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AHLA's Speaking of Health Law
Beyond the Law: Practical Impacts of Loper Bright, Corner Post, and Jarkesy on Health Care
Valerie Cohen, Partner, Venable LLP, speaks with Randy Sergent, Executive Vice President & General Counsel, CareFirst BlueCross BlueShield, and Shane Hunt, a government health care attorney, about the wide-ranging impacts of Loper Bright, Corner Post, and Jarkesy on the health care industry. They discuss the effect of Loper Bright on day-to-day company operations, judicial outcomes, and managed care; navigating regulatory ambiguity versus unfavorable regulatory interpretations; the potential for increased challenges to historic rules in light of Corner Post; and the implications of Jarkesy on health care enforcement and potential for unintended consequences. Sponsored by Venable.
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Speaker 2:I'm Valerie Cohen, a healthcare investigations and litigation partner at Venable, and I'm delighted to be moderating today's HHLA podcast Discussion Beyond the Law, practical Impacts of Lober , bright Corner Post and JARAs on Healthcare. I'm joined by two esteemed panelists, Randy Sargent, executive Vice President and General Counsel of CareFirst Blue Cross Blue Shield Health Plan. And Shane Hunt, a government healthcare attorney. As a disclaimer, the views that , uh, are gonna be expressed on this podcast are those of the individual panelists and not of their respective organizations or clients. Randy, can you kick us off and share with our listeners your background and professional experience?
Speaker 3:Sure. Uh, as , as you noted, I'm the general counsel of CareFirst Blue Cross Blue Shield. We are a health plan with , uh, just over 3 million members in Maryland, the District of Columbia in Northern Virginia, and we are a broad spectrum health insurer. We cover all the lines of health insurance business. I came , I've been with CareFirst about 14 years. Uh, before then, I was a partner at Venable, and before that I was a , uh, counsel to the Maryland Insurance Commissioner as part of the Maryland Attorney General's office. So , uh, when I come to these topics, I have a history of being advisor to regulators as well , as well as to businesses that are being regulated.
Speaker 2:Terrific. And she , can you share your background and professional experience with our audience?
Speaker 4:Of course. I'm , uh, Shane Hunt. I'm currently a litigator for the CMS division at the Department of Health and Human Services Office of General Counsel , uh, living in dc . Uh, before that I was a litigator at a , a law firm in New York City doing a lot of administrative law , um, especially health law , um, and a couple of other topics. Um , so like Randy have some government as well as, as , um, outside experience. Um, before that I graduated from Harvard Law School. Um, and just to reiterate, I'm speaking for myself on behalf of the department, OGC , the executive branch, current clients, former clients, or anybody else you might be thinking of besides myself.
Speaker 2:Well , thank you. And to round out the groups in-house and government backgrounds, I'm Valerie Cohen again, and I represent clients as outside counsel in investigations, litigations and compliance design in the managed care reimbursement pharmacy benefit and telehealth areas where of course, we contend with the Federal False Claims Act, anti-Kickback Statute, stark Law, and the myriad rules and state counterparts to those laws. Now, we will provide our listeners first with a high level overview of each of the three Supreme Court cases that we're gonna focus on , uh, all of which were rendered the last term between June and July of 2024. We're gonna assume for efficiency that the audience is familiar with these cases, and so we won't spend too much time on their backgrounds or detailed holdings. With that, Randy, do you wanna give our listeners an overview of the Lober Bright decision?
Speaker 3:Absolutely. So, Lober Bright Enterprises versus Raimondo is the case. Uh, to understand it, you have to go back to 1984 , uh, with Chevron USA versus Natural Resources Defense Counsel in which the Supreme Court ar articulated what was then a new test for evaluating an agency and interpretation of the law . Law . The Supreme Court applied the Chevron test developed by the Supreme Court, had two steps. First, determining whether the law was ambiguous, and second, if it was ambiguous, is the agency's interpretation reasonable or permissible were the words that they used. So that second deferential step was at issue In Loper Bright , Loper Bright involved a challenge to an observer requirement imposed by the National Marine Fishery Service under the Magnus and Stevens Stevens Fishery Conservation and Management Act. A group of fishing boat operators challenged whether the agency had the power to require them to pay for private onboard observers to monitor the vessels, vessels, fishing practices. There had been government , government employed observers for some time, but a new arrangement required private observers, and they were required even if only a portion of the catch was regulated, and the cost could be as much as 20% of the margin for the trip. So the fishermen were motivated to file suit. The district court concluded that the statute was unambiguous and authorized. The fee did not get to the second step of the Chevron test. The DC Circuit affirmed that judgment, but it found the statute to be ambiguous and held that the agency's , uh, interpretation was reasonable, and the court must accept it. The Supreme Court granted tertiary and in Loper Bright and essentially used that as a vehicle to overturn the Chevron test, stating that the a PA required the court to actually determine what the law meant in the first instance without deferring to a permissible agency interpretation.
