Eduardo J. GUZMAN, M.D., Plaintiff-Appellant, v. Sandra SHEWRY, Director of the California State Department of Health Care Services, Defendant-Appellee.
No. 08-55326.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted June 4, 2008. Filed Sept. 23, 2008. Amended Jan. 15, 2009.
552 F.3d 941
Eduardo J. GUZMAN, M.D., Plaintiff-Appellant, v. Sandra SHEWRY, Director of the California State Department of Health Care Services, Defendant-Appellee.
No. 08-55326.
United States Court of Appeals, Ninth Circuit.
Filed Sept. 23, 2008.
Amended Jan. 15, 2009.
Janet E. Burns, Deputy Attorney General, State of California, Los Angeles, CA, argued the cause for the defendant-appellee and filed a brief; Phillip J. Matsumoto, Deputy Attorney General, Richard T. Waldow, Supervising Attorney General, Douglas M. Press, Senior Assistant Attorney General, and Edmund G. Brown, Jr., Attorney General for the State of California, were on the brief.
Before: DAVID R. THOMPSON, DIARMUID F. O‘SCANNLAIN, and RICHARD C. TALLMAN, Circuit Judges.
ORDER AND AMENDED OPINION
ORDER
The opinion filed in this case on September 23, 2008, 544 F.3d 1073, is AMENDED as follows:
At page 13362, line 24, 544 F.3d at 1078, of the slip opinion, after the sentence concluding “halt the temporary suspension,” insert a new footnote reading <In his complaint, Guzman alleges that he also brings this claim directly under the Supremacy Clause. As such a claim is not “specifically and distinctly” put forward in his opening brief, we decline to consider it. See Entm‘t Research Group, Inc. v. Genesis Creative Group, Inc., 122 F.3d 1211, 1217 (9th Cir.1997).>
The panel has voted unanimously to deny the petition for rehearing. Judges O‘Scannlain and Tallman have voted to deny the petition for rehearing en banc and Judge Thompson so recommends. The full court has been advised of the petition for rehearing en banc and no active judge has requested a vote on whether to rehear the matter en banc.
The petition for rehearing and the petition for rehearing en banc аre DENIED. No further petitions for rehearing or rehearing en banc may be filed.
O‘SCANNLAIN, Circuit Judge:
We must decide whether a district court abused its discretion in denying a physician a preliminary injunction to halt his temporary suspension from California‘s Medi-Cal program based on his claims that such suspension violates federal Medicaid law and is prohibited by the Due Process Clause of the Fourteenth Amendment.
I
A
Medicaid is a cooperative federal-state program that authorizes the United States Government to provide funds to participating states to administer medical assistance to individuals “whose income and resources are insufficient to meet the costs of necessary medical services.”
B
Dr. Eduardo J. Guzman, M.D., is an obstetrician/gynecologist who provides services through Medi-Cal. Sometime in 2006, DHCS opened an investigation into certain claims Guzman had submitted to Medi-Cal for payment. On August 30, 2006, after several searches of his offices in Downey and Norwalk, California, DHCS filed an Accusation against Guzman alleging that he had imported large quantities of intrauterine devices (“IUDs“) from Mexico that had not been approved by the Food and Drug Administration (“FDA“) for use in this country; that he had inserted such devices into his patients, Medi-Cal beneficiaries; and that he had billed Medi-Cal for his services, fraudulently claiming that the devices used were FDA-approved. The Accusation notified Guzman that DHCS would seek permanently to suspend him from the Medi-Cal program as a result of these allegations. See
DHCS scheduled an administrative hearing on the Accusation for August 2007, but Guzman requested that it be postponed until the criminal proceedings against him were concluded.3
As the letter explained, California law entitled Guzman to appeal the temporary suspension. DHCS concedes, however, that such appeal is limited to the question of whether a provider is, in fact, under investigation for fraud or abuse. Thus, Guzman would not have been able to contest the underlying allegations against him in such an appeal. In addition, the letter explained that Guzman also had the right to “request a meeting with [DHCS] representatives” if he believed the information on which Medi-Cal was relying was erroneous. See
C
On February 5, 2008, Guzman filed a complaint against DHCS in the district court under
DHCS agreed to delay enforcement of the suspension for one month, allowing the district court sufficient time to rule on Guzman‘s expedited motion for a preliminary injunction. On March 4, 2008, the district court denied the motion, concluding that Guzman would not likely be able to show that
II
“Our review of the denial of a preliminary injunction is limited and deferential.” Wildwest Inst. v. Bull, 472 F.3d 587, 589 (9th Cir.2006) (internal quotation marks omitted). “We ask only whether the district court has abused its discretion.” Id. In such cases, the scope of our review is “generally limited to whether the district court [1] employed the proper preliminary injunction standard and [2] whether the court correctly apprehended the underlying legal issues in the case.” Earth Island Inst. v. U.S. Forest Serv., 351 F.3d 1291, 1298 (9th Cir.2003). In other words, “[a]s long as the district court got the law right, it will not be reversed simply because the appellate court would have arrived at a different result if it had applied the law to the facts of the case.” Wildwest Inst., 472 F.3d at 590.
