Am. Hosp. Ass'n v. Azar
895 F.3d 822
| D.C. Cir. | 2018Background
- Medicare OPPS reimburses hospitals for outpatient drugs via set rates; for most drugs payment is tied to average sales price (ASP) at 106% unless adjusted by the Secretary.
- The 340B Program allows certain hospitals to purchase outpatient drugs at reduced prices; Secretary set 2018 OPPS payment for 340B drugs at 77.5% of ASP (down from 106%) by invoking his adjustment authority.
- Three hospitals and three hospital associations sued the day the 2018 rule published, seeking declaratory and injunctive relief, alleging the Secretary lacked authority to base payment on estimates instead of acquisition-cost survey data and that the cut was not a permissible adjustment.
- Plaintiffs did not submit any individual reimbursement claims or administrative appeals before suing; they only submitted comments during the rulemaking and later, while the case was on appeal, made payment demands to HHS.
- The district court dismissed for lack of subject-matter jurisdiction, concluding plaintiffs failed to meet the § 405(g) presentment requirement; the D.C. Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether filing comments in informal rulemaking satisfies § 405(g) presentment requirement | Comments opposing the rule constitute presentment of Medicare claims and permit immediate judicial review | Presentment requires a concrete administrative claim for reimbursement and a decision; rulemaking comments are not such presentment | Filing comments in informal notice-and-comment rulemaking does not satisfy presentment requirement |
| Whether post-filing administrative submissions while case is on appeal can cure lack of presentment | Payment demands made to HHS during the appeal cured the jurisdictional defect | Jurisdiction is determined by facts at filing; post-filing presentment on appeal cannot retroactively create district-court jurisdiction | Post-filing demands made while case is on appeal do not cure lack of presentment for district-court jurisdiction |
| Whether § 405(g) allows anticipatory challenges to Medicare regulations before a concrete reimbursement dispute | Plaintiffs: rule invalidity may be challenged pre-enforcement via judicial review when rulemaking comments were made | Secretary: § 405(g) channels challenges through the administrative claims process; anticipatory challenges are barred | § 405(g) precludes anticipatory legal challenges; plaintiffs must present concrete claims for reimbursement first |
| Whether presentment requirement can be waived or cured by equitable doctrines | Plaintiffs point to precedents where presentment was deemed cured or satisfied in other contexts | Secretary argues presentment is nonwaivable requirement for a judicial 'decision' under § 405(g) and must occur before filing | Presentment is a nonwaivable precondition and was not satisfied here; equitable cure on appeal rejected |
Key Cases Cited
- Mathews v. Eldridge, 424 U.S. 319 (1976) (distinguishes presentment and exhaustion; requires presentment for judicial review)
- Heckler v. Ringer, 466 U.S. 602 (1984) (presentment bars anticipatory challenges; requires an opportunity for Secretary to rule on a concrete reimbursement claim)
- Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1 (2000) (Medicare claims are channeled through the administrative-review scheme; broad preclusion of direct judicial attacks)
- Nat'l Kidney Patients Ass'n v. Sullivan, 958 F.2d 1127 (D.C. Cir. 1992) (barred direct district-court challenge to rate reduction absent initial administrative determination)
- Grupo Dataflux v. Atlas Global Group, 541 U.S. 567 (2004) (jurisdiction depends on the state of facts when the action is brought)
- Mathews v. Diaz, 426 U.S. 67 (1976) (jurisdictional defects may be cured while case is pending in district court, not by events occurring only on appeal)
- Action Alliance of Senior Citizens v. Sebelius, 607 F.3d 860 (D.C. Cir. 2010) (discusses curing presentment where plaintiffs later obtained administrative decisions; not precedent for rulemaking comments as presentment)