Genesis HealthCare, Inc. v. Becerra, No. 20-1701 (4th Cir. 2022)Annotate this Case
Genesis Healthcare was a healthcare provider participating in the federal “340B Program,” which was designed to provide drugs to qualified persons at discounted prices. Under the Program, the Secretary of the Department of Health and Human Services (“HHS”) enters into agreements with drug manufacturers to sell drugs at discounted prices to entities such as Genesis Healthcare, which could, in turn, sell the drugs to their patients at discounted prices. After Genesis Healthcare purchased the covered drugs from the manufacturers, it dispensed them to patients through its wholly owned pharmacies or contract pharmacies. After the Health Resources and Services Administration (“HRSA”) conducted an audit of Genesis Healthcare in June 2017 for Program compliance, HRSA removed Genesis Healthcare from the 340B Program. The audit report found, among other things, that Genesis Healthcare dispensed 340B drugs to individuals who were ineligible because they were not “patients” of Genesis Healthcare. HRSA rejected Genesis Healthcare’s challenges; Genesis Healthcare, in turn, filed suit seeking a declaration it did not violate the requirements of the Program, and injunctive relief requiring HRSA to reinstate it into the Program and to retract any notifications that HRSA had provided to manufacturers stating that Genesis Healthcare was ineligible under the Program. In response to the lawsuit, HRSA ultimately: (1) notified Genesis Healthcare by letter that it “ha[d] voided” all audit findings and that Genesis Healthcare “ha[d] no further obligations or responsibilities in regard to the audit” and (2) filed a motion to dismiss Genesis Healthcare’s action as moot based on the letter. The district court granted HRSA’s motion, finding that the action was moot. The Fourth Circuit reversed the district court's finding the case was moot: Genesis Healthcare continued to be governed by a definition of “patient” that, Genesis maintained, was illegal and harmful to it. Therefore, there remained a live controversy between the parties.