backThe Fourth Circuit Rejects a Non-Delegation Doctrine Challenge to the Anti-Kickback Statute
On July 22, 2025, the Fourth Circuit published its opinion in United States v. Donald Booker, No. 23-461, affirming a 200-month prison sentence for the owner of United Youth Care Services, which billed North Carolina’s Medicaid program millions of dollars’ worth of medically unnecessary drug tests. As part of the decision, the Fourth Circuit addressed and rejected a challenge against the legal sufficiency of the Anti-kickback Statute (“AKS”) on the grounds that the AKS is an unconstitutional delegation of power from Congress to HHS.
Donald Booker owned and operated United Youth Care Services, a company that offered substance-abuse treatment programs, and United Diagnostic Laboratories, a separate but related entity that provided drug testing services for United Youth Care Services. The government alleged that United Youth Care Services billed North Carolina Medicaid for millions of dollars of drug tests that were not medically necessary. Donald Booker was convicted on ten counts following a three-week trial, including conspiracy, violations of the AKS, money-laundering conspiracy, and three concealment-money-laundering counts. Booker appealed the conviction to the Fourth Circuit.
Regarding the AKS violations, Booker argued that the AKS is unconstitutional because it violates the non-delegation doctrine. The non-delegation doctrine bars Congress from delegating its legislative powers to other branches of the government, including executive agencies such as HHS. Gundy v. United States, 588 U.S. 128, 132, 135 (2019) (plurality opinion). However, Congress can delegate its legislative powers so long as it provides an intelligible principle to guide the agency’s exercise of its discretion. Id. Donald Booker argued that HHS’s discretion to promulgate regulations and determine criminal conduct was too broad and therefore in violation of the non-delegation doctrine. However, the Fourth Circuit explained that Congress listed nine intelligible principles in the AKS, including the impact of regulations on access to and quality of health care services, patient choice in health care providers, and costs to federal health care programs. Based on the intelligible principles in the text of the AKS, the Fourth Circuit rejected Booker’s argument that the AKS violated the non-delegation doctrine.
United States v. Booker is relevant as a part of a broader challenge of the constitutionality of fraud and abuse laws. For example, in United States v. Motamedi, the Ninth Circuit similarly rejected a non-delegation attack on the AKS. No. 20-10364 (9th Cir.). Further, in United States ex rel. Zafirov v. Fla. Med. Assocs., LLC, the Middle District of Florida held that the qui tam provisions of the False Claims Act are unconstitutional. King & Spalding released a client alert on the Zafirov case, which can be found here. Zafirov is currently pending before the Eleventh Circuit. No. 24-13581 (11th Cir.) (pending).
The Booker opinion is available here.
Reporter, Priya Sinha, Atlanta, +1 404 572 3548, psinha@kslaw.com
Second Circuit Affirms Lower Court’s Ruling Rejecting Neurological Surgery Provider’s Challenge to the No Surprises Act
On July 22, 2025, the United States Court of Appeals for the Second Circuit affirmed the judgment of the United States District Court for the Eastern District of New York, which dismissed an amended complaint brought by Neurological Surgery Practice of Long Island, PLLC (“Neurological Surgery”) that sought to enforce aspects of the No Surprises Act related to the Act’s Independent Dispute Resolution (“IDR”) process. Neurological Surgery brought claims against the United States Department of Health and Human Services, Department of Treasury, Department of Labor, and the Secretaries of those agencies (collectively, “Departments”), alleging that the Departments violated the Administrative Procedure Act (“APA”) and the Due Process Clause of the Fifth Amendment by failing to lawfully implement portions of the No Surprises Act, and that the IDR process was backlogged as a result.
Under the No Surprises Act, which went into effect in January 2022, if an out-of-network healthcare provider and a patient’s healthcare plan are unable to agree on a compensation amount for the services rendered, the parties may engage in a streamlined baseball-style arbitration proceeding called the IDR process to determine the out-of-network rate. Under the statute, the IDR decision is binding on the parties. The No Surprises Act provides that the Departments will implement regulations to operationalize the IDR process.
Since implementation, the IDR process has been backlogged. Neurological Surgery alleged that the delays in resolution of its unpaid claims caused it to suffer substantial harm, placing it “in danger of financial collapse.” Specifically, Neurological Surgery alleged that the Departments violated the APA by failing to ensure a sufficient number of IDR entities were certified to timely decide disputes. Neurological Surgery also alleged that the Departments issued incorrect guidance about New York’s version of the No Surprises Act. Additionally, plaintiffs claimed that the Departments violated the Due Process Clause by failing to “compel healthcare plans and IDR entities to comply with the deadlines set the by [No Surprises] Act.” The Departments moved to dismiss these claims. Around the same time, the Departments paused operation of the IDR portal in order to make changes pursuant to a current Texas district court’s opinion that overturned portions of the Departments’ rulemaking governing the IDR process. Neurological Surgery subsequently challenged this temporary suspension of the IDR process.
Neurological Surgery amended its complaint, dropping the APA challenges. Notwithstanding the Amended Complaint, the district court dismissed all of Neurological Surgery’s claims. The district court held that Neurological Surgery lacked “standing to compel the Departments to enforce the Act’s deadlines for different stages of the IDR process on third parties,” and that since the No Surprises Act does not require the Departments to take specific actions regarding the number of arbitrators available for the IDR process, Neurological Surgery’s claims failed under the APA. The district court also held that Neurological Surgery’s claims regarding access to the IDR portal were moot because the portal has since re-opened.
The Second Circuit generally upheld the district court’s decision. However, the Second Circuit did not agree with the district court dismissing plaintiff’s claims as moot based on the reopening of the IDR portal. Instead, the Second Circuit concluded the plaintiff’s other claims that did not challenge the pause on the IDR portal “remain unaffected by the reopening of the portal,” and chose to dismiss them on other grounds. Because Neurological Surgery failed to include an APA claim in its amended complaint, the Second Circuit only addressed plaintiff’s lack of standing to bring a due process claims, reasoning: “[w]e read Neurological Surgery’s complaint to suggest its injury has been caused by the actions of healthcare plans and arbitrators, not the Departments.”
A copy of the Second Circuit’s opinion is available here.
Reporter, Brittni Hamilton, Los Angeles, CA, +1 213-218-4083, bhamilton@kslaw.com
Upcoming Events
Healthcare and the Supreme Court – Recent Key Decisions and Implications
August 6, 2025, 12:30 P.M. – 1:30 P.M. ET
The Supreme Court’s October 2024 Term produced several decisions that have significant implications for the healthcare industry, ranging from the calculation of Medicare reimbursement adjustments to the scope of relief available in litigation. King & Spalding’s experienced panel will review five key decisions and discuss their implications for healthcare providers. Topics for discussion will include:
- Advocate Christ Medical Center v. Kennedy and the Medicare DSH adjustment
- Medina v. Planned Parenthood South Atlantic and States’ compliance with Medicaid federal funding conditions
- United States v. Skrmetti and State regulation of transgender healthcare
- Kennedy v. Braidwood Management, Inc., the Preventive Services Task Force, and the Appointments Clause of the Constitution
- Trump v. CASA, Inc., the end of universal injunctions, and strategic litigation options for broad relief
To register, click here. You do not have to be a client to attend, and there is no charge. For questions, contact Sydney Forte.
Editors: Chris Kenny and Ahsin Azim
Issue Editors: Alana Broe and David Tassa