Eduardo Guzman v. Sandra Shewry

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

EDUARDO J. GUZMAN, M.D.,  No. 08-55326
Plaintiff-Appellant, D.C. No.
v. 08-CV-00769-
SANDRA SHEWRY, Director of the  MMM
California State Department of ORDER AND
Health Care Services, AMENDED
Defendant-Appellee.
 OPINION

Appeal from the United States District Court
for the Central District of California
Margaret M. Morrow, District Judge, Presiding

Argued and Submitted
June 4, 2008—Pasadena, California

Filed September 23, 2008
Amended January 15, 2009

Before: David R. Thompson, Diarmuid F. O’Scannlain, and
Richard C. Tallman, Circuit Judges.

Opinion by Judge O’Scannlain

535
 GUZMAN v. SHEWRY 539

COUNSEL

Patric Hooper, Hooper, Lundy & Bookman, Inc., Los Ange-
les, California, argued the cause for the plaintiff-appellant and
filed briefs.

Janet E. Burns, Deputy Attorney General, State of California,
Los Angeles, California, argued the cause for the defendant-
appellee and filed a brief; Phillip J. Matsumoto, Deputy Attor-
ney General, Richard T. Waldow, Supervising Attorney Gen-
eral, Douglas M. Press, Senior Assistant Attorney General,
and Edmund G. Brown, Jr., Attorney General for the State of
California, were on the brief.
540 GUZMAN v. SHEWRY
ORDER

The opinion filed in this case on September 23, 2008, is
AMENDED as follows:

At page 13362, line 24 of the slip opinion, after the sen-
tence concluding “halt the temporary suspension,” insert a
new footnote reading

The panel has voted unanimously to deny the petition for
rehearing. Judges O’Scannlain and Tallman have voted to
deny the petition for rehearing en banc and Judge Thompson
so recommends. The full court has been advised of the peti-
tion for rehearing en banc and no active judge has requested
a vote on whether to rehear the matter en banc. Fed. R. App.
P. 35.

The petition for rehearing and the petition for rehearing en
banc are DENIED. No further petitions for rehearing or
rehearing en banc may be filed.

OPINION

O’SCANNLAIN, Circuit Judge:

We must decide whether a district court abused its discre-
tion in denying a physician a preliminary injunction to halt his
temporary suspension from California’s Medi-Cal program
based on his claims that such suspension violates federal
Medicaid law and is prohibited by the Due Process Clause of
the Fourteenth Amendment.
 GUZMAN v. SHEWRY 541
I

A

Medicaid is a cooperative federal-state program that autho-
rizes the United States Government to provide funds to partic-
ipating states to administer medical assistance to individuals
“whose income and resources are insufficient to meet the
costs of necessary medical services.” 42 U.S.C. § 1396. The
program operates by authorizing the Federal Government to
pay a percentage of the costs a state incurs for patient care,
and, in return, the state complies with certain federal require-
ments. See 42 U.S.C. § 1396a. Administration of the program
is entrusted to the Secretary of Health and Human Services
(“HHS”), who also has the authority to promulgate regula-
tions under the Medicaid Act. California participates in Med-
icaid through the California Medical Assistance Program
(“Medi-Cal”), and has designated its Department of Health
Care Services (“DHCS” or the “Department”)1 as the agency
responsible for its administration. See id. § 1396a(a)(5); Cal.
Welf. & Inst. Code §§ 10720, 14000.

B

Dr. Eduardo J. Guzman, M.D., is an obstetrician/
gynecologist who provides services through Medi-Cal. Some-
time in 2006, DHCS opened an investigation into certain
claims Guzman had submitted to Medi-Cal for payment. On
August 30, 2006, after several searches of his offices in Dow-
ney and Norwalk, California, DHCS filed an Accusation
against Guzman alleging that he had imported large quantities
of intrauterine devices (“IUDs”) from Mexico that had not
been approved by the Food and Drug Administration (“FDA”)
1
As of July 1, 2007, the duties of the California Department of Health
Services were modified and the agency was renamed the Department of
Health Care Services. See Cal. Health & Safety Code § 20. Hereinafter,
this opinion shall refer to the agency by its current name, DHCS.
542 GUZMAN v. SHEWRY
for use in this country; that he had inserted such devices into
his patients, Medi-Cal beneficiaries; and that he had billed
Medi-Cal for his services, fraudulently claiming that the
devices used were FDA-approved. The Accusation notified
Guzman that DHCS would seek permanently to suspend him
from the Medi-Cal program as a result of these allegations.
See Cal. Welf. & Inst. Code § 14123. Some time later, the
California Attorney General’s Office filed felony criminal
charges against Guzman arising from the same alleged conduct.2

