Asante v. California Department of Health Care Services (155 F. Supp. 3d 1008, 2015)

United States District Court for the Northern District of California 2015-12-21

Commerce and Trade The Public Health and Welfare

Citations

Full opinion text

ORDER (1) GRANTING PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT; (2) GRANTING IN PART DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

EDWARD M. CHEN, United States District Judge

Nineteen hospitals from Oregon, Nevada, and Arizona challenge California’s Medi-Cal reimbursement policies for out-of-state hospitals. Compl. ¶ 1. Plaintiffs filed this action against California’s Department of Health Care Services in June 2014. Docket No. 1 (“Compl.”). Toby Douglas, Director of the California Department of Health Care Services, removed this action to federal court. Docket No. 1 (Not. of Removal). Plaintiffs bring the following causes of action: (1) violation of the Commerce Clause, Article I, Section 8, Clause 3 of the United States Constitution; (2) violation of the Equal Protection Clause under the Fourteenth Amendment to the United States Constitution; (3) violation of the Equal Protection Clause of the California Constitution; (4) violation of federal laws governing Medi-Cal DSH payments (42 U.S.C. § 1396a(a)(13)(A)); and (5) violation of federal laws governing Medi-Cal payments to out-of-state hospitals. (42 U.S.C. § 1396a(a)(16) ' and 42 C.F.R. § 431.52). Plaintiffs seek a declaration that the Department violates these provisions and an injunction enjoining the Department from enforcing the law.

I. FACTS AND PROCEDURAL HISTORY

A. The Federal Medicaid Program

Medicaid is a joint federal-state program that provides for the payment of medical services pursuant to the Medicaid Act to the poor, elderly, and disabled. 42 U.S.C. § 1396 et seq. States that choose to participate in Medicaid must submit a State Plan to the United States Department of Health and Human Services (“HHS”) for approval. The State Plan describes the policy and methods used to set payment rates for each type of service included in the program. See, e.g., Wilder v. Virginia Hosp. Ass’n, 496 U.S. 498, 502, 110 S.Ct. 2510, 110 L.Ed.2d 455 (1990). The Centers for Medicare and Medicaid Services (“CMS”) administers the Medicaid Program on the Secretary’s behalf, including approving State Plans and State Plan Amendments. Pharm. Research & Mfrs. of Am. v. Walsh, 538 U.S. 644, 650, n. 3, 123 S.Ct. 1855, 155 L.Ed.2d 889 (2003); 42 C.F.R. §§ 430.10, 430.15(b). A state may change its plan by obtaining approval of a State Plan Amendment (“SPA”) from CMS. The amendment must meet federal requirements. 42 U.S.C. §§ 1396a(b); 42 C.F.R. §§ 430.10, 430.12. The CMS reviews a state’s State Plan and State Plan Amendments to determine whether they comply with the statutory and regulatory requirements governing the Medicaid Program. Douglas v. Indep. Living Ctr. of S. Cal., Inc., — U.S. -, 132 S.Ct. 1204, 1208, 182 L.Ed.2d 101 (2012). If the CMS determines that a state is out of compliance with either the State Plan or the Medicaid Act, it may withhold federal funds. 42 C.F.R. §§ 430.15, 430.18, 430.35.

B. The California Medi-Cal Program

Medi-Cal is California’s state Medicaid healthcare program. Cal. Welf. Inst. Code §§ 14000 eb seq. California’s Department of Health Care Services (“Department”) is the single state agency responsible for the administration of Medi-Cal. Cal. Welf. Inst. Code § 10740. California has an extensive regulatory framework for the setting of reimbursement rates. See e.g., Cal. Welf. Inst. Code §§ 14075, 14079, 14105. California’s State Plan sets forth the standards and methods for reimbursement rates paid to Medi-Cal providers for MediCal covered services. The United States makes contributions to a state’s program provided the State Plan is consistent with the applicable Medicaid Act provisions. 42 C.F.R. § 430.35.

Medi-Cal is required to provide acute inpatient services that are not available in California pursuant to part 431.52(b) of Title 42 of the Code of Federal Regulations. See Reimbursement to General Acute Care Hospitals For Acute Inpatient Services. D’S RJN, Ex. B, State Plan Amendment (SPA) 13-004, approved by CMS on May 31, 2013, Attachment 4.19-A at 17.52. Title 42, Code of Federal Regulations, Section 431.52(b)(4), and title 22 California Code of Regulations, Section 51006, subdivision (a)(4) recognize that it may be a common practice for Medi-Cal recipients in some areas of California to obtain medical services in adjacent areas in the states of Oregon, Nevada, and Arizona. California Regulatory Notice Register 2015, Number 25-Z, published June 19, 2015. D’s RJN, Ex. B at 1007. In addition, in 2009, California amended Section 51543 of Title 22 of the California Code of Regulations. Section 51543 states:

Out-of-state hospital inpatient services which have been certified for payment at the acute level and which are either of an emergency nature or for which prior Medi-Cal authorization has been obtained, shall be reimbursed the current statewide per diem average of contract rates for acute inpatient hospital services provided by California hospitals with at least 300 beds or the out-of-state hospital’s actual billed charges, whichever is less.

Cal. Code Regs. tit. 22, § 51543

According to information published by the federal Medicare Program, there are over 3,000 hospitals across the country that may occasionally render services to a Medi-Cal beneficiary and bill the Medi-Cal program for reimbursement. Rowan Decl. ¶ 11. The Department claims that close to 3,000 out-of-state hospitals didn’t provide any Medi-Cal covered hospital inpatient services to a single Medi-Cal beneficiary during state fiscal year 2013/2014. Rowan Decl. ¶ 11. During that year, the nineteen plaintiff hospitals collectively rendered 859 Medi-Cal covered hospital stays resulting from admissions that were paid based on the APR-DRG methodology. Rowan Decl. ¶ 11. Twelve other out-of-state hospitals located in Arizona, Nevada, and Oregon that are within 55 miles of the California border rendered 143 Medi-Cal covered hospital stays. Rowan Decl. ¶ 12. 155 other out-of-state hospitals, not in proximity to the California border, rendered 338 hospitals stays. Rowan Decl. ¶ 12. While these stays represent only a small percentage of all Medi-Cal covered admissions paid under the APR-DRG methodology during state fiscal year 2013/2014, the amount of reimbursement at stake is not insignificant. For example, Renown Regional Medical Center Nevada Uncompensated Care Report (FY 30, 2013) states that the hospital’s inpatient out-of-state Medicaid cost of care was $11,444,335; total outpatient out-of-state Medicaid cost of care was $1,385,992; total inpatient dual eligible Medicaid cost of care was $12, 710,938. Docket No. 55, Exhibit 2 at 161. The report does not break down these numbers by state. However, the Department estimates that the 15-020 Amendment will increase Medi-Cal out-of-state expenditures by $1.4 million per year. D’s RJN, Ex. C at 1007.

