How the Supreme Court has roiled U.S. health-care agencies

Recent Supreme Court decisions curbing the power of federal agencies will hobble government efforts to protect public health, legal experts warn. The rulings will make it harder for some federal agencies to bring enforcement actions, give judges more leeway to second-guess agency decisions and, following a decision Monday, make it easier to challenge long-settled regulations.

Legal experts and heath officials expect a gusher of litigation that will complicate the regulation of drugs, tobacco products and cutting-edge medical technologies. The administration of government health insurance programs could be further mired in lawsuits. And decades-old agency decisions may be newly vulnerable to challenges.

The full ramifications of the court’s term, which ended Monday, may take years for legal experts and health policymakers to untangle. What’s clear is that the high court has delivered a seismic jolt to the administrative state that has for years been in the crosshairs of conservatives and industries.

“This term has been disastrous for public health in many ways,” said Reshma Ramachandran, a health policy expert and assistant professor at the Yale School of Medicine.

The Supreme Court on Friday, in Loper Bright Enterprises v. Raimondo, delivered perhaps the most consequential of its decisions curtailing the power of federal agencies, overturning a legal precedent — established in 1984 in Chevron v. Natural Resources Defense Council — that federal judges should defer to agencies when a law is ambiguous or Congress does not specify its intentions. Although initially championed by conservatives, the Chevron doctrine became vilified as an example of overreach by unelected and unaccountable bureaucrats.

In declaring the demise of the doctrine, Justice John G. Roberts Jr.’s wrote that agencies “have no special competence” in resolving statutory ambiguities — but courts do.

The 6-3 ruling, divided along ideological lines, could bog down health agencies’ rules on a slew of issues, from controversial rulemaking over tobacco products to more mundane matters involving billing. Health agencies could become more cautious, diverting more resources to preparing for an onslaught of lawsuits, several legal experts and former federal health officials said.

Among the agencies likely to be affected by the court’s decisions is the Food and Drug Administration, which routinely boasts that it regulates 21 cents of every dollar spent in America. It makes high-stakes rulings on medications, tobacco products and food additives — what’s safe and effective to put in your mouth, or jab into your arm.

Justice Elena Kagan, in her dissent, asserted that government regulators are best positioned to tackle highly technical subjects. To make her point, she asked two complicated health-care questions: What qualifies as a protein regulated by the FDA? And how should the Medicare program measure a “geographic area” when calculating reimbursements to hospitals based on the wage levels in certain regions?

The FDA declined to comment on the decision. The White House called the Chevron decision “yet another deeply troubling decision that takes our country backwards,” adding that President Biden’s legal team would work with federal agencies to do “everything we can to continue to deploy the extraordinary expertise of the federal workforce.”

[U.S. Supreme Court decision overturning Chevron doctrine could have major impacts in Alaska]

On Capitol Hill, Republicans praised the Supreme Court’s ruling upending the Chevron doctrine, with House GOP leaders pledging to swiftly ensure agencies follow the high court’s ruling.

That scrutiny could also affect agency powers to nimbly respond to health emergencies such as the coronavirus pandemic, said Andrew Twinamatsiko, a director of Georgetown’s Health Policy and the Law Initiative at the O’Neill Institute.

“It will really have a strong chilling effect on what agencies can do to anticipate health emergencies or health disasters,” he said of the court’s decision.

Drug approvals

Companies and opponents of controversial drugs may also target the FDA’s decisions on whether to approve new drugs, challenging actions that rely on interpreting ambiguous federal law. “So much of the statute around drug approval includes really vague language,” said Holly Fernandez Lynch, an assistant professor of medical ethics and law at the University of Pennsylvania.

New drugs approvals, for instance, are supposed to be based on “substantial” evidence grounded in “adequate and well-controlled investigations” — which the agency has interpreted to mean studies that include a control group, minimize age and gender biases and standardize doses.

“A single judge that doesn’t have any scientific training could weigh in and say FDA has interpreted ‘adequate and well controlled investigations’ incorrectly,” Ramachandran said. “That’s a recipe for disaster.”