A district court may grant a preliminary injunction under two sets of circumstances. In the first case, “‘a plaintiff must show (1) a strong likelihood of success on the merits, (2) the possibility of irreparable injury to plaintiff if preliminary relief is not granted, (3) a balance of hardships favoring the plaintiff, and (4) advancement of the public interest (in certain cases).‘” Natural Res. Def. Council, Inc. v. Winter, 518 F.3d 658, 677 (9th Cir.2008) (quoting Freecycle Network, Inc. v. Oey, 505 F.3d 898, 902 (9th Cir.2007)). In the second case, “a court may grant the injunction if the plaintiff demonstrates either a combination of probable success on the merits and the possibility of irreparable injury or that serious questions are raised and the balance of hardships tips sharply in his favor.” Id. (emphasis added) (quoting Freecycle, 505 F.3d at 902).
The district court articulated this standard and, in applying it, held that Guzman had failed to show a likelihood of success on the merits. Thus, the court declined to consider the possibility that Guzman would suffer irreparable injury. Such action was a valid exercise of the court‘s discretion. As we have held previously, before a preliminary injunction is granted, at “an irreducible minimum, the moving party must demonstrate a fair chance of success on the merits, or questions serious enough to require litigation.” Dep‘t of Parks & Recreation v. Bazaar Del Mundo Inc., 448 F.3d 1118, 1124 (9th Cir.2006) (quoting Arcamuzi v. Cont‘l Airlines, Inc., 819 F.2d 935, 937 (9th Cir.1987)). Thus, we must decide whether the district court correctly apprehended the law underlying Guzman‘s claims in concluding that he was unlikely to prevail. We now consider each of those claims in turn.
III
A
We begin with Guzman‘s claim that
Section 14043.36(a) states that
[i]f it is discovered that a provider is under investigation by the department or any state, local, or federal government law enforcement agency for fraud or abuse, that provider shall be subject to temporary suspension from the Medi-Cal program, which shall include temporary deactivation of the provider‘s number, including all business addresses used by the provider to obtain reimbursement from the Medi-Cal program.
Id. Guzman argues that this statute is preempted because federal law prohibits states from suspending providers from a state health care program simply because the provider is “under investigation” for fraud or abuse.
B
Medicaid, by definition, is a cooperative federal-state medical benefits assistance program. See
C
Section 1128 of the Social Security Act lists certain grounds upon which the Secretary of HHS must exclude providers from a federal health care program; the Act also lists certain other grounds upon which the Secretary may do so in his discretion. See
The applicable Medicare regulations cоnfirm this view. The regulation describing “State-Initiated Exclusions from Medicaid” provides that “a State may exclude an individual or entity from participation in the Medicaid program for any reason for which the Secretary could exclude that individual or entity.”
Accordingly, nothing in the federal Medicaid statutes or regulations prevents a stаte from suspending a provider temporarily from a state health care program on the basis of an ongoing investigation for fraud or abuse, as
IV
Even if
Section 1983 creates a cause of action against any person who, under color of state law, deprives “any citizen of the United States ... of any rights, privileges, or immunities secured by the Constitution аnd laws” of the United States. Id. Although this statute enables plaintiffs to enforce federal statutory rights, Maine v. Thiboutot, 448 U.S. 1, 4-5 (1980), it “does not provide an avenue for relief every time a state actor violates a federal law,” City of Rancho Palos Verdes v. Abrams, 544 U.S. 113, 119 (2005). Thus, to demonstrate that he is entitled to a pre-suspension hearing under federal Medicaid law, Guzman must establish that a federal statute unambiguously entitles him to such a right. After all, “[t]he Supreme Court has held that only violations of rights, not laws, give rise to
A
Guzman contends that he is afforded the right to a presuspension hearing by several Medicaid statutes and regulations. First, he points to the Social Security Act, which requires the Secretary of HHS to afford “reasonable notice and opportunity for a hearing” to any provider excluded from any federаl health care program.
