Successful appeal in ACLA’s PAMA lawsuit sends case back to D.C. District Court

August 5, 2019

The following is an update the National Independent Laboratory Association forwarded to its members on Friday, Aug. 2. Vachette is a proud NILA member.

On July 30, 2019, the U.S. Court of Appeals for the District of Columbia overturned a September 21, 2018, decision by the D.C. District Court to dismiss a lawsuit brought by the American Clinical Laboratory Association (ACLA) challenging the Department of Health and Human Services’ (HHS’s) definition of an “applicable laboratory.” At issue was HHS’s exclusion of virtually all hospital outreach laboratories from its definition of “applicable laboratory.” The D.C. District Court denied ACLA’s Motion for Summary Judgment and dismissed ACLA’s lawsuit because the PAMA statute prohibits courts from reviewing the “establishment of payment amounts” for clinical laboratory tests.

The D.C. District Court claimed that HHS’s definition of an “applicable laboratory” was “inextricably intertwined” with the payment rates, and therefore HHS’s definition of an “applicable laboratory” could not be challenged in court. ACLA appealed that decision on October 19, 2018.

The D.C. Court of Appeals overturned the D.C. District Court’s decision on July 30, 2019, deciding that PAMA’s method of collecting private payor data is distinct from determining PAMA’s payment rates, and therefore the D.C. District Court can decide whether HHS’s definition of an “applicable laboratory” is arbitrary and capricious, as claimed in ACLA’s lawsuit.

What does this mean?

The Appeals Court did not rule for or against ACLA’s legal challenge to HHS’s definition of an “applicable laboratory.” Rather, it decided that the D.C. District Court was not prohibited from hearing and ruling on ACLA’s lawsuit. Therefore, the case now goes back to the D.C. District Court for a hearing, discovery, filing of briefs, and possibly a trial, followed by a decision. Alternatively, ACLA could refile its “Motion for Summary Judgment,” which may result in a much quicker decision.

Here are some things to consider:

  1. The D.C. District Court proceedings could be lengthy, taking anywhere from six months to more than two years, before a decision is rendered. If ACLA files for Summary Judgment, a decision could be rendered much quicker.
  2. A settlement could be negotiated between ACLA and HHS before the D.C. District Court renders its verdict.
  3. Congress could amend PAMA before the D.C. District Court renders a decision.
  4. Expect HHS to argue the exclusion of hospital outreach private payor data was addressed earlier this year when it amended its definition of applicable laboratory to include private payor data from hospital 14x Type billing forms. However, this change does not apply to the private payor data used to set PAMA’s payment rates for 2018, 2019, and 2020.

NILA’s Role in ACLA’s Lawsuit

NILA, through AAB, filed two Amicus Curiae (“friend of the court”) briefs supporting ACLA’s legal challenges. The first was on February 21, 2018, supporting ACLA’s original lawsuit. The second was on December 11, 2018, supporting ACLA’s appeal of the D.C. District Court’s ruling that it could not rule on ACLA’s legal challenge.

NILA has also been working on a legislative “fix” to HHS’s flawed implementation of PAMA. That effort is still underway, and we encourage you to participate in NILA’s grassroots efforts to pass the LAB Act (HR 3584).

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