DHCS scheduled an administrative hearing on the Accusa-
tion for August 2007, but Guzman requested that it be post-
poned until the criminal proceedings against him were
concluded.3 DHCS granted the request. Nevertheless, on Janu-
ary 22, 2008, DHCS sent Guzman a letter informing him that
he would be suspended temporarily from participating in
Medi-Cal because of the pending criminal proceedings
against him. The letter stated that the suspension would take
effect on February 6, 2008, and would continue until Medi-
Cal determined that he was “no longer under investigation” or
until “after legal proceedings related to the alleged fraud or
abuses are completed.” Once enforced, the suspension would
prohibit Guzman from billing Medi-Cal for any services ren-
dered.4
2
The felony complaint filed in California Superior Court charged Guz-
man with two counts of grand theft, in violation of California Penal Code
section 487(a) and California Welfare and Institutions Code section
14107(b)(4)(A); three counts of making false or fraudulent claims, in vio-
lation of California Penal Code sections 550(a)(5), (6), and (7); and two
counts of delivering a misbranded drug or device, in violation of Califor-
nia Health and Safety Code sections 111440 and 111450.
3
As of the date of oral argument, no trial date in the criminal case had
yet been set and no hearing on the Accusation had yet been held.
4
To obtain reimbursement for services provided through Medi-Cal, a
medical professional must enroll in the Medi-Cal program and receive a
“provider number.” Cal. Code Regs. tit. 22, §§ 51000.7, 51000.20. The
letter informed Guzman that all provider numbers assigned to him would
be “temporarily suspend[ed] and deactivat[ed].”
 GUZMAN v. SHEWRY 543
As the letter explained, California law entitled Guzman to
appeal the temporary suspension. DHCS concedes, however,
that such appeal is limited to the question of whether a pro-
vider is, in fact, under investigation for fraud or abuse. Thus,
Guzman would not have been able to contest the underlying
allegations against him in such an appeal. In addition, the let-
ter explained that Guzman also had the right to “request a
meeting with [DHCS] representatives” if he believed the
information on which Medi-Cal was relying was erroneous.
See Cal. Welf. & Inst. Code § 14123.05. It is not clear
whether Guzman would have been able to challenge the valid-
ity of the underlying fraud allegations at such a meeting. In
any event, Guzman decided not to avail himself of either pro-
cedure.

C

On February 5, 2008, Guzman filed a complaint against
DHCS in the district court under 42 U.S.C. § 1983 seeking a
preliminary injunction to halt the temporary suspension.5 Guz-
man asserted that a preliminary injunction was necessary
because his suspension would irreparably harm his patients,
his practice, and his reputation.6 Although a California statute
authorizes such suspension, Cal. Welf. & Inst. Code
§ 14043.36(a), Guzman argued that the statute was preempted
5
In his complaint, Guzman alleges that he also brings this claim directly
under the Supremacy Clause. As such a claim is not “specifically and dis-
tinctly” put forward in his opening brief, we decline to consider it. See
Entm’t Research Group, Inc. v. Genesis Creative Group, Inc., 122 F.3d
1211, 1217 (9th Cir. 1997).
6
In addition to the loss of revenue from his Medi-Cal patients, Guzman
noted that he was under contractual obligations to report any such suspen-
sion to the hospitals with which he is affiliated and to the independent
physicians’ associations of which he is a member. Guzman predicted that
the hospitals would suspend or revoke his staff privileges and that the
associations would terminate his membership, actions that would preclude
him from receiving payments from private insurance companies that rep-
resent his non-Medi-Cal patients.
544 GUZMAN v. SHEWRY
by federal law, and that he was entitled to a pre-suspension
hearing either by federal Medicaid statutes and regulations or,
in the alternative, the Due Process Clause of the Fourteenth
Amendment.

DHCS agreed to delay enforcement of the suspension for
one month, allowing the district court sufficient time to rule
on Guzman’s expedited motion for a preliminary injunction.
On March 4, 2008, the district court denied the motion, con-
cluding that Guzman would not likely be able to show that
California Welfare and Institutions Code section 14043.36(a)
was preempted by federal law, or that he had a statutory or
constitutional right to a pre-suspension hearing. Nevertheless,
the district court granted a limited stay allowing Guzman to
file an emergency motion in this court to enjoin the suspen-
sion pending appeal. On March 5, 2008, a motions panel of
this court denied the motion, but expedited the briefing sched-
ule and the date of oral argument. This timely appeal fol-
lowed.

II

“Our review of the denial of a preliminary injunction is
limited and deferential.” Wildwest Inst. v. Bull, 472 F.3d 587,
589 (9th Cir. 2006) (internal quotation marks omitted). “We
ask only whether the district court has abused its discretion.”
Id. In such cases, the scope of our review is “generally limited
to whether the district court [1] employed the proper prelimi-
nary injunction standard and [2] whether the court correctly
apprehended the underlying legal issues in the case.” Earth
Island Inst. v. U.S. Forest Serv., 351 F.3d 1291, 1298 (9th Cir.
2003). In other words, “[a]s long as the district court got the
law right, it will not be reversed simply because the appellate
court would have arrived at a different result if it had applied
the law to the facts of the case.” Wildwest Inst., 472 F.3d at
590.

A district court may grant a preliminary injunction under
two sets of circumstances. In the first case, “ ‘a plaintiff must
 GUZMAN v. SHEWRY 545
show (1) a strong likelihood of success on the merits, (2) the
possibility of irreparable injury to plaintiff if preliminary
relief is not granted, (3) a balance of hardships favoring the
plaintiff, and (4) advancement of the public interest (in certain
cases).’ ” Natural Res. Def. Council, Inc. v. Winter, 518 F.3d
658, 677 (9th Cir. 2008) (quoting Freecycle Network, Inc. v.
Oey, 505 F.3d 898, 902 (9th Cir. 2007)). In the second case,
“a court may grant the injunction if the plaintiff demonstrates
either a combination of probable success on the merits and the
possibility of irreparable injury or that serious questions are
raised and the balance of hardships tips sharply in his favor.”
Id. (emphasis added) (quoting Freecycle, 505 F.3d at 902).

