Council for Urological Interests v. Sebelius
946 F. Supp. 2d 91
D.D.C.2013Background
- CUI, a not-for-profit of urology service providers, challenges CMS regulations affecting ‘under arrangements’ DHS referrals and payments.
- Stark Law prohibits physician referrals where there is a financial relationship; DHS includes inpatient/outpatient hospital services.
- 2001 regs defined ‘entity’ as the billing entity; services under arrangements could be DHS only if billed by the entity with payment from CMS.
- 2008 regs expanded ‘furnish’ to include the entity performing DHS, bringing physician-owned ventures under Stark Law prohibitions for referrals.
- 2008 regs also prohibited per-click lease payments for DHS provided under arrangements, citing abuse concerns; effective date delayed to allow restructuring.
- CUI filed suit alleging APA and RFA violations; court grants CMS summary judgment and denies CUI’s motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CMS’s definition of ‘furnishing’ DHS at Step 1 respects Congress’s intent | CMS’s broadened ‘furnish’ contravenes the Stark Law. | CMS defined ‘furnish’ by its plain meaning and aligned with statutory goals. | CMS’s definition is permissible under Chevron step one. |
| Whether CMS’s revised interpretation is a reasonable construction under Chevron step two | The 2008 expansion is vague and unsupported by statute or history. | Agency provided a reasoned analysis linking to statutory objectives and evidence of abuse. | CMS’s interpretation is reasonable and entitled to deference. |
| Whether CMS’s prohibition of per-click lease payments in 2008 violates the Stark Law or Congress’s intent | Conference Report and text show intent to permit per-click payments under certain conditions. | Secretary has authority to impose additional lease restrictions to protect against abuse; per-click payments can be banned. | CMS properly prohibited per-click payments under Chevron step two. |
| Whether the Regulatory Flexibility Act requires additional analysis for the challenged provisions | CMS failed to provide a dedicated RFA analysis for small entities. | RFA analysis was satisfied via IPPS analysis and certification; no extra analysis required. | CMS complied with RFA requirements; no additional analysis required. |
Key Cases Cited
- Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (U.S. 1984) (establishes the two-step Chevron framework for agency interpretations)
- Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (U.S. 1983) (arbitrary and capricious standard in agency rulemaking)
- Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546 (U.S. 2005) (extrinsic materials have limited use; context matters for statutory interpretation)
- Alabama Educ. Ass’n v. Chao, 455 F.3d 386 (D.C. Cir. 2006) (reasonableness of agency interpretation in Chevron step two)
- Petit v. U.S. Dep’t of Ed., 675 F.3d 769 (D.C. Cir. 2012) (requires reasoned analysis to sustain Chevron step two deference)