Hooper, Lundy & Bookman Announces Court Decision Invalidating Medicaid Payment Rate Freeze

LOS ANGELES--(BUSINESS WIRE)--In a case of national significance, a California appellate court has invalidated a Medicaid payment freeze on the grounds that, in adopting the freeze, the California Legislature failed to follow federal Medicaid notice and comment requirements.

Hooper, Lundy & Bookman, Inc. (HLB) represents 100 California hospitals in the case.

“We believe this to be the first case in the nation invalidating a Medicaid rate provision under federal notice and comment requirements,” said Hooper, Lundy & Bookman (HLB) Partner Byron Gross, who argued the case before the appellate court. “For these 100 hospitals alone, this case represents approximately $50 million in reimbursement. Further, this case is also important for other cases in which we are challenging Medi-Cal rate cuts on behalf of our clients.”

At issue was a freeze adopted as part of the 2004 California budget. Over a three-day period, the legislature proposed and enacted a freeze on the rates the state would use to reimburse certain hospitals that provided services to Medicaid beneficiaries during the state’s 2004-2005 fiscal year.

HLB represented the many hospitals that initially filed suit, claiming that the state’s legislative action violated federal Medicaid notice and comment requirements, as well as other federal Medicaid mandates for revising rates and rate methodologies. The trial court disagreed with the hospitals, except to the extent the freeze affected services rendered prior to the freeze’s enactment.

In today’s ruling, the appellate court reversed the trial court’s ruling. The court concluded that the federal statute requiring notice and comment procedures applied to action taken by the state legislature, and that the legislature’s process did not satisfy the federal statute.

“A significant aspect of this ruling is that the court, in essence, is telling the state what it must do to comply with federal Medicaid laws,” noted HLB Attorney Lloyd Bookman, who represented the hospitals along with Mr. Gross.

About Hooper, Lundy & Bookman: Hooper, Lundy & Bookman’s lawyers are regularly engaged in complex litigation involving health care providers. Many of the firm’s regulatory department attorneys have more than 20 years of experience in Medicare and Medicaid law. Our regulatory cases have resulted in numerous favorable judgments and new case law. With clients in 47 states and offices in Los Angeles, San Francisco and San Diego, the firm is the largest law firm in the country dedicated solely to the representation of health care providers. For more information, visit the firm’s website at www.health-law.com.