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

A private health insurer that participates in the Medicare Advantage program consolidated two of its contracts in 2024. One of the pre-existing contracts (“consumed contract”) had provided a Special Needs Plan (SNP) and received a star rating for that measure in 2023, while the other (“surviving contract”) did not. After consolidation, the insurer’s new contract offered an SNP for 2025. The Centers for Medicare and Medicaid Services (CMS) calculates star ratings for consolidated contracts by taking the enrollment-weighted mean of measure scores from the consumed and surviving contracts. Initially, CMS excluded the consumed contract’s SNP data for the 2025 star rating, but after the insurer’s request, CMS included the data, resulting in the same overall rating as before.The insurer challenged this calculation in the United States District Court for the District of Columbia, arguing that including the consumed contract’s SNP data violated the statute, regulations, and agency guidance, and that CMS failed to adequately explain a change in calculation methodology. The district court granted summary judgment in favor of CMS, finding that the agency’s actions complied with applicable law and guidance, and that no further explanation for the calculation was required.On appeal, the United States Court of Appeals for the District of Columbia Circuit affirmed the district court’s judgment. The appellate court held that CMS properly applied its regulations and guidance by including the consumed contract’s SNP measure score in the calculation. The court also found that the methodology provided accurate information to beneficiaries, as required by statute, and that CMS did not make a policy change triggering a requirement for further explanation. The district court’s entry of summary judgment in favor of CMS was affirmed. View "HMO Louisiana, Inc. v. Department of Health and Human Services" on Justia Law

A pharmaceutical company, together with a healthcare research organization and a kidney patient advocacy group, challenged regulatory actions by the Centers for Medicare & Medicaid Services (CMS) concerning the Medicare payment system for end-stage renal disease (ESRD). The dispute arose after CMS included oral-only drugs, specifically XPHOZAH—a drug manufactured by the company for treating hyperphosphatemia in dialysis patients—within the bundled payment for renal dialysis services under Medicare, effective January 1, 2025. Previously, such oral drugs were reimbursed separately under Medicare Part D.The plaintiffs filed suit in the United States District Court for the District of Columbia, contesting both the inclusion of oral-only drugs in the bundled payment regulation and the specific identification of XPHOZAH as a renal dialysis service. They asserted these actions were arbitrary, exceeded statutory authority, and violated the Administrative Procedure Act. CMS moved to dismiss the complaint, arguing that federal law expressly bars judicial review of the Secretary’s “identification of renal dialysis services included in the bundled payment.” The district court agreed, finding that both the regulation and the identification of XPHOZAH fell within the statutory bar to judicial review because they constituted “identifications” as defined by the statute and were within the agency’s delegated authority. The court dismissed the action for lack of jurisdiction.On appeal, the United States Court of Appeals for the District of Columbia Circuit reviewed the district court’s dismissal de novo. The appellate court affirmed, holding that the relevant statute, 42 U.S.C. § 1395rr(b)(14)(G), clearly precludes judicial review of the Secretary’s identification of renal dialysis services, including oral-only drugs and XPHOZAH. The court found that CMS acted within its statutory authority, and therefore, further judicial review was barred. The district court’s dismissal was affirmed. View "Ardelyx, Inc. v. Kennedy" on Justia Law