B
Second, Guzman points to the federal regulations that set forth the requirements for “State-Initiated Exclusions from Medicaid,”
By their express terms, such regulations do not apply to Guzman‘s temporary suspension from Medi-Cal because they set forth only those procedures which a state must follow in excluding providers for reasons upon which the Secretary of HHS could act. DHCS seeks temporarily to suspend Guzman from Medi-Cal because he is under investigation for fraud and abuse, as it has the authority to do under
C
Guzman points to one final source of his right to a presuspension hearing,
In the Omnibus Budget Reconciliation Act of 1981, Pub.L. No. 97-35, 95 Stat. 357, Congress cabined such principle by creating exceptions to
In 1983, HHS promulgated regulations to implement these exceptions, stating
Lock-out of providers. If a Medicaid agency finds that a Medicaid provider has abused the Medicaid program, the agency may restrict the provider, through suspension or otherwise, from participating in the program for a reasonable period of time.
Before imposing any restriction, the agency must meet the following conditions:
(1) Give the provider notice and opportunity for a hearing, in accordance with procedures established by the agency.
(2) Find that in a significant number or proportion of cases, the provider has:
(i) Furnished Medicaid services at a frequency or amount not medically necessary, as determined in accordance with utilization guidelines established by the agency; or
(ii) Furnished Medicaid services of a quality that does not meet professionally recognized standards of health care.
(3) Notify CMS and the general public of the restriction and its duration.
(4) Ensure that the restrictions do not result in denying recipients reasonable access (taking into account geographic location: and reasonable travel time) to Medicaid services of adequate quality, including emergency services.
Notably, such regulation is placed among the exceptions to the freedom of choice provision, see id.
Guzman is correct that his temporary suspension from Medi-Cal is a “restriction” on his participation in such program because the effect of the suspension is to prevent him from billing Medi-Cal for the costs of any services rendered. See supra at 946-47 & n. 3. Moreover, DHCS has never made any finding that Guzman has furnished unnecessary or inadequate medical services, as
Yet even if subsection (f) were designed to entitle Guzman to the remedies it describes, Guzman must demonstrate that a federal statute vests him with such a right. As we held in Save Our Valley, “agency regulations cannot independently create rights enforceable through
In determining whether Congress intended to create a federal right in a particular statutory provision, we examine three factors. “First, Congress must have intended that the provision in question benefit the plaintiff.” Blessing, 520 U.S. at 340. In answering this initial inquiry, we must determine whether the statute creates an “individual entitle-
Here, our analysis need not proceed further than this first step of the Blessing test because there is no federal statute that references any of the procedures set forth in subsection (f).9 Although subsection (f) was promulgated to implement the exceptions to the freedom of choice provision set forth in the Omnibus Budget Reconciliation Act of 1981, including the provider “lock-out” exception,
As we have stated in the past, “the Supreme Court‘s Sandoval and Gonzaga decisions, taken together, compel the conclusion that agency regulations cannot independently create rights enforceable through
Accordingly, Guzman is unlikely to succeed on the merits of his claim that he has an enforceable federal right to a hearing prior to the imposition of his tеmporary suspension from the Medi-Cal program.
V
Finally, Guzman argues that even if he is not entitled to a presuspension hearing under federal Medicaid law, the Fourteenth Amendment of the United States Constitution affords him such a remedy. The Fourteenth Amendment protects against governmental deprivations of “life, liberty, or property” without due process of law.
