Eight California Pharmacies File Lawsuit

SACRAMENTO, CA (06/09/2008)(readMedia)-- Today, eight retail community pharmacies filed a lawsuit against the California Department of Health Care Services and its director Sandra Shewry to stop the ten percent Medi-Cal provider cuts to pharmacies from going into effect on July 1, 2008. The action claims that the state Department of Health Care Services (DHCS) has not met all the requirements of the statute that imposes the ten percent cuts, which was passed by the California Legislature and signed into law in February 2008. DHCS must meet all of those requirements before the cuts can be implemented. The pharmacies are filing this action because of their concern about the drastic impact these cuts will have on California’s network of pharmacies as well as the tragic consequences to Medi-Cal patients.

California law requires DHCS to “promptly seek any necessary federal approvals for implementation of [the 10% cut],” which in turn requires California to file with the federal Centers for Medicare and Medicaid Services (CMS) a State Plan Amendment to implement the 10% cuts. The State Plan is a comprehensive written statement prepared by DHCS, which both describes the nature and scope of the Medi-Cal program and gives assurances that DHCS will administer the plan properly. DHCS cannot show that they have obtained “all necessary federal approvals” including the State Plan Amendment nor can they show that they have received approval to implement the cuts from CMS.

“This lawsuit was carefully drafted to include only issues of state law in order to avoid the fate of two other provider lawsuits that have been filed with the state only to be removed to the federal court at the request of DHCS,” said Lynn Rolston, chief executive officer of the California Pharmacists Association, which is a plaintiff in one of the provider lawsuits and supporter of the new pharmacy action. “Moving these cases to federal court is nothing more than a delay tactic that will cause the cuts to go into effect before the providers’ legal claims can be heard by a judge.”

If these cuts go into effect on July 1, 2008, pharmacists may have to turn away new Medi-Cal beneficiaries, stop serving Medi-Cal altogether or be forced to close their doors. The impact of the cuts on access to life saving medications for Medi-Cal beneficiaries and the impact on pharmacies in California are detailed in the report from Stephen Schondelmeyer and the declarations of the individual pharmacies that are part of the complaint filing.

The pharmacies have retained Duane Morris as their legal counsel in the matter.

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