Opposition Brief — Douglas v. California Pharmacists Association, (2009) (No. 1158)

Coua, U.S.

FILED

MAY 24 2010

OFFICE OF THE CLERK

No. 09-1158

In THE

SUPREME COURT OF THE UNITED STATES

DAVID MAXWELL-JOLLY, DIRECTOR, CALLFORNIA

DEPARTMENT OF HEALTH CARE SERVICES, PETITIONER,

U.

CALIFORNIA PHARMACISTS ASSOCIATION, ET AL.,

RESPONDENTS.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF OF RESPONDENTS INDEPENDENT

LIVING CENTER OF SOUTHERN CALIFORNIA,

INC.; GERALD SHAPIRO, PHARM.D, D/B/A

UPTOWN PHARMACY AND GIFT SHOPPE;

SHARON STEENE, D/B/A CENTRAL PHARMACY;

AND TRAN PHARMACY, INC., D/B/A TRAN

PHARMACY IN OPPOSITION

ROCHELLE BOBROFF LYNN S. CARMAN*

NATIONAL SENIOR CITIZENS MEDICAID DEFENSE FUND

Law CENTER 8 WATERBURY LANE

1444 EYE STREET, NW NOVATO, CA 94949

WASHINGTON, DC 20005 LYNNSCARMAN@HOTMAIL.COM

RBOBROFF@NSCLC.ORG (415) 927-4023

(202) 289-6976

STANLEY L. FRIEDMAN

445 S. FIGUEROA STREET, 27" FL

LOS ANGELES, CA 90071

FRIEDMAN@FRIEDMANLAW .ORG

(213) 629-1500

*Counsel of Record

MAY 24, 2010

PARTIES TO THE PROCEEDING

Petitioner is David Maxwell-Jolly, Director of the

Department of Health Care Services, State of

California (DHCS).

Respondents in this Opposition brief are

Independent Living Center of Southern California,

Inc.; Gerald Shapiro, Pharm.D., d/b/a Uptown

Pharmacy and Gift Shoppe; Sharon Steen, d/b/a

Central Pharmacy; and Tran Pharmacy, Inc., d/b/a

Tran Pharmacy, who are the plaintiffs-appellees in

Case No. 09-55692, Independent Living Center of

Southern California v. Maxwell.-Jolly.

CORPORATE DISCLOSURE STATEMENT

(RULE 29.6)

None of the corporations who were plaintiffs-

appellees below in Case No. 09-55692 have a parent

corporation and no public corporation owns any

stock in these corporations.

Ll

TABLE OF CONTENTS

PARTIES TO THE PROCEEDING.........0.000.000000000.. i

CORPORATE DISCLOSURE STATEMENT ............ i

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TABLE OF AUTHORITIES ................cccccccccscecsseeres iv

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TL AT 1

EAT 3

REASONS THE PETITION SHOULD BE

aloe cicsiemiaicamerissisentilccssineonestues 10

I. CERTIORARI SHOULD BE DENIED ON THE

FIRST QUESTION BECAUSE THERE IS NO DIVISION

In THE LOWER Courts AND THE DECISION BELOW

Is A CORRECT APPLICATION OF THIS COURT'S

SETTLED SUPREMACY CLAUSE JURISPRUDENCE......... 10

A. The Courts Of Appeals Have Uniformly

Reached The Same Conclusion As The

ot 10

B. The Decision Below, Like The Decisions Of

All The Other Courts Of Appeals, Followed

Numerous Precedents Of This Court

Permitting Preemption Claims To Enjoin

State Law, Including In Cases Involving

Spending Clause Statutes...............cccssceeeseees 13

C. There Is No Basis For Petitioner's Assertion

That A Preemption Claim Must Satisfy The

Standards Of an Implied Private Right of

Action and 42 U.S.C. § 1983 0..........ccccessseeees 20

il

I]. CERTIORARI SHOULD BE DENIED ON THE

SECOND QUESTION BECAUSE THE DECISION BELOW

Is A CORRECT APPLICATION OF THE MEDICAID ACT

AND THERE IS No RELEVANT DIVISION IN THE

iv

TABLE OF AUTHORITIES

Cases

Antrican v. Odom,

290 F.3d 178 (4th Cir. 2002) 17

Arkansas Dept. of Health & Human Services v.

Ahlborn,

547 U.S. 268 (2006) 16, 17, 26

BellSouth Telecommunications, Inc. v. MCImetro

Access Transmission Services, Inc.,

317 F.3d 1270 (11th Cir. 2003) 13

Bernhardt v. Los Angeles County,

339 F.3d 920 (9th Cir. 2003) 20

Blessing v. Freestone,

520 U.S. 329 (1997) 18

Blum v. Bacon,

457 U.S. 132 (1982) 17, 26

Bud Antle, Inc. v. Barbosa,

45 F.3d 1261 (9th Cir. 1994) 20

Burgio & Campofelice, Inc. v. New York State Dept.

of Labor,

107 F.3d 1000 (2d Cir. 1997) 12, 16

California Pharmacists Ass'n v. Maxwell-Jolly,

596 F.3d 1098 (9th Cir. 2010) 6,7

City of Burbank v. Lockheed Air Terminal Inc.,

411 U.S. 624 (1973) 4

City of Newport v. Fact Concerts, Inc.,

453 U.S. 247 (1981) 22

Cort v. Ash,

422 U.S. 66 (1975) 21

Crosby v. Nat'l Foreign Trade Council,

530 U.S. 363 (2000) 21

CSX Transp., Inc. v. Easterwood,

507 U.S. 658 (1993) 17

Dalton v. Little Rock Family Planning Services,

516 U.S. 474 (1996) 17

Edelman v. Jordan,

415 U.S. 651 (1974) 18

Equal Access for Ei Paso, Inc. v. Hawkins,

562 F.3d 724 (5th Cir. 2009) 20

Evergreen Presbyterian Ministries Inc. v. Hood,

235 F.3d 908 (5th Cir. 2000) 27

Frazar v. Gilbert,

300 F.3d 530(5th Cir. 2002) rev'd sub nom. Frew

ex rel. Frew v. Hawkins,

540 U.S. 431 (2004) 17

Frew ex rel. Frew v. Hawkins,

540 U.S. 431 (2004) 18

Golden State Transit Corp. v. City of Los Angeles,

493 U.S. 103 (1989) 23, 24

Gonzaga Univ. v. Doe,

536 U.S. 273 (2002) 12

Gray Panthers of San Francisco v. Schwarzenegger,

C 09-2307 PJH, 2009 WL 2880555 (N.D. Cal. Sept.

