Alcresta Therapeutics, Inc. v. Azar

• Citation: 318 F.Supp.3d 321
• Decision Date: 28 June 2018
• Docket Number: Civil Action No. 18–243 (TJK)
• Parties: ALCRESTA THERAPEUTICS, INC. et al., Plaintiffs, v. Alex M. AZAR II, Secretary of Health and Human Services, Defendant.
• Court: U.S. District Court — District of Columbia

318 F.Supp.3d 321

ALCRESTA THERAPEUTICS, INC. et al., Plaintiffs,

v.Alex M. AZAR II, Secretary of Health and Human Services, Defendant.

Civil Action No. 18–243 (TJK)

United States District Court, District of Columbia.

Signed June 28, 2018

Stephanie Ann Webster, Akin Gump Strauss Hauer & Feld LLP, Washington, DC, for Plaintiffs.

Melanie Dyani Hendry, U.S. Attorney's Office for the District of Columbia, Washington, DC, for Defendant.

MEMORANDUM OPINION AND ORDER

TIMOTHY J. KELLY, United States District Judge

On June 26, Plaintiffs filed an Emergency Motion (the "Emergency Motion") for an Injunction Pending Appeal of the Court's Order denying their Motion for Preliminary Injunction. See ECF No. 50 ("Emer. Mot."). For the reasons set forth below, the Emergency Motion is denied.

I. Background

On February 2, 2018, Plaintiffs Alcresta Therapeutics, Inc. ("Alcresta") and Jonathan Flath filed suit against the Secretary of Health and Human Services, alleging that the agency improperly failed to grant Alcresta a new billing code for one of its products, Relizorb. ECF No. 1. More than three weeks later, Plaintiffs filed an Amended Complaint, ECF No. 7, and a Motion for Preliminary Injunction (the "PI Motion"), ECF No. 8. At the parties' request, the Court stayed its consideration of the PI Motion while they discussed a potential settlement.

After settlement talks broke down, the Court held oral argument on the PI Motion and subsequently issued an Order denying the PI Motion, ECF No. 47, and an accompanying Memorandum Opinion ("PI Opinion"), ECF No. 48. The instant opinion assumes familiarity with the facts of the case as described in the PI Opinion. Id. at 1–9. In denying the PI Motion, the Court concluded that, based on the record, Alcresta was not entitled to a preliminary injunction because it failed to establish that absent an injunction, it would suffer irreparable harm. Id. at 10–15. The Court also concluded that Flath, a patient with cystic fibrosis

who had taken Relizorb for a few months, was not entitled to a preliminary injunction because: (1) he failed to demonstrate a substantial likelihood of standing, which is necessary to establish a likelihood of success on the merits; and (2) he failed to establish irreparable harm because the preliminary relief sought—including a temporary new billing code for Relizorb—would not cause government insurers to reimburse for Relizorb, and thus would not remedy the irreparable harm Flath had alleged. Id. at 1, 15–24.

On June 26, Plaintiffs appealed the Court's Order, ECF No. 51 (notice of appeal), and filed the instant Emergency Motion. The Emergency Motion seeks an injunction pending appeal resembling the preliminary injunction Plaintiffs requested earlier. Plaintiffs request that this Court order that Defendant (1) adhere to the Federal Advisory Committee Act ("FACA") and other required procedures in considering Alcresta's 2018 application for a permanent, unique billing code, (2) issue a "reasoned decision" on Alcresta's 2017 application, and (3) issue a "valid, usable temporary code" for Relizorb in the interim. Emer. Mot. at 1–2; see also PI Motion at 1. On June 27, Defendant filed his response. ECF No. 53.

II. Legal Standard

Federal Rule of Civil Procedure 62(c) provides that "[w]hile an appeal is pending from an interlocutory order ... that ... denies an injunction, the court may suspend, modify, restore, or grant an injunction on terms for bond or other terms that secure the opposing party's rights." "[I]njunction pending appeal is an extraordinary remedy." Memphis Publ'g Co. v. FBI , 195 F.Supp.3d 1, 3 (D.D.C. 2012) (citing Cuomo v. U.S. Nuclear Regulatory Comm'n , 772 F.2d 972, 978 (D.C. Cir. 1985) ). "The standards for evaluating a motion for an injunction pending appeal are ‘substantially the same as those for issuing a preliminary injunction.’ " Amgen Inc. v. Azar , No. 17-cv-1006, 2018 WL 1990521, at *1 (D.D.C. Feb. 22, 2018) (quoting Al–Anazi v. Bush , 370 F.Supp.2d 188, 199 n.11 (D.D.C. 2005) ). Plaintiffs "must establish that [they are] likely to succeed on the merits, that [they are] likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in [their] favor, and that an injunction is in the public interest." Id. (quoting Winter v. Nat. Res. Def. Council, Inc. 555 U.S. 7, 20, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008) ).

III. Analysis

In their Emergency Motion, Plaintiffs make two broad arguments for an injunction pending appeal, both of which reflect disagreement with the Court's reasoning in the PI Opinion. First, they argue that the D.C. Circuit uses a "sliding scale" to evaluate motions for preliminary injunctive relief, and that the Court erred by failing to apply it in the PI Opinion. Emer. Mot. at 2–3, 5. Second, Plaintiffs argue that the Court erred by concluding that they failed to demonstrate irreparable harm. Id. at 3–4. The Court addresses each argument in turn.

