Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-13-05003/USCOURTS-caDC-13-05003-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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United States Court of Appeals 

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 10, 2014 Decided March 7, 2014

No. 13-5003

ASSOCIATION OF AMERICAN PHYSICIANS AND SURGEONS AND 

ALLIANCE FOR NATURAL HEALTH USA,

APPELLANTS

v.

KATHLEEN SEBELIUS, SECRETARY OF HEALTH & HUMAN 

SERVICES,

IN HER OFFICIAL CAPACITY, ET AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 1:10-cv-00499)

Lawrence J. Joseph argued the cause and filed the briefs 

for appellants.

Dana L. Kaersvang, Attorney, U.S. Department of 

Justice, argued the cause for appellees. With her on the brief 

were Stuart F. Delery, Assistant Attorney General, Ronald C. 

Machen Jr., U.S. Attorney, and Mark B. Stern, Attorney. 

Alisa B. Klein, Attorney, U.S. Department of Justice, entered 

an appearance.

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Before: ROGERS, Circuit Judge, and WILLIAMS and

SENTELLE, Senior Circuit Judges.

Opinion for the Court filed by Senior Circuit Judge

WILLIAMS. 

WILLIAMS, Senior Circuit Judge: Plaintiff-appellants

Association of American Physicians & Surgeons, Inc. and 

Alliance for Natural Health USA sued the Secretary of Health 

and Human Services and the Commissioner of the Social 

Security Administration1 in district court, raising a wide 

variety of claims: (1) constitutional challenges to the Patient 

Protection and Affordable Care Act (“ACA”), (2) statutory 

(including Administrative Procedure Act) challenges to 

actions of HHS and the Commissioner relating to the 

implementation of ACA and prior Medicare legislation, and 

(3) a somewhat amorphous attack on the failure of the 

defendants to render an “accounting” that would (they argue) 

alert the American people to the insolvency towards which the 

Medicare and Social Security programs are heading. The 

district court dismissed the challenges variously for lack of 

jurisdiction or for failure to state a claim upon which relief 

can be granted. Association of American Physicians & 

Surgeons, Inc. v. Sebelius, 901 F. Supp. 2d 19 (D.D.C. 2012)

(“AAPS I”); see Fed. R. Civ. P. 12(b)(1), (6). Each of the 

challenges ultimately fails, for the reasons set forth below.

 1

 The Secretary of the Treasury is also named as a defendant, 

but appellants direct no arguments specifically to him.

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Constitutional Challenges

We take the constitutional claims first. If successful, they 

would radically alter the context for the statutory claims, 

while there is no chance that the statutory claims, if 

successful, would avoid the constitutional questions. 

Appellants attack 26 U.S.C. § 5000A, often spoken of 

informally as the ACA’s individual health insurance mandate, 

which was sustained as a valid exercise of the taxing power in 

National Federation of Independent Business v. Sebelius, 132 

S. Ct. 2566 (2012) (“NFIB”).2

 Id. at 2593-2600; Id. at 2609

(Ginsburg, J., joined by Breyer, Kagan, and Sotomayor, JJ., 

concurring) (agreeing that “the minimum coverage provision

is a proper exercise of Congress’ taxing power”). They argue 

that the tax violates both the Fifth Amendment’s prohibition 

of the taking of private property without just compensation 

and the origination clause, U.S. Const. art. I, § 7, cl. 1, which 

provides that “All Bills for raising Revenue shall originate in 

the House of Representatives; but the Senate may propose or 

concur with Amendments as on other Bills.” 

As to takings, the district court applied the Supreme 

Court’s opinion in Brushaber v. Union Pac. Railroad Co., 240 

 2

 Appellants mentioned the corresponding provision for 

employers in their opening brief but provided no rationale for 

treating it differently from the individual mandate. Appellants also 

mentioned an equal protection argument in their opening brief, but 

only in the standing section, not in the merits section. Later they 

appeared to advance arguments involving the equal protection 

clause and the employer provisions in letters filed under Fed. R. 

