Council for Urological Interes v. Kathleen Sebelius
668 F.3d 704
D.C. Cir.2011Background
- Regulations issued under the Stark law prohibit physician-owned joint ventures from referring patients for designated health services when physicians have a financial interest.
- Council for Urological Interests challenges the 2008 regulations as exceeding statutory authority and seeks relief in district court under 28 U.S.C. § 1331.
- The Medicare Act normally requires exhaustion and precludes general federal-question review under § 405(h), channeling claims through Medicare procedures.
- District court dismissed, holding there was no Illinois Council exception because hospitals (providers) could challenge via Medicare Act review.
- Council contends § 405(h) is not absolute and that the Illinois Council exception should permit direct § 1331 review given the unique posture of non-provider plaintiffs.
- Court must decide whether the Illinois Council exception applies so that the Council may pursue its claims in district court under § 1331 rather than being channelled through the Medicare Act.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 405(h) bars § 1331 review for the Council’s Medicare challenge. | Council argues the Illinois Council exception allows § 1331 review. | Sebelius argues channeling applies and blocks direct § 1331 review. | Illinois Council exception applies; § 1331 review allowed. |
| Whether the Illinois Council exception applies when some parties could seek Medicare Act review but a whole category (joint ventures) could not. | Council asserts complete preclusion would occur, so exception should apply. | Government contends proxy mechanism suffices; no preclusion. | Exception applies; district court may hear the claims under § 1331. |
| Whether there is an adequate proxy or alignment of interests to justify the Illinois Council exception. | Council argues no reliable proxy alignment exists between hospitals and Council members. | Government maintains no special alignment requirement procedurally. | Court rejects narrow proxy requirement; focus is practical preclusion risk. |
Key Cases Cited
- Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1 (2000) (channeling doctrine and review framework under § 405(h))
- Illinois Council on Long-Term Care, Inc. v. Bowen, 529 U.S. 1 (2000) (Illinois Council exception to channeling; review may be available in court in some cases)
- Michigan Academy of Family Physicians v. Bowen, 476 U.S. 667 (1986) (strong presumption in favor of judicial review; not precluded absent persuasive evidence)
- Block v. Community Nutrition Institute, 467 U.S. 340 (1984) (implication of preclusion where statute provides detailed mechanism for some parties to seek review)
- American Chiropractic Association, Inc. v. Leavitt, 431 F.3d 812 (D.C. Cir. 2005) (applies Illinois Council exception where some members can exhaust through Medicare Act; others cannot)