The Supreme Court of the United States Nov. 30 will hear oral arguments in a case brought by the AHA and others asking the court to reverse the 2020 federal appeals court decision that upheld the authority of the Department of Health and Human Services to significantly cut payments to certain hospitals that participate in the 340B Drug Pricing Program, threatening access care for patients. For more on the case, visit AHA’s litigation page and see materials under the “340B Payment Reductions” header.

Attorney Chad Golder, who authored an amicus brief filed by 37 state and regional hospitals associations in support of the AHA’s arguments in the case, will listen to the oral arguments and provide live insights and analysis. Visit this page on Nov. 30 beginning at 11:15 a.m. ET to see the live analysis. (Please note at the oral arguments may start a little bit later depending on the court’s schedule). AHA 340B members also will receive additional updates related to the oral arguments.

Chad Golder is an attorney who authored an amicus brief filed by 37 state and regional hospitals associations in support of the AHA’s arguments in the 340B case. The views of the author do not necessarily represent the views of the AHA.

If you are watching the live blog, you should refresh the page regularly to see the latest posts, which will appear at the bottom of the page as they are posted.


Tue, Nov 30, 2021 at 11:00 AM EST

Thanks to the American Hospital Association for the opportunity to live blog this important and interesting case. For those interested, you can listen to the live audio yourself here:

You can find the briefs in the case here:

When the argument begins, Donald Verrilli, counsel for the Petitioners (American Hospital Association, the Association of American Medical Colleges, America’s Essential Hospitals, Northern Light Health, Henry Ford Health System, and Fletcher Hospital, Inc., d/b/a AdventHealth Hendersonville), will be up first. He will be followed by Christopher Michel, counsel for the government Respondents. Both are experienced oral advocates, which should make for an enlightening oral argument. Stay tuned here for updates and analysis along the way.


Tue, Nov 30, 2021 at 11:05 AM EST

As we wait for the argument to begin, readers can take a look at these case previews, including a colorful one on SCOTUSBlog from my friend and former co-clerk, Nicholas Bagley, a professor at the University of Michigan Law School who teaches administrative and health law.

https://www.chiefhealthcareexecutive.com/view/supreme-court-will-hear-case-on-cuts-to-hospitals-in-340b-program

https://www.scotusblog.com/2021/11/chevron-deference-at-stake-in-fight-over-payments-for-hospital-drugs/


Tue, Nov 30, 2021 at 11:27 AM EST

The argument has begun. Counsel for Petitioners, Don Verrilli is now delivering his two-minute opening. He argues that the statute was intended to constrain agency discretion, that Congress wanted courts to review actions like those HHS took here, which was a “substitution” and not an “adjustment.”


Tue, Nov 30, 2021 at 11:30 AM EST

As in the other cases this Supreme Court Term, Justice Thomas asks the first question of counsel for Petitioners, Don Verrilli. He asks whether Mr. Verrilli is arguing that Chevron should be overturned if the Court is unwilling to accept some of his other arguments. Without addressing the issue head on, Verrilli responds that there are several ways to resolve the case before reaching that question because AHA should prevail under both steps of Chevron. But Justice Thomas’ immediate focus on overturning Chevron illustrates the importance of that legal issue lurking within this case. For those interested, see this opinion in yesterday’s Wall Street Journal: https://www.wsj.com/articles/courts-and-the-regulatory-state-american-hospital-association-agencies-chevron-rulings-11638123948?mod=opinion_lead_pos1. We will see if other Justices return to this issue as the argument unfolds.


Tue, Nov 30, 2021 at 11:38 AM EST

Chief Justice Roberts presses Verrilli on what the meaning of “purposes” is, and what the appropriate limiting principle is, for the statutory phrase “as necessary for purposes of this paragraph.” Justice Kagan picks up on this line of questioning, asking what adjustments are permitted to meet this standard. Verrilli answers that the agency needs to follow the steps that the statute proscribes to ensure that the rates are accurate and transparent, and he provides a series of specific examples of the kinds of adjustments are appropriate. All of the adjustments, he contends, should be made to make it a more accurate average price number.


Tue, Nov 30, 2021 at 11:43 AM EST

Verrilli argues that Congress did not grant the agency to distinguish among hospital subgroups—like 340B hospitals—in the statute for differential reimbursement rates. In response, Justice Alito asks whether there is any dispute that 340B hospitals pay less. Verrilli says no, but forcefully responds that this was something that Congress was well-aware of. It would be very odd, Verrilli argues, for Congress to let this feature of 340B hospitals “in through the backdoor” when making rate adjustments.


Tue, Nov 30, 2021 at 11:49 AM EST

As the argument goes along, there is very little questioning on the jurisdictional question in this case. The Justices are quite engaged with the ins-and-outs of the complicated statutory scheme. Less so about the judicial review provision that the government has pushed.


