The dormant Commerce Clause bars state laws that regulate commerce in a manner that discriminates against foreign or interstate commerce or favors in-state commerce. However, the Commerce Clause does not apply to acts that a state takes as a participant in the market. Here, California’s Health Care Services Department adopted regulations setting the rates at which it would reimburse hospitals for services rendered to Medi-Cal patients. This decision holds that those regulations were acts of a market participant, just like a private health insurer’s rate-setting agreements. No hospital was required (by California) to render services to Medi-Cal patients, and no patients were required to accept Medi-Cal benefits. Nor was the state leveraging a monopoly it held to obtain other benefits. So California’s rate-setting regulations were legal and not in violation of the Commerce Clause.
Ninth Circuit Court of Appeals (Fernandez, J.); April 2, 2018; 2018 WL 1570659