Knapp Medical Center v. Hargan
875 F.3d 1125
D.D.C.2017Background
- The Stark Law (42 U.S.C. § 1395nn) generally bars physician self-referrals to entities in which they have a financial interest but contains a hospital-ownership exception if reporting requirements are met.
- The Affordable Care Act added a restriction preventing physician-owned hospitals from expanding beyond their March 28, 2010 licensed capacity, with exceptions for certain "applicable hospitals" subject to an HHS exception process and regulations.
- The ACA also added § 1395nn(i)(3)(I), which provides there shall be "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) submitted comments challenging CMS’s handling and DHR’s statutory qualification; CMS approved the application.
- Knapp sued 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 CMS’s grant/denial of an individual expansion exception | Knapp: "process" means only the procedural/regulatory rulemaking in subparagraph (A); individual exception determinations remain reviewable | Government: "the process under this paragraph" covers the whole paragraph (A)-(I), including individual exception decisions, so review is barred | The court held the preclusion bars judicial review of expansion-grant decisions; district court lacked subject-matter jurisdiction |
| Whether legislative history or omission of "any determination made under such process" implies determinations are reviewable | Knapp: Congress omitted that phrase from the final ACA text, showing it rejected broader preclusion | Government: The omitted language from a different bill is not probative; the statute’s plain text controls | The court gave little weight to that legislative-history argument and relied on statutory text |
| Whether precedent (Florida Health, Texas Alliance) supports review of determinations distinct from unreviewable process | Knapp: prior cases distinguish inputs/outputs and limit preclusion; here determination is separable | Government: Those cases used functional analysis but do not compel narrowly reading an unqualified preclusion; section 1395nn(i)(3)(I) is broader | The court found those precedents distinguishable and applied a textual reading finding broad preclusion |
| Whether affirmance produces an "absurd result" (e.g., unchecked ministerial grants) or leaves open ultra vires review | Knapp: Complete preclusion could allow lawless grants; absurd consequence | Government: Ultra vires actions may still be reviewable; Knapp did not press ultra vires; prior ACA provisions have been totally precluded elsewhere | The court rejected the absurd-results argument and noted ultra vires claims were not presented |
Key Cases Cited
- Amgen, Inc. v. Smith, 357 F.3d 103 (D.C. Cir.) (courts must determine whether action is of the sort shielded from review before reaching merits)
- Texas Alliance for Home Care Servs. v. Sebelius, 681 F.3d 402 (D.C. Cir.) (functional analysis: inputs integral to a precluded process are themselves unreviewable)
- Fla. Health Scis. Ctr., Inc. v. Sec'y of HHS, 830 F.3d 515 (D.C. Cir.) (distinguishing inputs/outputs is inadequate when inputs are inextricably intertwined with unreviewable estimates)
- Block v. Cmty. Nutrition Inst., 467 U.S. 340 (1984) (clear congressional statement can preclude judicial review)