Case 1:21-cv-00081-SEB-MJD Document 48 Filed 02/23/21 Page 1 of 33 PageID #: 1256
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`UNITED STATES DISTRICT COURT
`FOR THE SOUTHERN DISTRICT OF INDIANA
`INDIANAPOLIS DIVISION
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`ELI LILLY AND COMPANY
`Lilly Corporate Center
`893 Delaware Street
`Indianapolis, Indiana 46225
`and
`LILLY USA, LLC
`1500 South Harding Street
`Indianapolis, Indiana 46221,
`Plaintiffs,
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`No. 1:21-cv-81-SEB-MJD
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`Document Electronically Filed
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`
`
`
`
`v.
`NORRIS COCHRAN, in his official
`capacity as Acting Secretary of HHS
`Office of the Secretary
`200 Independence Avenue, SW
`Washington, D.C. 20201,
`DANIEL J. BARRY, in his official capacity
`as Acting General Counsel of HHS
`Office of the General Counsel
`200 Independence Avenue, SW
`Washington, D.C. 20201,
`UNITED STATES DEPARTMENT OF
`HEALTH AND HUMAN SERVICES
`200 Independence Avenue, SW
`Washington D.C. 20201,
`DIANA ESPINOSA, in her official capacity
`as Acting Administrator of HRSA
`5600 Fishers Lane
`Rockville, Maryland 20852,
`and
`HEALTH RESOURCES AND SERVICES
`ADMINISTRATION
`5600 Fishers Lane
`Rockville, Maryland 20852,
`Defendants.
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`
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`
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`
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`PLAINTIFFS’ REPLY IN SUPPORT OF
`PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION
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`

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`Case 1:21-cv-00081-SEB-MJD Document 48 Filed 02/23/21 Page 2 of 33 PageID #: 1257
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`TABLE OF CONTENTS
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`INTRODUCTION ...........................................................................................................................1
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`ARGUMENT ...................................................................................................................................1
`
`I.
`
`Lilly Is Likely To Succeed On The Merits. .........................................................................1
`
`A.
`
`B.
`
`The ADR Rule Violates Article II of the Constitution. ...........................................1
`
`The ADR Rule Violates Article III of the Constitution. ..........................................8
`
`1.
`
`2.
`
`The ADR Rule cannot be salvaged by changing its text in litigation. .........9
`
`Lilly’s property rights are traditional private rights. ..................................13
`
`C.
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`The ADR Rule Violates the APA. .........................................................................18
`
`II.
`
`III.
`
`Absent A Preliminary Injunction, Lilly Will Suffer Irreparable Harm. ............................22
`
`The Balance Of Harms And Public Interest Favor Granting The Injunction. ...................24
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`CONCLUSION ..............................................................................................................................25
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`Case 1:21-cv-00081-SEB-MJD Document 48 Filed 02/23/21 Page 3 of 33 PageID #: 1258
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`
`
`TABLE OF AUTHORITIES
`
`Cases
`
`Alexander v. Sandoval,
`532 U.S. 275 (2001) .................................................................................................................15
`
`Alpine PCS, Inc. v. United States,
`878 F.3d 1086 (Fed. Cir. 2018)................................................................................................21
`
`Ariz. Pub. Serv. Co. v. EPA,
`211 F.3d 1280 (D.C. Cir. 2000) ...............................................................................................20
`
`Arthrex, Inc. v. Smith & Nephew, Inc.,
`141 S. Ct. 551 (2020) .................................................................................................................8
`
`Assoc. of Am. R.Rs. v. U.S. Dep’t of Transp.,
`821 F.3d 19 (D.C. Cir. 2016) .....................................................................................................4
`
`Astra U.S.A., Inc. v. Santa Clara County,
`563 U.S. 110 (2011) ...........................................................................................................14, 15
`
`Azar v. Allina Health Servs.,
`139 S. Ct. 1804 (2019) .............................................................................................................17
`
`Bond v. United States,
`564 U.S. 211 (2011) .................................................................................................................22
`
`CFTC v. Schor,
`478 U.S. 833 (1986) .....................................................................................................12, 13, 22
`
`Clinton v. City of New York,
`524 U.S. 417 (1998) .................................................................................................................22
`
`Council Tree Commc’ns, Inc. v. FCC,
`619 F.3d 235 (3d Cir. 2010).....................................................................................................20
`
`Ctr. for Auto Safety v. NHTSA,
