Am. Clinical Lab. Ass'n v. Azar
334 F. Supp. 3d 301
D.C. Cir.2018Background
- ACLA (trade association for clinical/anatomic pathology labs) challenged HHS final rule implementing PAMA §216, which defines “applicable laboratory” to include only labs that bill Medicare Part B under their own NPI.
- PAMA §216 requires certain laboratories to report private-payor payment amounts/volumes; those data feed the Secretary’s calculation of Medicare payment rates for clinical diagnostic lab tests.
- The disputed regulatory gloss narrowed the statutory definition, excluding most hospital labs that bill under a hospital NPI, and ACLA argued the rule violated PAMA and the APA.
- HHS moved to dismiss, arguing PAMA precludes judicial review of actions "establishing payment amounts under this section," so the court lacked subject-matter jurisdiction.
- The District Court concluded the data-collection rules are "inextricably intertwined" with rate-setting under §216(b), and thus barred from review by §1395m-1(h)(1); it dismissed for lack of jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Secretary’s definition of “applicable laboratory” is reviewable | ACLA: the rule concerns data reporting, not rate-setting, so §216(h) does not bar review; rule is contrary to statute and arbitrary/capricious under the APA | HHS: §216(h)(1) precludes judicial review of matters "establishing payment amounts under this section," and the reporting rule is integral to that process | Court: Not reviewable—data-collection rules are inextricably intertwined with rate establishment; dismissal for lack of jurisdiction |
| Whether the rule violates PAMA’s plain text / is unreasonable | ACLA: limiting to labs with their own NPIs unlawfully excludes most hospital labs and skews market-based rates | HHS: choice of which data to collect falls within Secretary’s statutory authority to set parameters and is shielded from review | Court: Did not reach merits due to lack of jurisdiction |
| Whether the rule impermissibly regulates laboratories’ primary conduct (requiring notice-and-comment and civil penalties) | ACLA: notice-and-comment requirement and penalties indicate Congress intended judicially reviewable substantive regulation | HHS: the rule’s purpose is data collection for rate-setting, not regulation of primary conduct | Court: Rule does not regulate primary conduct; that argument does not overcome statutory preclusion |
| Whether precedent permits review of agency selection of data inputs used to set payments | ACLA: inputs can be reviewed separately from outputs | HHS: selection of inputs is integral to unreviewable rate-setting | Court: Citing Florida Health, selection of data integral to unreviewable action is itself unreviewable |
Key Cases Cited
- Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (federal courts have limited jurisdiction)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (plaintiff bears burden to establish jurisdiction)
- Bowen v. Mich. Acad. of Family Physicians, 476 U.S. 667 (strong presumption favoring judicial review of administrative action)
- Block v. Cmty. Nutrition Inst., 467 U.S. 340 (statutory language can preclude judicial review)
- Tex. All. for Home Care Servs. v. Sebelius, 681 F.3d 402 (analysis of statutory preclusion and when related agency actions are insulated)
- Fla. Health Scis. Ctr., Inc. v. Sec'y of Health & Human Servs., 830 F.3d 515 (D.C. Cir. holding inputs integral to unreviewable payment determinations are themselves unreviewable)
- Nat'l Park Hospitality Ass'n v. Dep't of Interior, 538 U.S. 803 (distinguishing regulations that do not affect a party’s primary conduct)
- Abbott Labs. v. Gardner, 387 U.S. 136 (preclusion of review disfavored where regulation demands immediate changes with penalties)