365 F. Supp. 3d 1029
C.D. Cal.2019Background
- Deanco Healthcare, LLC purchased Mission Community Hospital in 2013 after California Attorney General (OAG) approval conditioned on providing minimum charity care or funding nonprofits (the "Charity Care Condition").
- Plaintiff says the Affordable Care Act reduced the uninsured population, decreasing demand for charity care and making compliance with the Charity Care Condition difficult.
- In 2016 Deanco asked the OAG to modify the Charity Care Condition; after a study and public hearing, the OAG denied the request in April 2018.
- Deanco filed suit in federal court in May 2018, claiming the Charity Care Condition is preempted by federal law (EMTALA, Medicaid/Medicaid expansion, ACA individual mandate, ACA exchanges, and CMS Medicaid regulations).
- Defendants moved to dismiss under Rule 12(b)(1) (Eleventh Amendment immunity) and 12(b)(6) (failure to state a preemption claim). The court dismissed the State and OAG with prejudice and dismissed the preemption claims without leave to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Eleventh Amendment immunity | OAG and State are subject to suit; OAG allegedly operates independently from the State | California and OAG are arms/instrumentalities of the State and entitled to immunity | State and OAG dismissed with prejudice; Deanco failed to allege facts to strip OAG immunity |
| Field preemption under EMTALA | EMTALA occupies the field of emergency care, precluding state charity-care conditions | EMTALA expressly disclaims broad preemption and only preempts direct conflicts | Field preemption claim dismissed; EMTALA contains an express nonpreemption clause so field preemption fails |
| Conflict (impossibility/obstacle) preemption (EMTALA and Medicaid-related laws) | Charity Care Condition conflicts with federal statutes and frustrates federal objectives | Deanco can comply with both federal law and the Charity Care Condition; at most the condition makes compliance costlier but not impossible or obstructive | Conflict preemption claims dismissed for failure to allege impossibility or that the condition obstructs congressional objectives |
| Leave to amend | (implicit) allow amendment to cure pleading defects | Amendment would be futile because Deanco admits it complies with federal law and the Charity Care Condition does not impede federal obligations | Denied leave to amend; dismissal without leave to amend as futile |
Key Cases Cited
- Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89 (1984) (Eleventh Amendment bars suits against state entities in federal court)
- Ex Parte Young, 209 U.S. 123 (1908) (permits suits for prospective injunctive relief against state officials)
- Valle del Sol Inc. v. Whiting, 732 F.3d 1006 (9th Cir. 2013) (field preemption principles and when federal interest is dominant)
- Draper v. Chiapuzio, 9 F.3d 1391 (9th Cir. 1993) (explicit preemption text forecloses inferring preemption)
- Cipollone v. Liggett Grp. Inc., 505 U.S. 504 (1992) (when Congress addresses preemption explicitly, courts should follow statutory text)
- Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363 (2000) (explains impossibility and obstacle conflict preemption)
- Armstrong v. Exceptional Child Ctr., Inc., 135 S. Ct. 1378 (2015) (describing Medicaid as a federal program subsidizing state provision of medical services)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading must contain factual matter to state a plausible claim)
- Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375 (1994) (plaintiff bears burden to establish federal jurisdiction)