individual
entitlements.” Id. at 548.
   CAL. ASS’N OF RURAL HEALTH CLINICS V. DOUGLAS 13

    In Developmental Services, we also noted that although
Washington State Health Facilities and Oregon Homes for
the Aging allowed “for a § 1983 action, . . . neither actually
discussed the question about what specific provision
conferred a cause of action upon providers; they were quite
general, even ambiguous, in that regard.” Id. at 547. In
addition, we recounted that the parties agreed in Exeter II that
a § 1983 action was available. Id. at 547–48. And all three
cases preceded Gonzaga University, which clarified the
requirements for bringing a § 1983 action. Id. at 548; see
also Gonzaga Univ., 536 U.S. at 285, 287 (holding that the
question is “whether or not Congress intended to confer
individual rights upon a class of beneficiaries” with “‘rights-
creating’ language”).

     Against this backdrop, we must decide whether Congress
intended to confer on the Clinics a private right of action to
challenge § 14131.10 as violating 42 U.S.C. § 1396a(bb)(1).
It did. Again, we must be clear at the outset that none of the
cases we have discussed considered whether a § 1983 action
exists to contend that a state had violated 42 U.S.C.
§ 1396a(bb)(1), the statutory provision before us. That
provision reads: “Beginning with fiscal year 2001 with
respect to services furnished on or after January 1, 2001, and
each succeeding fiscal year, the State plan shall provide for
payment for services . . . furnished by a Federally-qualified
health center and services . . . furnished by a rural health
clinic in accordance with the provisions of this subsection.”
42 U.S.C. § 1396a(bb)(1); see also § 1396a(bb)(5)–(6)
(setting forth procedures for payment of services). This
language persuades us that Congress intended to “confer
individual rights upon” the Clinics with specific “rights-
creating language.” Gonzaga, 536 U.S. at 285, 287 (internal
quotation marks omitted). First, the statutory text refers to
14 CAL. ASS’N OF RURAL HEALTH CLINICS V. DOUGLAS

rural health clinics and Federally qualified health centers
specifically by name, thus making the Clinics named
beneficiaries. Blessing, 520 U.S. at 340–41. Further, the
right to payment for services rendered is neither vague nor
amorphous; the statute plainly requires state plans to pay for
services furnished by FQHCs and RHCs. Id. Finally, the
statute imposes a mandatory obligation, stating that the state
plan “shall provide for payment for services.” 42 U.S.C.
§ 1396a(bb)(1) (emphasis added).

    Because the language contained in 42 U.S.C.
§ 1396a(bb)(1) is not general or administrative but contains
specific rights-creating language, it reflects Congress’s intent
to “create new rights enforceable under § 1983 . . . in clear
and unambiguous terms.” Gonzaga, 536 U.S. at 290; see also
Dev. Servs., 666 F.3d at 547–48. Thus, we now join several
of our sister circuits in holding that Medicaid providers have
a private right of action to bring a § 1983 claim to enforce
42 U.S.C. § 1396a(bb).

   B. The Medicaid Act Prohibits the Limitations
      Contained in § 14131.10

       1. We Do Not Accord Chevron Deference to CMS
          Approval

    After the district court entered judgment, CMS approved
the SPA the Clinics challenge on appeal. We ordered the
parties to brief the effect of this approval on the pending
appeal and to address the level of deference, if any, we owed
CMS’s approval of the SPA.

   It is clear that we cannot defer to CMS on any issue about
which “Congress has directly spoken,” such that “the intent
   CAL. ASS’N OF RURAL HEALTH CLINICS V. DOUGLAS 15

of Congress is clear.” See Chevron U.S.A. Inc. v. Natural
Res. Def. Council, Inc., 467 U.S. 837, 842 (1984). While the
question of statutory interpretation before us is difficult, we
cannot fairly say that Congress was “silent or ambiguous with
respect to the issue at hand.” Alaska Dep’t of Health,
424 F.3d at 939. Thus, we hold that Chevron deference does
not apply, and we therefore do not defer to CMS’s approval
of the challenged SPA.

    In considering whether Chevron deference applies, we
must first identify the “precise question at issue.” Chevron,
467 U.S. at 842. As discussed, Medicaid requires state plans
to cover, among other things, “rural health clinic services”
and “Federally-qualified health center services.” 42 U.S.C.
§§ 254b(a)(1), 1396d(l)(1)–(2), 1395x(aa)(2), (4). Both
these categories of services incorporate “physicians’
services.” Compare 42 U.S.C. § 1395x(r)(1)–(5) with
§ 1396d(a)(5)(A). California reads the Medicaid Act as
permitting it to reimburse RHCs and FQHCs for only those
“physicians’ services” performed by doctors of medicine and
osteopathy. Cal. Welf. & Inst. Code § 14131.10. Physicians’
services provided by other types of physicians, including
dentists, podiatrists, optometrists and chiropractors, are no
longer covered. Id. CMS implicitly approved California’s
interpretation of the Medicaid Act when it approved the
Department’s SPA post-judgment.

