Case 6:22-cv-00162 Document 1 Filed 04/27/22 Page 1 of 19 PageID #: 1
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`UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
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`
`
`
`Case No. __________
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`
`
`ORIGINAL COMPLAINT
`FOR DECLARATORY AND
`INJUNCTIVE RELIEF
`
`
`
`
`
`
`
`Plaintiff,
`
`
`LIFENET, INC.
`
`
`
` v.
`
`U.S. DEPARTMENT OF HEALTH AND HUMAN
`SERVICES,
`
`U.S. DEPARTMENT OF LABOR,
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`U.S. DEPARTMENT OF THE TREASURY,
`
`OFFICE OF PERSONNEL MANAGEMENT,
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`and the
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`CURRENT HEADS OF THOSE
`AGENCIES IN THEIR OFFICIAL
`CAPACITIES,
`
`
`
`
`
`
`Defendants.
`
`
`
`ORIGINAL COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF
`
`This is an action by LifeNet, Inc. (“LifeNet”) challenging, under the Administrative
`
`Procedure Act (APA), various regulations that implement the “No Surprises Act” of 2020, Pub. L.
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`116-260, div. BB, tit. I (Dec. 27, 2020).
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`This action is closely related to another action pending before this Court: Texas Medical
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`Association, et al. v. U.S. Dep’t Health & Hum. Serv’cs, et al., 21-cv-00425, Dkt. 113, 2022 WL
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`542879 (Feb. 23, 2022) (Kernodle, J.) (the “TMA Decision”). Plaintiff respectfully requests
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`assignment of this matter to Judge Kernodle, who authored the TMA Decision.
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`
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`1
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`INTRODUCTION
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`1.
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`Plaintiff LifeNet is an air ambulance company. LifeNet’s planes and helicopters
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`transport hundreds of patients each year—many of whom are suffering medical emergencies and
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`would risk death or further serious injury without LifeNet’s services. Defendants are the agencies
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`charged with implementing the No Surprises Act, and the heads of those agencies in their official
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`capacities.
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`2.
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`The No Surprises Act, as relevant here, creates an “Independent Dispute
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`Resolution” (IDR) process, in which out-of-network providers of emergency medical services,
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`such as LifeNet, can obtain an order, from an IDR entity, directing the patient’s health plan or
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`health insurer to pay the provider a certain amount for the services provided to the patient. IDR
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`proceedings are already beginning across the country.
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`3.
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`This Court’s TMA Decision struck down those parts of Defendants’ implementing
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`regulations that imposed a “QPA Presumption” on the IDR Process. The “QPA,” or “qualifying
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`payment amount,” is “generally” the median in-network rate for the service at issue as agreed to
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`by the specific payor (health plan or insurer). See TMA, 2022 WL 542879, at *2. The regulations’
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`QPA Presumption “places its thumb on the scale for the QPA, requiring arbitrators [i.e., the IDR
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`entities] to presume the correctness of the QPA and then imposing a heightened burden on the
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`remaining statutory factors to overcome that presumption.” Id. at *8. This Court set aside the
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`regulations’ QPA Presumption for two independent reasons: first, it “rewrites clear statutory
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`terms” of the No Surprises Act, id., and second, it was promulgated without the notice-and-
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`comment procedure that the APA requires, id. at *14.
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`4.
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`Despite this Court’s holding in TMA, the Defendants continue to apply the QPA
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`Presumption to air ambulance providers including LifeNet—making this lawsuit necessary.
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`Defendants are apparently relying on one sentence in their regulations, which was not expressly
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`2
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`struck down by TMA. LifeNet requests that this Court act swiftly to vacate this sentence, as well,
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`and for the same reasons as in TMA.
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`
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`
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`[REMAINDER OF PAGE INTENTIONALLY BLANK]
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`3
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`TABLE OF CONTENTS
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`INTRODUCTION .......................................................................................................................... 2
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`PARTIES ........................................................................................................................................ 5
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`JURISDICTION AND VENUE ..................................................................................................... 5
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`FACTUAL BACKGROUND ......................................................................................................... 6
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`I.