1. APR-DRG Methodology

On July 1, 2013, the Department implemented All Patient Refined Diagnosis Related Group (“APR-DRG”) reimbursement methodology. Compl. ¶¶ 12, 13. All hospital patients are categorized into APR-DRGs. Rowan Deck ¶ 4 (Docket No. 51-3). Under the ARP-DRG methodology, the rate paid for Medi-Cal covered hospital inpatient stays is based in part on the All Patient Refined Diagnosis Related Group that a Medi-Cal patient is assigned to based on his or her diagnoses and other factors such as procedure codes, age, gender, admission date, and discharge date. Id. at ¶ 5. Each APR-DRG is assigned a numerical weight that reflects the typical hospital resources needed to care for the patient relative to the hospital resources needed to care for the average patient who is assigned an APR-DRG weight of 1.0. Vaida Decl. ¶¶5, 8.'(Docket No. 39-1). Thus, a patient who consumes 5 times the hospital resources needed to care for an average patient would be assigned an APR-DRG weight of 5.0. Id.

The Department’s methodology for calculating a hospital’s reimbursement for a particular patient is equal to the ARP-DRG weight of that patient times the hospital’s “base price” times “policy adjustors.” Id. For the base price, the Department uses either a “Statewide Base Price” or a “Remote Rural Base Price” to establish the rates for all hospitals, except hospitals paid based on a transitional base price (an incremental change in base price). Rowan Decl. ¶ 6. The current Statewide base price is $6,289 and the current Remote Rural base price is $12,768. Id. at ¶ 6.

For in-state hospitals, the Department adjusts the labor component of the “base price” of each California hospital by the highest of the following Medicare wage indices: (1) the Medicare wage index for the geographical area in which the hospital is located; (2) the California rural floor wage index; or, (3) the wage index for the area in which the hospital has been reclassified by Medicare. Vaida Decl. ¶ 10. The State Plan 13-020 provides that a uniform wage index 1.0 applies to all out-of-state hospitals, which means that the base price for an out-of-state hospital is not adjusted upward or downward. Rowan Decl. ¶ 8. In 2013, “18 of the 19 [out-of-state hospital] plaintiffs.. .had a wage index that was greater than 1.0.” Vaida Decl. ¶ 12. According to the Complaint, “[a] California hospital with a wage index of 1.5 would have its ‘base price’ increased by $2,141 ($6,223 times 68.8% times 0.5), or from $6,223 to $8,364.” Compl. ¶ 16. Thus, “the California hospital with a wage index of 1.5 would receive 34% more per Medi-Cal discharge (i.e., $8,364 divided by $6,223) than an out-of-state hospital with the same wage index.” Id.

The qualifications for the higher remote rural base price are laid out in the State Plan. The State Plan uses the Remote Rural Base Price only for hospitals that qualify as “remote rural.” Rowan Decl. ¶ 8. California’s rural wage index is calculated based on the wage costs of nine rural hospitals and then applied to 211 urban hospitals. Vaida Decl. ¶ 14. The Remote Rural Base Price is only available for California hospitals. Rowan Decl. ¶ 16. “Thus, a California hospital that is ‘remote rural’ would receive a ‘base price’ of $10,218, while an out-of-state hospital that is similarly situated would receive a ‘base price’ of only $6,223. In this case, the California hospital that is deemed to be ‘remote rural’ would receive 64% more per Medi-Cal discharge (i.e., $10,218 divided by $6,223) than an out-of-state hospital that is similarly situated.” Compl. ¶ 18.

With the third wage adjustment, the Department permits in-state hospitals to use Medicare wage index reclassifications that increase their index values, but does not extend that same benefit to out-of-state hospitals. Vaida Decl. ¶ 17.

According to the Complaint, the Department also applies “policy adjustors” that increase its payments for particular services. Compl. ¶ 19. First, for stays in a neonatal intensive care unit (“NICU”), California hospitals receive a 75 percent payment increase. Compl. ¶ 19. Second, the Department makes “outlier payments.” Vaida Decl. ¶ 22. If a hospital’s “estimated cost” for rendering services exceeds the Medi-Cal reimbursement by certain “thresholds,” the hospital is entitled to “outlier” payments. Rowan Decl. ¶ 19. The “estimated cost” is determined by multiplying the hospital’s cost-to-charge ratio (CCR) by the hospital’s charges for the admission. Id. The Department annually receives a cost report from each California hospital to determine a hospital-specific CCR. Id. The Department claims it does not have access to cost reports for out-of-state hospitals. Id. Thus, “policy adjustors” are not available to out-of-state hospitals.

According to Plaintiffs, the effect of the Department’s reimbursement policies is even more pronounced when two or more of these policies are combined. For example, “a California hospital with a qualifying NICU and a wage index of 1.5 would receive 235% more per Medi-Cal discharge than a similarly situated out-of-state hospital! ].” Compl. ¶ 20.

2. Disproportional Share Hospital Payments

Under the State Plan, Medi-Cal also makes Disproportional Share Hospital (“DSH”) payments. DSH payments are supplemental payments to hospitals meeting DSH eligibility standards under applicable federal law and the State Plan. Chao Deck ¶ 3. DSH payments are made to eligible hospitals to compensate those which provide a disproportionate share of hospital services to Medicaid eligible and other low-income people that lack health insurance. Id. Federal law and the State Plan specify standards that a hospital must meet to be eligible for DSH payments. Id. ¶ 15. One requirement for DSH eligibility is that a hospital must either (a) have a Medicaid Inpatient Utilization Rate (MIUR) that is at least one standard deviation above the mean MIUR for all hospitals in the State receiving Medicaid payments, or (b) have a low income utilization rate (LIUR) that exceeds 25 percent. Id. Consistent with federal law and the State Plan, the Department performs the MIUR calculation and determination of the mean MIUR for hospitals “in the State.” Id. The Department claims that it needs a massive amount of data to determine if a hospital qualifies for DSH payments. Id. For example, the Department requires California hospitals to perform the MIUR and LIUR calculations that include each hospital’s inpatient days provided to Medicaid eligible patients of any state, total inpatient days, total Medi-Cal revenues received for all hospital services, cash subsidies from other government units, total revenues from all sources, total hospital charges for hospital inpatient services related to charity care, and total hospital charges for all inpatient services. Id. It has been longstanding policy in State Plan provisions that the MediCal program makes DSH payments only to eligible California hospitals. Id. Thus, out-of-state hospitals have been categorically excluded from DSH payments.