`710 F.2d 842 (D.C. Cir. 1983) .................................................................................................18
`
`Ctr. for Biological Diversity v. Everson,
`435 F. Supp. 3d 69 (D.D.C. 2020) ...........................................................................................20
`
`Curtis v. Loether,
`415 U.S. 189 (1974) .................................................................................................................15
`
`D.C. v. USDA,
`--- F. Supp. 3d ---, 2020 WL 6123104 (D.D.C. Oct. 18, 2020) ...............................................20
`
`ii
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`

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`
`
`Does v. City of Indianapolis,
`2006 WL 2927598 (S.D. Ind. Oct. 5, 2006) ............................................................................24
`
`Edmond v. United States,
`520 U.S. 651 (1997) .......................................................................................................2, 3, 4, 7
`
`FCC v. Fox Television Stations, Inc.,
`556 U.S. 502 (2009) ...................................................................................................................6
`
`Fleming v. USDA,
`--- F.3d ---, 2021 WL 560743 (D.C. Cir. Feb. 16, 2021) ...........................................................4
`
`Gen. Protecht v. Leviton,
`651 F.3d 1355 (Fed. Cir. 2011)................................................................................................23
`
`Glover v. United States,
`531 U.S. 198 (2001) .................................................................................................................15
`
`In re Grand Jury Investigation,
`916 F.3d 1047 (D.C. Cir. 2019) .............................................................................................5, 8
`
`Granfinanciera, S.A. v. Nordberg,
`492 U.S. 33 (1989) ...................................................................................................9, 15, 16, 17
`
`Intercollegiate Broadcasting System, Inc. v. Copyright Royalty Board,
`684 F.3d 1332 (D.C. Cir. 2012) .........................................................................................4, 5, 7
`
`Joelner v. Vill. of Wash. Park,
`378 F.3d 613 (7th Cir. 2004) ...................................................................................................24
`
`Little Sisters of the Poor Saints Peter & Paul Home v. Pennsylvania,
`140 S. Ct. 2367 (2020) .............................................................................................................18
`
`Long Island Care at Home, Ltd. v. Coke,
`551 U.S. 158 (2007) .................................................................................................................18
`
`Lucia v. SEC,
`138 S. Ct. 2044 (2018) ...............................................................................................................1
`
`Mertens v. Hewitt Assocs.,
`508 U.S. 248 (1993) .................................................................................................................11
`
`Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co.,
`463 U.S. 29 (1983) .........................................................................................................9, 20, 22
`
`Murray’s Lessee v. Hoboken Land & Improvement Co.,
`59 U.S. (18 How.) 272 (1856) .............................................................................................9, 18
`
`iii
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`
`
`Oil States Energy Services v. Greene’s Energy Group,
`138 S. Ct. 1365 (2018) .................................................................................................12, 16, 17
`
`Pacemaker Diagnostic Clinic, Inc. v. Instromedix, Inc.,
`725 F.2d 537 (9th Cir. 1984) (en banc) ...................................................................................13
`
`PHH Corp. v. CFPB,
`881 F.3d 75 (D.C. Cir. 2018) ...................................................................................................22
`
`Phila. Gas Works v. FERC,
`989 F.2d 1246 (D.C. Cir. 1993) .................................................................................................9
`
`PhRMA v. HHS,
`138 F. Supp. 3d 31 (D.D.C. 2015) ...........................................................................................20
`
`PhRMA v. HHS,
`43 F. Supp. 3d 28 (D.D.C. 2014) .............................................................................................20
`
`Plaut v. Spendthrift Farm, Inc.,
`514 U.S. 211 (1995) ...................................................................................................................8
`
`Public Citizen, Inc. v. Mineta,
`427 F. Supp. 2d 7 (D.D.C. 2006) .............................................................................................19
`
`Qualcomm Inc. v. Broadcom Corp.,
`2006 WL 8455598 (S.D. Cal. Feb. 13, 2006) ..........................................................................23
`
`SEC v. Chenery Corp.,
`332 U.S. 194 (1947) ...................................................................................................................9
`
`Seila Law LLC v. CFPB,
`140 S. Ct. 2183 (2020) .........................................................................................................2, 23
`
`Stern v. Marshall,
`564 U.S. 462 (2011) ......................................................................................................... passim
`
`Taggart v. Lorenzen,
`139 S. Ct. 1795 (2019) .............................................................................................................11
