Ivy Sports Medicine, LLC v. Sylvia Mathews Burwell

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 8, 2014 Decided September 26, 2014

No. 13-5139

IVY SPORTS MEDICINE, LLC,

APPELLANT

v.

SYLVIA MATHEWS BURWELL, SECRETARY OF HEALTH AND

HUMAN SERVICES (IN HER OFFICIAL CAPACITY), ET AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 1:11-cv-01006)

Matthew M. Hoffman argued the cause for appellant.

With him on the briefs was Mark A. Heller.

Adam C. Jed, Attorney, U.S. Department of Justice,

argued the cause for appellees. With him on the brief were

Stuart F. Delery, Assistant Attorney General, Ronald C.

Machen, Jr., U.S. Attorney, and Scott R. McIntosh, Attorney.

Before: GRIFFITH, KAVANAUGH, and PILLARD, Circuit

Judges.

Opinion for the Court filed by Circuit Judge

KAVANAUGH, with whom Circuit Judge GRIFFITH joins.

2

Dissenting opinion filed by Circuit Judge PILLARD.

KAVANAUGH, Circuit Judge: This case concerns the

Food and Drug Administration’s regulation – and subsequent

re-regulation – of a medical device called the Collagen

Scaffold, an absorbable surgical mesh that is designed for use

in knee-replacement surgeries. In December 2008, the

manufacturer of the scaffold, ReGen Biologics, obtained FDA

clearance to market the device. FDA’s clearance of the

scaffold soon came under fire in the press and from some

Members of Congress amid allegations that the process had

been tainted by improper political pressure from other

Members of Congress. An internal FDA investigation

concluded that some procedural irregularities had occurred

during the agency’s review of the device.

Following the internal investigation, FDA did not

exercise its clear statutory authority to reclassify the device.

Reclassification would force the device off the market and

require the device to undergo the extensive pre-market

approval process before it could again be marketed. That

statutory reclassification process generally requires FDA to

provide notice and an opportunity for comment before the

agency reclassifies a device. FDA here did not give notice

and opportunity for comment. Rather, FDA short-circuited

the statutory reclassification process by relying on what it

called its inherent reconsideration authority. Asserting that

inherent authority, FDA reevaluated the scaffold and

concluded that the agency had erred in allowing the device to

be sold. FDA issued an order rescinding its clearance

decision, forcing ReGen to immediately pull the scaffold from

the market. ReGen subsequently filed for bankruptcy.

ReGen and its successor in interest, Ivy Sports Medicine,

challenged FDA’s decision to rescind the clearance

3

determination as procedurally flawed. The District Court

granted summary judgment to FDA, and Ivy now appeals.

Because we conclude that FDA did not follow the proper

statutory procedure for reclassifying a device, we reverse the

judgment of the District Court. We direct the District Court

to vacate FDA’s decision and to remand to the agency for

further proceedings.

I

A

In 1976, Congress amended the Food, Drug, and

Cosmetic Act, 21 U.S.C. § 301 et seq., to grant FDA authority

to regulate medical devices intended for human use. Devices

fall into one of three categories – Class I, Class II, or Class

III. A device’s classification is determined based on “the

degree of regulation thought necessary to provide reasonable

assurance of each device’s ‘safety and effectiveness.’”

Contact Lens Manufacturers Association v. FDA, 766 F.2d

592, 594 (D.C. Cir. 1985).

The classification of a device matters because the three

classes trigger different approval processes. In order to enter

the market, manufacturers of Class III devices first must go

through the “premarket approval” process. “That process

generally requires extensive clinical research on a new device

to ensure the device’s safety, and it often takes significant

time.” Cytori Therapeutics, Inc. v. FDA, 715 F.3d 922, 923

(D.C. Cir. 2013). Class I and II devices are considered to

pose fewer risks and are therefore able to enter the market

more easily. Rather than requiring pre-market approval, Class

I and II devices are subject either to “general controls” such

as labeling restrictions (for Class I devices), or a combination

of general controls and “special controls,” such as

4

performance standards (for Class II devices). See 21 U.S.C.

§ 360c(a)(1)(A)(i), (a)(1)(B).

How does a device initially get classified into Class I, II,

or III? The Act makes Class III the default category for new

(that is, post-1976) medical devices, unless and until FDA

finds that one of two conditions has been met. See id.

§ 360c(f)(1). First, FDA may determine that a device is

“substantially equivalent” to a pre-existing Class I or II

device. Id. § 360c(f)(1)(A)(ii). To be substantially equivalent

to a pre-existing Class I or II device, the new device must

have “the same intended use as the predicate device,” and

either (i) have “the same technological characteristics as the

predicate device” or (ii) be shown to be as safe and effective

as the predicate device. Id. § 360c(i)(1)(A). Second,

regardless of whether a device is substantially equivalent to

an existing device, FDA may make a de novo determination

that a device meets the statutory definitions of Class I or II.

See id. § 360c(f)(1)(B), (f)(2)-(3). That determination may be

made on FDA’s own initiative or in response to the device

manufacturer’s petition for de novo classification.

Here is how it works in practice: Classification of a new

medical device into Class I or II is usually obtained by

submitting to FDA a “premarket notification,” which in turn

triggers the FDA’s substantial equivalence review. See id.

§ 360(k). In the pre-market notification, the manufacturer

states the new device’s intended use, identifies the predicate

devices to which the new device is substantially equivalent,

and offers a proposed classification. See id.; 21 C.F.R.

§ 807.87. If FDA agrees that the new device is substantially

equivalent to an existing Class I or Class II device, it issues a

classification order allowing the device to be marketed subject

to appropriate restrictions. See 21 C.F.R. § 807.100. But if

FDA disagrees with the proposed classification, the device

5

remains in Class III and must go through the pre-market

approval process, unless FDA subsequently approves a

petition for de novo classification. See 21 U.S.C.

§ 360c(f)(3)(A).

After a device has been initially classified, there is also a

process for FDA reclassification. The Act includes a

provision, Section 360c(e), allowing FDA to change the

classification given to a device. See 21 U.S.C. § 360c(e).

During the time period relevant to this litigation, that

provision stated: “Based on new information respecting a

device, the Secretary may, upon his own initiative or upon

petition of an interested person, by regulation (A) change such

device’s classification, and (B) revoke, because of the change

in classification, any regulation or requirement in

effect . . . with respect to such device.” Id. § 360c(e)(1)

(2011). Because reclassification must be done “by

regulation,” it must be done in accord with certain procedural

requirements, including notice and comment. See FDA Br.

36; 21 U.S.C. § 360c(e); 21 C.F.R. § 860.130(c).

B

ReGen Biologics, Inc. was a New Jersey-based medical

device manufacturer. In 1993, ReGen began research on a

new device for use in certain knee-repair surgeries. The fruit

of that labor, called the Collagen Scaffold, is a crescent-

shaped surgical mesh made of bovine collagen. According to

ReGen, the Collagen Scaffold was intended to reinforce and

repair the knee cartilage remaining after knee surgery and to

provide a scaffold on which new tissue could grow.

In 2004, ReGen submitted a Class III premarket approval

application but subsequently withdrew it and sought to

proceed through the quicker premarket notification process

for Class I or Class II devices. In 2005, ReGen submitted to

6

FDA its first pre-market notification for the Collagen

Scaffold. Shortly thereafter, FDA issued a letter finding that

the scaffold was not substantially equivalent to its claimed

predicates. FDA eventually agreed to convert that finding

into a request for additional information. After receiving the

requested information, FDA again determined that the

scaffold was not substantially equivalent.

In late 2006, ReGen submitted a second pre-market

notification with revised labeling. Following more back-and-

forth between ReGen and FDA, the agency issued another

finding that the Collagen Scaffold was not substantially

equivalent to existing devices. A few months after this

second decision, four members of New Jersey’s congressional

delegation wrote to the FDA Commissioner expressing

concern about FDA’s process for reviewing the scaffold.

Representatives from ReGen later met with the Commissioner

and with Dr. Daniel Schultz, the director of FDA’s Center for

Devices and Radiological Health, the office that oversees

device approval decisions. Although the FDA officials

declined to take further action on the denied application, Dr.

