Healthcare / Payor-Provider Disputes · No Surprises Act · Qualifying Payment Amount (QPA) · Administrative Procedure Act

Updated October 18, 2026, to reflect post-decision filings. See the dated update under What to Watch.

Introduction

The No Surprises Act (NSA) sends out-of-network payment disputes to “baseball” arbitration, and the courts have spent 2026 defining what that process produces. This one is about where the numbers start. Every independent dispute resolution (IDR) case begins with the qualifying payment amount (QPA), which the health plan calculates, and providers have argued that the federal rules for calculating it push QPAs below the market rates Congress meant them to reflect. On August 11, 2026, the en banc Fifth Circuit decided three of those challenges. First, it held that insurers may not include non-negotiated “ghost rates” for services a provider doesn’t provide. Second, it held that insurers may not exclude bonus and incentive payments, which may or may not be tied to the provision of specific items and services. Third, it held that insurers may exclude one-off, single-case agreements, which are common in air ambulance billing. The court also approved vacatur as the remedy, despite six judges’ view that the case should be remanded without vacatur.

Executive Summary

The plaintiffs are the Texas Medical Association, Tyler Regional Hospital and a physician, along with a second group the court calls “the air ambulance plaintiffs.” They sued the U.S. Department of Health and Human Services (HHS), the U.S. Department of Labor (DOL), the U.S. Department of the Treasury (Treasury) and the Office of Personnel Management (OPM) under the Administrative Procedure Act (APA), challenging the July 2021 interim-final rule in which the agencies set the QPA methodology, along with the FAQs the agencies issued in August 2022, as contrary to the NSA and arbitrary and capricious. The U.S. District Court for the Eastern District of Texas ruled for the plaintiffs and vacated the agencies’ actions. A Fifth Circuit panel reversed, and the full court granted rehearing, which vacated the panel opinion.

The en banc court affirmed in part, reversed in part and remanded. A majority held that, under the plain language of the NSA, the QPA: 1) must not include ghost rates; 2) must include bonus and incentive payments, which may or may not be tied to the provision of specific items and services; and 3) does not include single-case agreements. It held that the district court appropriately vacated the agencies’ actions. Three judges wrote separately: Judge Ho in a concurrence questioning universal vacatur, Judge Oldham in a partial concurrence that would have decided the case on APA notice-and-comment grounds, and Judge Haynes, joined by five judges, in a partial dissent on the first two issues and the remedy.

Background

What the QPA does in IDR

The NSA defines the QPA as “the median of the contracted rates recognized by” a plan “as the total maximum payment . . . for the same or a similar item or service that is provided by a provider in the same or similar specialty and provided in the geographic region in which the item or service is furnished.” 42 U.S.C. § 300gg-111(a)(3)(E)(i)(I). The statute builds it from the plan’s contracted rates as of January 31, 2019, for the same or a similar service, by providers in the same or similar specialty in the same geographic region, and takes the median, adjusted for inflation in later years. Id. § 300gg-111(a)(3)(E)(i). The court’s translation: “The QPA is the median of the total maximum rates in an insurer’s contract for an item or service that a provider provides and furnishes, sorted by specialty and geographic region.” Texas Medical Association, 2026 WL 2322331, at *1.

The QPA thus is a stand-in for what the plan would have paid an in-network provider. It does two jobs. First, in most cases it sets the patient’s cost-sharing, which keeps the patient out of the payment fight and prevents balance billing. Second, it is the starting point in IDR. As Judge Oldham’s opinion summarizes, the patient’s cost-sharing is calculated as a portion of the QPA, and the provider and insurer negotiate the rest. Id. at *10 (Oldham, J., concurring in part). When negotiation fails, the dispute goes to IDR, where each side submits an offer and the IDR entity picks one. The per curiam described the QPA’s role this way: “Congress intended the QPA to serve as a focal point of provider-insurer negotiations.” Id. at *3 (citing 42 U.S.C. § 300gg-111(c)(5)(C)(i)(I)).

That’s why the calculation matters to both sides. A plan’s offer is often built from the QPA, and a provider’s offer has to justify departing from it. Inputs that pull the median down, such as low non-negotiated rates, move the starting point toward the plan. Inputs that push it up, such as bonus payments tied to a service, move it toward the provider. Each of the three rules challenged here changed which rates go into the median.