`
`Thomas v. Union Carbide Agricultural Products Co.,
`473 U.S. 568 (1985) ...........................................................................................................13, 14
`
`United States v. Johnston,
`258 F.3d 361 (5th Cir. 2001) ...................................................................................................13
`
`Weiss v. United States,
`510 U.S. 163 (1994) ...................................................................................................................6
`
`iv
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`
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`Wellness Int’l Network, Ltd. v. Sharif,
`135 S. Ct. 1932 (2015) .............................................................................................................22
`
`Statutes
`
`5 U.S.C. § 553 ................................................................................................................................18
`
`11 U.S.C. § 548 ..............................................................................................................................15
`
`28 U.S.C. § 157 ..............................................................................................................................16
`
`42 U.S.C. § 256b .................................................................................................................... passim
`
`Regulations
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`42 C.F.R. § 10.20 .............................................................................................................................5
`
`42 C.F.R. § 10.21 ...........................................................................................................................10
`
`42 C.F.R. § 10.23 ...........................................................................................................................11
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`42 C.F.R. § 10.24 .........................................................................................................................2, 3
`
`85 Fed. Reg. 80,632 (Dec. 14, 2020) ...............................................................................................5
`
`Rules
`
`Fed. R. Civ. P. 65 ...........................................................................................................................11
`
`Other Authorities
`
`Caleb Nelson, Adjudication in the Political Branches,
`107 COLUM. L. REV. 559 (2007) ..............................................................................................14
`
`Dan. B. Dobbs, LAW OF REMEDIES: DAMAGES EQUITY RESTITUTION 9 (2D ED. 1993) ....................11
`
`Gary Lawson, Appointments and Illegal Adjudications: The America Invents Act
`through a Constitutional Lens, 26 GEO. MASON L. REV. 26 (2018). .........................................7
`
`HHS/HRSA, About the Unified Agenda, https://bit.ly/2OYh3FZ ................................................19
`
`HHS/HRSA, RIN: 0906-AA90 (Spring 2017), https://bit.ly/2ZydLLo ..........................................19
`
`HHS/HRSA, RIN: 0906-AB26 (Fall 2020), https://bit.ly/37yERqm .............................................19
`
`3 W. Blackstone, Commentaries (1765) ..........................................................................................9
`
`v
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`INTRODUCTION
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`The 340B ADR Rule provides a textbook illustration of the wisdom behind the safeguards
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`built into the Constitution and the Administrative Procedure Act. After a decade of inaction, the
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`government bowed to “public outcry” (Opp. 9) and promulgated an “Advisory Opinion” that both
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`reversed a longstanding and recently reaffirmed agency policy and imposed extra-statutory
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`burdens on politically unpopular drug manufacturers. It also issued a defective ADR regulation,
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`based on a stale record, without accounting for intervening factual and legal developments. The
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`result is an adjudication scheme overseen by agency employees who are neither accountable nor
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`impartial, in violation of Articles II and III of the Constitution. The government’s efforts to defend
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`the Rule in this Court make its defects worse, not better. The government’s opposition ignores the
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`Rule’s text and pretends its plain words do not mean what they say, but cannot refute Lilly’s
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`constitutional claims. Nevertheless, those post hoc editing efforts do succeed in rendering the
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`ADR Rule even more incoherent, arbitrary, and capricious than it was before. Bedrock principles
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`of administrative law preclude the government from defending a defective rule with explanations
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`that are at war with its text and stated justifications. A preliminary injunction is warranted.
