As highlighted by Professor Bagley on this blog last Friday, the D.C. Circuit’s recent opinion inAmerican Hospital Association v. Burwell offers an intriguing look at a complex problem facing the Medicare program—and the health care providers and suppliers wrapped up in its dramatically backlogged appeals system.

Professor Bagley’s excellent post neatly articulates the complicated issues before the court and also helpfully contextualizes the case—feats I won’t repeat here. What I wish to underscore are two significant statements made in the opinion that could carry weight going forward—both in this case, and more broadly.

First, the D.C. Circuit stated that “even government counsel conceded at oral argument that 43% of ALJ appeals (including from [Recovery Audit Contractor (RAC)] and non-RAC denials) succeed.” The court concluded that “[t]his reversal rate is hardly negligible,” and contrasted this with the alternate possibility that “[i]f the vast majority of these delayed appeals were ultimately denied, they might amount to little more than an unfortunate nuisance.” In this respect, the D.C. Circuit seemed to validate the concerns raised by multitudes of health care providers and suppliers in recent years about overly aggressive RAC reviews.

Separately, the opinion contains a noteworthy discussion of the boundaries of the HHS Secretary’s discretion to implement the RAC program in light of other statutory requirements, namely thestatutory deadlines governing the Medicare appeals process. While not dispositive of this case (due to the intertwined questions regarding the appropriateness of mandamus), the D.C. Circuit pronounced: “Federal agencies must obey the law, and congressionally imposed mandates and prohibitions trump discretionary decisions.”

This statement packs a punch, and it will be interesting to see how the D.C. District Court comes down on whether to grant mandamus relief in light of the existing statutory violation. In many cases challenging agency action as in excess of statutory authority, the devil lies in the details, and reasonable people can come to different conclusions regarding whether the agency has acted ultra vires. This case is different in that the Medicare appeals deadlines in the statute are not ambiguous, though the issue is complicated by the complex set of considerations regarding the appropriateness of a writ of mandamus in any individual situation.

This case promises to remain of interest and import for health care providers, health lawyers, and the broader administrative/regulatory law community.

Tamara Tenney is a Senior Attorney in the Health Care Regulatory group at Alston & Bird LLP.*

* The views expressed here are those of the author and do not represent or reflect the views of Alston & Bird.