Chevron Doctrine Takes Precedence Over Healthcare Industry Implications

Loper Light Transfers the power to interpret statutes back to the courts.

On June 28, 2024, the Supreme Court overturned the judgment Chevron doctrine with its decision in Loper Bright Enterprises part Raymond. Under Chevroncourts have historically relied on interpretation of ambiguities in statutes administered by a federal agency. Courts have relied on Chevron out of deference to the idea that Congress has implicitly delegated interpretive authority to the agency.

In contrast, Loper Light rejects Chevronimplied delegation assumption: “When the best interpretation of a statute…delegates discretion to an agency, the reviewing court’s role under the APA is, as always, to independently interpret the statute and carry out the will of Congress.”

Loper Lightthe requirement for independent judicial judgment as to whether an agency acted within the scope of its authority granted by Congress will necessarily require courts to review agency interpretations on a case-by-case basis. A court may still defer to or “seek assistance” from agency interpretations and consider the agency’s “experience and informed judgment,” but courts will also exercise much greater discretion to disagree with an agency’s interpretation of a statutory ambiguity. A court may now more easily consider “other information available to it” and potentially give greater weight to the perspectives of litigants and amici over the expertise of the agency. Even if a court finds an agency interpretation reasonable, the court may still substitute its own for it.

However, you should be careful because afterChevron the landscape will not be the same for all agencies. The Supreme Court has recognized that there are statutes that call for a greater degree of deference in certain circumstances. For example, banking agencies receive a great deal of deference for their interpretations of federal banking law. This does not follow from a general presumption, from Chevronwhich the Supreme Court overturned. Rather, it was a judicial response to specific concerns that Congress had addressed in federal banking law. These forms of deference set forth in the statutes tended to coalesce in Chevron over the years. But precedents still exist, and courts can revive these doctrines of statutory deference. This possibility is particularly important in health care because, for example, lower courts have long deferred to CMS’s interpretation of the Medicare Act in a way that may survive Loper Light.

Corner post Extends timeline for challenging agency actions.

Another very important decision from the end of the Supreme Court’s term, Corner Post Inc. part Board of Governors of the Federal Reserve System exposes many federal agency decisions to new challenges. Corner postLitigants and courts generally understood that the clock—the six-year statute of limitations for actions against the government—starts when the agency issues a rule or order. Now, the six-year window doesn’t start until the agency’s action harms the challenging party.

IN Corner postThe truck stop challenged a 2011 rule that capped transaction fees. The truck stop didn’t begin operating until 2018, and the company didn’t test the rule until 2021 — a decade after the rule took effect. Because the truck stop began sustaining injuries just two years earlier — within the statute of limitations — the Supreme Court ruled the company could challenge the decade-old rule.

The decision is a monumental extension of the timeline for litigants to litigate regulatory challenges. For example, there is no clear barrier to creating a new company to incur a timely injury to challenge regulations that negatively affect the industry. The extension of timelines will undoubtedly increase the number of disputes and create new opportunities to challenge federal agencies for good or ill. Previous FDA drug approvals are a particular area where litigation based on regulatory challenges is likely to occur. Corner post.

Jarkesy Limits the agency’s authority to make adjudications and enforce the law.

The day before the announcement Loper LightThe court issued another significant opinion that further empowers the judiciary to exercise authority over the agencies. SECTION part Jarkesyinvestment adviser challenged the Securities and Exchange Commission’s use of an administrative judge to impose a $300,000 civil penalty against the adviser and his firm. In finding that the SEC had violated the adviser’s Seventh Amendment right to a jury trial, the Court emphasized that Congress may not “remove from the jurisdiction of the courts any case which by its nature is a cause of action at common law or in equity.”

Jarkesy has significant implications beyond the SEC. The decision undermines the statutory authority of many other agencies to impose civil penalties. The ruling could also bar agencies from enforcing statutes that rely solely on agency case law as an enforcement tool—limiting agency enforcement actions to situations in which Congress has authorized the agency to file claims in courts. With a few “public rights” exceptions, such as taxation and immigration, Jarkesy establishes that most administrative proceedings involving a statutory claim similar to a common-law claim — those involving private parties — are a matter for Article III courts, not an administrative judge. Litigants will undoubtedly begin asking courts to assess the level of similarity needed between the statutory claim and the common-law claim in order to require an Article III court.

The new restrictions on administrative proceedings have several implications for the health care industry. For many programs that conduct enforcement through administrative adjudication, the question now arises whether those adjudication programs are unconstitutional, and the respondent has a right to defend himself in court. Another implication could be a decline in agency enforcement activity because litigation is more time-consuming and expensive. It seems inevitable that as agency enforcement resources are limited, the overall scale and pace of enforcement will decline.

Application

Loper Light, Corner postAND Jarkesy have changed the regulatory landscape. In an industry that faces a web of enforcement from all levels of government, health care and insurance providers are facing changes as the burden of regulatory oversight and compliance shifts from agencies to the courts.