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`ARGUMENT
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`I.
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`Lilly Is Likely To Succeed On The Merits.
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`A.
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`The ADR Rule Violates Article II of the Constitution.
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`Lilly is likely to succeed in its claim that the ADR Rule violates the Appointments Clause
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`of Article II. The government concedes (Opp. 13) that ADR panelists’ broad suite of powers—
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`“indeed, nearly all the tools of federal trial judges”—makes them “‘Officers of the United States,’
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`subject to the Appointments Clause.” Lucia v. SEC, 138 S. Ct. 2044, 2048, 2053-55 (2018). But
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`the government denies that the ADR panelists are principal officers who must be appointed by the
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`President with the advice and consent of the Senate. The government is wrong.
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`ADR panelists’ authority to make significant final decisions for the Executive Branch bears
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`all the traditional hallmarks of principal-officer power. Under the express terms of the 340B statute
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`and the ADR Rule, ADR panel decisions are the “final” word of the Executive Branch, “binding
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`on the parties,” and “precedential” within HHS. 42 U.S.C. § 256b(d)(3)(C); 42 C.F.R. § 10.24(d).
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`Those precedential decisions cannot be modified or undone by any superior officer within the
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`Executive Branch, not even by the Secretary himself; only “a court of competent jurisdiction” can
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`set them aside. Id. That suffices to make panelists principal officers, see PI Mem. 17-18, so the
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`Rule violates Article II by vesting panelists’ appointment in the Secretary.
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`None of the government’s attempts to resist that straightforward conclusion is persuasive.
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`The government says that “‘the line between principal and inferior officers’ turns on supervision
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`by a higher authority, not on the ‘exercise of significant authority.’” Opp. 14 (quoting Edmond v.
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`United States, 520 U.S. 651, 662-66 (1997)). That is wrong. As the Supreme Court explained just
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`last year, the line between principal and inferior turns on far more than just “whether the officer’s
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`work is ‘directed and supervised’” by a higher authority within Article II; it also depends on
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`“factors such as the nature, scope, and duration of an officer’s duties.” Seila Law LLC v. CFPB,
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`140 S. Ct. 2183, 2199 n.3 (2020) (quoting Edmond, 520 U.S. at 661, 663); Edmond, 520 U.S. at
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`667 (Souter, J., concurring) (“Having a superior officer is necessary for inferior officer status, but
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`not sufficient.”). Here, “the nature, scope, and duration of [ADR panelists’] duties” make clear
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`that they are principal officers for purposes of Article II: Most important, because panelists may
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`“render a final decision on behalf of the United States,” Edmond, 520 U.S. at 665 (majority op.);
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`see 42 U.S.C. § 256b(d)(3)(C); 42 C.F.R. § 10.24, they are principal officers under Article II.
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`But even if the government were right that principal-officer status hinged only on
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`“supervision by a higher authority,” Opp. 14, no such supervision exists here. By statute, ADR
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`2
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`panelists issue “a final agency decision” on behalf of the United States that is “binding upon the
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`parties involved.” 42 U.S.C. § 256b(d)(3)(C); see 42 C.F.R. § 10.24. Critically, they may do so
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`without “permi[ssion] … by other Executive officers.” Edmond, 520 U.S. at 665. That fact
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`distinguishes this case from Edmond, where the Court held Coast Guard judges to be inferior
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`officers because their decisions were subject to review by superior Senate-confirmed Article II
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`officials. See id. The government buries this critical point in a footnote, see Opp. 14 n.4, but
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`Edmond makes clear that that distinction makes all the difference. The Court emphasized that
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`without this power of review within the Executive Branch—which is lacking here—supervision
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`of the judges was “not complete.” 520 U.S. at 664. Instead, “[w]hat is significant is that the judges
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`of the Court of Criminal Appeals have no power to render a final decision on behalf of the United
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`States unless permitted to do so by other Executive officers.” Edmond, 520 U.S. at 665.
