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U.S. Supreme Court Overturns the Chevron Deference: What it Could Mean for Federal Healthcare Agencies

On a 6-3 decision following party lines, the conservative majority of the U.S. Supreme Court overturned a long-standing legal precedent that required courts to generally defer to regulations issued by Federal agencies that interpret and enact Congressional statutes, commonly referred to as Chevron deference.  Chevron deference required courts to defer to an agency’s “reasonable interpretations” of ambiguous statutes passed by Congress. The end of the precedent opens the doors to legal challenges of existing Federal administrative law, and will likely weaken the ability of Federal agencies to issue administrative regulations moving forward.

In particular, the decision increases uncertainty about former and future healthcare related rulemaking by agencies like Centers for Medicare & Medicaid Services, the Food and Drug Administration, and the Department of Labor.  Many experts expect that this ruling will result in a flurry of new lawsuits against Federal regulations, including by pharmaceutical companies, insurers, and hospitals.  Specifically, hospitals have generally opposed the Chevron doctrine for years, and may now feel empowered to sue if regulations are adopted that would decrease Medicare and Medicaid reimbursements.  The Biden administration’s drug price negotiation plan may now attract legal action from pharmaceutical companies looking to challenge administrative decisions that are putting the Congressionally enacted Inflation Reduction Act into effect.

Although the Chevron deference only applied to Federal regulations, the ruling against it could be used persuasively to challenge state regulations as well.

The Source will follow up with more information on this decision in a future Litigation post.

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