Schultz advised ReGen that it could submit a new pre-market

notification with additional revisions.

ReGen took Dr. Schultz up on his suggestion and

submitted a third pre-market notification in July 2008. As

they had before, FDA’s staff reviewers recommended that the

scaffold be found not substantially equivalent to the claimed

predicates. Rather than issue a final decision, however, Dr.

Schultz decided to convene and seek input from an expert

advisory panel. That panel ultimately concluded that the

scaffold “was as safe and effective as the predicate devices.”

FOOD & DRUG ADMINISTRATION, ORTHOPAEDIC AND

REHABILITATION DEVICES PANEL MEETING – NOVEMBER 14,

2008 (SUMMARY). Based on the panel’s conclusions and

7

other information in the administrative record, Dr. Schultz

issued a letter finding that ReGen had demonstrated

substantial equivalence and classifying the Collagen Scaffold

into Class II.

ReGen’s victory would prove short-lived. A few months

after ReGen received clearance to market the Collagen

Scaffold, the Wall Street Journal published an article alleging

that political pressure had skewed FDA’s review process. See

Alicia Mundy, Political Lobbying Drove FDA Process, WALL

ST. J., Mar. 6, 2009, at A1. The same day that the Wall Street

Journal article appeared, a United States Senator contacted

FDA to raise concerns that ReGen had been allowed to play

an outsized and inappropriate role in the process. Other

Members of Congress later raised similar concerns. And in

April 2009, at the same time ReGen was preparing for its first

commercial distributions of the scaffold in the United States,

a group of FDA employees wrote a letter to President Obama

accusing Dr. Schultz and the FDA Commissioner of

improperly influencing the results of the agency’s review.

Faced with those and other allegations of impropriety,

FDA’s newly appointed Acting Commissioner ordered an

internal investigation of the Collagen Scaffold’s review

process. The investigation culminated in a report issued in

September 2009. See FOOD & DRUG ADMINISTRATION,

REVIEW OF THE REGEN MENAFLEX: DEPARTURES FROM

PROCESSES, PROCEDURES, AND PRACTICES LEAVE THE BASIS

FOR A REVIEW DECISION IN QUESTION, PRELIMINARY REPORT

(2009). The report identified “multiple departures from

processes, procedures, and practices” that raised “serious

questions about whether the integrity (as well as the quality)

of the review process was compromised.” Id. at 1, 22.

Among other things, the report criticized ReGen’s access to

high-level FDA officials, and those officials’ involvement in

8

the decisionmaking process; communications between

Members of Congress and the FDA Commissioner; and

ReGen’s level of involvement in the expert panel

proceedings. Although the report stopped short of concluding

that the review process had been compromised, it

recommended reevaluation of Dr. Schultz’s decision to clear

the Collagen Scaffold. Id. at 23.

Following the report’s publication, FDA appointed a new

team to review the Collagen Scaffold. That team concluded

that the device was not substantially equivalent to its claimed

predicates. Dr. Jeffrey Shuren, who had succeeded Dr.

Schultz as head of FDA’s Center for Devices and

Radiological Health, then convened a second expert panel.

The second panel’s findings were mixed; although the

scaffold was “generally considered safe,” the panel members

raised “some concerns about efficacy.” J.A. 1020. In

October 2010, Dr. Shuren notified ReGen that the clearance

of the scaffold “was in error,” and that to “rectify this error”

FDA would rescind its substantial equivalence determination.

Letter from Dr. Jeffrey Shuren, Director, Center for Devices

and Radiological Health, to Dr. Gerald E. Bisbee, Jr.,

Chairman and Chief Executive Officer, ReGen Biologics, Inc.

(Oct. 14, 2010). That decision, in turn, meant that the

Collagen Scaffold would be in Class III and have to go

through the extensive pre-market approval process to be

marketed again. An official rescission order followed in

March 2011, forcing ReGen to withdraw the Collagen

Scaffold from the market.

ReGen then filed this suit in the District Court seeking

review of FDA’s decision pursuant to the Administrative

Procedure Act. See 5 U.S.C. § 702. During the pendency of

the case, ReGen went bankrupt and Ivy Sports Medicine, LLC

9

became the successor in interest to ReGen and was substituted

as plaintiff.

Before the District Court, Ivy argued that FDA’s

rescission order was unlawful. Of relevance here, Ivy

asserted that FDA did not have inherent authority to rescind

its substantial equivalence determination; rather, according to

Ivy, FDA should have exercised its statutory reclassification

authority if it wanted to change the original classification

decision. The District Court disagreed and granted summary

judgment to FDA. Our review of the District Court’s decision

is de novo. See Virginia Department of Medical Assistance

Services v. HHS, 678 F.3d 918, 921 (D.C. Cir. 2012).

II

FDA asserts that it had “inherent authority” to rescind its

determination that the Collagen Scaffold was substantially

equivalent to devices already in the market. Rescinding that

determination had the effect of putting the device into Class

III, and thus required completion of the extensive pre-market

approval process before the scaffold could be marketed again.

FDA used its inherent authority to rescind rather than its

statutory reclassification authority. As a result, FDA did not

go through the procedures – including notice and comment –

that are required for reclassification.

The Act does not contain an express provision granting

FDA authority to reconsider its substantial equivalence

determinations. But as FDA notes, administrative agencies

are assumed to possess at least some inherent authority to

revisit their prior decisions, at least if done in a timely

fashion. See, e.g., American Methyl Corp. v. EPA, 749 F.2d

826, 835 (D.C. Cir. 1984) (“We have held that agencies have

an inherent power to correct their mistakes by reconsidering

their decisions within the period available for taking an

10

appeal.”); Mazaleski v. Treusdell, 562 F.2d 701, 720 (D.C.

Cir. 1977) (“We have many times held that an agency has the

inherent power to reconsider and change a decision if it does

so within a reasonable period of time.”) (quoting Gratehouse

v. United States, 512 F.2d 1104, 1109 (Ct. Cl. 1975));

Albertson v. FCC, 182 F.2d 397, 399 (D.C. Cir. 1950) (“in the

absence of any specific limitation,” reconsideration available

“within the period for taking an appeal”); see generally

Daniel Bress, Note, Administrative Reconsideration, 91 VA.

L. REV. 1737 (2005). As this Court explained in an oft-

repeated framing of the principle, inherent authority for

timely administrative reconsideration is premised on the

notion that the “power to reconsider is inherent in the power

to decide.” Albertson, 182 F.2d at 399.

But we have also recognized that any inherent

reconsideration authority does not apply in cases where

Congress has spoken. In American Methyl Corp. v. EPA, 749

F.2d 826 (D.C. Cir. 1984), we held that an agency may not

rely on inherent reconsideration authority “when Congress

has provided a mechanism capable of rectifying mistaken

actions.” 749 F.2d at 835. In such circumstances, we

concluded, “it is not reasonable to infer authority to

reconsider agency action.” Id.; see also New Jersey v. EPA,

517 F.3d 574, 583 (D.C. Cir. 2008) (“Congress . . .

undoubtedly can limit an agency’s discretion to reverse

itself”). Put more simply, our cases assume that Congress

intends to displace an administrative agency’s inherent

reconsideration authority when it provides statutory authority

to rectify the agency’s mistakes.

Ivy argues that this case falls squarely within the ambit of

cases like American Methyl. In particular, Ivy contends that

Congress precluded FDA from exercising inherent authority

to rescind substantial equivalence determinations by creating

11

in 21 U.S.C. § 360c(e) a specific statutory mechanism to

correct alleged device classification errors. As relevant here,

that provision states: “Based on new information respecting a

device, the Secretary may, upon his own initiative or upon

petition of an interested person, by regulation (A) change such

device’s classification, and (B) revoke, because of the change

in classification, any regulation or requirement in effect under

section 360d or 360e of this title with respect to such device.”

21 U.S.C. § 360c(e)(1) (2011). To do so, the agency must

first give notice and opportunity for comment. See FDA Br.

36; 21 U.S.C. § 360c(e); 21 C.F.R. § 860.130(c).

