Munger Tolles Secures Unanimous Supreme Court Victory and Preserves Billions in Annual Medicare Subsidies for 340B Hospitals

Munger, Tolles & Olson secured a unanimous Supreme Court victory on behalf of the American Hospital Association in a case challenging a $1.6 billion annual cut to Medicare reimbursements for hospitals that provide medical care to underserved communities—known as 340B hospitals.

The decision reverses a D.C. Circuit Court’s ruling that had upheld the U.S. Department of Health and Human Services’ reduction of reimbursement rates in spite of its failure to survey the 340B hospitals’ drug acquisition costs.

At oral argument in December 2021, partner Don Verrilli successfully argued the case should be decided based on the clear and unambiguous text of the Medicare statute’s survey requirement.

“The text and structure of the statute make this a straightforward case. Because HHS did not conduct a survey of hospitals’ acquisition costs, HHS acted unlawfully by reducing the reimbursement rates for 340B hospitals,” Justice Brett Kavanaugh wrote in the opinion. 

The Court’s ruling preserves billions in annual subsidies for 340B hospitals.

In addition to Mr. Verrilli, the Munger Tolles team included partner Elaine Goldenberg and associate Rachel Miller-Ziegler.

The case garnered extensive media coverage including a recent article by Bloomberg Law highlighting Mr. Martinez’s role and his experience securing a Supreme Court win so early in his career.

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