Two things I love: administrative law and scary movies. No matter how busy I am, I try to watch a couple of really good scary movies each year around Halloween. I haven’t watched any yet this year, though, so if you have recommendations, please let me know.
Anyway, while preparing this Fifth Circuit Review–Reviewed, I wondered if there’s a connection between administrative law and scary movies that might explain my love of both. My best guess? Both often feature grueling tests of the mind–usually in the form of labyrinths or puzzles of one form or another. Examples on the cinematic side include the hedge maze from The Shining and the “games” from the Saw movies. The Fifth Circuit opinions discussed below feature an administrative-law labyrinth and puzzle. They may not seem so scary when you read about them from a safe distance. Trust me, though, for those trapped in one of these regulatory nightmares, the fear can be very real.
Judge Ho Confronts Conflicting Regulations
What do you do when a case implicates two provisions of the same law that appear to conflict? In this fascinating case about conflicting HHS regulations, Judge Ho provides the answer:
But what if the provisions simply cannot be reconciled? In that event, conflict with at least some text is unavoidable. Courts are “[c]ondemned by contradictory enactments to dishonor some bit of text.” Herrmann v. Cencom Cable Assocs., 978 F.2d 978, 983 (7th Cir. 1992) (Easterbrook, J.). But even so, respect for text requires that “judges must do the least damage they can.” Id. And doing the “least damage” to the text means attempting to determine, if at all possible, which of the two conflicting provisions should govern in a particular case. “This is no departure from textualism,” but rather a “recognition” that the law “has produced a series of texts that cannot coexist.” Id.
Finally, if we are truly unable to discern which provision should control, “the proper resolution is to apply the unintelligibility canon … and to deny effect to both provisions.” ANTONIN SCALIA & BRYAN A. GARNER, READING LAW: THE INTERPRETATION OF LEGAL *548 TEXTS 189 (2012). “After all, if we cannot make a valid choice between two differing interpretations, we are left with the consequence that a text means nothing in particular at all.” Id. (cleaned up). But make no mistake: This is a last resort. “Courts rarely reach this result,” because “outright invalidation is admittedly an unappealing course.” Id. at 189-90.
I learned a lot from this short opinion. Do you know, for example, whether the CFR or Federal Register version of a rule controls when the two conflict? Until I read this opinion, I didn’t either.
I have more on this case, including some questions for readers, here.
Sahara Health Care vs. HHS’s Medicare-Reimbursement-Appeals Labyrinth
Congress Designs the Labyrinth, and HHS Falls Behind
Sahara Health Care, Inc. v. Azar, No. 18-41120 (5th Cir. Sept. 18, 2020) (Elrod, Willett, Oldham) (Oldham, J., concurring in the judgment only)
To get paid for Medicare services, providers submit reimbursement claims to a Medicare Administrative Contractor (MAC). If the MAC denies a provider’s reimbursement claim claim, the Medicare Act provides a four-level administrative appeal process, followed by judicial review.
Once upon a time, this administrative-review scheme was functional and relatively efficient. Between 2009 and 2014, however, the number of appeals grew twelve-fold, and HHS was overwhelmed. By 2016, it had descended into a full-blown administrative hellscape.
As the backlog swelled, so did HHS’s delays at each stage of the review process. Delays at stage three–where, according to the statute at least, providers are entitled to an ALJ hearing and decision within ninety days–were especially harmful to hospitals. That’s because HHS starts recouping funds from providers at stage three. 42 U.S.C. § 1395ddd(f)(2)(A). Providers capable of waiting it out often succeed at the ALJ stage. But many face bankruptcy long before the end of their administrative appeal due to the MAC’s recoupment.
Sahara Enters the Labyrinth
When Sahara found itself caught in this bureaucratic Venus Flytrap, it turned to the courts. Sahara raised procedural due process and ultra vires claims, insisting that HHS’s attempts to recoup without first providing Sahara an ALJ hearing were unlawful.
The Fifth Circuit applied the Mathews v. Eldridge balancing test to hold that Sahara’s procedural due process claim failed. The panel acknowledged that Sahara’s private interests outweighed the government’s interest in efficient recoupment of Medicare overpayments, but HHS had already received substantial process and had chosen to ignore its statutory right to minimize its delay by escalating its claims through the administrative-review scheme:
I have more on this case here.
The Best of the Rest
The Court Takes an Important Case En Banc
On October 30, 2020, the Fifth Circuit voted to rehear Cochran v. SEC, No. 19-10396 (5th Cir. Aug. 11, 2020), en banc. Since I haven’t discussed this important case before, I thought I would do so here.
