The 5th U.S. Circuit Court of Appeals has issued its ruling in Physician Hospitals of America, et al. v. Sebelius, a case in which a group of doctors and hospitals sued U.S. Department of Health and Human Services Secretary Kathleen Sebelius, challenging a portion of the Affordable Care Act that limits doctors’ self-referral of Medicare patients to doctor-owned hospitals.
A trial court denied Sebelius’ motion to dismiss for lack of subject matter jurisdiction but granted her summary judgment motion, concluding that Congress had a rational basis in passing the law and that the law did not constitute a taking. The plaintiffs appealed the grant of summary judgment to the 5th Circuit.
Tex Parte readers may recall the case because of what happened at oral argument on April 3. Days before the argument, when another challenge to the act was pending at the U.S. Supreme Court in National Federation of Independent Business, et al. v. Sebelius, President Barack Obama made a statement about an “unelected” court possibly striking down the health-care overhaul. That prompted 5th Circuit Judge Jerry Smith to ask a U.S. Department of Justice attorney at oral argument in Physician Hospitals of America for a letter addressing the DOJ’s and U.S. Attorney General Eric Holder’s positions on the authority of federal courts to strike down laws passed by Congress. Holder responded to Smith’s request on April 5.
The U.S. Supreme Court issued its decision on ACA in National Federation of Independent Business on June 28.
The 5th Circuit vacated the appeal in Physician Hospitals of America on Aug. 16 and remanded it to the trial court for further proceedings, finding that the trial court did not have subject-matter jurisdiction to hear the case. The 5th Circuit wrote that the Physician Hospitals of America plaintiffs first should have pursued their claims through the DHS’ administrative process before filing their complaint in federal court.
“The plaintiffs had to proceed with the available administrative procedures,” wrote Judge Leslie Southwick in an opinion joined by Judges Emilio Garza and Smith. “Their failure to do so leaves us without subject-matter jurisdiction over the claims they have presented in this suit.”
--- John Council