in order to and obtain an industry wide benchmark of private market rates congress directed the secretary to collect data from a political laboratory and define specifically which laboratories would be required to analyze and then report the dat instead of complying with that directive the secretary rewrote the statutory definition to exclude hospital laboratory which are a large segment of the market from the statutory requirements and we are asking the court to correct that statutory violation what i'd like to do this morning  proceed in three steps first i think it might be helpful for the court if i briefly explain the relevant statutory provisions and why there's a statutory violation second address the issue of the jurisdictional bar and explain why it doesn't apply here and third explain why even if the jurisdiction bar did apply this falls within the exception for ultra vires action your honour's of the senate like to start by talking about the statutory requirements there's a lot of complexity but they can be simplified quite easily congress directed the agency to undertake  the first act was to go out and collect from a political laboratories get the laboratories to analyze collect compile and then report private market data and then that that's kind of the rug business is what is a political laboratory i mean your honor that that is that's exactly correct because on the merits and when you say it's clear from the statute that moved yes your honor i think that it is at least it's clear that it doesn't mean what the secretary said which is that congress provided a specific definition of laboratories you can see that in section eighty two of the statute it defines a political loud tori's to mean any laboratory that gets a majority of its medicare revenues from two specifically schedules the reason why that definition important because the laboratories that do not get a majority or also get revenue from other fee schedules are hospital laboratories so congress is trying to come up with a definition that would capture a broad array of market participants including the hospital laboratories what the secretary has now done in a redefinition and in fact you know if it defines it as a political lab as its definition of a political laboratory instead of focusing on the laboratory and its revenues what it does is it says that unplayable laboratory is that any entity that has a specific building number known as an n p r i and that specific billing number will in caps away not just the laboratory itself but any entity that's affiliated with it in the case of hospital laboratories or what that does is it sweeps in all the medicare revenues from the hospital as a whole so the hospital is doing surgeries it is doing radiology it's doing oncology all of those revenues are slept in and so instead of looking at the end of the news of the laboratory itself look at the outreach services provided by a hospital based laboratory as if that were a standalone laboratory in the community is that in your view the correct understanding of the stack you or would me answer the first part of that question and i may not quite get the last part of it but but in terms of we haven't got to the point where they back actually implemented the new rule and i want to be careful because i represented association as members with lots of different interests not to go too far back but the thing about the new fourteen x approach is that that would be an approach that in our view is designed to get at the statutory requirement which is to look at the revenues of the lab itself so in that way we think that it would address our concern here your honor but i guess my point and why maybe last year in the last part of the question is that what we think congress was intended to do in fact the agency recognizes this in their final rule is that they wanted to take a look at these laboratories that didn't just provide services to a hospital hospital patients but was actually competing with the independent laboratories that position laboratories in the marketplace by providing outreach services and our point has always been that there are a number of different types of metrics metrics that we propose in our comments metrics that the adopted in the new rule a classic sacha torrie access to his diction violation the reason why that's significant is because i think if you were to agree with us that the final rule is invalid then all you would do is write that down but the consequences of that i think would get to a point that i'm sure the government will focus on which will is that will render the raise that they put in place to alter the aris and they would allow any party that has complained about a payment so far to preserve their ability to seek form some form of redress and require the secretary to basically have apply the data collection requirements that congress required and have that reflected in the ultimate read rates that are going forward just just to follow up on not rates that have already been paid if you are contesting how many i guess my question is are the only options that pre pama rates or the rates that the secretary has put in place and the challenge regulation or is there some other options so your honor because this is an an ability to challenge it this happens all the time and then except in circumstances where there's tricky issues about budget neutrality which don't apply here the agency is allowed to go back through that administrative process and make changes so there would be lots of options if the court were to agree with us and strike down the rule for the agency to address this rule violation it would have to do something through that administrative process in terms of either putting and collect the correct data and put it in put the new schedule in place and apply it to the challenges that have already you why isn't the data collection that we're arguing over here part of the establishment of payment amounts either under the florida health and mercy hospital line of cases such that inexplicably intertwined we're just on the meaning of the word establishing itself so your honor thank you so that takes us to the jurisdictional bar and i think where this case is quite distinct from of those cases that we have sort of three lines of arguments first is that the tax here that not only shows that it's that the statute  that amounts here without coming up with the data collection so you're on to the salvation and has potentially two definitions in this area one is the act of establishing the pain in the mouse which we argue under the staff statute as a separate act than the act of promulgating the final rule the second interpretation wrong which is you're suggesting that the government suggested that establishing could mean any step in the process that leads to the ultimate rate are what have the dictionary definition to make or form to bring about or into existence you can't bring about the the the the payments you're talking about here without the data collection system so your honor with respect