Breaking Down the Overrule of Chevron: What It Means for Healthcare Providers
This article is written by CCG President, Ronald Chapman II
In a recent ruling, the United States Supreme Court overruled a prior precedent commonly known as Chevron.
How will this impact healthcare professionals? It’s first important to understand the history of Chevron, its intended purpose and how the overrule was overdue.
The History of the Chevron Deference
The Chevron deference was originally orchestrated under a 1984 decision in Chevron v. Natural Resources Defense Counsel. Under this doctrine, in the instance where a statute is ambiguous, courts were to defer a federal agency’s interpretation of that statute.
Let's look at an example of how this might apply in an opiate prescribing case:
A physician, according to federal regulations and the Controlled Substances Act, must only issue a prescription that is written in the usual course of professional practice for a legitimate medical purpose.
What does that mean?
The Drug Enforcement Administration (DEA) is an agency, and according to Chevron, would have the ability to interpret within the confines of the Controlled Substances Act what a legitimate medical purpose is. The DEA would have the ability to decide whether a physician has violated this requirement and what it means.
If a physician lost their case before the DEA and filed an appeal, that appeal would give deference to the decision of the Administrative Law judge. But according to Chevron, this deference can only be given if the statute was ambiguous. Many courts have ruled that this particular statute is ambiguous, and therefore a judge who is not appointed by The President, not confirmed by the Senate and who serves the DEA administrator would be able to decide how medicine in this country may be practiced.
So why did the Supreme Court give this power and then take it away?
During the Reagan administration, Reagan was frustrated by the DC Circuit Court of Appeals routinely declaring his initiatives unconstitutional and impacting his ability to make laws. Because of this, and because the President appoints the heads of agencies, he sparked litigation that would ensure agencies have more authority over certain matters and the courts have less.
At that moment when Chevron was decided, a train started in motion that gave federal agencies nearly unfettered power in this country. They have the ability to strip businesses of the ability to operate and to change the interpretation of what type of healthcare services can be billed for and what can be paid under the Medicare system. Agency regulations predominated our legal landscape and then something even more troubling happened.
Congress started passing laws criminalizing violation of agency regulations. This means that as it currently stands in this country, a person can go to jail for violation of a regulation that was created by an agency, and not an act of Congress, the Senate or a law signed by the President.
Why would the executive do this?
Presidents, every single one of them, take the opportunity to increase their power. Vesting this deference in the agencies ensured that they would have and maintain power over the laws of our country and the ability to pursue opponents of their agenda.
Now, a conservative Court that is essentially fed up with the expansion of executive authority and the nonsensical nature of agency regulation has decided that agencies have overstayed their welcome in the deference department.
How Does This Impact the Healthcare Community?
In the near term, you won't see too many effects. But as differences of opinion between agencies and individual parties start to swell, lawsuits will begin to rise. This could include lawsuits related to Medicare overpayment and audit findings, levied based on inappropriate interpretations of Medicare's guidelines. Someone may challenge the ability of Medicare to make such guidelines. It's impossible to predict exactly what challenges will rise, but these challenges will be heard in federal District Court and sometimes in federal appellate court where the agency is just another party at the table.
It's important to understand that the only deference that was given was given in a situation where the statute was ambiguous. If the statute was not ambiguous, one could apply text principles to determine the case.
Here's the kicker: Congress is not particularly good at writing clear statutes. There is an argument that most statutes are confusing and ambiguous and when the determination of ambiguity must be made by a district judge, it is the district judge that gets to determine whether any deference should be applied. Post Chevron, no deference will be applied, and the district judge is free to interpret the statute without regard to agency deference.
This distinction becomes most pronounced when a district court or an appellate court is asked to review prior agency decisions that supposedly have presidential effect.
Let's again go by example from a case that I submitted to the Supreme Court. A pharmacy received a DEA Order to Show Cause for supposedly filling prescriptions that lacked a legitimate medical purpose. I argued that the DEA must first show that the prescriptions were for a non-medical purpose, and that the patients were not using them for a non-medical purpose. The DEA and the administrative law judge disagreed with that assessment. They were aided by prior decisions of prior administrative law judges that said failing to resolve a red flag on a prescription amounts to filling it without a legitimate medical purpose.
We appealed this case to the 11th Circuit Court of Appeals and the 11th Circuit gave the DEA deference in their prior decisions. As a result, we appealed to the Supreme Court and unfortunately this wasn't the right case for the court.
Had this case occurred today, the 11th Circuit would only be bound by regulation in interpreting the legitimate medical purpose aspect. Given that the statute would be incorrectly applied in this context, the 11th Circuit would not have been able to justify the DEA action against the pharmacy. Case dismissed.
There's one other issue that we must discuss with the Chevron deference. This is the overall adherence to agency decisions, even though those decisions do not rest on statute but on agency precedent. The concept of stare decisis is a concept utilized in constitutional courts to ensure that prior decisions are respected. The DEA and other administrative bodies should not enjoy deference for their prior decisions. More specifically, just because the DEA decided the case one way does not mean that it should have any impact on a new case. This is because the DEA is not part of the judicial branch.
Here are a few specific predictions for the post Chevron era:
Agencies will adhere to the confines of properly enacted statutes and regulations in making their decisions.
Where they don't, districts will increase the number of decisions overturning agencies.
There will be a slight impact on the ability of the executive branch to regulate because of delays in federal cases.
Both Congress and the executive branch will enact statutes that are clearer.
It's going to be a rocky road, but in the end, the laws of our country will be clearer and individual parties, including healthcare practitioners across the country will be able to better understand their obligations. Chevron was necessary because of unchecked agency power and creating regulations vast and deep in matters, not delegated to their authority. Chevron is a powerful counterbalance to bring us back to the rule of law.