Laboratory News

Judge Rules for San Diego Labs in Medicare Competitive Bidding

It's a major win for three San Diego laboratories in their legal challenge to the Medicare Part B Laboratory Competitive Bidding Demonstration Project being implemented in the San Diego-Carlsbad-San Marcos metropolitan statistical area (MSA). Late last Friday afternoon, U.S. District Court Judge Thomas J. Whelan ruled that he would hear the labs' arguments in their case against the federal Centers for Medicare & Medicaid Services (CMS).

After reviewing legal briefs from CMS and the labs, Whelan ruled on Friday that: 1) the court has jurisdiction over the labs' claims in the case; 2) the labs have standing in the case; and, 3) at least some of the claims are ripe for review.

Sharp Healthcare, Scripps Health, and Internist Laboratory  originally went to Federal District Court last January seeking a temporary restraining order (TRO) to delay or stop the implementation of the Medicare Part B Laboratory Competitive Bidding Demonstration Project pilot in the San Diego MSA until the court can rule on several challenges to the federal program. At that time, the judge declined to issue a TRO, but did call for both parties to submit briefs on several key points involved in this case.

"The judge resolved these issues in our favor fairly convincingly," said attorney Patric Hooper of Hooper Lundy & Bookman in Los Angeles, who represents the labs. "The easiest thing for the judge to have done in this case would have been to get rid of it on jurisdictional grounds. The fact that he did not suggests to us that he sees at least some merit in the case."

"Given the complexity of the jurisdictional issues, we think this order, in itself, is a significant victory," observed Hooper. "Nevertheless, the judge's decision on jurisdiction and the related issues certainly does not guarantee that he will grant our preliminary injunction. The hearing [on Tuesday] should be interesting."

Hooper will be in Whelan's court on Tuesday, April 8, to argue that the court should issue the temporary restraining order.

Among the most significant statements in Whelan's 8-page ruling were those involving his decisions concerning arguments that federal attorneys representing U.S. Health and Human Services (HHS) Secretary Michael Leavitt had made in legal briefs. The March 3 issue of The Dark Report  pointed out how the federal attorneys had misrepresented selected facts to the judge in arguing their case against the laboratories' request for a TRO.

For example, Leavitt had argued that if the labs are not named winning bidders, they can use HHS' administrative review procedures rather than pursue their case in court. In his ruling released last Friday, Judge Whelan said, "... contrary to the secretary's contention, if plaintiffs lose, they cannot submit claims to Medicare and, therefore, will not be in a position to obtain administrative review."

Both Dark Daily and The Dark Report will be tracking this important story as it unfolds. Check both sources regularly for additional news and insight about this important court case.

Finally, Judge Whelan's ruling and willingness to hear additional evidence in this case does provide some confirmation that the flaws and biases the CMS officials built into the Medicare Part B Competitive Bidding Demonstration Project may well violate federal law and the Constitution.

Related Resources: 

Details for Demonstration Project For Competitive Bidding of Clinical Laboratory Service