3. Recently Approved State Plan Amendment 15-020

On September 29, 2015, the Department obtained CMS approval of the new State Plan Amendment 15-020 (“15-020 Amendment”). Docket No. 59 at 2 (“D’s Reply to P’s Opp’n”); Rowan Decl. ¶¶ 21-26; Second Supp. Rowan Decl. ¶¶ 3-4. On June 19, 2015, the Department published notice that it was planning to submit a State Plan Amendment to CMS with proposed changes to the APR-DRG policies concerning the wage index, remote rural base price, NICU policy adjustment, and CCR with respect to out-of-state border hospitals. Rowan Decl. ¶ 21. The notice stated:

It may be common practice for Medi-Cal recipients residing in some areas of California to obtain medical services in adjacent areas in the states of Oregon, Nevada and/or Arizona. In recognition of the role that border hospitals may play in providing services to those Medi-Cal beneficiaries, the Department intends to submit a SPA to further align payment standards applicable to California hospitals and [out-of-state] border hospitals to the greatest extent reasonably practicable.

Rowan Deck, Ex. C at 1007. (25-Z Cal. Regulatory Notice Reg. (June 19, 2015)).

The amendment defines “border hospitals” as those hospitals located outside of California that are within 55 miles driving distance from the nearest physical location at which a road crosses the California border, and includes all plaintiff hospitals. Rowan Decl. ¶¶ 11, 22.

The 15-020 Amendment provides for the following changes in the APR-DRG methodology that impact out-of-state border hospitals:

(1) For California hospitals and border hospitals, the Department will apply the same hospital specific wage area index value that the Medicare program applies to that hospital, further adjusted by the California Wage Area Neutrality Adjustment of .9797. Rowan Decl., Ex. B at 17.49.

(2) If a border hospital is defined as a rural hospital by the federal Medicaré program and meets the California State Plan definition of a “remote” hospital and complies with the State Plan non-combined license/provider number standard, it will qualify for the remote rural base price. Rowan Decl. ¶ 24.

(3) A border hospital will qualify for the 1.75 policy adjustor for a neonate hospital stay if the hospital submits an application for neonatal intensive care unit status to California Children’s Services. Rowan Decl. ¶ 25.

(4) For border hospitals, the cost-to-charge ratio used to determine outlier payments will be based on a formula using data from the Medicare average cost-to-charge ratios for operating and capital costs for hospitals in the state in which the border hospital is located. Rowan Decl. ¶ 25.

The effective date of these changes is July 1, 2015. Attachment 4.19-A, Docket No. 51-3 at 112. The Amendment does not change the Department’s policy excluding DSH payments to out-of-state hospitals. According to Plaintiffs, out-of-state hospitals are also excluded from the California “rural” floor wage index, Medicare wage index reclassifications, and Medicaid cost-to-charge ratio. Plaintiffs also complain that under the new State Plan, the “remote rural” definition for out-of-state hospitals remains very restrictive. P’s MSJ at 14.

C. The Parties

Plaintiffs are hospitals located in Oregon, Nevada, and Arizona that treat a significant number of Medi-Cal beneficiaries. They do so for two reasons. Compl. ¶ 1. First, Plaintiffs are the trauma facilities most conveniently available to MediCal patients in Oregon, Nevada, or Arizona. Compl. ¶ 9. As the California Court of Appeal noted in Children’s Hospital & Medical Center v. Bonta, 97 Cal.App.4th 740, 118 Cal.Rptr.2d 629 (1st Dist.2002):

Unlike the vast majority of out-of-state hospitals, respondents are located close to the California border and serve bi-state regions encompassing large rural areas of California in which the level of medical care immediately available is considerably lower than that provided by respondents. [The] respondents “provide the full medical services needed for acute care Medi-Cal patients not just visiting the states of Arizona, Oregon or Nevada, but also those Californians who must avail themselves of [respondents’ facilities] .. .because they are the closest major trauma centers available to Medi-Cal participants residing in California.” (original italics.) For example, because large numbers of Medi-Cal beneficiaries residing in California can so easily reach respondent Washoe Medical Center, located in Reno, Nevada, it treats more Medi-Cal patients than any other hospital in the nation located outside California. Moreover, due to the trauma care and other forms of intensive care respondent hospitals provide, they attract “Medi-Cal patients who are much sicker, and therefore require a greater expenditure of resources and costs, than the typical in-state Medi-Cal patient.”

Bonta, 97 Cal.App.4th at 760, 118 Cal.Rptr.2d 629. One plaintiff, the University Medical Center of Southern Nevada, is the only Level I trauma center within a 200 mile radius of Las Vegas, NV. Id. ¶ 10. Another plaintiff, the Renown Regional Medical Center, is the only Level II Trauma Center between Sacramento, CA, and Salt Lake City, UT. Plaintiffs serve MediCal patients from far northern and eastern reaches of California. Id. ¶ 9. These regions do not have many large medical facilities providing high levels of intensive care. Id. Defendants are the Department of Health Care Services and Toby Douglas. Toby Douglas is sued in his official capacity as Director of the Department.

II. REQUESTS FOR JUDICIAL NOTICE

Without opposition from Plaintiffs, the Department requested judicial notice over nine exhibits: (A) Excerpt from California’s State Medicaid Plan; (B) State Plan Amendment 13-004; (C) California Regulatory Notice Register 2000, Number 3-Z, published June 19, 2015; (D) Excerpt from the California Regulatory Notice Register 2000, Number 3-Z, published January 21, 2000; (E) Excerpt from the California Regulatory Notice Register 2000, Number 3-Z, published March 2, 2000; (F) May 31, 2013 approval Letter from Cindy Mann, Director of CMS, regarding State Plan Amendment 4.19-A; (G) December 5, 2013 approval Letter from Cindy Mann, Director of CMS, regarding State Plan Amendment 4.19-A; (H) Memorandum and Order, Children’s Hosp. and Health Ctr. v. Belshe, United States District Court, Northern District of California, Case No. C 95-01076 MHP, filed June 13, 2001; (I) Brief of the United States as Amicus Curiae, Children’s Hosp. and Health Center v. Belshe, United States District Court, Northern District of California, Case No. C 95-1076, filed March 1, 1995. Defendants’ Request for Judicial Notice in Support of Motion for Summary Judgment. (“D’s RJN”), Docket No. 51-1.

Under Federal Rule of Evidence 201, “[a] judicially noticed fact must be one not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201. Courts may take judicial notice of “undisputed matters of public record,” but generally may not take judicial notice of “disputed facts stated in public records.” Lee v. City of Los Angeles, 250 F.3d 668, 690 (9th Cir.2001) (emphasis in original).

