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Analyze court order and draft client alert regarding implications for 2020 NBPP.

Based on the attached filings, write a client alert that summarizes the Court's December order and how that order implicates the 2020 NBPP.

4a. D.D.C. 22-cv-02604 dckt 000043_000 filed 2023-11-27.pdf 4b. D.D.C. 22-cv-02604 dckt 000047_000 filed 2023-12-11.pdf 4c. D.D.C. 22-cv-02604 dckt 000051_000 filed 2023-12-22.pdf Document Contents: [File: 4a. D.D.C. 22-cv-02604 dckt 000043_000 filed 2023-11-27.pdf] **IN THE UNITED STATES DISTRICT COURT** **FOR THE DISTRICT OF COLUMBIA** HIV AND HEPATITIS POLICY INSTITUTE, et al., Plaintiffs, v. Civil Action No. 1:22-cv-2604 (JDB) UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, et al., Defendants. **DEFENDANTS’ CONDITIONAL MOTION TO CLARIFY SCOPE OF COURT’S** **ORDER** Defendants respectfully present this conditional motion to clarify the scope of the Court’s September 29, 2023, memorandum opinion and order (ECF Nos. 41 & 42) in this case. Plaintiffs in this case challenged a rule issued by the United States Department of Health and Human Services (“HHS”). The rule permitted, but did not require, health insurance issuers and group health plans to decline to credit certain financial assistance provided to patients by drug manufacturers when calculating whether those patients had met their cost-sharing obligations under the Affordable Care Act. _See Patient Protection and Affordable Care Act;_ HHS Notice of Benefit and Payment Parameters for 2021; Notice Requirement for Non-Federal Governmental Plans, 85 Fed. Reg. 29164, 29230–35, 29261 (May 14, 2020) (codified at 45 C.F.R. § 156.130(h)) (“2021 NBPP”). In a September 29, 2023, memorandum opinion and order, this Court held that the 2021 NBPP is unlawful “based on its contradictory reading of the same statutory and regulatory language and the fact that the agencies have yet to offer a ----- definitive interpretation of this language that would support the rule.” ECF No. 42, at 2. The Court “vacate[d] the 2021 NBPP to the extent that it amends 42 C.F.R. § 156.130(h),” and remanded the matter “to permit the agencies to interpret the statutory definition [of cost sharing] in the first instance.” _Id. at 20, 25 n.5._ HHS intends to address, through rulemaking, the issues left open by the Court’s opinion, including whether financial assistance provided to patients by drug manufacturers qualifies as “cost sharing” under the Affordable Care Act. Pending the issuance of a new final rule, HHS does not intend to take any enforcement action against issuers or plans based on their treatment of such manufacturer assistance. Defendants do not understand this Court’s order to require HHS to take enforcement action. The Court vacated the relevant portion of the 2021 NBPP but did not order any additional relief. ECF No. 41. To ensure that they are not inadvertently running afoul of the Court’s Order, however, Defendants respectfully request clarification from the Court if their understanding of the scope of the Court’s Order is incorrect. On November 27, 2023, undersigned counsel discussed this motion by email with counsel for Plaintiffs, Paul Hughes, who advised that “Plaintiffs oppose the requested relief on the grounds that they believe it is unlawful. Plaintiffs will file an opposition brief setting forth their position.” 2 ----- Dated: November 27, 2023 Respectfully submitted, BRIAN M. BOYNTON Principal Deputy Assistant Attorney General MICHELLE BENNETT Assistant Director, Federal Programs Branch _/s/ Carol Federighi_ CAROL FEDERIGHI Senior Trial Counsel United States Department of Justice Civil Division, Federal Programs Branch P.O. Box 883 Washington, DC 20044 Phone: (202) 514-1903 Email: carol.federighi@usdoj.gov _Counsel for Defendants_ 3 ----- [End of file: 4a. D.D.C. 22-cv-02604 dckt 000043_000 filed 2023-11-27.pdf] [File: 4b. D.D.C. 22-cv-02604 dckt 000047_000 filed 2023-12-11.pdf] **IN THE UNITED STATES DISTRICT COURT** **FOR THE DISTRICT OF COLUMBIA** HIV AND HEPATITIS POLICY INSTITUTE, et al., Plaintiffs, v. UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, et al., Defendants. No. 1:22-cv-2604 (JDB) **PLAINTIFFS’ RESPONSE TO THE GOVERNMENT’S MOTION FOR** **CLARIFICATION** Paul W. Hughes (D.C. Bar No. 997235) Andrew A. Lyons-Berg (D.C. Bar No. 230182) MCDERMOTT WILL & EMERY LLP 500 North Capitol Street NW Washington, DC 20001 (202) 756-8000 phughes@mwe.com _Counsel for Plaintiffs_ ----- **TABLE OF CONTENTS** Table of Authorities ........................................................................................................................ ii Introduction and Background ..........................................................................................................1 Argument .........................................................................................................................................3 A. The Court’s vacatur of the 2021 NBPP restores the prior rule. .....................................3 B. The requested clarification would nullify the Court’s judgment, and the government’s across-the-board declaration of non-enforcement is unlawful. ..............6 Conclusion .......................................................................................................................................9 i ----- **TABLE OF AUTHORITIES[†]** **Cases** _Am. Great Lakes Ports Ass’n v. Zukunft,_ 301 F. Supp. 3d 99 (D.D.C. 2018) .............................................................................................3 _Azar v. Allina Health Servs.,_ 139 S. Ct. 1804 (2019) ...............................................................................................................8 _Barnstead Broad. Corp. v. Offshore Broad. Corp.,_ 869 F. Supp. 35 (D.D.C. 1994) ..................................................................................................3 _Becerra v. U.S. Dep’t of Interior,_ 276 F. Supp. 3d 953 (N.D. Cal. 2017) .......................................................................................7 _California v. U.S. Bureau of Land Mgmt.,_ 277 F. Supp. 3d 1106 (N.D. Cal. 2017) .....................................................................................7 _*Clean Air Council v. Pruitt,_ 862 F.3d 1 (D.C. Cir. 2017) ...............................................................................................7, 8, 9 _Envt’l Def. Fund, Inc. v. EPA,_ 716 F.2d 915 (D.C. Cir. 1983) ...................................................................................................7 _Georgetown Univ. Hosp. v. Bowen,_ 821 F.2d 750 (D.C. Cir. 1987) ...................................................................................................3 _Grand Jury Proc. Under Seal v. United States,_ 947 F.2d 1188 (4th Cir. 1991) ...................................................................................................3 _Nasdaq Stock Mkt. LLC v. SEC,_ 38 F.4th 1126 (D.C. Cir. 2022) ..................................................................................................4 _Nat. Res. Def. Council v. Abraham,_ 355 F.3d 179 (2d Cir. 2004).......................................................................................................7 _Nat. Res. Def. Council v. EPA,_ 683 F.2d 752 (3d Cir. 1982).......................................................................................................7 _*Nat. Res. Def. Council v. Nat’l Highway Traffic Safety Admin.,_ 894 F.3d 95 (2d Cir. 