California Ass'n of Medical Products Suppliers v. Maxwell-Jolly, 199 Cal. App. 4th 286

CAMPS appeals denial of a petition for writ of mandate and declaratory/injunctive relief challenging the Department’s 2004 upper billing limit regulations (UBL) for Medi-Cal reimbursements on durable medical equipment and supplies.
The UBL ties Medi-Cal billing to the net purchase price with up to a 100% markup, aiming to close a fraud-prone loophole where discounted or free items were billed at higher rates.
Prior reimbursement methods varied by category (dispensed supplies, incontinence supplies, durable medical equipment); the UBL represented a change from those methods.
The Department issued an emergency rule in February 2003 under Gov. Code 14043.75 to address fraud and abuse, followed by formal amendments and final adoption in 2004, with substantial supporting findings.
CAMPS challenged the UBL under the Administrative Procedure Act (APA), arguing lack of substantial evidence of need, excess of statutory authority, lack of clarity, and arbitrary 100% markup; the trial court denied relief and CAMPS appealed.
The appellate court upheld the UBL, concluding the Department acted within its authority, complied with the APA, and that substantial evidence supported the reasonable necessity of the regulation.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Did the Department have substantial evidence of adverse economic impact as required by the APA?	CAMPS contends there was no evidentiary basis.	Department complied with APA and relied on facts and record.	No reversal; initial determination supported by substantial evidence.
Was the UBL within the Department’s statutory authority and consistent with controlling law?	CAMPS asserts excess of authority under 14043.75 and related statutes.	Department acted within broad fraud-abuse authority and harmonized provisions.	No reversal; regulation within statutory scope.
Was the UBL reasonably necessary to effectuate the statute and purpose of 14043.75?	CAMPS argues lack of substantial basis for necessity.	Loophole and fraud concerns justify necessity; record supports it.	No reversal; necessity supported by substantial evidence.
Is the term net purchase price and the 100% markup sufficiently clear under the APA?	CAMPS argues lack of clarity and enforcement confusion.	Clarity adequate; Office of Administrative Law addressable, not appellate issue.	No reversal on clarity; court declines to invalidate on this ground.
Is the 100% markup arbitrary or capricious?	CAMPS contends the figure is conjectural and unequal across categories.	Markup level reasonably designed to prevent abuse and reflect costs.	No reversal; markup deemed reasonable and rational.

Pulaski v. Occupational Safety & Health Stds. Bd., 75 Cal.App.4th 1315 (Cal. App. Dist. 3 1999) (AP A review with substantial evidence standard for regulatory invalidation)
20th Century Ins. Co. v. Garamendi, 8 Cal.4th 216 (Cal. 1994) (agency rulemaking reviewed for reasonableness and statutory alignment)
Yamaha Corp. of America v. State Bd. of Equalization, 19 Cal.4th 1 (Cal. 1998) (independent review of consistency with controlling law)
Security Pacific Nat. Bank v. Wozab, 51 Cal.3d 991 (Cal. 1990) (statutory interpretation principles and plain meaning)
Communities for a Better Environment v. California Resources Agency, 103 Cal.App.4th 98 (Cal. App. 2d Dist. 2002) (deference to agency expertise on regulatory necessity and impact)
California Unions for Reliable Energy v. Mojave Desert Air Quality Management Dist., 178 Cal.App.4th 1225 (Cal. App. 2d Dist. 2009) (substantial evidence and reasonableness in environmental/regulatory decisions)
Roddenberry v. Roddenberry, 44 Cal.App.4th 634 (Cal. App. 1996) (substantial evidence requires logical, non-speculative support)
Moore v. California State Bd. of Accountancy, 2 Cal.4th 999 (Cal. 1992) (interpretation of regulatory authority and statutory construction)