please the court my name is sam or bitch with me as lucene happy we're from fredrickson environ and we represent appellant key medical supply incorporated a specialty provider of durable medical equipment for  supplies known in the trade as demi post he medicals clientele are largely over eighty percent of its clientele are largely persons with developmental and other disabilities the question presented is did the district court err when it granted the united states motion to dismiss for lack of subject matter jurisdiction without first considering all of key medicals federal and constitutional claims he medical file to verify complaint to enjoin the medicare competitive bidding program key medical alleged that c m s blocked key medical and other bettors from submitting bona fide bits and extended the medicare competitive bidding program into demi post that would be covered by other secondary payers including the medicaid program that resulted in an economic harm to key medical and to an access harm and a denial of access to persons with developmental disabilities who use higher cost demi pose for their entire life because of their chronic conditions the verified complaint not only alleges that c m s committed a plain violation of statu it also alleges that they violated the administrative or the administrative procedure act the due process equal protection and taking clauses of the united states constitution and the relief that we request is the reverse the district court's dismissal and remain a matter for a determination on the merits when c m s first saw our verify complaint their statement was clear their council said to judge frankel if it is not possible for a plaintiff or anyone else to submit a bona fide bed they will not be held to that bit if the only bid they can submit is a tainted one or an invalid one and the reason for that taint is it attributable entirely to the secretary's faulty designed competitive  not work and they also said we don't need a law suit to shut this aspect of the program down with or without a lawsuit we would have no interest in upsetting patient care like that now the problem here  the disabled community served by key medical must be able to rely on vendors who are able to coordinate their medicare demi posts benefits with the demi pose accessible from other secondary players like medicaid like private insurers like the medical assistance waiver program slider stand medicaid is the main issue here could minnesota change its medicaid plan to do away with this problem could minnesota and that directive indicates that medicaid cannot in because of competitive bidding cannot take over the responsibility of paying something for that medicare would pay and  non winner provided the medicaid benefit they even gave them a code am one fifteen that was to be used by the state agencies so c m s is telling the state agencies you can't work around  now lower court relied heavily on a district court circuit court decision of the d c circuit named texas home care and while this case is distinguishable to from texas home care the problem that i have with texas on karen and ask you not to follow that case and depart from it is the constitution does not authorize congress to empower a federal agency to dole out benefits or eliminate part of regulated parties business arbitrarily and capriciously and then of a judicial review when it does so congress can't legislate around amendment and this is certain other way when c m s decided that it was not going to strictly abide by congress is enabling legislation it doesn't earn the seven jurisdictional shields of that  not hide elephants in mouse holes and if there was ever an elephant it would be tacking medicaid onto a medicare competitive betting program but i think that when  s criticizes our complaint because it describes so much detail and describes what's wrong with the pricing of what's wrong with the contracts and says therefore it falls  within the jurisdictional shields what's fundamentally wrong with c m s its position is that i'll use a heartland analogy when can you drop a two ton boulder into a lake and not have ripples  waves when they decided not to follow the enabling legislation of course those things are going to be broken and that's going to ripple down and importantly if we could cut through all the weeds congress did not delegate m s the definition of what constituted a bid for medicare competitive bidding they don't get a lot of things they delegate admitting structure but they did not delegate a bid congress said it's a short but clear definition bid defined in this section the term bid means an offer to furnish an item or service for a particular price and time period that includes where appropriate any services that are attendant to the furnishing of the item or service and then c m s passed a regulation that said a bit had to be bona fide and there were three tiers to being a bona fide bit cost of acquisition so what it the medical to buy the product a reasonable overhead and a reasonable profit who complain about a system that allows you to bid that except the major flaw here is that c m s didn't use that definition as a bed for a bed when it in acted it's a program that allows people to submit bids c m s changed it what c m s relied on was the old medicare fee schedule and told no it's not payment of a thousand me like they're paid congress invision a system whereby they would take beds from competitors and that's the bit i'm talking about c m s what analyze then congress had a statute a cost comparison statute if the total amount paid to contractors under those beds and under that system yielded payment amounts that would be less than what the free market under the old system would have allowed then they could award contracts so the bids i'm talking about are not the thing that comes out of the end of the mathematical equation but what goes in first by the competitor