Header graphic for print
Federal Regulations Advisor Insight and Commentary on U.S. Government Regulatory Affairs

Monday Morning Regulatory Review – 6/17/13

Posted in Judicial Process, Judicial Review & Remedies

Litigation involving various aspects of Department of Health and Human Services (HHS) regulations and operations dominated the past week with quiet endings.  The intense debate over the Food and Drug Administration (FDA) plans for emergency contraceptives Plan B and Plan B One Step fizzled with the government’s capitulation.  The organ donor litigation that captured much attention for a short period of time may also end quietly with new guidance.  And a door once opened in calculating Medicare reimbursements closed with reversal of the district court decision that HHS’s regulations were impermissibly retroactive because the court of appeals found the regulations consistent with prior adjudications that established the policy.

Plan B Capitulation:  The Administration announced that it would not pursue an appeal in Tummino v. Hamburg if the district court approved the Food and Drug Administration (FDA)’s plan to relabel the emergency contraceptives Plan B and Plan B One Step.  The complexity of the “two step” medication available to more juvenile purchasers than the simply “One Step” – an effect of the Second Circuit’s ruling on the Department of Justice (DOJ) request for a stay of the district court order reported in last week’s Monday Morning Regulatory Review – appears to have prompted DOJ to capitulate and accept the lesser of perceived evils than losing with a circuit-level adverse ruling.  The relabeling is likely to include new warnings, but the drug would become available over-the-counter to all, regardless of age.  The district judge accepted the capitulation.  The contentious litigation would thus come to an unsettled end, leaving unresolved issues of the regulatory (or non-regulatory) delegation of authority and the district court’s power to require HHS to relent on age restrictions.

Organ Donors:  The Organ Procurement and Transplantation Network set in motion a review of the guidelines for allocating adult organs to children and adopted an interim case-by-case review by a panel of experts.  As reported last week, two unusual district court temporary restraining orders required the Secretary of Health and Human Services (HHS) to place two children on the “adult” list to try to speed transplants, much to the chagrin of anyone else on the list.  The trial judge issued a further memorandum in the case, apparently sua sponte, in light of publicity.  In one case, a transplant has occurred.  Little further news about the state of the litigation.

Rule RetroactivityCatholic Health Initiatives v. Sebelius held that the Secretary of Health and Human Services (HHS)’s decision denying certain Medicare reimbursements under the Medicare statute was unlawful because the agency, in calculating reimbursements owed for a 1997 cost-reporting period, had retroactively applied a 2004 rulemaking without congressional authorization.  The United States Court of Appeals for the District of Columbia reversed, finding that the policy on which the agency relied in this case was first announced in an adjudication in 2000, not in the 2004 rulemaking, HHS’s interpretation of the statute was permissible, and the denial of reimbursements was not arbitrary and capricious.

The Court was puzzled that the main dispute centered on whether the regulation was impermissibly retroactive.  Applying its review authority to appeals from the district court, the court of appeals concluded

while the 2004 rulemaking was phrased as a matter of revised statutory interpretation, it is clear that the regulation — at least as it bears on the issue in this case — simply reiterated the prior rule of decision first announced in the [administrative] Edgewater adjudication and reaffirmed two years later in Castle ….  And of course, it is black-letter administrative law that adjudications are inherently retroactive. 

If the underlying law was an adjudicatory decision, not a regulatory decision, retroactivity was not only permissible, but given.  Quoting Justice Scalia, “Adjudication deals with what the law was; rulemaking deals with what the law will be.”  Therefore, the circuit reversed the district because, insofar as the current dispute, the rule only reiterated the previous adjudication and was not retroactive.