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When the U.S. Supreme Court’s 2024 decision in Loper Bright Enterprises v. Raimondo was issued, it rendered obsolete the Chevron decision, one of the most influential opinions of modern legal thought.
By overturning the Chevron doctrine, the court fundamentally altered how federal regulations are interpreted and enforced. While the decision affects all regulated industries, its implications for long-term care providers are particularly significant.
Established in 1984, the Chevron doctrine directed courts to apply a two-step test to determine whether the decisions of a federal agency were lawful.
Step One asked whether Congress had directly spoken to the precise issue at hand. If congressional intent is clear, then the Court’s inquiry ends.
However, if a court determines that the statute is silent or ambiguous with respect to the specific issue, Step Two requires a court to defer to an agency’s interpretation if that interpretation is reasonable. Though it was not considered a landmark case at the time, Chevron continued to influence the modern administrative state for 40 years.
The framework was not perfect, but it offered predictability. Agencies like the Centers for Medicare & Medicaid Services (CMS) could implement complex policies regarding long-term care providers such as clinical staffing requirements, quality measures, reimbursement mandates and enforcement processes, all based on technical expertise with some assurance of judicial support.
In striking down the Chevron decision, the majority opinion equated what started as a simple two-step to what had become a dizzying breakdance requiring constant clarification.
The Chevron dance may be over, but another has just begun. As an attorney specializing in representing healthcare providers before governmental agencies, I see this ruling as a defining moment.
Chevron deference once provided a layer of regulatory consistency upon which government agencies and healthcare providers could rely. Its removal introduces an era of judicial variability, creating risk, but also opportunity, for those willing to adjust to the current legal landscape.
What’s next
Healthcare providers and government agencies alike wonder what comes next. The overturning of Chevron means greater uncertainty given the likelihood of inconsistent decisions from the very different federal jurisdictions, and delays in the promulgation and implementation of agency regulations.
Without Chevron, courts must now interpret ambiguous statutes independently. Agency interpretations, even when technically sound, will no longer carry presumptive weight.
This shift comes at a time when long-term care providers are already under strain. Staffing shortages, increased regulatory scrutiny and complex care models have already stretched compliance resources. Now, the rules themselves may shift depending on the jurisdiction or the court’s philosophical leanings.
Multi-state providers will encounter additional complexities. When faced with an agency decision, that provider might initiate litigation in one federal circuit and then file a similar challenge in another. A CMS rule that is upheld in one federal circuit could be struck down in another.
If presented with inconsistent opinions, which should the agency follow? As the Court itself stated, “One judge might see ambiguity everywhere; another might never encounter it.” If courts are “[exercising] their independent judgment in deciding whether an agency has acted within its statutory authority” as the majority requires, this independent judgment will lead to inconsistent interpretations across the federal circuits.
Recent decisions following Loper Bright already show courts diverging in how they handle agency interpretations. This fragmentation increases the likelihood of forum shopping, as litigants seeking to challenge an agency’s action will pursue the most favorable jurisdiction, while those defending the agency’s position will gravitate toward courts that still lean toward deference.
These challenges can lead to further delays in the pursuit of justice as litigants seek favorable venues.
How courts are reacting
Courts have already begun to react differently post-Loper Bright. For example, the Fifth Circuit was skeptical of an agency rule favoring environmental, social, and governance (ESG) in choosing investments for a retirement plan.
The Fifth Circuit ultimately vacated the judgment of the district court and remanded the cases for further proceedings. However, in the Third Circuit, the court upheld an agency rule when it determined that Loper Bright does not undermine the validity of EPA regulations governing pesticide labeling.
Meanwhile, judges in the Mississippi and Texas have used the Loper Bright decision to block expansion of the Affordable Care Act. In the Sixth Circuit, the court chose not to defer to the National Labor Relations Board’s interpretation of the National Labor Relations Act.
Impact on legal strategy
In this post-Chevron environment, long-term care providers should proactively re-examine their operational policies with their legal team. Policy must be defensible based on statutory interpretation, not just regulatory compliance.
Additionally, business inefficiencies driven by compliance with agency regulations not based on the agency’s statutory authority should be reviewed and considered for possible legal challenge. Areas now subject to review will include qualifications for clinical staff, quality measures, reimbursement mandates, or agency enforcement processes.
Ultimately, the post-Chevron era introduces risk and some near-term instability, but also more opportunity for providers to resist agency overreach and reduce the impact of burdensome regulatory requirements.
Long-term care providers should be bold in challenging an agency’s regulatory interpretations, but understand that this period of instability will bring many challenges as the agencies, the providers and the courts learn this new dance.•
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Norris Cunningham is an attorney with Stoll Keenon Ogden PLLC. Opinions expressed are those of the author.
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