Jurisdiction Under Scrutiny in OPO Challenge to 2020 Final Rule

With the Centers for Medicare & Medicaid Services (CMS) poised to determine which organ procurement organizations (OPO) will retain their Medicare certification and service territories under a controversial new performance framework, a coalition of OPOs is fighting to have its day in court — but first, it must convince a federal judge that the courthouse doors are open to it at all. The U.S. District Court for the Middle District of Florida is actively weighing whether it has jurisdiction to hear a pre-enforcement challenge to a 2020 Final Rule, which introduced a competitive three-tier performance model that threatens lower-performing OPOs with the loss of their designated service areas (DSA) and, potentially, their Medicare certifications. The resolution of this threshold question will determine whether the plaintiff OPOs can seek judicial relief ahead of decertification proceedings, which CMS has signaled will occur after it finalizes its 2026 Proposed Rule at the end of the year.

As we have written before, four federal court cases challenging the 2020 Final Rule are currently in progress. The Final Rule, which was implemented in 2022 under a four-year certification period set to expire this year, established new criteria to determine whether an OPO will remain eligible for Medicare reimbursement and, crucially, whether that organization will be permitted to retain its DSA for the next certification cycle. OPOs and other entities within the organ transplant ecosystem have categorized the new rule as an existential challenge to their operations and sought to prevent its use during CMS’s 2026 recertification review.

In the Middle District of Florida case — the first of the four lawsuits to be filed — CMS argued that the court lacked jurisdiction over plaintiffs’ pre-enforcement challenge to the rule, as any claims “arising under” the Medicare statute must first be raised and exhausted via the administrative review process. In response, plaintiffs contended that the case arises under the National Organ Transplant Act (NOTA), not the Medicare statute, and, in any case, the administrative review process under the Medicare statute is limited to “individualized, fact-bound decertification decisions,” not wholesale challenges to a regulation itself, which could not be entertained in an administrative appeal. Plaintiffs argued that this is particularly relevant for Tier 2 OPOs. Though Tier 2 OPOs are considered in compliance with Medicare Conditions of Participation, they must nevertheless compete to retain their DSAs at the end of the recertification cycle and, should an organization lose that competition or any other bid to acquire a DSA, the plaintiffs argued that it would have no opportunity to appeal that loss and would face nonrenewal. As such, plaintiffs argued that the court has jurisdiction under the U.S. Supreme Court’s seminal decision in Illinois Council, which carved out an exception to the Medicare statute’s administrative exhaustion requirement if enforcing that requirement would result in “no review at all.”

The Court’s Perspective: Jurisdiction Remains Unresolved

The court, for its part, reserved judgment pending further context, noting that the parties addressed the jurisdictional issue only at “a surface level.” On May 5, 2026, the court requested supplemental briefing, observing that while the Supreme Court held in Illinois Council that “most, if not all” claims arising under the Medicare Act must first be channeled through administrative review, there is an exception where channeling would result in “no review at all.” The court further noted that although other circuits have held that the Illinois Council exception is foreclosed where “adequate proxies” have an “incentive to seek administrative review,” the U.S. Court of Appeals for the Eleventh Circuit has not addressed this issue — presenting a question of “first impression.”

Turning to Tier 2 OPOs, the court recognized that while CMS’s preamble statements during the 2020 rulemaking indicated that Tier 2 OPOs failing to win a competition to retain their DSA (or acquire another) face nonrenewal without administrative appeal rights, the agency’s current regulation contemplates that “at least in some circumstances,” CMS will decertify a non-renewed OPO — and that such decertification can be appealed. The court thus found it “unclear” whether Tier 2 OPOs retain access to the administrative appeals process and, accordingly, whether the court has jurisdiction over their claims.

The parties submitted supplemental briefings on May 20, 2026.