For its part, FDA acknowledges that it could have used

the statutory reclassification procedure in Section 360c(e) to

reclassify the Collagen Scaffold into Class III and thereby

remove it from the market. See FDA Br. 39. But FDA argues

that nothing in the Act or the American Methyl line of cases

bars the agency from relying on its inherent reconsideration

authority for the underlying substantial equivalence

determination. In FDA’s view, Ivy is conflating the

underlying substantial equivalence determination with the

potential consequence of that decision – classification into

Class I, II, or III.

Although counsel for FDA has advanced a forceful case

for the agency’s position, we ultimately think that Ivy has the

better of the argument. It may well be correct, as FDA

contends, that the statutory procedures outlined in Sections

360c(f) (for determining substantial equivalence) and 360c(e)

(for reclassification) are not mirror images of one another.

But the fundamental question both provisions address – what

is the appropriate classification of a new device? – is the

same. And as a practical matter, the decision to revoke a

substantial equivalence determination in circumstances like

those present here is a de facto reclassification of the device

12

into Class III, at least absent other FDA action. If FDA finds

that a device is no longer substantially equivalent to any

existing Class I or Class II devices, that device is

automatically reclassified as a Class III device. In other

words, to revoke a substantial equivalence determination is to

“change the classification,” 21 U.S.C. § 360c(e)(2), of that

device.

FDA’s statutory reclassification authority covers the

same concerns, and achieves the same result, as revocation of

a substantial equivalence determination. Therefore, as in

American Methyl, “Congress has provided a mechanism

capable of rectifying mistaken actions,” and it would be

unreasonable under this statutory scheme to infer that FDA

retains inherent authority to short-circuit or end-run the

carefully prescribed statutory reclassification process in order

to correct the same mistake. Indeed, accepting FDA’s

assertion of inherent authority would render Section 360c(e) a

dead letter in many cases because FDA could often reclassify

a device without complying with the procedural requirements

of that provision, in particular notice and comment.

In short, because FDA concededly could have used

Section 360c(e) to reclassify the Collagen Scaffold into Class

III, it could not rely on a claimed inherent reconsideration

authority to short-circuit that statutory process and revoke its

prior substantial equivalence determination to achieve that

same result.

The practical significance of our holding on this point is

limited but important. To reclassify under the statute, FDA

must go through certain procedural hoops, including notice

and comment. See FDA Br. 36. FDA obviously thinks notice

and comment is unnecessary here, a not-uncommon sentiment

among agencies that want to take action more promptly. But

13

notice and comment helps to prevent mistakes, because

agencies receive more input and information before they

make a final decision. And notice and comment also helps

ensure that regulated parties receive fair treatment, a value

basic to American administrative law. So notice and

comment, while somewhat burdensome, serves important

purposes both generally and in this statute.1

III

FDA responds that even if Section 360c(e) is the kind of

statutory provision that can displace inherent reconsideration

authority, the American Methyl principle still would not apply

on the particular facts of this case. American Methyl held that

EPA had erred by failing to use the statutory procedure for

revoking fuel-marketing waivers. But in a footnote, the Court

also stated that it was not expressing any view “as to EPA’s

power to revoke a waiver obtained through fraud, ex parte

contacts, or other misconduct tainting the original record and

thereby affecting the integrity of an agency’s proceedings.”

749 F.2d at 834 n.51. The Court went on to note that in the

case before it there was no evidence of such fraud or

misconduct in the administrative record. Id.

1

As both a legal and a practical matter, the difference between

our approach and the dissent’s approach is exceedingly narrow. As

a legal matter, we simply read this particular statutory notice and

comment scheme as one that, under our American Methyl

precedent, negates FDA’s resort to its inherent authority in these

circumstances. As a practical matter, FDA can still quickly and

readily reclassify a device even with notice and comment.

Moreover, in certain situations where it becomes necessary, an

agency may rely on exceptions to the notice and comment

requirement. See, e.g., 5 U.S.C. § 553(b)(3)(B).

14

Here, FDA argues that the findings of its internal

investigation – political pressure, agency acquiescence to that

pressure, and departures from standard agency procedures –

are the kinds of concerns that American Methyl contemplated

could warrant reconsideration on the basis of inherent

authority even if a statutory reconsideration provision exists.

FDA overreads American Methyl. To begin with, it is not

clear that American Methyl’s statements regarding the

implications of misconduct are anything more than dicta. As

FDA itself points out, the record in American Methyl

contained no evidence of misconduct. The Court therefore

had no occasion to consider whether a finding of misconduct

would allow an agency to use inherent authority – rather than

statutory authority – to reconsider a decision. Indeed, the

Court explicitly stated that it “of course intimate[d] no view”

on the subject. Id.; see also id. at 835 n.55 (fraud allegations

“an issue not before us today and on which we venture no

opinion”). Given its ambiguous precedential value, we are

hesitant to bind ourselves to American Methyl’s supposed

misconduct exception. Cf. Empresa Cubana Exportadora de

Alimentos y Productos Varios v. Department of Treasury, 638

F.3d 794, 802 (D.C. Cir. 2011) (where footnote was arguably

dicta, Court would “decline to elevate it now to a holding”).

In any event, it is unnecessary to decide today whether to

recognize that American Methyl exception. Even accepting

that American Methyl’s footnote 51 created an exception for

misconduct, that exception poses a high bar and would not

apply in this case. To state the obvious, not every wrong

decision or ill-considered decision is tainted by misconduct.

The term “misconduct” as used in American Methyl connotes

some clear legal or ethical violation. Here, the record

indicates that the review process for the Collagen Scaffold

was perhaps imperfect, but the supposed mistakes do not rise

15

to the level of misconduct contemplated by American Methyl.

For example, FDA’s report on the scaffold’s review process

acknowledged that communications between members of the

New Jersey congressional delegation and FDA officials were

“not inappropriate.” J.A. 850. And in fact, representing the

interests of constituents is a key and proper part of the job of

Representatives and Senators. Indeed, FDA received pressure

from other Members of Congress to change the original

reclassification decision. Not surprisingly, therefore,

Members of Congress were on both sides of the question.

The Members’ expression of their views – on both sides –

was not misconduct for purposes of the American Methyl

exception.

Similarly, while the report identified mistakes in the

expert panel proceedings, the report found no evidence that

those supposed defects affected FDA’s decision. See FDA

PRELIMINARY REPORT 20-21 (consequences of excluding

review team members were “speculative” and panel transcript

“does not provide adequate support for a conclusion that the

integrity of the process was compromised”).2

2

The District Court expressed concern about purported ex

parte contacts between FDA officials and ReGen’s executives

following the denial of ReGen’s second premarket notification. See

Ivy Sports Medicine, LLC v. Sebelius, 938 F. Supp. 2d 47, 57

(D.D.C. 2013). As Ivy points out, however, the statutes and FDA

regulation barring companies from meeting with FDA officials

apply only to formal, on-the-record hearings in a rulemaking or

adjudication, not to informal agency proceedings, such as

proceedings to determine substantial equivalence. See 5 U.S.C.

§ 557(a), (d); 21 C.F.R. § 10.55(a). And generally speaking, it is a

good thing for agency officials to meet with regulated entities and

other affected parties.

16

It is also notable that no senior leaders of FDA,

executives of ReGen, or Members of Congress were

disciplined for their involvement in the scaffold’s review

process. Yet if FDA actually rendered a decision tainted by

misconduct – as opposed to simply reaching a mistaken

decision or a decision it no longer agrees with – that

misconduct must have been due to the legally or ethically

wrongful actions of some person or persons. FDA’s inability

or unwillingness to identify those wrongdoers is an indication

that, in fact, no American Methyl-level misconduct occurred,

at least on the record before us.

***

Because Congress created a procedure for FDA to

reclassify medical devices, FDA may not short-circuit that

process through what it calls its inherent authority to reverse

its substantial equivalence determinations for those devices.

FDA’s order rescinding the Collagen Scaffold’s substantial

equivalence determination on the basis of inherent authority

was therefore invalid. We reverse the judgment of the

District Court. We direct the District Court to vacate FDA’s

decision and to remand to the agency for further proceedings.

So ordered.