Speaker 2:Thanks for that overview, Randy. And just days after Loper Bright , the Supreme Court dealt another blow to the administrative state. In its corner , post decision coroner Post involved a facial challenge to a 2011 rule that was promulgated by the Federal Reserve Board concerning fees associated with using debit cards. The 2011 rule was challenged for failing to comply with a 2010 authorizing statute 10 years after the rule was first promulgated. Uh, in 2021, a North Dakota truck stop and convenience store called Corner Post challenged that rule under the Administrative Procedure Act or a PA. Now, in a PA actions courts apply the federal six year statute of limitations. And , uh, that's what was at issue, whether that statute of , of limitations should apply from when the rule was first promulgated, or whether it should run from when , uh, coroner post was first injured by that rule. Uh, and importantly, corner Post involved a facial challenge, which means that it's sought to invalidate the rule in its entirety. This is in contrast to what we call as applied challenges that seek to invalidate a rules application to the particular plaintiff's situation. This distinction is meaningful because six circuits that had addressed the statute of limitations issue, including the eighth circuit, from which corner Post had derived determined that facial challenges had to be brought within six years of when the rule becomes final and only one loan circuit, the six that had had held that facial challenges to agency rules can be brought six years after one is injured. So the issue for the Supreme Court was, does the six year statute of limitations for a plaintiff's a PA claim begin to accrue when an agency issues a final rule or when the , when the rule first injures a plaintiff, the Supreme Court sided with the loan Minority Circuit and held six three in a decision authored by Justice Amy Cooney Barrett, that an a PA claim does not accrue until the plaintiff is injured by the agency's action. And since that decision, some view corner post , especially when coupled with the Loper Bright decision that Randy just described as cracking the door wide open to administrative challenges of historic rules to agents without deferring to agency's interpretations. So now turning to our third case, Shane , the ESY decision , uh, which some of you is further reducing certain historic administrative enforcement powers, can you please give our listeners an overview of the ESY decision?
Speaker 4:Of course. Uh, so in esy , the Securities and Exchange Commission had brought administrative proceedings against , uh, George esy and a fund that he managed , uh, alleging that they violated several securities, anti-fraud laws by doing things like lying to investors about what he was investing in and inflating the value of the funds to extract more fees. Uh, the agency , uh, ended up finding him liable and ordered darky to pay a civil monetary penalty to score unlawful profits and barred him from participating in the future in the securities industry. Darky appealed , uh, that decision to the Fifth Circuit, which vacated , uh, the agency decision on three grounds. Uh, first the Seventh Amendment , uh, and held that ACY was unconstitutionally deprived of his right to a jury trial under the Seventh Amendment. Uh, second that , uh, Congress had unconstitutionally delegated its legislative authority to the SEC by letting the SEC choose whether to bring an action as an administrative proceeding or in federal court. And third , there was an Article two problem that , uh, basically administrative law judges were two independents and couldn't be sufficiently controlled by political actors. Um, so on review in the Supreme Court , uh, the Supreme Court held six three in a decision by Chief Justice Roberts , uh, that the Fifth Circuit was correct, but affirmed only on the Seventh Amendment grounds , uh, that the SEC violated jar's right to a jury trial. So the, the court reasoned first that the Seventh Amendment was triggered because a civil monetary penalty for shared security fraud was legal in nature. Um, and to determine that the court looked at the kinds of things that English courts were doing in 1791 when the Seventh Amendment was passed. Um, and then second , uh, it said that the, the public rights exception didn't apply. So because the SEC targeted the same basic conduct as common law fraud, this is a private right rather than a public right. And so only courts , um, could hear it .