2018).................................................................................................7, 8, 9 _Nat’l Parks Conservation Ass’n v. Jewell,_ 62 F. Supp. 3d 7 (D.D.C. 2014) .................................................................................................4 _Nat’l Venture Capital Ass’n v. Duke,_ 291 F. Supp. 3d 5 (D.D.C. 2017) ...............................................................................................7 _*National Association of Manufacturers v. SEC,_ 631 F. Supp. 3d 423 (W.D. Tex. 2022) ..................................................................................8, 9 † Authorities on which we chiefly rely are marked with asterisks. ii ----- **Cases—continued** _Open Communities Alliance v. Carson,_ 286 F. Supp. 3d 148 (D.D.C. 2017) ...........................................................................................7 _S.C. Coastal Conservation League v. Pruitt,_ 318 F. Supp. 3d 959 (D.S.C. 2018) ............................................................................................7 _Texas v. Becerra,_ 2022 WL 18034483 (N.D. Tex. Nov. 15, 2022) ........................................................................3 **Statutes, Rules, and Regulations** 45 C.F.R. § 156.130(h)(1) (version effective June 24, 2019, to July 12, 2020) .................... passim _Patient Protection and Affordable Care Act; HHS Notice of_ _Benefit and Payment Parameters for 2020,_ 84 Fed. Reg. 17,454 (April 25, 2019) ................................................................................1, 4, 6 Fed. R. Civ. P. 62.1(a) .....................................................................................................................3 **Other Authorities** Hearing Before the Ohio House Public Health Policy Committee, The Ohio Channel (Nov. 1, 2023) ..........................................................................................................1, 4 Matt Wetzel & Heath R. Ingram, Federal Court Strikes Down Copay _Accumulator Programs, Goodwin (Oct. 9, 2023)......................................................................5_ Theresa C. Carnegie, et al., Court Strikes Down HHS Rule on Copay _Accumulators: Implications for Health Plans and PBMs, Mintz (Oct. 9, 2023) .......................5_ Theresa C. Carnegie, et al., HHS Court Filings Indicate that Agency Intends to _Preserve Copay Accumulators, Mintz (Dec. 4, 2023) .......................................................7, 8, 9_ iii ----- **INTRODUCTION AND BACKGROUND** As the Court is aware, this case concerns whether HHS acted lawfully in the 2021 Notice of Benefit and Payment Parameters (2021 NBPP) when it permitted insurers not to count certain payments obtained through drug-manufacturer assistance against insured individuals’ annual de ductible and out-of-pocket maximum amounts. In its September 29 Memorandum Opinion, the Court held that HHS’s regulation purporting to do so was arbitrary and capricious. See Op. 15-17. And it therefore ordered “that the [2021 NBPP] is VACATED to the extent that it amends [45] C.F.R. § 156.130(h),” the regulatory provision in question. Dkt. 41. The previous version of the regulation, which under well-established doctrine was returned to force by virtue of the 2021 NBPP’s vacatur, had permitted manufacturer assistance to be ex cluded from these cost-sharing amounts only with respect to “specific prescription brand drugs that have an available and medically appropriate generic equivalent.” 45 C.F.R. § 156.130(h)(1) (version effective June 24, 2019, to July 12, 2020). Under that version of the regulation, as the preamble of the adopting rule itself explained, “[w]here there is no generic equivalent available or medically appropriate . . . amounts paid toward cost sharing using any form of direct support of fered by drug manufacturers must be counted toward the annual limitation on cost sharing.” Patient _Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2020, 84_ Fed. Reg. 17,454, 17,545 (April 25, 2019) (emphasis added); see Op. 5-6. A representative of AHIP—the leading trade association representing health insurance plans, which participated as an amicus in favor of the government in this case—testified that the effect of this decision is clear: The prior version of Section 156.130(h)(1) is now in force. Ohio House Public Health Policy Committee, The Ohio Channel (Nov. 1, 2023), at 01:37 – 01:38 (testimony of Keith Lake, AHIP) (emphases added), https://www.ohiochannel.org/video/ohio-house-public-health policy-committee-11-1-2023. Multiple independent commentators reached the same conclusion, which is plainly dictated by governing law. 1 ----- Now, after losing on the merits, the government takes an extraordinary position—and, un der the guise of requesting “clarification,” asks the Court to sanction its behavior. The Court should explicitly reject the government’s request. Part of the government’s motion is unobjectionable. The government describes its intent to address these issues via rulemaking. That is appropriate and in keeping with the Court’s decision. (That said, no “clarification” is needed for the government to pursue such rulemaking.) But, in its motion—which has since gained broad attention—the government has also an nounced a whole new policy. While there can be no serious dispute that the predecessor version of Section 156.130(h)(1) is now in force, the government has announced as a categorical matter that no one needs to comply with that law. That is, the government has stated that it does not “intend to take any enforcement action against issuers or plans based on their treatment of … manufacturer assistance.” Mot. 2. Through this motion, the government has informed the Court and the public that it effectively intends to disregard the Court’s judgment, and instead act as if the 2021 NBPP had not been vacated, until it issues a new rule, whenever that may be. Id. That course of conduct is unlawful, and the Court should not sanction it. Not only is the government’s motion a clear “indication that the agencies will not abide by the Court’s ruling”— the previous absence of which was the basis for the Court’s decision not to issue an injunction requiring compliance (Op. 24 n.4)—but it is also unlawful on its own terms. An agency may not rescind a legislative regulation without notice and comment, and courts have held that a statement to the regulated industry that an agency categorically will not enforce a regulation is the functional equivalent to a recission, and therefore is similarly unlawful. If HHS believed that the return to force of the 2020 NBPP—a rule that the agency itself earlier promulgated—would cause disruption or other imminent adverse consequences, it had mul tiple avenues available to address that concern. The agency could have argued for remand without vacatur; it did not. See Dkts. 27-1; 38 (government’s summary judgment briefing, never invoking the remand-without-vacatur doctrine). The agency could have moved this Court or the D.C. Circuit for a stay of the judgment; it did not. And the agency could have attempted to issue a new rule 2 ----- using the good cause exception to notice and comment; but again, the agency has not done so. What HHS cannot do consistent with the APA and the rule of law is to inform the regulated public that, even though the pre-2021 NBPP version of the regulation is currently in effect as a result of this Court’s vacatur, no one needs to comply with that binding law. The government’s proposed “clarification” would therefore both practically nullify this Court’s judgment and independently violate the APA. The Court should reject the government’s request. **ARGUMENT[1]** **A.