Take the Fifth

Designated for publication

• Mississippi v. Department of Energy, 24-60529, petition for review of Department of Energy order
  • Oldham, J. (Haynes, Ho, Oldham), Haynes, J., concurring in judgment (oral argument), administrative law, appellate jurisdiction
  • Denying DOE’s motion to dismiss for lack of jurisdiction, and granting petition to review DOE order; remanding to DOE for further proceedings.
  • In February 2024, the Department of Energy promulgated a “Direct Final Rule” (DFR) establishing new energy conservation standards for consumer cooking appliances—including gas stoves and cooktops—without advance notice or a public comment period. The DOE had previously attempted to impose similar standards through notice-and-comment rulemaking but abandoned that effort after receiving an “avalanche of adverse comments.” Having failed at notice and comment, the DOE bypassed it altogether by using the DFR mechanism under the Energy Policy and Conservation Act (EPCA), § 6295(p)(4). Six states filed timely adverse comments during the 110-day post-promulgation comment period, and the DOE issued a Confirmation Notice on August 12, 2024, declining to withdraw the rule. The states petitioned for review 59 days later.
  • At issue on the petition was (1) whether the court had jurisdiction to review the petition—specifically, when a DFR is “prescribed” under § 6306(b)(1) so as to trigger the 60-day window for judicial review; and (2) whether the EPCA required the DOE to withdraw the DFR upon receiving the states’ adverse comments.
  • On jurisdiction, the court held that a DFR is not “prescribed” until the DOE adheres to it after considering adverse comments—not when it is first published in the Federal Register. Under DOE’s contrary reading, the 60-day petition window would expire 50 days before the statutory comment period even closed, rendering Congress’s 110-day comment period “meaningless surplusage.” As the court put it: “Going from dead to alive is the great promise of Holy Scripture, but the Department cites no authority for its relevance to administrative law.”
  • On the merits, the court found the DOE violated the EPCA in two ways: First, the “joint statement” required to trigger DFR authority failed to include stakeholders “fairly representative of relevant points of view”—particularly states that had opposed identical standards in prior rulemaking. Second, the DFR’s ban on linear power supplies failed to account for decreased product reliability and was therefore not “economically justified” under the EPCA’s factors.
  • The court emphasized that under the EPCA’s “lenient ‘reasonable basis’ standard,” the states’ comments needed only to show a possibility—not certainty—of unlawfulness to trigger the DOE’s mandatory duty to withdraw the DFR. The court concluded: “The idea that all that controversy could be elided using the DFR—a mechanism designed for consensus rulemaking—is untenable.”
  • Judge Haynes concurred in the conclusion that the court had jurisdiction but wrote separately to note that, in her view, the proper disposition on the merits was simply to remand for the DOE to reconsider its decisions “in light of the information set forth in this appeal,” rather than adopting the majority’s broader reasoning.

