Am. Clinical Lab. Ass'n v. Becerra, 21-5122

CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)
Writing for the CourtWilkins, Circuit Judge
Citation40 F.4th 616
Parties AMERICAN CLINICAL LABORATORY ASSOCIATION, Appellant v. Xavier BECERRA, Secretary, United States Department of Health and Human Services, Appellee
Docket Number21-5122
Decision Date15 July 2022

40 F.4th 616

Xavier BECERRA, Secretary, United States Department of Health and Human Services, Appellee

No. 21-5122

United States Court of Appeals, District of Columbia Circuit.

Argued February 25, 2022
Decided July 15, 2022

Ashley C. Parrish argued the cause for appellant. With her on the briefs were Mark D. Polston and Gabriel Krimm.

McKaye L. Neumeister, Attorney, U.S. Department of Justice, argued the cause for appellee. With her on the brief were Brian M. Boynton, Acting Assistant Attorney General at the time the brief was filed, Abby C. Wright, Attorney, Janice L. Hoffman, Associate General Counsel, U.S. Department of Health & Human Services, and Susan Maxson Lyons, Deputy Associate General Counsel for Litigation.

Before: Millett, Wilkins, and Jackson* , Circuit Judges.

Wilkins, Circuit Judge:

WILKINS, The Protecting Access to Medicare Act of 2014 ("PAMA" or "Act"), Pub. L. No. 113-93, 128 Stat. 1040, requires "applicable laborator[ies]" to report private payor—e.g., an insurance company—rates for laboratory tests to the Secretary of Health and Human Services ("HHS"). The Medicare program then uses private market payment rate data to set new Medicare reimbursement rates for laboratory tests. Specifically, PAMA directs the Secretary to calculate the "weighted median" of private payor data, which informs Medicare payment rates. 42 U.S.C. § 1395m-1(b)(1)(A). The Act provides that once Medicare rates are calculated, "the payment amounts ... shall continue to apply until the year following the next data collection period." Id. § 1395m-1(b)(4)(A). The Act further states that "[t]he payment amounts ... shall not be subject to any adjustment." Id. § 1395m-1(b)(4)(B).

In 2016, the Secretary issued a final rule that implemented PAMA's definition of "applicable laboratory." Medicare Program; Medicare Clinical Diagnostic Laboratory Tests Payment System, 81 Fed. Reg. 41,036 (June 23, 2016) ("2016 Rule"). The American Clinical Laboratory Association ("ACLA") filed a lawsuit challenging

40 F.4th 620

the 2016 Rule as arbitrary and capricious under the Administrative Procedure Act ("APA") on the basis that it depresses Medicare reimbursement rates by excluding most hospital laboratories from PAMA's reporting requirements. Specifically, ACLA contends that because hospital laboratories tend to charge higher prices than standalone laboratories, their exclusion from reporting obligations results in an artificially low weighted median.

This Court assumes familiarity with the procedural, regulatory, and factual background of this case, which another panel of this Court laid out in a prior opinion. See Am. Clinical Lab'y Ass'n v. Azar , 931 F.3d 1195 (D.C. Cir. 2019) (" ACLA I "). In ACLA I , we reversed the District Court's dismissal of ACLA's complaint challenging the 2016 Rule for lack of subject matter jurisdiction, see Am. Clinical Lab'y Ass'n v. Azar , 334 F. Supp. 3d 301 (D.D.C. 2018) (holding that PAMA bars judicial review of the Secretary's data collection practices), and remanded to the District Court to consider in the first instance whether the 2016 Rule is consistent with the APA. See ACLA I , 931 F.3d at 1198.

On remand, the parties cross-moved for summary judgment. The District Court again declined to reach the merits of ACLA's APA challenge to the 2016 Rule, based on its determination that the Secretary had issued a new rule ("2018 Rule") that superseded the 2016 Rule and mooted ACLA's lawsuit. Am. Clinical Lab'y Ass'n v. Becerra , No. 17-2645, 2021 WL 1197729, at *3–6 (D.D.C. Mar. 30, 2021). In relevant part, the 2018 Rule provides a more expansive definition of "applicable laboratory" and subjects more hospital laboratories to PAMA's reporting requirements. Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule and Other Revisions, 83 Fed. Reg. 59,452 (Nov. 23, 2018) ("2018 Rule"). ACLA appeals the District Court's dismissal for mootness on the grounds that ACLA members continue to suffer from "downstream effects" of the 2016 Rule, notwithstanding the Secretary's promulgation of the 2018 Rule. Appellant Opening Br. at 35.

