Justia U.S. D.C. Circuit Court of Appeals Opinion Summaries

Articles Posted in Health Law
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The United States Court of Appeals for the District of Columbia Circuit ruled in a case involving Regenative Labs ("Regenative"), a manufacturer of medical products containing human cells, tissues, or cellular or tissue-based products ("HCT/Ps"), and the Secretary of Health and Human Services. Following the Centers for Medicare and Medicaid Services ("CMS") issuing two technical direction letters instructing Medicare contractors to deny reimbursement for claims for products manufactured by Regenative, the company filed suit challenging these letters without first exhausting administrative remedies. The District Court dismissed the case due to lack of subject matter jurisdiction as Regenative had failed to exhaust its administrative remedies. On appeal, the Court of Appeals affirmed the District Court’s dismissal, in part for lack of subject matter jurisdiction and in part on grounds of mootness. The Court concluded that the claims raised by Regenative arose under the Medicare Act and had to be pursued through the statutorily-prescribed administrative process. The Court also found that the company’s request for the court to vacate the contested policy was moot because the policy had already been rescinded by CMS. Finally, the court rejected Regenative's argument for mandamus jurisdiction, finding that it did not satisfy the jurisdictional requirements for this relief. View "Row 1 Inc. v. Becerra" on Justia Law

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Hospitals receive greater payment if their Medicare patients are disproportionately low-income individuals entitled to federal supplemental security income benefits. Pomona Valley Hospital Medical Center contends that the Department of Health and Human Services undercounted the number of its Medicare patients who were entitled to SSI benefits and thus undercompensated the hospital for treating them. Pomona sought to prove the undercount through data from state benefit programs that piggyback on SSI. In an administrative proceeding, Pomona introduced expert testimony explaining how the state data derives from and overlaps with the federal SSI data. The Provider Reimbursement Review Board held that Pomona failed to prove the undercount, but the district court set aside its decision and remanded the case to the Board for further proceedings.   The DC Circuit affirmed. The court explained that using statewide statistics, Pomona estimated that fewer than 10 such patients would likely show up in its SSI-fraction calculations in any given year. And neither the Board nor the Contractor countered these estimates. Given the lack of contrary evidence in the record, such discrepancies appear immaterial and suggest no substantial flaw in Pomona’s methodology. Further, the court explained that Pomona provided uncontroverted evidence that two potential difficulties with its approach amounted to little more than rounding errors. It proffered creditable testimony from two experts indicating that the only explanation for the discrepancy was some error in CMS’s collection or matching of data. By contrast, the Contractor remained silent. Given the strength of the hospital’s showing, and the absence of any countervailing evidence, the Board’s conclusion that Pomona had failed to prove an undercount was unreasonable View "Pomona Valley Hospital Med v. Xavier Becerra" on Justia Law

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After the FDA promulgated regulations applying the Act to vaping products, Fontem US, LLC, submitted numerous applications to market its flavored and unflavored vaping products. The FDA denied all of them, concluding Fontem had not shown its products were “appropriate for the protection of the public health.” Fontem petitioned for review, arguing the denial was unlawful.   The DC Circuit denied the petition for review as to Fontem’s flavored products and granted the petition for review with respect to the unflavored products. The court explained that as to Fontem’s flavored products, the FDA reasonably found a lack of evidence that the benefits of such products to adult smokers sufficiently outweighed the potential risks to young non-smokers. The court wrote that as to Fontem’s unflavored products, however, the FDA acted unlawfully by failing to engage in the holistic public health analysis required by the statute. The court concluded that the agency did not take into account the potential benefits of unflavored products or weigh those benefits against risks to public health. Instead, the agency identified highly granular deficiencies but failed to evaluate the potential effects of such deficiencies on public health or to weigh these deficiencies against the potential benefits of Fontem’s products. View "Fontem US, LLC v. FDA" on Justia Law

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The Affordable Care Act obligates large employers to provide their full-time employees with health insurance coverage meeting certain requirements. If an employer fails to provide coverage or provides noncomplying coverage, it is liable for an exaction under 26 U.S.C. Section 4980H. In 2019, the Internal Revenue Service sent two letters proposing exactions under Section 4980H to appellant Optimal Wireless, a wireless communications company. Optimal then filed an action against the IRS and the Department of Health and Human Services, claiming that the agencies had failed to satisfy certain procedural requirements before imposing the proposed exactions. Optimal sought a declaratory judgment and an injunction barring the IRS from collecting any money without complying with those procedures. The district court dismissed Optimal’s suit for lack of jurisdiction.   The DC Circuit affirmed. The court explained that the Anti-Injunction Act provides that, with certain exceptions, “no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed.” The court explained that because Congress repeatedly called the Section 4980H exaction a tax, Optimal’s suit is barred by the Anti-Injunction Act. The court further wrote that Congress’s use of the phrase “assessable payment” does not conflict with—or otherwise detract from the import of—its choice to label the Section 4980H exaction a “tax” in multiple provisions. The terms are not mutually exclusive. View "Optimal Wireless LLC v. IRS" on Justia Law