** **The Court’s vacatur of the 2021 NBPP restores the prior rule.** Under black-letter administrative law, the result of this Court’s vacatur of the 2021 NBPP is that the previously effective version of Section 156.130(h) is reinstated: “‘When a court vacates an agency’s rules, the vacatur restores the status quo before the invalid rule took effect … .’ That is, the offending rule is rendered void and of no effect and there is a ‘reinstatement of the rules previously in force.’” _Am. Great Lakes Ports Ass’n v. Zukunft, 301 F. Supp. 3d 99, 103-104_ (D.D.C. 2018) (alterations incorporated) (first quoting Envtl. Def. v. Leavitt, 329 F. Supp. 2d 55, 64 (D.D.C. 2004); then quoting Action on Smoking & Health v. C.A.B., 713 F.2d 795, 797 (D.C. Cir. 1983)), aff'd, 962 F.3d 510 (D.C. Cir. 2020); see also, e.g., Georgetown Univ. Hosp. v. Bowen, 821 F.2d 750, 757 (D.C. Cir. 1987) (“[T]he effect of invalidating an agency rule is to reinstate the 1 The Court has jurisdiction to act on the government’s motion notwithstanding the government’s subsequent filing of its notice of appeal. See Dkt. 44. While the filing of a notice of appeal generally divests a district court of jurisdiction, the court retains jurisdiction to act in aid of the appeal, and district courts frequently exercise this authority to clarify the scope of equitable relief—so long as the scope of relief is only clarified, and not altered. E.g. Barnstead Broad. Corp. _v. Offshore Broad. Corp., 869 F. Supp. 35, 39 (D.D.C. 1994) (“The Court retains jurisdiction to_ decide Defendant's Motion for Clarification because to do so might aid in the appeal.”); Texas v. _Becerra, 2022 WL 18034483, at *1 (N.D. Tex. Nov. 15, 2022) (“Because there is no request to_ materially modify the Order, precedent provides that the Court has authority to resolve the motion.”); cf. Grand Jury Proc. Under Seal v. United States, 947 F.2d 1188, 1190 (4th Cir. 1991) (district court may “memorialize” an oral ruling that had been made prior to notice of appeal, because setting out reasons in writing aids the appeal). Alternatively, if the motion is construed as seeking relief from judgment, rather than non-substantive clarification, this Court retains explicit power under Rule 62.1 to either deny the motion or issue an indicative ruling that it would grant if it had jurisdiction. See Fed. R. Civ. P. 62.1(a). 3 ----- rules previously in force … . Accordingly, when the District Court vacated the Secretary's 1981 wage-index rule, it necessarily reinstated the Secretary's 1979 rule.”); Nat’l Parks Conservation _Ass’n v. Jewell, 62 F. Supp. 3d 7, 21 (D.D.C. 2014) (“Vacatur would result in the reinstatement of_ the 1984 Rule, which governed” prior to the challenged rule.). As described above, the version of Section 156.130(h) that governed prior to the 2021 NBPP—and that therefore was reinstated by this Court’s vacatur—provided that only manufac turer assistance amounts “for specific prescription brand drugs that have an available and medi _cally appropriate generic equivalent are not required to be counted toward the annual limitation_ on cost sharing.” 45 C.F.R. § 156.130(h)(1) (version effective June 24, 2019, to July 12, 2020) (emphasis added). The logical result of that specific allowance for drugs with generic equivalents is that other manufacturer assistance cannot be lawfully excluded. See, e.g. _Nasdaq Stock Mkt._ _LLC v. SEC, 38 F.4th 1126, 1137 (D.C. Cir. 2022) (applying the interpretive canon “expressio_ _unius est exclusio alterius”: “[M]ention of one thing … implies exclusion of another thing”). And_ HHS explained exactly that in adopting the earlier regulatory text: “Where there is no generic equivalent available or medically appropriate,” manufacturer assistance “must be counted toward the annual limitation on cost sharing.” 84 Fed. Reg. at 17,545 (emphasis added). In short, the predecessor version of Section 156.130(h) now governs. Up until the government’s recent motion, that is how the regulated public understood this Court’s judgment too. Take for example AHIP, the national trade association for health insurers, which filed an amicus brief in this case supporting the government’s position. See Dkt. 30. An AHIP representative testified before a state legislative committee in November that this Court “invalidated the current federal rule on accumulators. So a previous rule would now govern since this one has been invalidated.” Ohio House Public Health Policy Committee, The Ohio Channel (Nov. 1, 2023), at 01:37:31–01:37:40 (testimony of Keith Lake, AHIP) (emphases added), https://www.ohiochannel.org/video/ohio-house-public-health-policy-committee-11-1-2023. And, as AHIP recognizes, that “previous rule” permits copay accumulators solely in circumstances where “there is a drug with a generic alternative.” Id. at 01:37:47–01:37:50. 4 ----- Commentators have likewise broadly acknowledged that, following this Court’s ruling, the predecessor regulation is now in effect. For example, one law firm—with no involvement in this litigation for any party—issued the following analysis: The court deemed the 2021 NBPP rule unlawful and has mandated that insurers adhere to the 2020 NBPP federal rule governing health plans. According to this rule, copay accumulators are permissible only for branded drugs that have a generic equivalent, if allowed by state law. Consequently, health plans and PBMs are now prohibited by federal regulation from implementing copay accumulators for drugs that lack generic equivalents. Theresa C. Carnegie, et al., Court Strikes Down HHS Rule on Copay Accumulators: Implications _for Health Plans and PBMs, Mintz (Oct. 9, 2023), perma.cc/PG3F-6FG7._ Another law firm—again with no involvement in this litigation—similarly described the effect of this Court’s ruling: [A]s a result of the District Court’s ruling, the government will use an earlier 2020 version of the rule which allowed insurers to exclude from cost-sharing caps only copay support coupons for branded drugs that have available generic equivalents; if there is no generic equivalent, under the 2020 version of the rule, manufacturer copay support must be counted toward cost sharing. Matt Wetzel & Heath R. Ingram, _Federal Court Strikes Down Copay Accumulator Programs,_ Goodwin (Oct. 9, 2023), perma.cc/V3SR-PW26. In all, the net effect of this Court’s September 29, 2023, opinion and order was abundantly clear: Because the Court vacated the 2021 NBPP to the extent it amended Section 156.130(h), the version of that regulation that existed prior to the 2021 NBPP now governs. And that regulation had clear implications for the regulated public.[2] 2 The government cannot seriously suggest that there is any question about the proper interpretation of the now-governing version of Section 156.130(h). First, the text of the regulation it clear. It provides that co-pay assistance is “not required to be counted toward the annual limitation on cost sharing” in the limited circumstances where drugs “have an available and medically appropriate generic equivalent.” 45 C.F.R. § 156.130(h)(1). Accordingly, where the core condition— availability of a generic—is absent, then copay assistance must be counted. See page 4, supra. Any other reading would render this provision meaningless. Second, as we have described, the regulation’s preamble expressly says exactly this. Third, to the extent that HHS at one point hypothesized a conflict between the now-governing rule and IRS regulation, HHS appears to have—correctly— 5 ----- **B.