Today the Supreme Court issued a unanimous decision in American Hospital Association v. Becerra, ruling against the federal government. The case involves a complicated area of the Medicare reimbursement statutory scheme, and the Court held that the Department of Health and Human Services (HHS) does not have discretion under the statute to adjust reimbursement rates for certain hospitals when HHS has not surveyed the hospitals’ acquisition costs. The financial stakes are high, as HHS’s decision to reduce rates apparently saved Medicare around $1.6 billion per year.
For administrative law scholars and practitioners, however, the question presented frames why we have been watching the case so closely: “whether Chevron deference permits HHS to set reimbursement rates based on acquisition cost and vary such rates by hospital group if it has not collected adequate hospital acquisition cost survey data.” As the petitioners argued in their cert petition, “the decision below vividly confirms the continuing need for this Court to enforce limits on Chevron deference, particularly as it is applied in the D.C. Circuit, to ensure that it does not give cover to federal agencies when they supplant Congress’s policy judgments with their own.”
Some scholars and commentators worried that this case wasn’t an attempt to just cabin or limit the Chevron doctrine—the seminal 1984 Supreme Court precedent that commands courts to defer to a federal agency’s reasonable interpretation of an ambiguous statute the agency administrators—but perhaps eliminate it altogether. To be sure, there has been a growing call in recent years among conservatives and libertarians to do just that, highlighted perhaps by President Trump appointing some Chevron skeptics to the federal courts. Nick Bagley’s SCOTUSblog preview of the case nicely summarizes those concerns:
But the big question about the case is whether the court will use it as a vehicle to reconsider Chevron deference. In the plaintiffs’ view, it is galling—“an affront to the separation of powers”—that the courts would defer when Medicare has exploited a purported ambiguity to sidestep Congress’ clear instructions about how much to pay hospitals. Several of the conservative justices, including in particular Justices Clarence Thomas and Neil Gorsuch, may be receptive to the argument. If so, the right wing of the court could use the case to narrow or even overturn Chevron, with potentially dramatic implications for the scope of executive-branch power.
Those scholarly worries perhaps intensified at oral argument, when several of the Justices predictably asked whether the Court should overrule Chevron. Perhaps this case would be the vehicle by which the Court would eliminate Chevron deference entirely.
But those concerns turned out to be misplaced. At the end of the day, Bagley’s SCOTUSblog argument analysis was prescient:
Justice Brett Kavanaugh didn’t join in the questions about overturning Chevron. He instead asked Verrilli if his argument was basically to “take footnote 9 of Chevron seriously”—a footnote that urges the courts to “emplo[y] traditional tools of statutory construction” in order to “ascertai[n] that Congress had an intention on the precise question at issue.” Verrilli confirmed that it was.
After all, Justice Kavanaugh authored the unanimous decision for the Court today. And he concludes the opinion with a similar line: “In sum, after employing the traditional tools of statutory interpretation, we do not agree with HHS’s interpretation of the statute.”
Some may reasonably read this conclusion to infer that Justice Kavanaugh (and thus the unanimous Supreme Court) is sending a message that federal courts should “take footnote 9 of Chevron seriously.” (Footnote 9 instructs courts at the first step of Chevron to employ the traditional tools of statutory interpretation to determine whether Congress has spoken on the precise question or whether the statutory provision is ambiguous.) This would not be a new command. Justice Kagan, for example, advanced it powerfully in her 2019 opinion for the Court in Kisor v. Wilkie, in the related context of Auer deference to agency regulatory interpretations (citations omitted):
[Chevron step one] means a court cannot wave the ambiguity flag just because it found the regulation impenetrable on first read. Agency regulations can sometimes make the eyes glaze over. But hard interpretive conundrums, even relating to complex rules, can often be solved. To make that effort, a court must “carefully consider” the text, structure, history, and purpose of a regulation, in all the ways it would if it had no agency to fall back on. Doing so will resolve many seeming ambiguities out of the box, without resort to Auer deference.
But unlike Kagan in Kisor, Justice Kavanaugh does not cite Chevron in the opinion issued today—despite the question presented expressly asking whether the agency’s statutory interpretation should receive Chevron deference. Indeed, “Chevron,” “deference,” and “defer” are nowhere to be found in today’s opinion.
What should we make of this move? Probably not much.
Since at least Bill Eskridge and Lauren Baer’s extensive 2008 empirical study of administrative law deference doctrines at the Supreme Court, the conventional wisdom has been that Chevron deference may not have much of an effect on agency outcomes at the Court. Eskridge and Baer found that the Court only applied the Chevron deference framework in about one in four cases in which it should have. (Note, however, this fascinating replication study by Natalie Salmanowitz and Holger Spamann, which I blogged about here.) My guess is that this trend has continued since 2008; indeed, it wouldn’t surprise me if the current Court is even less likely to cite, discuss, or otherwise apply the Chevron framework.
This case is thus perhaps just another example of that phenomenon. In Justice Kavanaugh’s view, there’s no need to cite Chevron or mention deference if the statutory provision at issue is unambiguous. After all, the reviewing court doesn’t defer to an agency interpretation of an unambiguous statute. Per Chevron footnote nine: “If a court, employing traditional tools of statutory construction, ascertains that Congress had an intention on the precise question at issue, that intention is the law and must be given effect.”
In sum, American Hospital Association arguably does not break new ground in the Chevron debates. To be sure, Justice Kavanaugh’s opinion does not even cite Chevron, and it strangely (and perhaps inadvertently) reframes the step one inquiry as whether the court “agree[s] with” the agency statutory interpretation. But by ignoring Chevron, the opinion leaves Chevron deference undisturbed, and at least implicitly reinforces the Court’s recent calls to take Chevron step one seriously. [UPDATE: Jonathan Adler expands on this latter point here.]
To my mind, the remaining question is how the lower courts will respond. After all, as Kent Barnett and I documented in our study of Chevron deference in the circuit courts, there may be “a Chevron Supreme” and “a Chevron Regular.” Chevron deference may not have much of an effect on agency outcomes at the Supreme Court, but our findings suggest that it seems to matter quite a bit in the circuit courts. This dynamic has provided the Supreme Court with an effective tool to supervise lower courts’ review of agency statutory interpretations. But if the Supreme Court continues to send mixed signals about Chevron‘s applicability, Chevron‘s force in the lower courts may weaken, leading to less deference to agency statutory interpretations and, in turn, to less uniformity in federal law.
As I have observed elsewhere, if it’s important to reserve political (or policy) judgments for more politically accountable government actors than judges, the demise of Chevron Regular may be a cause for concern.