By W. Davis Powell, Esq. and Ren W. Klinovskiy, Esq.
In a landmark ruling issued on June 28, 2024, the Supreme Court overturned Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., a pillar of administrative law for forty years. The Court’s decision in Loper Bright Enterprises v. Raimondo shifts significant power from federal regulatory agencies to courts in interpreting federal law. While the Loper Bright decision does not directly overrule or strike down any existing statutes or regulations, it does clear the way for challenges to a broad swath of legislation and regulations overseen by federal agencies, including those charged with regulating health care providers.
Decided in 1984, the Chevron rule required courts to be deferential to federal regulatory agencies’ interpretation of ambiguous statutes. Forty years later, the Supreme Court overturned Chevron in Loper Bright. The Court held that the Administrative Procedure Act prohibits courts from deferring to an agency’s interpretation of an ambiguous statute. The Court further stated that Congress retains the power to delegate; courts may not simply defer decision-making in the case of ambiguity. Rather, courts have a duty to give agencies’ decisions “respectful consideration,” but should exercise their own independent judgment when it comes to deciding legal issues in review of agency actions.
It is important to note that Loper Bright does not directly impact any underlying regulations. The decision does, however, shift interpretive power to courts in holding that specialized agencies have “no special competence” in resolving ambiguities in statutes which have been delegated to them. The Loper Bright decision has enormous implications for health care programs in the US, which are heavily regulated by rules promulgated by federal agencies such as HHS, the FDA, and the DEA. While it will take time to determine the true impact of the decision, there are two principal ways Loper Bright may affect health care law:
- More Challenges to Health Care Regulations in Court: A great many health care regulations involve the interpretation of broad and ambiguous federal statutes. With Chevron’s deference requirement no longer at play, it is likely that litigants will be emboldened to take their chances in court to challenge these regulations.
Take, for example, the Patient Safety Quality Improvement Act (PSQIA). The PSQIA is a frequently invoked act for health care providers because it establishes confidentiality provisions for patient safety work product, including reports and analysis of patient safety events. However, there is often litigation surrounding the extent of the PSQIA’s protections. Congress delegated interpretation and implementation of the privilege and confidentiality provisions of the PSQIA to the Office for Civil Rights within HHS. Were a challenge to the PSQIA brought in federal court, the court assessing the law would be required to give respectful consideration, but not deference, to the legal analysis of the Office for Civil Rights.
Additionally, there are frequent legal challenges to the Centers for Medicare and Medicaid Services’ (CMS) decisions on reimbursement for health care services, which often rely on complicated regulatory formulas. Courts have deferred on CMS’s interpretations in the past under Chevron, but this strong judicial backstop will no longer be available. Loper Bright may embolden providers and suppliers to take their chances with more reimbursement appeals.
- A More Deliberative Regulatory Process: From an administrative perspective, agencies may slow down their work and focus on issuing specific, highly defensible rules that will withstand closer judicial scrutiny. This could bring an already slow process to a glacial pace. However, it could also mean that agencies may be less likely to “flip flop” on controversial policies between changing presidential administrations, as agencies must consider the enhanced litigation risk that Loper Bright creates. This has been an increasing problem in today’s polarized political environment, creating greater uncertainty that important federal regulations will remain consistent.
Looking forward, health care providers must be aware of the opportunities for challenges to longstanding regulations and regulatory agencies. Some commentators describe this decision as deregulation, but it could more precisely be described as shifting regulatory power from agencies to the judiciary. Federal courts now have significantly more authority in rejecting agency interpretations of laws that Congress delegated to those agencies, including the privacy issues in HIPAA, the preexisting conditions provisions in the Affordable Care Act, and the insulin price caps in the Inflation Reduction Act. These laws’—and countless others’—regulatory framework must be monitored to ensure that healthcare providers continue to comply with regulations as they inevitably evolve in the wake of Loper Bright.
