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The justices on Tuesday let stand a lower court decision that said California state courts have authority to hear the case challenging Nevada's discharge policies.
San Francisco is seeking $500,000 in reimbursement costs for treating 29 patients who were given vouchers for one-way bus tickets to California. It also wants an order barring Nevada from sending over any more patients.
A California Superior Court judge ruled that Nevada could be sued in California because it knew San Francisco would have to spend money on the patients.
Nevada claims the lawsuit interferes with its sovereign powers.
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