PILLARD, Circuit Judge, dissenting: This case requires us

to consider the source and scope of the FDA’s authority to

rescind its clearance of an ineffective medical device when

the agency concludes that its decision was flawed and that it

should not have cleared the device in the first place. Ivy

Sports Medicine’s predecessor, ReGen Biologics,1 developed

a surgical mesh, referred to as the Collagen Scaffold, which it

described as a resorbable, crescent-shaped mesh designed to

be implanted inside the knee joint in treatment of injuries of

the meniscus. The FDA cleared the device for marketing as a

Class II device under the Federal Food, Drug, and Cosmetic

Act, as amended by the Medical Device Amendments of 1976

(MDA) (collectively, FDCA or the Act). It did so without

making any substantive determination that the device met the

statutory Class II criteria, but by an alternative route that the

statute authorizes: deeming the device substantially

equivalent to other Class II surgical meshes already in use. In

effect, the FDA’s clearance of the Collagen Scaffold

piggybacked on its prior approval of other, ostensibly

equivalent “predicate” devices. But the FDA soon recognized

that the apparent equivalence was specious and rescinded the

Class II clearance because none of the predicate surgical

meshes was used in a weight-bearing joint like the knee, nor

was any used in place of diseased tissue. There was,

moreover, no evidence that the Collagen Scaffold had any

beneficial effect for its intended use.

Neither the erroneous clearance nor its reversal was

accompanied by notice and comment rulemaking. Ivy

acknowledges that the statute provides for substantial

equivalence determinations to be made without notice and

comment, but challenges the reversal because, in its view, the

FDA lacks authority to revisit any erroneous equivalence

decision except through the Act’s notice-and-comment

1

For the sake of simplicity, this opinion refers interchangeably to

both ReGen Biologics and Ivy Sports Medicine simply as “Ivy.”

2

process for making “Classification Changes.” Where a statute

specifies an exclusive process for revoking erroneous

decisions, agencies cannot circumvent that process by

adverting to their inherent or implied power of error

correction. Ivy contends that 21 U.S.C. § 360c(e)

(“subsection (e)”) is the exclusive process for revoking an

erroneous substantial equivalence determination, and so ousts

the FDA’s implicit reconsideration authority.

The FDA argues to the contrary. The regulatory

“Classification Changes” procedure, codified in subsection

(e), is a means to adjust a device’s statutory classification

“based on new information respecting [the] device.” It is

narrower than Ivy supposes, and clearly does not set forth the

exclusive process—and perhaps not even a permissible

route—for revocation of the FDA’s substantial equivalence

determination.

The statute’s text, structure, history, and purpose, in

addition to past administrative practice, all show that the FDA

permissibly read the statute not to displace its otherwise-

undisputed implicit authority to correct erroneous substantial

equivalence decisions. Subsection (e) speaks neither to

correction of decisions that were wrong when made, nor to

substantial equivalence determinations. It is keyed instead to

changes in light of new information of classifications that

were themselves made through a notice-and-comment process

under subsections (b)-(d). See 21 U.S.C. § 360c(b)-(d). It

does not relate to the type of de facto reclassification to Class

III that occurs upon revocation of an erroneous clearance into

a lower class under the substantial equivalence determination,

and, indeed, does not speak to any decision, such as an

equivalence revocation, that would move a device from Class

II or I into Class III. It does, however, specifically

3

contemplate shifts in the opposite direction, e.g., out of Class

III into Class II or I.

Congress did not intend subsection (e) to be the exclusive

method to reconsider assessments of substantial equivalence,

so it does not displace the FDA’s implicit authority to correct

its own errors. I believe the majority errs in reading the Act

to require that the agency’s erroneous approval of a medical

device via the abbreviated substantial equivalence process

remain frozen in place unless the agency takes the long way

around, through notice and comment rulemaking required for

“Classification Changes,” to undo it, and so I respectfully

dissent.

I. Background

As the majority explains, a medical device defaults to the

restrictive “Class III” under the Act unless the FDA

determines that it belongs in the less restrictive Class II or

Class I (or affirmatively classifies it as required to remain in

Class III). Ivy initially faced a choice of two routes by which

it might have its device moved into a less restrictive class.

One route was to petition the Secretary for classification of

the device directly under the statutory criteria. The other way

was to employ a shortcut “substantial equivalence” process.

After an initial stab at developing the clinical evidence for a

premarket approval application, Ivy chose to bypass the more

onerous regulatory route and seek FDA clearance into Class II

via the piggyback substantial equivalence process. Ivy thus

filed a premarket notification contending that its device was

substantially equivalent to a set of already-classified predicate

devices. If that abbreviated process did not succeed, Ivy

retained the option to seek clearance by petitioning the

Secretary for application of the statutory criteria under the de

novo classification process.

4

As it happened, the piggyback worked for Ivy, at least

temporarily. The FDA approved the Collagen Scaffold as

substantially equivalent to Class II surgical meshes that were

already being marketed to reinforce injured soft tissue, such

as a sutured rotator cuff or fistula. But the substantial

equivalence determination was fraught and close. The FDA

found equivalence reluctantly, and soon suspected that it had

erred. The agency did not immediately reverse itself,

however, but ordered an independent review of its process to

determine whether it had improperly bowed to outside

pressures. In addition, the agency organized a new FDA team

to review the device’s substantial equivalence, subject to

further review by a panel of outside experts. The preliminary

report of the internal investigation, titled “Review of the

ReGen Menaflex®: Departures from Processes, Procedures

and Practices Leave the Basis for A Review Decision in

Question,” identified significant process irregularities and

concerns about outside pressures. The scientific review found

no substantial equivalence due to the different technological

characteristics and intended use from the predicate meshes

and concluded that the Collagen Scaffold was not as safe and

effective as the predicates. With the results of those

investigations in hand, the FDA decided that the substantial

equivalence determination was indeed wrong and reversed it,

inviting Ivy to submit the device for a risk-based

classification of the device through the de novo process.

Instead of submitting the Collagen Scaffold for classification

under the statutory criteria, however, Ivy filed suit under the

Administrative Procedure Act challenging the FDA’s

authority to reconsider and revoke its own erroneous

substantial equivalence determination.

Ivy argues that the FDA’s reversal is invalid because, in

its view, Congress required any correction of error in a

substantial equivalence determination go through notice and

5

comment rulemaking, and the FDA’s reversal here, however

informed and procedurally careful, did not proceed by

regulation. Ivy points to subsection (e), the Act’s provision

entitled “Classification Changes” that authorizes such changes

by notice and comment rulemaking, and contends that the

statute makes that provision the exclusive authority for

reversal of erroneous substantial equivalence determinations

because the effect of such a reversal is to return the device by

default to Class III, and thus, effectively, to change its

classification.

Subsection (e)(1) begins:

Based on new information respecting a device, the

Secretary may, upon his own initiative or upon

petition of an interested person, by regulation (A)

change such device’s classification, and (B) revoke,

because of the change in classification, any regulation

or requirement in effect under section 360d or 360e of

this title with respect to such device.

21 U.S.C. § 360c(e)(1).2 The subsection goes on to provide

that, in promulgating such a classification-change regulation,

“the Secretary may secure from the panel to which the device

was last referred pursuant to subsection (c) of this section

[authorizing initial classification by regulation] a

recommendation respecting the proposed change in the

device’s classification.” Id. It then spells out conditions

required for changing device classifications, referring only to

changes from Class III to Class II or I, which the parties refer

to as “down classification.” It nowhere mentions substantial

2

As discussed further below, subsection (e) was amended in July

2012. Unless otherwise noted, all citations to the Act refer to the

provisions in effect when the FDA rescinded its substantial

equivalence determination.

6

equivalence or the statutory provision authorizing equivalence

determinations, nor does it mention changes in classification

in the other direction (as occurred here), from Class I or II to

Class III, referred to as “up classification.”

