Knapp Medical Center v. Eric D. Hargan
16-5234
| D.C. Cir. | Nov 21, 2017Background
- The Stark Law forbids physician self-referrals to entities in which they have a financial interest but includes a physician‑owned hospital exception if reporting requirements are met.
- The ACA amended the Stark Law to bar physician‑owned hospitals from expanding beyond their March 23, 2010 size, while creating an exception for certain "applicable hospitals" in underserved areas subject to Secretary of HHS approval.
- 42 U.S.C. § 1395nn(i)(3)(A)–(I) requires the Secretary to establish a process (including public input and regulations) for exception applications and states in (I) that there is "no administrative or judicial review … of the process under this paragraph (including the establishment of such process)."
- Doctors Hospital at Renaissance (DHR) applied for an expansion exception; competitors Knapp Hospitals submitted comments opposing approval; CMS approved DHR’s application.
- Knapp sued in district court seeking to set aside CMS’s approval; the district court dismissed for lack of subject‑matter jurisdiction under § 1395nn(i)(3)(I). Knapp appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 1395nn(i)(3)(I) precludes judicial review of an individual exception decision | Knapp: "process" means only the rulemaking/procedure in subpara (A); decisions granting/denying individual applications remain reviewable | Secretary/CMS: "process under this paragraph" covers the entire paragraph (A)–(I), including grant/denial of exceptions; thus review is barred | Court: Affirmed dismissal—§ 1395nn(i)(3)(I) precludes judicial review of expansion application decisions |
| Whether omission of an explicit phrase ("any determination made under such process") in the enacted ACA implies Congress intended to allow review | Knapp: Congress considered and rejected broader draft language, so omission shows intent to preserve review of determinations | Secretary: Legislative history of a different bill is not controlling; statutory text governs | Court: Statutory text controls; omission of draft language is not persuasive |
| Whether precedent requires distinguishing reviewable determinations from unreviewable procedural inputs | Knapp: Florida Health and Texas Alliance permit review of outputs even if inputs are unreviewable | Secretary: Those precedents apply a functional test and do not compel narrowing § 1395nn(i)(3)(I) here because § 1395nn(i)(3)(I) is an unqualified bar | Court: Relied on functional analysis; § 1395nn(i)(3)(I) is broad and precludes review here |
| Whether affirmance leads to absurd, unreviewable executive action (e.g., summary approvals) | Knapp: Total preclusion could allow arbitrary grants without applying statutory criteria | Secretary: Ultra vires claims remain a possible exception; plaintiffs did not allege ultra vires here | Court: Not persuaded by absurdity claim; did not decide whether ultra vires claims would be reviewable; affirmed dismissal |
Key Cases Cited
- Florida Health Scis. Ctr., Inc. v. Sec'y of Health & Human Servs., 830 F.3d 515 (D.C. Cir.) (explains functional test distinguishing reviewable claims from unreviewable agency inputs/outputs)
- Tex. All. for Home Care Servs. v. Sebelius, 681 F.3d 402 (D.C. Cir.) (construes statutory preclusion broadly where substantive elements are "inextricably intertwined" with an unreviewable process)
- Amgen, Inc. v. Smith, 357 F.3d 103 (D.C. Cir.) (framework for determining whether challenged agency action is of the sort shielded from review)
- Block v. Cmty. Nutrition Inst., 467 U.S. 340 (U.S. Supreme Court) (clear‑statement principle allowing Congress to preclude judicial review when language is explicit)