The case centered on Assembly Bill 290, a 2019 California law targeting the relationship between major dialysis providers Fresenius Medical Care and DaVita and the American Kidney Fund, a nonprofit that helps kidney disease patients pay insurance premiums. The law sought to cap reimbursement rates for dialysis providers who donate to charities and required various disclosures, after California found that providers "demonstrated a willingness to exploit the Affordable Care Act's rules for their own financial benefit."
Writing for the panel, Circuit Judge Ryan Nelson held that the law's reimbursement cap violates the First Amendment because it "burdens Providers' ability to charitably contribute" and fails exacting scrutiny. "While a sufficiently important government interest undergirds the provision, it fails the narrow tailoring prong," Nelson wrote, noting California could have achieved its goals through direct premium regulation rather than targeting charitable donations. The court also struck down disclosure requirements and restrictions on charity assistance conditions.
The district court had previously granted partial summary judgment, upholding some provisions while striking others as unconstitutional. California cross-appealed to defend the law, while the dialysis companies and American Kidney Fund appealed the adverse rulings. The case arose after AKF threatened to cease California operations if the law took effect, prompting the coalition to seek an injunction.
The ruling leaves only one minor disclosure requirement standing, but the court held even that cannot be severed from the rest of the struck-down law. The decision represents a significant victory for the dialysis industry's charitable giving model, which critics say allows companies to steer patients toward more profitable private insurance while appearing to help them financially. California officials have not indicated whether they plan to appeal to the Supreme Court.