Offers and outcomes in IDR

The QPA is the one figure the IDR entity is always required to consider, alongside other information the parties submit, such as the provider’s training and experience, the complexity of the case and the parties’ contracting history. 42 U.S.C. § 300gg-111(c)(5)(C). The plan calculates its QPA itself and discloses it with its initial payment or denial. A plan’s offer typically sits at or near its QPA, and providers argue for more. The Centers for Medicare & Medicaid Services (CMS) has reported that plans “often benchmarked their offers to the QPA,” while providers pointed to past out-of-network payments and in-network rates. CMS, Supplemental Background on Federal Independent Dispute Resolution Public Use Files (July 1, 2025 – December 31, 2025).

What a plan reports as its QPA can matter as much as how the QPA is calculated. In REACH Air Medical Services LLC v. Kaiser Foundation Health Plan Inc., Kaiser paid an air ambulance provider $24,813.48 and told it that amount was its QPA. In IDR, Kaiser offered the same $24,813.48 but told the IDR entity its QPA was $17,304.29. According to the provider, the lower figure made Kaiser’s offer look well above the QPA. The Eleventh Circuit held that those allegations were not pleaded with enough particularity and did not decide whether they were true. 160 F.4th 1110, 2025 WL 3222820, at *2, *7 (11th Cir. Nov. 19, 2025).

The outcomes of the IDR process have run heavily one way. In the second half of 2025, providers, facilities and air ambulance providers were the prevailing party in about 85% of payment determinations, down from 88% in the first half of the year, and the prevailing offer exceeded the QPA in about 87% of determinations. CMS, Supplemental Background, supra. Researchers at Georgetown University’s Center on Health Insurance Reforms, analyzing CMS data, put the provider share at 81% in 2023 and 85% in 2024. Jack Hoadley, Kennah Watts, Katie Keith & Ellie DeGarmo, The No Surprises Act IDR Process: An Early Look at 2025 Data, Health Affairs Forefront (Mar. 2026). A “win” means the IDR entity chose the provider’s offer, not that the provider received any particular amount, and a small number of high-volume filers account for much of the volume. Insurers read that record as evidence that the process is being gamed; providers read it as evidence that plans’ QPAs are routinely understated.

The rules and the record

The interim-final rule, issued without notice and comment by the agencies in July 2021, instructed insurers to treat “each contracted rate for a given item or service” as a “single data point when calculating a median contracted rate . . . regardless of the number of claims paid at that contracted rate.” Id. at *1 (quoting 86 Fed. Reg. 36,872, 36,889 (July 13, 2021)). Insurers often offer providers a form fee schedule covering every service, and providers negotiate only the rates for services they plan to bill. The rest, the “ghost rates,” can be very low, in some cases $0. Id. at *2. In FAQ 14 of the August 2022 FAQs, the agencies instructed insurers that they “should not include $0 amounts in calculating median contracted rates,” but left non-$0 ghost rates in. Id.

The July 2021 rule also excluded bonus and incentive payments, 45 C.F.R. § 149.140(b)(2)(iv), and single-case agreements from the QPA calculation. Id. at *4, *6.

The per curiam pointed to the IDR numbers as evidence of the effect: arbitrations exceeded the agencies’ expectations by a factor of 84, providers prevailed in over 80% of them, and arbitrators selected a rate above the QPA in 85%. Id. at *3.

On single-case agreements, the original panel had rejected the plaintiffs’ challenge to their exclusion. Texas Medical Association, 120 F.4th at 506. The plaintiffs did not ask the full court to rehear that ruling in their joint en banc petition, but the air ambulance plaintiffs raised it again in their supplemental en banc brief. Texas Medical Association, 2026 WL 2322331, at *6.