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`The government promises to cite “numerous persuasive decisions establish[ing] that,”
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`contrary to Edmond, “the absence of direct review of an officer’s decisions does not render that
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`officer a principal.” Opp. 14 n.4. But the government cites no such case, because none exists. To
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`the contrary, the Supreme Court has routinely reaffirmed the critical distinction underlying
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`Edmond. For instance, the Supreme Court held in Free Enterprise Fund v. PCAOB that PCAOB
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`members are inferior officers because the SEC’s “oversight authority” included the ability to
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`“approv[e] and alter[]” PCAOB decisions. 561 U.S. 477, 486, 510 (2010) (emphasis added). And
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`in Department of Transportation v. Association of American Railroads, Justice Alito made clear
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`that when—as here—an officer is empowered to make final, binding determinations on behalf of
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`an agency that are not reversible by any other Article II officer, the officer is a principal officer.
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`575 U.S. 43, 64 (2015) (Alito, J., concurring) (“[I]t looks like the arbitrator would be making law
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`without supervision—again, it is ‘binding arbitration.’ … As to that ‘binding’ decision, who is
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`3
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`the supervisor? Inferior officers can do many things, but nothing final should appear in the
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`Federal Register unless a Presidential appointee has at least signed off on it.” (emphasis added)).
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`The D.C. Circuit cases the government cites are to the same effect. On remand in American
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`Railroad, for example, the D.C. Circuit followed Justice Alito’s lead and held the challenged law
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`unconstitutional because—just as the ADR Rule does vis-à-vis panelists—it permitted arbitrators
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`to render “final,” “binding” decisions, but did not “provide any procedure by which the arbitrator’s
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`decision is reviewable.” Assoc. of Am. R.Rs. v. U.S. Dep’t of Transp., 821 F.3d 19, 39 (D.C. Cir.
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`2016). The D.C. Circuit confirmed this approach just last week, holding that USDA ALJs are
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`inferior officers because, unlike here or in American Railroads, “the Secretary” has authority to
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`“step in and act as final appeals officer in any case,” which means—unlike here—that the “ALJ’s
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`decision” is not necessarily the agency’s final word. Fleming v. USDA, --- F.3d ---, 2021 WL
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`560743, at *8 (D.C. Cir. Feb. 16, 2021). But here, just like the arbitrators in American Railroads,
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`ADR panelists render “final agency decision[s]” that by statute are not only “binding upon the
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`parties,” 42 U.S.C. § 256b(d)(3)(C), but “appealable only to courts of the Third Branch,” Edmond,
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`520 U.S. at 665; see 42 C.F.R. § 10.24(d) (ADR panel decisions are “final,” “precedential,” and
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`“binding” “unless invalidated by an order of a court of competent jurisdiction”). The government
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`again buries this problem below the line, Opp. 17 n.5, but it is no less fatal to its case.
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`Ignoring this precedent, the government seeks refuge in Intercollegiate Broadcasting
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`System, Inc. v. Copyright Royalty Board, 684 F.3d 1332 (D.C. Cir. 2012), but that case provides
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`no help to the government either. The government claims that the copyright royalty judges in
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`Intercollegiate were deemed inferior officers because their “decisions” were not reviewable “by
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`any other Executive Branch officer.” Opp. 15. In reality, Intercollegiate held that, as designed,
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`CRJs “are principal officers” precisely because—“unlike the judges in Edmond,” but exactly like
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`4
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`
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`ADR panelists here—the determinations “are final for the executive branch” and “not
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`reversible … by any other officer or entity within the executive branch.” 684 F.3d at 1340
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`(emphasis added). The court so held, moreover, even though the Register of Copyrights could
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`“review[] and correct[] any legal errors in the CRJs’ determinations.” Id. at 1338-39 (emphasis
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`added). The conclusion that ADR panelists are principal officers is thus a fortiori of
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`Intercollegiate, as ADR panels’ statutorily “final,” “binding” “agency decisions” are not
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`reviewable or correctible by anyone within the Executive Branch in any way. See 42 U.S.C.
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`§ 256b(d)(3)(C); 42 C.F.R. § 10.24(d).