they were rejected as the second or the first declaration of sarah anderson establishes they were rejected with a warning that they were above the medicare fee schedule congress did not say t competitors your bid shall be the medicare fee schedule or less congress didn't delegate that to have your nose rahm's ahead of this they had demonstration programs and you know the proper term and i don't but you know what i'm  and they had those kind of programs did they use that kind of structure and those programs are not no not at all not in the original ones and you can see all that didn't sound like them going it well if you look at appendix t eighteen you will see where they admit that in the demonstration programs the earlier ones some of the beds resulted in new payment amounts higher than the fee schedule a lot were lower that tells you right there but they could not have been using the medicare cap now they did use the medicare cap on the first round of betting  demi post items when it cost my client one hundred twelve dollars to buy one item that they are willing in the single payment amount to pay less than thirty bucks for that's a big issue now had they followed congress's directive and allowed bettors to cement whatever those three things add up to they would have gotten higher results in the competitive bidding the other part of our claim is that they added medicaid to the medicare competitive bidding winning bidders not only took my clients medicare business in the competitive bidding areas they handed them my clients medicaid business for duly eligible clients if you look at congress's statute this program is limited to quote the furnishing of demi posts under this section medicare they expanded it to the furnishing of dummy post that medicare would have never covered because the only thing medicare would do is send a denial which would then trigger and open the door for the medicaid and other secondary payers no house built on a seriously flawed foundation can attain level floors square corners or plumb chandelier we respectfully request that this court reverse the district court and remain on this case for a determination on americans and i'll give you additional time to reach for a bottle i was struck in this case especially by judge franks deep feelings about this i've never it's been a long time since i've read people are not going to get the supplies they need because of administrative bureaucracy that the government has set up and he's concerned the because of the texas home care case he cannot evaluate arbitrary and capricious conduct  where i really believe that this court should depart from texas home care if congress passed a statute that said we are arbitrarily and capriciously going to take those people who for whose whose name venner name starts with a through k and give them all the medicaid business and nobody else and arbitron caprices statute that would fall under the fifth amendment congress can't empower it that's why the reading of this shields is wrong congress can empower the federal agency to do more than what congress itself to do thank you i'll give you an extra minute don't rebuttal because i did want your reaction to judge for x statement very good morning you may proceed in the morning thank you your honor and dimensional time behalf of the secretary when congress created the medicare competitive bidding program it understood that the program was expected to create massive savings not just for the government but also for beneficiaries who in most cases had to provide co pays for the items at the same time that congress recognizes the program of create massive savings it also recognized that any delay in the implementation of the program would reduce or potentially even eliminate some of those savings and that's why congress exacted an exceptionally clear bar on judicial review and in this case the district court properly recognized that the statutory claims that the plaintiff is bringing in this case fall within that bar i also want to clarify just because i think the court questions at the very end of the opponent's argument the court was worried about some of the access issues and i just want to be clear that we very much disagree with any it's important to understand that in the first round of competitive bidding you had a bunch of metro areas where the few schedule price was higher in every single case than the price that the suppliers bid on were willing to contract that and in fact agreed to provide services for as far as the record indicates there were no access problems in those metro areas and at the very least it was not arbitrary and capricious for the secretary in continuing its policy in round two to say ok the first time we did this people bid below that thirty five dollars rate and we haven't seen any indications the beneficiaries are having trouble getting access furthermore there are unfortunate mechanisms built into the system so if it did turn out that a supplier who had bid and from the program which i think no contractor would want so there are these areas you refer to those that have more robust medicaid programs some of them have all have more robust medicaid programs but not that's not constant that's that's correct in your honor i think we have explained in the district court it turns out that there are at least eleven states whose medicaid programs reimburse at or below the medicare rate so in at least eleven states the state medicaid agency also concluded that these tubes could reasonably be supplied at the medicare fee schedule rate those are states that have very weak medicaid programs right i wouldn't want to take a position on whether or not a last money right will we know that it money for one particular two whether or not that classifies them as weak i'm not quite in a position to say but regardless the important point here is that if the court were concerned about beneficiary access what