Legal Analysis

• Ghost rates are not rates for services “provided by a provider.” The majority held that by requiring “each contracted rate” regardless of claims paid, the July rule swept in rates for services that were neither “provided by a provider” nor “furnished,” as the statute requires. Id. at *2. It called $0 rates “the clearest example,” noting that “it is undisputed that no provider ever agreed to provide any item or service for $0.” Id. And it read FAQ 14 as underscoring the problem rather than fixing it: if a $0 rate must come out because the provider obviously didn’t agree to it, the same is true of a below-market $1 rate. “Either the provider contracted for the rate, or he did not.” Id. at *3.
• The agencies’ textual and practical defenses didn’t carry. The agencies argued that the “same or similar specialty” limit already screens out ghost rates; the court answered that providers within a specialty often don’t offer overlapping services. Id. at *3. To the agencies’ arguments that providers need only make a service “available,” or might provide it in the future, the court answered that even on those readings the rules still include rates for services the agencies themselves described as ones providers are “not equipped to furnish.” Id. at *4. The agencies also asked what time period would determine whether a provider “provides” a service. The court called that “a fair question,” but one the agencies could have answered through notice and comment rather than an interim-final rule. Id.
• “Total maximum payment” includes bonus and incentive payments. Relying on dictionary definitions of “total” and “maximum,” the majority read the phrase to mean “the whole, entire payment and the sum of all payments from the insurer to the provider for the given item or service.” Id. at *4. The agencies argued that these payments are “rarely tied to specific contracted rates” and are usually paid “as an annual lump sum.” The court responded that some are tied to services, and that the rulemaking provision, which says the agencies “shall take into account payments that . . . are not on a fee-for-service basis,” 42 U.S.C. § 300gg-111(a)(2)(B), means they “cannot ignore or exclude them.” Id. at *5. On infeasibility, the court again said the agencies could have built a record through notice and comment. Id.
• Single-case agreements are not “contracted rates” recognized “under” a plan. Here the majority sided with the agencies. A “rate,” it reasoned, “connotes a per-unit price for multiple units,” which doesn’t naturally fit one-off agreements. Id. at *6. Even if it did, those agreements aren’t rates “recognized” “under” the plan, because they arise in emergencies “when insurers pay out-of-network providers at exceedingly high rates apart from any generally applicable health plan.” Id. The court added that a statute keyed to rates in effect on January 31, 2019 is “difficult to square with single-use agreements.” Id. It rejected the air ambulance plaintiffs’ counterarguments, including that the agencies treat single-case agreements as a “contractual relationship” elsewhere, 45 C.F.R. § 149.30. Id. at *7. On arbitrary-and-capricious review, it observed that because “the air ambulance business model is built on avoiding in-network contracts, we cannot say it was arbitrary or capricious to exclude them from a scheme built on in-network contracts.” Id. The plaintiffs also argued that including unpaid rates while excluding single-case agreements was internally inconsistent. The court agreed, and resolved the inconsistency by vacating the ghost-rate provisions. Id. at *7 n.4.
• Vacatur, not remand. Following circuit precedent that vacatur of unlawful agency action is the APA’s default remedy, the en banc court held that the district court appropriately vacated the agencies’ actions. Id. at *8 (citing Cargill v. Garland, 57 F.4th 447, 472 (5th Cir. 2023) (en banc), aff’d, 602 U.S. 406 (2024)). The agencies and insurers warned that recalculating QPAs would take time and that patients could lose balance-billing protection while that process unfolds. The court answered that “[t]he APA . . . does not embrace a too-big-to-vacate principle,” and pointed to the district court’s observation that the agencies “can exercise their enforcement discretion to allow insurers to continue using their existing QPAs until new QPAs are calculated consistent with the Act,” as they had been doing during the appeal. Id.
• Judge Ho: concurring, with reservations about universal vacatur. The government asked the court to revisit whether universal vacatur of an agency rule is lawful under the APA. Judge Ho laid out the arguments against it, drawing on Trump v. CASA, Inc., 606 U.S. 831 (2025), but concurred because circuit precedent goes the other way and there “is not presently interest [sic] to revisit that precedent.” Id. at *8–9 (Ho, J., concurring).
• Judge Oldham: concurring in part, on procedural grounds. Judge Oldham would have held FAQ 14 invalid because an agency “cannot fix a substantive error in a formal legislative rule through an informal FAQ document.” Id. at *12 (Oldham, J., concurring in part). On his view, the July rule’s inclusion of $0 ghost rates was contrary to law, FAQ 14 amended a legislative rule without notice and comment and was “a legal nullity,” and the court should remand with instructions to follow notice-and-comment procedure without reaching the other substantive challenges. Id. at *12–14, *18.
• Judge Haynes: concurring in part and dissenting in part. Judge Haynes, whose opinion refers in a footnote to “my panel opinion,” was joined by Judges Stewart, Graves, Higginson, Douglas and Ramirez. She agreed on single-case agreements and would have remanded rather than vacated. Id. at *18 & n.1 (Haynes, J., concurring in part and dissenting in part). On ghost rates, she read “provided” to mean “available” and viewed the $0 exclusion as essentially extinguishing the likelihood of rates for services a provider would never provide. Id. at *18–19. On bonuses, she read § 300gg-111(a)(2)(B) as authority for the agencies to decide how to treat those payments, and noted that some incentive adjustments, such as penalties, decrease payment. Id. at *19–20.