** **The requested clarification would nullify the Court’s judgment, and the** **government’s across-the-board declaration of non-enforcement is unlawful.** The government’s motion, however, blinks that reality. Having lost in its attempt to defend the 2021 NBPP on the merits—and having never asked this Court for either remand without vaca tur or a stay of its ruling—HHS apparently intends to simply carry on as if it had won, and this Court had never vacated the 2021 NBPP. That is, in the motion it filed with this Court, HHS has announced its intention “not … to take any enforcement action against issuers or plans based on their treatment of … manufacturer assistance” until it has issued a replacement rule. Mot. 2. HHS says this notwithstanding that currently binding law provides that manufacturer assistance “must be counted toward the annual limitation on cost sharing” “[w]here there is no generic equivalent available or medically appropriate.” 84 Fed. Reg. at 17,545; see 45 C.F.R. § 156.130(h)(1) (version effective prior to the 2021 NBPP). HHS’s putative motion to clarify has itself created uncertainty in the public. Despite the clarity of this Court’s order, the government’s position has thrown the market into disarray. One commentator who had previously described the implications of the Court’s decision in clear terms (see page 5, supra) now recognizes that the government has informed insurers that they need not comply with any law: HHS’s stated purpose of the Motion to Clarify was to confirm that the court’s ruling merely vacated the Notice of Benefit and Payment Parameters for 2021 (2021 NBPP) without ordering any additional relief. However, the HHS filings also relay **_two significant messages to health plans and PBMs impacted by the District_** Court’s ruling: (1) that HHS plans to issue rulemaking to address the District Court’s concerns with the 2021 NBPP, and (2) until that rulemaking is issued, **_health plans and PBMs are free to operate copay accumulators as they have been_** **_since 2021 without fear of enforcement from HHS._** disavowed such a theory. Indeed, HHS argued here that it “did not … find that the IRS rule directly conflicted with the 2020 Rule.” Dkt. 27-1, at 29. To the extent that HHS previously announced a non-enforcement policy (AR4321), that policy—which was itself unlawful for reasons we next explain—expired when the 2021 NBPP issued and became effective. _Id. In all events, having vacated the 2021 NBPP as unlawful, the Court_ cannot and should not sanction HHS’s attempt here to unlawfully suspend a duly promulgated regulation. 6 ----- Theresa C. Carnegie, et al., HHS Court Filings Indicate that Agency Intends to Preserve Copay _Accumulators, Mintz (Dec. 4, 2023) (emphasis added), perma.cc/4MSW-LKEN._ The Court should flatly reject the government’s request that it sanction the government’s proposed blanket policy of non-enforcement, which would amount to an unlawful suspension of the regulation that is presently binding law. Under the APA, “an agency issuing a legislative rule is itself bound by the rule until that rule is amended or revoked and may not alter such a rule without notice and comment.” Clean Air _Council v. Pruitt, 862 F.3d 1, 9 (D.C. Cir. 2017) (quotation marks omitted; alteration incorpo-_ rated). Suspensions of, or delays in implementing, a rule are subject to that same notice-and-com ment requirement. Nat. Res. Def. Council v. Nat’l Highway Traffic Safety Admin., 894 F.3d 95, 113 (2d Cir. 2018) (notice-and-comment “requirements apply with the same force when an agency seeks to delay or repeal a previously promulgated final rule,” because “altering the effective date of a duly promulgated standard could be, in substance, tantamount to an amendment or rescission of the standards.”) (quoting Nat. Res. Def. Council v. Abraham, 355 F.3d 179, 194 (2d Cir. 2004)); _Envt’l Def. Fund, Inc. v. EPA, 716 F.2d 915, 920 (D.C. Cir. 1983) (“The suspension or delayed_ implementation of a final regulation normally constitutes substantive rulemaking under APA § 553,” thus requiring “notice and comment”); Nat’l Venture Capital Ass’n v. Duke, 291 F. Supp. 3d 5, 15 (D.D.C. 2017) (“‘An agency . . . may not alter [a legislative] rule without notice and comment,’ nor does it have any inherent power to stay a final rule.”) (quoting Clean Air Council, 862 F.3d at 9).[3] 3 _See also, e.g., Open Communities Alliance v. Carson, 286 F. Supp. 3d 148, 162-163 (D.D.C._ 2017) (same); S.C. Coastal Conservation League v. Pruitt, 318 F. Supp. 3d 959, 964 (D.S.C. 2018) (“[T]he suspension of a rule requires the same substantive requirements of notice and comment rule making as the promulgation of that rule.”); California v. U.S. Bureau of Land Mgmt., 277 F. Supp. 3d 1106, 1121 (N.D. Cal. 2017) (“The APA does not permit an agency to guide a future rule through the rulemaking process, promulgate a final rule, and then effectively repeal it, simply by indefinitely postponing its operative date.”) (quoting Nat. Res. Def. Council v. EPA, 683 F.2d 752, 762 (3d Cir. 1982)); Becerra v. U.S. Dep’t of Interior, 276 F. Supp. 3d 953, 965-966 (N.D. Cal. 2017) (same). 7 ----- Moreover, that commonsense requirement applies even when (perhaps, especially when) the justification for the suspension or delay is that the agency is considering changing the under lying rule: “[A] decision to reconsider a rule does not simultaneously convey authority to indefi nitely delay the existing rule pending that reconsideration.” Nat. Res. Def. Council, 894 F.3d at 111-112; see also Clean Air Council, 862 F.3d at 9 (rejecting agency’s argument that it “has ‘in herent authority’ to ‘issue a brief stay’ of a final rule—that is, not to enforce a lawfully issued final rule—while it reconsiders it”). Yet that is precisely what the government says it is going to do here: “not … enforce a lawfully issued final rule … while it reconsiders it.” Id. Nor does it matter that the government has framed its action as a decision not “to take enforcement action” (Mot. 2), rather than a purported formal stay of the regulation. Courts con ducting this analysis look past formalism and evaluate instead the functional effect of an agency’s announcements. In National Association of Manufacturers v. SEC, 631 F. Supp. 3d 423, 427, 429 430 (W.D. Tex. 2022), the court concluded that the SEC had unlawfully suspended a binding reg ulation where an SEC division “declar[ed] it would no longer recommend enforcement actions premised on [that regulation] while the SEC considered alternatives,” and the agency stated in litigation that this exercise of enforcement discretion “provides [regulated entities] relief from” complying with the regulation. Indeed, “courts have long looked to the contents of the agency’s action, not the agency’s self-serving label, when deciding whether statutory notice-and-comment demands apply.” Azar v. Allina Health Servs., 139 S. Ct. 1804, 1812 (2019). Here, there can be no mistaking that HHS’s announcement, in a court filing, that it “does not intend to take any enforcement action against issuers or plans based on their treatment of … manufacturer assistance” (Mot. 2)—despite the existence of a binding regulation to the contrary— similarly “provide[s] [the regulated industry] with breathing room for complying with” the rein stated pre-2021 NBPP version of Section 156.130(h), and therefore is unlawful absent notice and comment. Nat’l Ass’n of Mfrs., 631 F. Supp. 3d at 429. Indeed, commentators have had no trouble reading between the lines (to the extent any such reading is even required). See Carnegie et al., _HHS Court Filings, supra at 6 (explaining that the government’s motion to clarify “relay[s] [a]_ 8 ----- significant message[:]” that “health plans and PBMs are free to operate copay accumulators as they have been since 2021 without fear of enforcement.” Just as in National Association of Manufacturers, therefore, the agency’s announced policy of “deliberate non-enforcement” of the reinstated prior version of Section 156.130(h) “for an in definite period is functionally indistinguishable from suspending” that regulation, and is thus un lawful without notice and comment. 