the agency did here was or the secretary at least reasonably concluded that these products could be provided out or below the medicare fee schedule rate does it change the program to a mail order program i think that's a point where your adversary's my understanding is that there are certain supplies that can be obtained from mail order but at the same time there are there even in minnesota area after we implemented competitive bidding that there are still local suppliers and i think the amicus even conceded that that there were at least judicial review precludes constitutional claims we've simply said that the constitutional claim that the plaintiff has has raised in this case are so insubstantial that they don't even raise a federal question and so you could just dismiss for lack of jurisdiction for that reason and in any event the court would could if the court were comfortable doing that the court could just find on the merits that they felt a state a claim and that would be an alternate grounds reference so they put the put the constitutional claims to one side in addition although we could have done this we have not in this case advocated for the proposition that true alter a virus action in the sense that that court this court used that term in the nebraska state legislative board case is outside this would be barred by the judicial review now all know that in the texas elian's case you had among other things a claim of ultra vires action and the d c circuit concluded that that was barred by the statute and that may well be the correct outcome but there's no need for the court to even go that far in this case an offer to provide an item and services and just taken on its face it's hard to see how even if the plaintiffs theory is right in these items cost a whole bunch of money how that means that the secretary has done anything contrary to statute if for some reason a supplier were willing to provide this below cost if it's still willing to provide the item and services that would seem to be consistent with this as you know it is true that the secretary has issued a regulation saying that it requires bids to be bonafide but if the if the provider's allegations are correct that would it moshe a violation of the secretary's regulations it wouldn't show alter virus action but in any event the court doesn't even need to go that far because at the end of the day all that you have here is you have a fact based claim that's not the kind of  not a situation in which everybody would agree and it's clear from the face of the legal claims that the secretary is acting concert a statute and i would add that this was a situation i'm sorry i want to go back to sort of basic principles and maybe i missed i'm able to understand exactly how the system works if you're so pretty bit in there was a reimbursement rate of thirty five dollars and thirty nine cents right correct before competitive bidding and so if you had a medicare patient who had one of these tubes a cost key medical one hundred twelve hours i think they said that's their allegation how well soon that's correct how were they eating the difference and everyone every medicare patient or claim that these actually cost one hundred twelve dollars but regardless taking that on its face if we understand the medical allegations to be that they would sell the first tube to a medicare patient i don't last but then because the state medica agency here so much more and for many more additional tubes that buy in a sense roping in a client for the first two which they could provide at a loss they would then get to bill state medicaid for a whole bunch of additional t medicare wouldn't cover and then they would make up the difference not just point out that that business model wouldn't work in at least the eleven states where the medicaid rate is out or below the medicare rate and yet there's no indication of access problems in those  states some of which were around one competitive bidding states even if even taking out the eleven states where souter below i presume there are a number of states that even if it's above thirty five dollars a wouldn't be above one hundred twelve dollars we're not what they say they're out of pocket of before they even have any service or or profit you're on i don't think the record explains what the feel what the state medicaid agencies pay in states other than minnesota although the record says it is there are at least eleven states that are out or below the few schedule but i suspect that your honor is right that if you looked at it you would find a range where some of them are above the medicare rate but still well below one hundred twelve dollar figure that he medicals quote and then my second question is  i think there may be one of the primary arguments is that even even if this program was was not alter virus as to medicare you are roping in so to speak medicaid and that there's no authority under the statu program is validly interpreted as extending to dual beneficiaries so at the very least given that the district court agreed with us it's hard to say that the secretary's interpretation is so beyond the pale as to come within the definition of alter a vi action that this court talked about in the process the legislative work case but even putting that aside just straight up with medicare beneficiaries who are eligible for both medicare and medicaid or medicare beneficiaries and so th and in fact medicaid is the pair of last resort as this court has recognized and medicare is the one who is supposed to be paying first and foremost and the secretary reasonably determine that when congress directed her to extend competitive bidding to medicare beneficiaries that meant all medicare beneficiaries whether or not they were also individuals who benefit from medicaid and i want to clarify just because i think there's been a misunderstanding here about what the agency's policy is from the