II. Analysis

The sole issue here is whether the FDCA requires the

agency to go through the rulemaking process authorized by

subsection (e) for “Classification Changes” in order to undo

an erroneous substantial equivalence determination, which it

was not in the first instance required to make by rule, and

which did not involve application of the Act’s classification

criteria. The nub of the dispute is a contest between dueling

statutory implications. The FDA relies on the established

principle that agencies’ power to make decisions implies their

power to reconsider and revoke erroneous decisions. Ivy

acknowledges such implicit power of error correction, but

contends that the FDCA eliminates it here by operation of the

settled canon, expressio unius est exclusio alterius, i.e., the

express mention of one thing excludes all others. Ivy says the

statutory provision authorizing “Classification Changes” by

regulation, 28 U.S.C. § 360c(e)(1), is the explicit and

exclusive avenue for changing any agency decision that yields

even a default, provisional reclassification of a medical

device. Thus, according to Ivy, the FDA must conduct

rulemaking under the “Classification Changes” provision, not

only to change a classification initially determined by

rulemaking under subsections (b)-(d), see 21 U.S.C.

§ 360c(b)-(d), but also to reverse a piggyback decision to

clear a device under subsection (f) as substantially equivalent

to a predicate device the FDA has already cleared, see id. §

360c(f)(1). As Ivy understands it, subsection (e) ousts by

negative implication the authority the agency would otherwise

have to reconsider and revoke, without conducting notice and

7

comment rulemaking, a non-regulatory substantial

equivalence decision that it made in error.

The FDA counters that it need not conduct notice and

comment rulemaking under subsection (e) to rethink and

retract a substantial equivalence decision that it decides, on

the original record, was wrong from the start. The FDA’s

inherent authority is preserved, it argues, because “neither the

text nor the legislative history of [subsection (e)] speak to

reconsideration or even to substantial equivalence at all.” Br.

for Appellees 30. And even if it can be read to bar

reconsiderations triggered by “new information,” such

information being the threshold requirement of subsection (e),

the FDA contends that it need not be used for revocation of

decisions “that were flawed at their inception.” Id.

The parties start from the shared premise that the FDA has

implicit statutory authority to correct its own errors, including

erroneous substantial equivalence decisions, unless subsection

(e) displaces it. See Slip Op. 9-10. It is well settled that, even

where Congress has provided no explicit mechanism for

agency reconsideration, statutes that authorize agencies to act

are also presumed to empower those agencies to reconsider

their actions to correct their mistakes. See, e.g., Boesche v.

Udall, 373 U.S. 472, 476 (1963); Civil Aeronautics Bd. v.

Delta Air Lines, Inc., 367 U.S. 316, 325 (1961); Am. Trucking

Ass’ns v. Frisco Transp. Co., 358 U.S. 133, 145 (1958); Nat’l

Ass’n of Trailer Owners, Inc. v. Day, 299 F.2d 137, 139 (D.C.

Cir. 1962). “[I]n the absence of any specific [statutory]

limitation,” an agency retains authority to reconsider and

correct an earlier decision. Albertson v. FCC, 182 F.2d 397,

399 (D.C. Cir. 1950). The description of such authority as

“inherent,” though widely used in our precedents, is

somewhat of a misnomer, because the FDA, like other

executive agencies, is “entirely a creature of Congress.” Civil

8

Aeronautics Bd., 367 U.S. at 322. Assuming no “inherent”

power in the constitutional sense, cf. Owens v. Republic of

Sudan, 531 F.3d 884, 893 (D.C. Cir. 2008), agencies are

typically understood to have statutorily implicit corrective

powers in the absence of statutory provisions explicitly

removing them. See Civil Aeronautics Bd., 367 U.S. at 321-

22. The touchstone, then, is congressional intent.

American Methyl Corp. v. EPA, 749 F.2d 826 (D.C. Cir.

1984), is a straightforward statutory interpretation decision,

and Ivy’s application of it here rests on a misreading of the

FDCA. In American Methyl, the EPA asserted that it retained

inherent authority to revoke a waiver granted under

Section 211(f)(4) of the Clean Air Act that allowed the

introduction of a fuel additive onto the market. See id. at 828-

29. The court rejected the agency’s assertion of inherent

authority to revoke the waiver, concluding that Section 211(c)

of the statute expressly “empowered [the agency] to take

action against an offending fuel or fuel additive” that was

“already in commerce,” and that, because the statute explicitly

set forth that process for taking a fuel additive off the market,

the agency could not avoid it by resorting to its “inherent

authority” to revoke the waiver. Id. at 835-366. Specifically,

the court looked at the “interrelationship” of subsections (c)

and (f) and concluded that Section 211(c) “provid[ed] a

mechanism for correcting” the error in that case. Id. at 834-

35; see also id. at 836-37 (analyzing “statutory design”). The

court also examined the legislative history, emphasizing that

it supported the view that Congress intended Section 211(c)

“as the exclusive means by which [the agency] was to correct

waivers mistakenly granted by default.” Id. at 836 (emphasis

added). Because “Congress contemplated regulation of fuels

and fuel additives . . . waived into commerce only through

proceedings under section 211(c),” the court reasoned that

“the legislative understanding thus rejects the implied

9

revocation authority claimed by the EPA.” Id. at 834

(emphasis added)). Explicit authority must be used where it

represents an exclusive and specific limitation on whatever

inherent authority the agency might otherwise have had.

Albertson, 182 F.2d at 399-400; Am. Methyl, 749 F.2d at 835.

As American Methyl recognizes, the touchstone in

determining whether an explicit provision must be read to

limit an agency’s implied authority to reconsider a prior

decision is whether “Congress had an intention on the precise

question at issue.” Am. Methyl, 749 F.2d at 833 (quoting

Chevron, U.S.A., Inc. v. Nat’l Resources Defense Council,

Inc., 467 U.S. 837, 843 n.9 (1984)). The “precise question” in

this case is whether Congress intended subsection (e), which

allows the FDA to make a “classification change” by

regulation, to be the exclusive means for the agency to

reconsider a substantial equivalence determination.

Answering that question requires examination of the statutory

scheme, see id. at 834-37, guided by “the customary statutory

interpretation tools,” Cal. Metro Mobile Commc’ns, Inc. v.

FCC, 365 F.3d 38, 44 (D.C. Cir. 2004) (“traditional tools”

include text, structure, purpose, and legislative history); see

also Am. Methyl, 749 F.2d at 834-837 (reviewing legislative

history, text, structure, and agency practice). Read with the

help of those customary tools of statutory interpretation, the

FDCA makes clear that Congress never intended to require

the FDA to use subsection (e) to rescind an erroneous

substantial equivalence determination.

A. Statutory Overview

Some statutory context is helpful to explicate the textual,

structural, and functional relationship between the full

regulatory classification process detailed in subsections (b)-

(d) and the shortcut subsection (f) substantial equivalence

10

determination. Compare 21 U.S.C. § 360c(b)-(d), with id.

§ 360c(f). Congress enacted the MDA in 1976 to bring

medical devices, not previously subject to federal regulation,

under the ambit of the FDCA. The new regulatory scheme

was designed to give consumers prompt access to medical

devices beneficial to human health while keeping off the

market devices that are not safe and effective. See Contact

Lens Mfrs. Ass’n v. FDA, 766 F.2d 592, 593-94 (D.C. Cir.

1985). The Act grants authority to the agency to classify

medical devices into three classes “based on the risk that they

pose to the public.” Medtronic Inc. v. Lohr, 518 U.S. 470,

476 (1996); see Contact Lens Mfrs. Ass’n, 766 F.2d at 594.

As the majority explains, a device’s classification determines

both the relative ease with which the device can enter the

market and the types of marketing restrictions to which it will

be subject, with devices in Class III requiring the FDA’s

affirmative premarket approval, subject to the most extensive

conditions, and those in Classes II and I subject only to

specific or general controls. See 21 U.S.C. § 360c(a)(1); Slip

Op. at 3. No medical device introduced after the enactment

date of the MDA may be marketed until the FDA has at least

acted to clear it. The FDA treats such a device as Class III by

default unless and until it moves it into a lower category, such

as by application of the statutory criteria, see id. § 360c(f)(2)-

(3), or a substantial equivalence determination under

subsection (f)(1).3

3

Class III devices may not be marketed without premarket

approval, whereas devices in Class II and Class I need no such

additional scrutiny. A premarket approval application initiates a

detailed process of scientific review requiring the manufacturer to

submit research findings showing the device is safe and effective

for its intended use, together with proposed labeling that is not false

or misleading. See 21 U.S.C. § 360e. The FDA’s premarket

approval process involves referral of the device to expert panels,

11

The majority is correct that, in practice, placement of a

new device in Class I or II usually is obtained through a

determination that the device is “substantially equivalent” to a

predicate device, i.e., one already in Class I or II. But the

majority misunderstands subsection (e) in part because it

leaves out of its description a number of related provisions of

Section 360c (“Classification Of Devices Intended For

Human Use”) that describe the Act’s foundational method of

device classification by regulation, informed by

recommendations from panels of scientific experts and

subject to public notice and comment. See 21 U.S.C.