    The question we must answer is whether Congress has
defined unambiguously the scope of physicians’ services for
which the Clinics must be reimbursed. As we discuss in the
following section, the statutory text provides a clear answer,
and, thus, we do not defer to CMS’s approval of the SPA.
16 CAL. ASS’N OF RURAL HEALTH CLINICS V. DOUGLAS

    Our recent decision in Managed Pharmacy Care v.
Sebelius, 716 F.3d 1235, (9th Cir. 2013), does not alter our
view. There, we considered whether reductions in Medi-Cal
reimbursement rates were consistent with Medicaid’s
requirement “that payments are consistent with efficiency,
economy, and quality of care.” 42 U.S.C. § 1396a(a)(30)(A).
We described the statutory language there as “amorphous”
and “broad and diffuse.” Managed Pharmacy, 716 F.3d at
1247–48 (quoting Sanchez v. Johnson, 416 F.3d 1051, 1060
(9th Cir. 2005)). We noted that the statute “uses words like
‘consistent,’ ‘sufficient,’ ‘efficiency,’ and ‘economy’” but
“without describing any specific steps a State must take in
order to meet those standards.” Id. Thus, the imprecise
language in question made the agency’s expertise relevant to
determining how to understand and interpret the statute. Id.

    Here, however, the statutory text does not use vague and
amorphous words. Instead, it outlines specifically the types
of services provided by RHCs and FQHCs that a state plan
must cover. “Congress has directly spoken to the precise
question at issue.” Chevron, 467 U.S. at 842. Because “the
intent of Congress is clear, that is the end of the matter; for
the court, as well as the agency, must give effect to the
unambiguously expressed intent of Congress.” Id. at 842–43.
Because we do not defer to CMS’s approval of the SPA, we
must interpret Medicaid to determine whether § 14131.10
conflicts with federal law.

       2. Statutory Interpretation

    The Medicaid Act requires participating states to cover
certain services in their state plans. 42 U.S.C. § 1396a(a)(10)
(referring to 42 U.S.C. § 1396d(a)(1)–(5), (17), (21), (28)).
These mandatory services include RHC and FQHC services.
   CAL. ASS’N OF RURAL HEALTH CLINICS V. DOUGLAS 17

Id. § 1396d(a)(2)(B)–(C). Specifically, Medicaid requires
payment for “rural health clinic services (as defined in
subsection (l)(1) of this section) and any other ambulatory
services which are offered by a rural health clinic (as defined
in subsection (l)(1) of this section) and which are otherwise
included in the plan” and “Federally-qualified health center
services (as defined in subsection (l)(2) of this section) and
any other ambulatory services offered by a Federally-
qualified health center and which are otherwise included in
the plan.” Id. § 1396d(a)(2). Subsections (l)(1) and (l)(2)
refer to 42 U.S.C. § 1396d(l)(1) and (2) of the Medicaid Act,
which define RHC and FQHC services by referring to the
Medicare Act. Id. § 1396d(l)(1) & (l)(2) (cross-referencing
42 U.S.C. § 1395x(aa) & (aa)(1)). Medicare defines RHC
and FQHC services to include “physicians’ services” and
services furnished by a physician’s assistant, nurse
practitioner, clinical psychologist or clinical social worker.
Id. § 1395x(aa)(1), (3).

    As noted by the district court, the parties agree on this
description of the law to this point. They also agree that the
“physicians’ services” referenced in the Medicare statute are
the core services that RHCs and FQHCs must provide
pursuant to Medicaid and for which they are entitled to
reimbursement. But here the parties diverge: They disagree
on which source of law—Medicaid or Medicare—defines
“physicians’ services” with respect to RHCs and FQHCs.

    The Clinics predicate their claim on a theory of federal
conflict preemption. See Pac. Gas & Elec. Co. v. State
Energy Res. Conservation & Dev. Comm’n, 461 U.S. 190,
204 (1983) (“[S]tate law is pre-empted to the extent that it
actually conflicts with federal law. Such a conflict arises . . .
where state law stands as an obstacle to the accomplishment
18 CAL. ASS’N OF RURAL HEALTH CLINICS V. DOUGLAS

and execution of the full purposes and objectives of
Congress.”) (citations and quotations omitted). The Clinics
contend that the expansive Medicare definition of
“physicians’ services” should control because in defining
RHC and FQHC services, the Medicaid Act refers to the
Medicare Act. 42 U.S.C. § 1396d(l)(1) (referring to
42 U.S.C. § 1395x(aa)). Because the Medicare Act defines
a “physician” as a doctor of medicine or osteopathy, a dentist,
a podiatrist, an optometrist or a chiropractor, the Clinics
argue that the services provided by these six classes of
professionals are those services for which California must
reimburse them. Id. § 1395x(r)(1)–(5). Thus, the Clinics
argue that federal law requires California to reimburse them
for the panoply of “physicians’ services” described in the
Medicare Act and therefore, that § 14131.10 conflicts with
federal law.