App. P. 28(j) (e.g., letters of July 15, 2013). Under these 

circumstances we have no occasion to address the claims involving 

the employer mandate or the equal protection clause.

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U.S. 1, 24-25 (1916), holding that an otherwise valid tax 

could run afoul of the takings clause only in a “case where,

although there was a seeming exercise of the taxing power, 

the act complained of was so arbitrary as to constrain to the 

conclusion that it was not the exertion of taxation, but a 

confiscation of property.” See AAPS I, 901 F. Supp. 2d at 38-

39. 

In an apparent effort to squeeze § 5000A into that narrow 

category, appellants argue that the tax (and the insurance 

program of which it is a part) asks “healthy private individuals 

to support unhealthy private individuals.” Appellants’ Br. 32. 

In support they cite the Court’s observation in Kelo v. City of 

New London, Conn., 545 U.S. 469 (2005), that “it has long 

been accepted that the sovereign may not take the property of 

A for the sole purpose of transferring it to another private 

party B, even though A is paid just compensation.” Id. at 477. 

But it is impossible to read that sentence in Kelo (even if we 

were to treat it as a holding, which it isn’t) as suggesting that 

any redistributive purpose sweeps an otherwise valid tax into 

the narrow group of measures condemned by Brushaber. 

Appellants make much of an assertion that their takings 

clause challenge is as-applied rather than facial. But other 

than saying so, they give us no reason why this should yield a 

more favorable outcome for the claim. We thus affirm the 

district court. 

In support of their origination clause claim, appellants 

argue that though the bill ultimately eventuating in the ACA 

originated in the House, it was not, as it left that chamber, a 

revenue bill; only amendments added in the Senate that made 

it such a bill. Appellants raised this argument for the first 

time only after an order by the district court, after the Court 

issued its decision in NFIB, inviting supplemental pleadings, 

well after appellants filed their opposition to the government’s

motion to dismiss. The district court dismissed the claim on 

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the principle that when a plaintiff files an opposition to a 

motion to dismiss, and addresses only some of the defendant’s 

arguments, the ones not addressed may be taken as conceded. 

AAPS I, 901 F. Supp. 2d at 37-38 (citing Iweala v. 

Operational Techs. Servs., Inc., 634 F. Supp. 2d 73, 80 

(D.D.C. 2009)). Appellants do not contest the general 

principle, but argue that because they raised the origination 

clause claim in supplemental briefing ordered by the district 

court, there was no waiver or forfeiture. 

Insofar as the government recognizes that the order for 

supplemental briefing renders this situation atypical, it focuses 

on the fact the order required both parties to file their 

supplemental briefs simultaneously. It’s hard to see how the 

mere fact of simultaneous filing helps the government. If it

felt that appellants had improperly raised new arguments, it 

was free to seek leave to object on that ground, to offer 

contrary arguments on the merits, or to move to amend its 

pleadings, Fed. R. Civ. P. 15. It did none of these. 

Regardless of the simultaneous filings, two 

considerations support the district court’s decision to treat the 

argument as conceded. First, the briefing in NFIB and the 

lower court decisions reviewed in NFIB, long before the 

decision issued, clearly raised the possibility that § 5000A 

would be sustained as a tax. See, e.g., NFIB, 132 S. Ct. at 

2593-2600 (opinion of Chief Justice Roberts) (addressing the 

government’s tax theory), 2650-55 (opinion of Justices Scalia, 

Kennedy, Thomas and Alito) (same). The government 

offered that theory as a defense in this very case, see Motion 

to Dismiss 5, 44-47, and appellants resisted the claim with 

roughly five pages of their opposition to that motion, see 

Opposition to Motion to Dismiss 41-46. Thus the decision in

NFIB did no more than render the tax theory more salient than 

it had been. 