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`In short, instead of “numerous persuasive decisions,” Opp. 14 n.4, no authority supports
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`the government’s claim that an agency adjudicative officer is inferior when—as here—that
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`officer’s final, binding decisions cannot be reviewed or set aside by another Executive officer.
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`The government’s last defense is to argue that ADR panel decisions can be supervised
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`through roundabout means. According to the government, the Secretary can remedy the Rule’s
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`constitutional defect by (1) “rescind[ing]” its delegation of authority to panels and “adjudicat[ing]
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`these matters personally,” or (2) revising the Rule and exercising “at will” removal power as in In
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`re Grand Jury Investigation, 916 F.3d 1047 (D.C. Cir. 2019). Opp. 16-17. Neither “fix” works.
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`First, the HHS Secretary cannot solve the Article II problem by personally adjudicating
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`ADR disputes. For starters, that is not what the 340B statute or the actual ADR Rule contemplate.
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`The Rule specifies where ADR panelists will come from (HRSA, CMS, and the HHS Office of
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`General Counsel) and who will appoint them (the Secretary). See 42 C.F.R. § 10.20; 85 Fed. Reg.
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`80,632, 80,634 (Dec. 14, 2020). Under that regulation, the HHS Secretary is not a panelist, and
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`neither is any other principal officer properly appointed by the President. That dooms the
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`government’s argument. Lilly is challenging the actual ADR Rule—not some hypothetical future
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`5
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`
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`regulation. Nor could the Secretary rescind the ADR Rule with the stroke of a pen; a policy
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`reversal along the lines the government posits here would require shepherding an entirely new rule
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`through the APA’s notice-and-comment process, an achievement that eluded HHS for a decade
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`the last time around. See FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2009).
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`In any case, the government’s solution would still violate Article II, since it would still
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`allow the Secretary, rather than the President, to make a principal-officer appointment. By giving
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`ADR panels authority to issue “a final agency decision,” 42 U.S.C. § 256b(d)(3)(C)—i.e., what
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`Justice Alito explained in American Railroads must be done by a principal officer: The statute’s
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`express terms make clear that the position of ADR panelist is necessarily a principal-officer
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`position, so it must be filled by a principal officer appointed by the President—or no one at all.
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`See Weiss v. United States, 510 U.S. 163, 170 (1994) (because military trial judge’s powers were
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`those of an officer, all those currently “serving as military judges must be appointed pursuant to
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`the Appointments Clause”). But by vesting panel appointments only in the Secretary, the ADR
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`Rule “allows the President no formal role at all in the selection of the particular individuals who
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`will actually serve in those positions,” which “disregard[s] the special treatment the Constitution
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`requires for the appointment of principal officers,” including allowing the Senate to “adequately
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`focus” on the role in which a nominee may actually serve. Id. at 591 (Souter, J., concurring).
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`Second, the argument that the Secretary has plenary removal power over ADR panelists,
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`see Opp. 17-18, fares no better. That is again contrary to the text of the ADR Rule, which says
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`that “individuals serving on a 340B ADR Panel may be removed for cause.” 85 Fed. Reg. at
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`80,634; see also 42 C.F.R. § 10.20(a)(ii) (“For each case, the HRSA Administrator shall …
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`[r]emove an individual from a 340B ADR Panel for cause.”). If the government is right that
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`panelists are actually subject to at-will removal by the HRSA Administrator’s direct superior, then
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`6
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`
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`the Rule’s express limitation to removal only “for cause” is utterly illusory—and a defense that
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`depends on turning an agency rule into nonsense is not a winning one.1
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`In all events, plenary removal authority would not suffice to make ADR panelists inferior
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`officers. To be sure, the power to remove an officer may be a “powerful tool for control.” Edmond,
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`520 U.S. at 664. That is why the D.C. Circuit found it a sufficient remedy to sever the limitations
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`on removability in Intercollegiate; there, the Register of Copyrights had the authority to “review[]
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`and correct[]” CRJs’ decisions. 684 F.3d at 1338-39 (emphasis added). But that is not the case
