The Supreme Court’s landmark decision Friday revoking broad deference to federal agencies is likely to bolster legal arguments against a federal nursing home staffing rule, experts told McKnight’s Long-Term Care News.

The ruling reverses a long-standing doctrine that has given regulatory agencies, including the Centers for Medicare & Medicaid Services, broad discretion to set rules for the entities they cover.

The demise of the Chevron deference means that courts will now have more power to override regulatory agencies that are perceived to have acted outside the scope of powers granted them by Congress. A lawsuit challenging the final CMS staffing rule makes a forceful argument that regulators overstepped their bounds, usurping a responsibility on staffing that Congress has historically reserved for itself.

That lawsuit was brought by the American Health Care Association, the Texas Health Care Association and three skilled nursing providers in May; LeadingAge joined the suit in June.

Friday’s decision in Loper Bright Enterprises v. Raimondo “amplifies and justifies our concern that government agencies are overextending their authority by implementing sweeping staffing mandates over the entire nursing home profession,” said Mark Parkinson, president and CEO of the American Health Care Association/National Center for Assisted 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,” he added. 

No hearings have been scheduled yet in the staffing rule case, AHCA v. Becerra, according to a check of federal court records Friday.

Broad implications for healthcare regulation

Abandonment of the Chevron doctrine will likely have implications for nearly every US industry, from the fisheries the Supreme Case case involved to pharmacies and education, experts said.

Mark Reagan, a seasoned long-term care attorney and managing shareholder of Hooper, Lundy & Bookman, said that it is akin to the “world turned upside down and a new day for administrative law.”

“The Wicked Witch of Chevron is finally dead. Courts will independently decide cases involving ambiguous statutes without deference,” he said in an email while traveling abroad. 

Like many whose cases depend on regulatory interpretation, Reagan had been waiting with anticipation for the Friday decision through much of June. He predicts broad implications for the nursing home sector.

“This is huge for CMS claims of jurisdiction in the staffing mandate litigation and of equal importance if the CMP [civil monetary penalty] elements of the proposed payment rule are adopted,” he said.

Chief Justice John Roberts authored the majority opinion, in which he argued that Chevron was a “judicial invention that required judges to disregard their statutory duties.”

“Perhaps most fundamentally, Chevron’s presumption is misguided because agencies have no special competence in resolving statutory ambiguities. Courts do,” the majority wrote in a 6-2 decision. “The only way to ‘ensure that the law will not merely change erratically, but will develop in a principled and intelligible fashion,’ … is for the Court to leave Chevron behind.”

“The holdings of those cases that specific agency actions are lawful — including the Clean Air Act holding of Chevron itself — are still subject to statutory [precedent], despite the Court’s change in interpretive methodology,” he added later.

While the Court said Friday’s ruling didn’t automatically apply to decisions that relied on Chevron logic over the last 40 years, Reagan said he wouldn’t be surprised to see fresh challenges on old regulations. Previously, he noted that complex Medicare reimbursement methodologies and Requirements of Participation could be targeted.

Friday’s decision might not constrain CMS on its own, Reagan said previously, but instead lead to more opportunities for successful litigation if the agency’s presumed authority “is far from clear.”

Still, Brendan Williams, an attorney and president and CEO of the New Hampshire Health Care Association, urged caution as providers and the rest of the nation waits to see how regulatory agencies and lower courts respond to the Supreme Court decision.

The ruling could actually cut both ways.

“Those cheering the demise of the Chevron doctrine should perhaps consider that the provider tax mechanism that provides critical nursing home funding in most states, and is also a longstanding target of fiscal conservatives, is a regulatory construct,” he said. “Regulatory enactments that might be beneficial to nursing homes can now be fruitful targets of litigation.”

The decision could also lead to more uncertainty when new rules are promulgated, added Thomas Barnard, a Baltimore-based healthcare attorney with Baker Donelson.

“It may complicate or add complexity to previously routine processes as new questions and challenges could be raised to agency views,” he told McKnight’s this weekend. “It may add a step or a layer in litigation, potentially slowing down some proceedings where there are disputes over statutory interpretation.”

But, Barnard added, the decision could also make more cautious in applying regulations “in unique or expansive ways” because they’re more likely to end up in court defending their interpretations.

Healthcare entities that bring cases challenging agency rules also must be prepared to do a better job educating judges as their expertise on issues they have no knowledge of may now supersede that of seasoned regulators in some cases, Barnard and colleagues wrote in a related blog Friday.

Split decision

Justices Elena Kagan and Sonia Sotomayor offered a dissent Friday. Justice Ketanji Brown Jackson sat out the main decision, having weighed in on the case as a lower court judge. In a companion and closely related case, she sided with Kagan and Sotomayor.

Several justices in January showed their willingness to side with businesses in Loper Bright and a companion case, both of which involved the regulation of fisheries.

Friday’s decision will likely require Congress to craft more detailed legislation to expressly delegate powers, a change Kagan warned against. 

Giving deference to federal agencies “has become part of the warp and woof of modern government, supporting regulatory efforts of all kinds — to name a few, keeping air and water clean, food and drugs safe, and financial markets honest,” Kagan wrote. “And the rule is right. This Court has long understood Chevron deference to reflect what Congress would want, and so to be rooted in a presumption of legislative intent. Congress knows that it does not — in fact cannot — write perfectly complete regulatory statutes.”

Kagan said the Court had in recent years “too often taken for itself decision-making authority Congress assigned to agencies.”

She characterized the switch on Chevron as a rule of judicial humility giving way to a rule of “judicial hubris.”