In a decision issued on November 21, 2017, the D.C. Circuit affirmed the district court determination that the Affordable Care Act (ACA) bars judicial review of CMS’s determination to grant or deny a hospital’s Stark Law expansion application. Knapp Medical Center, et al., v. Hargan, No. 16-5234 (D.C. Cir. Nov. 21, 2017). The decision is available here.
The ACA amended the physician-owned hospital exception under the Stark Law by limiting the ability of a physician-owned hospital to expand, known as the expansion prohibition. Subject to approval by the Secretary, there is an exception, however, for certain hospitals in medically underserved communities, referred to as “applicable hospitals” and “high Medicaid facilities” under the statute that meet certain statutory requirements. See 42 U.S.C. § 1395nn(i)(3). The statute authorizes the Secretary to establish and implement a process under which a hospital may apply for an exception from the expansion prohibition and precludes administrative and judicial review of the Secretary’s determination.
Doctors Hospital at Renaissance (DHR), a physician-owned hospital in Hidalgo County, Texas, applied to expand as an applicable hospital. Competing hospitals in Texas (Knapp Medical Center, McAllen Hospitals, L.P. and Cornerstone Regional Hospital, L.P., collectively, Knapp) filed comments opposing DHR’s expansion application. CMS approved DHR’s expansion application over Knapp’s objections. Shortly following CMS’s approval, Knapp sued to set aside CMS’s decision and block DHR’s expansion. In what appears to be a case of first impression, the district court found that the Stark Law, as amended by the ACA, prohibits judicial review of the Secretary’s procedure used to grant or deny a hospital’s application for an expansion exception. The sole issue on appeal was whether the district court accurately interpreted the preclusion-of-review provision under 42 U.S.C. § 1395nn(i)(3)(I), which provides in relevant part that, “[t]here shall be no administrative or judicial review under section 1395ff of this title, section 1395oo of this title, or otherwise of the process under this paragraph (including the establishment of such process).”
Affirming the district court decision, the D.C. Circuit determined that the language of the statute expressly limits administrative and judicial review, that the statutory preclusion is broad and unqualified, and that its decision was not out of line with prior decisions addressing similar questions of review in Florida Health Sciences Center, Inc. v. Secretary of Health & Human Services, 830 F.3d 515 (D.C. Cir. 2016), and Texas Alliance for Home Care Services v. Sebelius, 681 F.3d 402 (D.C. Cir. 2012). In concluding its analysis, the D.C. Circuit stated that:
Congress has undoubted power to restrict the jurisdiction of the lower federal courts and, when it does, we need only determine the scope of the restriction. We conclude that ‘the process under this paragraph’ encompasses all of section 1395nn(i)(3)(I), including the granting or denial of expansion applications.
