On June 28, 2024, the Supreme Court made a sharp about-face from a doctrine that has governed administrative law for decades, overruling the “Chevron deference” doctrine with its decisions in Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce (collectively referred to herein as “Loper Bright”). In this way, Loper Bright decision marks a new age for how courts oversee federal agency rulemaking and action. But will this new age necessarily be a “dark age” for healthcare, and specifically long term care? Here we will examine ways that Loper Bright could instead be a bright spot for long term care providers as they work to provide care in an increasingly complex regulatory landscape.

A Look at Chevron

A bedrock decision in the administrative law area since the 1980s, Chevron v. National Resources Defense Council provided the framework for judicial oversight of the “fourth branch of government” – the bureaucracy. In Chevron, the Supreme Court held that federal courts should defer to administrative agencies in instances of an agency’s reasonable interpretation when the law in question is silent on the question at issue or is ambiguous. This “Chevron deference” was intended to allow Courts to rely upon the “expertise” of agencies when those agencies interpreted their governing laws. However, over the years, Chevron has been criticized for allowing expansion of the bureaucratic state.

The New Rule

In expressly striking down Chevron, the Court in Loper Bright directed that “Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the [Administrative Procedure Act] requires.” In setting this new administrative review standard, the Court also noted that prior cases decided under Chevron are not impacted or overturned. Thus, Loper Bright should not rewrite the history books, but instead should only blaze a new trail for judicial oversight of agency action going forward.

The Potential Bright Side for Long Term Care

In recent years, federal regulation of long-term care has consistently expanded. As recently as April of this year, the Centers for Medicare and Medicaid Services (CMS) announced new minimum staffing standards for long term care facilities with an effective date of July 1, 2024. These rules have been criticized by the healthcare community, as the agency’s call for more and more staff comes at a time where staffing shortages are a pervasive problem. Loper Bright could provide long term care facilities with an opportunity to challenge these new rules, which Stotler Hayes Partner, Alyssa Nugent, will discuss more in depth in a JD Supra article later this week. Under Loper Bright, it would be up to a federal court to decide if the CMS’s new rules are appropriate based upon its governing statutes without deference to the agency’s interpretation.

Additionally, Loper Bright could provide additional support for providers seeking to challenge CMS’s decisions on payment or reimbursement for services. If a facility’s claim for reimbursement is denied, a facility could challenge the denial in court and require the court, under Loper Bright, to determine if the denial was in keeping with the statutes overseeing the agency. The deciding court would now not be required to provide any deference to the agency’s interpretation of the law in deciding the case.

Along different lines, litigation now under Loper Bright could pave the way for reduced litigation between long term care providers and their residents. In 2019, CMS issued a final rule prohibiting long term care providers from requiring residents sign a binding arbitration agreement as a condition of admission. With federal courts now following the Loper Bright framework, facilities could challenge this rule and require courts to determine if the rule is reasonable based upon CMS’ governing statutes, again with no deference to CMS’ interpretation of that law. If this rule were to be struck down by the courts, providers would be more freely able to limit exposure to future litigation and instead be able to resolve disputes with residents in the arbitration arena.

Impact on the State Level

At this time, Loper Bright is only applicable to review of federal agency action. The decision does not apply to state agencies. However, in states that follow a Chevron-like review process, challenges to the state rule can be expected to come to test if the state’s highest court will fall in line with Loper Bright.

If a Loper Bright framework was adopted at the state level, long term care providers would have the ability to also challenge rules espoused by the state Medicaid agency – such as standards for the state agency’s processing and approval of Medicaid applications. If successful, such a challenge could lead to expanded approvals for the aged, blind and disabled population that heavily relies on Medicaid benefits to pay for their long term care expenses. This would be a bright side, for providers and the residents themselves.

With Chevron not yet cold in the grave, how Loper Bright will impact regulated industries, particularly the long-term care sector of the healthcare industry, remains largely unknown. Yet, even at this early stage, long term care providers should consider themselves better positioned to push back against the heavy-handed regulations they have faced for so long. Only time – and additional decisions – will tell how bright a beacon Loper Bright can and will be for these essential care providers.