Holding

Affirmed in part, reversed in part and remanded for further proceedings consistent with the opinion, with the agency rules vacated. The court held that the July 2021 rule, as modified by FAQ 14, unlawfully requires insurers to include non-negotiated ghost rates in the QPA, and that the rule’s exclusion of bonus and incentive payments, 45 C.F.R. § 149.140(b)(2)(iv), conflicts with the statute’s “total maximum payment” language. It held that the exclusion of single-case agreements from “contracted rates” is consistent with 42 U.S.C. § 300gg-111(a)(3)(E)(i)(I) and is not arbitrary or capricious. It held that the district court appropriately vacated the agencies’ actions. Per the opinion’s opening footnote, nine judges joined the per curiam in full; Judge Southwick concurred in Parts I (ghost rates) and III (single-case agreements); and Judge Oldham concurred in part. Id. at *1 n.*.

What to Watch

• Further review. The government’s deadline to petition for certiorari is November 9, 2026, 90 days from the August 11, 2026 judgment, unless the deadline is extended.
• Update (October 18, 2026). The government filed its petition for certiorari on October 14, 2026, ahead of the deadline. Department of Health and Human Services v. Texas Medical Association, No. 26-491 (U.S. filed Oct. 14, 2026). The petition does not ask the Supreme Court to review the en banc court’s holdings on ghost rates, bonus and incentive payments, or single-case agreements. It presents only the remedy question: “[w]hether the Administrative Procedure Act . . . authorizes courts, in Section 706(2), to enter universal vacatur of agency rules that courts have held unlawful and, if so, in what circumstances.” That is the issue on which Judge Haynes, joined by five other judges, would have remanded rather than vacated. The government relies on Trump v. CASA, Inc., 606 U.S. 831 (2025), and acknowledges that there is no circuit split. The response is due November 13, 2026. The Fifth Circuit’s mandate issued October 2, 2026.
• New QPAs and the interim period. The court contemplated a period in which insurers recalculate QPAs, and the agencies use enforcement discretion to let existing QPAs stand in the meantime. The “fair question” the court left open is how to tell whether a provider “provides” a service and over what time period. This question will have to be answered—presumably by the agencies after a notice-and-comment period—before ghost rates can be screened out.
• Bonus and incentive payments in practice. The majority held that these payments must be included in the QPA “for the relevant item or service.” The agencies’ infeasibility objection, and Judge Haynes’s point that some adjustments are penalties that decrease payment, preview the questions that will arise in applying that holding.

What This Means for Resolving Payor-Provider Disputes

IDR is final-offer, or “baseball,” arbitration in which the reference point does much of the work. The QPA is that reference point. When it moves, both offers move with it: the plan’s number is anchored to it, and the provider’s argument is measured against it. The en banc court has moved two inputs in the providers’ direction and left a third, single-case agreements, where it was, so disputes over air ambulance services will continue to be built without those rates.

The near-term effect on resolution of these disputes runs in two directions. Until QPAs are recalculated, the parties are negotiating against a number the Fifth Circuit has held was calculated unlawfully, which gives providers an argument for discounting it and plans an argument that it remains the operative figure. That kind of disagreement over the starting point tends to keep claims in IDR. Once new QPAs are in place, though, a QPA that both sides regard as properly calculated is a more useful shared reference point than one either side treats as skewed. With continued litigation over the contours of the IDR process from both providers and payors, the number the process starts from carries more weight, and settling how it’s calculated may do more to narrow the range of outcomes—and promote more settlements in advance of IDR—than any later fight over an award.