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`II.
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`III.
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`IV.
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`V.
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`The No Surprises Act Created the IDR Process Without Any “QPA Presumption”
`................................................................................................................................. 6
`
`The Agencies Created One IDR Process in IFR Part II, With Only Slight
`Differences Between Air Ambulance IDRs and All Other IDRs ........................... 8
`
`IFR Part II’s QPA Presumption Clearly Rewrites the Statute ................................ 9
`
`The Departments’ QPA Presumption Was Issued Without Notice and Comment12
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`Defendants Continue to Apply the QPA Presumption to Air Ambulance IDRs,
`Despite this Court’s Opinion and Order in TMA .................................................. 13
`
`VI.
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`The QPA Presumption Is Harming and Will Continue to Harm LifeNet ............. 15
`
`CLAIMS FOR RELIEF ................................................................................................................ 16
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`I.
`
`II.
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`COUNT I: The QPA Presumption Contained in 45 C.F.R. § 149.510 and
`§ 149.520 Should Be Set Aside, Under the APA, Because It Is Arbitrary,
`Capricious, and Contrary to the Statute ................................................................ 16
`
`COUNT II: The QPA Presumption Should Be Set Aside Because the Agencies
`Failed to Follow Notice-and-Comment Procedures ............................................. 17
`
`PRAYER FOR RELIEF ............................................................................................................... 18
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`4
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`PARTIES
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`5.
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`LifeNet, Inc. is a corporation that operates one fixed-wing and two rotor-wing air
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`ambulances from three airbases. LifeNet’s air ambulances routinely transport emergency patients
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`located in this District, in Arkansas, and in Louisiana. LifeNet’s headquarters are in Texarkana,
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`Texas.
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`6.
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`Defendant U.S. Department of Health and Human Services is an executive
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`department of the United States headquartered in Washington, D.C.
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`7.
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`Defendant Xavier Becerra is the Secretary of Health and Human Services. He is
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`sued only in his official capacity.
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`8.
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`Defendant U.S. Department of the Treasury is an executive department of the
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`United States headquartered in Washington, D.C.
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`9.
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`Defendant Janet Yellen is the Secretary of the Treasury. She is sued only in her
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`official capacity.
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`10.
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`Defendant U.S. Department of Labor is an executive department of the United
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`States headquartered in Washington, D.C.
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`11.
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`Defendant Martin J. Walsh is the Secretary of Labor. He is sued only in his official
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`capacity.
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`12.
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`Defendant U.S. Office of Personnel Management (OPM) is an executive agency of
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`the United States headquartered in Washington, D.C.
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`13.
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`Defendant Kiran Ahuja is the Director of OPM. He is sued only in his official
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`capacity.
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`JURISDICTION AND VENUE
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`14.
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`The Court has subject-matter jurisdiction over this action under 28 U.S.C. § 1331
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`and 28 U.S.C. § 1346(a).
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`
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`5
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`15.
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`LifeNet’s causes of action are provided by the Administrative Procedure Act,
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`5 U.S.C. §§ 702-706, and the Declaratory Judgment Act, 28 U.S.C. §§ 2201-2202.
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`16.
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`Venue is proper in this judicial district under 28 U.S.C. § 1391(e). This is an action
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`against the United States and various of its Departments and Department Officials in their official
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`capacities. Plaintiff resides in this District, and a substantial part of the events or omissions giving
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`rise to Plaintiff’s claims occurred in this District.
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`FACTUAL BACKGROUND
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`I.
`
`The No Surprises Act Created the IDR Process Without Any “QPA Presumption”
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`17.
`
`The No Surprises Act was enacted on December 27, 2020, as part of the
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`Consolidated Appropriations Act, 2021. Pub. L. 116-260, 134 Stat. 1182, div. BB, tit. I (2020). Its
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`relevant requirements went into effect on January 1, 2022. For convenience and simplicity, this
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`Complaint cites the No Surprises Act as codified in the Public Health Service (“PHS”) Act, 42
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`U.S.C. §§ 300gg-111 et seq.1
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`18.