Norwich Pharmaceuticals sought to market a generic version of Xifaxan, a drug invented by Salix Pharmaceuticals for treating irritable bowel syndrome with diarrhea and hepatic encephalopathy. Norwich submitted an Abbreviated New Drug Application (ANDA) to the FDA, identified as number 214369. Salix believed this ANDA infringed its patents and sued Norwich in the United States District Court for the District of Delaware. That court found Norwich’s ANDA infringed Salix’s patents related to hepatic encephalopathy, while the patents for irritable bowel syndrome were invalid as obvious. The court’s final judgment barred FDA approval of Norwich’s ’369 ANDA until Salix’s hepatic encephalopathy patents expired in October 2029.Following the judgment, Norwich amended its ’369 ANDA to remove the indication for hepatic encephalopathy and requested the Delaware District Court modify its judgment to allow immediate FDA approval of the amended ANDA. The court denied this motion, reasoning that Norwich could not change its ANDA after final judgment to circumvent the prior ruling. Norwich appealed to the United States Court of Appeals for the Federal Circuit, which agreed the judgment restricted approval of the entire ANDA, including non-infringing indications, until 2029, and affirmed the Delaware District Court’s decision.After the FDA declined to grant final approval of Norwich’s amended ANDA, instead issuing only tentative approval, Norwich sued in the United States District Court for the District of Columbia, arguing the FDA acted arbitrarily and capriciously. The court granted summary judgment to the FDA and Salix. On appeal, the United States Court of Appeals for the District of Columbia Circuit held that the Delaware District Court’s judgment applied to Norwich’s ANDA as amended, so the FDA correctly delayed final approval until October 2029. The appellate court affirmed the district court’s judgment. View "Norwich Pharmaceuticals, Inc. v. Kennedy" on Justia Law

Three Medicaid beneficiaries in Indiana challenged the federal agency’s approval of a ten-year extension to Indiana’s Medicaid program, known as HIP 2.0, asserting that the program did not comply with the requirements of the federal Medicaid Act. The plaintiffs argued that the agency’s 2020 approval, as well as a 2023 letter maintaining the program despite concerns about coverage reductions, were arbitrary and capricious under the Administrative Procedure Act. Indiana, seeking to defend HIP 2.0, intervened in the case.The United States District Court for the District of Columbia granted summary judgment to the beneficiaries, holding that the agency’s approval was not based on reasoned decision-making and failed to consider all relevant factors, particularly whether the program would help furnish medical assistance. The court vacated the 2020 approval and remanded the matter to the agency for further proceedings but stayed the vacatur order, allowing most of HIP 2.0 to remain in effect except for specific premium requirements. Indiana appealed, seeking review of the district court’s remand order, while the beneficiaries and the federal agency argued that the order was not a final, appealable decision.The United States Court of Appeals for the District of Columbia Circuit reviewed whether it had jurisdiction over Indiana’s appeal. The court held that the district court’s remand order was not a final decision under 28 U.S.C. § 1291 because it did not end the litigation on the merits and substantive proceedings before the agency remained. The appellate court also found that none of the exceptions to the final judgment rule applied, including the collateral-order doctrine or Rule 54(b) certification. Accordingly, the D.C. Circuit dismissed Indiana’s appeal for lack of jurisdiction. View "Rose v. Kennedy" on Justia Law

Novartis Pharmaceuticals Corporation manufactures Entresto, a drug used to treat chronic heart failure. MSN Pharmaceuticals, Inc. sought approval from the Food and Drug Administration (FDA) to market a generic version of Entresto by submitting an abbreviated new drug application (ANDA). MSN’s application excluded certain methods of use protected by Novartis’s patents and claimed that the generic drug contained the same active ingredients as Entresto. The FDA approved MSN’s application, prompting Novartis to challenge the approval, arguing that the generic’s labeling and composition were unlawfully different from Entresto.The United States District Court for the District of Columbia reviewed Novartis’s claims under the Administrative Procedure Act. Novartis argued that the FDA’s approval of MSN’s ANDA and denial of Novartis’s citizen petitions were arbitrary and capricious, particularly regarding the omission of patented dosing regimens and indications from the generic’s label, and the determination that the generic contained the same active ingredients as Entresto. The district court granted summary judgment in favor of the FDA, finding that the agency’s actions were reasonable and consistent with statutory and regulatory requirements. Novartis appealed this decision.The United States Court of Appeals for the District of Columbia Circuit affirmed the district court’s judgment. The appellate court held that the FDA reasonably concluded the generic drug’s labeling changes were permissible to avoid patent infringement and did not render the generic less safe or effective for non-patented uses. The court also found that the FDA’s determination that the generic and Entresto shared the same active ingredients was supported by scientific evidence and regulatory guidance. The court applied de novo review to legal questions and deferred to the FDA’s scientific expertise, ultimately upholding the agency’s approval of MSN’s ANDA. View "Novartis Pharmaceuticals Corp. v. Kennedy" on Justia Law