The liberty guaranteed by the Fourteenth Amendment is necessarily broad. See Bd. of Regents v. Roth, 408 U.S. 564, 572 (1972). To that end, Guzman argues that DHCS‘s failure to provide him with a pre-suspension hearing deprived him of three protected liberty interests: (1) his right to contract with the state; (2) his interest in
A
Guzman argues that because his temporary suspension denies him the ability to receive reimbursement for treating Medi-Cal patients, he has been deprived of his right to сontract with the state. In support of such assertion, Guzman relies on the D.C. Circuit‘s decision in Trifax Corp. v. District of Columbia, 314 F.3d 641 (D.C.Cir.2003), which indicates that “formally debarring a corporation from government contract bidding constitutes a deprivation of liberty that triggers the procedural guarantees of the Due Process Clause.” Id. at 643. However, Guzman‘s reliance on such authority is misplaced. Participation in the Medi-Cal program entitles Guzman to reimbursement for treating patients who receive Medi-Cal benefits; it does not involve bidding on government contracts.10 As the Seventh Circuit explained in Medley v. City of Milwaukee, 969 F.2d 312 (7th Cir.1992), there is no authority for the proposition that a private party, such as Guzman, has a “liberty interest in ... participation in a government assistance program designed to provide benefits for a third party.” Id. at 317. Accordingly, we must conclude that DHCS‘s action does not deprive Guzman of his interest in contracting with the state.
B
Guzman next argues that his temporary suspension denies him his liberty interest in pursuing the occupation of his choice. The Supreme Court has not defined the boundaries of an individual‘s right to pursue his chosen profession, but it has stated that there is “some generalized due process right to choose one‘s field of private employment.” Conn v. Gabbert, 526 U.S. 286, 291-92 (1999). The Court has emphasized, however, that all cases recognizing such a right have “deal[t] with a complete prohibition on the right to engage in a calling, and not [a] sort of brief interruption.” Id. at 292 (emphasis added). Indeed, the liberty interest in pursuing one‘s chosen profession has been recognized only in cases where (1) a plaintiff challenges the rationality of government regulations on entry into a particular profession, see, e.g., Schware v. Bd. of Bar Exam‘rs, 353 U.S. 232 (1957), or (2) a state seeks permanently to bar an individual from public employment, see, e.g., Roth, 408 U.S. at 573.
Guzman‘s claim does not fall into either of these two recognized categories. With respect to the first, DHCS has temporarily suspended Guzman from Medi-Cal, thereby preventing him from receiving reimbursement for treating Medi-Cal patients. DHCS has not, however, revoked or suspended his license to practice medicine. Thus, Guzman‘s case is distinguishable from those in which plaintiffs have challenged the rationality of a state-imposed barrier to entering a particular profession, such as a testing or licensing requirement. See, e.g., Schware, 353 U.S. at 247 (recognizing the liberty interest of an
As to the second category, Guzman is not a public employee, nor has DHCS‘s decision to suspend him deprived him of future public employment. Consequently, the suspension did not impose a complete bar on his ability to become a public employee. See Cafeteria & Rest. Workers Union, Local 473 v. McElroy, 367 U.S. 886, 895-96 (1961) (concluding that an employment decision to bar a cook from working at a particular military base did not violate the cook‘s due process rights because she “remained entirely free to obtain employment ... with any other employer“); Llamas v. Butte Cmty. Coll. Dist., 238 F.3d 1123, 1126, 1128 (9th Cir.2001) (concluding that a janitor fired from his job and “barred from all future employment with the District” was not deprived of his liberty interest in pursuing the occupation of his choice because he had “not been banned from pursuing a janitorial position [or other public employment] elsewhere“).
In sum, Guzman‘s temporary suspension from the Medi-Cal program does not exclude him from the medical profession, nor does it deprive him of, or prevent him from applying for, public employment. Accordingly, Guzman has not been deprived of a protected liberty interest in pursuing the occupation of his choice.
C
Finally, Guzman contends that the Due Process Clause entitles him to a pre-suspension hearing because the grounds on which the suspension is based harm his reputation. A person‘s liberty interest is implicated if the government levels a charge against him that “impairs his reputation for honesty or morality.” Erickson, 67 F.3d at 862 (citing Vanelli v. Reynolds Sch. Dist. No. 7, 667 F.2d 773, 777 (9th Cir.1982)). DHCS‘s suspension of Guzman triggers such an interest because it is predicated on the fact that he is under investigation for “fraud and abuse,” an allegation that impacts his reputation for honesty. See Cox v. Roskelley, 359 F.3d 1105, 1113 (9th Cir.2004) (concluding that a termination letter which alleged that a plaintiff had overchargеd for services rendered “could impair [plaintiff‘s] reputation for honesty or morality“).