The district court articulated this standard and, in applying
it, held that Guzman had failed to show a likelihood of suc-
cess on the merits. Thus, the court declined to consider the
possibility that Guzman would suffer irreparable injury. Such
action was a valid exercise of the court’s discretion. As we
have held previously, before a preliminary injunction is
granted, at “ ‘an irreducible minimum, the moving party must
demonstrate a fair chance of success on the merits, or ques-
tions serious enough to require litigation.’ ” Dep’t of Parks &
Recreation v. Bazaar Del Mundo Inc., 448 F.3d 1118, 1124
(9th Cir. 2006) (quoting Arcamuzi v. Cont’l Airlines, Inc., 819
F.2d 935, 937 (9th Cir. 1987)). Thus, we must decide whether
the district court correctly apprehended the law underlying
Guzman’s claims in concluding that he was unlikely to pre-
vail. We now consider each of those claims in turn.

III

A

We begin with Guzman’s claim that California Welfare and
Institutions Code section 14043.36(a) is preempted by federal
law. “Under the Supremacy Clause, U.S. Const., art. VI, cl.
2, state laws that interfere with, or are contrary to the laws of
congress, made in pursuance of the constitution are invalid.”
546 GUZMAN v. SHEWRY
Wis. Pub. Intervenor v. Mortier, 501 U.S. 597, 604 (1991)
(internal quotation marks and citation omitted). Guzman
argues that California Welfare and Institutions Code section
14043.36(a) runs afoul of this provision because it conflicts
with, and is therefore preempted by, federal Medicaid law. In
preemption cases, we begin with the presumption that the
“historic police powers of the States” are not superseded by
federal law unless such result was the “clear and manifest pur-
pose of Congress.” Medtronic, Inc. v. Lohr, 518 U.S. 470, 485
(1996) (internal quotation marks and citation omitted).

Section 14043.36(a) states that

[i]f it is discovered that a provider is under investiga-
tion by the department or any state, local, or federal
government law enforcement agency for fraud or
abuse, that provider shall be subject to temporary
suspension from the Medi-Cal program, which shall
include temporary deactivation of the provider’s
number, including all business addresses used by the
provider to obtain reimbursement from the Medi-Cal
program.

Id. Guzman argues that this statute is preempted because fed-
eral law prohibits states from suspending providers from a
state health care program simply because the provider is
“under investigation” for fraud or abuse.

B

[1] Medicaid, by definition, is a cooperative federal-state
medical benefits assistance program. See 42 U.S.C. § 1396a.
As we have stated before, because such program “exemplifies
what is often referred to as cooperative federalism,” “the case
for federal preemption becomes a less persuasive one.” Wash.
Dep’t of Soc. & Health Servs. v. Bowen, 815 F.2d 549, 557
(9th Cir. 1987) (internal quotation marks and citations omit-
ted). The Medicaid statutes contain no “explicit pre-emptive
 GUZMAN v. SHEWRY 547
language” limiting the grounds upon which a state may sus-
pend a provider from a state health care program.7 See Mor-
tier, 501 U.S. at 605. Thus, we must determine whether the
federal Medicaid scheme is “ ‘so pervasive as to make reason-
able the inference that Congress left no room for the States to
supplement it,’ ” id. (quoting Rice v. Santa Fe Elevator Corp.,
331 U.S. 218, 230 (1947)), or whether compliance with the
California statute “ ‘stands as an obstacle to the accomplish-
ment and execution of the full purposes and objectives of
Congress,’ ” id. (quoting Hines v. Davidowitz, 312 U.S. 52,
67 (1941)).

C

[2] Section 1128 of the Social Security Act lists certain
grounds upon which the Secretary of HHS must exclude pro-
viders from a federal health care program; the Act also lists
certain other grounds upon which the Secretary may do so in
his discretion. See 42 U.S.C. § 1320a-7. In listing the discre-
tionary grounds for suspension, one subsection of the Act
explains that the Secretary may exclude or suspend “[a]ny
individual or entity which has been suspended or excluded
from participation . . . [in] a State health care program, for
reasons bearing on the individual’s or entity’s professional
competence, professional performance, or financial integrity.”
Id. § 1320a-7(b)(5). This provision plainly contemplates that
states have the authority to suspend or to exclude providers
from state health care programs for reasons other than those
upon which the Secretary of HHS has authority to act. Were
such not the case, this subsection would not vest the Secretary
with any authority not already provided elsewhere in the stat-
ute, and its inclusion would be redundant. See Spencer
Enters., Inc. v. United States, 345 F.3d 683, 691 (9th Cir.
7
The Social Security Act requires states to exclude providers from state
health care plans if directed to do so by the Secretary of HHS, 42 U.S.C.
§ 1396a(a)(39), but it does not expressly prohibit states from excluding or
suspending providers in other circumstances.
548 GUZMAN v. SHEWRY
2003) (“[I]t is . . . a ‘cardinal rule of statutory interpretation
that no provision should be construed to be entirely redun-
dant.’ ” (quoting Kungys v. United States, 485 U.S. 759, 778
(1988))); see also Clark v. Capital Credit & Collection Servs.,
Inc., 460 F.3d 1162, 1175 (9th Cir. 2006) (same).