The decision to reverse the doctrine may not mean sudden changes to policies affecting drugmakers, according to the firm TD Cowen, but could impact how the agency moves to regulate emerging technologies such as artificial intelligence, nanotechnology and digital therapeutics.

Stuart Pape, a former FDA associate chief counsel, predicted the ruling will lower the odds of the agency succeeding in its quests to require labels on the front of food packages and regulate certain lab tests it says may be unreliable.

Medicare and Medicaid

The Supreme Court’s Chevron ruling could also invite more challenges to Medicare and Medicaid programs. Officials often use novel interpretations of the law to set new, at times divisive, policy, such as defining terms for Medicare drug negotiations or crafting changes to the Medicaid drug rebate program, experts said.

“A big question mark is, ‘Will agencies like the Centers for Medicare and Medicaid Services be less amenable to those types of innovative interpretations of law to solve hard policy problems?’” said James Huang, a partner in law firm Hogan Lovells’s health-care practice.

One health-care company has already prominently cited Loper in suing the Department of Health and Human Services — the day the Supreme Court decision was released. HMH Hospitals in New Jersey is alleging the health agency’s “irrational and unlawful” interpretation of federal law deprived three of its medical centers of Medicare reimbursements it says it was due.

Health-care providers suspended from receiving Medicare payments on suspicions of fraud or not following federal procedures could also benefit from another Supreme Court decision issued last week, said Andrew Tsui, a former CMS attorney who now handles health-care cases for the firm Greenberg Traurig.

In that decision, Securities and Exchange Commission v. Jarkesy, justices ruled that the agency wrongfully relied on administrative hearings — not federal courts — to bring enforcement actions and issue fines. In her dissent, Justice Sonia Sotomayor wrote that “dozens of agencies could be stripped of their power to enforce laws enacted by Congress.”

Tobacco

Legal battles over deference to agencies could also play out in cases involving tobacco products regulated by the FDA, which is perpetually mired in litigation filed by the industry.

Tobacco companies will try to use the loss of the Chevron doctrine to thwart the Biden administration if pushes forward with the long-delayed rule to ban menthol cigarettes, said Mitch Zeller, former director of the FDA’s Center for Tobacco Products. He said he worries industry will be emboldened to find a sympathetic judge primed to rule that the agency did not correctly interpret federal law.

“It would be deeply troubling from a public health perspective if a single conservative judge would seek to displace the role of experts in assessing the science,” Zeller said.

The vaping industry has already signaled the demise of the Chevron doctrine will bolster ongoing legal battles with the FDA over millions of denials to market e-cigarette products. The Supreme Court will decide this year whether to accept legal questions over the FDA’s handling of vaping regulations.

“The Tobacco Control Act is ambiguous on the standard of what is ‘appropriate for the protection of public health,’” said Tony Abboud, head of the Vapor Technology Association, adding the ruling bolsters its assertion that the FDA “overstepped its authority when it chose to implement a de facto ban on flavored e-cigarettes.”

Revisiting old cases

The Supreme Court’s decision Monday in Corner Post v. Board of Governors of the Federal Reserve adds another wrinkle to the changing regulatory landscape in health care. Justices ruled in favor of a North Dakota truck stop that argued it should be allowed to challenge a federal regulation on debit card swipe fees because the truck stop company had not been incorporated until after the six-year statute of limitations on the fee regulation expired. Federal law sets a six-year statute of limitations to challenge regulations.

The Biden administration had argued that a ruling extending the statute of limitations could jeopardize decades-old regulations. During oral arguments in a case involving access to the abortion pill mifepristone, U.S. Solicitor General Elizabeth B. Prelogar suggested that doctors could sue over drug approvals decided decades ago if the Supreme Court ruled against the administration in Corner Post.

Two years after the Supreme Court overturned the constitutional right to abortion, justices this term essentially punted on the FDA’s approval of mifepristone and emergency-room abortions. But legal scholars believe the issues will eventually return to the justices for consideration.

In her sharp dissent Monday in Corner Post, Justice Ketanji Brown Jackson suggested the mifepristone case would be “fair game” for a new lawsuit, even though the statute of limitations for challenging the drug, approved in 2000, had long expired.

“From this day forward, administrative agencies can be sued in perpetuity over every final decision they make,” she wrote.