medicare program standpoint if the state medicaid agency wanted to implement a system where it said ok for additional to beyond the one that medicare denies if you want to go to a supplier like the medical who  isn't who didn't win a contract if you want to go to a supplier like you medical for your additional tubes the medicare program has no album with that there may be implementation issues it may be that you know because of how they can prove any you have to prove  place though i think what they're relying on is a document that they found on c m s his website through google searching i'll just add that we do not believe that that document accurately reflects c m s policy and we're in the process of taking it down but i think it's very telling that the link that they provide in their declaration is not even a link directly to the website it's a link to a google search and then you click on the search you can eventually get to the document so you don't have any context for what that document is or how even ended up on the website what it's part of but regardless the agency does not stand by that argument we don't think it reflects current policy but but even beyond that the most important thing here is you have a declaration in the record from the government and i can give the medicaid agency if they want to work out some sort of system where they allow their beneficiaries to go to key medical for the second and third two that's perfectly fine with us so so under your theory chimerical would be better off t out of the old system because they don't even have to part provide the first two but the last but they could provide the second third to the higher reimbursement right that assuming medicaid continues the higher reimbursed right now they may change their reimbursement rates but th at the end of the day i don't the court needs to get into any of this because you have an extraordinarily clear bar on judicial review a claim and go on a claim that the agency acted arbitrary and capricious lee under the administrative procedure act is exactly the classic kind of claim that is precluded by bars like this and the administrative procedure act it's something you can recognize it because that that averaging pre standard which comes from the administrative procedure act also is incorporated is is something that answer from congress was that it wanted to implement these things quickly and to ensure savings and i'll just add that it also included a whole bunch of other enforcement mechanisms and ways to police the program and congress clearly thought that those were sufficient here so this  not an off the cuff decision by congress and i don't mean to be flippant about it but it was thought through i take it exactly you know what they've done watch and say the congress has done to the courts in the immigration system they've made their wishes clear that they don't want  would you give mister orbit at least four minutes place thank you your honor first of all i'd like to point out the counsel only read to you half of the definition of what congress out of it was a b is not as council said an offer to furnish an item or service for a particular price in time that's what he told you you got to read the rest of the statute any services that are it if that includes any services that are  attendant to the furnishing of the item or service congress told bettors they would be allowed to bid amounts that would be in essence what c m s called bona fide enough for the acquisition  overhead that's the definition of a bid they did not implement that that judge frank endorsed the statutory argument of c m s i think that that's a gross overstatement given judge frank's highly unusual order here the court's review of the thirteen hundred plus page administrative record submitted by c m s showed c m s never bothered to consider at all what w happen after they implemented medicare competitive bidding to that segment of society the duly eligible individuals who use both medicare and medicaid to provide demi pose and he's right my client when they were a medicare competitor when they were able to provide medicare in the competitive bidding area they're still able to provide it elsewhere they took a substantial loss on their first for looking to the internet look at their declarations where they tried to put a good shine on a tennis shoe with respect to pricing of these tubes and their efforts to try to find things on the internet that that to me is incredible but the point of the matter is they may disavow a memo that actually went to state agencies they can't disavow their own code they in they put in am one fifteen a procedural code to prevent the exact kind of business the key medical would get if they had the ability to bill medicaid directly and the only person the only entity the only vendor that gets to bill medicaid in that secondary time is the vendor that gets the medicare denial and that's the contract winner that's not key medical and that's not the medicaid program that c m s they said that there's a substantial benefit to beneficiaries because there cope has reduced not medicals clientele he medicals clientele are duly eligible because of their disability they're not paying out of pocket for this it's a reasonable governmental step to provide demi posed for these individuals and is doing here is usurping the medicaid authority of the department of human services of the state of minnesota they're the ones that get to implement the pricing for demi post the the coverage for demi post so that every better lied when they there must be that everybody are lying when they submitted their bids that's exactly what i'm saying every better in every single circumstance had to put it for these tubes a price which was below the bonafied bit and then had to certify under penalty of the false claims act that they had indeed put bona fide bids in council puts the nebraska case front and center