The Court GRANTS the Department’s request for judicial notice of Exhibits A-I. A trial court can take judicial notice of public documents in connection with a motion for summary judgment. Cash Inn of Dade, Lie. v. Metro. Dade Cnty, 938 F.2d 1239, 1242-43 (11th Cir.1991). First, it is appropriate to take judicial notice of California’s State Medicaid Plan and its legislative histories. See, e.g., Chaker v. Crogan, 428 F.3d 1215, 1223 n. 8 (9th Cir.2005) (granting plaintiffs request to take judicial notice of the legislative history of a state statute). Second, it is proper to take judicial notice of the court’s own records in prior litigation related to the case before it. Amphibious Partners, LLC v. Redman, 534 F.3d 1357, 1361-62 (10th Cir.2008) (district court was entitled to take judicial notice of its memorandum of order and judgment from a previous case involving the same parties); United States ex rel. Robinson Rancheria Citizens Council v. Borneo, Inc., 971 F.2d 244, 248 (9th Cir.1992) (“[W]e may take notice of proceedings in other courts, both within and without the federal judicial system, if those proceedings have a direct relation to matters at issue.”); see also United States v. Wilson, 681 F.2d 118 (9th Cir.1980) (stating that a court may take judicial notice of court records in another case). Notice can be taken, however, “only for the limited purpose of recognizing the ‘judicial act’ that the order represents on the subject matter of the litigation.” United States v. Jones, 29 F.3d 1549, 1558 (11th Cir.1994) (citing Liberty Mut. Ins. Co. v. Rotches Pork Packers, Inc., 969 F.2d 1384, 1388 (2d Cir.1992)). See also General Electric. Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1082, n. 6 (7th Cir.1997) (“We agree that courts generally cannot take notice of findings of fact from other proceedings for the truth [of the matter] asserted therein because these findings are disputable and usually are disputed”); San Luis v. Badgley, 136 F.Supp.2d 1136, 1146 (E.D.Cal.2000) (quoting Jones for the proposition that a court “may take judicial notice of a document filed in , another court not for the truth of the matters asserted in the litigation, but rather to establish the fact of such litigation and related filings”). Applying this standard, the Court takes judicial notice of the existence and legal effect of the memorandum and order in Children’s Hosp. and Health Ctr. v. Belshe, United States District Court, Northern District of California, Case No. C 95-01076 MHP, filed June 13, 2001.

Third, it is proper to take judicial notice of the United States’ Amicus Curiae brief. Estate of Blue v. County of Los Angeles, 120 F.3d 982, 984 (9th Cir.1997) (noting that a court “may properly take judicial notice of the papers filed” in both federal and state court proceedings). “As the brief is not a ’fact,’ legal or adjudicative, but only legal argument, Fed. R. Evid. 201 is not a bar.” Natural Res. Def. Council v. Sw. Marine, Inc., 39 F.Supp.2d 1235, 1236 n. 1 (S.D.Cal.1999) aff'd, 236 F.3d 985 (9th Cir.2000) (taking judicial notice of the U.S. Government’s amicus curiae brief). The Court takes notice of the argument contained in the amicus brief.

Finally, it is proper to take judicial notice of CMS’s letters. Kottle v. Northwest Kidney Centers, 146 F.3d 1056, 1064 n. 7 (9th Cir.1998) (holding that state health department records were proper subjects of judicial notice); Mack v. South Bay Beer Distribs, Inc., 798 F.2d 1279, 1282 (9th Cir.1986) (observing that the court may take judicial notice of the records and reports of state administrative bodies), overruled on other grounds by Astoria Fed. Sav. & Loan Ass’n v. Solimino, 501 U.S. 104, 111 S.Ct. 2166, 115 L.Ed.2d 96 (1991).

III. DISCUSSION

A. Legal Standard

The purpose of summary judgment is to avoid unnecessary trials when there is no dispute as to the facts before the court. Zweig v. Hearst Corp., 521 F.2d 1129 (9th Cir.1975), cert. denied, 423 U.S. 1025, 96, 96 S.Ct. 469, 46 L.Ed.2d 399 (1975).

Under Federal Rule of Civil Procedure 56(a), “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “The moving party has the burden of establishing the absence of a genuine dispute of material fact. The court must view the evidence in the light most favorable to the non-movant and draw all reasonable inferences in the non-movant’s favor.” City of Pomona v. SQM N. Am. Corp., 750 F.3d 1036, 1049-50 (9th Cir.2014). “ ‘Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.’ ” Id.

Once the moving party has shown that there is an absence of evidence to support the claims of the non-moving party, the non-moving party may not simply sit back and rest on the allegations in its complaint. See Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Instead, it must “go beyond the pleadings and by [its] own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial.” Id. (internal quotations omitted). Summary judgment should be granted where a party “fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden at trial.” Id. at 322-23, 106 S.Ct. 2548. On cross-motions for summary judgment on the same issues, the court must “evaluate each motion separately, giving the non-moving party the benefit of all reasonable inferences.” Am. Civil Liberties Union of Nev. v. City of Las Vegas, 333 F.3d 1092, 1097 (9th Cir.2003).

B. Plaintiffs’ Statutory Claim to Disproportionate Share Payments

In order to assert claims for violations of 42 U.S.C. § 1396a(a)(13)(A), Plaintiffs must first establish that the statute in question creates a private cause of action. In Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975), the Supreme Court set out a four-factor test for determining whether a federal statute implies a private right of action:

First, is the plaintiff one of the class for whose especial benefit the statute was enacted, — that is, does the statute create a federal right in favor of the plaintiff? Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one? Third, is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff? And finally, is the cause of action one traditionally relegated to state law, in an area basically the concern of the States, so that it would be inappropriate to infer a cause of action based solely on federal law?

Id. at 78, 95 S.Ct. 2080 (citations and quotation marks omitted).

In two cases after Cort, the Supreme Court emphasized that congressional intent is the primary determinant in this inquiry. See Touche Ross & Co. v. Redington, 442 U.S. 560, 575-76, 99 S.Ct. 2479, 61 L.Ed.2d 82 (1979) (stating that “[t]he central inquiry remains whether Congress intended to create, either expressly or by implication, a private cause of action” and that the remaining three factors are “traditionally relied upon in determining legislative intent.”); Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 24, 100 S.Ct. 242, 62 L.Ed.2d 146 (1979) (reiterating that “[t]he disposi-tive question remains whether Congress intended to create any such remedy”). “[U]nless this congressional intent can be inferred from the language of the statute, the statutory structure, or some other source, the essential predicate for implication of a private remedy simply does not exist.” Northwest Airlines, Inc. v. Transp. Workers Union of America, 451 U.S. 77, 94, 101 S.Ct. 1571, 67 L.Ed.2d 750 (1981).

As demonstrated below, with regard to DSH payments, there is no evidence that Congress intended to confer enforceable rights and remedies upon health care providers under the current version of 42 U.S.C. § 1396a(a)(13)(A).

1. Section 1396a(a)(13)(A) and Section 1396r-4

Pursuant to 42 U.S.C. § 1396a(a)(13)(A)(2006), a state plan changing Medicaid rates must provide:

(A) for a public process for determination of rates of payment under the plan for hospital services, nursing facility services, and services of intermediate care facilities for the mentally retarded under which—

(i) proposed rates, the methodologies underlying the establishment of such rates, and justifications for the proposed rates are published,

(ii) providers, beneficiaries and their representatives,- and other concerned State residents are given a reasonable opportunity for review and comment on the proposed rates, methodologies, and justifications

(in) final rates, the methodologies underlying the establishment of such rates, and justifications for such final rates are published, and

(iv) in the case of hospitals, such rates take into account (in a manner consistent with section 1923) the situation of hospitals which serve a disproportionate number of low-income patients with special needs.

