The End of Chevron Deference and Its Impact on the Health Care Industry

On June 28^th, 2024, the United States Supreme Court released its decision ending the doctrine known as Chevron deference: “[t]he Administrative Procedure Act requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority, and courts may not defer to an agency interpretation of the law simply because a statute is ambiguous; Chevron is overruled.” Loper Bright Enters. v. Raimondo, Nos. 22-451, 22-1219, 2024 U.S. LEXIS 2882, at *1-2 (June 28, 2024).

The Supreme Court reversed a 40-year-old precedent that has governed the interpretation of vague and ambiguous federal statutes.  Chevron deference, as it has come to be known, required courts to defer to the judgment of administrative agencies when dealing with vague or ambiguous statutes. Now, the Supreme Court has ruled that the constitutional separation of powers doctrine requires leaving Chevron behind and returning statutory interpretation to the courts. This decision, however, does not “call into question prior cases that relied on the Chevron framework[,] and [] previous rulings, including the Clean Air Act holding in Chevron itself, are still subject to statutory stare decisis,” despite the change in the Supreme Court’s interpretive methodology. Id., at *16.

How The End of Chevron Deference Will Impact the Health Care Industry

When litigants challenge vague or ambiguous statutes, consistent with the role of federal Article III courts, reviewing federal courts must now exercise their own independent judgment in deciding whether an agency has “acted within its statutory authority,” paving the way for more solidified regulations in the health care field, rather than allowing administrative agencies, such as the Centers for Medicare and Medicaid Services, to freely and frequently amend their rules, regulations, and programs. Id., at *61. Ending Chevron deference will further eliminate the “unwarranted instability in the law,” and will no longer require health care providers to exist in an environment where they find themselves “attempting to plan around agency action in an eternal fog of uncertainty.” Id., at *59.

Stabilizing the rapid change of the law and allowing it to develop in a “principled” fashion will create a smoother regulatory landscape for providers to follow. This stability is a stark contrast to the previously uncertain regulatory environment whereby providers were forced to defer to administrative agencies, who often amended or changed their positions based on political considerations and the changes in presidential administrations. This will result in administrative adherence to regulations that have been set in stone, subject to Congressional change, rather than requiring deference to administrative agencies who often shift their interpretation of the laws.

It is important to note that the Supreme Court allows for statutes to “delegate[] authority to an agency consistent with constitutional limits,” and that “courts must respect the delegation[,]” as it is called for within a regulation’s statutory source. Id., at *61.

Where Do We Go From Here?

On July 1^st, 2024, the Court issued another ruling of consequence with respect to administrative agency actions in Corner Post, Inc. v. Bd. of Governors of the Fed. Rsrv. Sys., No. 22-1008, 2024 U.S. LEXIS 2885 (July 1, 2024). In a 6-3 decision, it was determined that “[a] claim accrues when the plaintiff has the right to assert it in court—and in the case of the APA, that is when the plaintiff is injured by final agency action[,]” rather than when the rule is first promulgated. Id. at *11. The decision in Corner Post allows for even more time to challenge actions that are finalized by administrative agencies, and when viewed in conjunction with the Loper Bright decision, enables healthcare organizations to challenge federal agency rules that have typically been subject to the rule of a statute of limitations. As many administrative agencies craft their regulations to be malleable, there is a possibility that future regulations created by an agency will be left with little to no wiggle room to avoid the likelihood of success of any future legal challenges. This may well lead to better government in the administrative age. The decision in both Loper Bright and Corner Post paves the way for any entities “injured by agency action [to] have access to judicial review[,]” regardless of whether the injury occurred after six years of the rule came into force. Id., at *37.

While the true impacts of the end of Chevron deference remains to be seen, we can anticipate increased challenges to administrative agency rules in federal courts. Since these decisions apply exclusively to the federal courts, the potential impacts of these decisions on state court action are not known.

For more information, please contact David R. Ross, Esq., Shareholder, at dross@oalaw.com or at (518) 312-0167.

Ms. Olivia Vecchio, Law Clerk, contributed to this article.