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`The provisions of the Act at issue here are: 42 U.S.C. § 300gg-111, which governs
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`all emergency medical services, and 42 U.S.C. § 300gg-112, which makes certain modifications
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`for air ambulance service providers.
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`19.
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`The IDR Process is similar to “binding final offer arbitration,” also referred to as
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`“baseball-style” arbitration. Each party—the provider and the insurer—submits an “offer” of the
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`payment amount. The IDR entity then picks one of the two offers.
`
`
`1 The NSA made parallel amendments to provisions of the PHS Act, which is enforced by the
`Department of Health and Human Services (“HHS”); to the Employee Retirement Income Security
`Act (“ERISA”), which is enforced by the Department of Labor; and to the Internal Revenue Code
`(“IRC”), which is enforced by the Department of the Treasury. These other provisions, enacted
`into ERISA and the IRC, are the same in all material respects as the codification in the PHS Act,
`which is cited in this Complaint.
`
`
`
`6
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`20.
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`In an air ambulance IDR, the No Surprises Act requires that the IDR entity
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`“shall . . . tak[e] into account” a list of nine “considerations” specified in the statute. 42 U.S.C. §
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`300gg-112(b)(5)(A). These nine “considerations” are:
`
`a.
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`The “qualifying payment amount” (QPA). 42 U.S.C. § 300gg-
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`112(b)(5)(C)(i)(I). The QPA is generally the median of the rates that the specific payor (health
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`plan or insurer) agreed to pay for air ambulance services in 2019 in the geographic area in which
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`the services at issue were provided.2 The statutory definition of the QPA is the same, for air
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`ambulance services, as it is for all other items and services. Compare id. to 42 U.S.C. § 300gg-
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`111(a)(3)(E).
`
`b.
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`“The quality and outcomes measurements of the provider that furnished
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`such services.” 42 U.S.C. § 300gg-112(b)(5)(C)(ii).
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`c.
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`“The acuity of the individual receiving such services or the complexity of
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`furnishing such services to such individual.” Id.
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`d.
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`“The training, experience, and quality of the medical personnel that
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`furnished such services.” Id.
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`e.
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`The “[a]mbulance vehicle type, including the clinical capability level of
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`such vehicle.” Id.
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`f.
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`The “[p]opulation density of the pick up location (such as urban, suburban,
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`rural, or frontier).” Id.
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`g.
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`“Demonstrations of good faith efforts (or lack of good faith efforts) made
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`by the nonparticipating provider or nonparticipating facility or the plan or issuer to enter into
`
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`2 If the insurer did not have sufficient agreements, in 2019, to calculate a median rate (i.e., the
`insurer had fewer than three such rates) then the insurer is permitted to instead consult a public
`“database.” 42 U.S.C. § 300gg-111(a)(3)(E)(iii)(I).
`
`
`
`7
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`network agreements and, if applicable, contracted rates between the provider and the plan or issuer,
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`as applicable, during the previous 4 plan years.” Id.
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`h.
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`Any information the IDR entity requests from the parties to the IDR
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`proceeding. Id. (B)(5)(C)(i)(II).
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`i.
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`Any additional information submitted by either party relating to its offer.
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`Id.
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`II.
`
`The Agencies Created One IDR Process in IFR Part II, With Only Slight
`Differences Between Air Ambulance IDRs and All Other IDRs
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`21.
`
`Congress instructed the Departments to promulgate implementing regulations to
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`govern the IDR Process. Congress actually gave two identical versions of the same instruction: By
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`December 27, 2021 (i.e., within one year of enactment), the Departments were to “establish by
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`regulation” an “IDR process” for “air ambulance services,” 42 U.S.C. § 300gg-112(b)(2)(A), and
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`an “IDR process” for all other “item[s] or service[s],” id. § 300gg-111(c)(2)(A).
`
`22.
