Loper Bright cuts down on agency power: It’s a great decision… if you like litigation

Well, the U.S. Supreme Court just took its ball and walked off the playground, to the dismay of federal agencies.  

You might have heard about the case names, but take it from me, you might not have heard all the details you should.

On June 28, the U.S. Supreme Court issued a 6-3 opinion in Loper Bright Enterprises et al. v. Raimondo, No. 22-451, 603 U.S. (2024) (together with Relentless, Inc., et al. v. Department of Commerce, et al., No. 22-1219 (“Loper Bright”) overturning the four-decades-old deference doctrine established in Chevron USA Inc. v. NRDC. The majority opinion was written by Chief Justice Roberts.

The decision basically gives more power to the courts and takes powers reserved for federal agencies away.  As a result, the Loper Bright decision will make it easier (in court) to contest regulations and challenge these agencies’ abilities to promulgate new regulations absent a clear grant of statutory authority.

Basically, in Loper Bright, the High Court held that agencies should no longer be given broad discretion in setting and interpreting rules for the entities they oversee.  Rather, the majority declared that agencies do not have the wherewithal to resolve ambiguous statutes, as Chevron proclaimed.  The decision takes back power from agencies and gives it directly to the courts, as Roberts took pains to point out:  “Perhaps most fundamentally, Chevron’s presumption is misguided because agencies have no special competence in resolving statutory ambiguities. Courts do.” 

The court even went back to the 1803 decision in Marbury v. Madison for a basis to stake its claim as the sole interpreter of the law. Again, from Roberts’ majority opinion:

“In the foundational decision of Marbury v. Madison, Chief Justice Marshall famously declared that ‘[i]t is emphatically the province and duty of the judicial department to say what the law is.’ 1 Cranch 137, 177 (1803).” 

This change dramatically changes the landscape for long-term care providers and others in healthcare who are heavily regulated and who often battle the many administrative agencies they deal with.

Some people may think that the Chevron reversal by the Supreme Court in Loper Bright was a victory for healthcare providers everywhere. After all, if they are often aggrieved with the morass of burdensome healthcare regulations (minimum staffing rules included), Loper Bright provides various avenues to challenge agency decision making, perhaps de novo, treating agencies as nothing more than a messenger for Congress. 

In other words, many like the fact that the decision limits the power of agencies, not allowing them to interpret laws themselves.  

For example, are you the type of provider that would rather deal with (or work directly with) agencies and their rules and try to work things out at the regulatory level? Or, on the other hand, would you like to have the court decide in each instance when you are aggrieved by an administrative agency interpretation? 

There are pros and cons to each, but certainly, the court having more power here than regulators could just be a proxy for more litigation.  

In a dissenting opinion, Justice Sonia Sotomayor said the decision to overrule the Chevron doctrine “is likely to produce large-scale disruption.” That disruption comes in the form of further litigation to minimize agency power and rule-making:  “Litigants seeking further dismantling of the ‘administrative state’ have reason to rejoice in their win today, but those of us who cherish the rule of law have nothing to celebrate,” Sotomayor said, acknowledging that Loper Bright will lead to more litigation, and more stalling of agency rulemaking and agency authority. 

Even more litigation

Overturning Chevron would necessarily mean that it could be more expensive to challenge agency decision-making before a court rather than before a regulatory agency in the normal course. Imagine your argument before a court: Hi, Judge. You are much smarter than agencies. Can you help us interpret this law and not take the agency’s interpretation for granted? 

This type of argument is easy to raise and can subject agency rulemaking to a slew of lawsuits attempting to invalidate or reverse its application for lack of statutory authority to promulgate the rule in the first place.  

But be careful even if you wish for more litigation to challenge agency actions. Some commentators have noted that one of the biggest downfalls of Loper Bright is that each individual judge around the country may have a different interpretation of a statute they are now empowered to interpret. 

That could lead to massive inconsistencies among judges in different regions and different jurisdictions instead of one consistent interpretation made by a particular agency. So more litigation, or more court interpretation, is not always as beneficial as providers may think.