A group of hospitals challenged the calculation of their Medicare fractions for fiscal year 2007, which is a key component in determining eligibility and payment amounts under the Medicare disproportionate share hospital (DSH) adjustment. The DSH adjustment provides increased reimbursement to hospitals serving a high number of low-income patients. The hospitals disputed the inclusion of Medicare Part C beneficiaries in the Medicare fraction, arguing that this reduced their payments. After the Centers for Medicare and Medicaid Services (CMS) published the Medicare fractions, the hospitals appealed to the Provider Reimbursement Review Board, seeking review of the calculation before the final DSH adjustment was determined.The Provider Reimbursement Review Board dismissed the hospitals’ appeal for lack of jurisdiction, reasoning that a challenge could only be brought after the final determination of the DSH adjustment was made and reflected in the Notice of Program Reimbursement (NPR). The Board concluded that publication of the Medicare fraction alone did not constitute a “final determination” as required by statute. The hospitals then sought review in the United States District Court for the District of Columbia, which disagreed with the Board and held that the hospitals’ challenge could proceed, interpreting precedent to allow appeals at the stage of Medicare fraction publication.The United States Court of Appeals for the District of Columbia Circuit reviewed the case and reversed the district court’s judgment. The court held that the Board lacked jurisdiction to hear the hospitals’ challenge prior to the issuance of the NPR, because only the NPR constitutes the Secretary’s “final determination as to the amount of the payment” under the relevant statutory provision. The court clarified that while some prospective payment system components may be appealed before the NPR, retrospective adjustments like the DSH adjustment require final settlement before an appeal is ripe. View "Battle Creek Health System v. Kennedy" on Justia Law

A pharmaceutical company sought approval from the Food and Drug Administration (FDA) to market tasimelteon, a drug previously approved for a rare sleep disorder, as a treatment for jet lag. The company submitted results from several clinical trials, focusing on both objective sleep measures and subjective assessments of alertness and next-day functioning. The FDA’s Center for Drug Evaluation and Research issued a complete response letter indicating that the application did not provide substantial evidence of efficacy, particularly criticizing the measurement of next-day impairment and the tools used for subjective endpoints. The company engaged in further discussions and dispute resolution with the FDA, including proposing a narrower indication for approval, but these efforts were unsuccessful.After the FDA issued a formal notice of opportunity for a hearing (NOOH), the company requested a hearing and submitted expert declarations supporting the adequacy of its clinical evidence. The FDA ultimately denied both the application and the hearing request, finding no genuine and substantial issue of fact warranting a hearing. The company then petitioned the United States Court of Appeals for the District of Columbia Circuit for review, arguing that the FDA was required to hold a hearing, that material factual disputes existed, that the FDA’s decision-making was arbitrary and capricious, and that the final decision violated the Appointments Clause.The United States Court of Appeals for the District of Columbia Circuit held that the Food, Drug, and Cosmetic Act does not require the FDA to hold a hearing before denying every new drug application, but the agency must grant a hearing if there are material factual disputes. The court found that, in this case, the FDA’s refusal to hold a hearing was arbitrary and capricious because the company’s expert evidence created genuine disputes over the adequacy of the clinical trials. The court remanded the case to the FDA for further proceedings consistent with its opinion. View "Vanda Pharmaceuticals, Inc. v. FDA" on Justia Law

