In a significant legal development, a California physician has lost his appeal against the state's Department of Health Care Services over Medi-Cal reimbursement rates. K. Andrew Johnson filed the complaint in the Superior Court of Los Angeles County on September 2022, naming the California Department of Health Care Services and its director, Michelle Baass, as defendants.
Johnson, a licensed medical doctor specializing in anesthesia services in Southern California, argued that the Department failed to comply with Welfare and Institutions Code section 14079 when setting Medi-Cal reimbursement rates for anesthesiologists. According to Johnson's amended petition for writ of mandate, the Department did not consider annual cost increases for physicians, Medicare reimbursement levels, and prevailing customary physician charges as required by law.
The plaintiff sought multiple forms of relief from the court. He requested an order directing the Department to incorporate these statutory factors into their next access report and all future reports. Additionally, he demanded retroactive reimbursements dating back to 2001 and proposed that 25 percent of this common fund be allocated for attorney fees.
However, Johnson faced significant legal hurdles. The trial court initially ruled that he lacked standing to seek updates or retroactive reimbursements but allowed him to pursue claims related to future compliance with section 14079. Following a hearing on April 4, 2023, Judge Mary H. Strobel denied Johnson’s petition entirely. The court found that his claims were not ripe for review and stated that Johnson had not proven any present abuse of discretion by the Department or established a current legal duty to act.
Johnson's appeal was subsequently reviewed de novo by the Court of Appeal of the State of California, Second Appellate District. The appellate court upheld the lower court's decision, emphasizing that while section 14079 requires periodic reviews considering various economic factors like Consumer Price Index and Medicare rates, it does not mandate specific outcomes or rate adjustments based on these considerations alone.
Moreover, Johnson's argument hinged on data showing significant discrepancies between static Medi-Cal rates and rising costs reflected in other indices like Medicare rates and Consumer Price Index over two decades. Despite this data suggesting inadequate consideration by the Department, the court maintained that mere absence of rate increases did not conclusively prove non-compliance with statutory requirements.
The appellate judges also noted that Johnson could have utilized discovery processes to gather more detailed information about how the Department sets these rates but failed to do so. Furthermore, they highlighted alternative avenues available for challenging such administrative decisions at federal levels through agencies like CMS (Centers for Medicare & Medicaid Services).
Representing Johnson were attorneys Thomas J. Weiss and Dean L. Johnson from Weiss & Zaman law firm. The defendants were represented by Attorney General Rob Bonta along with Assistant Attorney General Cheryl L. Feiner and Deputy Attorneys General Gregory D. Brown and Jacquelyn Y. Young.
The case ID is B330572.