Speaker 2:Okay. Well, with that context, let's get into the practical impacts of these decisions. Starting with Loper Bright on Loper , A lot of ink has been spilled about its potential impacts , uh, sheen in these initial few months since the decision was first rendered. How have you been thinking about Loper Bright ?
Speaker 4:I think for, for all of these , uh, cases, I've been kind of dividing it into three different , uh, uh, areas. First is, you know, case outcomes. Uh , this is most obvious. How will courts decide cases that are litigated differently than they used to before these decisions? Um , but I also think there are two, you have to look at two more practical, more upstream effects . Uh , one is how did the, the cases affect the policies and decisions that agencies or companies will institute in the first place? Um, and two, you know, of that universe of , of agency decisions , uh, which of those decisions are gonna be challenged , uh, in court? And I think that Look or Bright has an impact on, on all three of those categories.
Speaker 2:That's a really good framework for, for thinking about the implications here. Randy, taking up the theme of company decision making , how sweeping do you view loafer's impacts where it does not, at least by its terms, disturb a number of areas, including deference to agency fact finding and policy making deference to agency action pursuant to an explicit delegation of authority by Congress, as well as pre Chevron standards of review for agency interpretations of statutes like Skidmore , uh, and also where it doesn't disturb pre Loper holdings that apply the Chevron framework. In other words, is Loper really that ground shifting when it comes to organizational impacts in your view?
Speaker 3:Uh , I honestly don't think so. It's a story that's still read yet to be written , uh, and we will see what the courts do with it, but I, I do , it shifts the ground somewhat, but I think the standard, you know, this that comes down to us from Skidmore will be very important. Uh, where the , the Skidmore case from 1944, the Supreme Court said, you need to listen to the agency and then give their opinion some weight when you make your decision to the court. Uh, so we're talking about the incremental difference between deferring to the agency if its opinion is reasonable, and taking the agency's opinion seriously and considering it to get to a right result , uh, or what you think is the best result , uh, for that under the statute as it was intended. Uh, many states haven't applied Lo Bright . I'm most familiar with Maryland, which had a standard that is very similar to what has been articulated under , uh, the Skidmore Standard. Uh, and in practical terms, judges, at least in my experience, often hate to see a wrong result. I'm not sure there are many judges that feel that an agency interpretation is incorrect that would've applied Chevron deference in the first place , uh, to uphold that standard. And we , uh, and I've seen reports that Chevron itself has not been used , uh, as much in recent years in terms of decision making inside of a company. There's very little that we would do based on the standards of deference in an action. Um, I think where if, at least in an , if you're an individual company acting as a regulated entity , if you are inclined to sue over an issue, it's imp sufficiently important to that company that you're going to, you're going to view the statutory , uh, you know, the statute is being incorrectly interpreted, no matter whether you defer, don't defer to the agency opinion. So I wouldn't expect day to day . And then of course, we comply with the law as it's written and as , as it's in effect , uh, until , until it's not. We don't predict how the outcomes of cases for that purpose.
Speaker 2:Thank you for that, Randy. And there's no question that lo bright's lo Bright Impacts agency powers across lots of industries, but focusing our discussion on healthcare here in the healthcare managed care space, we have the Medicare statute that contains an explicit delegation to the Secretary of the Department of Health and Human Services to promulgate regulations that effectuate the Medicare statute. Shane, do you think that this explicit delegation protects the rules that are promulgated under the Medicare statute?
Speaker 4:Well , I think there are a lot of explicit delegations in , in the Medicare statute and , and the healthcare statutes generally. Um, and, and I think there's gonna be an incentive for, for agencies to try to move some of their regulations into express delegations. Um, but you know , that kind of then raises two questions. One is , uh, what counts as an express delegation? Uh, you know, we know that Lo of Bright tells us that under the a PA ambiguity isn't an , a delegation to an agency, rather it, you know, tells courts that they should be figuring out what the ambiguity means. Uh, so I think , uh, lo of Wright has some guidance on what Congress needs to say to specifically empower agencies and focused on whether Congress asked an agency to define a term, to make rules, subject to, you know, broad guidance, like what's appropriate , um, and to, I think , the languages to fill up the details of a regulatory scheme. Um, but Congress has been legislating in healthcare a lot over the last 40 years since Chevron was decided. And, you know, it wasn't really writing with that framework in mind. So I think you're gonna have some questions about what, what counts as an express delegation. Uh, and then once you have an expressed delegation, Loper Wright says that courts are still supposed to be policing, you know, the outer bounds of that delegation. Um, and, you know , how is the court going to figure out what those outer bounds are? Does this mean that it's just Chevron 2.0 , uh, when there's an express delegation? Um, or, or maybe it's something different. Loper Bright cited this Medicaid case , uh, Batton d Francis , where Congress expressly , um, and , and in that case it said that when Congress expressly delegates authority to the secretary, his regulations have legislative effects . So that sounds like something maybe more broad than we used to have under Chevron. Um, and so I think those are, are, you know , at least two of the issues that we're gonna start having to figure out.
