A Supreme Court decision handed down Friday morning could transform the way federal agencies operate, providing the basis for senior living operators and other companies to challenge agency decisions.
The court ruled 6-3 in Loper Bright Enterprises v. Raimondo to overturn the Chevron doctrine, which held that US courts should give substantial deference to federal agency decisions. The decision affects almost every US agency, among them the Department of Labor and its Wage and Hour Division and Occupational Safety & Health Administration, the US Equal Employment Opportunity Commission, the National Labor Relations Board and the Centers for Medicare & Medicaid Services, all of which have issued several rules affecting senior living providers.
The Chevron doctrine is named after a landmark 1984 ruling involving the oil and gas company. The doctrine required courts to defer to an agency’s “reasonable” interpretation of ambiguous laws passed by Congress, but critics argued that it gave federal agencies too much power in drafting regulations. Proponents, however, warned that overturning Chevron would threaten the agencies’ ability to draft regulations in areas such as the workplace, healthcare, the environment and nuclear energy, making it more difficult to implement laws passed by Congress.
The ruling gives courts substantially more power. “Going forward, if agency action is challenged in court, courts will continue to respect the agency’s authority if it has been properly delegated by statute. However, if a law is ambiguous, courts will now get to decide whether an agency has acted within its statutory authority — rather than yielding to the agency,” according to Fisher Phillips.
The law firm said that it expects the Labor Department’s overtime and independent contractor rules; Equal Employment Opportunity Commission regulations stemming from the Age Discrimination in Employment Act and the Americans with Disabilities Act; the National Labor Relations Board’s joint employer rule and several rules related to union activity; the Federal Trade Commission’s ban on noncompete agreements; OSHA’s “walk-though” rule; and Department of Homeland Security immigration rules, among many others, to come under attack “in the coming months and years.”
‘Significant impact’ expected
The US Chamber of Commerce hailed the decision “an important course correction that will help create a more predictable and stable regulatory environment” for businesses.
“The Supreme Court’s previous deference rule allowed each new presidential administration to advance their political agendas through flip-flopping regulations and not provide consistent rules of the road for businesses to navigate, plan and invest in the future,” the organization’s president and CEO, Suzanne P. Clark, said in a statement.
LeadingAge Vice President of Legal Affairs Jonathan Lips told McKnight’s Senior Living that “while the specific effects will depend on a variety of factors, the court’s decision today will have a significant impact in years to come.” He said that the decision “will have an expansive impact on federal regulation and legislation, including statutes and rules governing healthcare, affordable housing and aging services.”
Lips said the ruling could affect how federal agencies interpret statues relating to program they administer and the content of regulations the agencies issue. It also could influence how members of Congress draft bills in some cases, necessitating that they include more detailed requirements or definitions or address specifically what authority or discretion is delegated to a federal agency charged with implementing a statutory provision.
He added that the decision also could result in additional litigation by parties seeking to challenge certain federal regulations and the interpretation of statutes that underlie those rules.
Argentum noted that the ruling applies only to federal agencies and does not overturn Chevron deference policies adopted by some states, but it could bring additional momentum for states to challenge such deferential policies.
“While some states have adopted a Chevron deference framework for state regulators to interpret ambiguous statutes, other states do not have this policy, and several states have begun eroding deference to regulators through state statutes, court opinions and state constitutional amendments,” the association wrote in a blog post and shared in a statement with McKnight’s Senior Living. Several states filed amicus briefs supporting the plaintiff in the recent Supreme Court case, Argentum noted.
The American Health Care Association / National Center for Assisted Living applauded the decision and its implications in the outcome of a lawsuit challenging the Center for Medicare & Medicaid Services’ authority to issue a minimum staffing mandate for nursing homes. Although the mandate applies directly only to nursing homes, senior living provider advocates have raised concerns about how it could affect them, given that they are “fishing from the same pool” of workers as nursing homes.
“This decision amplifies and justifies our concern that government agencies are overextending their authority by implementing sweeping staffing mandates over the entire nursing home profession,” AHCA/NCAL President and CEO Mark Parkinson told McKnight’s Senior Living. “Our position has always been that this staffing mandate should have never been finalized, and in light of this development, we urge the administration to rescind the rule and work in partnership with providers and stakeholders to develop more meaningful solutions to improve care for seniors.”
Originated with fishing boats
The Loper Bright Enterprises v. Raimondo case began as a challenge to a rule that required commercial fishing boats to bear the cost of an observer to monitor regulation compliance.
In the majority opinion, Chief Justice John Roberts called Chevron’s presumption that statutory ambiguities are implicit delegations of authority by Congress to federal agencies “misguided.” Federal agencies, he said, “have no special competence in resolving statutory ambiguities. Courts do.”
Justice Neil Gorsuch, in his concurring opinion, said that the court placed a “tombstone on Chevron no one can miss.” The decision “returns judges to interpretive rules that have guided federal courts since the nation’s founding,” he said.
‘Large-scale disruption’ coming?
In a dissenting opinion, Justice Sonia Sotomayor said that Chevron rests on the idea that “Congress knows that it does not — in fact cannot — write perfectly complete regulatory statutes.” She said the decision to overrule the Chevron doctrine “is likely to produce large-scale disruption.”
“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,” she said.
Sotomayer accused the conservative members of the court of making a “power grab” that undermines the nation’s history of allowing regulatory agencies broad rule-making authority.
“Shifting views about the worth of regulatory actors and their work do not justify overhauling a cornerstone of administrative law,” Justice Elena Kagan said in her dissent. She characterized the decision as “yet another example of the Court’s resolve to roll back agency authority, despite congressional direction to the contrary.”
“In one fell swoop, the majority today gives itself exclusive power over every open issue — no matter how expertise-driven or policy-laden — involving the meaning of regulatory law.”
Jarkesy case also affects federal agencies
The decision came one day after the Supreme Court limited federal agencies’ use of administrative law judges. In a similar 6-3 decision, the justices ruled that people accused of fraud by the Securities and Exchange Commission have the right to a jury trial in federal court. The ruling found that the SEC’s proceedings in some civil fraud complaints violate the Constitution.
The Securities and Exchange Commission vs Jarkesy decision, SCOTUSblog predicted, “will have a far-reaching impact on dozens of federal administrative agencies that use similar processes.”