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MSHA’s jurisdiction, the Federal Mine Safety and Health Review Commission (“Commission”) held that for the list of items in Section 802(h)(1)(C) to be considered a “mine,” the items had to be located at an extraction site, or the roads appurtenant thereto.  Because neither the trucks nor the facility associated with the citations at issue were located on land covered under subsections (A)–(B), the Commission found they failed to constitute a “mine” and vacated the citations. The Commission also found that, as an independent contractor not engaged in servicing a mine at the time of the citation, KC Transport failed to qualify as an “operator” under Section 802(d) of the Mine Act. The Secretary of Labor (“the Secretary”), acting through MSHA, appealed the Commission’s decision and asked the court to uphold the two citations as an appropriate exercise of the Secretary’s jurisdiction under the Mine Act. In the Secretary’s view, subsection (C) of the “mine” definition covers KC Transport’s facility and trucks because they were “used in” mining activity.   The DC Circuit vacated and remanded the Commission’s decision, allowing the Secretary to interpret the statute’s ambiguous language. The court explained that given the Mine Act’s language, context, and the court’s binding precedent, it finds that the Commission erred in its interpretation of the “mine” and “operator” definitions. And we generally defer to the Secretary’s reasonable interpretation of an ambiguous statute—even when the Commission disagrees. But here, the Secretary’s position treats subsection (C) as 4 unambiguous and makes no meaningful effort to address the numerous practical concerns that would arise under such an interpretation. View "Secretary of Labor v. KC Transport, Inc." on Justia Law

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Ascension Borgess Hospital and forty-four other hospitals appeal the grant of summary judgment to the Secretary of the U.S. Department of Health and Human Services (“HHS”) dismissing challenges of certain reimbursements for uncompensated care. The Hospitals challenged the “disproportionate share hospital” (“DSH”) payments. The Provider Reimbursement Review Board (“PRRB”) dismissed the complaint for lack of jurisdiction pursuant to the statutory bar on administrative and judicial review of challenges to the methodology for calculating those payments. The Hospitals contend that HHS was required to promulgate its audit instructions by notice and comment rulemaking before using audited data from each hospital’s Worksheet S-10 to estimate the Hospitals’ proportionate shares of the national total of uncompensated care. They maintain that they do not challenge the Secretary’s estimate but seek only an order directing fulfillment of HHS’s notice and comment obligations.   The DC Circuit affirmed the grant of summary judgment to the Secretary. The court held that t the Hospitals’ framing of their challenge as purely procedural under the Medicare Act’s notice and comment requirement does not save their appeal, notwithstanding the “strong presumption in favor of judicial review of final agency action.” Even if, as the Hospitals contend, the alleged procedural violation is reviewable, the Hospitals have failed to identify any standard required to be set by rule that was not. Although neither DCH nor Florida Health addresses whether notice and comment rulemaking is required for protocols or procedures used to modify providers’ raw uncompensated care data before calculating DSH payment estimates, routine audit instructions to Medicare contractors ordinarily fall outside of section 1395hh’s rulemaking requirement. View "Ascension Borgess Hospital v. Xavier Becerra" on Justia Law

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In 2019, the Department of Justice announced that it would resume federal executions using a new lethal agent: the drug pentobarbital. Shortly thereafter, Citizens for Responsibility and Ethics in Washington submitted a Freedom of Information Act (FOIA) request for the Bureau of Prisons’ records related to its procurement of pentobarbital. The Bureau of Prisons supplied some records but withheld any information that could identify companies in the government’s pentobarbital supply chain. The Bureau invoked FOIA Exemption 4, which protects, among other things, trade secrets and confidential commercial information. The district court sustained those withholdings and entered judgment for the Bureau.   The DC Circuit reversed. The court concluded that on de novo review that the Bureau of Prisons has not met its burden to justify the challenged nondisclosures. In particular, the Bureau has not provided the detailed and specific explanation required to justify withholding the information as “commercial” and “confidential” under Exemption 4. The court remanded to the district court to determine in the first instance whether and to what extent any information in the public domain is the basis on which the government seeks to withhold any records or reasonably segregable portions thereof under Exemption 4. View "CREW v. DOJ" on Justia Law

