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Callahan v. United States Department of Health and Human Services

United States Court of Appeals, Eleventh Circuit

September 25, 2019

RANDALL CALLAHAN, KATRYNA GRISSON, CANDICE SEAMAN, MICHAEL WINGATE, EMORY UNIVERSITY, d.b.a. Emory University Hospital, HENRY FORD HEALTH SYSTEM, INDIANA UNIVERSITY HEALTH, OREGON HEALTH & SCIENCE UNIVERSITY, PIEDMONT HEALTHCARE, THE RECTOR AND VISITORS OF THE UNIVERSITY OF VIRGINIA, on behalf of its Medical Center, THE REGENTS OF THE UNIVERSITY OF MICHIGAN, on behalf of its academic medical center, Michigan Medicine, SAINT LUKE'S HOSPITAL OF KANSAS CITY, UNIVERSITY OF IOWA, UNIVERSITY OF KANSAS HOSPITAL AUTHORITY, a body politic and corporate and an independent instrumentality of the State of Kansas, UNIVERSITY OF KENTUCKY, VANDERBILT UNIVERSITY MEDICAL CENTER, VIRGINIA COMMONWEALTH UNIVERSITY HEALTH SYSTEM AUTHORITY, THE WASHINGTON UNIVERSITY, BARNES-JEWISH HOSPITAL, Plaintiffs - Appellants,
v.
UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, through ALEX M. AZAR II in his official capacity as Secretary of the United States Department of Health and Human Services, UNITED NETWORK FOR ORGAN SHARING, Defendants-Appellees, SUSAN JACKSON, CHARLES BENNETT, Intervenor Appellees.

          Appeal from the United States District Court for the Northern District of Georgia D.C. Docket No. 1:19-cv-01783-AT

          Before WILSON and NEWSOM, Circuit Judges, and COOGLER, [*] District Judge.

          NEWSOM, CIRCUIT JUDGE:

         The liver is one of the human body's most vital and versatile organs. Among its 500-some-odd functions, the liver cleans the blood, regulates amino acids, produces critical proteins, manages blood clotting, and facilitates digestion. But that's when things go right. Far too often-and due to a variety of causes- things can go wrong, and when they do modern medicine has to step in. For minor liver complications, medication and dietary changes will usually do the trick. When liver failure sets in, though-when things go really wrong-there is often only one long-term solution: transplant.

         This case centers on the high-stakes rules that determine which patients- among the more than 12, 000 currently on the national waiting list-receive the liver transplants they need. In December 2018, a private nonprofit entity tasked by the Department of Health and Human Services (HHS) with coordinating the nation's organ-transplant system adopted a new policy for allocating donated livers. This suit followed. Plaintiffs, four liver-transplant candidates and more than a dozen transplant hospitals, challenged the policy in federal district court on a variety of grounds and moved for preliminary injunctive relief barring the policy's implementation. The district court denied the motion, and plaintiffs filed an interlocutory appeal.

         The central question we face is one of regulatory construction. In particular, we must determine whether 42 C.F.R. § 121.4(b) required the Secretary of HHS to take two procedural steps that all agree he did not: (1) referral of the new liver-allocation policy to an entity called the Advisory Committee on Organ Transplantation and (2) publication of the new policy in the Federal Register for public comment. We hold that the Secretary was not required to do so, and we therefore affirm-at least in that regard-the district court's denial of plaintiffs' preliminary-injunction motion. Because the district court failed to address two of plaintiffs' claims, however, we remand for consideration of them in the first instance.

         I

         Before diving into the merits, we first need to canvass the statutory and regulatory landscape, some factual background, and the case's procedural posture. Fair warning: This gets complicated.

         A

         In the United States, organ transplants are a public-private affair. The National Organ Transplant Act of 1984 requires HHS to appoint and oversee the Organ Procurement and Transplant Network (OPTN)-a private nonprofit responsible for coordinating foundational aspects of the nation's organ-transplant system. See 42 U.S.C. § 274. Under the Act, the OPTN must maintain a list of transplant candidates, implement a system for allocating donated organs, and ensure the organs' equitable distribution. See id. § 274(b).

         While the Act describes the OPTN's duties in broad strokes, HHS's implementing regulation-the "Final Rule"-covers the nitty-gritty, from the OPTN's Board of Directors to its record-maintenance policy. See 42 C.F.R. §§ 121.1–.13. Most importantly for present purposes, the Final Rule prescribes the procedures that the OPTN must follow when developing new organ-transplant policies, as well as the circumstances under which-and extent to which-HHS must review those policies. See id. § 121.4.

         We'll get way down into the regulatory weeds in due time, complete with a dense block quote of the Final Rule's pertinent text-but for now it's enough to summarize the Rule's key features. As an initial matter, the Final Rule states that whenever the OPTN proposes any new policy, its Board of Directors must give OPTN members and other "interested parties" an opportunity to comment on it, and the Board must "take [those comments] into account" in developing and adopting the policy. Id. § 121.4(b)(1). Separately, the Rule requires the OPTN to provide the Secretary of HHS with two types of proposed policies at least 60 days prior to their intended implementation: (1) those that the OPTN Board "recommends to be enforceable"[1]; and (2) those that relate to "such other matters as the Secretary directs." Id. at § 121.4(b)(2). Finally, as part of the same subsection-and as you'll see soon enough, this is where the debate hinges-the Final Rule requires the Secretary to refer "significant proposed policies" to the Advisory Committee on Organ Transplantation and to publish those policies in the Federal Register for "public comment." Id.