631 F. Supp. 3d at 429; see also id. at 431 (agency’s “subtle wink to [the] industry … that the SEC would not enforce the Proxy Advice Rule’s compliance deadline” held to be an unlawful suspension of that rule). To be clear, our point is not that the Court can or should require HHS to institute individual enforcement actions against specific insurers. But what the agency cannot lawfully do is declare to the regulated industry that insurers “are free to operate copay accumulators as they have been since 2021 without fear of enforcement” (Carnegie et al., HHS Court Filings, supra), even though this Court’s vacatur of the 2021 NBPP has left the pre-2021 regulations—which prohibit precisely that conduct—now in effect. To do so would effectively suspend the existing regulations without notice and comment, something no agency has the power to do. Nat’l Ass’n of Mfrs, 631 F. Supp. 3d at 429-430; see also Nat. Res. Def. Council, 894 F.3d at 111-112; Clean Air Council, 862 F.3d at 9. And it would also nullify this Court’s judgment, achieving the same practical results—includ ing the same practical harms to the individual Plaintiffs (see, e.g., Op. 11-12)—as if the agency had won on the merits, instead of lost. If the government had thought a stay of this Court’s judg ment were warranted, it could have pursued one, in keeping with the reticulated framework for proving entitlement to such relief. It did not. The government cannot act simply as if a stay had been granted, when the government did not so much as request one. The Court certainly should not “clarif[y]” (Mot. 2) that the government’s proposed conduct is permissible. **CONCLUSION** For the foregoing reasons, the Court should deny the government’s motion for clarification. Further, the Court may wish to consider injunctive relief (see Op. 24 n.4), directing that the agency may not lawfully erect an across-the-board policy of non-enforcement. While the Court cannot 9 ----- and should not involve itself in the agency’s case-by-case enforcement decisions, a blanket policy of non-enforcement functions is both (1) a de facto stay of this Court’s order and (2) a rescission or suspension of the predecessor rule. Neither course of action is lawful. Thus, just as the court held in National Association of Manufacturers, the Court should state that a categorical non-en forcement policy is unlawful. Dated: December 11, 2023 Respectfully submitted, /s/ Paul W. Hughes Paul W. Hughes (D.C. Bar No. 997235) Andrew A. Lyons-Berg (D.C. Bar No. 230182) MCDERMOTT WILL & EMERY LLP 500 North Capitol Street NW Washington, DC 20001 (202) 756-8000 phughes@mwe.com _Counsel for Plaintiffs_ 10 ----- [End of file: 4b. D.D.C. 22-cv-02604 dckt 000047_000 filed 2023-12-11.pdf] [File: 4c. D.D.C. 22-cv-02604 dckt 000051_000 filed 2023-12-22.pdf] **UNITED STATES DISTRICT COURT** **FOR THE DISTRICT OF COLUMBIA** **HIV AND HEPATITIS POLICY** **INSTITUTE et al.,** **Plaintiffs,** **v.** **Civil Action No. 22-2604 (JDB)** **UNITED STATES DEPARTMENT OF** **HEALTH AND HUMAN SERVICES et al.,** **Defendants.** **MEMORANDUM OPINION & ORDER** Plaintiffs, three individuals and three patient advocacy groups, challenged a rule promulgated by defendants, the U.S. Department of Health and Human Services (“HHS”), its component agency the Centers for Medicare and Medicaid Services, and the leadership of those agencies (collectively, the “agencies”). That rule, the “2021 NBPP,” affirmatively permitted, but did not require, health insurance issuers and group health plans to decline to credit certain financial assistance provided to patients by drug manufacturers when calculating whether those patients have met their cost-sharing obligations under the Affordable Care Act. On September 29, 2023, this Court granted plaintiffs’ motion for summary judgment, denied the agencies’ cross-motion for summary judgment, vacated the challenged rule, and remanded the matter to the agencies. See HIV & Hepatitis Pol’y Inst. v. U.S. Dep’t of Health & Hum. Servs., Civ. A. No. 22-2604 (JDB), 2023 WL 6388932 (D.D.C. Sept. 29, 2023) [ECF No. 42] (“SJ Op.”); Summ. J. Order [ECF No. 41]. The agencies now move for clarification of the scope of the Court’s decision. For the reasons that follow, the Court will grant the motion. ----- **Background** The Court assumes familiarity with its prior opinion and the factual and procedural history set forth therein. As relevant here, the Court vacated the rule challenged by plaintiffs and remanded to the agencies for further consideration. Summ. J. Order; SJ Op. at *14.[1] The Court also noted that “[s]hould the agencies need further clarification as to what rule is in effect while they consider the matter on remand, they may seek guidance from the Court.” SJ Op. at *14 n.5. On November 27, 2023, the agencies filed a motion to clarify the scope of the Court’s order. Defs.’ Conditional Mot. to Clarify [ECF No. 43] (“Mot.”). The agencies indicate their intent “to address, through rulemaking, the issues left open by the Court’s opinion” and to refrain from “tak[ing] any enforcement action against issuers or plans based on their treatment of such manufacturer assistance” pending the issuance of a new final rule. Id. at 2. They seek to “clarif[y]” their understanding of the Court’s decision as “vacat[ing] the relevant portion of the 2021 NBPP but . . . not order[ing] any additional relief.” Id. In particular, they seek confirmation that the Court’s order does not “require HHS to take enforcement action.” Id. The next day, the agencies filed a notice of appeal to the D.C. Circuit. Notice of Appeal [ECF No. 44]. On December 11, 2023, plaintiffs filed their own notice of appeal. Notice of Appeal [ECF No. 46]. They also opposed the agencies’ motion to clarify. Pls.’ Resp. to Mot. [ECF No. 47] (“Opp’n”). Plaintiffs argue that the Court’s vacatur of the 2021 NBPP restores the prior rule and that the agencies’ newly announced nonenforcement policy is unlawful. See id. at 3–10. The agencies filed a reply in support of their motion, Defs.’ Reply in Further Supp. of Mot. [ECF No. 49] (“Reply”), and plaintiffs filed a motion for leave to file a surreply, Mot. for Leave 1 Citations to the Court’s prior opinion follow the Westlaw pagination. ----- to File Surreply & Surreply [ECF No. 50]. The agencies have indicated that they oppose plaintiffs’ motion for leave to file a surreply but will not file a separate opposition. Id. at 1. The agencies’ motion to clarify is thus fully briefed and ripe for decision. **Legal Standard** “A ‘motion for clarification’ is not a formal creature of civil procedure; it appears nowhere in the Federal Rules.” All. of Artists & Recording Cos. v. Gen. Motors Co., 306 F. Supp. 3d 413, 418 (D.D.C. 2016). Even so, courts generally “permit parties to tender motions that beseech the court ‘to explain or clarify something ambiguous or vague’ about a ruling.” Id. (quoting United States v. Philip Morris USA, Inc., 793 F. Supp. 2d 164, 168 (D.D.C. 2011)). Such motions “have a limited role,” and are not a proper vehicle for “seek[ing] to alter or modify the result” of the prior ruling. Steele v. United States, Civ. A. No. 14-1523 (RCL), 2023 WL 6215790, at *5 (D.D.C. Sept. 25, 2023) (quoting Sai v. Transp. Sec. Admin., Civ. A. No. 14-403 (RDM), 2015 WL 13889866, at *3 (D.D.C. Aug. 19, 2015)). **Analysis** **I.