that's not quite right the very least it's inexplicably in or twine it is not your honor and let me explain why that's mouse it is taking a step that might ultimately lead to that but there's no way in which you would say that that is actually an establishment of payment it's the only point holding these clickable labs the only reason they're this is not just asking for sort of discovery this in as we set forth in the declarations that are attached to the complaint this required the individual laboratories to take data rican pile a lot of it was in different systems take some of that off of the was reading cases to prepare prepare for the presentation of argument but in the cases for oral argument that i was engaged in oral argument that section that you just quoted that the government relies on proves why we are right congress set forth two distinct acts the first  final rule itself was not an establishment of pain or out in congress treated differently in one thing i know i'm out of time but hardin close but let me say this if you take a look at subsections eighty nine ten and eleven that talks about civil monitoring penalt confidentiality of information and regulates under the government's reading assume as you post imposed a monetary penalty that would be part of the stablish ing a pain in the mouth because it was under the same section of the same heading and it was under connected with the ultimate goal of establishing pain in the house and the other thing you want to make be raised in a penalty is the penalty proceedings get get reviews or just the city provision and so if you had a client who just said i'm not going to do this because it's not fair there's no one's argue that this is a channelling provision and i think you know if it helps to that is to just take a look at the next section does much channeling in this context was actually a penalty channelings normally just a different procedure true your honor is if you take a look at the next provision which is that the directive that talks about protecting confidential information if the secretary to morrow were to say that he intended to disclose all this confidential information we would argue that there is a judicial review there that would not be channelled through a penalty for vision it would just be old it would be contrary to what the statute requires one of the things that's really how these penalties were it says up to ten thousand per day for each failure to report we have mean that each  charge was an individual emptor i mean i'm trying to figure out how to pony up these penalties are which might be a factor as well we don't know your honor exactly because we complied but our understanding is that it could be up to them one of the declarations makes this point only seeking to count out lab outreach services as if there was an outreach live at the hospital and and we're looking lab even though it's one unit and and to look only at the  ratio of medicare payments to the specified america payments in the average lab but that's not your understanding i think that's what we think that's what we think should happen and what the agent with the as i understand the agency the secretary said look it is too difficult for us to disaggregate these things so we're just going to example hospital last on the assumption that it is not valid but i'm thinking i'm trying to understand what you think the statute recalls for and whether it would call for just putting and whether you think that's what they're doing or not we think they should they need to compare they need to take a look at that the revenues from the lab the hospital out that are attributable to outreach services that are paid on these two schedules and compare it to the total revenues that the lab would receive that requires some form of accounting mechanism because the payments of the hospital receives including the lab services are all bundled together so you have to account and disaggregate our point is that that isn't a throw up your hands it's too difficult there are a number of ways that you and i think that what's important about that is both the textual argument that seems that was not made and then also understanding the footnote nine which is essential to that decision so one of the things that we're focusing on here is you know i think my three points one is distinction that this is not just an amount determination but it's much broader than that so they interpret the statutory provisions relating to the process of awarding a contract and those other provisions that are different from the establishment of payment amounts as somehow being broader and then when you look at the court's decision it really doesn't engage in a textual analysis to suggest that congress had created textual signals here the different acts the different language the fact that there's actually concrete standards to apply and instead the court says look this all falls within the scope of that broad language particularly because not just an amount determination it's much more than that in your honor but once we get past that i think you're absolutely right that the other cases show in every one of these cases text is so important in all of these cases there is either no textual argument or the textual argument is so weak that the court dispenses with very quickly so for example mercy hospitals they try to argue that the alternative rates are not within the statutory definition the current puts out that the words are right there and there's no argument other than trying to make general principles what we've got here though is a clear indication that congress actually in the statute distinguish between these two different things and the arguments that the government raises about under the statute or the heading your honor you ask the question just shows that there's two x none of those are the types of clear and convincing evidence that this court has required so in the tax we have to prevail and then what we would say is all those cases can also be distinguished by the fact that you would expect congress to anticipate judicial review here for two reasons one there's a concrete standard that has been applied so as an mot minding the supreme court said we don't just throw up your hands we can actually hold you to the directive in comics that congress would  judicial review and second it's a regulation of primary conduct where we expect agencies aren't acting exercising what we think of as legislative power there to define what the rules for should be no not something like under the a p a an internal procedure or what the constitutional argument is due process you call it separation of powers you can just explain to me what it what it is yes your honor so it's a constitutional argument in the sense of interpretive away from constitutional doubt but we think that when an agency is asked to exercise legislative rule making powers in this case required to go through the notice and comment process and probably gave it a rule where it's filling in the gaps that direct parties in coerce