42 U.S.C. § 1396a(a)(13)(A).

In addition, section r-4(c)(3)(B), entitled “Payment adjustment,” provides:

[A] payment adjustment for a disproportionate share hospital must...

(3) provide for a minimum specified additional payment amount (or increased percentage payment) that varies according to type of hospital under a methodology that—

(B) results in an adjustment for each type of hospital that is reasonably related to the costs, volume, or proportion of services provided to patients eligible for medical assistance under a State plan approved under this subchapter or to low-income patients...

42 U.S.C. § 1396r-4(c)(3)(B).

By their plain language, neither Section 13(A) or 1396a(a) nor Section 1396r-4 contain express rights creating language that would confer private rights of action on health care providers. See Gonzaga, 536 U.S. at 287, 122 S.Ct. 2268 (statutory provision fails to confer enforceable rights when it “entirely lack[s] the sort of ‘rights-creating’ language critical to showing the requisite Congressional intent to create new rights”); Cannon v. Univ. of Chicago, 441 U.S. 677, 690 n. 13, 99 S.Ct. 1946, 60 L.Ed.2d 560 (1979) (stating that rights-creating language “confer[s] a right directly on a class of persons that include[s] the plaintiff in the case” rather than “for the benefit of the public at large.”); ASW v. Oregon, 424 F.3d 970, 975 (9th Cir.2005) (stating that “[o]ur initial inquiry is whether the text and structure of the Act contains the requisite ’rights-creating’ language that evinces a congressional intent to confer an entitlement to individualized payment determinations.”) (internal citations omitted).

As a starting point, the current wording of the statute must be juxtaposed against prior language at issue in Children’s Hosp. & Health Ctr. v. Belshe, 188 F.3d 1090 (9th Cir.1999), on which Plaintiffs rely. Prior to 1980, states were required to reimburse hospitals “the reasonable cost[s]” of providing inpatient services. Folden v. Washington State Dep’t of Soc. & Health Servs., 981 F.2d 1054, 1056 (9th Cir.1992). In response to concerns that the Medicaid reimbursement standard did not give enough authority to the states, Congress enacted the Boren Amendment as part of the Omnibus Reconciliation Act of 1980, Pub.L. No. 96-499, § 8962(a), 94 Stat. 2599 (1980). The Boren Amendment provided additional payments for disproportionate share hospitals. Belshe, 188 F.3d at 1093; Children’s Seashore House v. Waldman, 197 F.3d 654, 656 (3d Cir.1999). Disproportionate share hospitals are those hospitals that serve a larger number of Medicaid recipients and other low-income persons than other hospitals. Chao Decl. ¶ 3. The Boren Amendment also gave states greater flexibility in calculating reasonable costs and in containing the continuing escalation of those costs.” Folden, 981 F.2d at 1056. Importantly, however, the Boren Amendment required that states establish payment and reimbursement rates that were “reasonable and adequate” to cover the costs that must be incurred by efficiently and economically operated facilities. Omnibus Budget Reconciliation Act of 1980, Pub.L. No. 96-499, § 962(a), 94 Stat. 2599, 2650 (1980) (codified at 42 U.S.C. § 1396a(a)(13)) (repealed 1997).

In 1997, Congress amended the Medicaid Act to “eliminate the Boren Amendment and establish instead a notice and comment provision.” Exeter Memorial Hosp. Ass’n v. Belshe, 145 F.3d 1106, 1108 (9th Cir.1998) (citing Balanced Budget Act of 1997, Pub.L. No. 105-33, 111 Stat. 251, § 4711, codified at 42 U.S.C. § 1396a(a)(13)(A)). Congress replaced “reasonable and adequate” rate requirement in the Boren Amendment with a “public participation” process, which requires the states to publicize their reimbursement methodologies and subject them to public comment. U.S.C. § 1396a(a)(13)(A).

Plaintiffs urge this Court to follow the Ninth Circuit’s decision in Belshe, 188 F.3d 1090. In Belshe, the Ninth Circuit held that the Boren Amendment unambiguously applied to out-of-state as well as in-state hospitals, and thus out-of-state hospitals could not be excluded from DSH payments. Belshe, 188 F.3d at 1097. However, the Ninth Circuit emphasized that its holding in Belshe was based on the now-repealed Boren Amendment. Id. at 1099. The Belshe court had no occasion to interpret the new statutory language of the Balanced Budget Act of 1997.

The question before the Court is whether the Plaintiffs still have a private right of action under the § 1396a(a)(13)(A) as amended by the Balanced Budget Act of 1997 to challenge the Defendant’s exclusion of out-of-state hospitals from DSH payments. The Court concludes that unlike the Boren Amendment, the current statute does not confer such a private right of action.

In Children’s Seashore House v. Wald-man, the Third Circuit squarely addressed this question. The Court held Congress removed a party’s ability to enforce any substantive rights to payments when it replaced the Boren Amendment (and its “reasonable and adequate rate” requirement) with a requirement that a state establish a public process by which its rates would be determined. 197 F.3d 654, 659 (3d Cir.1999). Specifically, the Waldman court stated that “it is clear that by amending a-13 in 1997, Congress eliminated the Boren Amendment’s requirement that a state must provide... ‘reasonable and adequate’ [rates].” Id. at 659. By doing so Congress removed ability of a disproportionate share hospital to enforce any statutory substantive right to reasonable and adequate adjustment on account of treatment of Medicaid enrollees from another state. Id. The court explained:

[I]t is clear that if Congress had not repealed the Boren Amendment in 1997, we would be bound to follow the holdings in West Virginia v. Casey. But inasmuch as we based West Virginia v. Casey on our conclusion that Pennsylvania’s denial of adjustments to out-of-state hospitals violated the “reasonable and adequate” requirement of a-13 as it then existed, see 885 F.2d at 29, we now must determine whether Congress’s removal of the “reasonable and adequate” language from a-13 requires a different result than that we reached in West Virginia v. Casey. [W]e conclude that the repeal of the Boren Amendment' does require a result different from that in West Virginia v. Casey.

Id. at 656-57. The court held that the public process provision did not confer a private right of action.

The court also held that a disproportional share hospital could not maintain an action for DSH adjustments under definitional provision 42 U.S.C. § 1396r-4. Id. at 660. Section § 1396r-4 sets the parameters of what is a DSH, what constitutes and adequate payment adjustment, and what limits are placed on federal financial participation and on state allotments for each year. Id. The court explained that unless section §.1396r-4 establishes an enforceable right on its own, the hospital does not have an enforceable statutory claim. “Yet, r-4 imposes neither procedural nor substantive requirements on a state that provide a basis for the [hospital] to press such claims. Rather r-4 is a definitional provision that describes certain procedures that a state must satisfy, such as submitting a qualified plan to the Secretary of Health and Human Services by a certain date to establish an adequate state disproportionate share hospital adjustment plan.” Id. at 659. For these reasons, the Third Circuit affirmed the district’s court dismissal of the hospital’s section 1983 statutory claim and held that the hospital cannot maintain an action to enforce the Medicaid Act with respect to DSH adjustments. Id. at 660.