Thus, Guzman can establish that he has a protected liberty interest at stake if he can satisfy the test we set forth in Vanelli: he must demonstrate that (1) “the accuracy of the charge is contested,” (2) “there is some public disclosure of the charge,” and (3) the charge is “‘made in connection with the termination of employment or the alteration of some right or status recognized by [] law.‘” Erickson, 67 F.3d at 862 (alteration in original) (quoting Vanelli, 667 F.2d at 777-78).
Applying Vanelli, we note initially that Guzman contests the accuracy of the charges against him. Ultimately, however, Guzman‘s likelihood of success on the merits of this claim turns on whether he can demonstrate a “public disclosure” of DHCS‘s charges against him under the second prong of the Vanelli test.
1
With respect to this second prong, Guzman first argues that federal regulations require DHCS to report his suspension to the Healthcare Integrity and Protection Data Bank (“HIPDB“), and that such reporting would constitute “public disclosure” sufficient to deprive him of a protected liberty interest. The HIPDB is a public database, maintained by HHS under authority provided by the Social Security Act, which records certain “final adverse actions” taken against health care providers. See
Federal regulations provide that “Federal and State Government agencies must report health care providers, suppliers, or practitioners excluded from participating in Federal or State health care programs” for inclusion in the HIPDB.
Guzman argues that his temporary suspension is an “exclusion,” which DHCS must report to the HIPDB, thereby publishing its charges against him. In response, DHCS contends that its policy is to report only “final” actions to the HIPDB. DHCS believes that the temporary suspension it imposed on Guzman under
The district court agreed with Guzman that DHCS‘s policy of not reporting temporary suspensions appears to conflict with the plain language of the regulations. See
Guzman concedеs that, as a matter of policy, DH[C]S does not report temporary suspensions to the HIPDB. He fears, however, that because that policy apparently violates federal regulations, DH[C]S may ultimately be forced to report the suspension. Guzman adduces no evidence that there will likely be a change in DH[C]S‘s policy during the pendency of this litigation. Specifically, he presents no evidence that the policy has been challenged by federal Medicaid authorities or third parties, or that DH[C]S for some other reason will not continue to adhere to it for the foreseeable future.
Absent such evidence, Guzman‘s speculative, unsupported fear that the charges will be reported does not provide a sufficient basis upon which to conclude that he is likely to succeed on the merits of his procedural due process claim.
After DHCS stipulated that it would comply with such an order, the district court
We cannot conclude that the district court abused its discretion in the treatment of this claim. The record establishes that DHCS has not reported Guzman‘s suspension to the HIPDB, and Guzman offers no evidence that DHCS is likely to change its policy in the future. Moreover, DHCS has been ordered to notify Guzman of any change in its policy, at which time Guzman could renew his motion for a preliminary injunction.
Accordingly, based on the present record, we conclude that Guzman is not likely to succeed in proving that DHCS will publicly disclose the charges against him.
2
In the alternative, Guzman also asserts that he is under contractual obligations with several independent physicians’ associations to disclose his temporary suspension and that he is required to report the suspension to most of the hospitals at which he has staff privileges. Guzman‘s argument that his own disclosure of the suspension deprives him of a protected liberty interest is foreclosed by our decision in Llamas. In that case, we rejected the claim of a terminated public employee that his liberty interest would be implicated if he responded truthfully regarding such termination on a civil service job applicаtion he planned to file in the future. 238 F.3d at 1125-30. We explained that “to allow the potentially stigmatized party to satisfy the publication prong by disseminating the details surrounding his termination would contradict the purposes of the publication requirement as made clear in ... Supreme Court precedent.” Id. at 1131 (citing Bishop v. Wood, 426 U.S. 341, 349 (1976)).
Guzman points to no authority for the proposition that the contracts that obligate him to self-report his suspension are sufficient to constitute public disclosure for purposes of a due process claim, and we are aware of none.12 Accordingly, we conclude that Guzman‘s private obligations to report DHCS‘s action do not satisfy the public disclosure prong of the Vanelli test.
Having determined that Guzman is unable to demonstrate that the nature of the charges against him will be publically disclosed, wе need not consider whether the charges have been made in connection with the alteration of a protected right or status.13 See Erickson, 67 F.3d at 862. Ac-
VI
For the foregoing reasons, the district court‘s decision is
AFFIRMED.
DIARMUID F. O‘SCANNLAIN
UNITED STATES CIRCUIT JUDGE