July 10, 2024, 6:57 p.m.
The future of health care regulations could be thrown into uncertainty.
Federal health policies are now more susceptible to legal challenges following Supreme Court decisions issued in the last few days of its term, according to health care and legal experts.
A decision that has received much attention by congressional lawmakers overturned a legal precedent, known as the Chevron doctrine, by which courts gave agency interpretation of a statute deference if the law was ambiguous or silent on an issue.
The impact was felt almost immediately. A district court in Mississippi cited the Supreme Court opinion less than a week later in its decision to block enforcement of a federal health anti-discrimination regulation that had included protections for transgender care.
Senior Judge Louis Guirola Jr. in the Southern District of Mississippi noted language from the Supreme Court opinion that said courts “need not and under the [Administrative Procedure Act] may not defer to an agency interpretation of the law simply because a statute is ambiguous.”
He rejected the idea that Congress had adopted an ambiguous definition of “sex” and blocked protections against discrimination based on “gender identity” nationwide. The rule was set to take effect last Friday.
“Chevron has had the effect of upholding a lot of administrative actions,” said Zachary Lundgren, an associate at Holland & Knight. “Now with Chevron gone, that means that the Court will no longer defer to agency interpretations, and courts will apply their own interpretations of statutes.”
Jeffrey Davis, health-policy adviser at McDermott+Consulting, said there are already areas “ripe for litigation” and the ruling will give entities more confidence to move forward with legal action. As an example, he pointed to new nursing-home-staffing standards, which have already attracted a legal challenge.
“What I think this means for a policy environment is a significant change,” said Miranda Franco, a senior policy adviser also at Holland & Knight. “Things are going to be tremendously slowed down now, and I think Congress and both the agencies are going to be much more cautious.”
Sarah Somers, legal director at the National Health Law Program, said members of Congress already have been “on notice” that they will have to be specific with their language in legislation.
“In some cases that’s easier said than done,” she said. “It’s particularly challenging, I would say, in Medicare and Medicaid because they’re so technical. There are so many implications for different requirements.”
Sen. Bill Cassidy, the top Republican on the Senate Health, Education, Labor and Pensions Committee, sent departments letters requesting information on how they plan to comply with the Supreme Court decision.
“Such unfettered agency power by the unelected is a perversion of the Constitution,” he wrote in a letter on June 30 to Health and Human Services Secretary Xavier Becerra.
Cassidy pointed to the implementation of the No Surprises Act, which aims to protect patients from unexpectedly high medical bills. He wrote that the department has “cast aside clear congressional directives and key parts of the statute,” resulting in multiple lawsuits. He asked how the department will enforce laws “as Congress writes them, and not to improperly legislate via agency action?”
But experts told National Journal that the decision overturning Chevron wasn’t the only one that could have substantial impacts on agency powers.
On its last day before adjourning, the Supreme Court issued another opinion that could open up older regulations to legal challenges.
That ruling effectively lengthens the timeline in which a regulation can be challenged. The justices determined that entities have six years from the time they felt harmed from a regulation to bring legal action. This is a reversal from lower courts’ decisions saying the statute of limitations begins on the date of publication of a regulation.
Richard Pierce, a law professor at the George Washington University Law School, considers Corner Post, Inc. v. Board of Governors of the Federal Reserve System more impactful than the overturning of Chevron deference.
“Anybody who dislikes a rule, even if the rule is 20 years old or 50 years old, all they have to do is spend a couple hundred bucks necessary to create a new company and to say in the charter of that company that its business is to do something that is adversely affected by the agency rule, and then they can go to court,” he said.
Justice Ketanji Brown Jackson, who dissented along with Justices Sonia Sotomayor and Elena Kagan, wrote that the decision means “there is effectively no longer any limitations period for lawsuits that challenge agency regulations on their face. Allowing every new commercial entity to bring fresh facial challenges to long-existing regulations is profoundly destabilizing for both Government and businesses.”
Somers said, “You could have an entity saying, 'We’re just now being harmed by it.' Things that were thought to be at rest may not be at rest at all.”
Some experts also pointed to a third case they say could restrict health agencies’ ability to level civil penalties on entities they regulate.
The Supreme Court ruled in this case that when the Securities and Exchange Commission seeks penalties for securities fraud, the defendant is entitled to a jury trial.
“Under the logic of that case, a lot of agencies, including HHS—it calls into question their ability to impose civil monetary penalties versus having to go through a court,” said Brenna Jenny, partner at Sidley Austin LLP.
Jenny said HHS has a broad set of civil monetary-penalty authorities across its agencies. Having a looming potential that agencies will have to go through courts, Jenny said, “is going to give defendants a stronger bargaining position in negotiations.”
Going to court is “more difficult, more burdensome, more expensive, and more time consuming than adjudicating the case at the agency,” Pierce said. “That’s going to have massive effects on a lot of agencies. We will not know for many, many years how many agencies and how many statutes that applies to.”