A. The Sliding Scale

"Before the Supreme Court's decision in Winter , courts in this circuit applied a ‘sliding-scale’ approach under which ‘a strong showing on one factor could make up for a weaker showing on another.’ " Amgen , 2018 WL 1990521, at *1 (quoting Sherley v. Sebelius , 644 F.3d 388, 392 (D.C. Cir. 2011) ). In Winter , the Supreme Court rejected the argument that "when a plaintiff demonstrates a strong likelihood of prevailing on the merits, a preliminary injunction may be entered based only on a ‘possibility’ of irreparable harm." 555 U.S. at 21, 129 S.Ct. 365. Instead, plaintiffs seeking preliminary relief must "demonstrate that irreparable injury is likely in the absence of an injunction." Id. at 22, 129 S.Ct. 365. "Some judges of the D.C. Circuit have expressed the view that ... Winter supplants the ‘sliding scale’ approach, and a movant cannot obtain an injunction without showing ‘both a likelihood of success and a likelihood of irreparable harm.’ " Soundboard Ass'n v. FTC , 254 F.Supp.3d 7, 9–10 (D.D.C. 2017) (quoting Sherley , 644 F.3d at 392 ). But the D.C. Circuit "has not yet needed to decide th[e] issue." League of Women Voters of U.S. v. Newby , 838 F.3d 1, 7 (D.C. Cir. 2016).

Against this backdrop, Plaintiffs argue that the "sliding scale" governs the Emergency Motion and that the PI Opinion misapplied that standard, because it did not conduct a full analysis of their likelihood of success on the merits or the balance of equities. Emer. Mot. at 2–3. As an initial matter, the Court has strong doubts that the sliding-scale approach survives Winter . See, e.g., Nken v. Holder , 556 U.S. 418, 438, 129 S.Ct. 1749, 173 L.Ed.2d 550 (2009) ("When considering success on the merits and irreparable harm, courts cannot dispense with the required showing of one simply because there is a strong likelihood of the other." (Kennedy, J., concurring) ); Davis v. Pension Benefit Guar. Corp. , 571 F.3d 1288, 1296 (D.C. Cir. 2009) ("[U]nder the Supreme Court's precedents, a movant cannot obtain a preliminary injunction without showing both a likelihood of success and a likelihood of irreparable harm, among other things." (Kavanaugh, J., concurring) ); Guttenberg v. Emery , 26 F.Supp.3d 88, 100 n.5 (D.D.C. 2014) ("Even a narrow reading of the Court's holding in Winter supports the view that sliding-scale analysis is obsolete.").¹

But "[w]hether or not Winter spelled the end of sliding-scale analysis, one thing is clear: plaintiffs here must at least ‘demonstrate that irreparable injury is likely in the absence of an injunction.’ " Guttenberg , 26 F.Supp.3d at 101 (quoting Winter , 555 U.S. at 22, 129 S.Ct. 365 ). "Under Winter , even a ‘strong likelihood of prevailing on the merits’ cannot make up for a deficient showing of irreparable injury." Id. (quoting Winter , 555 U.S. at 21–22, 129 S.Ct. 365 ). As the Court explained in its PI Opinion, Plaintiffs have failed to demonstrate that they are "likely" to suffer irreparable harm in the absence of an injunction. PI Opinion at 10–15, 22–24. Thus, they are not entitled to a preliminary injunction, and the Court need not analyze the remaining factors to reach this conclusion. See, e.g., Chaplaincy of Full Gospel Churches v. England , 454 F.3d 290, 297 (D.C. Cir. 2006) ("A movant's failure to show any irreparable harm is therefore grounds for refusing to issue a preliminary injunction, even if the other three factors entering the calculus merit such relief."); CityFed Fin. Corp. v. OTS , 58 F.3d 738, 747 (D.C. Cir. 1995) ("[Plaintiff] has made no showing of irreparable injury here, [and] that alone is sufficient for us to conclude that the district court did not abuse its discretion by rejecting [plaintiff's] request."); Mdewakanton Sioux Indians of Minn. v. Zinke , 255 F.Supp.3d 48, 51 & n.3 (D.D.C. 2017) ("Regardless of how the other three factors are analyzed, it is required that the movant demonstrate an irreparable injury.").

In fact, the D.C. Circuit has upheld the denial of a motion for an injunction pending appeal where the plaintiff has failed to establish irreparable harm. See FTC v. Weyerhaeuser Co. , 648 F.2d 739, 743 (D.C. Cir. 1981) ("[T]he FTC ... has failed to show irreparable harm. For this reason alone an injunction pending appeal is unwarranted.").² Here too, where the Court has found that Plaintiffs have not shown a likelihood of irreparable harm, the Court must deny the Emergency Motion.³

B. Irreparable Harm

Plaintiffs also argue that an injunction pending appeal is justified because the Court purportedly "disregarded" three arguments that they are suffering irreparable harm: (1) Flath's inability to obtain Relizorb and the alleged inability of patients taking Relizorb generally to submit claims under Medicare; (2) Alcresta's alleged loss of $15 million in profits, which Plaintiffs claim are not recoverable; and (3) the procedural injury related to the government's alleged failure to comply with FACA. Emer. Mot. at 3. But none of these alleged harms is sufficient to demonstrate irreparable...