The court upheld its original ruling that the subpoenas were pretextual and issued outside the statutory authority granted to the DOJ under 18 U.S.C. § 3486(a)(1)(A)(i)(I). The statute authorizes the DOJ to investigate federal health care offenses, but the court determined there was no evidence that the subpoenas were issued for that purpose.
In its original order, the court determined that the DOJ failed to make a prima facie showing that it was investigating fraud or unlawful off-label promotion at the hospital. Instead, the court found that Seattle Children’s presented over 200 pages of evidence—including executive orders, memoranda from the Attorney General, public statements by the President, and White House press releases—indicating the subpoenas were intended to end gender-affirming care.
The DOJ argued that the court committed manifest error by shifting and heightening its burden of proof, failing to provide an opportunity to make a showing, and discounting the Attorney General’s stated purpose. The court rejected these arguments, noting that requiring a prima facie showing is simply applying the law and does not constitute a burden shift.
The court also clarified that it did not apply a probable cause standard, which agencies need not show to justify a subpoena. Instead, the court found that the DOJ’s only showing was a two-page declaration by Acting Director Lisa Hsiao containing conclusory statements that the subpoenas were lawfully issued.
Even if the DOJ had met its initial burden, the court held that Seattle Children’s carried a heavy burden to show improper purpose. The record demonstrated that the subpoenas sought an astonishingly broad array of documents without any suspicion that the hospital was engaging in fraudulent billing or off-label promotion, a characterization echoed by other courts reviewing similar subpoenas.
The court noted that multiple other district courts have reached similar conclusions regarding virtually identical subpoenas issued to hospitals across the country. No decision identified by either party rules in the DOJ’s favor.
The court concluded that the DOJ’s administrative subpoena power is not a loophole for achieving policy goals not authorized by Congress. The subpoenas were denied because they were issued to fulfill a well-publicized policy objective rather than to investigate federal health care offenses.