Court orders temporary halt to CBD.

On April 8, 2008, a federal district court in San Diego ordered a temporary halt to Centers for Medicare and Medicaid Services' (CMS') competitive bidding demonstration (CBD) in the San Diego-Carlsbad-San Marcos communities of southern California. The order resulted from a lawsuit brought by three area labs --Internist Laboratory, Sharp Healthcare, and Scripps Health--requesting a preliminary injunction to prevent the project from proceeding while the legal issues are adjudicated. In granting the plaintiffs' request, Judge Thomas J. Whelan ordered that CMS not be permitted to:

*. announce winning bidders (CMS had intended to announce the winning bidders on Friday, April 11);

*. implement or carry out the CBD project for the San Diego-Carlsbad-San Marcos metropolitan area; and

*. disclose any information included in the bid applications.

Judge Whelan also ordered that the preliminary injunction remain in force "until further order of the Court," which presumably means until the Court issues a final decision on the legal issues contained in the lawsuit. Certain criteria must be met in order to issue a preliminary injunction, including:

*. establishing that the Court has jurisdiction to hear the case and that the plaintiffs have standing to bring the lawsuit. Both of these were affirmed in a ruling issued by Judge Whelan on Friday, April 4, 2008; and

*. establishing that the plaintiffs' claims are "ripe for review" (i.e., ready to be heard by the Court. For example, in denying plaintiffs' Feb. 4,2008, request for a temporary restraining order, the judge ruled that no irreparable harm had been created by requiring labs to submit bids by Feb. 15.

On the other hand, Judge Whelan affirmed on April 4, 2008, that the plaintiffs' claims were then "ripe for review" because CMS' stated intention to announce winning bidders on April 11 presented the real possibility of irreparable harm to at least one of the plaintiffs--Internist Laboratory--demonstrating that the plaintiffs a) will suffer irreparable harm; b) are likely to succeed on the merits of the case; and c) will clearly suffer the most hardships. Judge Whelan ruled that all of these conditions are met. He cited the fact that Internist Laboratory relies on Medicare for 65% of its revenue and that if this lab fails to qualify as a winning bidder, it will undoubtedly suffer irreparable harm by being put out of business.

Judge Whelan also ruled that plaintiffs are likely to succeed on the merits of a number of claims made in their lawsuit, including that:

*. CMS' failure to comply with the Administrative Procedures Act (APA) was not harmless;

*. CMS' definition of the "face-to-face" exemption from competitive bidding is arbitrary and capricious; and

*. CMS' requirement that labs bid on the specimen-collection fee goes beyond the agency's statutory authority and is, therefore, illegal.

Finally, Judge Whelan ruled that the three plaintiffs' laboratories would suffer the balance of the hardships. In addition to the possibility of Internist Laboratory being forced out of business, Judge Whelan notes that Scripps Health estimates that it could lose a minimum of $1.9 million in revenue and that Sharp Healthcare would have to close some drawing sites and a significant segment of its outreach laboratory. In addition to these economic injuries, Sharp and Scripps identified severe challenges to their integrated medical networks. And, Judge Whelan concludes "... the quality of patient health care (for Medicare beneficiaries and others) will diminish."

As for CMS, Judge Whelan believes the only hardship it will suffer is that the CBD project will be delayed for a period of months. "Given that roughly five years have passed since Congress authorized the project," Judge Whelan points out, "it is doubtful that a short delay will have a significant impact in the ultimate long-term goal of reducing Medicare costs."

While the Court's ruling is a very positive development, it is not final, and CMS is likely to appeal this ruling. The court decision is an important, but not conclusive, steppingstone towards the Clinical Laboratory Coalition's (CLC's) ultimate goal: persuading Congress to repeal the authorization for the CBD project.

Whelan's preliminary injunction provides the lab community with a temporary window of time to generate additional grassroots support for the HR 3453 and S 2099 bills to repeal competitive bidding for Part B clinical laboratory services. Contact your Members of Congress. Urge them to co-sponsor HR 3453 and S 2099. Visit AAB/NILA's special website, www. SaveOurLabs.com, for sample letters to Members of Congress, copies of HR 3453 and S 2099, a list of current co-sponsors, and copies of Judge Whelan's April 4 and April 8, 2008, court decisions.

DO NOT DELAY! Congress is likely to complete its Medicare legislation early because of the Presidential election--possibly by late June or early July.

Mark S. Birenbaum, phD, is administrator of the American Association of Bioanalysts. He holds a degree in Microbiology from Washington University in St. Louis, MO.

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By Mark S. Birenbaum, PhD

RELATED ARTICLE

Laboratory Association Members of the CLC*

*. American Association of Bioanalysts(AAB)

*. American Association for Clinical Chemistry (AACC)

*. American Clinical Laboratory Association (ACLA)

*. American Medical Technologists (AMT)

*. American Society for Clinical Laboratory Science (ASCLS)

*. American Society for Clinical Pathology (ASCP)

*. American Society for Microbiology (ASM)

*. Clinical Laboratory Management Association (CLMA)

*. College of American Pathologists (CAP)

*. National Independent Laboratory Association (NILA)

* In addition to the laboratory association members, there are a number of individual laboratories and other trade associations that participate in CLC activities.