• Texas Medical Association v. HHS, 23-40605, appeal from E.D. Tex.
  • en banc per curiam (joined by Elrod, Jones, Smith, Richman, Willett, Ho, Duncan, Engelhardt, Wilson; Southwick, concurring as to Parts I and II; Oldham, J., concurring in part); Ho, J., concurring; Oldham, J., concurring in part; Haynes, J., dissenting in part (joined by Stewart, Graves, Higginson, Douglas, Ramirez) (oral argument); administrative law, en banc
  • On en banc review of October 30, 2024, panel opinion (Southwick, Haynes, Douglas, JJ.), affirming the district court in part and reversing in part, holding that including ghost rates and excluding bonus/incentive payments were unlawful, but that excluding single-case agreements was permissible. Vacatur was affirmed as the appropriate APA remedy.
  • The No Surprises Act (NSA) protects patients from unexpected out-of-network medical bills by establishing an independent dispute resolution process centered on the “qualifying payment amount” (QPA)—the median of an insurer’s contracted rates for a given service. In July 2021, the agencies (HHS, Labor, and Treasury) promulgated an interim-final rule (the “July Rule”) without notice and comment, directing insurers to include “each contracted rate” in the QPA calculation regardless of whether claims were ever paid at that rate. This captured non-negotiated “ghost rates”—placeholder rates for services providers never actually perform—which could be as low as $0 or $1, artificially deflating QPAs. In August 2022, the agencies issued FAQ 14 directing insurers to exclude $0 ghost rates but not other below-market ghost rates. The July Rule also excluded bonus and incentive payments from the QPA and excluded single-case agreements (common in air ambulance billing). The artificially low QPAs caused arbitrations to dwarf the agencies’ expectations by a factor of 84, with providers prevailing over 80% of the time and arbitrators selecting rates higher than the QPA in 85% of cases.
  • At issue on appeal was (1) Whether the July Rule’s inclusion of non-negotiated “ghost rates” in the QPA calculation violated the NSA’s requirement that the QPA reflect rates for services “provided by a provider”; (2) whether the July Rule’s exclusion of bonus and incentive payments violated the NSA’s “total maximum payment” language; (3) whether the exclusion of single-case agreements (e.g., air ambulance bills) from “contracted rates” was lawful; and (4) the appropriate remedy.
  • On ghost rates, the court held the July Rule violated the NSA because the statute limits the QPA to rates for items or services “provided by a provider” and “furnished” in a geographic region. Ghost rates represent services never negotiated, never performed, and sometimes impossible for the provider to perform. The court noted the agencies’ own August FAQ correction “only emphasizes that the July Rule was contrary to law”—if $0 ghost rates must go, so must $1 ghost rates: “Either the provider contracted for the rate, or he did not.”
  • On bonus payments, the court found the NSA’s “total maximum payment” language unambiguously requires inclusion of all payments an insurer makes to a provider for an item or service, including bonuses and incentives. Congress further directed the agencies to “take into account payments that . . . are not on a fee-for-service basis,” foreclosing the agencies from simply ignoring them.
  • On single-case agreements, the court held that the word “rate” connotes a per-unit price for recurring transactions, not a one-off emergency payment, and that such payments are not made “under” an insurer’s health plan. Excluding them from an in-network-rate-based calculation was neither contrary to law nor arbitrary and capricious, particularly given that “provider avoidance of insurance network participation combined with aggressive collection practices has been described as a business strategy of some providers of air ambulance services.”
  • On remedy, the court reaffirmed that vacatur is the APA’s default remedy under circuit precedent, rejecting a “too-big-to-vacate” principle while noting the agencies could exercise enforcement discretion to prevent disruption during recalculation.
  • Judge Ho concurred separately to question whether universal vacatur of agency rules is lawful under Article III and the APA, noting that it “presents many of the same challenges as the universal injunctions condemned in CASA.” He observed that § 706 “does not say anything about ‘vacating’ agency action” and that the APA’s remedy provision (§ 703) conspicuously omits vacatur from its list of available remedies. Nevertheless, he concurred given binding circuit precedent.
  • Judge Oldham concurred on narrower, procedural grounds: The July Rule was an interim-final rule promulgated without notice and comment, and when the agencies discovered its $0 ghost-rate problem, they attempted to fix it through an informal FAQ document—which constituted an invalid amendment of a legislative rule. He emphasized: “Procedural checks are the principal barrier standing between the American people and the unelected bureaucrats of our Fourth Branch. The agencies in this case cast aside that barrier.” Under FTI and sister-circuit precedent, a substantive change to a legislative rule requires another legislative rule adopted through notice and comment; FAQ 14 failed that test.
  • Judge Haynes dissented from the majority’s conclusions on ghost rates and bonus payments. On ghost rates, she argued that “provided by a provider” means only that a service is “available,” not that it must have been previously performed, and that the same-or-similar-specialty requirement plus the $0 exclusion adequately addressed the concern. She emphasized that plaintiffs’ reading was “unworkable” because those calculating the QPA could not “accurately determine with certainty which in-specialty services the thousands of providers across the country would never—even in emergency circumstances—perform.”
  • On bonus payments, Judge Haynes argued the Act expressly delegated authority to the agencies to determine how to handle non-fee-for-service payments, noting the statute says the “rulemaking shall take into account” such payments—not that the “methodology” must include them. She warned that including incentive payments “would skew the calculation, making it less likely to reflect market rates” and would be “complicated, expensive, time-consuming, and lead to inconsistencies among

Unpublished decisions

• United States v. Castro, 24-11000, c/w 26-10428, appeal from N.D. Tex.
  • per curiam (Duncan, Oldham, Wilson) (no oral argument), criminal, Brady violation, Confrontation Clause, sentencing
  • Substituting new opinion for July 10 opinion, affirming in part and dismissing as moot in part appeal from conviction of aiding and assisting in the preparation of false and fraudulent tax returns.
  • John Anthony Castro founded Castro & Co., a tax-preparation firm, and was convicted after a bench trial on 33 counts of aiding and assisting in the preparation of false and fraudulent tax returns in violation of 26 U.S.C. § 7206(2). Between 2014 and 2016, Castro devised a scheme to inflate client refunds by falsifying Schedule C business expenses and Schedule A deductions, splitting the inflated refunds with clients as his fee. He was sentenced to 188 months’ imprisonment after the district court applied multiple sentencing enhancements, including two levels for obstruction of justice and four levels for being an organizer or leader of criminal activity.
  • At issue on appeal was (1) whether the court had jurisdiction to review post-notice-of-appeal rulings on motions to correct trial transcripts and for a new trial; (2) whether the government suppressed Brady material warranting a new trial; (3) whether Castro validly waived his Sixth Amendment Confrontation Clause rights through stipulations; and (4) whether the district court erred in applying the leadership enhancement under U.S.S.G. § 3B1.1(a) and the obstruction-of-justice enhancement under U.S.S.G. § 3C1.1.
  • The court dismissed the trial-transcript challenge for lack of jurisdiction, finding that it was a post-judgment order that required its own notice of appeal. It held that the government forfeited any timeliness objection to Castro’s new-trial motion, preserving appellate jurisdiction over that issue, but affirmed the denial of the motion on the merits because the alleged Brady evidence was either cumulative, already known, or wholly conclusory. The court found no Confrontation Clause violation because Castro agreed to the stipulations in writing, did not dissent at trial, and the stipulations were part of a legitimate strategy to narrow the case to the issue of willfulness. The leadership enhancement was affirmed because the scheme was “otherwise extensive,” involving family members, attorneys, a CPA, and an estimated $15.1 million tax loss. The obstruction enhancement was affirmed based on record evidence that Castro filed lawsuits against an IRS agent and sent threatening communications to investigators, making witnesses hesitant to testify. The consolidated bail-pending-appeal matter (No. 26-10428) was dismissed as moot.

