Health Law Daily Challenge to Medicare Advantage Organization network adequacy standards rule not ripe
Friday, January 22, 2021

Challenge to Medicare Advantage Organization network adequacy standards rule not ripe

By Nadine E. Roddy, J.D.

Parties challenging the final rule failed to respond to HHS’s ripeness argument, thereby conceding the issue.

A federal district court for the District of Columbia dismissed a complaint challenging a final rule issued by HHS affecting outpatient dialysis centers because the parties failed to respond to HHS’ argument concerning ripeness. Noting the importance of the ripeness doctrine in cases involving agency action, the court chose to treat the ripeness issue as conceded (Dialysis Patient Citizens v. Azar, January 19, 2021, Chutkan, T.).

Background. Several parties, including a group called Dialysis Patient Citizens and a corporation called U.S. Renal Care, Inc. (collectively DPC), brought suit against HHS, CMS, and their officials (collectively HHS), challenging a final rule published on June 2, 2020 (85 FR 33796), that established network adequacy standards for Medicare Advantage Organizations (MAOs). Among other things, the rule removed outpatient dialysis centers from the list of facilities to which quantitative "time-and-distance" standards apply when assessing the adequacy of MAO networks. Instead of requiring that Medicare Advantage (MA) plans continue to meet time-and-distance requirements for dialysis facilities, the final rule allowed MA insurers simply to attest that their network provided adequate access to dialysis.

The complaint alleged that the rule discriminated in violation of the Social Security Act, the Patient Protection and Affordable Care Act, the Administrative Procedure Act, and the Medicare Act. Specifically, the allegations concerned the coverage of Medicare beneficiaries with End Stage Renal Disease (ESRD) under Medicare Part C. DPC moved for summary judgment, while HHS moved to dismiss or, in the alternative, for summary judgment.

Ripeness doctrine. In seeking dismissal of the complaint, HHS argued that DPC’s claims were not ripe for adjudication, that DCP lacked standing, that the court lacked subject matter jurisdiction, and that DCP failed to state any claim upon which relief could be granted. The court first noted that, in interpreting the Constitution’s Article III limitation on judicial power, courts have developed a series of principles termed "justiciability doctrines," among which are standing, ripeness, mootness, and the political question doctrine. In cases concerning agency action, the ripeness doctrine requires that a litigant's claims be "constitutionally and prudentially ripe" in order to protect (1) the agency's interest in crystallizing its policy before that policy is subjected to judicial review; (2) the court's interests in avoiding unnecessary adjudication and in deciding issues in a concrete setting; and (3) the petitioner's interest in prompt consideration of allegedly unlawful agency action. The court lacks subject-matter jurisdiction if a plaintiff's claims are not ripe.

Noting that DPC had failed to respond to any of HHS’ ripeness arguments in their opposition to the department’s Motion to Dismiss, the court held that DPC’s claims were not ripe for adjudication. The court rejected DPC’s contention that its response to HHS’ standing arguments sufficed as a response to the ripeness arguments. Further, given DPC’s failure to address the ripeness issue, the court elected to treat the ripeness issue as conceded. Citing precedent to the effect that when a party fails to respond to an argument raised in a motion, it is proper to treat that argument as conceded, the court granted HHS’ motion to dismiss without prejudice. The court cautioned that if DPC chose to refile, the other threshold questions addressed in HHS’ motion to dismiss, including justiciability and subject matter jurisdiction, would be reviewed closely and should be briefed accordingly. Both parties’ motions for summary judgment were denied.

The case is No. 20-cv-1664 (TSC).

Attorneys: Cynthia Gierhart (Holland & Knight LLP) for Dialysis Patient Citizens. Johnny Hillary Walker, III, U.S. Attorney's Office For Alex M. Azar, II.

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