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Second, the district court called for supplemental briefing 

only to address “whether [NFIB] and Hall v. Sebelius [667 

F.3d 1293 (D.C. Cir. 2012), addressed below] require the 

dismissal of any counts.” It was thus much more limited than 

plaintiffs now suggest; it did not invite briefing “on the 

impact” of NFIB. Compare Reply Br. 17-18. The district 

court was therefore perfectly reasonable in applying the 

standard rule inferring concession from gaps in a plaintiff’s 

opposition to a motion to dismiss. 

We note, though we do not rely on, the presence of an

origination clause challenge to § 5000A in Sissel v. U.S. Dep’t 

of Health & Human Servs., 951 F. Supp. 2d 159 (D.D.C. 

2013), appeal pending, No. 13-5202 (D.C. Cir.).

Statutory (Including APA) Claims

Appellants’ first statutory claim is an objection to 

provisions in a Social Security Administration (“SSA”) 

handbook, the Social Security Program Operations Manual 

System (“POMS”). These provisions explain that individuals 

entitled to social security benefits are automatically entitled to 

Medicare Part A benefits. POMS HI 00801.002, POMS HI 

00801.034, and POMS GN 00206.020. Appellants argue that 

the handbook provisions exceed the SSA’s statutory authority 

and that their adoption should have been preceded by noticeand-comment rulemaking. The district court dismissed the 

claim on a variety of standing theories. AAPS I, 901 F. Supp. 

2d at 29-34. We affirm on a somewhat simpler basis.

First, appellants’ substantive attack on the POMS 

provisions is clearly foreclosed by our decision in Hall v. 

Sebelius, 667 F.3d 1293 (D.C. Cir. 2012), holding that the 

statutory text establishing Medicare Part A precludes any 

option not to be entitled to its benefits (though eligible 

persons are free not to exercise their entitlement). Id. at 1295-

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97. Although Steel Co. v. Citizens for a Better Environment, 

523 U.S. 83, 94-95 (1998), normally bars a court from 

addressing a substantive merits claim before addressing all 

jurisdictional vulnerabilities (the government presses several, 

such as the channeling provision of 42 U.S.C. § 405(h)), there 

is an exception within Steel Co. for a merits decision resting 

entirely on prior or simultaneous rulings on an identical merits 

question, id. at 98-101. 

Second, appellants’ claim to notice-and-comment 

procedures under the APA fails because our decision in Hall

eliminates any possibility that such procedures could remedy 

appellants’ alleged injury. It is true that a party asserting a 

procedural injury enjoys a somewhat relaxed test as to 

whether compliance with the procedural requirement would 

lead to “redress” of the party’s substantive injury (i.e., lead to 

a less injurious outcome), see Lujan v. Defenders of Wildlife, 

504 U.S. 555, 572 n.7 (1992), but here there is no way 

whatsoever that notice-and-comment procedures could help 

appellants, see, e.g., Simon v. Eastern Ky. Welfare Rights 

Org., 426 U.S. 26, 38, 41-43 (1976). Hall did not hold that 

the POMS permissibly interpreted the statute to preclude 

withdrawal by eligible persons from the entitlement to 

Medicare Part A. Rather it held that the statute itself barred 

any such effort to escape entitlement. Hall, 667 F.3d at 1296 

(“under the law, plaintiffs remain legally entitled to the 

benefits regardless of whether they accept them”); id. 

(“plaintiffs’ position is inconsistent with the statutory text”). 

Accordingly, all the procedure in the world could not lawfully 

lead the SSA to a conclusion that would redress appellants’ 

substantive injury. 

Appellants’ second statutory claim attacks an interim 

final rule, Changes in Medicare and Medicaid Programs, 75 

Fed. Reg. 24,437 (May 5, 2010) (“IFR”), and two 2009 

changes to a Medicare claims processing manual, Change 

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Requests 6417 and 6421, on both procedural and substantive 

grounds. (“Change Request” is the term for an update to 

HHS’s online manual, see Complaint, ¶ 76). The district 

court rejected the claims in part on a standing theory and in 

part on the merits. AAPS I, 901 F. Supp. 2d at 39-46. The 

government argues that the claims are moot, and we agree. 