What about policy and guidance?  

Speaking of a potential lack of consistent interpretation, one thing healthcare providers have enjoyed, or at least took solace in, were the interpretations of agencies to help the provider measure and calculate their compliance and concomitant agency enforcement.  

Now, however, that guidance of agencies can be called into question. For example, even the Centers for Medicare & Medicaid Services policy and guidance pronouncements (not just rulemaking) could, theoretically, be rendered… meaningless. 

In other words, if agencies are no longer granted substantial deference because they are not recognized “experts” (and only courts are), then their guidance and policy should theoretically carry less weight, according to the Loper Bright decision.

Will the real ‘expert’ please stand up?

Now, under Loper Bright, with more litigation, courts will be the sole arbiters of ambiguous statutory language and may not fully understand the business objectives of the healthcare entities or how they fit into the nation’s healthcare system — at least without the knowledge that agencies have possessed about healthcare over the last several decades.  

Indeed, Justice Kagan’s dissent pointed out this problem of a court’s lack of expertise compared to U.S. agencies — agencies that understand healthcare better than individual courts:  

“Some interpretive issues arising in the regulatory context involve scientific or technical subject matter. Agencies have expertise in those areas; courts do not. Some demand a detailed understanding of complex and interdependent regulatory programs. Agencies know those programs inside-out; again, courts do not.

“We knew that as between courts and agencies, Congress would usually think agencies the better choice to resolve the ambiguities and fill the gaps in regulatory statutes. Because agencies are “experts in the field,” she added in her dissenting opinion.

Indeed, Justice Kagan even points out that this use of courts instead of agency experts to interpret statutes is exacerbated for complex scientific or technical issues that can be at the forefront of healthcare regulation. She also discusses how such expertise is also needed in the field of artificial intelligence, which is also a key part of healthcare today and into the future:

“Today, the majority… gives courts the power to make all manner of scientific and technical judgments  … It puts courts at the apex of the administrative process as to every conceivable subject — because there are always gaps and ambiguities in regulatory statutes, and often of great import. What actions can be taken to address climate change or other environmental challenges? What will the Nation’s health-care system look like in the coming decades?… What rules are going to constrain the development of A.I.? In every sphere of current or future federal regulation, expect courts from now on to play a commanding role… It is a role this Court has now claimed for itself, as well as for other judges.”  – J. Kagan, dissenting, pp. 31-32.

What’s realistic here?

Indeed, there is a bit of impracticality at play here. Go to an agency vs. go to court for an answer.  Justice Kagan did a good job of presenting concrete examples of when agency interpretation of Congressional intent is needed.  She also explains how Congress cannot always provide specific language in its statutory enactments because they simply cannot know at the time a law is passed, and a function of administrative agency law has been to let the agencies decide.

As Justice Kagan pointed out with specific pieces of legislation in her dissent, Congress does not always inadvertently make statutes ambiguous. Many times, Congress is purposely ambiguous, and Congress drafts in that way to allow for administrative agencies to set forth their reasonable interpretation, or guidance. That reliance is now presumably gone in favor of a more impractical court interpretation.  

Plus, Congress may not have the wherewithal, practically speaking, to create more specific statutes. Again, we look to the second page of Kagan’s dissent:

“This Court has long understood Chevron deference to reflect what Congress would want, and so to be rooted in a presumption of legislative intent. 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.”

The bottom line is: If you like dismantling agencies by utilizing expensive litigation to do so, with specific court intervention, then Loper Bright will be a decision celebrated by you. 

But if you are a healthcare provider that seeks guidance and efficiency in government and the cooperation and certainty that agencies can provide, then Loper Bright may just make things more inefficient for you… in court.  

Neville M. Bilimoria is the Managing Partner of the Chicago Office, Partner in the Health Law Practice Group and member of the Post-Acute Care And Senior Services Subgroup at Duane Morris LLP.

The opinions expressed in McKnight’s Long-Term Care News guest submissions are the author’s and are not necessarily those of McKnight’s Long-Term Care News or its editors.

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