Although the Ninth Circuit has not ruled on the precise question here, in Alaska Dep’t of Health & Soc. Servs. v. Centers for Medicare & Medicaid Servs., 424 F.3d 931, 941 (9th Cir.2005), the Ninth Circuit noted (consistent with Waldman) that in 1997, when Congress repealed the Boren Amendment and replaced it with the notice and comment rulemaking requirements, “Congress intended that there be no ‘cause of action for [providers] relative to the adequacy of the rates they receive.’ ”) (quoting Evergreen Presbyterian Ministries Inc. v. Hood, 235 F.3d 908, 919 n. 12 (5th Cir.2000) (citing H.R. No. 105-149, at 1230 (1997))). The H.R. report, cited in Evergreen, stated, “It is the Committee’s intention that, following the enactment of the [Balanced Budget Act of 1997], neither this nor any other provision of [§ 1396] will be interpreted as establishing a cause of action for hospitals and nursing facilities relative to the adequacy of the rates they receive.” Likewise in Developmental Servs. Network v. Douglas, 666 F.3d 540, 543 (9th Cir.2011), the providers claimed that the Department violated 42 U.S.C. § 1396a(a)(30)(A) by limiting reimbursement rates under California’s Medicaid program. Id. The providers argued that the implementation of the statute was unlawful because it violated section 1396a(a)(30)(A)’s requirement that the states consider quality of care in setting Medicaid payment rates. Id. Quoting Alaska Department of Health, 424 F.3d at 941, the court concluded that because no individual right has been created for providers relative to the adequacy of the rates they receive, the providers had no cause of action under § 1983. Id. at 547-48.

The Second and Fourth Circuits have also held that there is no private right of action after the repeal of the Boren Amendment by the Budget Reconciliation Act of 1997. See e.g., New York Ass’n of Homes & Servs. for the Aging, Inc. v. DeBuono, 444 F.3d 147, 148 (2d Cir.2006) (affirming the district court’s conclusion that plaintiff-providers’ claims, based on sections 13(A) and 30(A) of the Medicaid Act, were “unenforceable against the defendants by providers through 42 U.S.C. § 1983” and its further conclusion that “§ 1396r does not create a federally enforceable right because it was obviously intended to benefit Medicaid beneficiaries, not providers.”); HCMF Corp. v. Allen, 238 F.3d 273, 276 (4th Cir.2001) (affirming the district’s court conclusion in HCMF Corp. v. Gilmore, 26 F.Supp.2d 873, 880 (W.D.Va.1998) that “[w]ith the repeal of the Boren Amendment nothing remains that remotely resembles, a federal right to reasonable and adequate rates”). See also In re NYAHSA Litig., 318 F.Supp.2d 30, 39-40 (N.D.N.Y.2004) aff'd sub nom. New York Ass’n of Homes & Servs. for the Aging, Inc. v. DeBuono, 444 F.3d 147 (2d Cir.2006) (stating that providers cannot use § 1983 to enforce any rights contained in § 1396a(a)(30)(A)). Cf. Am. Soc’y of Consultant Pharmacists v. Concannon, 214 F.Supp.2d 23, 29 (D.Me.2002) (recognizing a limited private cause of action enforceable under § 1983 for violation of section 13(A)’s guarantee of a “reasonable opportunity to comment” on a change in the rate of service reimbursement).

The Court finds Waldman’s analysis persuasive and consistent with the thrust of Ninth Circuit decisions which have opined on the effect of the Balanced Budget Act of 1997. Plaintiffs have failed to state a private cause of action under 42 U.S.C. §§ 1396a(a)(13)(A) and 42 U.S.C. § 1396r-4. Accordingly, the Court grants the Defendant summary judgment on Plaintiffs’ claim under § 1396a(a)(13)(A).

C. The Dormant Commerce Clause

Plaintiffs contend that the disparity between the amounts the Department pays for Medi-Cal covered hospital in-patient stays to California and out-of-state hospitals violates the Commerce Clause. Compl. ¶¶ (26-29); P’s MSJ at 16.

The Department argues the dormant Commerce Clause analysis does not apply here because the Medicaid program is authorized by Congress. The Department bases this argument on several grounds. D’s MSJ at 14. First, Congress is spending federal funds to finance Medicaid. D’s MSJ at 15. Second, Congress provided a “series of federal checkpoints” by delegating its authority to the Secretary of Health and Human Services. Id; Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 102 S.Ct. 894, 71 L.Ed.2d 21 (1982). In the alternative, the Department claims that even if the payments are subject to the dormant Commerce Clause analysis, the Department is exempt from Commerce Clause restrictions because it is a market participant. D’s MSJ at 17.

1. Legal Standard

The Commerce Clause states that “Congress shall have Power... To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” U.S. Const., art. I, § 8, cl. 3. Although the Commerce Clause speaks only of Congress’s power, it has long been understood that there is a dormant or negative aspect of the Commerce Clause that limits the power of the states to regulate commerce. The Commerce Clause both permits Congress to regulate commerce among the States and “also directly limits the power of the States to discriminate against interstate commerce.” New Energy Co. of Ind. v. Limbach, 486 U.S. 269, 273, 108 S.Ct. 1803, 100 L.Ed.2d 302 (1988). This limitation on the states prohibits states from enacting laws that “benefit in-state economic interests by burdening out-of-state competitors.” Id. Under the dormant Commerce Clause analysis, courts “protect [] the free flow of commerce, and thereby safeguard[ ] Congress’ latent power from encroachment by the several States[]” when Congress has not affirmatively exercised its Commerce Clause power. Merrion v. Jicarilla Apache Indian Tribe, 455 U.S. 130, 154, 102 S.Ct. 894, 71 L.Ed.2d 21 (1982).

Thus, the threshold question in dormant Commerce Clause cases is whether Congress has exercised its Commerce Clause power in a particular field; if so, judicial review under the dormant Commerce Clause is precluded. See Wyoming v. Oklahoma, 502 U.S. 437, 457-58, 112 S.Ct. 789, 117 L.Ed.2d 1 (1992); South-Central Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 87-93, 104 S.Ct. 2237, 81 L.Ed.2d 71, (1984). For a statute to preclude dormant Commerce Clause review, however, congressional intent to authorize the challenged act(s) must be unmistakably clear. E.g., Wyoming, 502 U.S. at 458, 112 S.Ct. 789; Wunnicke, 467 U.S. at 91-92, 104 S.Ct. 2237; Hillside Dairy, Inc. v. Lyons, 539 U.S. 59, 66, 123 S.Ct. 2142, 156 L.Ed.2d 54 (2003) (“Congress certainly has the power to authorize state regulations that burden or discriminate against interstate commerce,.. .but we will not assume that it has done so unless such an intent is clearly expressed.”).

