Florida Court Upholds CMS Rule On Organ Procurement Organizations

What You Need to Know

• Key takeaway #1

  A federal court in Florida ruled in favor of the government, finding that a 2020 rule overhauling how organ procurement organizations (OPO) are evaluated and ranked is legally valid. The court granted summary judgment to the government and rejected all the OPOs’ legal challenges.

• Key takeaway #2

  The court gave significant deference to policy choices made by the U.S. Centers for Medicare and Medicaid Services (CMS), finding that the competitive ranking system, the data sources used, and the performance metrics were all legally permissible — even if imperfect.

• Key takeaway #3

  The ruling creates a path for full implementation of the new performance rankings, which will determine whether each of the 55 OPOs gets recertified, must compete to keep its territory, or face decertification. Four other courts are still considering similar challenges, meaning there is still the possibility for an opposing decision regarding the rule.

Background

On September 28, 2026, the U.S. District Court for the Middle District of Florida upheld the U.S. Centers for Medicare and Medicaid Services’ (CMS)final rule governing organ procurement organizations (OPO). The rule, promulgated in 2020, will have its fullest effect when CMS releases final OPO performance rankingsdetermining the fate of the 55 OPOs(Regulatory Uncertainty Ahead For Organ Transplant System). The Middle District of Floridais among five courts hearing challenges to the rule and the first to issue a decision.Legacy of Life Hawaii v. HHS, which was filed August 6, 2026, is the most recent.

OPOs procureand transport organs for 100,000+patients on waiting lists.Each of the 55 OPOs serves a designated service area (DSA) and must meet outcome and process measures set forth in CMS’ regulations. In 2020, CMS introduced new outcome measures that fundamentally changed how OPO performance is measured. Under the 2020 rule, OPOs are evaluated under two metrics —donation rate and transplantation rate as a function of donor potential— relative to one another.Tier 1 OPOs perform within the top 25%; Tier 2 OPOsare at or above the median but not in Tier 1; and Tier 3 OPOs do not have at least one measure that is at or greater than the median.

Tier 1 OPOs are automatically recertified for afour-year cycle; Tier 3 OPOs are decertified but have appeal rights to challenge their decertification. Tier 2 OPOs’ continuing participation for the next certification cycle depends on a competition with any other OPO(s) that wants to take over its DSA. A loss means non-renewal with no appeal rights.The OPO can recompete at the end of the subsequent cycle, but a second loss results in decertification.

Beginning in 2025, OPOs challenged CMS’s final rule in five separate lawsuits.OPOsargue that CMS’s model deviates from statutory law, is arbitrary and capricious, and will devastate organ donation and transplantation (CMS projected that a significant percentage of OPOs will be decertified). The Middle District of Florida disagreed. 

Jurisdiction

 The court’s prior request for supplemental briefingforeshadowed its lengthy discussion of subject matter jurisdiction. (Client Alert June 3, 2026: Jurisdiction Under Scrutiny in OPO Challenge to 2020 Final Rule.) The court dismissed Tier 1 OPO claims, finding that they lacked standing to sue because there was no evidence of harm. For Tier 2 and 3 OPOs, the court found standing to sue and determined their claims “arose under” the Medicare statute pursuant to 42 U.S.C. § 405, which requires exhaustion of administrative remedies. An exception applies under Illinois Council, because exhaustion would result in “no review at all.” The court noted that Tier 2 OPOs have no administrative review of non-renewal and face aloss of Medicare reimbursement, which would force the OPO to cease operations.

The court rejected the government’s “proxy theory,” which has been adopted in other circuits, and provides that the Illinois Council exception does not apply if there is a party that is “similarly situated” and has access to administrative and judicial review. The government argued that Tier 3 OPOs could serve as proxies for Tier 2 OPOs by raising challenges in their own decertification appeals.

The court noted that the U.S. Court of Appeals for the 11th Circuit has not addressedthe theory, which the court opined rests on a “fundamental misunderstanding” of Illinois Counciland does not apply when a plaintiff is barred from administrative and judicial review by the “terms of the regulatory scheme itself.” The proxy theory also assumes that relief will benefit the excluded party. The government argued that Tier 3 OPOs could seek vacatur on behalf of Tier 2 OPOs. However, the court, in a 36-page discussion, asserted that vacatur of agency rules raises constitutional issues as a remedy, stating that “I doubt that Congress can, consistent with the Constitution, delegate the act of vacating an agency rule to federal courts.”