1, 2009) 20

Green v. Mansour,

474 U.S. 64 (1985) 22

GTE N., Inc. v. Strand,

209 F.3d 909(6th Cir. 2000), cert. denied, 531 U.S.

957 (2000) 13

Guar. Nat. Ins. Co. v. Gates,

916 F.2d 508 (9th Cir. 1990) 20

Hagans v. Lavine,

415 U.S. 528 (1974) 23

Hines v. Davidowitz,

312 U.S. 52 (1941) 26

vl

Illinois Ass'n of Mortg. Brokers v. Office of Banks &

Real Estate,

308 F.3d 762 (7th Cir. 2002) 12

Indep. Living Ctr. of S. California, Inc. v. Maxwell-

Jolly,

572 F.3d 644 (9th Cir. 2009) 7

Indep. Living Ctr. of S. California, Inc. v. Shewry,

543 F.3d 1050 (9th Cir. 2008) cert. denied, 129 S.

Ct. 2828 (U.S. 2009) 4

Lawrence County v. Lead-Deadwood Sch. Dist. No.

40-1,

469 U.S. 256 (1985) 17

Long Term Care Pharmacy Alliance v. Ferguson,

362 F.3d 50 (ist Cir. 2004) 27

Methodist Hospitals, Inc. v. Sullivan,

91 F.3d 1026 (7th Cir. 1996) 27

Minnesota HomeCare Ass'n, Inc. v. Gomez,

108 F.3d 917 (8th Cir. 1997) 27

Missouri Child Care Ass'n v. Cross,

294 F.3d 1034 (8th Cir. 2002) 17

Pennsylvania Prot. & Advocacy, Inc. v. Houstoun,

228 F.3d 423 (3d Cir. 2000) 17

Pharm. Research & Mfrs. of Am. v. Walsh,

538 U.S. 644 (2003) 16, 17

Qwest Corp. v. City of Santa Fe, New Mexico,

380 F.3d 1258 (10th Cir. 2004) 12

Ray v. Atl. Richfield Co.,

435 U.S. 151 (1978) 4

Rite Aid of Pennsylvania, Inc. v. Houstoun,

171 F.3d 842 (3d Cir. 1999) 27

Rosado v. Wyman,

397 U.S. 397 (1970) 18

Rowe v. New Hampshire Motor Transp. Ass'n,

552 U.S. 364 (2008) 26

Shaw v. Delta Air Lines, Inc.,

463 U.S. 85 (1983) 4, 13, 14, 15

St. Thomas--St. John Hotel & Tourism Ass'n, Inc. v.

Gou't of U.S. Virgin Islands,

218 F.3d 232 (3d Cir. 2000) 12

Planned Parenthood of Houston & Se. Tex. v.

Sanchez,

403 F.3d 324 (5th Cir. 2005) 16

United States v. Lopez,

514 U.S. 549 (1995) 11

Verizon Maryland, Inc. v. Global NAPS, Inc.,

377 F.3d 355 (4th Cir. 2004) 12, 21

Verizon Maryland, Inc. v. Pub. Serv. Comm'n of

Maryland,

535 U.S. 635 (2002) passim

Westside Mothers v. Haveman,

289 F.3d 852(6th Cir. 2002), cert. denied, 537 U.S.

1045 (2002) 17

Wilder v. Virginia Hosp. Ass‘n,

496 U.S. 498 (1990) 18

Winkelman ex rel. Winkelman v. Parma City Sch.

Dist.,

550 U.S. 516 (2007) 19

Statutes

28 U.S.C. § 1331 14, 23

42 U.S.C. § 1396a(a)(1)-(71) 1

42 U.S.C. § 1983 passim

42 U.S.C. § 1988 22

Cal. Welf. & Inst. Code § 14105.19(b)(1) (2008) _ 2

Other Authorities

David Sloss, Constitutional Remedies for Statutory

Violations,

89 Iowa L. Rev. 355 (2004) 11, 22

Viii

Samuel R. Bagenstos, Spending Clause Litigation in

the Roberts Court,

58 Duke L.J. 345 (2008) 11

BRIEF IN OPPOSITION

STATEMENT

A. Statutory Framework

1. Title XIX of the Social Security Act, 42 U.S.C.

§ 1396 et seq. (hereinafter “Medicaid Act”), is a

cooperative federal-state program that provides

federal financial assistance to participating States to

enable them to provide medical treatment for the

poor, elderly, and disabled.

A State's participation in Medicaid is voluntary.

However, if a State chooses to participate, then it

must comply with the Medicaid Act and its

implementing regulations. To receive federal funds,

States are required to establish and administer their

Medicaid programs through individual “state plans

for medical assistance” approved by the federal

Secretary of Health and Human Services (HHS). 42

U.S.C, § 1396.

The Medicaid Act provides specific requirements

for state plans and reimbursement rates, see 42

U.S.C. § 1396a(a)(1)-(71), including those set out in §

1396a(a)(30)(A) (hereinafter “Section 30A”), the

specific provision at issue in this case. Section 30A

requires that a state plan must provide such methods

and procedures relating to payments for care and

services to assure that payments are consistent with

efficiency, economy, and quality of care and are

sufficient to enlist enough providers to ensure that

care and services are as available to recipients as is

available to the public in the same geographical area.

2. On February 16, 2008, the California

Legislature enacted Assembly Bill X3 5 (hereinafter

“AB 5”). AB 5 added § 14105.19 to the Welfare and

Institutions Code, which instructed petitioner

Director of the Department of Health Care Services,

as the state agency which administers California's

state Medicaid plan, to cut by ten percent

reimbursement rates under the Medi-Cal fee-for-

service program to physicians, dentists, pharmacies,

adult day health care centers, optometrists, clinics,

and other providers. AB 5 provided that the ten

percent rate cuts were to go into effect on July 1,

2008. See Cal. Welf. & Inst. Code § 14105.19(b)(1)

(2008). !

The California Legislature subsequently enacted

Assembly Bill 1183 (hereinafter “AB 1183”), on

September 30, 2008. Section 44 of AB 1183 amended

§ 14105.19 to make the rate reductions of AB 5,

excluding non-contract hospitals, expire on February

28, 2009. Cal. Welf. & Inst. Code § 14105.19(b).

