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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`CALIFORNIA LIFE SCIENCES
`ASSOCIATION, et al.,
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`Plaintiffs,
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`v.
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`CENTER FOR MEDICARE AND
`MEDICAID SERVICES, et al.,
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`Defendants.
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`Case No. 20-cv-08603-VC
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`ORDER GRANTING MOTION FOR
`PRELIMINARY INJUNCTION
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`Re: Dkt. No. 27
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`The motion for a preliminary injunction is granted based on the government’s failure to
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`complete the notice and comment procedures required by the Administrative Procedure Act. The
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`government is enjoined from implementing the rule pending completion of those procedures.
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`The recent ruling by Judge Catherine Blake thoroughly explains why the rule should be
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`temporarily enjoined, and her reasoning is largely adopted here. See Association of Community
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`Cancer Centers v. Azar, 2020 WL 7640818 (D. Md. Dec. 23, 2020). This ruling will highlight a
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`few specific points:
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`1. Judicial review. As Judge Blake explains, the bars on judicial review contained in 42
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`U.S.C. §§ 405(g), (h) do not apply to this case. The defendants cite 42 U.S.C. § 1395ff(b), which
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`incorporates the bars in section 405 into the Medicare statute, but that provision applies to
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`appeals of initial determinations of benefits under part A and part B of subchapter XVIII
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`(“Health Insurance for Aged and Disabled”). Section 1395ii similarly incorporates section 405(h)
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`into the Medicare statute, but only “with respect to this subchapter”—subchapter XVIII. See 42
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`U.S.C. § 1395ii. Here, the plaintiffs challenge the government’s implementation of a model
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`Case 3:20-cv-08603-VC Document 50 Filed 12/28/20 Page 2 of 4
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`under 42 U.S.C. § 1315a, which is in subchapter XI (“General Provisions, Peer Review, and
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`Administrative Simplification”). Section 1320a-7 applies the bars on judicial review in section
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`405(h) to parts of subchapter XI, but not to section 1315a. See 42 U.S.C. § 1320a-7(f). Because
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`the plaintiffs’ claims do not “arise under” any of the subchapters or sections subject to section
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`405’s bars on judicial review, the Court has jurisdiction over the claims. See Sensory
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`Neurostimulation, Inc. v. Azar, 977 F.3d 969, 976 (9th Cir. 2020).
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`In addition, the limits on judicial review contained in 42 U.S.C. § 1315a(d)(2) do not
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`apply to the plaintiffs’ notice and comment claim because this claim is not inextricably
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`intertwined with the substantive statutory claims. Cf. Heckler v. Ringer, 466 U.S. 602, 614
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`(1984). The alleged APA violation, and the relief sought for that violation, is very different from
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`the alleged substantive violations and the relief sought for those.
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`2. Likelihood of success on the merits. The plaintiffs have demonstrated that they are
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`very likely—indeed virtually certain—to prevail on their claim that the government violated the
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`APA’s notice and comment requirements. As Judge Blake explains, the government’s argument
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`that the good cause exception applies is flimsy; complying with the notice and comment
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`requirements here would not interfere with the agency’s ability to carry out its mission, or cause
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`real harm to life, property, or public safety. See California v. Azar, 911 F.3d 558, 575-77 (9th
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`Cir. 2018); East Bay Sanctuary Covenant v. Trump, 950 F.3d 1242, 1278 (9th Cir. 2020). This
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`would be true even if the government had not delayed so long in adopting the rule, but it is
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`especially true in light of those delays. See Azar, 911 F.3d at 577; Chamber of Commerce v.
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`Department of Homeland Security, 2020 WL 7043877, at *7-9 (N.D. Cal. Dec. 1, 2020).
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`In fact, it seems obvious—based on both common sense and the way the interim final
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`rule is written—that the reasons the government offers for dispensing with the notice and
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`comment requirements are contrived. The real reason is that the current presidential
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`administration is in its waning days and would not have time to enact the policy if it adhered to
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`these requirements. While there’s nothing unlawful per se about rushing to enact policy in the
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`final days of a presidential administration (indeed, it’s a time-honored tradition), executive
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`branch officials may not circumvent clear legal requirements in the eleventh hour to achieve
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`goals they couldn’t accomplish in the normal course.
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`3. Irreparable harm. There is no dispute that some of the plaintiffs’ members will suffer
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`financial losses if the rule takes effect on January 1. While it’s true that financial harm is
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`typically not considered “irreparable,” there is also no dispute that here the plaintiffs’ members
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`would be unable to recover their losses from the government should they ultimately prevail.
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`Thus, by definition, the plaintiffs have demonstrated a likelihood of irreparable harm. See City &
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`County of San Francisco v. United States Citizenship & Immigration Services, 981 F.3d 742, 762
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`(9th Cir. 2020); East Bay Sanctuary Covenant, 950 F.3d at 1280.
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`The government argues that even in cases where a plaintiff will ultimately be unable to
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`recover financial losses, there is no irreparable harm unless the losses are “considerable” or
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`would threaten to put the plaintiff out of business. This overreads Ninth Circuit law, and it
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`confuses the irreparable harm inquiry with the next part of the preliminary injunction test, which
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`relates to the balance of hardships. If a financial loss is irreparable but small, the plaintiff has
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`checked the “irreparable harm” box, even if the size of the harm will make it more difficult to
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`establish that the hardship to the defendant from an injunction is outweighed by the hardship to
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`the plaintiff from the lack of an injunction. In any event, the plaintiffs here have demonstrated
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`that the financial losses of their members would indeed be considerable. See Chen declaration ¶
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`20; Hardy declaration ¶ 28.
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`4. Balance of hardships and the public interest. For the reasons explained by Judge Blake,
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`the disruption and harm that would likely be caused by implementing the rule on January 1 is far
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`greater than the harm that would result from delaying the rule until completion of the notice and
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`comment process. See generally Chen declaration; Hardy declaration; see also Garthwaite
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`declaration.
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`5. Scope of relief. For the reasons explained by Judge Blake, the only appropriate relief is
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`to vacate the interim final rule pending completion of the notice and comment process. See also
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`East Bay Sanctuary Covenant, 950 F.3d at 1282-84. After all, the agency itself declared that the
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`model would only be effective if it had a nationwide scope. See 85 Fed. Reg. 76180, 76188
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`(Nov. 27, 2020). It would thus be inappropriate—indeed counter to the purposes of the rule
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`itself—to enjoin enforcement of the rule merely as to the plaintiffs in this case.
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`IT IS SO ORDERED.
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`Dated: December 28, 2020
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`______________________________________
`VINCE CHHABRIA
`United States District Judge
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