The recent U.S. Supreme Court decision overturning the Chevron Doctrine, which curtailed the power of the federal agencies to interpret the laws they administer, could prove to be disruptive in the health care realm, said two attorneys with Schwabe in Portland.

“It could be very far-reaching, and we expect to see a lot of lawsuits,” said Jon French, a shareholder at Schwabe who focus on the health care. “It’s a good time to be a regulatory lawyer.”

Much of health care is driven by federal administrative agencies, notably, the Centers for Medicare and Medicaid Services, the world’s largest purchaser of health care. Challenges flowing from the Supreme Court decision could arise over Medicare’s power to negotiate drug prices, as well as laws around surprise billing, price transparency and mandatory coverage under the Affordable Care Act.

The landmark 6-3 decision in Loper Bright v. Raimondo, overturning a 1984 precedent, reins in federal agencies’ ability to set rules in regulatory and scientific matters, handing the authority to courts to determine Congress’ intent when it drafted various laws. The Chevron doctrine had allowed judges to defer to agencies to reasonably interpret ambiguous laws.

The ruling could prompt small businesses, drugmakers and hospitals to challenge regulations they don’t like and that they contend aren’t specified in law, leaving the country with a patchwork of health regulations, according to KFF News.

“States will have different decisions on similar facts and appellate circuits will have a difficult decision,” French said. “The Supreme Court is biting off a big chunk too. It will have to weigh in more over time. They and Congress are the places where the buck stops.”

Gary Bruce, who is also a Schwabe shareholder specializing in health care, said health systems and providers who have responded to surveys about which issues are top of mind usually bring up staffing, reimbursement rules and other rules that affect their bottom lines.

“We can expect those pain points will be the first targets of any litigation efforts,” Bruce said. “It’s worth pointing out that the current regulations will remain on the books and valid until they’re overturned by a court, and that requires a substantial effort on the part of a health system or hospital. It has to be an individual or through a professional organization that files and funds a lawsuit and waits for a ruling.”

The more specific the agency’s authority under a statute to take actions or set rules, the more likely the courts are to still defer to the agency, he said. But not all statutes are that specific.

“Congress has built Chevron into the statutes they’ve drafted and maybe got used to not being as prescriptive,” French said.

The Loper Bright decision draws a distinction between factual and legal determinations by agencies, with factual determinations given “considerable weight, especially when they’re supported by a lot of evidence,” Bruce said.

French predicted there will be even more challenges to CMS payment rates, which are already common.

“CMS will have to be more cautious,” he said. “We don’t know what that looks like yet.”

Medicare reimbursement rates are determined based on factual data on health care costs across the country, inflation rates and other inputs, which will still be relevant and taken into account if a court is asked if the rates are correct, Bruce said.

“The court will still look at factual determinations and may come up with the same result that the agency came up with and say the agency did its job,” he said.

Industry groups, including the American Hospital Association, are likely refocusing their legislative agendas as well, based on Loper Bright. While the decision just applies at the federal level, it could also be persuasive to state courts, which have jurisdiction over states laws affecting health care.

One thing for sure is that people will get creative.

“I guarantee there will be crafty plaintiffs lawyers out there representing organizations with resources who will come up with new theories and new avenues to attack agency decision that their clients do not like,” French said. “It could be several years before we see resolution of some of the biggest ones. For individual providers and organizations in Oregon, it’s business as usual until one of these cases flips a switch , we we don’t know when or if that will happen.”

Read the full article in the Portland Business Journal.

This article was republished with permission from the Portland Business Journal.