MEDICAID DEFENSE FUND DEATHWATCH 7 10 13

Facts: On June 27, Medicaid Defense Fund (MDF), on behalf of Managed Pharmacy Care and all California pharmacies, presented motion to stay the May 24, 2013 Decision of the Ninth Circuit Appeals Court to Justice Kennedy of the Supreme Court. Justice Kennedy denied the stay motion on July 2. On July 2, MDF presented the stay motion to Justice Alito. As of today, Justice Alito is considering the motion, but has made no ruling up or down. MDF seeking to file additional claims back in the District Court, for injunction Meanwhile, this past Monday, July 8, Judge Christina Snyder held a conference, and gave the plaintiffs in the several AB 97 cases, including our Managed Pharmacy Care case, a week, to July 15, to file our claims for why we should be allowed to file further motions to stop the 10% cut in these AB 97 cases. The State and the United States will then have a week to file objections. Judge Snyder will then decide whether to allow MDF to file amended complaints/motions to enjoin the 10% cut of AB 97. Judge Snyder's view was that the Ninth Circuit Decision covered the whole case; and the case is now in the Supreme Court: so, no new claims can be filed, and would waste judicial resources. We objected to this procedure, but that was her order. So next Monday, July 18, our MDF will be filing our additional claims, on behalf of Managed Pharmacy Care, why injunction must be issued to stop this destructive 10% cut to pharmacies in the Medi-Cal FFS program. MDF also preparing our Petition to Supreme Court to reverse the Ninth Circuit Decision. Meanwhile, regardless of whether any individual Justice grants a stay, MDF's petition to the Supreme Court on behalf of Gary Ellis' group, Managed Pharmacy Care, to reverse the Ninth Circuit Decision, is due August 22. Comment: The undersigned, in a prior lifetime was a criminal defense attorney, with many criminal trials and four murder cases under his belt. This case is exactly like them, a death penalty case. People will die if we lose. Pharmacy owners and employees, -- ordinary citizens who are the backbone of this country, will be destroyed and a profession ruined, if the Ninth Circuit Decision is not stayed or overturned. So we have to treat this as a death penalty case, and keep going, even though, for anybody who can count, the odds of winning became astronomically against us, once the Bush/Reagan Ninth Circuit panel ruled against us on May 24. In the meanwhile, what should I do? We at MDF are asked this every day. The basic answer is that what you should do is up to you, and, you should consult your own retained counsel to advise you as to your particular situation, of what to do and not to do.

Having said that, there are certain parameters that can be generally stated. In stating them, MDF is not in any way providing you with any legal opinion upon which you should or may rely, or recommending what you should or should not do. You should still consult your own attorney. Ninth Circuit Decision does not apply to Medi-Cal managed care prescriptions which are paid for by the managed care entity. I.e., AB 97 does cut payments to managed care entities by 10%, but, does not apply to pharmacies for prescriptions paid for by a Medi-Cal managed care entity. (If the managed care entity does cut its prospective rates on account of the 10% cut, then, only in that event, would the Ninth Circuit Decision, indirectly, affect your pharmacy. But, there can still be no recoupments, retroactively, by a Medi-Cal managed care entity.) Note. There are a small number of carve out psychotropic drugs in Medi-Cal managed care plans, which are paid for by Medi-Cal FFS. So, these carve out prescriptions, paid for by Medi-Cal FFS, are subject to the 10% cut Decision of the Ninth Circuit. Second. The Medi-Cal FFS program: The Ninth Circuit Decision does affect every prescription dispensed since June 1, 2011 and in the future, in the Medi-Cal FFS program, only. 1. However, there is no law or regulation or contract with Medi-Cal which prevents a pharmacy from not dispensing to any or all Medi-Cal FFS recipients, or refusing to fill some prescriptions but not others in the Medi-Cal FFS program. That is entirely up to you, to fill or not fill, or stop completely, filling Medi-Cal FFS prescriptions, or to only fill some Medi-Cal FFS prescriptions, but not others; or not fill any of them. 2. If you stop filling Medi-Cal FFS prescriptions, there are great legal difficulties which hinder DHCS in the courts, against being able to both get a judgment and collect the judgment against any assets of the owner of the pharmacy, (whether the owner be a corporation or an individual sole proprietor or partnership). And the bankruptcy laws afford protection as a last resort, if need be. (We have no information and can make no predictions on this subject, but, it does appear to MDF that there is a possibility that the State could decide not to seek recoupment in the courts for the 10% paid to pharmacies before the pharmacy stopped dispensing to Medi-Cal FFS; all, due to the legal difficulties, labor, and great outlay of expense, (not recoverable in any judgment), to collect anything from a pharmacy owner who stops dispensing to Medi-Cal FFS). (Of course, if you continue dispensing in Medi-Cal FFS, you will get hit by recoupment.) Again, it is MDF's view that you should consult your own attorney. Make your own individual choice about what to do or not to do in this disaster situation. Most of all, no decisions as a group of two or more pharmacies should be made, because of antitrust statutes prohibiting agreements in restraint of trade. ************************************************************************* If you would like to support Medicaid Defense Fund, please make your donation check payable to, and be sure to mail it to: Medicaid Defense Fund 404 San Anselmo Ave. San Anselmo, CA 94960 Yours sincerely, Lynn S. Carman CEO, Medicaid Defense Fund