289 F. Supp. 3d 45
D.C. Cir.2017Background
- Congress created the 340B Program to let certain hospitals buy covered outpatient drugs at discounted prices, enabling them to stretch federal resources for vulnerable patients.
- Medicare Part B outpatient drugs are paid under the Outpatient Prospective Payment System (OPPS); when hospital acquisition-cost data are unavailable, the statute directs use of an alternate average price provision "as calculated and adjusted by the Secretary."
- CMS issued the 2018 OPPS final rule reducing Medicare reimbursement for drugs acquired through 340B by roughly 22.5% (effectively nearly 30% in the final formula), citing studies (e.g., MedPAC) showing hospitals receive substantial 340B discounts and invoking the Secretary’s authority to "calculate and adjust" payments.
- Three hospital associations and three member hospitals sued under the APA, claiming CMS exceeded statutory authority; they moved for a preliminary injunction to block implementation pending litigation.
- Defendants (HHS/CMS) moved to dismiss for lack of subject-matter jurisdiction and failure to state a claim; the district court held it lacked jurisdiction because plaintiffs had not presented any concrete reimbursement claims to the Secretary as required by 42 U.S.C. § 405(g), and therefore dismissed and denied the injunction as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether court has jurisdiction under 42 U.S.C. § 405(g) to review challenge to 2018 OPPS 340B payment reduction | Plaintiffs argued presentment satisfied by detailed rulemaking comments and that exhaustion should be excused | Defendants argued plaintiffs failed to present any concrete reimbursement claim to the Secretary and thus § 405(g) bars district-court review | Held: No jurisdiction — presentment absent; dismissal under Rule 12(b)(1) granted |
| Whether rulemaking comments qualify as "presented" claims under § 405(g) | Plaintiffs: comments during notice-and-comment satisfy presentment | Defendants: generalized comments are not concrete claims for reimbursement | Held: Comments insufficient; presentment requires an individualized, concrete claim |
| Whether exhaustion requirement is excused (futility or other grounds) | Plaintiffs sought to excuse exhaustion as futile or inappropriate | Defendants: exhaustion required unless established exception applies; no futility shown | Held: No exception applied; exhaustion not satisfied and cannot be waived for presentment requirement |
| Whether merits should be reached (APA challenge to statutory authority) | Plaintiffs urged merits review and preliminary injunction | Defendants argued threshold jurisdictional defect foreclosed merits | Held: Court declined to reach merits due to jurisdictional defect; preliminary injunction denied as moot |
Key Cases Cited
- Lujan v. Defs. of Wildlife, 504 U.S. 555 (standing burden and jurisdictional principles)
- Heckler v. Ringer, 466 U.S. 602 (requirement to present a concrete claim to Secretary under § 405(g))
- Mathews v. Eldridge, 424 U.S. 319 (final decision/administrative-review framework and presentment principles)
- Shalala v. Ill. Council on Long Term Care, Inc., 529 U.S. 1 (§ 405(g)/(h) channeling requirement; narrow exceptions to judicial review)
- Action All. of Senior Citizens v. Sebelius, 607 F.3d 860 (D.C. Cir.) (discussing presentment; district-court remedies/remand context)