Terri R. Winnon, a former executive assistant and controller for a group of skilled nursing facilities (SNFs) in Texas, alleged that her former employers and associated entities engaged in fraudulent schemes to obtain improper reimbursements from Medicare and Texas Medicaid. She claimed that the defendants paid unlawful kickbacks to doctors and hospital discharge planners for patient referrals and inflated therapy service bills to maximize government reimbursements. Winnon’s allegations included specific practices such as employee bonuses tied to Medicare census targets, “sham” medical directorships, and “marketing gifts” to hospital staff, as well as systematic upcoding of therapy services by a contracted provider, RehabCare.After Winnon filed her qui tam action under the False Claims Act (FCA) and related Texas statutes, the United States District Court for the District of Columbia dismissed her claims. The court found that her allegations against RehabCare were barred by the FCA’s public disclosure provision, as similar claims had already been made public in a prior lawsuit, United States ex rel. Halpin & Fahey v. Kindred Healthcare, Inc. The district court also determined that Winnon’s claims against the SNF Defendants did not meet the heightened pleading requirements of Federal Rule of Civil Procedure 9(b), as they lacked sufficient particularity regarding the alleged fraudulent conduct.On appeal, the United States Court of Appeals for the District of Columbia Circuit affirmed the district court’s dismissals. The appellate court held that Winnon’s claims against RehabCare were precluded by the public disclosure bar because her allegations were substantially similar to those previously disclosed and she did not qualify as an “original source” under the FCA. Regarding the SNF Defendants, the court concluded that Winnon’s allegations failed to satisfy Rule 9(b)’s requirement for particularity, as she did not provide enough specific details to support a strong inference that false claims were actually submitted. The court affirmed the district court’s judgments in full. View "USA v. Lozano" on Justia Law

Jazz Pharmaceuticals, Inc. (Jazz) challenged the FDA's approval of Avadel CNS Pharmaceuticals Inc.'s (Avadel) drug Lumryz, which contains the same active ingredient, oxybate, as Jazz's drug Xywav. Jazz argued that the FDA's approval violated its seven-year marketing exclusivity under the Orphan Drug Act (ODA). The key issue was whether Lumryz and Xywav are considered the "same drug" under the ODA, which would bar the FDA from approving Lumryz during Xywav's exclusivity period.The United States District Court for the District of Columbia granted summary judgment in favor of the FDA and Avadel, concluding that the FDA's approval of Lumryz did not violate the ODA. The court reasoned that the statutory text, history, and purpose indicated that Congress intended to incorporate the FDA's regulatory definition of "same drug," which includes a clinical superiority requirement. The court found that Lumryz, being clinically superior to Xywav due to its once-nightly dosing regimen, was not the "same drug" as Xywav.The United States Court of Appeals for the District of Columbia Circuit affirmed the district court's decision. The appellate court held that the FDA did not act beyond its statutory authority in approving Lumryz. The court concluded that Congress, by amending the ODA in 2017, intended to incorporate the FDA's longstanding regulatory definition of "same drug," which includes the concept of clinical superiority. Since Lumryz was found to be clinically superior to Xywav, it was not considered the "same drug," and thus, the FDA's approval of Lumryz during Xywav's exclusivity period was lawful. View "Jazz Pharmaceuticals, Inc. v. Kennedy" on Justia Law

California collects a fee from in-state hospitals and uses the revenue, along with federal Medicaid funds, to provide subsidies to California hospitals serving Medicaid beneficiaries. Out-of-state hospitals near the California border, which sometimes serve California Medicaid beneficiaries but do not pay the fee, sought access to these subsidies. They argued that their exclusion violated the dormant Commerce Clause, the Equal Protection Clause, and federal Medicaid regulations.The United States District Court for the District of Columbia rejected the out-of-state hospitals' arguments and granted summary judgment in favor of the Centers for Medicare and Medicaid Services (CMS). The hospitals appealed the decision.The United States Court of Appeals for the District of Columbia Circuit reviewed the case de novo and affirmed the district court's decision. The court held that the QAF program does not discriminate against interstate commerce because it does not tax out-of-state hospitals, and the supplemental payments are based on in-state provision of medical care. The court also found that the program does not violate the Equal Protection Clause, as California could rationally decide to target subsidies to in-state hospitals serving a disproportionate share of Medi-Cal beneficiaries. Lastly, the court concluded that the QAF program does not violate federal Medicaid regulations, as the regulation in question pertains to base payments for specific services rendered to beneficiaries, not supplemental subsidies like the QAF payments. View "Asante v. Kennedy" on Justia Law