         B

         An organization called the United Network for Organ Sharing has served as the OPTN for the past 35 years. In 2013, United Network approved and implemented the liver-allocation policy that remains in place today. The current policy distributes livers based on two geographic criteria: "Regions"-11 groups of states-and "Donation Service Areas" (DSAs)-58 smaller, geographically irregular areas (within and among states) that surround the entities that United Network has tasked with collecting donated organs.[2]

         In recent years, the use of DSAs has come under fire. Critics of the DSA-based system contend that because DSAs are neither geographically uniform nor designed to minimize transit of donated organs, reliance on them can lead to bizarre allocation results. They argue, for instance, that organs can end up traveling greater distances to less-sick patients.[3] Defenders of the DSA-based system, by contrast, insist that aligning organ allocation with the organ-procurement organizations encourages communication between the entities that collect organs and those that perform transplants.

         By 2016, United Network had decided that things needed to change. After more than a year of exploring alternatives, United Network approved a new liver-allocation policy in December 2017. That policy-which retained DSAs but reduced their impact on allocation decisions-was set to take effect in December 2018. In May 2018, however, a group of patients awaiting liver transplants filed a comment with the Secretary pursuant to 42 C.F.R. § 121.4(d)[4] criticizing any continued use of DSAs in liver-allocation determinations. Two months later, in July 2018, the Secretary instructed United Network's Board to scrap the December 2017 policy and adopt a new one that eliminated the use of Regions and DSAs altogether.

         United Network went back to the drawing board, but it faced an extremely tight timeline. The Secretary's July 2018 instruction imposed a December 3, 2018 deadline for promulgating the new liver-allocation policy. By September, the Liver and Intestinal Transplantation Committee-a specialized group within United Network that makes recommendations to the Board-had homed in on two alternative, DSA-less approaches for allocating livers: the "Acuity Circles" model and the "Broader 2-Circle" model.[5] When the Committee published its policy proposal on October 6, it identified the Broader 2-Circle model as the "preferred" policy, but it sought public comment on both options. At the Committee meeting on November 2, the Broader-2 Circle model prevailed by a narrow 11-9 vote.

         United Network's Board, however, went the other way. On December 3, 2018-the HHS-imposed deadline-the Board adopted the Acuity Circles model. This model, the Board found, would result in "lower waitlist mortality rate[s]" and "more equity in access" for liver-transplant candidates. United Network later set the policy's implementation date for April 30, 2019.

         Up to this point, HHS had remained on the sidelines. Of course, the Secretary had initiated the process by directing United Network to adopt a new, DSA-less allocation policy. But once the new policy's development began, HHS didn't actively intervene. As particularly relevant here, consistent with HHS's treatment of prior organ-allocation policies, the Secretary didn't refer the new policy to the Advisory Committee on Organ Transplantation or publish it in the Federal Register for public comment.

         The new policy's detractors, however, brought HHS into the mix. Just as critics of the December 2017 policy had done, a group of hospitals that opposed the new policy filed a comment with the Secretary asking him to suspend the new policy's implementation until something better could be developed. This time, though, the policy survived the challenge. Acting on the Secretary's behalf, the Administrator of HHS's Health Resources and Services Administration responded to the comment, announcing that no further action was warranted and that the new policy would take effect as scheduled.

         C

         On April 22, 2019-eight days before the new policy's official implementation date-a collection of hospitals and individual patients sued HHS and United Network in the United States District Court for the Northern District of Georgia.[6] Plaintiffs' complaint challenged the new liver-allocation policy on three grounds: (1) that HHS failed to follow legally required procedures during the development of the new policy, in violation of the Administrative Procedures Act (APA); (2) that HHS's and United Network's actions were-both substantively and procedurally-arbitrary, capricious, and otherwise not in accordance with the law, also in violation of the APA; and (3) that HHS's and United Network's conduct violated the Due Process Clause of the Fifth Amendment. Asserting the same grounds, plaintiffs also filed a motion for a temporary restraining order, asking the district court to prevent the new policy's impending implementation.[7]

         Following HHS's agreement to delay implementation by two weeks, the district court received expedited briefing and held a hearing on plaintiffs' TRO motion. On May 13, 2018, the district court-in an order that addressed only plaintiffs' first claim-denied the motion. The following day, the new liver-allocation policy went into effect for the first time. Its force, however, was short lived. Plaintiffs immediately noticed this appeal and sought an injunction pending its disposition, which the district court granted. As a result, HHS reinstated the prior (and once again current) policy.

         So here we are. After years of development, thousands of public comments, and several revisions, the nation's policy for allocating donated livers hangs in the balance.

         II

         The standard for obtaining preliminary injunctive relief is a familiar one. Such relief is appropriate if-but only if-the movant shows "(1) substantial likelihood of success on the merits; (2) irreparable injury will be suffered unless the injunction issues; (3) the threatened injury to the movant outweighs whatever damage the proposed injunction may cause the opposing party; and (4) if issued, the injunction would not be adverse to the public interest." McDonald's Corp. v. Robertson, 147 F.3d 1301, 1306 (11th Cir. 1998). Because a preliminary injunction "is an extraordinary and drastic remedy, " relief may not be granted ...


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