them to do something they otherwise wouldn't do it is regulating primary conduct and those are the situations where private rights are at stake and where the separation powers in the delegation concerns are at their greatest i'm not suggesting to you that congress in those residency cases i wasn't clear i mean  serious constitutional doubt and that would normally require some education president cases that would show that it's constitutionally troublesome to go through notice and comment and yet not have that the subject you usually view and i just still is to say well that's all one thing congress intended that to be precluded what we have here is something different we have congress taking new stored in the act of directing the agency to go out and take very private confidential information that otherwise would not be collected analyzed in this way and requiring laboratories any laboratory that has a majority of its revenues on these schedules medicare revenues on the schedules to start recording this data that is a type of think youngers passed a law that said that what constitutional provision requiring that there review nothing your honor what i would say though is that congress it just goes to the point of speaking clearly that in light of this court in florida health and other cases as we need to look at the nature of the decision of the action that is taking place and then look at the nature of the bar all i'm suggesting your honor is that it's not surprising that congress treated these a separate acts required one with notice and comment rule making and didn't expect the one to be free from judicial review because it recognized the need sure of the act that the agency was doing data collection are also precluded instead it was very clear that in the first case we're going to have all these extra procedures we're going to have protected confidential information we're going to require a separate act and we're going to require moves in common rule making we're not just making an option we're going to require your i do think there's a difference in the sense of this is in florida health it's all about the choice of the data which is something that the agency does entirely with its discretion we're not really challenging the choice of data what we're challenging is the final rule that redefines the definition of a political laboratory congress did not do intend to eliminate judicial review of the iranian data we would say in that circumstance no that's for the help the a range of data is caught up with the establishment but that's very different from the separate act that requires a lot more process to occur before you get to the point that the what data to collect and then he points in that all data point that use the browser protect the data sorry try to protect the confidentiality of the doubt and that's part of the process to correct that is a statutory requirement that that and challenge be covered by the jurisdictions driven provision addition here certainly if there's an instance where the secretary does it all over the statute i know i read so let me keep the question the one that i asked they've hired someone who seems quite an unreasonable choice of a contractor to be in charge of protecting the confidentiality this information and so someone says a lab that is covered by a political lab here but understandably doesn't want to turn over its information can they sue and say their collection process you a hypothetical that involves an arguably reasonable decision by the secretary is part of the data collection process and in that sort of argument i'm sure if what they were trying to challenge was that they said secretary's definition is too narrow so in in the case that we have here if a complaint was that we're going to be assessed fines under the secretary's definition but not under the statute that that certainly would go through the fire process for everyone to claim that could never throwing penalties against any laboratory so far but here to get to your hypothetical even assuming there's issues in the penalty proceeding even assuming in the penalty proceeding there'd be some serious concerns about you know what the of judicial review work we think that a very different type of remedy that they'd be getting and that type of case in that type of case to be getting yourself you most likely be getting the bigger the penalty right so you wouldn't it would have to be whatever the ham up process was for and you know some middle ground there there is no middle ground which i think only highlights why congress thought that the judicial review for question was so important that they got rid of  know you're asking us to adopt an interpretation of statutory tax that gets you into the jurisdiction stripping provision that's our job to be careful when we do that we have presumptions against you and so we have to think carefully about what instruction arguments mean and i'm trying to find you're now trying to claim some wiggle room there let's put confidentiality aside and not decided today you seem to be suggesting we have to decide that mercy hospital mercy hospital this court said that realistically when a court cannot review wine agency action without reviewing the other agency action then that is instance where you know this collection process you might imagine an instance where congress imagines a whole new system pushing congress to point out and we still don't keep the piano data private it wouldn't have anything to do with the payment rates at that point because at that point there's a whole new same parts of the process here are not in data collection process or not in a strictly intertwined with rates there is that there's some part i mean it sounds like you're saying something certainly your position is some parts are you would say what they want to about the relief think about the claims that the plaintiff here is bringing and if you go to page thirty eight and thirty nine of the joint appendix which are their claims and their requests for rel virtually all the labs are going to have to shut down there's no way they could do it within that one week period without shutting down their business and putting all hands on deck for data collection and we think that it's definitely under each one we think that know and it's not as uncommon everyone's told the secretary don't do a five day time period we will there's no way we can supply unless we shut down our businesses and the secretary says five days it is perhaps there's a little bit if we just said no we're not going to go through notice and comment you know perhaps somebody could raise it whenever there is a very very that we simply do not do so i'll understand that whatever the secretary does it's not going to be general i mean this court has said you need to find a patent violation of the statute and i realize i'm going over my time and so i'm happy to answer this and that is something that we certainly do not have here is i think if you those types of instances we think that this is essentially just a