** **Jurisdiction** The Court will first consider whether it has jurisdiction to entertain the agencies’ request. Neither party disputes the Court’s jurisdiction—plaintiffs address this issue briefly in a footnote, while the agencies do not address it at all. See Opp’n at 3 n.1; see generally Mot.; Reply.[2] An appeal generally “divests the district court of its control over those aspects of the case involved in the appeal.” Coinbase, Inc. v. Bielski, 143 S. Ct. 1915, 1919 (2023) (quoting Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 58 (1982) (per curiam)); see also 16A Wright 2 Because the Court will conclude that it has jurisdiction, it need not reach the question whether jurisdiction is waivable or forfeitable in this situation. ----- & Miller, Federal Practice and Procedure § 3949.1 (5th ed. April 2023 update) (“Wright & Miller”).[3] However, this is “not a per se rule,” but rather “a judicially crafted rule rooted in the interest of judicial economy, designed ‘to avoid confusion or waste of time resulting from having the same issues before two courts at the same time.’” United States v. Rodgers, 101 F.3d 247, 251 (2d Cir. 1996) (quoting United States v. Salerno, 868 F.2d 524, 540 (2d Cir. 1984)). Hence, “its application is guided by concerns of efficiency and is not automatic.” Id. District courts generally retain jurisdiction to act “in aid of the appeal,” including by clarifying an ambiguity in the appealed-from decision. See, e.g., United States v. Viola, 555 F. App’x 57, 59–60 (2d Cir. 2014); Lytle v. Griffith, 240 F.3d 404, 407 n.2 (4th Cir. 2001); Barnstead Broad. Corp. v. Offshore Broad. Corp., 869 F. Supp. 35, 38–39 (D.D.C. 1994); see generally Wright & Miller. Applying that principle to the particular circumstances here—where the Court specifically invited the agencies to seek clarification if necessary, the agencies did so prior to noticing their appeal, the relief sought is clarification of ambiguity rather than a substantive alteration, and the appeal is still in its infancy—the Court concludes that it may properly consider the agencies’ motion. **II.** **Merits** **A.** **Effect of Vacatur of 2021 NBPP** The Court’s prior decision vacated the 2021 NBPP but did not explicitly specify what rule was in effect on remand. See SJ Op. at *14 n.5; cf. id. at *6 (alluding to fact that prior rule would 3 Had the agencies filed their motion to clarify within 28 days of entry of the Court’s judgment, the Court could arguably have construed the motion as made under Federal Rule of Civil Procedure 59 or 60 so as to retain jurisdiction pending the disposition of the motion. Federal Rule of Appellate Procedure 4(a)(4)(B)(1) provides that “[i]f a party files a notice of appeal after the court . . . enters a judgment—but before it disposes of [certain timely post-judgment motions]—the notice becomes effective to appeal . . . when the order disposing of the last such remaining motion is entered.” Fed. R. App. P. 4(a)(4)(B)(1). These post-judgment motions include timely filed motions under Federal Rules of Civil Procedure 59 and 60 (the latter if “filed within the time allowed for filing a motion under Rule 59”). Id. 4(a)(4)(A). The relevant time period under Rule 59 is 28 days. Fed. R. Civ. P. 59(b), (e). Here, however, the agencies filed their motion outside of this 28-day window so the motion cannot toll the effective date of their notice of appeal. ----- govern on remand). Clarification of this ambiguity is warranted. See, e.g., All. of Artists & Recording Cos., 306 F. Supp. 3d at 418. The effect of vacatur is to “reinstate the rules previously in force.” Georgetown Univ. Hosp. v. Bowen, 821 F.2d 750, 757 (D.C. Cir. 1987) (cleaned up) (quoting Action on Smoking & Health v. CAB, 713 F.2d 795, 797 (D.C. Cir. 1983)), aff’d, 488 U.S. 204 (1988); see also, e.g., Am. Great Lakes Ports Ass’n v. Zukunft, 301 F. Supp. 3d 99, 103–04 (D.D.C. 2018), aff’d sub nom. Am. Great Lakes Ports Ass’n v. Schultz, 962 F.3d 510 (D.C. Cir. 2020); Nat’l Parks Conservation Ass’n v. Jewell, 62 F. Supp. 3d 7, 21 (D.D.C. 2014). As the Court has previously noted, there is some tension in D.C. Circuit case law on this point. See AFL-CIO v. Chao, 496 F. Supp. 2d 76, 83 n.1 (D.D.C. 2007) (discussing Small Refiner Lead Phase-Down Task Force v. U.S. E.P.A., 705 F.2d 506, 545 (D.C. Cir. 1983)). But the weight of circuit precedent favors the reinstatement-on-vacatur principle, and this principle is also “consistent with the unanimous body of law from other circuits.” Id. In any event, here the agencies never argued that vacatur did not restore the prior rule. The prior (and thus reinstated) rule is the “2020 NBPP.” See Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2020, 84 Fed. Reg. 17454, 17568 (April 25, 2019) (previously codified at 45 C.F.R. § 156.130(h) from June 24, 2019 to July 12, 2020).[4] The Court expresses no view on plaintiffs’ proffered interpretation of this rule. See Opp’n at 4–5. 4 The Court agrees with plaintiffs’ position (uncontested by the agencies) that, by its own terms, the nonenforcement policy announced in August 2019 expired upon issuance of the 2021 NBPP. See Opp’n at 5 n.2; Admin. Rec. [ECF No. 40-2] at 4321 (“Until the 2021 NBPP is issued and effective, the Departments will not initiate an enforcement action . . . .”). ----- **B.** **Nonenforcement Policy** The Court’s prior decision vacated the 2021 NBPP. It did not purport to interpret the 2020 NBPP or to rule on the legality of any nonenforcement policy. And for good reason: these issues were not before the Court. Plaintiffs’ amended complaint challenges only the 2021 NBPP. See Am. Compl. [ECF No. 10] at 28–29; see also, e.g., Reply Supp. Pls.’ Mot. for Summ. J. & Opp’n to Defs.’ Cross-Mot. [ECF No. 32] at 11 (“[T]he statutory validity of the pre-existing regulations [i.e., the 2020 NBPP] is simply not at issue in this case.”). Plaintiffs take issue with the agencies’ apparent announcement, in their motion to clarify, of a new nonenforcement policy. See Mot. at 2; Opp’n at 6–9. The lawfulness of any such policy is not properly before the Court on the present motion to clarify. A ruling on this issue would go far beyond merely “clarify[ing] something ambiguous or vague” in the Court’s prior decision. All. of Artists & Recording Cos., 306 F. Supp. 3d at 418 (quoting Philip Morris USA, Inc., 793 F. Supp. 2d at 168); see Steele, 2023 WL 6215790, at *5. Hence, the Court declines to reach this question, and expresses no view on it. - * * For the foregoing reasons, and upon consideration of the entire record herein, it is hereby **ORDERED that [50] plaintiffs’ motion for leave to file a surreply is GRANTED; and it** is further **ORDERED that [43] defendants’ motion to clarify [41] [42] the Court’s September 29,** 2023 order and memorandum opinion is GRANTED. /s/ JOHN D. BATES United States District Judge Dated: December 22, 2023 ----- [End of file: 4c. D.D.C. 22-cv-02604 dckt 000051_000 filed 2023-12-22.pdf]