Speaker 2:Mm-Hmm, <affirmative> and staying on the explicit delegation theme, Congress gave HHS discretion to issue Medicare payment rules. CMS, which of course administers the Medicare program, may argue that this is sufficient to insulate its interpretive discretion from administrative and even judicial review. That said, Congress's Medicare payment legislation is often complicated and precise , subject to different interpretations such that Loper bright's rejection of Chevron may very well provide openings for relief in the courts, not withstanding expressed delegations. Randy, what are your thoughts on whether managed care may be insulated from the impacts of Lo Bright ?
Speaker 3:I mean, I think there are , um, across the, the healthcare regulation space, there are plenty of instances where there are delegations of authority. So it's, it's an area that , uh, perhaps in other industries, it's, there are many more avenues to argue discretion was not conferred. Uh, I do agree with Shane. There's gonna be litigation on the outer bounds of many of those delegations as the courts, as the lower courts digest , uh, what their new role is in determining what, what Congress meant when the delegated authority. And I think that's how I see the impact here of Loper Wright . Uh, one way of looking at it is Loper Wright encourages Congress to think about when it determines that an agency has expertise, that Congress wants the agency to apply to an area. Uh, and in a way, eliminating Chevron allows that instruction from Congress to give effect . Because under Chevron, all agencies had had discretion whether or not Congress thought that that was true. So , uh, I think in a way you might look at Bright , not merely reinforcing the role of the courts traditionally, but at least in the court's mind , uh, also reinforcing the role of Congress in making those kinds of determinations.
Speaker 2:I'd like to ask you both, do you think that Loper Bright will have the practical impact of changing the outcome of decisions or just changing the reasoning for those decisions? In other words, is it more of a doctrinal change, if anything? Randy , uh, curious your thoughts.
Speaker 3:I think it's , uh, it's one of those that it's gonna be almost impossible mathematically to approve. Uh, I was an engineer before I went to law school, so I would love to have a mathematical model for these things. I suspect that there will be differences at the margin, but they will be at the margin in terms of what the courts decide, because the difference between a Skidmore type of standard, you must listen to and seriously consider the opinions of the agency, especially if they're contemporaneous with the statute between that standard and the LOPA and Chevron deference, which is that you must police whether the agency opinion is permissible, right, or acceptable is I think, pretty thin. Uh , especially if a court, as I said before, if a court is inclined to think that the agency is wrong, I'm not sure that there's many cases under Chevron with a judge saying, I'm, I'm sure this is wrong, but I'm going to defer anyway. Um, so I'm not sure that there will be that much. There may be more impact on agency decision making and the internal discussion in agencies , uh, in terms of what their lawyers are advising , uh, as they develop the rules and regulations.
Speaker 2:And Shane, what about you?
Speaker 4:I think Randy brings up a, a a good point on , uh, it , even if things change on the margins, I actually think that that could really change , um, things in healthcare, because of all of the various entities that health agencies regulate, it only takes a small shift in the expected outcomes to really change the number of cases that get brought. And that in turn could change a lot of, of , of the healthcare landscape. Um, but I also think that if you do just see more of a change in the rationale, that also could be influential , um, because it could affect other doctrines. Uh, lo of Wright suggested that, you know, there were several doctrines, like major questions that were intended as an effort to cabin Chevron. So maybe that kind of doctrine becomes less important. Uh, same thing with arbitrary capricious review. If courts are looking more at the , the actual authority under the statute of an agency, maybe, you know , this hard look review starts becoming , um, you know, fewer cases are decided under that. Um, and then if you start deciding fewer cases on those kinds of questions, you push more into agencies or more into statutory interpretation. Um, and there how you win and lose can really matter. Uh, 'cause agencies are repeat players in courts. Um, so like, like any of the repeat players, it's not just about whether a particular policy is upheld or not. The, the , the rationale you lose with or win with can make a difference what the agency can do going forward. You can lose by winning win by losing, it can be a wash . Um, I mean, look at , uh, makes me think of like Empire Health. The last case, the last case actually that commentator thought were gonna decide Chevron , um, in the Supreme Court. And there, the agency won at step one in the Supreme Court on the specific dish issue that the hospitals were challenging. And then the hospitals took that decision, turned around and argued in , uh, lower courts that the, the Supreme Court's decision decision made another dish policy illegal. And we're gonna hear argument on that, you know, in a couple of weeks, an advocate Christ. Um, so you have to wonder whether that's how everything would've played out, if, if the court had applied , uh, Chevron , um, in Empire Health. Uh , you know, the step one, step two process. So I think, you know, all of these can, can really impact what, what it looks like for, for health entities .
