192 F. Supp. 3d 129
D.D.C.2016Background
- Plaintiffs Knapp Medical Center, McAllen Hospitals, L.P., and Cornerstone Regional Hospital, L.P. are competing hospitals in Hidalgo County, Texas; Doctors Hospital at Renaissance (DHR) is a physician-owned hospital in the same county that sought a 100% expansion.
- The Stark Law (42 U.S.C. § 1395nn), as amended by the Affordable Care Act, created a statutory application process and criteria under which physician-owned hospitals may seek permission from HHS to expand.
- DHR filed an application (amended after an HHS rule change) and HHS approved the expansion on September 11, 2015; notice was published in the Federal Register.
- Plaintiffs challenged HHS’s approval, alleging (1) failure to publish the initial application, (2) violation of the two-year reapplication rule, (3) mischaracterization of DHR as a “high Medicaid facility,” and (4) arbitrary application of statutory criteria.
- Plaintiffs invoked the APA, the Mandamus Act, and the Declaratory Judgment Act; HHS and DHR moved to dismiss for lack of jurisdiction.
- The court held it lacked jurisdiction because Congress expressly precluded judicial and administrative review of the expansion application process and decisions under 42 U.S.C. § 1395nn(i)(3)(I).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held | |
|---|---|---|---|---|
| Whether the court has jurisdiction to review HHS’s approval of DHR’s expansion | Plaintiffs argued HHS misapplied statutory/regulatory criteria and that judicial review of that application is available under the APA and other acts | HHS (and DHR) argued Congress expressly barred administrative and judicial review of the expansion process and resulting decisions under § 1395nn(i)(3)(I) | Court held Congress’s language bars review of the application process and decisions; dismissal for lack of jurisdiction | |
| Whether the plaintiffs’ specific statutory and procedural objections (publication, two-year rule, Medicaid status, discrimination) are reviewable | Plaintiffs framed these as statutory violations and arbitrary agency action subject to review | Defendants contended these challenges attack the agency’s application of the statutorily created process, which Congress insulated from review | Court ruled these claims are challenges to the process/application and therefore precluded from review | |
| Whether ultra vires/non-statutory review (agency acted beyond authority) preserves judicial review despite the statutory bar | Plaintiffs suggested courts should still review if HHS exceeds statutory authority | Defendants noted ultra vires review exists but is extremely limited and requires a concrete allegation that the agency acted beyond statutory authority | Court found plaintiffs did not plausibly allege HHS acted ultra vires and their speculative concerns did not create a justiciable controversy | |
| Whether Texas Alliance precedent affects scope of review | Plaintiffs distinguished their complaint as targeting application, not the process | Defendants relied on Texas Alliance for Home Care Servs. to show process and application are inseparable for purposes of a statutory bar | Court followed Texas Alliance, holding the process and decision are inseparable and § 1395nn(i)(3)(I) precludes review | Court applied Texas Alliance to bar review |
Key Cases Cited
- Texas Alliance for Home Care Servs. v. Sebelius, 681 F.3d 402 (D.C. Cir.) (statutory bar to review of contract awards extends to standards integral to the award)
- Trudeau v. Fed. Trade Comm’n, 456 F.3d 178 (D.C. Cir.) (judicial review available for ultra vires agency action in limited circumstances)
- Bowen v. Mich. Acad. of Family Physicians, 476 U.S. 667 (Congressional intent to preclude review must be clear and convincing to overcome presumption of reviewability)
- Abbott Labs. v. Gardner, 387 U.S. 136 (judicial review presumption for administrative action)
- Amgen, Inc. v. Smith, 357 F.3d 103 (D.C. Cir.) (discussing statutory indicators that may overcome the presumption of reviewability)
- Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (federal courts are courts of limited jurisdiction; party asserting jurisdiction bears the burden)