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2008
Competitive Bidding History
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Court Orders Temporary Halt To Competitive Bidding
Demo
4/8/08
Judge
Whelan's April 4, 2008,
and April 8, 2008,
decisions
Late yesterday afternoon, April
8, 2008, a federal district court in San Diego ordered a
temporary halt to CMS's Competitive Bidding Demonstration
Project in the San Diego-Carlsbad-San Marcos communities of
Southern California.
The order to temporarily halt the
demonstration project resulted from a lawsuit brought by three
San Diego area laboratories [Internist Laboratory, Sharp
Healthcare, and Scripps Health] who had requested a preliminary
injunction to prevent the project from proceeding while the
legal issues are adjudicated.
In granting the plaintiff's
request for a preliminary injunction, Judge Thomas J. Whelan
ordered that CMS not be permitted to:
- Announce winning bidders
[CMS had intended to announce the winning bidders on Friday,
April 11];
- Implement or carry out the
Competitive Bidding Demonstration Project for the San
Diego-Carlsbad-San Marcos Metropolitan Area; and
- Disclose any information
included in the bid applications.
Judge Whelan also ordered that
the preliminary injunction remain in force "until further order
of the Court," which presumably means until the Court holds a
trial and issues a decision on the legal issues contained in the
lawsuit.
In order to issue a preliminary
injunction, certain criteria must be met, including:
-
Establishing that the Court
has jurisdiction to hear the case and that the
Plaintiffs have standing to bring the lawsuit. Both of
these were affirmed in a ruling issued by Judge Whelan
on Friday, April 4, 2008;
Establishing that the
Plaintiff's claims are "ripe for review", i.e., ready to
be heard by the Court. For example, in denying
plaintiff's February 4, 2008, request for a Temporary
Restraining Order (TRO), Judge Whelan ruled that no
irreparable harm had been created by requiring labs to
submit bids by February 15.
On the other hand, Judge Whelan
affirmed on April 4, 2008, that Plaintiffs' claims were then
"ripe for review" because CMS's stated intention to announce
winning bidders on April 11 presented the real possibility of
irreparable harm to at least one of the Plaintiffs (Internist
Laboratory);
3. Demonstrating that the
Plaintiffs:
- Will suffer irreparable
harm;
- Are likely to
succeed on the merits of the case; and
- Will clearly suffer the
balance of hardships.
Judge Whelan ruled that all of
these conditions are met.
He cited the fact that Internist
Laboratory relies on Medicare for 65% of its revenue and that if
Internist Laboratory fails to qualify as a winning bidder, it will
undoubtedly suffer irreparable harm by being put out of business.
Judge Whelan also ruled that
Plaintiffs are likely to succeed on the merits of a number of claims
made in their lawsuit, including that:
- CMS's failure to comply with
the Administrative Procedures Act (APA) was not
harmless;
- CMS's definition of the
"face-to-face" exemption from bidding is arbitrary and
capricious;
- CMS's requiring laboratories
to bid on the specimen collection fee goes beyond the
agency's statutory authority and is therefore illegal.
While the Court's ruling is a very
positive development, it is NOT Final!
Consider it an important, but not conclusive, steppingstone towards
our ultimate goal:
Persuading Congress to
Repeal the authorization for the competitive bidding
demonstration project.
The Preliminary Injunction provides
the laboratory community with a temporary window of
time to generate additional grassroots support for the House HR
3453) and Senate (S. 2099) bills to repeal competitive bidding for
Part B clinical laboratory services.
Please contact your Members of
Congress and urge them to cosponsor HR 3453 and S. 2099.
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