[3] The applicable Medicare regulations confirm this view.
The regulation describing “State-Initiated Exclusions from
Medicaid” provides that “a State may exclude an individual
or entity from participation in the Medicaid program for any
reason for which the Secretary could exclude that individual
or entity.” 42 C.F.R. § 1002.2(a). Next, it instructs that “noth-
ing [in the regulations] should be construed to limit a State’s
own authority to exclude an individual or entity from Medic-
aid for any reason or period authorized by State law.” Id.
§ 1002.2(b). Thus, not only does the applicable federal statute
fail to prohibit states from suspending providers from state
health care programs for reasons other than those upon which
the Secretary of HHS may act, the governing regulation spe-
cifically instructs that states have such authority.

[4] Accordingly, nothing in the federal Medicaid statutes or
regulations prevents a state from suspending a provider tem-
porarily from a state health care program on the basis of an
ongoing investigation for fraud or abuse, as California Wel-
fare and Institutions Code section 14043.36(a) permits. Thus,
we agree with the district court that Guzman is unlikely to
prevail on the merits of his claim that such statute is pre-
empted by federal law.

IV

Even if California Welfare and Institutions Code section
14043.36(a) is not preempted, Guzman argues that federal
Medicaid law entitles him to a hearing before his temporary
suspension from the Medi-Cal program is imposed. Guzman
seeks to enforce such purported right through 42 U.S.C.
§ 1983.
 GUZMAN v. SHEWRY 549
[5] Section 1983 creates a cause of action against any per-
son who, under color of state law, deprives “any citizen of the
United States . . . of any rights, privileges, or immunities
secured by the Constitution and laws” of the United States. Id.
Although this statute enables plaintiffs to enforce federal stat-
utory rights, Maine v. Thiboutot, 448 U.S. 1, 4-5 (1980), it
“does not provide an avenue for relief every time a state actor
violates a federal law,” City of Rancho Palos Verdes v.
Abrams, 544 U.S. 113, 119 (2005). Thus, to demonstrate that
he is entitled to a pre-suspension hearing under federal Med-
icaid law, Guzman must establish that a federal statute unam-
biguously entitles him to such a right. After all, “[t]he
Supreme Court has held that only violations of rights, not
laws, give rise to § 1983 actions.” Save Our Valley v. Sound
Transit, 335 F.3d 932, 936 (9th Cir. 2003) (citing Gonzaga
Univ. v. Doe, 536 U.S. 273, 285 (2002); Blessing v. Free-
stone, 520 U.S. 329, 340 (1997)).

A

[6] Guzman contends that he is afforded the right to a pre-
suspension hearing by several Medicaid statutes and regula-
tions. First, he points to the Social Security Act, which
requires the Secretary of HHS to afford “reasonable notice
and opportunity for a hearing” to any provider excluded from
any federal health care program. 42 U.S.C. § 1320a-7(f)(1).
Yet by its plain terms, such provision applies only to exclu-
sions imposed by the Secretary himself; it does not govern
state exclusion procedures. Accordingly, the provision does
not control Guzman’s state-initiated temporary suspension.

B

Second, Guzman points to the federal regulations that set
forth the requirements for “State-Initiated Exclusions from
Medicaid,” 42 C.F.R. §§ 1002.1-.230. One such regulation
requires the relevant state agency to “have administrative pro-
cedures in place that enable it to exclude an individual or
550 GUZMAN v. SHEWRY
entity for any reason for which the Secretary could exclude
such individual or entity.” Id. § 1002.210. Another regulation
provides that the state agency must give the individual or
entity “the opportunity to submit documents and written argu-
ment against” such exclusion and “any additional appeals
rights that would otherwise be available under procedures
established by the State.” Id. § 1002.213.

[7] By their express terms, such regulations do not apply to
Guzman’s temporary suspension from Medi-Cal because they
set forth only those procedures which a state must follow in
excluding providers for reasons upon which the Secretary of
HHS could act. DHCS seeks temporarily to suspend Guzman
from Medi-Cal because he is under investigation for fraud and
abuse, as it has the authority to do under California Welfare
and Institutions Code section 14043.36(a). The Secretary of
HHS has no similar authority. Accordingly, a suspension
under section 14043.36(a) is not controlled by §§ 1002.1-.230.8

C

Guzman points to one final source of his right to a pre-
suspension hearing, 42 C.F.R. § 431.54(f). Consistent with
Medicaid’s purpose of providing health care to the indigent in
quantity and quality equivalent to the standard of care avail-
able to the general population, federal law requires state
health care plans to provide that “any individual eligible for
medical assistance . . . may obtain such assistance from any
institution . . . or person . . . qualified to perform the service
8
Even if it were, Guzman’s likelihood of success on the merits would
remain insubstantial. Guzman was notified of his temporary suspension
before it was enforced, and California law entitled him to file a written
appeal, Cal. Welf. & Inst. Code § 14043.65, and a meeting with DHCS
officials, id. § 14123.05. Moreover, California law gives Guzman the right
to an in-person hearing before his suspension becomes permanent. Id.
§ 14123. Indeed, a hearing already would have taken place but for Guz-
man’s request that DHCS postpone proceedings pending the resolution of
his criminal trial.
 GUZMAN v. SHEWRY 551
or services required . . . , who undertakes to provide him such
services.” 42 U.S.C. § 1396a(a)(23). This mandate is some-
times referred to as the “freedom of choice” principle. See
Ball v. Rodgers, 492 F.3d 1094, 1098 n.4 (9th Cir. 2007).