John Libby is an arbitrator, mediator, and settlement counsel with LibbyADR LLC. This post contains his own summaries of the decisions discussed, prepared for general informational purposes only. The summaries are not intended to be a complete statement of any court’s reasoning, nor should they be taken to indicate how he would rule as an arbitrator in any particular case. In addition, the summaries are not legal advice, nor should they be construed as legal advice. Readers should not act on these posts, but should review the decisions themselves and consult with legal counsel.

Healthcare / Anti-Kickback Statute · Beneficiary Inducement Statute · HHS-OIG Advisory Opinions

Introduction

Patient-support programs test the outer edge of the Anti-Kickback Statute, with those offering such seemingly beneficial services to patients arguing that, as a criminal bribery statute, the terms “remuneration” and “induce” must be read narrowly to mean corrupt payments and quid-pro-quo dealing, not ordinary financial help that happens to make a treatment easier to choose. The Second Circuit rejected that reading in Pfizer, Inc. v. U.S. Department of Health & Human Services, 42 F.4th 67 (2d Cir. 2022), cert. denied, 143 S. Ct. 626 (2023), and the Fourth Circuit rejected it in Pharmaceutical Coalition for Patient Access v. United States, 126 F.4th 947 (4th Cir. 2025). On September 4, 2026, the D.C. Circuit made it three, in a case about an advisory opinion issued by the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services concerning a gene therapy for sickle cell disease and a program offering patients up to $70,000 toward fertility services that chemotherapy may cost them. In addition to joining its sister circuits in giving “remuneration” and “induce” their ordinary meanings, the court made two other rulings under the Administrative Procedure Act. First, it held that OIG acted arbitrarily and capriciously by brushing past a statutory exception with the observation that it “lack[ed] data.” Second, it held that OIG had no authority to issue regulations allowing it to determine when the 60-day statutory deadline for issuing advisory opinions began and could be tolled.

Executive Summary

Vertex makes Casgevy, a gene therapy for sickle cell disease and transfusion-dependent beta-thalassemia. The treatment requires intensive chemotherapy that can impair fertility, so Vertex created a Fertility Support Program offering patients up to $70,000 toward fertility services. It opened the program to privately insured patients and, in June 2023, asked OIG for an advisory opinion on whether extending it to federally insured patients would violate the Anti-Kickback Statute or the Beneficiary Inducement Statute. OIG didn’t issue its opinion for more than a year, and only did so three days after Vertex sued to compel it, concluding that the program would violate both statutes. The district court sided with OIG on every issue. The D.C. Circuit affirmed in part, reversed in part, and remanded. On the AKS, it held that “induce” and “remuneration” carry their ordinary meanings — to influence or prevail upon a person, and valuable compensation in any form — rather than a narrower sense drawn from criminal solicitation and facilitation, joining the Second Circuit in Pfizer and the Fourth Circuit in Pharmaceutical Coalition for Patient Access. On that reading, the program is remuneration to induce the purchase of Casgevy. But the court set aside OIG’s conclusion that the program would also violate the Beneficiary Inducement Statute, holding that the agency failed to engage with the evidence that the statutory Promotes Access to Care Exception applied. And it held that OIG’s regulations — which start the 60-day advisory-opinion clock at “formal acceptance” rather than receipt, and toll it while the agency seeks more information — are contrary to law.

Background

The two statutes

The AKS criminalizes knowingly and willfully offering or paying “any remuneration (including any kickback, bribe, or rebate) … to any person to induce such person … to purchase” an item or service reimbursable under a federal healthcare program. 42 U.S.C. § 1320a-7b(b)(2)(B). Violations are felonies, and the statute carries an extensive set of safe harbors, with authority in the Secretary to create more. The BIS is the civil counterpart, reaching remuneration offered to a beneficiary that the offeror “knows or should know is likely to influence” the beneficiary’s choice of provider, practitioner or supplier. Id. § 1320a-7a(a)(5). Among the BIS’s own exceptions is one for remuneration that “promotes access to care and poses a low risk of harm to patients and Federal health care programs.” Id. § 1320a-7a(i)(6)(F). Parties may ask OIG for an advisory opinion on whether proposed conduct would violate either statute; the opinion binds both the agency and the requester.