Section 45 of AB 1183 added a new § 14105.191

(2009) that, effective March 1, 2009, required a five

percent rate cut for pharmacies under Medi-Cal’s

fee-for-service program. Section 57 of AB 1183

makes the legislative finding that the “state faces a

fiscal crisis that requires unprecedented measures to

be taken to reduce General Fund expenditures.” Pet.

App. 210. The Legislature provided that the act

would “take effect immediately.” Pet. App. 216-17 (§

76).

| The ten percent cuts of AB 5 were challenged in another

case with the same caption. The instant suit does not address

the cuts in AB 5.

B. Factual Background

1. The Respondents are an independent living

center with more than 5,000 clients or members who

are Medi-Cal beneficiaries in the Medi-Cal fee-for-

service program, and three Medi-Cal pharmacies

with more than 8,000 Medi-Cal beneficiaries. On

January 16, 2009, they sued David Maxwell-Jolly,

Director of the California Department of Health

Care Services, in the United States District Court of

the Central District of California to prevent the

implementation of AB 1183. Pet. App. 128-29.

The complaint alleged that the action of the State

to enact and implement the five percent payment

reduction of AB 1183 was void, contrary to and

preempted under the Supremacy Clause by the

federal quality of services and equal access clauses of

Section 30A, due to the fact that the Legislature had

enacted AB 1183 without considering—as required

by Section 30A—the relevant factors of whether

providers could sustain the payment reduction

without loss of quality of services and equal access of

beneficiaries to quality services; and that irreparable

injury in the form of reduction and denial of access

to services to Medi-Cal beneficiaries would result.

Pet. App. 130.

The relief sought by Respondents was an

injunction to prohibit the Director of the Department

of Health Care Services from implementing AB

1183. Pet App. 130.

2. On February 27, 2009, the district court

granted respondents’ motion for injunctive relief.

Pet. App. 151.

In holding that respondents could bring their

claim under the Supremacy Clause, the district court

relied on the Ninth Circuit’s decision in Indep.

Living Ctr. of S. California, Inc. v. Shewry, 543 F.3d

1050 (9th Cir. 2008) cert. denied, 129 S. Ct. 2828

(U.S. 2009) (hereinafter “JLC 7”). In that opinion,

the Ninth Circuit stated that “(t]he Supreme Court

has repeatedly entertained claims for injunctive

relief based on federal preemption, without requiring

that the standards for bringing suit under § 1983 be

met.” The court cited in detail the numerous cases

holding that claims for injunctive relief based on

federal preemption may be brought absent any

express right or cause of action. /d. at 1055-1056

(citing, inter alia, City of Burbank v. Lockheed Air

Terminal Inc., 411 U.S. 624 (1973); Ray v. All.

Richfield Co., 435 U.S. 151 (1978); and Shaw v.

Delta Air Lines, Inc., 463 U.S. 85 (1983). Jd. at 1055-

1056.

In JLC J, the Ninth Circuit also rejected

petitioner's argument that a claim of preemption

under a federal statute enacted pursuant to

Congress’ spending power, like the Medicaid Act,

should be treated differently. Jd. at 1059-1062. The

Ninth Circuit noted that this Court and other

circuits that have addressed the argument flatly

rejected it. Id. _ Petitioner’s petitions for rehearing,

rehearing en banc and certiorari for this decision

were denied.

The first question of this present petition for

certiorari (No. 09-1158) is essentially, therefore,

another bite of the same apple, without any change

in circumstances or new law cited by petitioner to

justify or explain why the Court should now re-visit

and re-review its prior decision to deny certiorari on

the facts and legal claims in respect to which

certiorari was previously denied, in 2009.

3. In the instant case, the district court concluded

that respondents had met their burden of

demonstrating that a preliminary injunction should

issue to enjoin implementation of AB 1183.

The district court found that respondents

demonstrated a likelihood of success on the merits

because the Legislature enacted the rate reduction

without any consideration of the relevant factors

required by Section 30A to be considered—efficiency,

economy, quality of care, and equality of access, as

well as the effect of providers’ costs on those relevant

factors—and failed to show any justification other

than purely budgetary concerns for rates that

substantially deviate from the providers’ costs. Pet.

App. 139, 143.

Also, it found that respondents demonstrated a

substantial likelihood of irreparable harm resulting

from implementation of AB 1183, because the cuts

would limit Medi-Cal beneficiaries’ access to many

brand and generic drugs. Pet. App. 144-49. In

addition, the evidence established that independent

pharmacies represent thirty-three percent of the

licensed community pharmacies in California and

many of these pharmacies with higher than average

costs would be “hard-hit” by the cut, causing a

discontinuation or severe reduction in services to

Medi-Cal beneficiaries. Pet. App. 148-49.

Weighing the balance of the hardships and the

public interest, the district court concluded that the

“significant threat to the health of Medi-Cal

recipients” that “reducing payments to health-care

service providers will likely cause” outweighed any

expected fiscal savings, which the district court

noted were unlikely to materialize because “many

Medi-Cal beneficiaries will turn to more costly forms

of medical care, such as emergency room care.” Pet.

App. 147 n.7.

On April 3, 2009, the district court denied

petitioner’s motion to amend, alter, or clarify the

preliminary injunction of February 27, 2009. Pet.

App. 152.

4. On March 3, 2010, the Ninth Circuit affirmed

the district court's issuance of a preliminary

injunction. Pet. App. 53. In an unreported decision,

the court referenced the reasoning supplied in

another case decided that day, California

Pharmacists Ass'n v. Maxwell-Jolly, 596 F.3d 1098

(9th Cir. 2010) (hereinafter “California

Pharmacists”), which rejected petitioner's arguments

on the likelihood of success on the merits. Pet. App.

4.

Petitioner argued in both California Pharmacists

and the instant case that while the state Legislature

enacted the rate cuts, nevertheless, the Legislature

did not need to comply with the mandate of Section

30A. Instead, petitioner contended, only the

Department was required to consider the factors set

forth in Section 30A. Pet. App. 11.

The Ninth Circuit held in California Pharmacists

that whichever state body sets the rates must

comply with the federal requirements for setting

them. The court explained: “[S]uch an approach is

consistent with that of our sister circuits, where in

the context of legislative, as opposed to agency, rate-

setting, they too have focused on ensuring that the

legislative body had information before it so that it

could properly consider efficiency, economy, quality

of care, and access to services before enacting rates.”

Pet. App. 15-16 (emphasis in original) (citing cases

from the Eighth Circuit).