In the Omnibus Budget Reconciliation Act of 1981, Pub. L.
No. 97-35, 95 Stat. 357, Congress cabined such principle by
creating exceptions to § 1396a(a)(23) allowing states to “lock
in” certain beneficiaries who utilize Medicaid services “at a
frequency or amount not medically necessary” by limiting the
number of providers from whom they may obtain medical ser-
vices. 42 U.S.C. § 1396n(a)(2)(A) (1982). Similarly, the Act
allowed states to “lock out” certain providers from state
health care programs upon a finding that the provider fur-
nished medical services “at a frequency or amount not medi-
cally necessary” or “of a quality which does not meet
professionally recognized standards of health care.” Id.
§ 1396n(a)(2)(B).

[8] In 1983, HHS promulgated regulations to implement
these exceptions, stating that, consistent with the Act, “a State
shall not be deemed to be out of compliance with [the free-
dom of choice provision]” if it has “elected any of the excep-
tions set forth in [the regulation],” including subsection (f),
which provides as follows:

Lock-out of providers. If a Medicaid agency finds
that a Medicaid provider has abused the Medicaid
program, the agency may restrict the provider,
through suspension or otherwise, from participating
in the program for a reasonable period of time.

Before imposing any restriction, the agency must
meet the following conditions:

(1) Give the provider notice and opportunity for a
hearing, in accordance with procedures established
by the agency.
552 GUZMAN v. SHEWRY
(2) Find that in a significant number or proportion
of cases, the provider has:

(i) Furnished Medicaid services at a fre-
quency or amount not medically necessary,
as determined in accordance with utiliza-
tion guidelines established by the agency;
or

(ii) Furnished Medicaid services of a qual-
ity that does not meet professionally recog-
nized standards of health care.

(3) Notify CMS and the general public of the
restriction and its duration.

(4) Ensure that the restrictions do not result in deny-
ing recipients reasonable access (taking into account
geographic location: and reasonable travel time) to
Medicaid services of adequate quality, including
emergency services.

42 C.F.R. § 431.54(f).

Notably, such regulation is placed among the exceptions to
the freedom of choice provision, see id. § 431.54
(“Exceptions to certain State plan requirements”), rather than
those setting forth the procedural safeguards that must be fol-
lowed when states exclude providers from state health care
programs. See id. §§ 1002.1-.230 (“State-Initiated Exclusions
from Medicaid”). Yet reading this provision in isolation, Guz-
man argues that it vests him with a right to the remedies set
forth in the regulation prior to the enforcement of his tempo-
rary suspension.

Guzman is correct that his temporary suspension from
Medi-Cal is a “restriction” on his participation in such pro-
gram because the effect of the suspension is to prevent him
 GUZMAN v. SHEWRY 553
from billing Medi-Cal for the costs of any services rendered.
See supra at 13361-62 & n.3. Moreover, DHCS has never
made any finding that Guzman has furnished unnecessary or
inadequate medical services, as section 431.54(f)(2) appears
to require in order for a state to avoid infringing upon the
freedom of Medicaid recipients to choose among providers.

[9] Yet even if subsection (f) were designed to entitle Guz-
man to the remedies it describes, Guzman must demonstrate
that a federal statute vests him with such a right. As we held
in Save Our Valley, “agency regulations cannot independently
create rights enforceable through § 1983.” 335 F.3d at 939;
see also Alexander v. Sandoval, 532 U.S. 275, 291 (2001)
(“Language in a regulation may invoke a private right of
action that Congress through statutory text created, but it may
not create a right that Congress has not.”); Gonzaga, 536 U.S.
at 290 (“[I]f Congress wishes to create new rights enforceable
under § 1983, it must do so in clear and unambiguous terms
. . . .”).

In determining whether Congress intended to create a fed-
eral right in a particular statutory provision, we examine three
factors. “First, Congress must have intended that the provision
in question benefit the plaintiff.” Blessing, 520 U.S. at 340. In
answering this initial inquiry, we must determine whether the
statute creates an “individual entitlement,” Gonzaga, 536 U.S.
at 287, that is “unambiguously conferred,” id. at 283 (internal
quotation marks omitted), by the use of “rights-creating lan-
guage,” id. at 284 n.3. See Harris v. Olszewski, 442 F.3d 456,
461 (6th Cir. 2006) (applying Gonzaga to this prong of the
Blessing test).

[10] Here, our analysis need not proceed further than this
first step of the Blessing test because there is no federal stat-
ute that references any of the procedures set forth in subsec-
tion (f).9 Although subsection (f) was promulgated to
9
The second factor of the test asks whether “the right assertedly pro-
tected by the statute is not so vague and amorphous that its enforcement
554 GUZMAN v. SHEWRY
implement the exceptions to the freedom of choice provision
set forth in the Omnibus Budget Reconciliation Act of 1981,
including the provider “lock-out” exception, 42 U.S.C.
§ 1396n(a)(2)(B) (repealed 1987), Congress decided to repeal
such provision in 1987. See Medicare and Medicaid Patient
and Program Protection Act of 1987, Pub. L. No. 100-93, sec.
8(h), § 1915(a)(2), 101 Stat. 680, 694. Thus, whatever the
effect of HHS’s decision to retain the implementing regula-
tion after the repeal of the statute, Guzman cannot contend
that such regulation entitles him to a right enforceable in the
§ 1983 claim he has brought here.

