SCOTUS Strikes Down Chevron Doctrine, Curbing Federal Agency Power

Dive Brief:

• The U.S. Supreme Court overturned the Chevron doctrine on Friday, a decades-old legal precedent that gives regulatory agencies leeway to interpret vague legislation when crafting regulations.
• The court’s 6-3 decision is a major blow to federal agencies, including those in healthcare, that relied on the Chevron doctrine to implement regulations in cases where Congress was unclear about its intent.
• Now, “courts may not defer to an agency interpretation of the law simply because a statute is ambiguous,” Chief Justice John Roberts wrote in the court’s majority opinion.

Dive Insight:

Nullifying Chevron is expected to have significant implications on the ability of regulatory entities, including the HHS and the CMS, to issue rules without legal challenges.

Chevron was meant to ensure that judges deferred to subject matter experts in federal agencies when challenges arose over ambiguous laws. With Chevron overturned, judges will now make those decisions.

In a dissenting opinion, Justice Elena Kagan decried the court’s decision as a power grab for the judicial system.

“Congress knows that it does not — in fact cannot — write perfectly complete regulatory statutes. It knows that those statutes will inevitably contain ambiguities that some other actor will have to resolve, and gaps that some other actor will have to fill. And it would usually prefer that actor to be the responsible agency, not a court,” Kagan wrote. “In recent years, this Court has too often taken for itself decision-making authority Congress assigned to agencies.”

Justices Sonia Sotomayor and Ketanji Brown Jackson joined Kagan in her dissent, while Clarence Thomas, Samuel Alito, Neil Gorsuch, Brett Kavanaugh and Amy Coney Barrett were in the majority with Roberts.

The court’s controversial decision raises the bar for healthcare regulators when they’re implementing laws with undefined terms — and opens the door for stakeholders in the industry to sue when they’re unhappy with an agency’s reading of statute.

Regulators will need to be better prepared to defend their interpretations, according to Kelly Cleary, a partner in D.C.-based law firm Akin.

For example, the American Hospital Association sued the HHS in 2020 over regulations forcing hospitals to publish their prices for standard procedures. The powerful hospital lobby lost that case in a lower court and on appeal, with the courts finding the CMS’ interpretation of the law backing the regulations was reasonable based on Chevron.

The ruling doesn’t call prior cases that relied on Chevron into question, according to the majority opinion written by Chief Justice John Roberts. However, following today’s decision, “that case would have come out very differently,” Cleary said over email.

SCOTUS’ decision also makes it much harder for the HHS and CMS to address fast-moving issues, like artificial intelligence in healthcare, according to Cristina Rodriguez, senior counsel at Florida law firm Wolfe Pincavage. 

It could also destabilize programs like Medicare and Medicaid that are complex and require frequent regulatory updates to operate. 

“We anticipate that today’s ruling will cause significant disruption to publicly funded health insurance programs, to the stability of this country’s healthcare and food and drug review systems, and to the health and well-being of the patients and consumers we serve,” wrote a group of healthcare organizations, including the American Academy of Pediatrics and the American Cancer Society, in a statement Friday.