Tue, Nov 30, 2021 at 11:55 AM EST

Returning to Justice Thomas’ opening question, Justice Alito asks Verrilli if the only way to win the case is to overturn Chevron, does he want the Court to overturn Chevron. He answers yes. Justice Gorsuch asks what Verrilli would replace Chevron with. Verrilli says there are some options for what to do in a Chevron-free world. One is that even if the D.C. Circuit’s reading is within the realm of possibility, there is still a “best reading”—AHA’s reading.


Tue, Nov 30, 2021 at 11:58 AM EST

Verrilli argues that if HHS was really unhappy with the subsidy given to 340B hospitals have, it has two choices. Follow the means in the statute by doing a cost study or go to Congress to change the law. On that strong note, Verrilli sits down. Christopher Michel is up for HHS.


Tue, Nov 30, 2021 at 12:00 PM EST

In his opening, Michel begins by emphasizing the jurisdictional issue and the government’s argument that the budget neutrality requirement make remediating any error difficult, which he says bolsters his claim of no judicial review. He argues that the agencies made modest adjustment, which was well within its statutory authority.


Tue, Nov 30, 2021 at 12:03 PM EST

Justice Thomas again asks the first question: why would an agency ever act under subclause one by conducting a survey when it has the government’s claimed authority under subclause two. Michel says there’s a higher showing required under subclause 2 and there is a lot of data available under a study. Thomas asks how many times HHS has conducted a study. Michel responds only once, in 2020, while this case was pending. He points, however, to a GAO report saying that HHS shouldn’t do many studies because it is burdensome and the results of studies are poor. He says, however, that despite this, the 2020 study lead to roughly the same data as HHS applied here.


Tue, Nov 30, 2021 at 12:16 PM EST

Justice Alito asks whether HHS could do a survey of JUST 340B hospitals or all of the hospitals. Michael says that is a hotly debated issue because 340B hospitals don’t want to see the results. Alito contends, then, that if you have a group of hospitals that indisputably pay less but the only way to make an adjustment for those hospitals is to survey ALL hospitals, then it would make sense to adjust in the way HHS did here. Michael unsurprisingly agrees.


Tue, Nov 30, 2021 at 12:17 PM EST

Point of personal pride: Justice Kavanaugh talks about the importance of 340B hospitals, citing the state associations’ amicus brief. He argues that Congress was aware of this, so it isn't right to call it an "overpayment" of 340B hospitals.


Tue, Nov 30, 2021 at 12:18 PM EST

Michel, in response, encourages the Court to review other amicus briefs in the case (e.g., the brief by the Federation of American Hospitals and the Rural Hospital Coalition), but he does note that HHS supports the work of 340B hospitals.


Tue, Nov 30, 2021 at 12:24 PM EST

Justice Sotomayor asks Michel for a one sentence description of the purpose of the paragraph. Michel responds that the purpose of paragraph is setting reimbursement rate equivalent to acquisition cost.


Tue, Nov 30, 2021 at 12:31 PM EST

Justices Barrett, Breyer, and Gorsuch again raise questions about Chevron issues. Justice Gorsuch, for example, asks how much ambiguity is enough to invoke Chevron. Michel says no one can really answer that question, but it’s not ambiguous at all here. Gorsuch follows up with some surprise that the government can't tell us how much ambiguity is enough after 40 years of Chevron.


Tue, Nov 30, 2021 at 12:34 PM EST

Justice Kavanaugh says the argument hasn’t focused enough of the word “adjust.” He says that the Court’s decision in the MCI case suggest it’s a word of constraint, a word of modest changes. Michel says that “adjust” has to take its meaning from context, and here the context is making an adjustment that corresponds to the difference between acquisition costs and reimbursements. He argues that the adjustment is a cautious estimate of the difference between those two things on the facts of the case.


Tue, Nov 30, 2021 at 12:38 PM EST

Verrilli up for rebuttal. He makes four points. First, consistent with the flavor of much of the argument, he begins by focusing on the particular text of the statute. Next, he critiques the 2020 agency study that Michel raised during his argument, noting that MedPac recommended a far smaller adjustment in reimbursement rates. Verrilli then talks about the consequences of reducing money to 340B hospitals, responding specifically to the concerns raised by Justice Kavanaugh about the role they play in our healthcare system. Finally, he says that way more ambiguity is needed to invoke Chevron deference than is present here. The argument then concludes and the case is submitted.


Tue, Nov 30, 2021 at 12:39 PM EST

Thanks to AHA for the opportunity to live blog this case. I’ll be back later today with a brief bigger-picture reaction to the argument.


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