    The Department, on the other hand, contends that the
Medicaid definition of “physicians’ services” controls
because there is no basis for referring to the definitions
contained in Medicare to determine what Medicaid requires.
Medicaid defines “physicians’ services” as “services
furnished by a physician (as defined in section 1395x(r)(1) of
this title).” Id. § 1396d(a)(5)(A). Section 1395x(r)(1) defines
“physician” as a “doctor of medicine or osteopathy.” Id.
§ 1395x(r)(1). While the subsequent subsections of
§ 1395x(r) list the other types of physicians contained in the
Medicare Act, including dentists, podiatrists, optometrists and
chiropractors, the Medicaid Act provision defining
“physicians’ services” refers only to § 1395x(r)(1). Thus, the
Department argues, the services provided by doctors of
medicine and osteopathy are required services, while those
provided by dentists, podiatrists, optometrists and
   CAL. ASS’N OF RURAL HEALTH CLINICS V. DOUGLAS 19

chiropractors are optional and do not require reimbursement
to RHCs and FQHCs.

    We begin our analysis with the text of the statute.
Arlington Cent. Sch. Dist. Bd. of Educ. v. Murphy, 548 U.S.
291, 296 (2006). The Supreme Court has “stated time and
again that courts must presume that a legislature says in a
statute what it means and means in a statute what it says
there.” Id. (citation and quotation omitted). “When the
statutory language is plain, the sole function of the courts—at
least where the disposition required by the text is not
absurd—is to enforce it according to its terms.” Id. (citation
and quotation omitted).

    First and foremost, we note that Medicaid requires state
plans to cover, as a floor, various services listed in 42 U.S.C.
§ 1396d(a). See 42 U.S.C. § 1396a(a)(10)(A) (requiring state
plans to cover the services listed in paragraphs (1) through
(5), (17), (21) and (28)). But two provisions are of particular
interest. Medicaid specifically requires coverage for: “rural
health clinic services (as defined in subsection (l)(1) of this
section) and . . . Federally-qualified health center services (as
defined in subsection (l)(2) of this section) . . . .” 42 U.S.C.
§ 1396d(a)(2). In addition, Medicaid requires coverage for
“physicians’ services,” defined as services “furnished by a
physician (as defined in section 1395x(r)(1) of this title).” Id.
§ 1396d(a)(5). By its very terms, then, Medicaid requires
state plans to cover both RHC and FQHC services and,
separately, it also requires state plans to cover “physicians’
services furnished by a physician.” Id.

    Next we note that these two provisions refer explicitly to
two paragraphs in the definitional section of the Medicaid
statute that define “rural health clinic services” and
20 CAL. ASS’N OF RURAL HEALTH CLINICS V. DOUGLAS

“Federally-qualified health services.” Id. § 1396d(l)(1),
(l)(2). Section 1396d(l)(1) states: “The terms ‘rural health
clinic services’ and ‘rural health clinic’ have the meanings
given such terms in section 1395x(aa) . . . .” Section
1396d(l)(2) provides: “The term ‘Federally-qualified health
center services’ means services of the type described in
subparagraphs (A) through (C) of section 1395x(aa)(1) . . . .”
These statutory commandments are unambiguous. The RHC
services and FQHC services that Medicaid requires states to
cover are coequal to those services as they are defined in
§ 1395x(aa) of the Medicare statute. In other words,
whatever meaning the Medicare statute gives to those terms,
they bear the same meaning in the Medicaid statute.
Medicaid imports the Medicare definitions wholesale.

    Thus, we must determine how Medicare defines the
relevant terms. Medicare provides that “rural health clinic
services” and “Federally-qualified health center services”
both include “physicians’ services.”              42 U.S.C.
§ 1395x(aa)(1)(A), (3). Medicare defines “physician” to
include five categories of professionals: doctors of medicine
and osteopathy, doctors of dental surgery or dental medicine,
doctors of podiatry, doctors of optometry and chiropractors.
Id. § 1395x(r)(1)–(5). It is clear then that the “physicians’
services” that the Clinics provide, and for which they must be
reimbursed, include not only the services furnished by
doctors of medicine and osteopathy, but also the services
furnished by dentists, podiatrists, optometrists and
chiropractors.