Next, petitioner argued in California Pharmacists

that the state Legislature did actually consider the

factors of Section 30A. The Ninth Circuit upheld the

district court's conclusion that the legislative history

showed that the Legislature did not in fact consider

the Section 30A factors but rather was “concerned

solely with budgetary matters.” Pet. App. 20.

The Ninth Circuit then reiterated its holding from

Indep. Living Ctr. of S. California, Inc. v. Maxwell-

dolly, 572 F.3d 644 (9th Cir. 2009)(hereinafter “JLC

II’), which is consistent with all the courts of appeals

to consider the issue, that Section 30A mandates

that state Medicaid rate reductions “may not be

based solely on state budgetary concerns.” 572 F.3d

at 659 (citing cases from the Third, Eighth, Ninth,

and Tenth Circuits).

Petitioner further argued in California

Pharmacists that the Department had retained the

discretion not to implement the rate cut and that the

Department’s post-enactment study complied with

the requirements of Section 30A. The Ninth Circuit

noted that this argument had been waived because it

was not raised in petitioner's opening brief, but

further rejected the argument on the merits. Pet.

App. 22-24.

The court concluded that the Department's

contention that it had discretion not to implement

the cuts was rebutted by the clear text of the state

law as well as the state's published notice

announcing that the Department “is mandated” to

implement the rate reductions. Pet. App. 26-28.

5. In the instant ILC Plaintiffs case, petitioner

did not contest, at the preliminary injunction

hearing, nor in his appeal briefs, that the

Legislature did not in fact consider the relevant

quality and equal access factors of Section 30A, in

enacting AB 1183. Pet. App. 141, 54-55. At oral

argument at the Ninth Circuit, petitioner did assert,

for the first time, that the legislature had considered

the Section 30A factors with regard to pharmacies.

Yet, the only evidence proffered by petitioner was a

comment on the May 30, 2008 agenda of Assembly

Budget Subcommittee stating: “Dec. 2007 Myers and

Stauffer study found that current Medi-Cal drug

pricing averages around 5 percent over cost,” (Pet.

App. 54-55), the veracity of which comment was

challenged by the ILC Plaintiffs at the oral

argument. The Ninth Circuit, without ruling on the

veracity issue, noted that petitioner did not even

argue in his briefing, in either the district court or

on appeal, that the citation to a study is sufficient to

comply with Section 30A. Jd. The Ninth Circuit

concluded that a one-sentence citation to the May

30, 2008 agenda “does not show adequate

consideration of the § 30(A) factors.” Jd. at 55-56.

In addition, the Ninth Circuit found that the

cited study did not demonstrate that the rate cut

complied with Section 30A. The court noted that

while the study addressed costs, “it is bereft of any

analysis of the remaining § 30(A) factors — efficiency,

economy, quality, and access to care.” Pet. App. 56.

The study indicated that in setting an appropriate

reimbursement formula, costs and market dynamics

should be “balanced with the need to maintain

sufficient access to services for Medi-Cal recipients

throughout the state.” Jd. Further, the study

instructed that the rate setter should “consider

issues of access to services.” Jd. The study also

did not address whether “the costs observed are

reflective of providers operating in the most efficient

manner possible.” Id. The Ninth Circuit

therefore affirmed the district court’s holding that

respondents were likely to succeed on their claim

that the rates were not set in compliance with

Section 30A.

The Ninth Circuit similarly found that the

district court did not abuse its discretion in holding

that respondents had demonstrated irreparable

harm. The appeals court explained: “The district

court concluded that even if, on average pharmacies

would be compensated above their acquisition costs,

the Director had not refuted Plaintiffs’ showing that

many brand and generic drugs would be reimbursed

at a level below cost, limiting Medi-Cal patients’

access to those drugs.” /d.

10

REASONS THE PETITION SHOULD BE

DENIED

1. CERTIORARI SHOULD BE DENIED ON THE

FIRST QUESTION BECAUSE THERE IS NO

DIVISION IN THE LOWER COURTS AND

THE DECISION BELOW IS A CORRECT

APPLICATION OF THIS COURT'S SETTLED

SUPREMACY CLAUSE JURISPRUDENCE

A.The Courts Of Appeals Have Uniformly

Reached The Same Conclusion As The

Panel Below

While petitioner's previous petitions have alleged

conflict in the courts of appeals, the present petition

contains no such claim. To the contrary, the present

petition seeks review based on the harmonious

interpretation of law among the Ninth, D.C., Fifth

and Eighth Circuits. Pet. 27. Indeed, every court of

appeals is in accord with the Ninth Circuit's holding

that a federal court may resolve, on the merits, a

claim that a plaintiff will be injured unless

injunctive or declaratory relief is issued to enjoin a

preempted state law.

The unanimity among courts of appeals follows

naturally from the clarity of the Court’s preemption

decisions, such as Verizon Maryland, Inc. v. Pub.

Serv. Comm'n of Maryland, 535 U.S. 635 (2002).

Petitioner’s assertion that the Court has failed to

address pertinent questions of law is rebutted by the

widespread agreement among courts of appeals

regarding the appropriate standards for permitting a

preemption claim.

ll

Verizon established that a statutory cause of

action is not needed for a preemption claim. Any

change in this holding would impact a wide range of

preemption claims, including those frequently

brought by businesses. Indeed, “most federal

statutes that are at issue in ... preemption cases do

not create an express private cause of action for

injunctive relief against state officers.” David Sloss,

Constitutional Remedies for Statutory Violations, 89

lowa L. Rev. 355, 406-7 (2004).

Petitioner suggests that preemption claims under

Spending Clause statutes should be treated

differently, but petitioner does not cite a single case

that so holds. And there is no basis in the text of the

Constitution for differentiating the Spending Clause

from any other constitutional provision under which

Congress legislates. Samuel R. Bagenstos, Spending

Clause Litigation in the Roberts Court, 58 Duke L.J.

345, 392-93 (2008).

A change in the standards for preemption would

have widespread implications, reducing the primacy

of federal law in our system of government. As

Justice Kennedy has observed, “the whole

jurisprudence of preemption” is of vital importance

to “maintaining the federal balance.” United States

v. Lopez, 514 U.S. 549, 577 (1995) (Kennedy, J.,

concurring).

Petitioner provides citations for the decisions of

the D.C., First, Fifth, and Eighth Circuits that have

permitted preemption claims to be considered on the

merits in the context of Spending Clause statutes.