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Under the Hatch-Waxman Act, a drug may receive “new chemical entity exclusivity” if no active ingredient in the drug was previously “approved.” The drug Aubagio was awarded this exclusivity because the Food & Drug Administration (“FDA”) determined that Aubagio’s only active ingredient, teriflunomide, had never previously been approved. This case concerns a challenge to Aubagio’s exclusivity period, which Sandoz Inc. raises to secure a solo period of marketing exclusivity for its generic equivalent. Sandoz maintains that teriflunomide was previously “approved” as an impurity in the drug Arava. In the alternative, Sandoz argued that teriflunomide was in fact approved as an active ingredient in Arava. The district court granted summary judgment for the FDA, agreeing with the agency that Aubagio was entitled to exclusivity because teriflunomide had never previously been approved.   The DC Circuit affirmed the district court’s judgment. The court held that while Sandoz did not exhaust its statutory argument before the FDA, in the absence of a statutory or regulatory exhaustion requirement, the court found it appropriate to decide Sandoz’s challenge. When the FDA approves a new drug, it does not also “approve” known impurities in that drug for the purpose of new chemical entity exclusivity. And the record is clear the FDA did not approve teriflunomide as an active ingredient when it approved Arava. Aubagio was therefore entitled to new chemical entity exclusivity, and Sandoz cannot benefit from a solo exclusivity period for its generic equivalent. View "Sandoz Inc. v. Xavier Becerra" on Justia Law

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Appellant sought the dismissal of most of the counts of his indictment and a new trial on the remaining counts. In his view, the indictment failed to allege a convergence between the deceived entity, CareFirst, and those deprived of property— which, in Appellant’s view, were his clients. In other words, he claimed that the indictment did not allege that he defrauded CareFirst of any of its own property. He argued instead that the indictment and trial improperly relied on evidence that he defrauded his small business clients by overcharging them for health insurance premiums. He also brought a number of evidentiary challenges.   The DC Circuit affirmed Appellant’s conviction and sentence. The court wrote that there is no convergence problem in this case. The indictment alleged that Appellant defrauded CareFirst, causing it to lose money. That is the same fraud that the government proved at trial. The differential between the falsely lowered premiums that Appellant tricked CareFirst into charging and those he billed his clients represented, at least in part, property fraudulently taken from CareFirst. That price difference also helped to show Appellant profit motive for the fraud, and demonstrated that he was neither acting as a Robin Hood nor at the behest of his clients to help reduce their premiums. None of Appellant’s other challenges on appeal succeed. View "USA v. Tarek Abou-Khatwa" on Justia Law

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In 2016, the Secretary of Health and Human Services (“HHS”) issued a final rule that implemented The Protecting Access to Medicare Act of 2014 (“PAMA” or “Act”), definition of “applicable laboratory” (“2016 Rule”). The American Clinical Laboratory Association (“ACLA”) filed a lawsuit challenging the 2016 Rule as arbitrary and capricious under the Administrative Procedure Act (“APA”) on the basis that it depresses Medicare reimbursement rates by excluding most hospital laboratories from PAMA’s reporting requirements. ACLA contended that because hospital laboratories tend to charge higher prices than standalone laboratories, their exclusion from reporting obligations results in an artificially low weighted median.   On remand, the parties cross-moved for summary judgment. The district court declined to reach the merits of ACLA’s APA challenge to the 2016 Rule, based on its determination that the Secretary had issued a new rule (“2018 Rule”) that superseded the 2016 Rule and mooted ACLA’s lawsuit.   The DC Circuit concluded that the case is not moot. Accordingly, the court reversed the district court’s dismissal for lack of subject matter jurisdiction and reached the merits of ACLA’s APA claim. The court explained that the 2016 Rule is arbitrary and capricious because the agency “failed to consider an important aspect of the problem.” The court wrote that PAMA provides that an applicable laboratory “means a laboratory that” receives “a majority” of its Medicare revenues from the Physician Fee Schedule or Clinical Laboratory Fee Schedule. Thus, hospital laboratories that provide outreach services may, in some instances, constitute “applicable laboratories” under PAMA. View "American Clinical Laboratory Association v. Xavier Becerra" on Justia Law