The Parties’ Dispute Over the Basis for Jurisdiction and the Exhaustion Requirement

In its response, CMS acknowledged that the 2020 Final Rule does not address the questions raised by the court. Instead, the agency pointed to its January 2026 Proposed Rule, which the agency intends to finalize prior to issuing its decertification and nonrenewal determinations at the end of this cycle. CMS stated that the proposed rule “provides that a Tier 2 OPO that is unsuccessful in competition and is no longer designated to a DSA would still be re-certified.” However, “[i]f the OPO is not designated to a DSA by the end of the recertification cycle in 2030,” then it would be “unable to demonstrate compliance with either the process or outcome measures for recertification” and “would be decertified at that time,” which would then “trigger the opportunity for an appeal of the decertification.” CMS also argued Tier 3 OPOs serve as an “adequate proxy” for Tier 2 OPOs in any appeal insofar as “plaintiffs’ claims are framed as a challenge to the validity of the tier system itself, and a Tier 3 OPO has just as much of an interest (if not more) in pursuing that challenge.”

In their supplemental briefing, plaintiffs continued to press that their case does not arise under the Medicare statute but under NOTA, and in support, pointed to a decision issued by the U.S. Court of Appeals for the Second Circuit in which the court determined that a challenge to  CMS’s nursing home regulation could proceed absent exhaustion. In Avon Nursing & Rehabilitation v. Becerra, the court held that while plaintiffs’ claim did “arise under” the Medicare statute, it also arose under the Medicaid statute, and thus there was an independent basis for subject matter jurisdiction. Relying on this decision, plaintiffs argued that here, the independent basis of jurisdiction existed in NOTA, as they were challenging a regulation that CMS adopted under that legislation to govern the ability of OPOs to operate and exist. As such, the consequences of CMS’s 2020 Final Rule “extend far beyond the incidental, downstream effects that CMS's Final Rule may have on an OPO's eligibility to seek Medicare reimbursement.” Plaintiffs also pushed back on CMS’s contention that Tier 3 OPOs can serve as proxies for Tier 2 OPOs, arguing that they could not adequately represent Tier 2 OPOs’ interests.

Implications for OPOs, Transplant Hospitals, and Related Entities

The court’s forthcoming ruling on jurisdiction will be determinative of whether this challenge is permitted to proceed on the merits. If the court is persuaded by CMS’s position — that OPOs cannot bring a pre-enforcement challenge to CMS’s 2020 Final Rule — it will dismiss the case for lack of jurisdiction, and other courts may follow suit, leaving OPOs without recourse in advance of CMS’s nonrenewal and decertification determinations. On the other hand, the court may find that plaintiffs’ case should be permitted to proceed, allowing OPOs a meaningful opportunity to seek relief and elicit a decision on the merits before CMS begins decertification and recertification proceedings.

How the court will ultimately resolve this jurisdictional question remains to be seen, but it appears to be struggling with the dilemma posed to Tier 2 OPOs in particular, and the conflict between CMS’s preamble statements and its existing regulation that cannot be cured by a proposed rule that is not in effect. The court has already noted that the 2020 Final Rule itself does not address what happens to Tier 2 OPOs that lose in competition, and that CMS’s preamble language is “mere agency guidance” without the force of law.

Beyond this litigation, OPOs must also reckon with a broader intensification of regulatory scrutiny from CMS: in addition to the proposed rule on outcome measures that featured prominently in its supplemental briefing, the agency has issued new guidance directed at patient safety and financial concerns that have been the subject of Congressional hearings, and most recently proposed changes to its payment policy for non-renal organs. For OPOs already operating under the shadow of imminent recertification, the outcome of this case, and the pace at which it moves, could not be more consequential. Because OPOs are a critical component of an interwoven transplantation system, the court’s decision will reverberate to other providers and participants, and most importantly, those who rely on life-saving transplants to survive.

Crowell & Moring is available to advise any OPOs or any other entities that may be impacted by this dispute; we highly encourage concerned parties to reach out to their preferred Crowell lawyer or any author of this alert for further insight.