A comprehensive news source trusted by law firms and attorneys specializing in health law trust. Health Law Reporter covers the latest legal developments that influence the health care industry,...
March 10 — In a decision that could impact the heavily regulated health-care industry significantly, the U.S. Supreme Court March 9 ruled that the Administrative Procedure Act expressly exempts federal agencies from formal notice-and-comment rulemaking requirements when they make changes to their interpretative rules.
Attorneys told Bloomberg BNA that the decision isn't helpful for health-care organizations, which in the past have been adversely affected by interpretative rule changes made without following APA requirements, because it allows federal agencies to change rules that have the force of law without offering regulated entities a notice-and-comment opportunity. The ruling also could encourage the Centers for Medicare & Medicaid Services to make substantive regulatory revisions without complying with the APA, one attorney said.
Attorneys also said that the court appeared to have lingering concerns about the issuance of conflicting regulatory interpretations without notice and comment because these rules bind regulated entities and because courts generally must defer to the agency interpretations under existing Supreme Court precedent. Three concurring opinions, however, suggested the court ultimately could decide that interpretative rules aren't entitled to any judicial deference, they noted.
The high court reversed a ruling of the U.S. Court of Appeals for the District of Columbia Circuit that the Department of Labor erred in not giving notice and obtaining comment before issuing a reinterpretation of a 2006 DOL opinion letter involving the classification of mortgage loan officers under the Fair Labor Standards Act.
Writing for the court, Justice Sonia Sotomayor found that the D.C. Circuit's doctrine from Paralyzed Veterans of America v. D.C. Arena, 117 F.3d 579 (D.C. Cir. 1997)—which states that an agency cannot significantly modify a previously issued definitive interpretation of a rule without public notice and comment—is “contrary to the clear text of the APA's rulemaking provisions.”
Sotomayor said the APA's “categorical exemption of interpretive rules from the notice-and-comment process is fatal to the Paralyzed Veterans doctrine,” which “improperly imposes on agencies an obligation beyond the APA's maximum procedural requirements.”
Justices Samuel Alito, Antonin Scalia and Clarence Thomas wrote separate concurring opinions to call into question high court precedent requiring deference to an agency's administrative interpretations of its own regulations.
At the time two petitions challenging the D.C. Circuit's opinion were filed, health-care attorneys predicted the Supreme Court could grant review and that a decision would affect health-care providers because of the number of agencies and rules that govern health-care organizations. They also noted that the D.C. Circuit is the federal forum in which many, if not most, regulatory challenges are brought.
The court agreed to review the case in June 2014.
“On first blush, today’s decision is not helpful to members of the health-care industry because it permits agencies to alter definitive interpretations of their regulations without having to go through notice-and-comment rulemaking,” James F. Segroves, with Hooper, Lundy & Bookman PC, Washington, said. “However, the concurring opinions of Justices Scalia, Thomas, and Alito should not go unnoticed as they indicate that at least three members of the Supreme Court are interested in reevaluating whether agencies should receive any judicial deference when the agencies are interpreting their own regulations,” he said.
“While, by tradition, it takes the votes of four justices to grant certiorari, members of the health-care industry would be well advised to consider preserving the deference issue for potential Supreme Court review,” Segroves said.
Kenneth Marcus, with Honigman Miller Schwartz and Cohn, Detroit, agreed that the concurring opinions, especially that of Thomas, “calls into serious question the Supreme Court's long-standing doctrine of deferring to agency interpretation of regulations.”
“Although this analysis qualifies as dicta, it may signal that the Supreme Court in a future decision may limit the deference doctrine,” he said. “Parties challenging agency regulations would welcome a tightening of the deference doctrine.”
To contact the editor responsible for this story: Fabia Mahoney at email@example.com
Text of the opinion is available at http://www.bloomberglaw.com/public/document/Perez_v_Mortgage_Bankers_Assn_No_131041_and_131052_US_Mar_09_2015.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)