The district court’s discussion thoroughly describes the 

IFR and the Change Requests. It is enough for our purposes 

to observe that they govern the process by which physicians 

may “opt out” of participation in Medicare Part B, and, having 

opted out, may nonetheless refer patients for services covered 

by Part B. 

As is common with interim final rules, the IFR here was 

superseded by a rule promulgated after notice and comment, 

Changes in Medicare and Medicaid Programs, 77 Fed. Reg. 

25,284 (Apr. 27, 2012), issued while this case was pending in 

the district court. The government argues that the procedures 

accompanying adoption of the 2012 rule clearly moot 

appellants’ procedural claim. Moreover, the Secretary made 

substantive changes to the interim rule as a result of the 

comments. See, e.g., id. at 25,291-92. Appellants do not 

dispute these points. 

In their opening brief, appellants make the startling 

argument that their claim is not moot because, “once the 2012 

rule is invalidated, the Administration will need to retreat to 

the procedurally defective actions challenged here.” 

Appellants’ Br. 49. Appellants cite no case or reasoning to 

support the idea that a claim can be saved from mootness by 

the court’s blithely hypothesizing that a whole other set of 

rules, not at issue in the present case, or so far as appears even 

challenged in any proceeding, may be invalid. Appellants

also argue that when we hold ACA unconstitutional as a 

violation of the origination clause, the IFR, etc., will 

inevitably fall. We may assume arguendo that the second step 

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in this argument is sound, but that is of no help to appellants: 

their premise—that we would vindicate their origination 

clause claim—has proven incorrect. Appellants further argue 

that the “substantive defects” carry over from the IFR to the 

2012 rule, and that this commonality defeats mootness. But it 

is clearly preferable as a general matter to review a set of 

claims in the context of an extant rather than a defunct rule, 

and appellants do not even argue that the passages to which 

they object are so isolated as to defeat that general principle. 

Claim for an “Accounting”

Finally, appellants claim that the Social Security 

Commissioner and the Secretary have violated their “fiduciary 

and equitable duties,” Compl. ¶¶ 111, 117, by failing to 

provide an “honest accounting” of the financial situation 

facing Social Security and Medicare. Id. at ¶¶ 106-117. The 

district court held that plaintiffs did not identify an injury 

sufficient for standing and dismissed on that ground, AAPS I, 

901 F. Supp. 2d at 46, a position endorsed by the government 

on appeal. The plaintiffs stress that, contrary to the 

conclusion of the district court, they have asserted such an 

injury, pointing to the particular interest in the solvency of the 

Medicare Program held by the physician members of 

appellant organizations. 

We need not address whether appellants’ alleged injury 

should be classified as merely an abstract interest “in proper 

application” of the laws, as the district court found, AAPS I, 

901 F. Supp. 2d at 46, citing Lujan, 504 U.S. at 573-74, or as 

a harm that, though very widely shared, is sufficiently 

concrete to satisfy Article III’s injury requirement, FEC v. 

Akins, 524 U.S. 11, 23-25 (1998). Appellants provide no legal 

argument for their claims against the Commissioner and 

Secretary. They do not cite a statute, the Constitution, or any 

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case law for the foundation of the alleged fiduciary duties; 

they do not even sketch a penumbra possibly emanating from 

any part of the laws or Constitution of the United States. 

Although “[i]t is firmly established in our cases that the 

absence of a valid (as opposed to arguable) cause of action

does not implicate subject-matter jurisdiction,” Steel Co., 523 

U.S. at 89, it is equally clear that where a claim is “wholly 

insubstantial and frivolous,” it may be dismissed for want of 

jurisdiction. Bell v. Hood, 327 U.S. 678, 682-83 (1946). As 

the filings in the district court and before this court do not 

disclose even an arguable theory, we find a want of 

jurisdiction over the claim to an “accounting.” 

* * *

For the reasons stated above, the judgment of the district 

court is 

Affirmed.

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