Healthcare Uncertainty Looms in Wake of Key Supreme Court Decision

As a quick refresher, last year the U.S. Supreme Court overturned 40 years of precedent and upended statutory construction and enforcement by overturning the Chevron decision with the Loper Bright decision. This caused endless speculation about the future of federal healthcare regulation – and once again proved that the Roberts Court has little respect for precedent.

Prior to Loper Bright, so-called “Chevron deference” mandated that courts defer to a federal agency’s reasonable interpretation of an ambiguous statute. Because healthcare is subject to technical complexity and rapid evolution, this approach was particularly useful. Deferring to regulatory agencies permitted knowledgeable experts to implement regulation in the face of rapid changes. Even with administrative changes, most of the rank-and-file members of these agencies remained constant, so a form of institutional memory and some long(-ish)-term consistency was inherent. Unlike other agencies, the Centers for Medicare & Medicaid Services (CMS) seems to suffer from regulatory whiplash of the whims of the Executive Branch.

I want to detour briefly into another Supreme Court decision. Recently, the Court decided Trump v. CASA. This case was an application for a stay of an injunction from the Fourth Circuit. The case has garnered widespread attention, since it arises out of Trump’s Executive Order to end birthright citizenship. The Court dealt with the citizenship question by stating plainly that the “Court does not address the question whether the Executive Order violates the Citizenship Clause or Nationality Act.” That being said, the Court did make a bold holding in saying “universal injunctions likely exceed the equitable authority that Congress has given to federal courts.”

I’ll use an example. Historically, a plaintiff (or plaintiffs) would file for an injunction. They would “venue shop” in an effort to find the most favorable Circuit Court. That Circuit could subsequently issue a nationwide injunction. The CASA case limits that possibility. Justice Barrett’s majority opinion reaches all the way back to court of equity in 18^th-century England and the Judiciary Act of 1789 to justify the legal wrangling in this decision. What this means is that federal courts will have limited ability to issue broad, nationwide injunctions. As I’ve noted previously, there are 94 federal district courts and 13 circuit courts. States like Texas could end up with four opinions on the same question. This inherently increases the likelihood that cases will end up in the Supreme Court, and that disparate rules will be applied in close geographic locations.

Let’s turn back to Loper Bright. In the year since the decision, not a single case based on Loper Bright has made it to the Supreme Court. In fairness, the U.S. Department of Health and Human Services (HHS) hasn’t had time to issue many rules; the final six months of the Biden Administration was followed by the first six months of Trump, plus personnel and budget reductions. Frankly, the agency has more to worry about than regulations.

But that’s not the whole story. The regulatory void has been filled with executive orders. These orders are not subject to Loper Bright, but the agency actions to implement them are. We should also expect new rules to implement the changes in the so-called “Big Beautiful Bill.” As folks realize the benefit losses and arcane hoops imposed to maintain benefits, we might expect more litigation – all of which will be subject to Loper Bright – but no universal injunctions.

Put simply, healthcare just got weirder.