Speaker 2:Randy, as the lead lawyer of your organization, do you feel that bad agency interpretation is still better than uncertainty? In other words, what , what's more important, having clarity on the agency's position of a perhaps disputed legal term, even if your organization disagrees with that view or keeping the issue up for interpretation by the courts?
Speaker 3:Well, like any good lawyer, I would have to say it depends. Um, so one , uh, one point that I would not have thought through necessarily before joining an in-house legal department when I was a , a partner or even with the state, is uncertainty looks very different from my side of the table. We are in an uncertain market. We have uncertain regulations in multiple jurisdictions with multiple regulators. There are uncertainties as to what the competitors doing. We don't know where healthcare rates are going, what the providers are charging, what trends are trends or what products want to buy. The technology is changing and AI is entering the field. Also, there are uncertain regulations, statutes, and laws. So when you say, could we eliminate uncertainty, is it better? It really depends. There are some rules. Uh, and that , uh, and it was a surprise to me as a lawyer when I was working for the Maryland Insurance Administration. There were a number of rules that the industry said, we just want the rule. We will program it into our systems. We want to all do it the same way. And you can go left or you can go right on this rule, just tell us what it is . And there's plenty of rules like that. There are many other rules where a bad rule or a rule that's inconsistent between companies or a rule that is not able to be implemented would be extremely difficult and disruptive. And sometimes they can change the dynamics of the product in surprising ways. So I'd have to say to to us , uh, you don't want to solicit uninformed agency views , uh, to get certainty. That's always a risk. Uh, if you, if an agency is pushed into taking a position on something that it doesn't have a real opinion about , uh, it may turn out to be that's where an agency at most, at risk of regretting its own , uh, pronouncement. Uh, and we consider ambiguities all the time. We have ambiguous statutes, we have ambiguous regulations, conflicting statutes and regulations. What we offer is in-house attorneys is not so much an answer many times as a path, like a navigation path. How do we comply with these conflicting rules in the best way that we can, knowing that that also has to be weighted against all of the uncertainties as a company , uh, that a healthcare company is navigating at the same time.
Speaker 2:Randy, your your response calls to mind for me, the, the notion of intent and state of mind in , uh, the highly regulated and, and often ambiguous area that we all work in. Um, uh, certainly in my day-to-Day, I deal with scenarios of, well, if there's an ambiguity, an ambiguity in a regulation, express delegation or not, what interpretation should an organization take? And in 2023, the Supreme Court ruled in the super value case that at least in the false Claims Act context, the subjective intent and understanding of the rules in play at the time of the alleged improper action is what controls not after the fact explanations of what could be viewed as objectively reasonable in terms of the interpretation of that ambiguous term or statute. Now, as a practical matter, navigating that in current times could mean that when we think about building a contemporaneous record of efforts to understand and comply with the law, that , that, that may have higher value these days post super value than perhaps before. Um, and so these are the types of things that I know many of us , uh, on , whether in-house or or on the outside, think about , uh, when we deal in the industry that we do. So, let us give some , uh, important attention to, to another one of our cases, corner post and talk about the interplay between reduced agency deference and a broader period to challenge historic rules. Shane, there's a concern that Loper Bright may spawn a lot of litigation over allegedly ambiguous statutory terms, potentially using straw litigants with new injuries under old rules as now seem to be permitted under a corner post. What do you make of this concern? Do you think it's overblown? Have you started seeing plaintiffs lodging facial challenges to historic rules based on new injuries? What's your take?