The SEC brought an enforcement action against Michelle Cochran and elected to proceed before an ALJ. Before the ALJ could rule, Cochran filed a lawsuit in federal district court seeking to enjoin the enforcement action. She claims that the multiple layers of “for cause” removal protection SEC ALJs enjoy violate separation-of-powers principles.
The district court dismissed for lack of subject jurisdiction. It concluded
that 15 U.S.C. § 78y provides the exclusive means for asserting these claims
before an Article III court—in the court of appeals after a final order issues.
The Fifth Circuit’s August 11, 2020, panel opinion affirmed.
Judge Costa wrote for the panel majority. The question for the Court was whether 15 U.S.C. § 78y implicitly stripped the district court of jurisdiction over Cochran’s claim. To decide that question, Judge Costa explained, the Court had to apply the standard announced in Thunder Basin Coal Co. v. Reich, 510 U.S. 200 (1994).
Last year, the Fifth Circuit applied that standard to hold that the judicial review scheme Congress established in 12 U.S.C. § 1818 foreclosed district court review. Bank of Louisiana v. FDIC, 919 F.3d 916 (5th Cir. Mar. 28, 2019) (Smith, Duncan, Engelhardt). I covered that case here. The panel majority concluded that Bank of Louisiana controlled Cochran’s case as well.
Judge Haynes dissented. In her view, Bank of Louisiana didn’t control because the panel in that case didn’t address a structural claim like the one Cochran raises.
Administrative Law in a Time of COVID-19
Valentine v. Collier, No. 20525 (5th Cir. Oct. 13, 2020) (Willett, Ho, Duncan)
Two inmates incarcerated at a Texas prison housing geriatric, medically-compromised, and mobility-impaired inmates, sued the Texas Department of Criminal Justice over its response to COVID-19. On behalf of themselves and a putative class of similarly situated inmates, they alleged violations of the 8th Amendment, the Americans with Disabilities Act, and the Rehabilitation Act.
After a bench trial, the district court ruled for the inmates and permanently required TDCJ to follow specific procedures to protect the inmates from COVID-19. The district court scheduled permanent injunction to go into effect on October 14, 2020.
TDCJ appealed the permanent injunction, and the district court denied its motion for a stay pending appeal. In response, the TDCJ filed an emergency motion asking Fifth Circuit to stay. The Fifth Circuit granted the motion.
The Court held that TDCJ was likely to succeed on the merits because the inmates had failed to exhaust administrative remedies under the Prison Litigation Reform Act (PLRA). Although the TDCJ had acknowledged that “the existing grievance process was inadequate in light of COVID-19,” the panel reasoned that “inadequate is not a synonym for unavailable.” Because the the TDCJ “was capable of providing some relief for the action complained of,” the TDCJ’s grievance process was “available” for PLRA purposes.
A more in-depth summary of this case is available here.
The Fifth Circuit Defers to NLRB Under Chevron
IBEW v. NLRB, No. 19-60616 (5th Cir. Sept. 2, 2020) (Jones, Elrod, Higginson)
Under the National Labor Relations Act, it is an “unfair labor practice” for an employer “to refuse to bargain collectively with the representatives of [its] employees.” 29 U.S.C. § 158(a)(5). This case required the Fifth Circuit to decide whether transmission and distribution dispatchers employed by Entergy Mississippi, Incorporated are “employees” or “supervisors” under the Act.
The unions representing Entergy’s dispatchers–referred to here as “IBEW”–argued that the National Labor Relations Board erred when it deemed them “supervisors,” excluding them from the Act’s collective-bargaining protections. Unpersuaded, the Fifth Circuit affirmed.
I have more on this case, including the panel’s deference to NLRB’s interpretation of the statutory term “independent judgment” here.
LREAB v. FTC II
Louisiana Real Estate Appraisers Board v. FTC, No. 19-30796 (5th Cir. Oct. 2, 2020) (Jones, Elrod, Higginson)
The FTC has two problems with a rule LREAB promulgated to implement Louisiana’s appraisal management company registration act. First, the FTC claims the rule unlawfully restrains competition. Second, according to the FTC, LREAB’s enforcement of the rule amounts to illegal price-fixing.
The FTC filed an administrative complaint against LREAB. In response, LREAB filed suit in federal district court seeking to stop the FTC proceeding in its tracks, claiming state-action immunity.
The district court stayed the ongoing FTC proceeding, and FTC appealed. It contended the district court lacked jurisdiction over LREAB’s case because there was no final agency action subject to review. LREAB insisted the district court had jurisdiction under the collateral-order doctrine.
The Fifth Circuit agreed with the FTC. Judge Jones’s opinion for a unanimous panel discusses the interplay between collateral-order doctrine and state-action immunity at length. Anyone interested in those doctrines will want to give it a read.