As we have stated in the past, “the Supreme Court’s Sando-
val and Gonzaga decisions, taken together, compel the con-
clusion . . . that agency regulations cannot independently
create rights enforceable through § 1983.” Save Our Valley,
335 F.3d at 939. Such conclusion “should surprise no one, as
it results directly from the broader, venerated constitutional
law principle that Congress, rather than the executive, is the
lawmaker in our democracy.” Id.

[11] Accordingly, Guzman is unlikely to succeed on the
merits of his claim that he has an enforceable federal right to
a hearing prior to the imposition of his temporary suspension
from the Medi-Cal program.

V

[12] Finally, Guzman argues that even if he is not entitled
to a pre-suspension hearing under federal Medicaid law, the
Fourteenth Amendment of the United States Constitution
affords him such a remedy. The Fourteenth Amendment pro-
tects against governmental deprivations of “life, liberty, or

would strain judicial competence.” Blessing, 520 U.S. at 340-41 (internal
quotation marks omitted). The final factor asks whether the statute “unam-
biguously impose[s] a binding obligation on the States.” Id. at 341.
 GUZMAN v. SHEWRY 555
property” without due process of law. U.S. Const. amend.
XIV. To state a cognizable due process claim, Guzman must
have a “recognized liberty or property interest at stake.”
Schroeder v. McDonald, 55 F.3d 454, 462 (9th Cir. 1995). We
have previously held that a provider such as Guzman does
“not possess a property interest in continued participation in
Medicare, Medicaid, or the federally-funded state health care
programs.” Erickson v. United States ex rel. Dep’t of Health
& Human Servs., 67 F.3d 858, 862 (9th Cir. 1995). Thus,
under our precedent, Guzman must demonstrate that he pos-
sesses a liberty interest that will be jeopardized by his tempo-
rary suspension from Medi-Cal.

[13] The liberty guaranteed by the Fourteenth Amendment
is necessarily broad. See Bd. of Regents v. Roth, 408 U.S. 564,
572 (1972). To that end, Guzman argues that DHCS’s failure
to provide him with a pre-suspension hearing deprived him of
three protected liberty interests: (1) his right to contract with
the state; (2) his interest in pursuing the occupation of his
choice; and (3) his reputation for honesty and morality.
Although all three interests are protected under the Fourteenth
Amendment, Guzman must first demonstrate that he was
actually deprived of at least one of these interests before he
can establish that he is entitled to relief. See Cleveland Bd. of
Educ. v. Loudermill, 470 U.S. 532, 541 (1985).

A

[14] Guzman argues that because his temporary suspension
denies him the ability to receive reimbursement for treating
Medi-Cal patients, he has been deprived of his right to con-
tract with the state. In support of such assertion, Guzman
relies on the D.C. Circuit’s decision in Trifax Corp. v. District
of Columbia, 314 F.3d 641 (D.C. Cir. 2003), which indicates
that “formally debarring a corporation from government con-
tract bidding constitutes a deprivation of liberty that triggers
the procedural guarantees of the Due Process Clause.” Id. at
643. However, Guzman’s reliance on such authority is mis-
556 GUZMAN v. SHEWRY
placed. Participation in the Medi-Cal program entitles Guz-
man to reimbursement for treating patients who receive Medi-
Cal benefits; it does not involve bidding on government con-
tracts.10 As the Seventh Circuit explained in Medley v. City of
Milwaukee, 969 F.2d 312 (7th Cir. 1992), there is no authority
for the proposition that a private party, such as Guzman, has
a “liberty interest in . . . participation in a government assis-
tance program designed to provide benefits for a third party.”
Id. at 317. Accordingly, we must conclude that DHCS’s
action does not deprive Guzman of his interest in contracting
with the state.

B

Guzman next argues that his temporary suspension denies
him his liberty interest in pursuing the occupation of his
choice. The Supreme Court has not defined the boundaries of
an individual’s right to pursue his chosen profession, but it
has stated that there is “some generalized due process right to
choose one’s field of private employment.” Conn v. Gabbert,
526 U.S. 286, 291-92 (1999). The Court has emphasized,
however, that all cases recognizing such a right have “deal[t]
with a complete prohibition on the right to engage in a calling,
and not [a] sort of brief interruption.” Id. at 292 (emphasis
added). Indeed, the liberty interest in pursuing one’s chosen
profession has been recognized only in cases where (1) a
plaintiff challenges the rationality of government regulations
on entry into a particular profession, see, e.g., Schware v. Bd.
of Bar Exam’rs, 353 U.S. 232 (1957), or (2) a state seeks per-
manently to bar an individual from public employment, see,
e.g., Roth, 408 U.S. at 573.

[15] Guzman’s claim does not fall into either of these two
recognized categories. With respect to the first, DHCS has
temporarily suspended Guzman from Medi-Cal, thereby pre-
10
Accordingly, we need not determine whether to incorporate Trifax’s
holding into our jurisprudence.
 GUZMAN v. SHEWRY 557
venting him from receiving reimbursement for treating Medi-
Cal patients. DHCS has not, however, revoked or suspended
his license to practice medicine. Thus, Guzman’s case is dis-
tinguishable from those in which plaintiffs have challenged
the rationality of a state-imposed barrier to entering a particu-
lar profession, such as a testing or licensing requirement. See,
e.g., Schware, 353 U.S. at 247 (recognizing the liberty interest
of an individual denied the right to sit for a state bar exam).

