The Supreme Court's landmark June 28, 2024 decision in Loper Bright Enterprises v. Raimondo abandoned the Chevron doctrine after 40 years of deferring to agency interpretations of ambiguous laws. As previewed in our June 28 alert, Loper continues the Court's departure from agency deference through this most significant blow. The practical impacts of Loper on the robust healthcare regulatory regime will be tested in the ensuing months and years. We examine what is and is not likely to change for the healthcare industry.

Key Takeaways

• Under Loper, courts are directed to rely on their independent judgment in determining the meaning of ambiguous healthcare statutes and are no longer required to defer to healthcare agencies' interpretations of those statutes
• Loper does not disturb: (1) deference to agency factfinding and policymaking; (2) deference to agency action pursuant to an explicit delegation of authority by Congress; (3) pre-Chevron­ standards of review for agency interpretations of statutes (i.e., Skidmore); and (4) pre-Loper holdings applying the Chevron framework
• The Loper decision is likely to lead to more litigation concerning the healthcare regulatory framework. Regardless of who prevails in those litigations, increased litigation challenging the current regulatory regime may exacerbate the level of uncertainty in the industry
• To avoid the courts second-guessing agency interpretations, future healthcare legislation may be drafted with greater specificity

What Appears to Remain Intact Post-Loper

• Deference to agency factfinding and policymaking. Loper dismantled judicial deference to agencies' legal interpretations of ambiguous statutes but retained deference to agencies' factfinding and policymaking. The Court contrasted the Administrative Procedure Act's (APA) explicit mandate for a deferential standard in "judicial review of agency policymaking and factfinding" against the APA's specification "that courts, not agencies, will decide 'all relevant questions of law' arising on review of agency action." The APA's silence about a "deferential standard for courts to employ in answering those legal questions" was telling, according to the Court. The Court did not elaborate much on the dividing line between factfinding, policymaking, and legal determinations, but asserted that the APA provides sufficient guidance as to the statutory boundaries of agency action and judicial review. Litigants should be prepared for courts to heed Loper's admonition that courts, not agencies, are best equipped to interpret ambiguous laws.
• Deference to explicit delegations of authority. Where Congress has explicitly delegated discretionary authority to an agency to implement the purpose of a particular statute by promulgating rules, "courts must respect that delegation, while ensuring that the agency acts within it." Loper rejected the idea that "statutory ambiguities are implicit delegations to agencies," but maintained a degree of deference to explicit delegations of discretionary authority to agencies, provided the delegation is constitutional and the agency engaged in "reasoned decisionmaking." Thus, rules (and agencies' corollary interpretations of those rules) promulgated pursuant to an express delegation of authority are expected to continue to receive greater deference than rules and guidance promulgated without an express delegation.
• Pre-Chevron standard of review for agency interpretation. Loper retains pre-Chevron jurisprudence that permits courts to be persuaded by agency interpretations, but the "weight of such a judgment" would "depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control." In other words, courts may still adopt compelling agency interpretations of ambiguous statutes so long as those agency interpretations do not supplant the independent judgment of the court.
• Pre-Loper decisions relying on Chevron under stare decisis. The Loper Court was clear that it did "not call into question prior cases that relied on the Chevron framework," and the "holdings of those cases . . . are still subject to statutory stare decisis despite [the Court's] change in interpretive methodology." However, this proclamation seems to be in tension with the immediately preceding paragraphs, which assert that Chevron "has undermined the very rule of law values that stare decisis exists to secure." Thus, the controlling authority of pre­-Loper precedents applying the Chevron framework is now in question.

Loper's Implications for Healthcare Stakeholders

While the full breadth of the Loper decision's ripple effects remains to be seen, we consider below some of the potential implications for healthcare laws, agencies, and industry stakeholders.

• The Supreme Court's emphasis on the plain statutory text may place significant pressure on the level of specificity and prescriptiveness with which Congress drafts healthcare legislation.
• Loper may create more strain on U.S. Department of Health and Human Services rulemaking to unequivocally demonstrate a tight nexus between a regulation and an explicit statutory delegation of authority. This may prove particularly challenging as new, emerging technologies evolve more rapidly than the relevant legislation and regulations implementing it. For example, in our June 18 Q&A on Healthcare Hot Topics in 2024, we explained that AI is rapidly reshaping healthcare and how the Centers for Medicare and Medicaid Services (CMS) are regulating it. Post-Chevron, CMS may not be as nimble in adapting to such emerging advanced technologies. As a result, CMS may attempt to regulate AI—along with other emerging technologies like cybersecurity—through other avenues, such as its contracts with Medicare Advantage Organizations, as discussed in our April 5, 2024 article, Health Care AI: The New Buzzword in a Shifting Legal Regime. Such a move, however, may invite APA challenges alleging that shoehorning new obligations into contracts runs afoul of the APA's formal rulemaking requirements.
• Abandoning Chevron may create more of an appetite to litigate APA claims because courts are no longer required to defer to agency interpretations. The lack of central agency-level interpretations may lead to inconsistent findings in different jurisdictions. This may in turn create an incentive to forum-shop, depending on previous favorable APA challenges in different districts. Indeed, we may see renewed interest in litigation related to Medicare drug price negotiations or reimbursement rates.
• Magnifying the impact of Loper's departure from agency deference, the Court's July 1, 2024 decision in Corner Post, Inc. v. Board of Governors of the Federal Reserve System may widen the time frame for challenging historic agency rules. The Court ruled in Corner Post that an APA claim does not accrue until a plaintiff is injured by final agency action—not when the final rule is issued, as the lower courts had held. In other words, new challenges to old regulations may go forward so long as the suit is filed within the applicable statute of limitations. Taken together, Loper and Corner Post may usher in the relitigation of seemingly resolved agency interpretations of ambiguous laws.