Behind the Bill: July 10, 2024

In our inaugural installment of Behind the Bill, let’s take a deeper look into the latest court rulings.

The Supreme Court of the United States (SCOTUS) just concluded its 2023-2024 term, delivering a flurry of decisions in the final days of their session. Among the 60 opinions issued, several recent decisions significantly impact federal agencies.

Companion cases Loper Bright Enterprises v Raimondo and Relentless Inc v Department of Commerce
Decided June 28, 2024
Vacated and remanded, 6-3 along ideological lines

Summary
SCOTUS overturned a landmark precedent in administrative law, the Chevron doctrine, which gave federal agencies such as the US Food and Drug Administration (FDA) and the Centers for Medicare & Medicaid Services (CMS) the authority to interpret ambiguous statutes. Although SCOTUS hasn’t applied Chevron since 2016, lower courts have relied on it in over 21,000 opinions since its establishment in 1984.¹

What Does This Mean?
Often when enacting statues, Congress may implicitly delegate agency authority by using vague language. This is especially evident in the Food, Drug, and Cosmetic Act, which contains unclear definitions of “active ingredient” and “active moiety” and has been subject to several lawsuits. Lower courts have typically deferred to the FDA’s interpretation as such questions require an assessment of scientific data specific to the drug in question—competencies that are squarely within the FDA’s purview but are often out of reach for many courts.^1,2 As Justice Kagan perfectly summarized in a previous ruling about administrative law, “Judges are most likely to come to divergent conclusions when they are least likely to know what they are doing. Is there anything to be said for courts all over the country trying to figure out what makes for a new active moiety?”³

What’s Next?
Now, courts will likely turn to the Skidmore doctrine, another form of deference that enables them to defer to an agency’s interpretation of a statute or regulation only to the extent that it is persuasive. This shift could lead to a more critical examination of agency interpretations, potentially making it easier to challenge and overturn those decisions based on the subjective persuasiveness of the agency’s reasoning. Additionally, precedence no longer applies; if a plaintiff can demonstrate that the FDA’s interpretation differs from its previous practices, the court is less likely to defer to the agency’s current interpretation (so while Congress can amend statutes based on evolving needs, federal agencies do not have that same ability within their interpretations).⁴

Corner Post Inc v Board of Governors of the Federal Reserve System
Decided July 1, 2024
Reversed and remanded, 6-3 along ideological lines

Summary
SCOTUS ruled that plaintiffs have 6 years from the date they are injured by a regulation to challenge that regulation under the Administrative Procedure Act (APA). In their reasoning, the Court stated that a right of action “accrues” when a plaintiff has a right to file suit, and under the APA, a plaintiff cannot sue until they suffer injury from a final agency action. Justice Jackson’s dissent argued that the APA clearly defines a 6-year limitation period starting when a rule becomes final.⁵

What Does This Mean?
There is effectively no longer a limitations period for lawsuits challenging agency regulations. Rather, the statute of limitations begins once the plaintiff is injured, regardless of when that agency action was finalized. In this case, the Corner Post plaintiff experienced financial harm, which is a likely basis for future lawsuits from other stakeholders.

What’s Next?
With the possibility of legal challenges arising years after a regulation has been finalized, federal agencies like the FDA and CMS may face greater uncertainty in enforcing their rules. Pharmaceutical manufacturers, patient advocacy groups, and others might use this ruling to challenge older regulations that they believe have caused harm.

Between Chevron and Corner Post, the stability of longstanding statutes and regulations is at risk. Federal agencies, stakeholders, and the public must now navigate a more uncertain regulatory environment, where legal challenges could emerge long after regulations are established, and the scientific authority of agencies carries less weight.

Join me every Wednesday as I highlight key court decisions, review notable health policies, and analyze what’s behind the bill in health care.

References

1. Chevron Inc v NRDC Inc, 467 US 837 (1984).

2. Federal Food, Drug, and Cosmetic Act, 21 USC §371 (1938). Accessed July 9, 2024. https://uscode.house.gov/view.xhtml?path=/prelim@title21/chapter9&edition=prelim

3. Kisor v Wilkie, 588 US 558, 580 (2019).

4. Skidmore v Swift & Co, 323 US 134 (1944).

5. Corner Post Inc v Board of Governors of the Federal Reserve System, 603 US _____ (2024).