Some of the Supreme Court’s conservative wing today used a Medicare dispute as a platform to express frustration with major precedent that is central to environmental law.
During oral arguments today, the justices considered whether to overturn a lower court’s ruling upholding a 2018 Department of Health and Human Services rule that slashed prescription drug discounts for hospitals serving low-income communities — despite falling short of a statutory requirement to collect data on drug acquisition costs.
A divided panel of judges of the U.S. Court of Appeals for the District of Columbia Circuit upheld the HHS rule using Chevron deference, which gives federal agencies leeway to interpret ambiguous laws.
“Are you arguing that we should overrule Chevron to get to the statutory approach that you’re taking?” Justice Clarence Thomas asked Donald Verrilli Jr., the attorney for the hospital groups.
Verrilli, a partner with the law firm Munger, Tolles & Olson LLP, said the court doesn’t have to overturn Chevron to reverse the D.C. Circuit, which he said went “hunting for ambiguity” when it upheld the HHS rule.
“This is a situation in which the statute is clear and unambiguous at the first stage of Chevron, and therefore one doesn’t get to the question of Chevron being overruled,” he said.
While the federal government did not lean heavily on Chevron to defend the HHS rule, other parties have highlighted the deference question as a likely reason the Supreme Court — now dominated by six conservative justices — decided to grant the case.
Outside parties have also urged the justices to take the case as an opportunity to topple Chevron deference, which would have broad implications for federal agencies like EPA to broadly interpret their authority under statutes like the Clean Air Act (Greenwire, Nov. 29).
Justice Stephen Breyer, a member of the court’s liberal wing, questioned whether a weaker deference standard — Skidmore, in which courts defer to persuasive agency interpretations — should apply instead of Chevron.
“Skidmore says when they get something they know more about, we ought to pay attention to them,” Breyer said.
Verrilli said Skidmore would not help because the dispute over the HHS rule is not a question of expertise but is about statutory purpose.
He later told Justice Samuel Alito that the court should overturn Chevron if it meant the hospital groups would win the case.
But in a line of questioning from Justice Neil Gorsuch, Verrilli stopped short of suggesting a new standard of deference for the court to apply. He instead referred to his initial argument that the statute at issue in the HHS dispute was not ambiguous as to the department’s requirement to collect cost survey data.
“None of that works for me,” Gorsuch said to Verrilli.
Gorsuch later expressed frustration with Chevron.
“These cases often tend to arise in circumstances just like this, where the government is seeking deference for a rule that advantages it,” Gorsuch said.
A lawyer for the federal government noted that the HHS rule does not benefit the government, because the money saved as a result of reducing the drug discount rate — $1.6 billion in this case — is required to be reallocated.
Other justices kept their questions focused on the content of the statute, avoiding the deference question altogether. Justices Brett Kavanaugh and Amy Coney Barrett, two other members of the court’s conservative wing, focused their questions on Chevron’s application to the statute at issue in this case.
The Supreme Court is expected to reach a decision in the case by next summer.