Affirmative Points: 1. Structure: a. Does the response provide general background on the case? (1 point) 2. Style: N/A 3. Substance: a. 2020 NBPP: i. Does the response state that copay accumulator programs permit insurers not to count certain payments obtained through drug-manufacturer assistance against insured individuals’ annual deductible and out-of-pocket maximum amounts? (1 point) ii. Does the response state that the 2020 NBPP allows private health plans to exclude the value of manufacturer cost-sharing support from patients’ annual cost-sharing limits only if a generic equivalent is available and medically appropriate? (1 point) b. 2021 NBPP: i. Does the response state that the 2021 NBPP had allowed private health insurers to utilize copay accumulator programs regardless of a generic’s availability? (1 point) c. September 2023 Order: i. Does the response state that the Court vacated the 2021 NBPP in its September 2023 order? (1 point) d. Motion to Clarify: i. Does the response state that the Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (collectively, the agencies) motioned to clarify the scope of the Court’s September 2023 order? (1 point) ii. Does the response state that in their motion to clarify, the agencies explained that they intended to address through rulemaking any issues left open by the Court’s September 2023 order? (1 point) iii. Does the response state that in their motion to clarify, the agencies explained that they would not take any enforcement action against insurers for the copay accumulator programs they choose to offer? (1 point) iv. Does the response state that Plaintiffs objected to the agencies’ plans to implement a nonenforcement policy? (1 point) e. December 2023 Order: i. Does the response state that the Court’s December 22 order makes clear that the 2020 NBPP was reinstated by the Court’s prior September 2023 order? (1 point) ii. Does the response state that as of the December 22 order, private health plans may exclude the value of manufacturer cost-sharing support from patients’ annual cost-sharing limits only if a generic equivalent is available and medically appropriate? (1 point) iii. Does the response state that considering the reinstated 2020 NBPP and the agencies’ nonenforcement policy, it is unclear whether the limitation regarding generic availability will be enforced? (2 points) iv. Does the response state that the agencies’ intention to engage in future rulemaking on the issue indicates that a new rule may be forthcoming? (2 points) Negative Points: 1. -1 point for every hallucination 2. -0.5 point for every statement of accurate but extraneous or misconstrued information