§ 360c(b)-(d). Reading Section 360c as a whole makes clear

that the subsection (e) process is required not for revocations

of piggyback substantial equivalence determinations, but for

changes in classifications initially made by the foundational

regulatory classification route.

When Congress enacted the MDA to bring medical

devices under the ambit of the FDCA, it faced the project of

classifying an enormous number of then-existing medical

devices (now commonly referred to as “pre-amendments

devices”). Subsections (b)-(d) require that to be done through

a process of notice and comment rulemaking, supported by

input from expert advisory panels, to determine with respect

to each type of device its effectiveness and the risks it poses,

and what kinds of controls might be needed for it be used as

and inspection of the manufacturing site and assurances about the

manufacturing process. Throughout the premarket approval

process, the burden of proof is on the manufacturer. Approval,

when given, is typically accompanied by marketing conditions to

provide reasonable assurance of safety and effectiveness. See id. §

360e(c)-(d). The time and cost associated with the premarket

approval process tends to motivate manufacturers to seek

classification of their devices into Class I or II where it is feasible

to do so. See Medtronic, 518 U.S. at 479.

12

intended in a safe and beneficial manner. See 21 U.S.C.

§ 360c(b)-(d). The Act provides—in subsection (e), on which

Ivy relies—that, where new information respecting a device

comes to the FDA’s attention, the agency must again deploy

notice and comment rulemaking if it wants to change the

device’s classification. Id. § 360c(e). Pre-amendments

devices are grandfathered and thus left unclassified unless and

until the FDA classifies them pursuant to subsection (a)-(d).

See Medtronic, 518 U.S. at 477-78.

Congress further created, in subsection (f), a dual-track

process to be followed to clear new, or “post-amendments”

devices. Whereas the default for pre-amendments devices is

that they are left unclassified until classified, subsection (f)

starts all post-amendments devices in Class III by default, and

then sets forth two tracks for their clearance for marketing.

One track involves FDA application of the statutory criteria to

post-amendments devices through a rulemaking process

analogous to that used for pre-amendments devices. Thus, if

a new device has no apparent equivalent among cleared

predicate devices, for example, it can be cleared like a pre-

amendments device, through a process that may include

expert panels and is subject to notice and comment. See 21

U.S.C. § 360c(f)(3).

The other track piggybacks on the foundation of devices

classified by regulation, by simply matching new devices to

those already-reviewed predicates as a way to assign them to

their appropriate classes. See id. § 360c(f)(1). That second,

expedited clearance process applies to post-amendments

devices that are “substantially equivalent” to already cleared

devices to avoid shielding devices already in use from

competition from new and potentially improved versions. See

id.; Medtronic, 518 U.S. at 478. The substantial equivalence

inquiry does not require the FDA to apply the statute’s

13

classificatory criteria to the new device, but asks whether the

new device is substantially equivalent to a predicate device

and thus can be assigned the same classification. See id.

§ 360c(i) (defining substantial equivalence). The substantial

equivalence decisional process is a procedural as well as

substantive shortcut, as it does not require notice and

comment rulemaking. See id. § 360c(f)(1).

Finally, subsection (f) provides that proponents of post-

amendments devices can have it both ways: When a

manufacturer or importer tries the substantial equivalence

shortcut and fails, the device defaults back to Class III, see id.

§ 360c(f)(1), but that need not be the end of the road. If, for

example, the FDA rules adversely on a petition for substantial

equivalence because the device has a different intended use

from the predicate, the unsuccessful petitioner can within 30

days request that the Secretary classify the device as safe and

effective in its own right under a de novo process applying the

statutory criteria. See id. § 360c(f)(2).

B. Statutory Text

In discerning Congress’s meaning, the text is primary.

Subsection (e) authorizes the FDA, on its “own initiative or

upon petition of an interested person, by regulation,” to

change a device’s classification. 21 U.S.C. § 360c(e)(1). The

parties agree that “by regulation” means notice and comment

rulemaking. The question is whether Congress intended

subsection (e) to be the exclusive process for reconsidering

erroneous substantial equivalence determinations. The

statute’s text shows that it did not and, indeed, raises doubts

about whether it would have even been permissible for the

agency to use it for that purpose.

14

1. Subsection (e) explicitly addresses subsection (c)

classification, not subsection (f) substantial

equivalence.

The first hint that subsection (e) does not restrict the

agency’s reconsideration of erroneous substantial equivalence

determinations is that subsection (e) makes no reference to the

piggyback substantial equivalence process or the provisions

codifying it, whereas it explicitly cross-references the full

regulatory process for classifying devices by application of

the statute’s classification criteria, with input from expert

advisory panels and notice and comment. As Ivy’s counsel

acknowledged during oral argument, Congress developed

subsection (e) as a procedural mechanism for reclassifying

pre-amendments devices. See Oral Arg. Rec. at 4:45-4:55

(counsel for Ivy) (describing rulemaking procedures for pre-

amendments devices and explaining that “Congress initially

provided for reclassification of pre-amendments devices by

notice and comment rulemaking [i.e. via subsection (e)] to

parallel that original classification decision”). Subsection (e)

specifically cross-references the classification procedures for

ab initio regulatory device classification: It empowers the

FDA to “secure from the panel to which the device was last

referred pursuant to [the rulemaking procedures for pre-

amendments devices] a recommendation respecting the

proposed change in the device’s classification.” Id.

§ 360c(e)(1) (citing § 360c(c)). Mirroring the requirements of

the regulatory classification procedures (set forth in

subsections (b)-(d)), subsection (e) requires that any panel

recommendation for a classification change must likewise be

published in the Federal Register. Compare id. § 360c(d)(1),

with id. § 360c(e)(1). The explicit statutory cross-reference

and the parallel procedures reflect Congress’s assumption that

the device classifications subject to change under subsection

15

(e) are those that were made in the first instance, with expert

panel input, pursuant to subsections (b)-(d).

The text of subsection (e) makes no mention whatsoever

of subsection (f) or substantial equivalence determinations.

Because classifications that result from substantial

equivalence determinations, unlike those made under

subsections (b)-(d), do not proceed by panel recommendation

and notice and comment rulemaking, subsection (e)’s textual

reference to subsection (c) and “the panel to which the device

was last referred” make no sense in the context of revocation

of a substantial equivalence determination, such as is at issue

in this case. Subsection (e)’s explicit references to the panel

process, and its lack of any mention of either error correction

or substantial equivalence, belies Ivy’s efforts to cast it as the

only way the FDA can correct an equivalence decision it

recognizes was wrong.

2. Subsection (e) speaks to classification changes based

on new evidence, not correction of errors in an initial

substantial equivalence determination.

Two additional textual features reinforce the conclusion

that subsection (e) is not the FDA’s exclusive means to

revoke an invalid substantial equivalence determination:

Subsection (e) is titled “Classification Changes,” and provides

for changes in response to “new information respecting a

device.” Neither of those terms is apposite to revocation of

equivalence decisions that were invalid at their inception.

The FDA asserts here the authority to reconsider a

decision on its initial record, not to change it based on new

information. The agency’s reversal of its determination that

the Collagen Scaffold was equivalent to predicate devices—

like any determination that the agency made the wrong

equivalence decision from the start—was not triggered by any

16

“new information,” and yet such information is the threshold

condition for application of subsection (e).4

It is also not at all clear that, even if it were triggered by

new information, reversal of a substantial equivalence

determination is a “classification change” within the meaning

of subsection (e). Revoking the decision that the Collagen

Scaffold was substantially equivalent to devices in Class II

caused a de facto “change” in its “classification” back to

Class III, but that change resulted from the statutory default

that places all post-amendments devices in Class III until the

FDA takes appropriate action on them. 21 U.S.C.