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`On October 7, 2021, the Departments published an Interim Final Rule entitled
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`Requirements Related to Surprise Billing; Part II, 86 Fed. Reg. 55,980 (Oct. 7, 2021) (“IFR Part
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`II”). IFR Part II contains rules for conducting the IDR Process, including the QPA Presumption.
`
`23.
`
`The principal provisions of IFR Part II relating to the IDR Process are codified in
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`45 C.F.R. § 149.510.3 Section 149.510 applies, in full, to any IDR that is not an air ambulance
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`IDR.
`
`
`3 The Departments also codified these regulations under titles 26 and 29 of the Code of Federal
`Regulations, which concern ERISA and the Internal Revenue Service. These other codifications
`are the same, in all material respects, as the codifications in 45 C.F.R. Part 149, which are cited
`in this Complaint.
`
`
`
`8
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`24.
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`A second section—Section 149.520—applies to air ambulance IDRs. This section
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`simply incorporates, by reference, nearly all of Section 149.510. See 45 C.F.R. § 149.520(b)(1).4
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`25.
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`According to the statute, the only difference between air ambulance IDRs and all
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`other IDRs is the list of “additional circumstances” that the IDR entity is to consider when choosing
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`which offer to select. Some of these “additional circumstances” are different, in an air ambulance
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`IDR—for example, the “population density” at the patient’s “pick up location,” and the
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`“ambulance vehicle type.” 42 U.S.C. § 300gg-112(b)(5)(C)(ii).
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`26.
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`The regulation—Section 149.520(b)(2)—directs the IDR entity to consider these
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`different “additional circumstances” in air ambulance IDRs. Otherwise, air ambulance IDRs are
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`to follow the procedures set forth in Section 149.510, which apply to all other IDRs. See 45 C.F.R.
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`§ 149.520(b)(1).
`
`III.
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`IFR Part II’s QPA Presumption Clearly Rewrites the Statute
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`27.
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`The Departments’ QPA Presumption is codified in five parts of 45 C.F.R § 149.510
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`and in one sentence of 45 C.F.R. § 149.520, as shown in the following chart. The five parts of
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`Section 149.510 (shown in the first five rows of the chart) were expressly vacated by the TMA
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`decision. The one sentence from Section 149.520 (shown in the sixth and final row of the chart)
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`was not expressly vacated by TMA:
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`4 45 C.F.R. § 149.520(b)(1) states: “Except as provided in paragraphs (b)(2) and (3) of this
`section, in determining the out-of-network rate to be paid by group health plans and health
`insurance issuers offering group or individual health insurance coverage for out-of-network air
`ambulance services, plans and issuers must comply with the requirements of § 149.510, except
`that references in § 149.510 to the additional circumstances in § 149.510(c)(4)(iii)(C) shall be
`understood to refer to paragraph (b)(2) of this section.”
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`9
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`Regulatory Text (bold language contains the QPA Presumption) Citation
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`“(viii) Material difference means a substantial likelihood that a
`reasonable person with the training and qualifications of a
`certified IDR entity making a payment determination would
`consider the submitted information significant in determining
`the out-of-network rate and would view the information as
`showing that the qualifying payment amount is not the
`appropriate out-of-network rate.”
`
`ii) Payment determination and notification. Not later than 30
`business days after the selection of the certified IDR entity, the
`certified IDR entity must:
`(A) Select as the out-of-network rate for the qualified IDR item
`or service one of the offers submitted under paragraph
`(c)(4)(i) of this section, taking into account the
`considerations specified in paragraph (c)(4)(iii) of this
`section (as applied to the information provided by the parties
`pursuant to paragraph (c)(4)(i) of this section). The certified
`IDR entity must select the offer closest to the qualifying
`payment amount unless the certified IDR entity
`determines that credible information submitted by either
`party under paragraph (c)(4)(i) clearly demonstrates
`that the qualifying payment amount is materially
`different from the appropriate out-of-network rate, or if
`the offers are equally distant from the qualifying
`payment amount but in opposing directions.
