617 F.Supp.3d 547
E.D. Tex.2022Background:
- Congress enacted the No Surprises Act to limit patient liability for out-of-network emergency and certain non-emergency services and to create an independent dispute resolution (IDR) process using a qualifying payment amount (QPA) and several additional statutory factors.
- Federal agencies issued an interim final rule (the Rule) for air-ambulance providers that incorporates a QPA-presumption provision—requiring arbitrators to pick the offer closest to the QPA unless credible information clearly shows the QPA is materially different.
- This QPA-presumption language is nearly identical to the provision this Court struck down in Texas Medical Association v. HHS (TMA) for contradicting the statute and for being issued without notice-and-comment.
- LifeNet (an air-ambulance provider) sued, seeking vacatur of the final sentence of 45 C.F.R. §149.520(b)(2) (and parallel provisions in Titles 26 and 29), alleging the Rule (1) conflicts with the statute and (2) was issued without APA notice-and-comment.
- Defendants moved to transfer under the first-to-file rule to D.C. (pointing to Association of Air Medical Services), but the court denied transfer because TMA was the operative first-filed, the issues substantially overlap, and compelling circumstances favored retaining the case.
- The court (1) found LifeNet has Article III standing, (2) held the Rule conflicts with the unambiguous statutory text and was issued without notice-and-comment, (3) granted LifeNet summary judgment, and (4) vacated the challenged regulatory sentences and remanded.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Transfer (first-to-file) | TMA addresses same core issue; this court should retain jurisdiction. | Air Medical was first to challenge air-ambulance rule; comity favors transfer to D.C. | Denied transfer: TMA was first-filed on overlapping issue; compelling circumstances counsel retention. |
| Standing | LifeNet is a regulated "nonparticipating provider," suffers procedural and imminent economic injuries from QPA presumption. | LifeNet lacks injury; payments flow through Air Methods so LifeNet not directly harmed; relief won't redress. | LifeNet has Article III standing (object of rule, procedural injury, likely financial harm; redressability met). |
| Statutory validity (QPA presumption) | Rule improperly gives QPA dispositive weight, contrary to statute requiring consideration of QPA and additional factors without prescribed weighting. | Agencies argue statutory scheme, deference, and that Rule reasonably implements Congress's intent. | Rule conflicts with unambiguous statute; placing a presumption on QPA rewrites statutory text—set aside under APA. |
| APA notice-and-comment | Agencies bypassed notice-and-comment; good-cause exception not satisfied. | Agencies claim congressional authorization, good cause, or harmless error. | Agencies failed to meet APA notice-and-comment requirements; good cause inapplicable; failure was not harmless—provides independent basis to set aside. |
Key Cases Cited
- Util. Air Regul. Grp. v. EPA, 573 U.S. 302 (2014) (agency rule invalid when it rewrites clear statutory terms)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standing: injury-in-fact, traceability, redressability framework)
- Summers v. Earth Island Inst., 555 U.S. 488 (2009) (procedural-right injuries may confer standing only when tied to concrete interest)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment standards)
- Contender Farms, L.L.P. v. U.S. Dep’t of Agric., 779 F.3d 258 (5th Cir. 2015) ("objects" of regulation ordinarily have standing)
- W. Gulf Mar. Ass’n v. ILA Deep Sea Local 24, 751 F.2d 721 (5th Cir. 1985) (first-to-file rule aims to avoid duplicative litigation and conflicting rulings)
- Mann Mfg., Inc. v. Hortex, Inc., 439 F.2d 403 (5th Cir. 1971) (compelling-circumstances exception to first-to-file rule)