--- title: Circuit Court Overturns District Court's Vacatur of Exclusionary Rule Regarding Certain 1115 Waiver Days description: On December 9, 2025, the Fifth Circuit (Case 24-10934) overturned the Northern District of Texas decision in Baylor All Saints Medical Center v. Becerra, reinstating CMS’s “Exclusion Rule” at 42 CFR §412.106(b)(4)(iii). image: https://public.govdataservices.com/hubfs/Midsection%20of%20businesswoman%20with%20binders%20at%20office.jpeg --- [Skip to content](https://public.govdataservices.com/the-scoop/circuit-court-overturns-district-courts-vacatur-of-exclusionary-rule-regarding-certain-1115-waiver-days#main-content) Close - [Services](https://public.govdataservices.com/services-page) - [Medicare DSH](https://public.govdataservices.com/medicare-dsh) - [SSI Realignment](https://govdataservices-21378692.hs-sites.com/medicare-dsh#SSI) - [340B MA Underpayments](https://public.govdataservices.com/340b-medicare-advantage-underpayments) - [Medicare Bad Debt](https://public.govdataservices.com/medicare-bad-debt) - [Worksheet S-10 Uncompensated Care](https://public.govdataservices.com/s-10) - [Transfer DRG](https://public.govdataservices.com/transfer-drg) - [Medicare ID & Shadow Billing](https://public.govdataservices.com/medicare-id-shadow-billing) - [MBI ID Finder](https://public.govdataservices.com/mbi-id-finder) - [MIDaS Insurance ID](https://public.govdataservices.com/midas-insurance-id) - [Annual Wellness Visit](https://public.govdataservices.com/annual-wellness-visit) - [Eligibility & Other Services](https://public.govdataservices.com/eligibility-and-other) - [Bundle & Save](https://public.govdataservices.com/bundle-and-save) - [Demo](https://public.govdataservices.com/demo-diagnostics-review) - Resources - [Links](https://public.govdataservices.com/links) - [Blog](https://public.govdataservices.com/the-scoop) - [Contact Us](https://public.govdataservices.com/contact-us) SEARCH [Client Login](https://www.govdataservices.com/gdswebsite/DesktopDefault.aspx) [![GDSlogo\_avenir\_2](https://public.govdataservices.com/hs-fs/hubfs/GDSlogo_avenir_2.png?width=1194&height=340&name=GDSlogo_avenir_2.png)](https://public.govdataservices.com/) - [Services](https://public.govdataservices.com/services-page) - [Medicare DSH](https://public.govdataservices.com/medicare-dsh) - [SSI Realignment](https://govdataservices-21378692.hs-sites.com/medicare-dsh#SSI) - [340B MA Underpayments](https://public.govdataservices.com/340b-medicare-advantage-underpayments) - [Medicare Bad Debt](https://public.govdataservices.com/medicare-bad-debt) - [Worksheet S-10 Uncompensated Care](https://public.govdataservices.com/s-10) - [Transfer DRG](https://public.govdataservices.com/transfer-drg) - [Medicare ID & Shadow Billing](https://public.govdataservices.com/medicare-id-shadow-billing) - [MBI ID Finder](https://public.govdataservices.com/mbi-id-finder) - [MIDaS Insurance ID](https://public.govdataservices.com/midas-insurance-id) - [Annual Wellness Visit](https://public.govdataservices.com/annual-wellness-visit) - [Eligibility & Other Services](https://public.govdataservices.com/eligibility-and-other) - [Bundle & Save](https://public.govdataservices.com/bundle-and-save) - [Demo](https://public.govdataservices.com/demo-diagnostics-review) - Resources - [Links](https://public.govdataservices.com/links) - [Blog](https://public.govdataservices.com/the-scoop) - [Contact Us](https://public.govdataservices.com/contact-us) [Client Login](https://www.govdataservices.com/gdswebsite/DesktopDefault.aspx) [Chris Cusimano](https://public.govdataservices.com/the-scoop/author/chris-cusimano) Dec 15, 2025, 3:29:45 PM 1 min read # Circuit Court Overturns District Court's Vacatur of Exclusionary Rule Regarding Certain 1115 Waiver Days [Previous](https://public.govdataservices.com/the-scoop/cms-2026-outpatient-pps-final-rule) [Next](https://public.govdataservices.com/the-scoop/340b-hospitals-opps-drug-acquisition-cost-survey-is-live) On December 9, 2025, the Fifth Circuit (Case 24-10934) overturned the Northern District of Texas decision in *Baylor All Saints Medical Center v. Becerra*, reinstating CMS’s “Exclusion Rule” at **42 CFR §412.106(b)(4)(iii)**. The key point: The District Court lacked authority to vacate the rule because the hospitals **had not first stated their claim through the administrative process**. Without an adverse agency decision, judicial