Speaker 4:Yeah, I think that agencies have been living in a world for a while now, where, where agencies get sued over controversial policies. Um, and there's definitely been strategic behavior even before corner post . Uh, it feels like courts are deciding more and more lawsuits based on, you know, brand new associations , uh, incorporated in favorable districts , uh, on behalf of their members . So I , I don't think it's unreasonable to think that this is just another way, one other way that plaintiffs are gonna try to try to gain a litigation advantage against the government. Um, but you have to keep in mind that , uh, in healthcare there are a lot of regulated parties with a lot of diverging interests. Um, and a rule that benefits one industry , uh, could hurt another , uh, industry or some subset of beneficiaries, or it could rile up some other interest . Um , so maybe quarter post opens the door door for some , uh, plaintiffs to bring ideologically driven suits or whatever. But the other thing is, keep in mind that quarter post was just about facial challenges, subject to, you know, the, the general statute, federal statute of limitations. Um, and it distinguished as applied challenges where the statute of limitations runs from a particular agency action. So in healthcare, there are a lot of channeling requirements which are gonna filter out a , a , a chunk of those claims. Um, obviously it's not everything, but if you can only challenge a Medicare payment rule by channeling the issue through a claim for payment, then you know, you're gonna need to be an entity that can assert a claim for payment. You're gonna need a provider agreement or the , you know, whatever else you need to be able to, to , to qualify under that . So it's gonna be a little bit harder, at least in that context, to set up that kind of entity than, than maybe in others.
Speaker 2:Fair enough. And Randy , what about you? Do you expect the litigation calculus to meaningfully change, at least for sophisticated li litigants after Corner post and Little Bright ?
Speaker 3:I think , um, 'cause what Shane is saying makes sense, I think for a , say, a regulated industry like health insurance from the perspective of a health insurer, we're already there and we've been there. Um, the, the litigation in MySpace that is most prominent is actually the last 10 odd years of Affordable Care Act litigation, none of which was actually Chevron standard material. And all based on challenges to the statute itself, maybe all is the wrong word, but primarily the key cases were based on the statute itself. I think that , uh, to the extent that you don't want to challenge your regulators who you have a relationship with, unless it's significant and serious, and I don't, I, we would be able to do that , uh, as a person in the marketplace. So it , it may be that if you're in a less regulated industry, or as Shane points out, if you're not already a player in that marketplace, you see more cases like that. I wouldn't expect that within the industry corner posts , it generates a lot of additional litigation.
Speaker 2:Hmm . Well, we , we'll certainly see, see what , uh, time and, and precedent shows in terms of potential upticks in litigation. It , it ,
Speaker 3:I've been told I've been wrong before <laugh>
Speaker 2:Well , uh, time will tell us one way or the other, or , or it might be in determinative , uh, but it certainly, it's hard to know that resource implications to the government, at least post Loper and Corner post , uh, namely whether they're gon there's gonna be a meaningful enough uptick in litigation such that healthcare agencies will need to reallocate resources to defend those litigations that are challenging established rules, and perhaps whether the government's appetite and budget for affirmative enforcement might decrease as their overall scope of defensive litigation expands. So we'll see how all that shakes out. Now let's talk about the Darky case. Uh , on its face, it's an SEC based decision, but the dissent , and many commentators view it as an existential threat across agencies with Justice Sotomayor writing in dissent that quote , the constitutionality of hundreds of statutes may now be in peril, and dozens of agencies could be stripped of their power to enforce laws enacted by Congress. End quote . Shane , what do you think, do you think courts will extend darky to other industries or make efforts to keep it somewhat cabined?
Speaker 4:Yeah , I think it's definitely a change. For, for years it was somewhat subtle that as long as Congress was acting under its enumerated powers, it could let agencies , um, enforce the new statute in-house without thinking too much about the Seventh Amendment. Uh, the , the court rejected that, that argument and said that if geography wanted to stand on this jury trial rights, then a jury needed to decide the CMP not the agency. Uh , you know, that's not normally how I think those civil fines working. I never, I never thought that living in DC I might be able to tell the DC police officer that you could only write me a ticket for 20 bucks or less under the text of the Seventh Amendment. Um, but, you know, maybe DC is a special case. Um, but, you know, regardless, I think there's something of a brave new world here. Um, that said, there are practical limitations. I was looking at some of the, the federal caseload statistics before the call , um, from the administrative office of the United States courts, and they say that in 2023, litigants filed something like , uh, 285,000 new federal cases. Um, you know, compare that to, if you go onto the CMS website, they estimate that CM S'S Medicare administrative contractors decided over a billion fee for service claims in the first instance. So, I, I can't imagine judges volunteering to take over a billion adjudications or really question whether, you know, managed care providers can decide , uh, beneficiary claims in the first instance. I think that would massively expand jury duty for one. Um, so certainly I think courts are gonna start drawing some lines , um, and possibly some, some big lines.
