Ivy Sports Medicine, LLC v. Sylvia Mathews Burwell, 412 U.S. App. D.C. 452

Background

ReGen (later Ivy) developed the Collagen Scaffold, an absorbable surgical mesh for knee repair; FDA initially cleared it in Dec. 2008 via a "substantial equivalence" determination placing it in Class II (bypassing full premarket approval required for Class III).
After press reports and congressional inquiries raised concerns about the review process, FDA conducted an internal investigation that found procedural departures and recommended reevaluation.
FDA reconsidered, concluded the original substantial equivalence finding was erroneous, and rescinded the clearance without using the statutory reclassification process that requires notice-and-comment rulemaking; the rescission forced removal from the market and ReGen later went bankrupt; Ivy sued under the APA.
FDA defended its rescission as permissible exercise of inherent administrative "reconsideration" authority; Ivy argued Congress had displaced that authority by providing §360c(e) as the exclusive reclassification procedure.
The D.C. Circuit majority held FDA could not use inherent authority to achieve the functional equivalent of reclassification (up‑classifying to Class III) because Congress provided §360c(e) as the statutory mechanism and the agency failed to follow its notice-and-comment requirements; the rescission was vacated and remanded.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether FDA may rescind a prior substantial‑equivalence clearance via inherent agency "reconsideration" rather than using statutory reclassification procedures (21 U.S.C. §360c(e)).	Ivy: Congress displaced inherent reconsideration by providing §360c(e) as the corrective, notice‑and‑comment reclassification mechanism; FDA must use that procedure to effect the same result.	FDA: Substantial‑equivalence determinations and reclassification are different; agency retains inherent authority to correct its own erroneous determinations without §360c(e) rulemaking.	Held: FDA could not short‑circuit §360c(e); rescission was de facto reclassification and required the statute’s procedure (notice and comment); FDA’s action invalid.
Whether allegations of misconduct (political pressure/procedure departures) permit FDA to rely on inherent authority despite §360c(e).	Ivy: (implicit) even where process flaws exist, statutory procedure governs.	FDA: Internal investigation findings of improper influence justify use of inherent reconsideration notwithstanding American Methyl.	Held: Majority: alleged departures did not amount to the high‑bar "misconduct" exception; even if an exception existed, record did not show misconduct sufficient to qualify.
Remedy and practical consequences: must FDA always use §360c(e) to reverse equivalence for a single device?	Ivy: Reversal without §360c(e) is unlawful; device must be reclassified through statutory process.	FDA: §360c(e) may be used but is not exclusive; agency can rescind and invite de novo classification by manufacturer.	Held: Court vacated FDA’s rescission and remanded for further proceedings; emphasized limited practical impact (FDA may still reclassify using §360c(e) or rely on notice‑and‑comment exceptions when applicable).

Key Cases Cited

American Methyl Corp. v. EPA, 749 F.2d 826 (D.C. Cir. 1984) (agencies may not rely on inherent reconsideration when Congress provided a statutory mechanism to correct the same error)
Mazaleski v. Treusdell, 562 F.2d 701 (D.C. Cir. 1977) (agencies have power to reconsider and change decisions within a reasonable period)
Albertson v. FCC, 182 F.2d 397 (D.C. Cir. 1950) (reconsideration inherent in the power to decide absent specific statutory limitation)
Contact Lens Mfrs. Ass'n v. FDA, 766 F.2d 592 (D.C. Cir. 1985) (classification framework and risk‑based regulation of devices)
Cyto‑Ri Therapeutics, Inc. v. FDA, 715 F.3d 922 (D.C. Cir. 2013) (distinction between premarket approval for Class III and abbreviated substantial‑equivalence review)