Merits  

While the court does not expressly articulate a standard of deference applicable to CMS’ interpretation of statutory law, its decision applied considerable deference to the agency while rejecting plaintiffs’ arguments as not memorialized in express statutory language.The court rejected plaintiffs’arguments that CMS’s Final Rule violated 42 U.S.C. § 273:

• Process and multiple outcome measures were lacking:The final rule augments the broader regulatory scheme that has applied such measures since 2006. Nothing in the statute requires CMS to evaluate all metrics in a “binary pass-or-fail manner” nor does it “require that success in one measure excuse failure in another.” The court rejected the OPOs’ argument that the two outcome measures are too highly correlated.It statedthat “nothing in the statute requires that the outcome performance metrics be unrelated or independent measures.” 
• The statute did not authorize CMS’ competitive model:The statute delegates to the secretarythe authority to set outcome performance measures. Nothing in the statute prohibits relative comparisons among OPOs. CMS has measured relative performance outcomes since 1996. 
• The rule did not account for service area differences:The court found that the certification scheme already includes risk adjustments (e.g., age-adjusted transplantation rate, donor potential defined by cause of death).The statute does not require consideration of “all” factors or any “particular” factor. The secretary explained that the metrics adjust for geographic differences in the number and causes of death. The top-performing OPOs are geographically and demographically diverse.

Not Arbitrary and Capricious

The court rejected each challenge under the Administrative Procedure Act (APA) for the following reasons:

• Correlated metrics:The court rejected the OPOs’ argument that the two outcome measures are too highly correlated because they were both determined as a function of donor potential, stating that “nothing in the statute requires that the outcome performance metrics be unrelated or independent measures.”
• Unreliable CDC data:The court acknowledged flaws in the CDC mortality data but held that the reliance on imperfect datais “common in agency decision-making.” Thecourt rejected plaintiffs’ reliance on studies as post-dating the final rule and were not part of the administrative record.  
• 12-month data window:The secretary explained that a longer data window would mask current performanceand potentially “doom” newly selected OPOs. The statute “does not require the Secretary to consider data from the entire four-year window; it only requires that the Secretary not recertify more frequently.” 
• Factors outside OPOcontrol:While OPOs do not control the ultimate transplant decision, they have “the ability to influence transplant hospital practice through OPO advisory boards” and can “place their organs outside their DSAs.” The court also accepted CMS’ exclusion of zero-organ donors (i.e., donors with no organs transplanted) as necessary to “incentivize all OPOs to pursue less than ideal and marginal donors.”
• Confidence interval bias:Confidence intervals ensure that differences in OPO outcome metrics are statistically significant.Tighter confidence intervals for larger OPOsreflect larger sample sizes, not bias; poor results reflect poor performance rather than the statistical methodology.
• 25% Tier 1 cutoff: The secretary selected the 25% threshold consistent with Executive Order 13,879 and data showingthat the top quarter of OPOs achieve more than double the rates of lower-performing OPOs. The threshold is achievable by all OPOs, given confidence intervals and the previous year’s data benchmarking.

Adequate Response to Significant Comments

The court found that the secretary adequately responded to significant comments, allowing Tier 2 OPOs to compete rather than face automatic decertificationand establishing annual performance assessments to give OPOs the opportunity to improve over time.

The court rejected the notion that the final rule would disrupt the organtransplantation system.In its discussion of jurisdiction, the court also adopted the contrary view, asserting that vacatur of the rule would constitute the “most disruptive remedy imaginable for the agency” and “introduce chaos for both the regulated OPOs and the intended beneficiaries, such as the organ-donor recipients, hospitals, and transplant providers.”

Outcome

The court had jurisdiction over the action as to Tier 2 and 3 OPOs claims. Finding no statutory violation and no arbitrary and capricious action, the court granted summary judgment to the secretary.

Specifically:

1. Tier 1 Iowa Donor Network’s claims were dismissed without prejudice for lack of jurisdiction, and Iowa Donor Network was terminated from the case.
2. The secretary’s motion for summary judgment was granted as to all remaining plaintiffs.
3. Plaintiff’s motion for summary judgment was denied.

Implications of the Court’s Decision

The final disposition of CMS’s rule will havea wide-ranging impact on the interwoven organ transplant system that requires close coordination among OPOs, donor and transplant hospitals, tissue banks, histocompatibility laboratories, and most importantly, those in need of organ transplants. While decisions are pending in other lawsuits, the Middle District of Florida will help pave the way for full implementation of CMS’ rule at the end of the current recertification cycle in January2027. CMS wasted no time in bringing the decision to the attention of the court in HonorBridge v. Kennedy, 4:26-cv-00003-M-RM (E.D.N.Y. Oct. 2, 2026), ECF No. 30 via an October 2, 2026,notice of authority.

See our past Client Alerts on this topic: 

• April 23, 2026: What Organ Procurement Organizations Need to Know About CMS’s New Proposed Rule

• March 19, 2026: New Federal Guidance for Organ Procurement

• February 13, 2026: CMS Proposes New Payment Policy for IOPOs and HCLs