Sierra Med. Servs. Alliance v. Jennifer Kent, 883 F.3d 1216

Background

California requires ambulance companies to provide emergency transport regardless of ability to pay (Cal. Health & Safety Code §1317) and provides Medi‑Cal (Medicaid) reimbursement to enrolled providers under rates set by DHCS.
Plaintiffs (private ambulance companies) contend Medi‑Cal reimbursement (~$118.20 per one‑way trip) covers only ~20% of their actual cost, producing alleged annual losses of ~$60 million.
DHCS relies on an established State Plan methodology (Attachment 4.19‑B) and historical regulations (Cal. Code Regs. tit. 22, §51527) for rate setting; rates for ambulance services have not been newly promulgated since 2003. Public supplemental reimbursements exist for public providers; a newer program (2017) provides additional supplemental reimbursement to both public and private providers.
Plaintiffs sued in federal court alleging violations of the Fifth Amendment Takings Clause, the Fourteenth Amendment Due Process and Equal Protection Clauses, the Commerce Clause (dormant), and the Contract Clause; district court granted DHCS summary judgment after extended discovery and a stay.
On appeal, the Ninth Circuit affirmed, finding plaintiffs lacked sufficient evidence to prevail on any claim and rejecting newly raised or waived claims (e.g., Supremacy Clause, new statutory causes of action).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Takings Clause — does Cal. Health & Safety Code §1317(d) effect a taking by forcing unpaid emergency transport?	§1317(d) compels provision of emergency transport to Medi‑Cal patients without prepayment/ability to decline, interfering with property (ambulances, contracts, equipment) and causing uncompensated losses.	Participation in Medi‑Cal is voluntary; any burden is regulatory and plaintiffs produced no evidentiary showing of a compensable taking under Penn Central.	Reversed district court only as to the threshold property‑interest error (plaintiffs do have protected property interests), but affirmed summary judgment because plaintiffs failed to produce evidence on Penn Central factors (economic impact, investment‑backed expectations, character of action).
Due Process (procedural and substantive) — do plaintiffs have a protected interest in Medi‑Cal reimbursement rates?	Plaintiffs argue DHCS’s failure to update rates deprives them of property/liberty without due process.	Reimbursement rates are not a constitutional property/right because Medi‑Cal participation is voluntary.	Affirmed — no protected property interest in specific Medi‑Cal rates; due process claims fail.
Equal Protection — does differential supplemental reimbursement (public v. private) violate equal protection?	Differential treatment of public providers (eligible for state‑share counting) burdens private providers unfairly.	State has a rational fiscal justification: payments to public providers can be counted toward the state’s Medicaid share, serving legitimate state interests.	Affirmed — classification survives rational‑basis review.
Contract Clause & Dormant Commerce Clause — do state inaction/ differentials impair contracts or discriminate against interstate commerce?	Contract impairment: failure to update rates substantially impairs contracts with localities naming plaintiffs as exclusive providers. Dormant Commerce: supplemental program discriminates vs. out‑of‑state private providers.	Contract claim is challenge to legislative inaction, not a change in law; plaintiffs identify no contractual term impaired. Dormant Commerce claim was not pleaded and plaintiffs lack standing as they are not out‑of‑state public providers.	Affirmed — Contract Clause claim fails (no substantial impairment shown); Dormant Commerce claim fails for lack of pleading and standing.

Key Cases Cited

Armstrong v. Exceptional Child Ctr., 135 S. Ct. 1378 (2015) (Supremacy Clause does not create private cause of action against states; remedy is withholding federal funds)
Managed Pharmacy Care v. Sebelius, 716 F.3d 1235 (9th Cir. 2013) (no property interest in specific Medicaid reimbursement rates because participation is voluntary)
Lingle v. Chevron U.S.A. Inc., 544 U.S. 528 (2005) (distinguishes takings tests; regulatory takings framework)
Penn Central Transp. Co. v. City of New York, 438 U.S. 104 (1978) (ad hoc three‑factor test for regulatory takings)
Lucas v. S.C. Coastal Council, 505 U.S. 1003 (1992) (per se taking when regulation deprives owner of all economically beneficial use)
Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982) (permanent physical occupation is a per se taking)
Horne v. Dep’t of Agric., 135 S. Ct. 2419 (2015) (Takings Clause protects personal property as well as real property)
Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment standard — nonmoving party must produce evidence to show genuine issue of material fact)
Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (reasonable jury standard for genuine dispute)
FCC v. Beach Commc’ns, Inc., 508 U.S. 307 (1993) (rational‑basis review — upholding classifications with any conceivable rational basis)