[16] As to the second category, Guzman is not a public
employee, nor has DHCS’s decision to suspend him deprived
him of future public employment. Consequently, the suspen-
sion did not impose a complete bar on his ability to become
a public employee. See Cafeteria & Rest. Workers Union,
Local 473 v. McElroy, 367 U.S. 886, 895-96 (1961) (conclud-
ing that an employment decision to bar a cook from working
at a particular military base did not violate the cook’s due pro-
cess rights because she “remained entirely free to obtain
employment . . . with any other employer”); Llamas v. Butte
Cmty. Coll. Dist., 238 F.3d 1123, 1126, 1128 (9th Cir. 2001)
(concluding that a janitor fired from his job and “barred from
all future employment with the District” was not deprived of
his liberty interest in pursuing the occupation of his choice
because he had “not been banned from pursuing a janitorial
position [or other public employment] elsewhere”).

[17] In sum, Guzman’s temporary suspension from the
Medi-Cal program does not exclude him from the medical
profession, nor does it deprive him of, or prevent him from
applying for, public employment. Accordingly, Guzman has
not been deprived of a protected liberty interest in pursuing
the occupation of his choice.

C

Finally, Guzman contends that the Due Process Clause
entitles him to a pre-suspension hearing because the grounds
on which the suspension is based harm his reputation. A per-
558 GUZMAN v. SHEWRY
son’s liberty interest is implicated if the government levels a
charge against him that “impairs his reputation for honesty or
morality.” Erickson, 67 F.3d at 862 (citing Vanelli v. Reyn-
olds Sch. Dist. No. 7, 667 F.2d 773, 777 (9th Cir. 1982)).
DHCS’s suspension of Guzman triggers such an interest
because it is predicated on the fact that he is under investiga-
tion for “fraud and abuse,” an allegation that impacts his repu-
tation for honesty. See Cox v. Roskelley, 359 F.3d 1105, 1113
(9th Cir. 2004) (concluding that a termination letter which
alleged that a plaintiff had overcharged for services rendered
“could impair [plaintiff’s] reputation for honesty or morali-
ty”).

Thus, Guzman can establish that he has a protected liberty
interest at stake if he can satisfy the test we set forth in
Vanelli: he must demonstrate that (1) “ ‘the accuracy of the
charge is contested,’ ” (2) “ ‘there is some public disclosure
of the charge,’ ” and (3) the charge is “ ‘made in connection
with the termination of employment or the alteration of some
right or status recognized by [ ] law.’ ” Erickson, 67 F.3d at
862 (alteration in original) (quoting Vanelli, 667 F.2d at 777-
78).

[18] Applying Vanelli, we note initially that Guzman con-
tests the accuracy of the charges against him. Ultimately,
however, Guzman’s likelihood of success on the merits of this
claim turns on whether he can demonstrate a “public disclo-
sure” of DHCS’s charges against him under the second prong
of the Vanelli test.

1

With respect to this second prong, Guzman first argues that
federal regulations require DHCS to report his suspension to
the Healthcare Integrity and Protection Data Bank
(“HIPDB”), and that such reporting would constitute “public
disclosure” sufficient to deprive him of a protected liberty
interest. The HIPDB is a public database, maintained by HHS
 GUZMAN v. SHEWRY 559
under authority provided by the Social Security Act, which
records certain “final adverse actions” taken against health
care providers. See 42 U.S.C. § 1320a-7e(a). Information in
this database is available on request to federal and state gov-
ernment agencies, health plans, health care practitioners and
providers, and persons requesting statistical information. See
45 C.F.R. § 61.12(a). Because members of the public can
access information in the HIPDB, DHCS’s reporting of Guz-
man’s suspension to the HIPDB would constitute publication
that deprives him of a protected liberty interest. See Cox, 359
F.3d at 1108-12 (concluding that a termination letter, which
set forth allegations of a public employee’s incompetent and
unethical behavior, was “published” the moment it was placed
in the employee’s publicly accessible personnel file).

Federal regulations provide that “Federal and State Govern-
ment agencies must report health care providers, suppliers, or
practitioners excluded from participating in Federal or State
health care programs” for inclusion in the HIPDB. 45 C.F.R.
§ 61.10(a) (emphasis added). In addition, “exclusion” is
defined for reporting purposes as “a temporary or permanent
debarment of an individual or entity from participation in any
Federal or State health-related program.” Id. § 61.3. The
report to the HIPDB must include, among other things, “[a]
narrative description of the acts . . . upon which the reported
action was based.” Id. § 61.10(b)(4)(i).