Transactional

Corporate Strategy & Advising

Draft memorandum to general counsel regarding the treatment of employee equity awards in merger.

"Draft a memo to the general counsel of Ansys, Inc. describing the treatment of employee equity awar(...TRUNCATED)

"19. Synopsys.pdf\n\nDocument Contents:\n[File: 19. Synopsys.pdf]\n**Exhibit 2.1**\n\n**EXECUTION CO(...TRUNCATED)

"Affirmative Points:\n\n1. Structure:\n a. Is the response formatted as a memo? (1 point)\n (...TRUNCATED)

Transactional

Drafting

"Draft board consent approving a potential conflict of interest in the engagement of a lawyer who is(...TRUNCATED)

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Transactional

Negotiation Strategy

Analyze expense reimbursement provisions in precedent agreements to determine market terms.

"State whether or not each document contains an expense reimbursement provision. Summarize the expen(...TRUNCATED)

"60a. Spansion Inc..pdf\n60b. J. L. Halsey Corporation.pdf \n60c. Condor Hospitality Trust, Inc..pdf(...TRUNCATED)

"Affirmative Points:\n\n1. Structure: N/A\n2. Style: N/A\n3. Substance:\n a. Spansion, Inc. d(...TRUNCATED)

Litigation

Trial Preparations & Oral Argument

"Draft an explanation of potential objections to a third-party subpoena in federal court and create (...TRUNCATED)

"Can we object to subpoenas served on third parties in federal court? Please explain and provide opt(...TRUNCATED)

"Affirmative points\n\n1. Structure: \n a. Does the response include an overview of options o(...TRUNCATED)