As Judge Griffith covered last week, the motions panel at the D.C. Circuit has remained busy of late. It appears this month will be no exception. Last week, the D.C. Circuit administratively stayed much of the district court’s preliminary injunction in National Treasury Employees Union v. Vought, No. 25-5091, which had prevented the government from shutting down the Consumer Financial Protection Bureau. However, the administrative stay was based on the government’s “representations that, absent congressional action, the Consumer Financial Protection Bureau will remain open and will perform its legally required functions” in the meantime. The court will hear argument on the government’s emergency motion for stay pending appeal on Wednesday this week (Judges Pillard, Katsas, and Rao). For more about the “little examined device” of administrative stays, see Rachel Bayefsky, Administrative Stays: Power and Procedure, 97 Notre Dame L. Rev. 1941 (2022).

In other news, the D.C. Circuit issued one opinion last week, in Asante v. Kennedy, No. 23-5055. Judge Srinivasan, writing for the majority, described the issue this way: “California collects a fee from in-state hospitals and then uses a portion of the revenues, along with matching federal Medicaid funds, to provide subsidies to California hospitals that serve the State’s Medicaid beneficiaries.” A “group of out-of-state hospitals located near the California border,” who sometimes serve California Medicaid beneficiaries, but “do not pay the fee assessed against in-state hospitals to generate revenues for the subsidy program,” sued to obtain the subsidy payments. The hospitals argued that California’s exclusion of out-of-state hospitals from the subsidy program violated the dormant Commerce Clause, the Equal Protection Clause, and federal Medicaid regulations. (In case you are wondering why the case is captioned “v. Kennedy” instead of “v. California,” it is because the Centers for Medicare and Medicaid Services approved California’s program as part of its approval of the state Medicaid plan.)

The D.C. Circuit rejected those arguments. Regarding the dormant Commerce Clause, the court reasoned that a “tax and supplemental payment based on the in-state provision of medical care do not unconstitutionally discriminate against interstate commerce.” The subsidy program imposes no costs on the out-of-state hospitals because they are not subject to the tax. Applying rational basis review, the court likewise rejected the Equal Protection Clause argument because it was “not irrational” for California to structure the program “on the assumption that the bulk of services to Medi-Cal beneficiaries would be supplied by California hospitals.” Finally, the court considered Medicaid regulations that require a state to pay for a state resident’s out-of-state services “to the same extent that it would pay for services furnished within its boundaries.” 42 C.F.R. § 431.52(b). The court held that this parity requirement applied only to the base payment for services, “i.e., insurance payments for a specific service rendered to a specific beneficiary,” and not to supplemental payments like the California subsidy at issue.

Judge Katsas dissented. He would have held that “California pays in-state hospitals more for furnishing care to Medi-Cal beneficiaries than it would pay similarly situated out-of-state hospitals for furnishing the same care,” in violation of the Medicaid regulation. (He therefore declined to reach the constitutional questions).