    We hold that Medicaid imposes on participating states an
obligation to cover “rural health clinic services” and
“Federally-qualified health center services,” and Medicaid
imports the Medicare definition of those terms. Thus,
   CAL. ASS’N OF RURAL HEALTH CLINICS V. DOUGLAS 21

Medicare unambiguously defines the Clinics’ services to
include services performed by dentists, podiatrists,
optometrists and chiropractors, in addition to services
provided by doctors of medicine and osteopathy. Any
alternate reading of the statute would do violence to
Medicaid’s command that the terms “rural health clinic
services,” “rural health clinic” and “Federally-qualified health
center services” shall have the meanings given those terms in
Medicare. 42 U.S.C. § 1396d(l)(1), (l)(2). We therefore
reverse the district court grant of summary judgment to the
Department.

    C. The Department’s Cross-Appeal is Moot

    We must consider whether CMS’s approval of the SPA
following the entry of judgment below renders the
Department’s cross-appeal moot. It does.

    “Article III of the Constitution requires that there be a live
case or controversy at the time that a federal court decides the
case; it is not enough that there may have been a live case or
controversy when the case was decided by the court whose
judgment we are reviewing.” Burke v. Barnes, 479 U.S. 361,
363 (1987) (citing Sosna v. Iowa, 419 U.S. 393, 402 (1975)
and Golden v. Zwickler, 394 U.S. 103, 108 (1969)). “If an
action or a claim loses its character as a live controversy, then
the action or claim becomes ‘moot,’ and we lack jurisdiction
to resolve the underlying dispute.” Doe v. Madison Sch. Dist.
No. 321, 177 F.3d 789, 797–98 (9th Cir. 1999).

    The Department seeks reversal of the injunctive and
declaratory relief granted below. The district court enjoined
the Department from implementing § 14131.10 pending
CMS’s approval of the SPA. Thus, the injunction is no
22 CAL. ASS’N OF RURAL HEALTH CLINICS V. DOUGLAS

longer in place. The district court also granted declaratory
relief to the Clinics, finding that the Department was required
to obtain approval of the SPA before implementing changes
to the state plan. Again, however, CMS has since approved
the SPA. Thus, absent an exception, CMS’s approval of the
SPA renders moot the Department’s cross-appeal as to
injunctive and declaratory relief. Oregon v. Fed. Energy
Regulatory Comm’n, 636 F.3d 1203, 1206 (9th Cir. 2011)
(per curiam) (holding the mootness doctrine helps “‘avoid
advisory opinions on abstract propositions of law’”) (quoting
Hall v. Beals, 396 U.S. 45, 48 (1969) (per curiam)).

    “Issues that are capable of repetition, yet evading review
present an exception to the mootness doctrine.” Doe,
177 F.3d at 798 (citations and quotations omitted). “That
exception, however, is limited to extraordinary cases in which
(1) the duration of the challenged action is too short to be
fully litigated before it ceases, and (2) there is a reasonable
expectation that the plaintiffs will be subjected to the same
action again.” Id. (citation and quotations omitted).

    The nature of the SPA process satisfies the first prong of
this test. An SPA is deemed approved within 90 days unless
CMS sends written notice that the plan or amendment was
rejected, or requests additional information within that
timeframe. 42 C.F.R. § 430.16. This 90-day period will be
too short for full litigation to take place. Doe v. Reed,
697 F.3d 1235, 1240 (9th Cir. 2012) (“Cases that qualify
under prong one present controversies of inherently limited
duration.”).

   “Turning to the second prong, the challenged conduct is
capable of repetition where there is evidence that it has
occurred in the past, or there is a reasonable expectation that
      CAL. ASS’N OF RURAL HEALTH CLINICS V. DOUGLAS 23

the petitioner would again face the same alleged invasion of
rights.” Alcoa, Inc. v. Bonneville Power Admin., 698 F.3d
774, 787 (9th Cir. 2012) (citations and internal quotation
marks omitted). Before our decision in Developmental
Services Network, there may have been a reasonable
expectation that the Department would attempt to implement
changes to a state plan prior to receiving CMS’s approval;
Developmental Services Network forecloses that possibility.
666 F.3d at 544–46. In that case, we considered whether a
different Medi-Cal provision violated the Medicaid Act. We
held, unambiguously, that “the State [is] obligated to submit
and obtain approval of its SPA before implementation.” Id.
at 546. We cannot reasonably expect that the Department
will ignore our explicit requirement to obtain CMS approval
before implementation of any future amendments to its state
plan. Thus, the Department’s cross-appeal is moot.

IV.      Conclusion

    REVERSED and REMANDED. We DENY the
Clinics’ motion to augment the record as moot. Each side
shall bear its own costs.