`
`(iii) Considerations in determination. In determining which offer to
`select, the certified IDR entity must consider:
`…
`(C) Additional information submitted by a party, provided the
`information is credible and relates to the circumstances described in
`paragraphs (c)(4)(iii)(C)(1) through (5) of this section, with respect
`to a qualified IDR item or service of a nonparticipating provider,
`facility, group health plan, or health insurance issuer of group or
`individual health insurance coverage that is the subject of a payment
`determination. This information must also clearly demonstrate
`that the qualifying payment amount is materially different from
`the appropriate out-of-network rate.
`
`(iv) Examples. The rules of paragraph (c)(4)(iii) of this section
`are illustrated by the following examples: … [four examples
`illustrating the QPA Presumption].”
`
`
`
`
`10
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`45 C.F.R. §
`149.510(a)(2)(viii)
`
`45 C.F.R. §
`149.510(c)(4)(ii)(A)
`
`45 C.F.R. §
`149.510(c)(4)(iii)(C)
`
`45 C.F.R. §
`149.510(c)(4)(iv)
`
`

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`Regulatory Text (bold language contains the QPA Presumption) Citation
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`45 C.F.R. §
`149.510(c)(4)(vi)(B)
`
`45 C.F.R. §
`149.520(b)(2)
`
`
`(B) If the certified IDR entity does not choose the offer closest to
`the qualifying payment amount, the certified IDR entity's
`written decision must include an explanation of the credible
`information that the certified IDR entity determined
`demonstrated that the qualifying payment amount was
`materially different from the appropriate out-of-network rate,
`based on the considerations allowed under paragraph
`(c)(4)(iii)(B) through (D) of this section, with respect to the
`qualified IDR item or service.
`(b) Determination of out-of-network rates to be paid by
`health plans and health insurance issuers; independent
`dispute resolution process—
`. . . .
`
`(2) Additional information. Additional information
`submitted by a party, provided the information is
`credible, relates to the circumstances described in
`paragraphs (b)(2)(i) through (vi) of this section, with
`respect to a qualified IDR service of a
`nonparticipating provider of air ambulance services
`or health insurance issuer of group or individual
`health insurance coverage that is the subject of a
`payment determination. This information must also
`clearly demonstrate that the qualifying payment
`amount is materially different from the
`appropriate out-of-network rate.
`
`28.
`
`The QPA Presumption requires the IDR entity to “begin with the presumption that
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`the amount closest to the QPA is the appropriate out-of-network rate.” IFR Part II, 86 Fed. Reg.
`
`at 55,999. The QPA is to be the “presumptive factor.” Id. at 55,996-97. The IDR entity must
`
`select the “offer” closest to the QPA unless the IDR entity “determines that credible information
`
`submitted by either party . . . clearly demonstrates that the [QPA] is materially different from the
`
`appropriate out-of-network rate.” 45 C.F.R § 149.510(c)(4)(ii)(A) (emphases added).
`
`29.
`
`The QPA Presumption deviates from the statute. The No Surprises Act provides
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`that the IDR entity, conducting an air ambulance IDR, “shall . . . tak[e] into account” a list of nine
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`“considerations” specified in the statute. 42 U.S.C. § 300gg-112(b)(5)(A). Only one of those
`
`
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`11
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`

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`considerations is the QPA. The plain text of the statute does not give the QPA any greater weight
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`than the other eight factors that the IDR entity “shall take into account.”
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`30.
`
`The Departments lacked any statutory authority to impose the QPA Presumption.
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`Congress instructed the Departments to “establish by regulation one independent dispute
`
`resolution process under which . . . a certified IDR entity . . . determines . . . in accordance with
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`the succeeding provisions of this subsection . . . the amount of payment.” Id. (b)(2)(A) (emphasis
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`added). Those “succeeding provisions of this subsection” included the other eight considerations
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`that the Congress required that the IDR entity “shall take into account.” Congress did not authorize
`
`the Departments to instruct the IDR entities to give presumptive weight to the QPA.