Pet. 27. Petitioner has previously conceded in its

earlier petition that in cases brought under non-

12

Spending Clause statutes, several other Circuits

have permitted preemption claims “regardless of

whether the federal statutes create privately

enforceable rights,” giving as examples cases from

the Second, Third, and Tenth Circuits. Petition in

ILC HI at 22, n.6.

Indeed, the Tenth Circuit held that a “party may

bring a claim under the Supremacy Clause that a

local enactment is preempted even if the federal law

at issue does not create a private right of action.”

Qwest Corp. v. City of Santa Fe, New Mexico, 380

F.3d 1258, 1266 (10th Cir. 2004). Accord Burgio &

Campofelice, Inc. v. New York State Dept. of Labor,

107 F.3d 1000, 1006 (2d Cir. 1997). The Third

Circuit similarly concluded that “a state or

territorial law can be unenforceable as preempted by

federal law even when the federal law secures no

individual substantive rights for the party arguing

preemption.” St. Thomas--St. John Hotel & Tourism

Ass'n, Inc. v. Gov't of U.S. Virgin Islands, 218 F.3d

232, 241 (3d Cir. 2000).

Moreover, the Fourth, Sixth, Seventh and

Eleventh Circuits have also held that preemption

claims do not depend upon a cause of action in the

preempting federal statute. The Fourth Circuit

stated: “we need not inquire into whether [the

federal statute] provides a cause of action” for a

preemption claim. Verizon Maryland, Inc. v. Global

NAPS, Inc., 377 F.3d 355, 368-369 (4th Cir. 2004).

The Seventh Circuit rejected the argument advanced

by petitioner in this case that Gonzaga Univ. v. Doe,

536 U.S. 273 (2002), is applicable to a preemption

claim. Illinois Ass‘n of Mortg. Brokers v. Office of

13

Banks & Real Estate, 308 F.3d 762, 765 (7th Cir.

2002). The Sixth Circuit held that there is “a cause

of action for prospective injunctive relief’ for federal

preemption claims. GTE N., Inc. v. Strand, 209 F.3d

909, 916 (6th Cir. 2000), cert. denied, 531 U.S. 957

(2000). Finally, the Eleventh Circuit held en banc

that, apart from any express cause of action

available under the statute, “[fledera] courts must

resolve the question of whether a public service

commission’s order violates federal law and any

other federal question.” BeliSouth

Telecommunications, Inc. uv. MClImetro § Access

Transmission Services, Inc., 317 F.3d 1270, 1278

(11th Cir. 2003) (citing Verizon Maryland, Inc., 535

U.S. 635); see also id. at 1296 (Tjoflat, J., dissenting

on other grounds) (“litigants may assert a private

right of action for preemption under the Supremacy

Clause”).

B.The Decision Below, Like The Decisions

Of All The Other Courts Of Appeals,

Followed Numerous Precedents Of This

Court Permitting Preemption Claims To

Enjoin State Law, Including In Cases

Involving Spending Clause Statutes

1. This Court has long permitted private parties

to obtain declaratory and injunctive relief to prevent

injury from state laws that are preempted by federal

law. In Shaw v. Delta Air Lines, Inc., 463 U.S. 85

(1983), employers sought a declaration that a New

York law was preempted by a federal statute

providing no cause of action. The Court unanimously

reached the merits of the employers’ preemption

claim. It explained:

14

A plaintiff who seeks injunctive relief from state

regulation, on the ground that such regulation is

pre-empted by a federal statute which, by virtue

of the Supremacy Clause of the Constitution,

must prevail, thus presents a federal question

which the federal courts have jurisdiction under

28 U.S.C. § 1331 to resolve.

463 U.S. at 96 n.14.

Subsequently, this Court unanimously reaffirmed

the availability of injunctive relief on the basis of

federal preemption. In Verizon Maryland, Inc. v.

Pub. Serv. Comm'n of Maryland, 535 U.S. 635

(2002), the Court again sustained the jurisdiction of

the federal courts to hear claims that state conduct

(there, an order of the public service commission)

was preempted by federal law. In Verizon, the state

commission argued that Verizon’s preemption claim

could not proceed, because the federal

Telecommunications Act “does not create a private

cause of action to challenge the Commission's order.”

535 U.S. at 642. The Court dismissed this argument,

stating:

We need express no opinion on the premise of this

argument. “It is firmly established in our cases

that the absence of a valid (as opposed to

arguable) cause of action does not implicate

subject-matter jurisdiction, i.e, the courts’

statutory or constitutional power to adjudicate the

case.” As we have said, “the district court has

jurisdiction if the right of the petitioners to

recover under their complaint will be sustained if

the Constitution and laws of the United States are

given one construction and will be defeated if they

15

are given another, unless the claim clearly

appears to be immaterial and made solely for the

purpose of obtaining jurisdiction or where such a

claim is wholly insubstantial and frivolous.”

Id. at 642-643 (citations and some quotation marks

omitted).

As in Shaw and Verizon, respondents seek

declaratory and injunctive relief against an allegedly

preempted state law. Respondents’ entitlement to

relief will unquestionably depend on_ the

construction of a federal statute. Petitioner does not

argue that the claim is immaterial or wholly

insubstantial and frivolous. The Ninth Circuit

dutifully followed Shaw and Verizon in reaching the

merits of the preemption claim.

It is true that these cases speak in terms of

jurisdiction, rather than in terms of a cause of

action. But petitioner does not dispute the existence

of a federal cause of action to enforce the Supremacy

Clause. Indeed, petitioner himself conceded below

that there were “circumstances under which a party

may properly seek relief under the Supremacy

Clause.” C.A. ILC I Pet. Opening Br. 6. This sensible

concession is in accord with the repeated and

consistent actions of this Court in adjudicating

preemption claims on the merits even in the absence

of an express or implied statutory cause of action. It

is also consistent with the understandings of leading

federal courts treatises. See Richard H. Fallon, Jr.,

Daniel J. Meltzer, & David L. Shapiro, Hart &

Wechsler’s The Federal Courts & The Federal System

903 (5th ed. 2003); 13D Charles A. Wright, Arthur R.

16

Miller & Edward H. Cooper, Federal Practice and

Procedure § 3566 (3d ed. 2008).?

2. Petitioner nonetheless argues that respondents’

claim should be dismissed, because the federal

statute at issue in this case, Medicaid, is a Spending

Clause statute. Pet. 26-27. That assertion is contrary

to this Court’s recent practice.

