987 F.3d 1137
D.C. Cir.2021Background
- Medicare Part B reimburses certain outpatient drugs under a statutory formula (106% of average sales price) in 42 U.S.C. §1395w-3a; that provision also states there shall be no administrative or judicial review of payment determinations.
- The Balanced Budget and Emergency Deficit Control Act (Balanced Budget Act) requires sequestration (automatic spending cuts) when deficit targets are missed; special rules cap reductions to Medicare Part B "individual payments for services" at 2%.
- Following a 2013 sequestration order, Medicare Part B reimbursements were reduced by 2%. Community Oncology Alliance (an association of oncologists) sued to prevent application of the sequestration to Part B drug reimbursements, seeking declaratory and injunctive relief and invoking 2 U.S.C. §922(a)(2); it also requested a three-judge district court.
- The district court denied the three-judge request and dismissed for lack of subject-matter jurisdiction, relying on statutory bars to review; Community Oncology appealed.
- The D.C. Circuit reviewed whether (1) §922(a)(2) authorized this challenge, (2) federal-question jurisdiction was barred by Medicare’s §405(h)/§1395ii, (3) §405(g) provided an administrative-review path, and (4) a three-judge court was required.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 2 U.S.C. §922(a)(2) authorizes district-court review of the sequestration’s application to Medicare Part B drugs | §922(a)(2) permits private parties to challenge application of sequestration to Part B drugs | §922(a)(2) permits only challenges "concerning the constitutionality of" the Balanced Budget Act (facial challenges), not as-applied challenges to specific sequestration orders | §922(a)(2) does not cover this as-applied challenge; it authorizes facial challenges to the Act, not challenges to an individual sequestration order’s application |
| Whether federal-question jurisdiction under 28 U.S.C. §1331 exists given Medicare’s §405(h)/§1395ii | Claims arise under the Balanced Budget Act (not Medicare), so §405(h) does not bar §1331 jurisdiction | Claims seek additional Medicare reimbursement under 42 U.S.C. §1395w-3a, so they arise under the Medicare Act and §405(h)/§1395ii strip §1331 jurisdiction | Claims arise under the Medicare Act; §405(h)/§1395ii remove federal-question jurisdiction from the district court |
| Whether §405(g) provides jurisdiction via judicial review of a final HHS decision (presentment/exhaustion) | Community Oncology asserts members filed reimbursement claims, so §405(g) provides a path to district-court review | No specific final agency decisions, claim numbers, administrative records, or exhaustion shown—so §405(g) cannot be invoked | §405(g) does not supply jurisdiction because no concrete final HHS decision or exhausted administrative record was identified |
| Whether a three-judge court was required under §922(a)(5) | Community Oncology requested a three-judge court for review under the Balanced Budget Act | Because §922(a)(2) did not apply, the three-judge provision was inapplicable; initial judge properly determined three-judge panel not required | District court properly declined to convene a three-judge court |
Key Cases Cited
- Weinberger v. Salfi, 422 U.S. 749 (1975) (§405(h) bars constitutional claims that seek benefits under the Social Security Act when the Act provides the standing and substantive basis)
- Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1 (2000) (applies §405(h) to bar claims seeking increased Medicare payments even when based on other statutes)
- Heckler v. Ringer, 466 U.S. 602 (1984) (Medicare claims for increased payments arise under the Social Security Act for §405(h) purposes)
- Mathews v. Eldridge, 424 U.S. 319 (1976) (administrative presentment and exhaustion requirements for judicial review)
- Shapiro v. McManus, 136 S. Ct. 450 (2015) (initial district judge may decide whether a case falls within a special jurisdictional grant requiring a three-judge court)
- Am. Hosp. Ass'n v. Azar, 895 F.3d 822 (D.C. Cir. 2018) (discusses §405(g) and the preconditions for judicial review of Medicare claims)
- Clapper v. Amnesty Int’l USA, 568 U.S. 398 (2013) (Article III standing limits for prospective or speculative injuries)