The program and the request

Because older patients often cannot tolerate the chemotherapy regimen, Casgevy is best taken young — by patients with their childbearing years ahead of them, who may then need fertility treatments costing tens of thousands of dollars. That is the concern the Fertility Support Program was designed to address, and Vertex withheld it from federally insured patients until OIG ruled.

Vertex requested the advisory opinion on June 13, 2023. OIG formally accepted it on June 26, requested more information, and tolled the deadline until Vertex responded on October 10. OIG said at a November teleconference that it could not issue a favorable opinion, then did not publish. Vertex asked repeatedly over the following months. On July 15, 2024, Vertex sued to compel issuance. Three days later — more than a year after the request and nine months after the supplemental information — OIG issued the opinion, concluding the program would provide prohibited remuneration under both statutes and that the Promotes Access to Care Exception did not apply because the agency “lack[ed] data.” The district court granted summary judgment for OIG on every issue and held the challenge to the timing regulations nonjusticiable once the opinion had issued.

Legal Analysis

• “Induce” means to influence, not to solicit a crime. Statutes sometimes use “induce” in a specialized criminal-law sense carrying common-law solicitation and facilitation. The court held the AKS does not, and the distinguishing feature is what is being induced. In United States v. Hansen, 143 S. Ct. 1932 (2023), the induced act — illegal immigration — was itself a crime. Under the AKS, the act induced is a beneficiary’s selection of medical services, which is lawful. With no unlawful act at the end of the chain, the presumption that Congress imported the common-law sense weakens considerably.
• The safe harbors are what settle it. The AKS’s safe harbors cover prosaic transactions — a hospital paying its physicians, a health center waiving coinsurance for a patient who qualifies for subsidized services, a pharmacy waiving a co-pay for a patient in good-faith financial need. If “induce” meant criminal solicitation, none of those would ever have needed excepting, and the safe harbors would be largely surplus. The court quoted the Fourth Circuit’s formulation that the narrow reading would “create vast superfluity in the statute.” Pharm. Coal. for Patient Access, 126 F.4th at 958.
• “Remuneration” is not confined to corrupt payments. Vertex argued that the parenthetical — “(including any kickback, bribe, or rebate)” — colors the term under noscitur a sociis (the canon that a word is known by the company it keeps). The court answered on the list’s own contents: a kickback and a bribe carry corrupt connotations, but a rebate is simply a discount or refund. A list that is not uniformly corrupt cannot narrow the general term to corruption. The court also noted the repeated “any” and the illustrative “including,” both signals of breadth.
• Lenity and vagueness got no traction. Neither the rule of lenity nor constitutional avoidance has a role, the court held, where text, context and structure resolve the question. On vagueness, the possibility of close cases does not make a statute vague, and the AKS’s knowing-and-willful scienter requirement alleviates the concern — a point on which the court noted the First, Ninth and Eleventh Circuits have come out the same way.
• The BIS ruling is an administrative-law ruling. The court held that OIG never explained why the Fertility Support Program does not qualify under the statutory exception promoting access to care. Vertex had submitted studies that infertility risk leads sickle cell patients to forgo potentially lifesaving treatment, evidence that many patients cannot afford fertility services, CMS guidance describing lack of access to fertility preservation as a significant access barrier for gene therapy candidates, and program controls limiting eligibility to patients already prescribed the therapy. OIG’s entire response was that it lacked data to determine that the program improves access. It did not say what data, why it could not obtain it, or why Vertex’s showing fell short. The district court’s view that the agency’s “path may reasonably be discerned” did not survive.
• A statutory deadline is a deadline. Congress specified, as part of the required contents of the advisory-opinion regulations, that the Secretary “shall be required to issue” an advisory opinion “not later than 60 days after the request is received.” 42 U.S.C. § 1320a-7d(b)(5)(B)(i). OIG’s regulations started the clock at formal acceptance — up to ten business days after receipt — and tolled it while the agency sought additional information or outside expert advice. Neither provision is authorized by the statute. Drawing on its en banc decision in Allegheny Defense Project v. FERC, 964 F.3d 1 (D.C. Cir. 2020), the court held that OIG has no “unwritten and unilateral power to indefinitely evade” the deadline, that an agency’s practical need for more time does not license tolling, and that a general grant of procedural authority cannot displace specific statutory text. That the statute attaches no consequence to missing the deadline does not imply permission to regulate around it.
• Mootness did not shield the regulations. Issuing the opinion mooted the claim that it was being unlawfully withheld, but not the challenge to the underlying policy. Vertex, which has sought advisory opinions before and credibly represents that it will again, is a repeat player likely to be subject to the same practice — enough for standing, and the purely legal question was ripe.

