On March 31, 2025, the U.S. District Court for the Eastern District of Texas (District Court) struck down the U.S. Food and Drug Administration’s (“FDA” or “Agency”) Final Rule that would have asserted FDA’s authority to regulate laboratory-developed tests (“LDTs”) as medical devices under the Federal Food, Drug, and Cosmetic Act (“FD&C Act”) (“LDT Final Rule” or “Final Rule”) and which established regulations related to LDTs. For more information on the 2024 LDT Final Rule, please see Hall Render’s previous client alert and accompanying webinar.
Background
For decades, LDTs—in-house diagnostic tests developed, validated, and performed within a single laboratory—have been regulated by states and the Centers for Medicare & Medicaid Services (“CMS”) under the Clinical Laboratory Improvement Amendments of 1988 (“CLIA”), while FDA exercised enforcement discretion. On May 6, 2024, FDA issued a Final Rule that formally classified all LDTs as medical devices subject to FDA oversight, ending its longstanding enforcement discretion policy. The Final Rule outlined a phase-in approach to compliance, with initial requirements such as adverse event reporting and correction/removal procedures set to take effect on May 6, 2025.
Following the publication of the Final Rule, legal challenges were raised regarding FDA’s authority to regulate LDTs. The plaintiffs, including the American Clinical Laboratory Association (“ACLA”), the Association for Molecular Pathology (“AMP”), and individual laboratories consolidated two complaints against FDA, originally titled ACLA v. FDA and Molecular Pathology v. FDA. They argued that FDA’s Final Rule was an unlawful agency action exceeding its statutory authority and claimed it was arbitrary, capricious, and an abuse of discretion. FDA maintained that the Final Rule was well within its authority under the FD&C Act and did not violate the Administrative Procedure Act (“APA”).
The District Court disagreed with FDA, granting the plaintiffs’ motion for summary judgment and concluding that the LDT Final Rule exceeded FDA’s statutory authority.
Key Issues and District Court Findings
FDA’s Statutory Authority to Regulate LDTs as Medical Devices
The District Court began by addressing the plaintiffs’ claim that FDA overstepped its authority under the FD&C Act. The District Court compared the FD&C Act’s language and historical use with CLIA, noting that the FD&C Act defines medical devices as tangible items such as instruments, apparatus, machines, contrivances, and in vitro reagents intended for diagnosis, treatment, or affecting the structure or function of the body.
The District Court adopted the plaintiffs’ position that an LDT is a proprietary process used by a clinical laboratory to generate diagnostic information from a patient specimen for a treating physician. Each laboratory develops its own LDTs based on specialized knowledge and testing protocols. LDTs are not mass-produced or sold with user instructions; they are in-house services performed solely by the developing laboratory, with results provided directly to the ordering physician. They are not sold as kits, shared with outside entities, or transferred as physical products—no tangible item changes ownership. The District Court thus concluded that LDTs are professional medical services, distinct from tangible goods FDA may regulate as devices.
The District Court examined the history of CLIA, focusing on the statutory definition of “clinical laboratory” as “a facility for the examination of materials derived from the human body to provide information for diagnosis, prevention, treatment or health assessment” (42 U.S.C. § 263a(a)). It concluded that CLIA regulates facilities providing laboratory-based health care services, not medical devices. The court further reasoned that FDA’s authority is limited to regulating products under the FD&C Act, while CMS oversees CLIA. Comparing the language of the FD&C Act and CLIA, the court determined that FDA’s authority extends only to devices, not health care services, particularly those not introduced into interstate commerce.
FDA’s Enforcement Discretion and History of Attempting to Regulate LDTs
The District Court examined FDA’s history of attempting to regulate LDTs, including its unsuccessful efforts since 1992 through draft guides, non-binding guidance, and proposed rules—all of which faced strong industry and congressional opposition. Congress also attempted to expand LDT regulation but failed to enact legislation, including the Food and Drug Administration Safety and Innovation Act (“FDASIA”) of 2012, and later initiatives like the VALID and VITAL Acts of 2020.
Impact of Loper Bright Decision
The District Court ruled in favor of the plaintiffs, holding that FDA exceeded its statutory authority by attempting to regulate LDTs under the Final Rule. The court emphasized that, consistent with the 2024 Supreme Court decision in Loper Bright Enterprises v. Raimondo, courts must independently assess whether an agency has acted within its statutory bounds. Loper Bright overturned the Chevron doctrine, which had required courts to defer to agencies’ interpretations of ambiguous statutes.
Applying the Loper Bright standard, the District Court found that the FD&C Act does not grant FDA authority to regulate LDTs as medical devices. Congress established CLIA to govern laboratory testing separately. FDA’s historical use of enforcement discretion regarding LDTs, combined with legislative failures to expand FDA’s authority, reinforced the conclusion that the regulatory framework prohibits FDA from using the Final Rule to extend its authority.
Because it found that FDA exceeded its statutory authority, the District Court declined to address the plaintiffs’ argument that the Final Rule should also be invalidated as arbitrary and capricious under the APA. The Final Rule was vacated and remanded to the Department of Health and Human Services (“HHS”) for further consideration. The District Court highlighted the significant projected costs of the Final Rule—ranging from $12.57 billion to $78.99 billion—which could burden laboratories and limit their ability to develop and utilize LDTs.
Looking Forward
With the Final Rule vacated, FDA cannot enforce it under its current statutory authority. While the agency may pursue future regulatory or legislative pathways, its next steps are uncertain. Laboratories are not required to comply with FDA’s impending regulatory requirements for LDTs but should closely monitor developments, particularly any legislative efforts to clarify or amend the regulatory framework for LDTs.
FDA has until May 30, 2025, to appeal the District Court’s decision. Although an appeal is possible, it is unlikely given recent HHS workforce reductions and FDA’s shifting priorities under the current administration.
The District Court’s decision also highlights a broader shift in judicial review following Loper Bright. Courts will now exercise independent judgment, resulting in less deference to agency interpretations and potentially more legal challenges to federal agency actions.
For more information on medical devices, drugs, or biologics, please contact:
- Carolina Wirth at (202) 780-2989 or cwirth@hallrender.com;
- Melissa Markey at (248) 740-7505 or mmarkey@hallrender.com;
- Bennett Murphy at (317) 429-3618 or bmurphy@hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot give legal advice outside of an attorney-client relationship.
