                                                                           FILED
                           NOT FOR PUBLICATION                             APR 04 2014

                                                                       MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U.S. COURT OF APPEALS



                            FOR THE NINTH CIRCUIT


EXCEPTIONAL CHILD CENTER, INC.;                  No. 12-35382
INCLUSION, INC.; TOMORROW’S
HOPE SATELLITE SERVICES, INC.;                   D.C. No. 1:09-cv-00634-BLW
WDB, INC.; LIVING INDEPENDENTLY
FOR EVERYONE, INC.,
                                                 MEMORANDUM*
              Plaintiffs - Appellees,

  v.

RICHARD ARMSTRONG; LESLIE
CLEMENT,

              Defendants - Appellants.


                   Appeal from the United States District Court
                             for the District of Idaho
                 B. Lynn Winmill, Chief District Judge, Presiding

                     Argued and Submitted December 2, 2013
                              Seattle, Washington

Before: TALLMAN and BEA, Circuit Judges, and MURPHY, District Judge.**



        *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
       **
             The Honorable Stephen Joseph Murphy, III, United States District
Judge for the Eastern District of Michigan, sitting by designation.
      Defendants-Appellants Richard Armstrong, the Director of Idaho’s

Department of Health and Welfare (“IDHW”), and Leslie Clement, an IDHW

Deputy Director and former IDHW Division of Medicaid Administrator

(collectively, “the Directors”), appeal the district court’s grant of summary

judgment in favor of Plaintiffs-Appellees, a group of agencies providing supported

living services to Medicaid-eligible individuals in Idaho (collectively “the

Providers”). We have jurisdiction under 28 U.S.C. § 1291, and we affirm.

      We review a district court’s grant of summary judgment and its rulings on

matters of statutory interpretation de novo. See Newton-Nations v. Betlach, 660

F.3d 370, 378 (9th Cir. 2011). Summary judgment is appropriate where the

pleadings, the discovery and disclosure materials on file, and any affidavits show

that there is no genuine issue as to any material fact and that the movant is entitled

to judgment as a matter of law. See Fed. R. Civ. P. 56(a).

      The Providers have an implied right of action under the Supremacy Clause

to seek injunctive relief against the enforcement or implementation of state

legislation. See Indep. Living Ctr. of S. Cal. v. Shewry, 543 F.3d 1050, 1065 (9th

Cir. 2008) (“Under well-established law of the Supreme Court, this court, and the

other circuits, a private party may bring suit under the Supremacy Clause to enjoin

implementation of state legislation allegedly preempted by federal law.”).


                                           2
Although the dissenting justices in Douglas v. Independent Living Center of

Southern California, Inc., 132 S. Ct. 1204, 1212 (2012) (Roberts, J., dissenting),

would have held otherwise, we remain bound by the prior holdings of the Supreme

Court, and of our court, that have recognized a private right of action under the

Supremacy Clause. See Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96 n.14 (1983);

Bud Antle, Inc. v. Barbosa, 45 F.3d 1261, 1269 (9th Cir. 1994).

      Section 30(A) of the Medicaid Act requires that state Medicaid plans contain

procedures to ensure that reimbursement rates for healthcare providers “are

consistent with efficiency, economy, and quality of care and are sufficient to enlist

enough providers” to meet the need for care and services in the geographic area.

42 U.S.C. § 1396a(a)(30)(A). We have interpreted Section 30(A) to require that

reimbursement rates bear a reasonable relationship to provider costs.1 Orthopaedic

Hosp. v. Belshe, 103 F.3d 1491, 1499 (9th Cir. 1997). Where rates fail to

“substantially reimburse providers their costs,” there must be some justification

other than “purely budgetary reasons.” Id. at 1499, 1499 n.3.



      1
        The Directors call on us to abandon the requirements of Orthopaedic
Hospital. Nonetheless, “[w]e are bound by circuit precedent unless there has been
a substantial change in relevant circumstances, or a subsequent en banc or Supreme
Court decision that is clearly irreconcilable with our prior holding.” See United
States v. Vasquez-Ramos, 531 F.3d 987, 991 (9th Cir. 2008) (internal citations
omitted). Neither circumstance is present here.

                                          3
      The Directors conducted yearly cost studies between 2006 and 2009,

developed a new rate setting methodology, and recommended substantial increases

in reimbursement rates for supported living services based on the cost study

results. The Stipulated Facts provide that the Directors did not implement the

proposed rate changes because the Idaho legislature did not appropriate the

necessary funds. Because the reimbursement rates at issue fail to “substantially

reimburse providers their costs,” and because the Directors concede that the 2006

rates remained in place for “purely budgetary reasons,” the district court did not err

in granting summary judgment to the Providers.2

      AFFIRMED.




      2
        We express serious doubt over whether the Directors’ inaction constitutes a
“Thing” in state law that can be preempted under the Supremacy Clause.
However, the Directors failed to make this argument to the district court and they
did not raise the issue in their briefing to our court. Therefore, we deem the issue
waived. See Smith v. Marsh, 194 F.3d 1045, 1052 (9th Cir. 1999) (“[A]n appellate
court will not consider issues not properly raised before the district court.
Furthermore, on appeal, arguments not raised by a party in its opening brief are
deemed waived.”).

                                          4