2. Congressional Authorization

The Department relies on White v. Massachusetts Council of Const. Emp’rs, Inc., 460 U.S. 204, 103 S.Ct. 1042, 75 L.Ed.2d 1 (1983) and Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 102 S.Ct. 894, 71 L.Ed.2d 21 (1982) in arguing that Congress implicitly approved the practice of discrimination against out-of-state hospitals in respect to Medicaid payments. D’s MSJ at 14-16.

At issue in White was an executive order issued by Boston’s Mayor requiring all construction projects funded by the city or by funds that the city had authority to administer, to be performed by a work force consisting of at least 50% residents of the city. White, 460 U.S. at 205-06, 103 S.Ct. 1042. A number of the projects were funded in part with federal Urban Development Action Grants. Id. at 212, 103 S.Ct. 1042. The Supreme Court held that the order did not violate the dormant Commerce Clause for two reasons. First, insofar as the city expended its own funds and projects, it was a market participant unconstrained by the dormant Commerce Clause. Id. at 215, 103 S.Ct. 1042. Second, because the city expended federal funds, the order was “affirmatively sanctioned” by the federal regulations of those programs. Id.

The Department relies on the Court’s statements in White that the federal regulations “affirmatively sanctioned” the executive order because Boston’s construction project was funded by federal funds. D’s MSJ at 16. The Department, however, reads too much into White.

In White, the Supreme Court examined the applicable statutes and found that the federal programs “were intended to encourage economic revitalization, including improved opportunities for the poor, minorities, and unemployed,” particularly to distressed cities and urban counties White 460 U.S. at 213, 103 S.Ct. 1042. Thus, the mayor’s executive order was “harmonious” with federal law because “the federal regulations for each program affirmatively permitted] the type of parochial favoritism expressed in the order.” Id.

White is distinguishable from the case at bar for two reasons. First, as discussed below, the Department is not a market participant. Second, unlike in White, where the mayor’s executive order was consistent with Congress’ goal of improving the opportunities for the poor, minorities, and unemployed in targeted areas, here, the Department’s policies are far from being in harmony with Medicaid. Moreover, in White, the implementing regulations expressly authorized “the type of parochial favoritism [towards distressed cities and urban counties] expressed in the [challenged] order.’ ” Id. at 215, 103 S.Ct. 1042; 42 U.S.C. § 5318 (b)(1). No such geographic targeting was contemplated by Congress in enacting the Medicaid Act; nor has the Secretary promulgated regulations authorizing the discrimination challenged harmonious with Congress’ intent. Indeed, if anything, Congress was concerned -with ensuring that cross-border medical services be available to all Medicare recipients.

At its core, the purpose of the Medicaid Act is to enable “each state, as far as practicable under the conditions in such state, to furnish.. .medical assistance on behalf of families with dependent children and of aged, blind, or disabled individuals, whose income and resources are insufficient to meet the costs of necessary medical services....” 42 U.S.C. § 1396-1. As noted in Belshe, discrimination against out-of-state hospitals which provide medical care to residents of the state undermines that purpose.

The Department also argues that Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 102 S.Ct. 894, 71 L.Ed.2d 21 (1982), shields the Department from the reach of the dormant Commerce Clause. In Mer-rion, the Commissioner of Indian Affairs, on behalf of the Secretary of the Interior, approved petitioners’ leases with the Tribe to extract and produce oil and gas from the reservation. Merrion, 455 U.S. at 133-35, 102 S.Ct. 894. The Tribe was organized under the Indian Reorganization Act of 1934, which authorizes any tribe residing on a reservation to adopb a constitution subject to the approval of the Secretary of the Interior. Id. at 134, 102 S.Ct. 894. The Secretary approved the Tribe’s Revised Constitution that allowed the Tribal Council “to enact ordinances, subject to approval by the Secretary of the Interior, to impose taxes and fees on non-members of the tribe doing business on the reservation.” Id. at 135, 102 S.Ct. 894.(citing Revised Constitution of the Jicarilla Apache Tribe, Art. XI, § 1(e)). Pursuant to its Revised Constitution, the Tribal Council adopted an ordinance imposing a severance tax on oil and gas production on tribal land. Id. at 135-36, 102 S.Ct. 894. The Secretary then approved the ordinance. Id. at 136, 102 S.Ct. 894. The petitioners, non-Indian lessees producing oil and gas from within the tribe’s reservation, challenged the tax on the grounds that the severance tax violated the dormant Commerce Clause. Id. at 135, 152-53, 102 S.Ct. 894.

The Department relies on Merrion for the proposition that “a series of federal checkpoints” for the Department’s State plans and amendments authorizes the Department to discriminate against out-of-state hospitals. However, Merrion does not apply as broadly to this case as the Department suggests. In upholding the Apache severance tax, the Court observed that the ability to tax is an inherent power exercisable by all sovereigns. Id. at 141, 102 S.Ct. 894. It “simply does not make sense to expect the tribes to carry out municipal functions.. .without being able to exercise at least minimal taxing powers.” Id. at 138, 102 S.Ct. 894 n. 5. The Court also observed that Congress knew that Indian tribes were imposing mineral severance taxes such as the one challenged by the petitioners when it enacted the Natural Gas Policy Act of 1978, 15 U.S.C. § 3301 et seq. Section 3320(c) defined, for purposes of the Act, “State Severance Tax” as any “severance, production, or similar tax.. .imposed on the production of natural gas...by any State or Indian Tribe.” 15 U.S.C. § 3320(c), Repealed. Pub.L. 101-60, § 2(b), July 26, 1989, 103 Stat. 158.

The inherent sovereign power of a Tribe to tax is not at issue in the case at bar. While Merrion found that the Apache’s taxing power was an inherent attribute of tribal sovereignty that has not been divested by Congress, id. at 152, 102 S.Ct. 894, that issue of sovereignty is not relevant here.

Merrion's analysis in upholding the severance tax because Congress “has affirmatively acted by providing a series of federal checkpoints that must be cleared before a tribal tax can take effect,” id. at 155, 102 S.Ct. 894, is more on point. Before the Tribe could impose a severance tax on non-Indian lessees, the Tribe had to pass three “federal checkpoints”: the Secretary’s approval of Merrion’s lease with the Tribe, the Secretary’s approval of the Tribe’s Revised Constitution, as well as the Secretary’s specific approval of the ordinance.