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`31.
`
`In their rulemaking, the Departments did not identify any gap or ambiguity in the
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`No Surprises Act’s description of how an IDR entity should select an appropriate out-of-network
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`rate.
`
`IV.
`
`The Departments’ QPA Presumption Was Issued Without Notice and Comment
`
`32.
`
`IFR Part II took effect immediately—i.e., on October 7, 2021—and is, in general,
`
`applicable with respect to plan, policy, or contract years beginning January 1, 2022.
`
`33.
`
`IFR Part II represented the end of the Departments’ collective decision-making
`
`process.
`
`34.
`
`Although the Departments placed language in IFR Part II, indicating that they invite
`
`comments on certain aspects of the published regulations, that language does not create a formal
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`legal obligation on the Departments to review and consider such comments, much less to revise
`
`the rules based on any comments received.
`
`35.
`
`The Administrative Procedure Act (APA) required the Departments to provide
`
`public notice of the proposed regulations and an opportunity for comment, unless the Departments
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`“for good cause” found that notice and comment “are impracticable, unnecessary, or contrary to
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`
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`12
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`

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`the public interest.” 5 U.S.C. § 553(b)(B). The Departments would then have been required to
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`provide a meaningful response to substantive comments received.
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`36.
`
`The No Surprises Act does not contain any express permission for the Departments
`
`to depart from the APA’s notice-and-comment requirement.
`
`37.
`
`The Departments could have complied with the APA and provided the public with
`
`notice and an opportunity to comment on IFR Part II.
`
`38.
`
`“[I]f the Departments had provided notice and comment,” then LifeNet and other
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`affected air ambulance providers “could have submitted the specific reasons and authorities for
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`why they believed the Rule is inconsistent with the Act, how the Rule would impact them as
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`providers, and how the Rule could be drafted to track the statutory text more closely.” TMA, 2022
`
`WL 542879, at *13.
`
`39.
`
`The Department’s excuses for not allowing notice and comment on the IFR Part II
`
`regulations do not suffice to show “good cause.” See id. at *12 (“the Court finds that the
`
`Departments lacked good cause to bypass notice and comment”).
`
`V.
`
`Defendants Continue to Apply the QPA Presumption to Air Ambulance IDRs,
`Despite this Court’s Opinion and Order in TMA
`
`40.
`
`This Court’s TMA Decision struck down all five aspects of the QPA Presumption
`
`that are found in Section 149.510.
`
`41.
`
`None of the TMA plaintiffs specifically requested that the Court strike down the
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`one sentence in Section 149.520 that refers to the QPA Presumption. That sentence reads: “This
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`[additional] information must also clearly demonstrate that the qualifying payment amount is
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`materially different from the appropriate out-of-network rate.” 45 C.F.R. § 149.520(b)(2).
`
`42.
`
`However, the TMA decision did strike down a sentence in Section 149.510 that is
`
`identical to this sentence in Section 149.520. The two sentences are shown in the chart below:
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`
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`13
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`

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`Case 6:22-cv-00162 Document 1 Filed 04/27/22 Page 14 of 19 PageID #: 14
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`(bold
`
`45 C.F.R. § 149.510(c)(4)(iii)(C)
`language vacated by TMA)
`Additional information submitted by a party,
`provided the information is credible and
`relates to the circumstances described in
`paragraphs (c)(4)(iii)(C)(1) through (5) of this
`section, with respect to a qualified IDR item
`or service of a nonparticipating provider,
`facility, group health plan, or health insurance
`issuer of group or individual health insurance
`coverage that is the subject of a payment
`determination. This information must also
`clearly demonstrate that the qualifying
`payment amount is materially different
`from the appropriate out-of-network rate.