Speaker 2:Well, Randy , um, what, what do you think about the potential unintended consequences of darky from your perspective? Do you think there are along the lines that , that Shane is describing, whether, you know, the uptick in in jury duty, <laugh> , or certainly the, the caseload , uh, prospects , uh, for courts , um, will we really see more civil jury trials where agencies are seeking civil, monetary penalties? Do, do you think defendants are gonna forgo jury trials even though that's now their right where CMPs are at stake? What , what's your thinking?
Speaker 3:I , I would have to say this is a little out of my area because we try very hard not to incur civil monetary penalties, and there's not really a decision point at which <laugh> CareFirst or certainly not where I would advise them to say, oh, there's a joy trial. Right? You may proceed. So we, we have been fortunate not to have to confront that issue. Uh, and we try very hard not to get in that position. Um, I don't really know how to predict. I think, I think Shane, the billion might have been the admit the healthcare claims that were paid rather than say disputes. Um, but , uh, the , uh, I do think though it's an issue to watch, I think Shane's right, the , the courts have the capacity , uh, if you take the three decisions together, it seems to be the court has a concern with the traditional roles of the courts in deciding disputes, saying what the law is granting the jury trial right under the Seventh Amendment, and that creates, each one of those creates additional work. The difference between Chevron deference and the Skidmore standard is that the court has to decide, it can't look at the top gloss and say, it seems within bounds, I'm going to move on. Um, in that sense, the courts said they wanted to do the work in these three opinions, the courts have to be able to do it. And I do have a concern as a participant , uh, in the system where there may be companies needing to resolve their contract disputes. At the same time, there's an additional burden of regulatory work aids . If Chevron , uh, I'm sorry if Loper bright , uh, and ESY and corner posts do significantly increase litigation, do the courts have the capacity to resolve the disputes that are engendered in a way that does not extend deadlines , uh, that does not make the court system unworkable , uh, where we do need effective dispute resolution?
Speaker 2:She , what are your thoughts about potential consequences ? Yeah ,
Speaker 4:I was gonna say, my , my , my first reaction to what, what Randy is saying is, I , I , I think that if, you know, congress or , or courts have concerns , uh, I mean, there are a lot of instances where , uh, the sixth and seventh Amendment , uh, rights have always been understood to exist. And, you know, jury trials are still rare. So congress and courts have plenty of models that they want to , to , to make sure that that jury trial still stay rare. Um, but even for an agency or an individual agency , uh, one thing to think about is uhy jargony only applies to legal remedies. So one thing that the H agency can try to do is maybe try to , uh, do things that don't implicate the Seventh Amendment. So civil monetary penalties were expanded in the seventies as a way to , uh, actually decrease penalties before that, you know, if the government didn't like what you were doing, it would terminate your license, suspend you from a government program, or, or even criminally prosecute you. Uh, so one kind of ironic response might be if agencies go back to suspensions and terminations , um, to , to decrease , uh, the , the likelihood of a jury trial. And if there's no procedural difference for the government between a fine and a criminal prosecution, maybe it pushes even more cases into the criminal space. Um, so it's, it's hard to know exactly what's gonna happen there, but it , it , there is a little bit of irony that by expanding some amendment rights, you might end up just leading to harsher penalties.
Speaker 2:Well, that , that certainly would be a jarring result, no question. Uh, thank you for, for , uh, illuminating that, that possibility chain. So Randy, taking all three cases together, what are some considerations for those in an in-house legal role or in-house compliance role when preparing or updating policies and procedures that may incorporate existing agency interpretations? At what point do you change policy or operations? Is it, once appeals are exhausted, once Supreme Court has spoken on the issue, h how , how do you, how do you work that into the day-to-Day?
