Government’s Remedies Reply Brief

Introduction

The Court determined that the U.S. Department of Health and Human Services ("Agency") acted in an ultra vires fashion when it reduced the payment, in the 2018 Medicare Outpatient Prospective Payment System Rule ("OPPS Rule"), 82 Fed. Reg. at 52, 362, for drugs purchased through the 340B Program. Memorandum Opinion ("Op."), Dec. 27, 2018, ECF No. 25. The Court, however, declined to issue a remedy without further briefing, as it recognized that the remedy in this case could potentially wreak havoc on the vast and complex Medicare payment system. Cf. Op. at 35. That concern was well placed. As the Agency explained in its opening brief, vacating the 2018 OPPS Rule would disrupt the entire Medicare outpatient payment system, affecting the Agency, providers, and beneficiaries alike - and compelling the agency to review and reassess more than 110 million claims. HHS Remedy Br., ECF No. 31, Jan. 31, 2019, at 8-9. In many cases, beneficiaries would end up paying more after this reassessment than would otherwise have been the case. Remand without vacatur minimizes hardships to beneficiaries and providers. It is the proper remedy: It would allow the Agency to use its expertise to select the optimal remedy (including the optimal payment calculus) in light of all of the competing interests in the vast system it administers. Id. at 10-11. It would give effect to this Court's ruling while allowing the Agency to maintain budget neutrality, as required, and minimizing disruption and hardships to beneficiaries.¹

Plaintiffs argue for a different approach, but their argument is unpersuasive. Plaintiffs seek an injunction requiring the Agency to pay the 340B hospitals pursuant to a particular payment amount specified in their brief. But D.C. Circuit precedent is clear: In a circumstance such as this, an injunction imposing specific duties on the agency is improper. Rather, a court is to remand the matter to the agency for it "to decide in the first instance how best to provide relief." Bennett v. Donovan, 703 F.3d 582, 589 (D.C. Cir. 2013). This deference principle is particularly compelling in the area of Medicare given the "substantial deference that Courts owe to the Secretary [ of Health and Human Services] in the administration of such a 'complex statutory and regulatory regime."' Shands Jacksonville Med. Ctr., Inc. v. Azar, 2018 WL 6831167, at *13 (D.D.C. Dec. 28, 2018) (quoting Good Samaritan Hosp. v. Shalala, 508 U.S. 402, 404 (1993)). Plaintiffs cite several cases which they contend support their entitlement to the particular payment amount they advance, but none imposes the kind of mandatory injunction plaintiffs seek here. Finally, contrary to plaintiffs' assertions, budget neutrality is inextricably linked to the policy in question and is therefore relevant to the issue ofremedy. The budget neutrality requirement significantly increases the disruptiveness of vacatur, and militates in favor of remand without vacatur.

1. By advocating for remand without vacatur, Defendants do not waive their appellate rights. See Occidental Petroleum Corp. v. S.E.C., 873 F.2d 325,330 (D.C. Cir. 1989).