review was premature. **What this means for hospitals** - The “Exclusion Rule” is back in effect. - Hospitals objecting to the exclusion of **Section 1115 waiver days** from the Medicare DSH fraction must now **route challenges through the PRRB**. - The Fifth Circuit reaffirmed that disputes over this rule arise under the **Medicare statute**, not the Public Health Service Act—even where 340B impacts are alleged. **Why this matters** The Exclusion Rule represents HHS’s regulatory response to prior hospital wins (*Forrest General Hospital v. Azar* and *Bethesda Health v. Azar*), which recognized hospitals’ ability to count certain 1115 waiver days. Rather than seeking Supreme Court review, HHS chose rulemaking. **Bottom line** Hospitals should **carefully evaluate and preserve protests** related to 1115 waiver-based Medicaid days that stem from Secretary-approved waivers—**with legal guidance**. If you have questions regarding Medicare DSH, feel free to contact me: 📩 adamblackwell@govdataservices.com ![avatar](https://public.govdataservices.com/hs-fs/hubfs/chriscusimano.jpg?width=290&name=chriscusimano.jpg) #### [Chris Cusimano](https://public.govdataservices.com/the-scoop/author/chris-cusimano) ## RELATED ARTICLES ### [Chris Cusimano Jan 11, 2023, 1:30:00 PM 2 min read District Court Rule January 10, 2023, to Allow HHS to Use Its Discretion to Determine How to Remedy the 340B Underpayments from January 1, 2018, through September 27, 2022 Tuesday, January 10, 2023, the District Court for the District of Columbia ruled to allow HHS to use its discretion to ... Start Reading](https://public.govdataservices.com/the-scoop/district-court-rule-january-10-2923-to-allow-hhs-to-use-its-discretion-to-determine-how-to-remedy-the-340b-underpayments-from-january-1-2018-through-se-1681184669749) ### [Chris Cusimano Sep 3, 2024, 4:00:00 PM 2 min read Medicare DSH: US District Court in TX Vacates 1115 Waiver "Exclusion Rule" Baylor All Saints Medical Center, ET AL. v. Xavier Becerra (“CASE”) was released August 15, 2024 in the United States District ... Start Reading](https://public.govdataservices.com/the-scoop/tx-vacates-1115-waiver-exclusion-rule) ### [Chris Cusimano Jul 30, 2026, 11:45:14 AM 2 min read Public Record of 340B MA Underpayment Settlements Continues to Grow The public record of Medicare Advantage 340B underpayment settlements continues to grow, with at least three additional cases ... 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All rights reserved - [Site Use Agreement](https://public.govdataservices.com/terms-of-use) - [Confidentiality and Privacy](https://public.govdataservices.com/privacy) ```json { "@context" : "http://schema.org", "@type" : "Organization", "knowsLanguage" : "en", "name" : "", "url" : "https://public.govdataservices.com/the-scoop/circuit-court-overturns-district-courts-vacatur-of-exclusionary-rule-regarding-certain-1115-waiver-days" } ``` ```json { "@context" : "http://schema.org", "@type" : "BlogPosting", "abstract" : "On December 9, 2025, the Fifth Circuit (Case 24-10934) overturned the Northern District of Texas decision in Baylor All Saints Medical Center v. 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Becerra, reinstating CMS’s “Exclusion Rule” at 42 CFR §412.106(b)(4)(iii). The key point: The District Court lacked authority to vacate the rule because the hospitals had not first stated their claim through the administrative process. Without an adverse agency decision, judicial review was premature. What this means for hospitals The “Exclusion Rule” is back in effect. Hospitals objecting to the exclusion of Section 1115 waiver days from the Medicare DSH fraction must now route challenges through the PRRB. The Fifth Circuit reaffirmed that disputes over this rule arise under the Medicare statute, not the Public Health Service Act—even where 340B impacts are alleged. Why this matters The Exclusion Rule represents HHS’s regulatory response to prior hospital wins (Forrest General Hospital v. Azar and Bethesda Health v. Azar), which recognized hospitals’ ability to count certain 1115 waiver days. Rather than seeking Supreme Court review, HHS chose rulemaking. Bottom line Hospitals should carefully evaluate and preserve protests related to 1115 waiver-based Medicaid days that stem from Secretary-approved waivers—with legal guidance. 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