We conclude that the case is not moot. Accordingly, we reverse the District Court's dismissal for lack of subject matter jurisdiction and reach the merits of ACLA's APA claim.


Under the Act, an applicable laboratory is "a laboratory that, with respect to its revenues under this subchapter, a majority of such revenues are from this section, section 1395l (h) of this title, or section 1395w-4 of this title." 42 U.S.C. § 1395m-1(a)(2). This definition refers to a laboratory that receives most of its overall Medicare funding from the Physician Fee Schedule or the Clinical Laboratory Fee Schedule. ACLA I , 931 F.3d at 1199–1200. These fee schedules, in turn, typically "pay for laboratory services provided by independent laboratories and physician-office laboratories." Id. at 1200. As a general matter, hospital laboratories that provide "outreach services"—services for people who are neither hospital inpatients or outpatients—fall within the ambit of PAMA's definition of an applicable laboratory, so long as they receive most of their Medicare revenue from the Physician Fee Schedule or Clinical Laboratory Fee Schedule. Id.

The 2016 Rule implemented PAMA's definition of "applicable laboratory" by identifying laboratories that would be subject to reporting requirements by their National Provider Identifier ("NPI") number. (Healthcare providers generally use an NPI number to bill Medicare.) But as this Court previously observed in ACLA I ,

40 F.4th 621

"very few hospitals have laboratory-specific NPIs, and they generally submit claims under the hospital's NPI." 931 F.3d at 1202 (alteration accepted) (internal quotation marks and citation omitted). Therefore, because hospital laboratories that provide outreach services do not typically have their own NPIs, the 2016 Rule exempts these entities from data reporting requirements, even if they meet PAMA's statutory definition of an "applicable laboratory." See 42 U.S.C. § 1395m-1(a)(2). As such, ACLA contends that the 2016 Rule excludes "a large swath of the clinical laboratory marketplace from the statutory reporting requirements," which "reduces the weighted median of all reported tests, [thereby] depressing the Medicare reimbursement rates." Appellant Opening Br. at 2, 14.

Before this Court issued ACLA I , the Secretary promulgated the 2018 Rule, which "requires laboratories providing outreach services to report data using the CMS-1450 14x TOB—a billing form used only by hospital outreach laboratories." ACLA I , 931 F.3d at 1202 (citing 2018 Rule, 83 Fed. Reg. at 59,673 –75). In so doing, the Secretary amended the definition of "applicable laboratory" to include hospital laboratories that provide outreach services. This presumably resolved ACLA's key grievance with the 2016 Rule. Nevertheless, because the 2018 Rule was "not at issue" in ACLA I , a panel of this Court ultimately determined that ACLA had associational standing to challenge the 2016 Rule and that PAMA's jurisdiction-stripping provisions—with respect to judicial review of payment amounts—did not bar judicial review of a final rule. ACLA I , 931 F.3d at 1202, 1203–08. Accordingly, the Court reversed the District Court's holding on subject matter jurisdiction and remanded to the District Court to adjudicate the merits of ACLA's arbitrary-and-capricious challenge to the 2016 Rule. Id. at 1209.

On remand, the District Court reasoned that because ACLA's lawsuit did not challenge the 2018 Rule, "the only remedy that would be available to plaintiff here would be retrospective relief for any past payments that were calculated using the only [sic] 2016 Rule – that is, payments calculated for 2018-20 based on data collected data [sic] in early 2017 using the challenged definition." Am. Clinical Lab'y Ass'n , 2021 WL 1197729, at *5 (citation omitted). But PAMA "bars judicial review of ‘the establishment of [Medicare] payment amounts.’ " Id. (quoting 42 U.S.C. § 1395m-1(h) ). Accordingly, the District Court held that "even if the Court were to rule in plaintiff's favor on the merits, it could not order the agency to revise any payment amounts in the fee schedules used to determine 2018-20 payments or any particular payments to plaintiff's members." Id. at *5 (citation omitted). "Further, the Court could not vacate [the 2016 Rule] and order the Secretary to bring his regulations into compliance with the Medicare statute since the [2016 Rule's] definition is no longer in effect." Id. at *6. Accordingly, the District Court determined that ACLA's lawsuit was moot and dismissed the case for lack of subject matter jurisdiction for a second time. Id.


This Court reviews the district court's dismissal for lack of subject matter jurisdiction de novo . Fla. Health Scis. Ctr., Inc. v. Sec'y of Health & Hum. Servs. , 830 F.3d 515, 518 (D.C. Cir. 2016) ; ACLA I , 931 F.3d at 1202–03.

The "constitutional minimum of standing contains three elements": (1) a concrete and particularized "injury-in-fact"; (2) that is fairly...

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