This Court has repeatedly adjudicated claims by

private parties asserting preemption by virtue of the

Medicaid statute and other federal spending

statutes. In Arkansas Dept. of Health & Human

Services v. Ahlborn, 547 U.S. 268 (2006), a Medicaid

recipient sought a declaratory judgment that a state

law was preempted by the Medicaid Act, and this

Court unanimously agreed. In Pharm. Research &

Mfrs. of Am. v. Walsh, 538 U.S. 644 (2003), drug

makers also brought an action asserting preemption

of a state law under the Act. A plurality of four

Justices concluded on the merits that the state law

was not preempted, while three Justices argued in

dissent that the state law was indeed preempted.*

> The Second and Fifth Circuits have identified the Supremacy

Clause itself as the basis of a cause of action for preemption

claims. See Burgio & Campofelice, Inc. v. New York State Dept.

of Labor, 107 F.3d 1000, 1006 (2d Cir. 1997); Planned

Parenthood of Houston & Se. Tex. v. Sanchez, 403 F.3d 324, 333

(5th Cir. 2005).

’ Justice Thomas's concurrence suggested that the Court might

want to consider “whether Spending Clause legislation can be

enforced by third parties in the absence of a private right of

action.” Pharm. Research & M/rs. of Am. v. Walsh, 538 U.S.

644, 683 (2003) (Thomas, J., concurring in judgment). Justice

(Footnote continued on following page)

17

Furthermore, petitioner's argument appears to

rely on the assumption that federal Spending Clause

statutes cannot preempt state statutes under the

Supremacy Clause. But that is contrary to a host of

this Court’s holdings. See, e.g., Dalton v. Little Rock

Family Planning Services, 516 U.S. 474, 476 (1996)

(per curiam) (preemption under Medicaid); Blum v.

Bacon, 457 U.S. 132, 138 (1982); CSX Transp., Inc.

v. Easterwood, 507 U.S. 658, 663 (1993); Lawrence

County v. Lead-Deadwood Sch. Dist. No. 40-1, 469

U.S. 256, 269-270 (1985); see also Pennsylvania Prot.

& Advocacy, Inc. v. Houstoun, 228 F.3d 423, 428 (3d

Cir. 2000) (Alito, J.).4 In essence, petitioner makes a

policy argument against enforcement of the

Medicaid statute, but this policy argument has no

basis in law.

Scalia concurred separately, proposing initial enforcement by

the federal government. Jd. at 675 (Scalia, J., concurring in

judgment). Nevertheless, both Justices joined without

reservation the Court’s subsequent decision in Arkansas Dept.

of Health & Human Services v. Ahiborn, 547 U.S. 268 (2006),

resolving a private action asserting preemption under

Medicaid.

4 Every court of appeals to consider the argument that

Medicaid as a whole is unenforceable ‘arising largely in the

context of suits under § 1983) because vu. .cs nature as Spending

Clause legislation, has rejected that argument as contrary to

extensive Supreme Court precedent. Missouri Child Care Ass'n

v. Cross, 294 F.3d 1034, 1041 (8th Cir. 2002); Antrican v. Odom,

290 F.3d 178, 188 (4th Cir. 2002); Westside Mothers v.

Haveman, 289 F.3d 852, 860 (6th Cir. 2002), cert. denied, 537

U.S. 1045 (2002); Frazar uv. Gilbert, 300 F.3d 530, 550 (5th Cir.

2002) rev'd sub nom. Frew ex rel. Frew v. Hawkins, 540 U.S.

431 (2004).

18

Indeed, this Court has consistently held that the

Eleventh Amendment is not a bar to private parties

seeking prospective injunctive relief against state

officials to enforce Medicaid and other Spending

Clause statutes because such suits are necessary in

order to vindicate the Supremacy Clause. See Frew

ex rel. Frew v. Hawkins, 540 U.S. 431, 437 (2004)

(Medicaid); Edelman v. Jordan, 415 U.S. 651 (1974)

(Aid to the Aged, Blind, and Disabled).

3. Petitioner also suggests (Pet. 37) that because

of the oversight role of the federal government in the

Medicaid program, a preemption claim should not be

permitted. As this Court explained in Verizon, a

preemption claim may proceed as long as the statute

“does not divest the district courts of their authority”

under federal question jurisdiction to review the

state's “compliance with federal law.” Verizon

Maryland, Inc., 535 U.S. at 642 (emphasis in

original). There is nothing in the text or structure of

the Medicaid Act that divests the courts of their

authority to resolve a preemption claim. The federal

government's ability to withhold federal funds does

not preclude other federal remedies. Rosado v.

Wyman, 397 U.S. 397 (1970). See also Blessing v.

Freestone, 520 U.S. 329, 346-348 (1997); Wilder v.

Virginia Hosp. Ass‘n, 496 U.S. 498, 521 (1990).

4. Preemption claims such as respondents’ are

consistent with the voluntary nature of states’

participation in federal spending programs.

Petitioner’s assertion of a “sovereign right to

choose not to comply,” with such statutes, Pet. in

ILC I at 32 (April 1, 2009), is erroneous. States have

a sovereign night to choose not to participate in

19

federal programs and to choose not to take federal

monies. But once they have made those choices, the

State “must comply with [the federal statute's]

mandates.” Winkelman ex rel. Winkelman v. Parma

City Sch. Dist., 550 U.S. 516, 520 (2007).

Althowzh petitioner complains of the cost to

comply with federal law, (see, Pet. Br. 28), the

federal government matches or exceeds state dollars

for Medi-Cal. The federal government paid half of

Medi-Cal expenditures prior to October 2008, and

will pay more than half for the period of October

2008 to December 2010 pursuant to the American

Recovery and Reinvestment Act of 2009 (hereinafter

“ARRA”), Pub. L. No. 111-5, 123 Stat. 115. Under

ARRA, the federal government is expected to spend

over $11 billion on Medi-Cal for that period. Kaiser

Commission on Medicaid and the Uninsured,

American Recovery and Reinvestment Act (AARA):

Medicaid and Health Care Provisions (Mar. 2009), at

http://www.kff.org/medicaid/upload/7872.pdf. In

return for this infusion of billions of federal dollars

to provide health insurance for California residents,

it is fitting that the state be required to comply with

federal law.