Holding

Affirmed in part, reversed in part, and remanded. The court held that OIG correctly concluded that the Fertility Support Program would provide remuneration to induce the purchase of Casgevy within the meaning of the AKS. OIG’s determination that the program would violate the BIS was arbitrary and capricious and is set aside. The advisory-opinion timing provisions are contrary to law: the rules starting the 60-day clock at formal acceptance rather than receipt, 42 C.F.R. §§ 1008.41(b), 1008.43(c)(1), and the tolling provisions, which the court set aside, id. §§ 1008.39(a) (second sentence), 1008.41(e), 1008.43(c).

What to Watch

• What the court expressly left open. There are three. The court did not decide how much influence is required to constitute inducement — it did not need to, given the size and design of this program. It did not decide whether “induce” in the AKS is identical in meaning to “influence” in the BIS. And it did not reach OIG’s alternative theory that the program provides prohibited remuneration to physicians and treatment centers through the opportunity to earn treatment-related fees.
• The remand at OIG. The agency must reconsider the Promotes Access to Care Exception and explain its conclusion. The court also noted that OIG may take a different view on remand of whether to grant prospective immunity under the AKS, a question Vertex did not press on appeal. A reasoned denial remains available; a conclusory one does not.
• Whether the AKS question goes further. Three circuits now read “remuneration” and “induce” broadly and none has held otherwise, which makes this an unlikely vehicle for Supreme Court review and a diminishing argument at the district-court level. Watch for a rehearing or certiorari petition on the ordinary timeline; none had been reported as of this writing.
• Advisory opinions as a usable tool. If the 60-day clock runs from receipt and cannot be tolled, the advisory opinion process becomes something a company can plan around rather than an open-ended wait — Vertex’s own took more than a year. OIG’s response to the compressed deadline it now faces will be interesting to watch.
• Program design in the meantime. Patient-support programs tied to a specific product or service remain exposed under the AKS regardless of the benevolence of their purpose. The defensible space has moved to the exceptions and safe harbors, and to the scienter element — which OIG, following its usual practice, did not formally analyze in the advisory opinion at all.

What This Means for Resolving Disputes Involving the AKS

For parties trying to resolve a dispute involving the meaning and scope of the AKS — disputes that most often arise in False Claims Act litigation — the useful observation is that the range of outcomes on the AKS question has narrowed considerably, and narrowing is what makes matters resolvable. A defendant arguing that “remuneration” reaches only corrupt transactions is now arguing against three circuits and none in the other direction. That argument has gone from a plausible dispositive defense to a discount.

The contested space has shifted to ground that is inherently more negotiable. Whether an activity alleged to violate the AKS is in fact legitimate is a highly factual question, not a clean question of statutory construction. Whether conduct was knowing and willful is a fact question too. Disputes that turn on evidentiary judgments of that kind are the ones where a neutral can be useful, because both sides can see the range and neither can be confident of the ends of it. Disputes that turn on a pure question of law, by contrast, tend to be litigated to a decision — which is what the last several years of AKS scope litigation produced, and what this decision brings closer to a close.

John Libby is an arbitrator, mediator, and settlement counsel with LibbyADR LLC. This post contains his own summaries of the decisions discussed, prepared for general informational purposes only. The summaries are not intended to be a complete statement of any court’s reasoning, nor should they be taken to indicate how he would rule as an arbitrator in any particular case. In addition, the summaries are not legal advice, nor should they be construed as legal advice. Readers should not act on these posts, but should review the decisions themselves and consult with legal counsel.