Knapp Med. Ctr. v. Burwell — June 2016 (Summary)

STARK LAW

Knapp Med. Ctr. v. Burwell
Civil Action No. 15-cv-1663 (RMC) (D.D.C. June 28, 2016)

The United States District Court for the District of Columbia granted a motion to dismiss in favor of the Department of Health and Human Services (“HHS”) against three hospitals that were challenging a decision by HHS (plaintiff hospitals) to approve the expansion of a physician-owned hospital.  As established by the Stark Law, physician-owned hospitals must get permission from HHS before they can expand.  Upon approval, physician-owned hospitals will be permitted to expand up to 100%.  The physician-owned hospital seeking expansion filed two applications with HHS. HHS approved the request for expansion, determining that the requirements for approval were met, and granting permission for the hospital to double in size. The plaintiff hospitals challenged HHS’s approval of expansion on several grounds. In response to the challenge, both HHS and the physician-owned hospital filed a motion to dismiss for lack of subject matter jurisdiction.

Congress has intentionally precluded review of an agency’s process or the decisions resulting from that process by stating that “there shall be no administrative or judicial review…of this title…or otherwise of the process….”  The plaintiff hospitals argued that they sought review of the process of approval used by HHS not the approval itself.  The court concluded that according to Congress’s expressed insulation of agency decisions, the process cannot be separated from the result.

The plaintiff hospitals also argued that without review of the HHS decision, HHS could easily exceed its authority to grant physician-owned hospital expansions. That argument was also rejected by the court.  According to the court, plaintiff hospitals “have not alleged or argued that HHS acted beyond its statutory authority when it granted [the physician-owned hospital’s] request for expansion, but instead worry about the possibility of such action at an unspecified time in the future. Their worry does not constitute a case or controversy.”  Because allegations must be concrete and not hypothetical or abstract, the claim brought by the plaintiff hospitals was dismissed.