• United States v. Elliott, 24-30772, appeal from E.D. La.
  • per curiam (Duncan, Oldham, Wilson) (oral argument withdrawn), criminal, Second Amendment, sentencing
  • Reversing felon-in-possession conviction, and vacating in part and affirming in part sentence.
  • Burneal Elliott pleaded guilty to possessing a firearm as a convicted felon (18 U.S.C. § 922(g)(1)), possessing a machine gun (18 U.S.C. § 922(o)), possessing with intent to distribute cocaine base, and possessing a firearm in furtherance of a drug trafficking crime. He later moved to dismiss his § 922(g)(1) and § 922(o) charges on constitutional grounds, which the district court denied as untimely and on the merits. The district court imposed a 15-year aggregate sentence, including a contested four-level enhancement under U.S.S.G. § 2K2.1(b)(1)(B) based on a finding that Elliott possessed 8 to 24 firearms.
  • At issue on appeal was (1) whether § 922(g)(1) is unconstitutional as applied to Elliott, whose predicate felony was simple possession of cocaine; (2) whether § 922(o) survives Second Amendment scrutiny; and (3) whether the district court erred in applying the firearms-count sentencing enhancement.
  • Applying plain-error review, the court reversed Elliott’s § 922(g)(1) conviction under the circuit’s recent decision in United States v. Hembree, which held that § 922(g)(1) is unconstitutional as applied to defendants whose predicate felony is simple cocaine possession. The court affirmed the denial of Elliott’s § 922(o) challenge, noting that circuit precedent in United States v. Wilson forecloses it. On the sentencing enhancement, the court found any error harmless because the district court stated it would have imposed the same sentence regardless. However, because the reversed § 922(g)(1) count was grouped with Counts 2 and 3 under U.S.S.G. § 3D1.2(c), the court vacated the sentence on those counts and remanded for resentencing, while affirming the Count 4 sentence.

• United States v. Dunn, 26-10045, appeal from N.D. Tex.
  • per curiam (Clement, Engelhardt, Wilson) (no oral argument), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• United States v. Bogle, 26-10058, appeal from N.D. Tex.
  • per curiam (Willett, Duncan, Engelhardt) (no oral argument), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• United States v. Dominguez, 25-11278, appeal from N.D. Tex.
  • per curiam (Elrod, Wilson, Douglas) (no oral argument), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• Spinks v. Linthicum, 25-50811, appeal from W.D. Tex.
  • per curiam (Higginbotham, Jones, Oldham) (no oral argument), prisoner suit
  • Affirming summary judgment dismissal of claims against prison health-services defendants.
  • The court found that Spinks abandoned any challenge to summary judgment by failing to address or identify any error in the district court’s ruling in her opening brief. Arguments raised for the first time in her reply brief were deemed waived.

• United States v. Perez-Montano, 25-50710, appeal from W.D. Tex.
  • per curiam (Higginbotham, Jones, Oldham) (no oral argument), criminal, sentencing
  • Affirming 160-month sentence imposed after guilty plea to illegal reentry, rejecting argument that the upward variance was substantively unreasonable because his offense was not unusual, the sentence was more than double the national average, and his criminal history was improperly double-counted.
  • The court found the district court did not abuse its discretion. The record supported the variance based on the need to promote respect for the law, provide just punishment, deter future criminal conduct, and protect the public in light of Perez-Montano’s extensive criminal history exhibiting violence and recidivism. The court also noted that proportionally greater variances have been upheld in prior cases.

• United States v. Tijerina, 25-40049, appeal from S.D. Tex.
  • per curiam (Haynes, Graves, Ramirez) (no oral argument), criminal, sentencing
  • Vacating sentence on conviction of possession with intent to distribute and conspiracy to possess with intent to distribute cocaine, the sentence at the top of the guidelines range based on a drug quantity calculation that included over three kilograms of cocaine, and remanding for resentencing.
  • The court agreed with both parties that the inclusion of two additional kilograms was plain error, vacated Tijerina’s sentence, and remanded for resentencing. The court declined to address a separate challenge to another component of the drug quantity calculation.

• United States v. Avila-Cruz, 25-50705, appeal from W.D. Tex.
  • per curiam (Higginbotham, Smith, Ho) (no oral argument), criminal, sentencing
  • Affirming 72-month sentence on conviction of illegal reentry.
  • The court found no procedural error because the district court cited appropriate § 3553(a) factors and gave reasons tied to those factors. On substantive reasonableness, the court held there was no abuse of discretion. As to supervised release, the court found no plain error.