`
`
`45 C.F.R. § 149.520(b)(2) (not expressly
`vacated by TMA)
`Additional information. Additional
`information submitted by a party, provided
`the information is credible, relates to the
`circumstances described in paragraphs
`(b)(2)(i) through (vi) of this section, with
`respect to a qualified IDR service of a
`nonparticipating provider of air ambulance
`services or health insurance issuer of group or
`individual health insurance coverage that is
`the subject of a payment determination. This
`information must also clearly demonstrate
`that the qualifying payment amount is
`materially different from the appropriate
`out-of-network rate.
`
`43.
`
`On April 12, 2022, Defendants issued updated “guidance” to IDR entities. That
`
`guidance instructs IDR entities to continue to apply the QPA Presumption to air ambulance IDRs:
`
`Federal Independent Dispute Resolution (IDR) Process Guidance for Certified IDR Entities, at
`
`22 (Apr. 12, 2022), available at https://www.cms.gov/sites/default/files/2022-04/Revised-IDR-
`
`Process-Guidance-Certified-IDREs.pdf.
`
`44.
`
`Applying the QPA Presumption only to air ambulance IDRs is arbitrary, irrational,
`
`and deviates from the statute. The statutory text indicates that the QPA should be used in the same
`
`way in air ambulance IDRs as in all other IDRs, i.e., as one factor among many to be considered.
`
`
`
`14
`
`

`

`Case 6:22-cv-00162 Document 1 Filed 04/27/22 Page 15 of 19 PageID #: 15
`
`The relevant statutory text, regarding the consideration to be given to the QPA by the IDR entity,
`
`is identical for all IDRs:
`
`42 U.S.C. § 300gg-111(c)(5)(C) (IDRs for all
`other
`items and services, besides air
`ambulances)
`(C) Considerations in determination
`(i) In general
`In determining which offer is the payment to
`be applied pursuant to this paragraph, the
`certified IDR entity, with respect to the
`determination for a qualified IDR item or
`service shall consider--
`(I) the qualifying payment amounts (as defined
`in subsection (a)(3)(E)) for the applicable year
`for items or services that are comparable to the
`qualified IDR item or service and that are
`furnished in the same geographic region (as
`defined by the Secretary for purposes of such
`subsection) as such qualified IDR item or
`service; and … [additional circumstances].
`
`42 U.S.C. § 300gg-112(b)(5)(C)
`ambulance IDRs)
`
`(air
`
`(C) Considerations in determination
`(i) In general
`In determining which offer is the payment to
`be applied pursuant to this paragraph, the
`certified IDR entity, with respect to the
`determination
`for a qualified
`IDR air
`ambulance service shall consider--
`(I) the qualifying payment amounts (as defined
`in section 300gg-111(a)(3)(E) of this title) for
`the applicable year for items or services that
`are comparable to the qualified IDR air
`ambulance service and that are furnished in the
`same geographic region (as defined by the
`Secretary for purposes of such subsection) as
`such qualified IDR air ambulance service; and
`… [additional circumstances].
`
`
`
`VI.
`
`The QPA Presumption Is Harming and Will Continue to Harm LifeNet
`
`45.
`
`By “put[ting] a thumb on the scale in favor of the QPA,” the QPA Presumption
`
`causes a procedural injury to LifeNet. TMA, 2022 WL 542879, at *4. The QPA Presumption
`
`deprives LifeNet of “the arbitration process established by the Act,” a “procedural right” that is
`
`designed to “protect [LifeNet’s] concrete interests” in receiving compensation for its services. Id.
`
`46.
`
`The QPA Presumption also causes economic injury to LifeNet. In calendar year
`
`2021, LifeNet conducted many emergency flights transporting patients who were insured by a
`
`commercial (i.e., non-Medicare, non-Medicaid) health plan or health insurer, for which LifeNet
`
`was an “out-of-network” provider. LifeNet expects it will conduct many such flights in 2022, as
`
`well. LifeNet’s right to compensation from the plan or insurer, for many of those 2022 emergency
`
`flights, will be governed by the No Surprises Act and by the QPA Presumption challenged in this
`
`
`
`15
`
`

`

`Case 6:22-cv-00162 Document 1 Filed 04/27/22 Page 16 of 19 PageID #: 16
`
`action. LifeNet reasonably expects that some and perhaps all of these services will soon be the
`
`subject of IDR proceedings. The application of the QPA Presumption in these IDR proceedings
`
`will “systematically reduce out-of-network reimbursement compared to an IDR process without
`
`such a presumption,” TMA, 2022 WL 542879 at *5, which will cause LifeNet significant economic
`
`injury over the long term because the QPA Presumption will “drive out-of-network reimbursement
`
`rates to the QPA as a de facto benchmark.” Id.
