Christina A. Snyder, a U.S. District Court judge in Los Angeles, ruled in favor of pharmacies and hospital-based nursing facilities that sought to fend off the rate cut. In both cases, Snyder ruled that the gravity of the state's fiscal crisis is not greater than the harm that might come to patients who are denied medical care.
A separate lawsuit by the California Medical Association, which represents about 30,000 physicians, is pending before Snyder and also seeks to strike down the rate cut. A hearing on the case is expected later this month.
The cuts are among many drastic measures being used to close California's massive budget deficit. They drew major protests from doctors, dentists, hospitals and pharmacists who take care of patients in the Medi-Cal program, one of the lowest-paying Medicaid programs in the nation.
The budget cuts grew more controversial when Medi-Cal authorities announced plans in October to collect funds it had already sent to providers for services, drawing protests from doctors and some clinics.
Norman Williams, a spokesman for the Department of Health Care Services, which administers Medi-Cal, said in an e-mail that the rate reductions were approved by federal Medicare and Medicaid overseers and are "supported by extensive analyses." He said the finding showed that "approved reductions will allow California to continue to meet federal standards requiring an adequate level of access to care for beneficiaries."
"In addition, DHCS created a first-of-its-kind monitoring plan to ensure that the implementation of the reductions does not threaten adequate access for beneficiaries going forward," Williams wrote.
Snyder, though, for now has put a stop to some budget cuts and found fault with state arguments supporting them.
In one order issued Dec. 28, the judge sided with pharmacists, who argued that if the cuts stay in place, they would have to close their doors or cease making home deliveries of medications.
She discussed a "monitoring plan" that the state submitted to federal overseers, which is meant to track the effects of the payment reduction. Medi-Cal authorities argued that the plan proved that patients would not face "irreparable harm" as a result of budget cuts.
Snyder disagreed: "The court believes that the monitoring plan at best presents a potential remedy after an access or quality problem has been detected."
The California Hospital Association also sued over 10 percent rate cuts to long-term care facilities linked to hospitals. Attorneys for the state argued, in response, that plaintiffs claimed "irreparable harm" based only on assumptions that providers will no longer see patients.
In that case, Snyder also found that "the State's fiscal crisis does not outweigh the serious irreparable injury plaintiffs would suffer" if the cuts were made permanent.
She also noted that a higher court already has ruled that the harm to the state of seeing one of its laws, in this case the budget bill, overturned is no match for the "public's interest in ensuring that state agencies comply with the law and protect beneficiaries' access to services."
The California Medical Association, which is joined by some pharmacists and dentists in its case, makes arguments that mirror those of pharmacists and hospitals that filed separate lawsuits. Nearly 100 doctors, pharmacists and dentists submitted declarations on Dec. 30 explaining the effects of the cuts.
Dr. Bruce Kovacs, a gynecologist who sees patients in Los Angeles County, said about 70 percent of his patients are covered by Medi-Cal. He predicted that the budget cuts will cost the state more money in the long run. He described one scenario in which doctors might be too financially strained to render prenatal care to women who, in turn, give birth prematurely.
""This is a clear example of prevention being less expensive than treatment," Kovacs wrote. "This does not even take into account the human cost of preterm delivery and the inherent risk of long-term physical and intellectual impairment of children who are born prematurely."
Dr. Shannon Suo, a Sacramento physician who estimates that half of the patients she sees are covered by Medi-Cal, gave an example of a patient who already experienced harm when no specialist was available. Suo wrote that she requested an urgent consultation with an orthopedist for a patient whose finger was broken.
But "no surgeon would see her for several weeks, at which time it was no longer possible" for the finger to heal properly.
Read more California investigative reports at CaliforniaWatch.com.