Providence Service Corporation Comments on U.S. Court of Appeals' Decision to Uphold Federal Injunction Blocking California's 10% Cut in Medi-Ca...( TUCSON Ariz. July 1...),Health

TUCSON, Ariz., July 15 /PRNewswire-FirstCall/ -- The Providence Service Corporation (Nasdaq: PRSC) today commented on the recent ruling by the U.S. Court of Appeals for the Ninth Circuit upholding the August 2008 federal injunction prohibiting the 10% cut in California's Medi-Cal payments to various health care providers that was initially passed by the California Legislature in February 2008. In the ruling, Judge Milan Smith Jr. wrote, "A budget crisis does not excuse ongoing violations of federal law."

"We are pleased that despite the appeal by the California Department of Health Care Service, the Ninth Circuit has intervened on behalf of Medicaid beneficiaries, upholding the injunction that barred the Medi-Cal cuts," said Fletcher McCusker, Chairman and CEO.

In the Ninth Circuit decision, a three judge panel not only upheld the injunction, but also determined that it should reach back to July 1, 2008 when the rate cuts took effect, rather than the August 18, 2008 date of the issuance of the injunction.

In the ruling, Judge Smith stated that the balance of hardships "tips sharply" in the plaintiffs' favor, "as the 10% reduction threatens access to much-needed medical care." The court added, "There is a robust public interest in safeguarding access to health care for those eligible for Medicaid, whom Congress has recognized as the most needy in the country."

The attempted 10% cut to reimbursement rates under California's Medicaid program, Medi-Cal, was initially passed by California state legislators in February 2008. The rate reductions took effect on July 1, 2008. A group of Medi-Cal beneficiaries and providers sued the California Department of Health Care Service, claiming the cuts violated federal laws requiring state payments to be "consistent
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