Nonetheless, Merrion is distinguishable. Congress has done far less here than in Merrion; unlike Merrion, it has not set up a “series of federal checkpoints.” Although Congress delegated authority to approve state plan to CMS, the administrative oversight of state Medicaid payments policies is limited to but one “checkpoint,” wherein CMS reviews State plans. See 42 U.S.C. §§ 1396a(b); 42 C.F.R. §§ 430.10, 430.15(b). CMS has not promulgated any regulation expressly authorizing the discrimination challenged herein. Moreover, whereas in Merrion, Congress was “well aware that Indian tribes impose mineral severance taxes” of the sort in question, Merrion, 455 U.S. at 156, 102 S.Ct. 894, there is no evidence here that Congress expected or authorized states to discriminate in rate setting. Unlike Merrion, there is no unmistakably clear congressional intent to permit discrimination against out-of-state hospitals in respect to reimbursement under Medicaid.

The Fourth Circuit’s decision in Environmental Technology Council v. Sierra Club, 98 F.3d 774 (4th Cir.1996) is persuasive on this point. In Sierra, the South Carolina Department of Health and Environmental Control promulgated a set of laws that restricted in-state treatment and disposal of hazardous waste generated in other states. 98 F.3d at 780. South Carolina argued that Congress affirmatively authorized the South Carolina laws when Congress delegated the authorization of state programs to the Environmental Protection Agency. Id. at 782-83. Under the Resource Conservation and Recovery Act of 1976 (“RCRA”), Congress delegated to EPA the task of reviewing and authorizing state programs as consistent with the federal program. Id. at 779. RCRA allows a state to implement its own program in lieu of the federal program if the state’s program is “equivalent to” and “consistent with” the federal program and provides for the “adequate enforcement of compliance.” 42 U.S.C. § 6926(b).

In 1985, EPA gave South Carolina RCRA authorization to operate its waste program despite the argument that the program was “inconsistent” with federal law by imposing a discriminatory fee on waste generated out of state. Under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”), South Carolina submitted to EPA a Capacity Assurance Plan (“CAP”). CAP requires that each state submit a proposal to EPA demonstrating that over a 20-year period the state will have either: (1) adequate capacity available to dispose of hazardous wastes generated within the state; or (2) arrange for the disposal of wastes generated in-state in other states through interregional agreements. 42 U.S.C. § 9604(c)(9); Sierra, 98 F.3d at 779-80. South Carolina’s CAP did not discriminate. South Carolina designed several laws that attempted to limit the level of out-of-state hazardous wastes entering its borders: South Carolina’s legislature passed two statutes, its Governor signed two Executive Orders, and the South Carolina Department of Health and Environmental Control promulgated one regulation. Sierra, 98 F.3d at 780. EPA approved South Carolina’s CAP and South Carolina’s hazardous waste program under RCRA. Sierra, 98 F.3d at 781. Because South Carolina is one of the few states which had large hazardous waste treatment and disposal facilities, it attempted, through a series of measures, to reduce the amount of hazardous waste entering its borders. Id. at 780. South Carolina’s legislature enacted a blacklisting provision that prohibited entry into the state of certain out-of-state wastes and imposed a discriminatory fee on waste generated out-of-state. Id.

When out-of-state waste facilities challenged South Carolina’s waste program as violation of the Commerce Clause, South Carolina asserted that RCRA and CERC-HA embody a congressional exercise of the commerce power rendering the dormant Commerce Clause analysis irrelevant. Sierra, 98 F.3d at 782. First, South Carolina argued that under RCRA, Congress has expressly authorized any state program that meets “EPA’s consistency standard of ‘reasonableness.’ ” Id. at 782. The Fourth Circuit, rejecting the argument, stated that “[wjhile EPA may change its position on what ‘consistency’ entails, the Constitution has not changed and, in the absence of a clear Congressional statement authorizing discrimination by the states with respect to hazardous wastes, we must apply the Constitution’s dictates.” Id. at 783. (citing C & A Carbone, Inc. v. Town of Clarkstown, N.Y., 511 U.S. 383, 407-10, 114 S.Ct. 1677, 128 L.Ed.2d 399 (1994)) (emphasis added).

Also, South Carolina, like the Department here, heavily relied on Merrion to argue that by delegating the authorization of state programs to the EPA under RCRA and CERCLA, Congress created a system of “checkpoints” for South Carolina’s waste program. Id. at 782. The state argued that Congress’s “checkpoints” affirmatively authorized the challenged state laws because EPA approved RCRA program and CAP. Id. at 782-83. The Fourth Circuit rejected the argument and distinguished Merrion for several reasons. First, unlike in Merrion, where Congress was aware that Indian tribes were imposing taxes on non-members, Congress did not anticipate or authorize a discriminatory fee for disposal of waste generated out of state. See id. at 784. Second, the court found that EPA had not expressly approved South Carolina’s discriminatory laws; absent was “express congressional authorization.” Id. at 784 n. 17.

Here, the Secretary of Health and Human Services engaged in the same type of administrative review similar to that described in Sierra. With little comment, CMS approved California’s State Plan Amendments 13-033 and 15-020. As in Sierra, and as noted above, the CMS did not enact regulations authorizing the Department’s discriminatory practices. D’s RJN, Ex. G; Rowan Second Suppl. Decl. Ex. A. Nor is any evidence that Congress knew of and intended to authorize such practices.

The Department argues that Congress intended that states be allowed in particular to limit DSH payments to out-of-state hospitals (see D’s Opp’n to P’s MSJ, pp. 11-12). Though this argument was made on the merits in opposing Plaintiffs’ claim that the Department violated federal statutory law, this contention could implicate the dormant Commerce Clause analysis as well. If Congress was unmistakably clear in authorizing states to exclude out-of-state hospitals from DSH payments, this would remove this aspect of discrimination from Commerce Clause scrutiny. The Court, however, finds no such clear authorization.

ín support of its argument, the Department cites provisions from 42 U.S.C. § 1396r-4. In particular, the Department cites phrases such as “to a State” (subdivision®), “for hospitals in the State” (subdivision (f)(6)), “any hospital in such State” (subdivision (g)(2)(B)), “to hospitals in the State” (subdivision (h)(1)(B)), and “in the State” (subdivision (j)(2)).

However, the core of this argument was soundly rejected by the Ninth Circuit in Belshe:

Belshe refers to the definitions section of the Medicaid statute, 42 U.S.C. § 1396r-4(b)(1)(A), which sets forth the requirements for a hospital to be eligible for DSH payments. That section defines hospitals eligible for DSH payments by eomparing them to the mean of “hospitals receiving Medicaid payments in the State.” Belshe argues this language proves that the DSH payment requirement in the Boren Amendment applies only to in-state hospitals. This argument fails.

Section 1396r-4(b)(l)(A) provides that states administering their Medicaid programs are required to determine whether a hospital qualifies for DSH payments by referring to the mean number of Medicaid patients served by hospitals in their state. This language does not say that only hospitals within the state can qualify for DSH payments; instead, it uses in-state hospitals to calculate a benchmark for the number of Medicaid patients.

188 F.3d at 1096-97.

The Ninth Circuit’s conclusion is underscored when reading the entirety of Section 1396r-4 — throughout its lengthy text ■ spanning from subdivision (a) through (j) with many subparts, reference is made r