Moreover, this is not the first time the Ninth

Circuit has recognized this cause of action. To the

contrary, the court of appeals and many other courts

of appeals expressly reached the same conclusion

long ago. As petitioner himself acknowledged below,

the Ninth Circuit “has recognized that ‘the

Supremacy Clause creates an implied right of action

for injunctive relief against state officers who are

threatening to violate the federal Constitution or

laws.’ " C.A. ILC I Pet. Opening Br. 5-6 (quoting

20

Guar. Nat. Ins. Co. v. Gates, 916 F.2d 508, 512 (9th

Cir. 1990)); see also Bernhardt v. Los Angeles

County, 339 F.3d 920, 929 (9th Cir. 2003); Bud

Antle, Inc. v. Barbosa, 45 F.3d 1261, 1269 (9th Cir.

1994).

5. Petitioner argues that under the Ninth Circuit's

ruling in ILC J, any alleged conflict between federal

and state law is sufficient to “enjoin state conduct,”

thereby opening “the door to a flood of lawsuits.”

Pet. 27. Yet, petitioner refutes his own argument by

citing a recent California case applying ILC 7 in

which the district court dismissed the Supremacy

Clause claim, finding no preemption of state law.

Pet. 28 (citing Gray Panthers of San Francisco v.

Schwarzenegger, C 09-2307 PJH, 2009 WL 2880555

(N.D. Cal. Sept. 1, 2009)). Similarly, in other

Supremacy Clause cases involving Spending Clause

statutes in which the court found no conflict between

federal and state law, claims have been dismissed in

accordance with this Court’s clear directions for

preemption cases. See, e.g., Equal Access for El

Paso, Inc. v. Hawkins, 562 F.3d 724 (5th Cir. 2009).

C.There Is No Basis For Petitioner’s

Assertion That A Preemption Claim Must

Satisfy The Standards Of an Implied

Private Right of Action and 42 U.S.C. §

1983

Petitioner suggests that respondents’ preemption

claim should be dismissed because it does not meet

the standards for a cause of action under an implied

private right of action and under 42 U.S.C. § 1983

(“Section 1983”). Pet. 27. This Court has never

21

utilized either standard for a preemption claim, and

indeed, petitioner cites no case which has so ruled.

1. Petitioner suggests that Congress did not

intend to create a private remedy under an implied

private right of action. Pet. 27. The remedy in this

case is a declaration that federal law preempts state

law and an injunction preventing enforcement of a

preempted state law. This remedy is supplied by the

Supremacy Clause, not an implied private right of

action, and does not depend upon an express

declaration by Congress. As this Court has

explained, “the existence of conflict cognizable under

the Supremacy Clause does not depend on express

congressional recognition that federal and state law

may conflict.” Crosby v. Nat'l Foreign Trade

Council, 530 U.S. 363, 388 (2000). Thus, the cases

cited by petitioner requiring express statements by

Congress to create an implied private right of action

are simply inapposite to respondents’ preemption

claim.

Indeed, Verizon rejected the assertion that a

district court could not reach the merits of a

preemption claim unless the plaintiff had

demonstrated a statutory cause of action. Verizon

Maryland, Inc. v. Pub. Serv. Comm'n of Maryland,

535 U.S. 635, 642 (2002). Dutifully following

Verizon, the Fourth Circuit rejected the argument

advanced by petitioner in the instant case (Pet. 17)

that Cort v. Ash, 422 U.S. 66 (1975), applies to a

preemption claim. Verizon Maryland, Inc., 377 F.3d

at 368-369. As noted supra, a claim under the

Supremacy Clause is not dependent upon a statutory

cause of action, either express or implied.

22

2. Section 1983 is an express cause of action to

enforce statutory and constitutional rights that

provides various remedies against individuals acting

under color of state law and municipal corporations.

It does not supplant or repeal remedies available

under the Constitution and the laws of the United

States for injunctive or declaratory relief.

Preemption and § 1983 are completely distinct

and separate avenues of enforcing federal law. The

remedies available under § 1983 are far more

extensive than under preemption, including

compensatory and punitive damages against state

actors in their individual capacities, compensatory

damages against municipalities, and attorneys’ fees.

See City of Newport v. Fact Concerts, Inc., 453 U.S.

247 (1981); 42 U.S.C. § 1988. Preemption claims, in

contrast, seek only to enforce the structural

relationship between federal and state law by

obtaining prospective equitable relief against state

and local officials in their official capacities.

“Remedies designed to end a continuing violation

of federal law are necessary to vindicate the federal

interest in assuring the supremacy of that law.”

Green v. Mansour, 474 U.S. 64, 68 (1985). For a non-

frivolous preemption claim, “denial of a judicial

remedy would undermine federal supremacy and

subvert the rule of law by enabling state officers to

proceed with enforcement of an invalid state law, to

the detriment of private parties.” David Sloss,

Constitutional Remedies for Statutory Violations, 89

lowa L. Rev. 355, 409 (2004).

Several members of this Court have stressed that

preemption claims and § 1983 serve different

purposes and have different requirements. In Golden

State Transit Corp. v. City of Los Angeles, 493 U.S.

103 (1989), for example, Justice Kennedy explained

that even though he would have held that the

plaintiff could not bring its action under § 1983,

nevertheless:

we would not leave the [plaintiff] without a

remedy. Despite what one might think from the

increase of litigation under the statute in recent

years, § 1983 does not provide the exclusive relief

that the federal courts have to offer. * * *

[Plaintiffs may vindicate [statutory] preemption

claims by seeking declaratory and equitable relief

in the federal district courts through their powers

under federal jurisdictional statutes. See 28

U.S.C. § 1331 (1982 ed.); 28 U.S.C. § 2201; 28

U.S.C. § 2202 (1982 ed.). These statutes do not

limit jurisdiction to those who can show the

deprivation of a right, privilege, or immunity

secured by federal law within the meaning of §

1983.

Id. at 119 (Kennedy, J., dissenting) (some citations

omitted, emphasis added).

Petitioner asserted in its reply brief in ILC I

that Justice Kennedy's Golden State dissent

indicates that an “immunity” is needed for a

preemption claim. Pet. Reply in ILC IJ at 6. In fact,

Justice Kennedy said precisely the opposite: “Pre-

emption concerns the federal structure of the Nation

rather than the securing of rights, privileges, and

immunities to individuals.” 493 U.S. at 117. See also

Hagans v. Lavine, 415 U.S. 528, 553 (1974)

(Rehnquist, J., dissenting) (a claim that state

24

regulations conflict with federal regulations would

properly invoke federal question jurisdiction to

determine whether the state regulations are “invalid

under the Supremacy Clause of the United States

Constitution”).