Guzman argues that his temporary suspension is an “exclu-
sion,” which DHCS must report to the HIPDB, thereby pub-
lishing its charges against him. In response, DHCS contends
that its policy is to report only “final” actions to the HIPDB.
DHCS believes that the temporary suspension it imposed on
Guzman under California Welfare and Institutions Code sec-
tion 14043.36(a) is not a “final action” and thus need not be
reported.11
11
We deny DHCS’s motion requesting that we take judicial notice of a
letter from the Chief Counsel of the Office of Inspector General (“OIG”),
560 GUZMAN v. SHEWRY
[19] The district court agreed with Guzman that DHCS’s
policy of not reporting temporary suspensions appears to con-
flict with the plain language of the regulations. See 45 C.F.R.
§§ 61.3, 61.10. Nevertheless, the court concluded that because
DHCS has an established policy of not reporting such suspen-
sions, Guzman’s fear of disclosure was merely speculative.
As the district court explained,

Guzman concedes that, as a matter of policy,
DH[C]S does not report temporary suspensions to
the HIPDB. He fears, however, that because that pol-
icy apparently violates federal regulations, DH[C]S
may ultimately be forced to report the suspension.
Guzman adduces no evidence that there will likely
be a change in DH[C]S’s policy during the pendency
of this litigation. Specifically, he presents no evi-
dence that the policy has been challenged by federal
Medicaid authorities or third parties, or that DH[C]S
for some other reason will not continue to adhere to
it for the foreseeable future.

Absent such evidence, Guzman’s speculative,
unsupported fear that the charges will be reported
does not provide a sufficient basis upon which to
conclude that he is likely to succeed on the merits of
his procedural due process claim.

After DHCS stipulated that it would comply with such an
order, the district court directed DHCS to provide Guzman
with at least ten days’ notice of any change in its reporting

to DHCS that explains how OIG defines final adverse actions for HIPDB
reporting purposes. Judicial notice may be taken of any fact “not subject
to reasonable dispute in that it is . . . capable of accurate and ready deter-
mination by resort to sources whose accuracy cannot reasonably be ques-
tioned.” Fed. R. Evid. 201. Whatever OIG’s stated policy may be, one
may reasonably dispute whether the OIG’s description of the policy is
consistent with the manner in which it is applied. Accordingly, we decline
to take judicial notice of such document.
 GUZMAN v. SHEWRY 561
policy. This order remains in effect until the administrative
hearing on DHCS’s charges against Guzman is concluded
and, if notice is given prior to or during such hearing, the dis-
trict court’s order provides that Guzman may renew his
motion for a preliminary injunction.

[20] We cannot conclude that the district court abused its
discretion in the treatment of this claim. The record estab-
lishes that DHCS has not reported Guzman’s suspension to
the HIPDB, and Guzman offers no evidence that DHCS is
likely to change its policy in the future. Moreover, DHCS has
been ordered to notify Guzman of any change in its policy, at
which time Guzman could renew his motion for a preliminary
injunction.

[21] Accordingly, based on the present record, we conclude
that Guzman is not likely to succeed in proving that DHCS
will publicly disclose the charges against him.

2

[22] In the alternative, Guzman also asserts that he is under
contractual obligations with several independent physicians’
associations to disclose his temporary suspension and that he
is required to report the suspension to most of the hospitals at
which he has staff privileges. Guzman’s argument that his
own disclosure of the suspension deprives him of a protected
liberty interest is foreclosed by our decision in Llamas. In that
case, we rejected the claim of a terminated public employee
that his liberty interest would be implicated if he responded
truthfully regarding such termination on a civil service job
application he planned to file in the future. 238 F.3d at 1125-
30. We explained that “to allow the potentially stigmatized
party to satisfy the publication prong by disseminating the
details surrounding his termination would contradict the pur-
poses of the publication requirement as made clear in . . .
Supreme Court precedent.” Id. at 1131 (citing Bishop v.
Wood, 326 U.S. 341, 349 (1976)).
562 GUZMAN v. SHEWRY
[23] Guzman points to no authority for the proposition that
the contracts that obligate him to self-report his suspension
are sufficient to constitute public disclosure for purposes of a
due process claim, and we are aware of none.12 Accordingly,
we conclude that Guzman’s private obligations to report
DHCS’s action do not satisfy the public disclosure prong of
the Vanelli test.
[24] Having determined that Guzman is unable to demon-
strate that the nature of the charges against him will be publi-
cally disclosed, we need not consider whether the charges
have been made in connection with the alteration of a pro-
tected right or status.13 See Erickson, 67 F.3d at 862. Accord-
ingly, we conclude that Guzman is unlikely to succeed in
establishing a violation of his rights under the Fourteenth
Amendment.
VI
For the foregoing reasons, the district court’s decision is
AFFIRMED.
12
Guzman cites Merritt v. Mackey, 827 F.2d 1368 (9th Cir. 1987), for
the proposition that liability may exist where the state actor indirectly
causes a private party to deprive another private party of a protected inter-
est. In Merritt, we held that an employee of a nonprofit drug and alcohol
rehabilitation center stated a claim under § 1983 that he was deprived of
his property interest in continued employment when state and federal
agents intentionally coerced the nonprofit to fire him by conditioning fur-
ther funding on his termination. Id. at 1371. Such circumstances are not
present here, however, as DHCS played no role in Guzman’s decision to
enter the private contracts that require reporting.
13
In Erickson, we held that health care providers’ exclusion from Medi-
care, Medicaid, and certain federally funded health care programs by the
Secretary of HHS on account of their fraud-related convictions altered
their legal “status” as program participants and consequently deprived
them of a protected liberty interest. 67 F.3d at 863. We do not address
whether Erickson should be extended to address situations, such as Guz-
man’s, where a party has been suspended during the pendency of an inves-
tigation.