`
`CLAIMS FOR RELIEF
`
`I.
`
`COUNT I: The QPA Presumption Contained in 45 C.F.R. § 149.510 and § 149.520
`Should Be Set Aside, Under the APA, Because It Is Arbitrary, Capricious, and
`Contrary to the Statute
`
`(5 U.S.C. § 706)
`
`47.
`
`Plaintiff incorporates and re-alleges all of the foregoing paragraphs. Plaintiff also
`
`incorporates all of this Court’s findings and holding in the TMA decision.
`
`48.
`
`The regulations that govern the IDR Process—45 C.F.R. §§ 149.510 and 149.520—
`
`are final agency action subject to review under the APA. 5 U.S.C. § 704. These regulations were
`
`published as an Interim Final Rule. That publication marks the consummation of the Departments’
`
`collective decision-making, establishes the rights and obligations of air ambulance providers,
`
`group health plans, and issuers, and is a regulation from which legal consequences will flow.
`
`49.
`
`Under Section 706 of the APA, a district court shall “hold unlawful and set aside
`
`agency action . . . found to be” either “arbitrary, capricious, an abuse of discretion, or otherwise
`
`not in accordance with law” or “in excess of statutory jurisdiction, authority, or limitations, or
`
`short of statutory right.” 5 U.S.C. § 706(2)(A), (C).
`
`50.
`
`The QPA Presumption is contained in the six provisions listed above in paragraph
`
`27.
`
`
`
`16
`
`

`

`Case 6:22-cv-00162 Document 1 Filed 04/27/22 Page 17 of 19 PageID #: 17
`
`51.
`
`The QPA Presumption is “in excess of statutory jurisdiction, authority, or
`
`limitations,” 5 U.S.C. § 706, because it deviates from Congress’s clear direction that the QPA is
`
`just one of nine factors that the IDR entity “shall consider” when “determining which offer is the
`
`payment to be applied.” 42 U.S.C. § 300gg-112(b)(5)(C)(i).
`
`52.
`
`By tying the IDR entity’s hands in this way, the QPA Presumption abrogates the
`
`discretion that Congress deliberately granted to the IDR entity (and not to the Departments).
`
`Congress provided that the IDR entity—not the Departments—would have the power to
`
`“determine[] . . . in accordance with the succeeding provisions of this subsection, the amount of
`
`payment . . . for such services.” 42 U.S.C. § 300gg-112(b)(2)(A). By selecting in advance one
`
`factor (the QPA) that “must” be given presumptive effect, and by requiring a heightened
`
`explanation whenever the IDR entity deviates from the QPA presumption, the regulations usurp
`
`the discretion that Congress granted to the IDR entity.
`
`53.
`
`For these reasons, LifeNet respectfully requests that this Court (i) set aside and
`
`vacate the QPA Presumption, (ii) issue a declaratory judgment instructing IDR entities not to
`
`follow the QPA Presumption in any IDR Proceedings, and (iii) issue a declaratory judgment that
`
`IDR decisions, in which the IDR entity applied the QPA Presumption when determining which
`
`offer to select, are void and without effect and must be re-opened and started anew.
`
`II.
`
`COUNT II: The QPA Presumption Should Be Set Aside Because the Agencies
`Failed to Follow Notice-and-Comment Procedures
`
`(5 U.S.C. §§ 553, 706)
`
`54.
`
`Plaintiff incorporates and re-alleges all of the foregoing paragraphs. Plaintiff also
`
`incorporates all