§ 360c(f)(1). The Collagen Scaffold moved back to Class III

only provisionally and by default, and not as the result of any

affirmative classification decision based on new information,

such as subsection (e) contemplates.

3. Subsection (e) refers only to changes from more to less

restrictive classifications, but invalidating an

erroneous equivalence determination has the opposite

effect.

Subsection (e) provides further textual indication that it

does not apply to the kind of de facto classification change

here, resulting from operation of the statute’s default

4

The FDA has read “new information” to also encompass the

reevaluation of existing information. J.A. 1675; see, e.g., Medical

Devices; Reclassification of the Cutaneous Carbon Dioxide and the

Cutaneous Oxygen Monitor, 67 Fed. Reg. 76,678, 76,679 (2002)

(citing, inter alia, Holland Rantos v. U.S. Dep’t of Health, Educ., &

Welfare, 587 F.2d 1173, 1174 n.1 (D.C. Cir. 1978)). That is not

contrary to the point that Congress tied subsection (e) to evidence-

based classifications based on the statutory criteria, not to

rescissions of substantial equivalence determinations that were void

on the record information from the start.

17

placement of post-amendments devices in Class III: It refers

only to what the parties call “down classifications” (e.g., from

Class III to Class II or I) and not to “up classifications” (e.g.,

from a lower class back up to Class III). Subsection (e) thus

is not the requisite process for all reclassifications, as Ivy

implies, but specifically governs moving Class III devices to

lower classifications under certain circumstances. See id.

§ 360c(e)(2)(A) (referring to classification change from Class

III to Class II); id. § 360c(e)(2)(B) (referring to classification

change from Class III to Class I). Under subsection (e), the

FDA may change a device’s classification from Class III to

Class I or Class II if the agency determines that the controls

provided by the lower classification “would provide

reasonable assurance of the safety and effectiveness of the

device.” 21 U.S.C. § 360c(e)(2)(A) & (B). By contrast, in

this case as in any case of substantial equivalence, the FDA

did not have to consider the ability of classification controls to

assure safety and effectiveness; rather, the agency simply

determined—based on an evaluation of the device’s intended

use and technological characteristics—that the Collagen

Scaffold was not substantially equivalent to the predicate

devices that the manufacturer had identified. See Oral Arg.

Rec. at 28:53-31:21.

Based on its explicit reference to down classifications

only, it is far from obvious why the plain text of subsection

(e) even permits, much less mandates, that the agency use it to

upclassify the Collagen Scaffold. See Oral Arg. Rec. at

25:55-26:15 (counsel for FDA) (asserting the agency’s up-

classification authority but acknowledging that the question

has not been adjudicated by any court).5 Neither of the types

5

After the events at issue here, Congress prospectively amended

subsection (e) to provide that it may be used to “up classify”

devices from Class II to III. Food and Drug Administration Safety

& Innovation Act, Pub. L. No. 112-144, § 608, 126 Stat. 993, 1055-

18

of reclassifications specifically enumerated in subsection (e)

(from Class III to II, or from Class III to I) describes the effect

of the FDA’s rescission of the substantial equivalence

determination, which restored the Collagen Scaffold from

Class II to the default, more closely restricted, Class III.

C. Statutory Structure and Purpose

The structure of the statute reinforces the textual evidence

that Congress intended subsection (e) to play a different and

more limited role than Ivy contends. A key structural feature

of the Act is subsection (e)’s placement in the statute, which

reinforces the distinction between the foundational

classification of devices via a regulatory process of

determining their safety and effectiveness, and the dependent

process of classification based on matching new devices with

predicates already on the market. The second, procedurally

abbreviated, process piggybacks on the first process, which

relies on expert panels and notice-and-comment rulemaking.

Subsection (e) appears immediately after those subsections

that set forth the regulatory classification process, but before

subsection (f), which sets forth the piggyback classification

method. Thus, the procedure that Ivy says must control

rescission of an erroneous substantial equivalence

determination appears in the statute before the FDCA defines

or even mentions “substantial equivalence.” See 28 U.S.C.

§ 360c(f)(A)(ii). It seems unlikely that Congress codified a

56 (2012) (amending 21 U.S.C. § 360c(e)(1) to permit

reclassification from Class II to III when Class I and II controls

“together are not sufficient to provide a reasonable assurance of

safety and effectiveness for such device”). As the majority

emphasizes, the FDA has taken the position that, even prior to its

amendment, the agency could have used subsection (e) to reclassify

the Collagen Scaffold into Class III. That contention is addressed

below.

19

mechanism for correcting a type of determination before it

codified the authority for making such determination in the

first place. Subsection (e) more logically relates not to

substantial equivalence determinations, but to the full-dress

device-classification provisions set forth in subsections (b)-

(d)—to which it expressly refers and which immediately

precede it in the statute. Structurally, it makes sense that

subsection (e) explains how to change the type of ab initio

classification described in the immediately preceding

subsections of the statute; it is much less logical to conclude

that it governs undoing a different kind of decision that the

statute does not even set forth until later.

That conclusion is further reinforced by the equal rigor of

the processes required to classify a device under subsections

(b)-(d) and to change its classification under subsection (e),

both of which require notice and comment rulemaking. For

example, just as pre-amendments classifications must be

announced “by regulation,” so too a classification change

under full-dress reclassification must be effectuated “by

regulation.” Compare 21 U.S.C. § 360c(d)(1) (initial

classification), with id. § 360c(e)(1) (classification changes).

That symmetry contrasts with the very different, shortcut

process contemplated for substantial equivalence decisions

under subsection (f)(1). Id. § 360c(f)(1). The latter type of

decisions bypass the statutory classification criteria and

instead focus on matching a new device with a cleared

predicate, and do not require notice and comment rulemaking.

It makes practical sense that decisions made through the

time consuming and expensive rulemaking process cannot be

lightly changed—hence the notice and comment requirement

in subsection (e) for classifications changes, which mirrors

the process in subsection (d) for the classifications thereby

being changed. In contrast, classifications made by deciding

20

into which of several boxes to place a new device (where the

boxes are the prior device classifications) typically are—and

are intended to be—quicker and more informal. Cf.

Medtronic, 518 U.S. at 478-79 (contrasting the roughly 20

hours needed to complete the “limited form of review”

required for substantial equivalence with the 1,200 hours

needed to complete a premarket approval).

Reading the statute so as not to require the subsection (e)

process be used to correct erroneous substantial equivalence

determinations best serves the statute’s purpose. Congress

enacted the FDA classification system to make sure that

consumers benefit from safe and effective medical devices

and are protected from those that are useless or unsafe. See

id. at 475-77. The substantial equivalence process helps to

preserve market competition in medical devices by removing

unnecessary barriers that the classification process could pose

to devices that are substantially equivalent to, and may be

cheaper or better than, those that are already on the market.

See id. at 478.

The court has it backwards in citing the accuracy benefits

of notice and comment in support of Ivy’s view, see Slip Op.

at 12-13: Substantial equivalence decisions are prone to error

in part because they are made without notice and comment, so

Ivy’s contention that notice and comment, admittedly not

required for the initial equivalence decision, is necessary to

fix such a decision if it was wrong creates an obstacle against

correction of mistakes in a body of presumptively error-prone

decisions. I read the Act to allow equivalence decisions to be

reversed as readily as they are made (leaving open to a device

manufacturer or importer to seek a more fully informed and

thus accurate consideration of the device through the de novo

process), which I believe better serves the Act’s purpose of

assuring the safety and effectiveness of medical devices than

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does the one-way ratchet that Ivy advocates. The harms

likely to flow from reading the Act so that mistaken

equivalence determinations are easier to make than to fix are

likely to be multiplied, because devices cleared as

substantially equivalent thereby qualify as predicate devices

for future equivalence decisions. An uncorrected error in

deeming a device substantially equivalent invites a daisy

chain of further errors. The court’s holding that FDA must

undertake the relatively formal, slow, and costly process

contemplated by subsection (e) in order to correct errors in

relatively quick and informal substantial equivalence

determinations creates an unwarranted asymmetry, making

erroneous approvals easy to make and cumbersome and slow

to correct—a result that is at odds with the core aims of the

Act.