repackaged type of garden variety arbitrary and capricious type of claim but you know the sort of the purely hypothetical when is it you know agency action simply contrary to statute all labs that are medicare participants please provide us your market based services i really don't know why congress didn't do that it certainly didn't do that here we know from the few textual cues that congress was it tempting to approximate market based rates it wasn't attempting to get exact market based rates for example these rates only update every three years so at the total medicare revenues just because you know that only goes to show that the secretary was in acting sorts of was kind of clarifying those sorts of provisions in doing what he was that somehow hypothetically some point got to the point that said your definition was wrong you don't dispute that there's any statutory bargain with them being applied i guess kind of provide a reimbursement a book review board or i'm not sure what the process would be for barrier to providing new that they currently i think we said that the only remaining basis for standing which we think is their only basis for standing is that the payment rates are incorrect back because they want to pay rates changed and this is a provision wouldn't change wouldn't it that's what i'm trying to be clear about are certain number of years that are payments of already been made under the rates that they don't like and you don't have any you agree that if hypothetically you don't think it should happen the court were to hold that the payment rate was wrong because the you know what i'd like to do is three points first judgment i just highlight your question about the confidential data second judge who are in judge millette address your point about the remedy here because i didn't mean to make it as complicated it might seem and third address the ultra derrius point very quickly so they have no answer to the confidential data point and i'd urge your court to look at the mark mining case because what's key about these cases is that the court looks not just at the scope of the jurisdictional bar but also as to whether there is any concrete standard that the court can apply what is going on in florida health cases the only standard is whether it's an appropriate estimate and the court has to throw up its hands and say well can this be separated out in this case in subsection a in all of these provisions we have concrete standards that can be applied to congress under mark minding the supreme court would say intended the judiciary would force which is very different than the secondary conduct of trying to establish payment amounts which has to do with the ring data those two things are separate in the statute you can separate them and then judge there is a reasonably successful interpretation it therefore has to be in our favor on the remedy question your honor let me put this it this way if the agency had said in response to congress's directives we don't care that congress wants market data we are going to collect data however we want but then what we're going to do is we are going to just go ahead and throw out twenty percent of the best data there the highest payment rates so that we can ensure that when the data gets pushed into the establishment of pa we will have only collected data that will ensure that it suppressed you would say at that point that it was altered varies and what you would do is you would strike it down and you would let the agency use the administrative processes for fixing it all we're asking for from a remedy from this court is  that the final rule is on lawful and a vacated we think that the result of that is that the rates are altered varies and then the agency can fix that through the administrative process it uses all the time which is why the judge millette that argument was not raised in the briefs if it had been they would have raised if they didn't it was the dog that never barked and then lastly on the altar of your is question all i would say your honour's were not trying to argue that anything on the awful comes within the scope of what we're saying is that city of arlington in the s a s case urge you to look at both of those get rid of the idea that there revenues to those two feet schedules the only reason it did that is because it knew that hospital labs also had revenues from other medicare schedule that's the reason why it was defined that way the fact that the secretary comes along to exclude hospital labs is a complete  ordering of the whole point of the statute i'm sure your clients who are involved in the legislative process do you have any idea why they didn't just say laboratory that gets reimbursement from medicare give us your market based schedule because there are some hospital laboratories out there that do not provide free services what they are doing is largely due our services we don't want your prices we only want your outreach services which is why that every lab gets swept and as long as the majority of its medicare revenue so even if it does mostly private services but occasionally doesn't medicare services it has to report the data because they want to know for those labs that have a majority of the medicare revenues from these two particular schedule so what they're looking at just to learn you put your finger right on it is they want to get all of the independent labs all the physician labs all the specialty labs and all the hospital outreach labs to the extent the hospital every time they're doing out metric is that they use for hospital and outpatient but your it's just a training mechanism for the hospital and the point is we know they can do it because in the new two thousand and eighteen rule they've done it we know that we've submitted commonsense they can do it and the agency just threw up its hands and said we're going to of fourteen x that refers to fourteen x i don't know it's just that back in the beginning in the beginning we proposed a bunch of things fourteen x with one of those i'm not sure that's entirely the same variant that we're seeing now but the concept was something that we proposed to them and you can imagine would not be difficult for the secretary to just say i can't figure out any way you want and then let me just finish with this point this is an extraordinary violation of statute we have hospital labs that are twenty five percent of this the market for these schedules only less than one percent report we have seven thousand hospital labs that provide outreach services at least thirty five hundred of those which are signal cannot reach service is only twenty one reported and that twenty one is both over and under inclusive because only depended on whether have a billing number had nothing to do with the amount of their actual revenues and we even have in certain states a big complaint was in the record about utah because there is one hospital that provides sixty percent of the services there and it didn't have to report this is completely undercutting what congress intended this is