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`here. And, contrary to the government’s suggestion, the Supreme Court has never held that an
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`officer is inferior just because he can be removed. Rather, the Court has made clear that removal
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`power suffices to render an officer inferior only when that power is buttressed by or tantamount to
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`the power to review, modify, or otherwise undo the officer’s decisions. Edmond drew that precise
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`distinction: The Judge Advocate General had unfettered power to remove the Coast Guard judges
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`“without cause,” but that did not suffice to make them inferior officers; his oversight powers were
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`“not complete” because he “ha[d] no power to reverse decisions.” 520 U.S. at 664. It was only
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`because the Article II officers on the Court of Appeals for the Armed Forces did have that power
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`that the Coast Guard judges were inferior officers. Id. That makes eminent sense, since even
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`plenary power to remove would thus not permit a superior to correct or reverse decisions already
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`made: “The firing of judges does not, in itself, vacate their decisions.” Gary Lawson,
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`Appointments and Illegal Adjudications: The America Invents Act through a Constitutional Lens,
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`1 That is particularly true given that this argument belies everything the government says to
`justify its decision to eschew independent, impartial ALJs (in favor of existing agency employees
`likely to hold positions consistent with HHS policy). See pp. 21-22, infra. The government cannot
`defend an agency action by assuring on the one hand that ADR panelists will be fully “objective[]”
`and impartial adjudicators, Opp. 32, yet touting on the other the “Secretary’s ability to remove an
`individual from a panel, or from the Board, at will—with or without a conflict of interest,” Opp. 18.
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`7
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`26 GEO. MASON L. REV. 26, 61 (2018). And, here, making ADR panelists removable at will would
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`not make them inferior officers because their decisions cannot be undone by the Secretary.
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`That also distinguishes this case from In re Grand Jury Investigation, where removal
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`effectively allowed control of the removed officer’s decisions. There, the Attorney General not
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`only could remove the Special Counsel at will, but could unilaterally rescind the Special Counsel’s
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`entirely-regulatory authority, terminate an investigation, and discharge the grand jury. That is not
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`the case here. Even a removed ADR panelist’s decisions would remain the agency’s final word,
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`“precedential and binding on the parties involved[,] unless invalidated by an order of a court of
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`competent jurisdiction.” 42 C.F.R. § 10.24(d); see 42 U.S.C. § 256b(d)(3)(C); see also Free Enter.
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`Fund, 561 U.S. at 544 (Breyer, J., dissenting) (doubting “that courts will always be able to cure
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`[an Article II] defect merely by severing an offending removal provision”); Lawson, supra, at 61
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`(concluding that the “power to fire [ALJs] does not constitute the kind of formal control over their
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`decisions that makes them inferior rather than principal officers” where—as here—“their decisions
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`are the final (nonpresidential) word on the exercise of executive power”).
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`Thus, the government’s creative attempts to avoid the Rule’s obvious Appointments Clause
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`defects fail. But to the extent this Court has any doubt about the inadequacy of the government’s
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`severance-and-removal gambit, the proper course would be to enjoin the ADR Rule pending the
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`Supreme Court’s resolution of Arthrex, Inc. v. Smith & Nephew, Inc., 141 S. Ct. 551 (2020), in
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`which the efficacy of the same proposed remedy (vis-à-vis administrative patent judges) is directly
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`at issue. See Ex. A (PTO order staying numerous proceedings pending Arthrex).
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`B.
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`The ADR Rule Violates Article III of the Constitution.
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`Lilly is also likely to succeed in showing that the ADR Rule violates Article III. The ADR
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`Rule grants to administrative adjudicators the very core of the “judicial Power.” See Plaut v.
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`Spendthrift Farm, Inc., 514 U.S. 211, 221 (1995). Even the government admits that “Article III
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`8
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`prevents Congress from ‘withdraw[ing] from judicial cognizance any matter which, from its
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`nature, is the subject of a suit at the common law.’” Opp. 22 (quoting Stern v. Marshall, 564 U.S.
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`462, 484 (2011)). Under the Rule, an aggrieved entity (either a covered entity or a manufacturer)
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`can file what the rule describes as an “action” for “monetary damages or equitable relief.” 42
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`C.F.R. § 10.21(a). Yet such actions are h