D. Agency Practice

The text and structure of the Act are sufficient, standing

alone, to demonstrate that Congress did not intend full-dress

reclassification to be the exclusive statutory mechanism for

the agency’s reconsideration of an erroneous substantial

equivalence determination. Nevertheless, because this court

in American Methyl considered prior administrative practice

relevant to the strength of the agency’s statutory reading, see

749 F.2d at 838-39, it is worth briefly mentioning the FDA’s

prior practice. In American Methyl, the agency’s own prior

practice belied its proffered statutory analysis, see id. at 838,

but here the FDA’s practice is consistent with its position that

a classification change by regulation is not the exclusive

method for reconsidering a substantial equivalence

determination. Indeed, as discussed below, it may not be an

appropriate method at all.

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Two aspects of the FDA’s practice are especially

pertinent. First, with respect to the rescission of prior

substantial equivalence determinations, the FDA represented

that there have been approximately 50 agency rescissions of

substantial equivalence determinations in the history of the

program, and that none of those has been accomplished using

the regulatory classification change process of subsection (e).

See Oral Arg. Rec. at 31:25-33:38. That further distinguishes

this case from American Methyl, where “the agency’s

prelitigation administrative practice belie[d] its professed

belief in an implied revocation authority.” 749 F.2d at 838.

We noted there that, “[i]n seven years of administering

section 211(f), American Methyl [was] the first manufacturer

subjected to a revocation proceeding” based on the EPA’s

asserted inherent authority; in every prior case the EPA had

used the statute’s express “control or prohibition” authority,

id., and we concluded that course of conduct “exemplified the

understanding” of the statute we adopted there to oust any

residual reconsideration power and restrict the agency to the

“control or prohibition” provision, id. at 838-39.

Second, the FDA emphasizes—and Ivy does not

dispute—that the agency rarely uses the regulatory

reclassification authority to reclassify a single device, but

rather uses it to change the classification of groups of devices.

See Oral Arg. Rec. at 5:40-6:44, 31:25-33:38. The pending

reclassification proceeding relating to transvaginal meshes (on

which Ivy relied in its opening brief and again brought to the

court’s attention after oral argument) underscores that point.

As the government explains, the FDA is currently using the

subsection (e) reclassification procedure, including soliciting

recommendations from an expert panel, to change the

classification of two types of surgical meshes that encompass

more than 100 different devices cleared over the course of 20

years. See 79 Fed. Reg. 24,634, 24,636 (May 1, 2014). The

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consistent practices of not using subsection (e) to correct

errors in substantial equivalence determinations, and using it

to accurately build the foundational classification architecture

of types of devices on which substantial equivalence decisions

piggyback, lend support to the agency’s position that it was

not required to use the subsection (e) regulatory process to

correct the mistaken equivalence decision about a single

device in this case.

E. FDA’s Assertion That It Could Have Used

Subsection (e)

Ivy places substantial weight on the FDA’s

acknowledgement that, although the agency chose not to do

so, it could have used the subsection (e) regulatory route to

move the Collagen Scaffold from Class II to Class III. In

Ivy’s view, that concession all but clinches the case, on the

logic that, if subsection (e) is available to move the device

from Class II to Class III, under American Methyl, subsection

(e) ousts implicit authority to correct an error by any other

route. The court accepts that argument as decisive. It

concludes that, because the FDA “concededly could have

used [full-dress reclassification] to reclassify the Collagen

Scaffold into Class III, it could not rely on a claimed inherent

reconsideration authority to short-circuit that statutory process

and revoke its prior substantial equivalence determination.”

Slip Op. at 12 (citing American Methyl).

That conclusion is in error for two related reasons. First,

for the reasons discussed above, subsection (e) does not

appear to apply at all to the kind of error-correction at issue in

this case. And, second, even if the agency could have acted

under subsection (e) to change the classification of the

Collagen Scaffold, as the FDA contends, American Methyl’s

negative implication would only apply here to displace the

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FDA’s implicit authority if the only permissible reading of the

Act is that subsection (e) is the exclusive means for rescinding

an erroneous substantial equivalence determination. The

agency vigorously contests that point, and it has the better of

the argument.

There is some question whether the FDA is correct that it

could have used the subsection (e) process had it so chosen.

As noted above, the revocation of the substantial equivalence

determination was not “[b]ased on new information

respecting [the] device,” as subsection (e) expressly requires;

it effected a “classification change” only by default, and it

was an up classification whereas subsection (e) only addresses

down classifications; and it addressed a decision not

previously made with input from a panel convened under

subsection (c), and thus was not the kind of decision

subsection (e) describes.

Assuming it were available to the FDA to change the

device’s classification under subsection (e), that route would

have effected an affirmative, regulatory “classification”

decision. The route the FDA took, in contrast, merely

reversed the agency’s erroneous substantial equivalence

determination, leaving to Ivy, if it so chose, to petition to

classify the Collagen Scaffold under the statutory criteria for

Class II. See 21 U.S.C. §§ 360c(f)(1)(B) & (C), (f)(2), (f)(3);

J.A. 1317-18 (notifying Ivy of FDA’s reversal of its

substantial equivalence determination and inviting it to

petition for Class II). In effect, what the FDA did left to Ivy

whether to use the statutory-criteria regulatory classification

process; all the agency did was to undo its error in having

equated the device to an existing, already classified predicate

device. It is consonant with the statute’s structure and

purposes for the FDA to conclude that it would have been

authorized, had it so chosen, to take an alternative course of

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not only undoing its error, but going on to apply the statute’s

criteria affirmatively to make a classification decision.

In any event, the FDA chose not to invoke the subsection

(e) process here. My view of the statute does not rely on

whether the agency was correct that it could have done so. It

is at least clear that, even if the subsection (e) process were

available to the FDA to initiate a full regulatory

reclassification process to assess the propriety of the Collagen

Scaffold remaining in Class II, that process is not required

where the agency chooses simply to rescind a substantial

equivalence decision it made in error without initiating any

affirmative regulatory classification process such as

subsection (e) provides.

III. Conclusion

The text and structure of the Act, along with the agency’s

administrative practice, amply support the FDA’s

interpretation as not confining the agency to the notice and

comment process set forth in subsection (e) when it acts to

rescind a substantial equivalence decision it made in error.

The preceding analysis of subsection (e) shows that the

expressio unius canon that the American Methyl court invoked

in rejecting the agency’s claim of implicit authority in that

case does not apply to correction of a substantial equivalence

determination that was erroneous from the start. See 749 F.2d

at 835-36; cf. Adirondack Med. Ctr. v. Sebelius, 740 F.3d 692,

697 (D.C. Cir. 2014) (emphasizing that “the canon’s

relevance and applicability must be assessed within the

context of the entire statutory framework”). That is especially

true where, as here, a more plausible understanding is that

Congress intentionally created two classification tracks—ab

initio regulatory classifications, and the substantial

equivalence shortcut—with separate procedural and

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substantive requirements, and that subsection (e) addresses

only the first track. See Nat’l Shooting Sports Found., Inc. v.

Jones, 716 F.3d 200, 211 (D.C. Cir. 2013) (no application of

expressio unius where its invocation “disregards other

plausible explanations for an omission” (brackets and internal

quotation marks omitted)).

A conclusion that the full-dress reclassification procedure

did not preclude the FDA from exercising its implicit

statutory authority to rescind the Collagen Scaffold’s

substantial equivalence determination would not mean that

the FDA’s exercise of that authority was reasonable in this

case. See Mazaleski v. Treusdell, 562 F.2d 701, 720 (D.C.

Cir. 1977). The parties disagreed on that point in the district

court, but because Ivy did not renew those arguments until its

reply brief, I would affirm the district court’s conclusion on

that point. See New York Rehab. Care Mgmt., LLC v. NLRB,

506 F.3d 1070, 1076 (D.C. Cir. 2007) (“[W]e have generally

held that issues not raised until the reply brief are waived.”

(internal quotation marks omitted)).

Because all these reasons lead me to conclude that the

FDA permissibly read section (e) not to displace its authority

to revoke its mistaken clearance of the Collagen Scaffold

without undertaking full notice and comment rulemaking, I

respectfully dissent.