Indeed, petitioner, in contending on the basis of

no supporting precedent, the novel view that the

rules applicable to whether a person injured by

preempted state action may obtain injunctive relief

are those rules applicable to § 1983, ignores

statements in Golden State in which the Court has

specifically highlighted the differences between §

1983 and preemption:

Given the variety of situations in which

preemption claims may be asserted, in state court

and in federal court, it would be obviously

incorrect to assume that a federal right of action

pursuant to § 1983 exists every time a federal rule

of law pre-empts a state regulatory authority.

Golden State Transit Corp., 493 U.S. at 107-108

(emphasis added).

Il. CERTIORARI SHOULD BE DENIED ON THE

SECOND QUESTION BECAUSE THE

DECISION BELOW IS A _ CORRECT

APPLICATION OF THE MEDICAID ACT AND

THERE IS NO RELEVANT DIVISION IN THE

LOWER COURTS

1. Petitioner asserts that the Ninth Circuit’s

opinion does not comport with the text of the

Medicaid statute. Pet. 3-7, 30-33. This claim is

without basis. The opinion in this matter is mindful

of the textual provisions of Section 30A, concluding

the evidence showed that the state statute conflicted

with federal statutory requirements.

The Medicaid statute, in Section 30A, requires

states to utilize “methods and procedures...to assure

that payments are consistent with efficiency,

economy, quality of care, and are sufficient to enlist

enough providers" so that beneficiaries have the

same access to services as the general population.

The evidence demonstrated that the state

Legislature which enacted the rate cut never

considered the impact of the rate cut on the Section

30A factors of efficiency, economy, quality, and

access to care. Because the Legislature did nothing

to assure that payments were sufficient to provide

access to services comparable to the general

population, the state statute conflicted with federal

law.

Petitioner mischaracterizes the Ninth Circuit's

evidentiary holding as setting numerous “specific

requirements” for a study to comply with Section

30A. Pet. 31-33. In fact, the Ninth Circuit’s opinion

does not set forth any specifications for procedures or

studies that would comply with Section 30A. On the

contrary, the Ninth Circuit merely evaluated the

evidence proffered by the parties and concluded the

setting of the pharmaceutical rates lacked any

consideration of numerous Section 30A factors.

Instead, the evidence demonstrated that the rates

were set for purely budgetary reasons. Pet. App. 20.

Further, the Dec. 2007 Myers and Stauffer cost

study filed by petitioner as proof of the Legislature’s

compliance with Section 30A explicitly stated that

the study did not contain any information about

26

access to services and that the “evaluation” of fees

should include consideration of access to services.

Pet. App. 55-56. The study similarly noted that it

did not address efficiency and that this should be

considered in setting rates. Jd. § Thus, the Ninth

Circuit properly held that the study does not show

that the rate cut was enacted in accordance with

Section 30A.

Petitioner suggests that the Ninth Circuit erred

in holding that the Legislature, as distinguished

from the Department, was required to comply with

Section 30A. Pet. App. 31-32. This Court held in

Ahlborn that when a state Legislature enacts a

statute that conflicts with the federal Medicaid law,

the state statute is “unenforceable.” Arkansas Dept.

of Health & Human Services v. Ahlborn, 547 U.S.

268, 292 (2006). It is well established that the

enactments of state Legislatures may be preempted

by federal law. See, e.g., Rowe v. New Hampshire

Motor Transp. Ass'n, 552 U.S. 364 (2008); Blum v.

Bacon, 457 U.S. 132, 138 (1982); Hines v.

Davidowitz, 312 U.S. 52 (1941). The Ninth Circuit

properly analyzed the text and legislative history of

the state law and found it conflicted with the textual

requirements of Section 30A.

2. All Circuits which have ruled on the subject

have unanimously concluded that although

budgetary considerations, - which are not listed in

the text of Section 30A as a relevant factor at all -

may be considered by the rate setter along with the

relevant factors of efficiency, economy, quality of

care, and equal access, nevertheless, rates based

purely on budgetary considerations, or in which

budgetary considerations are the conclusive factor,

27

violate Section 30A. See, eg., Rite Aid of

Pennsylvania, Inc. v. Houstoun, 171 F.3d 842 (3d

Cir. 1999); Minnesota HomeCare Ass'n, Inc. v.

Gomez, 108 F.3d 917, 917 (8th Cir. 1997).

This being so, the claim of the petitioner that the

Ninth Circuit is out of step with other Circuits on

the basic issue of whether a State may reduce

Medicaid provider payments purely for budgetary

reasons, is without merit. Cases from the Fifth and

Seventh Circuit addressed only the “equal access”

provision of Section 30A. Those courts described the

plaintiffs’ appeal as not raising a failure of the state

to consider the factors of efficiency, economy and

quality of care. See Evergreen Presbyterian

Ministries Inc. v. Hood, 235 F.3d 908, 932 (5th Cir.

2000); Methodist Hospitals, Inc. v. Sullivan, 91 F.3d

1026, 1029 (7th Cir. 1996). Similarly, the First

Circuit did not address these requirements in

rejecting the enforceability of Section 30A under 42

U.S.C. § 1983. See Long Term Care Pharmacy

Alliance v. Ferguson, 362 F.3d 50, 59-60 (Ist Cir.

2004). There is no split among the Circuits on

whether the requirements of Section 30A can be

disregarded; therefore, no review is warranted in

respect to the Second Question asserted by

petitioner.

28

CONCLUSION

For the reasons set forth above, the petition for a

writ of certiorari should be denied.

Respectfully submitted,

ROCHELLE BOBROFF

NATIONAL SENIOR

CITIZENS LAW CENTER

1444 EYE STREET, NW,

STE 1100

WASHINGTON, DC 20005

RBOBROFF@NSCLC.ORG

(202) 289-6976

LYNN S. CARMAN*

MEDICAID DEFENSE FUND

8 WATERBURY LANE

Novato, CA 94949

LYNNSCARMAN@HOTMAIL.C

OM

(415) 927-4023

STANLEY L. FRIEDMAN

445 S. FIGUEROA STREET,

27™ FL

LoS ANGELES, CA 90071

FRIEDMAN@FRIEDMANLAW.

ORG

(213) 629-1500

*Counsel of Record

Counsel for Respondents

Independent Living Center of

Southern California, Inc.;

Gerald Shapiro, Pharm.D.,

d/b/a Uptown Pharmacy

and Gift Shoppe; Sharon

Steen, d/b/a Central

Pharmacy; and Tran

Pharmacy, Inc., d/b/a Tran

Pharmacy

May 24, 2010