Speaker 3:The , um, so this is really another form of legal UNC uncertainty that's not different in kind from one we already have in a heavily regulated industry. We deal with gaps in statute , uh, laws that don't have implementing regulations, regulations themselves that have gaps in ambiguities and conflicting statutes and regulations. Um , we, we have two approaches. First, the law is the law until it's not, we don't look ahead and say, well, we're not going to implement this law that's in effect, because the court might overturn it, right? You, you don't, you need to implement it when it goes into effect. And you can only stop having it, you know, following it when it is not in effect. Uh, but that's not a very satisfying answer when you have to program your systems. So as advisors, as I said before, we don't give answers. We, we work on helping find pathways. Uh , and what we mean by that is how can your organization nimbly react to the fact that this law is in effect, we have to comply with it today? Are we building a system that we can , that is nimble enough that we can change it in the future if there's a reason, if there's a real chance that it may be something else? And, and we have to do that all the time, not always just because of a court challenge, it's because of other implementation dates and timelines. So that is part of our normal day job, is helping find that pathway to compliance.
Speaker 2:Well, Randy, Shane, this has certainly been a thought provoking discussion, and I thank you both very much. What closing remarks would you like to leave our listeners work with, starting with you, Randy?
Speaker 3:Um, I think I , I shared before my, my view on all three of these decisions , uh, is , is a reinforcement of what the Supreme Court thinks is the traditional role of the courts , uh, in the delineating the legislative and executive and judicial powers. Uh, and Chevron, in a sense, was a Jewish prudential role , uh, that allowed the courts not to delve as deeply into disputes. And I am concerned as to whether the courts have the capacity to fully take on the role as envisioned by the Supreme Court. Uh, but also I, I note the 40 year cycle , uh, Skidmore was in 1944. Chevron in 1984 said, well, we should be more deferential than the Skidmore standard. And here in 2024, we have the Loper Bright saying, actually, the Skidmore standard was right after all. So it occurs to me that somewhere in America, there's a 14-year-old sitting in one of our medical classrooms who will likely write the opinion in 2064, possibly reinstating something similar to Chevron.
Speaker 2:Wow. Well , we'll talk about a prognostication. Thank you, Randy and Sheen . What , what are , what are some closing remarks on your end?
Speaker 4:I don't know if I'm gonna go 40 years out, but I , I definitely agree with Randy that I , I , I think this is gonna , uh, these three cases move more issues from agency rulemaking and adjudication to , to judicial adjudication. Um, and that I think not only changes who's doing the regulation, it's gonna change the process for how regulation , um, in healthcare happens. Um, when agencies can through statutes, they have to follow the, the Administrative Procedure Act . Most commonly, they're gonna issue a notice of proposed rulemaking in the federal Register. Often they give you a press release. Um, and this can happen on a pretty predictable timeline , um, especially for payment rules. You know, everyone can just look to that federal register , uh, notice to figure out what might be changing. Stakeholders have a legal right to weigh in through comments. And when the agency finalizes any regulation, they have a legal obligation to respond to significant comments. Um, and the, the final regulation that they , uh, propagate is gonna be perspective most often, generally applicable, generally nationwide. Uh, it , it's , it's different when courts are considering statutes. They deal with individual cases and controversies. That means they're gonna be deciding particular disputes brought by particular plaintiffs in a particular judicial district. They're not issuing a press release, putting everybody on notice about what they're deciding. They're not publishing in the federal Register. Um, and if you're a stakeholder who cares about what the court has to say , um, you know , you don't have a right to be heard in somebody else's case. So a , a judge doesn't need to respond to arguments raised an amicus brief, the same way that an agency might be required to respond to, to comments. Um, and the other thing is, I think judges are, are deciding things after the fact. So when you have like, prospective payment systems and Medicare, I think that that's gonna , the , the more that we're deciding things after the fact , uh, through, through the judiciary, it's gonna affect what it , what it ends up looking like. And you can't call a judge to ask for an FAQ on their interpretation of, of the Affordable Care Act or anything like that. Um, so I think the changes are, I , I think these cases are gonna change what it means to work in the health space . Um, and people are gonna have to change their behavior accordingly. Uh, we'll see if, like Randy says, it's , uh, we, we , uh, should be looking for something different in another 40 years, but at , at least in the near term , um, I think it's gonna , it's gonna make a difference for, for what it looks like to be in healthcare. Right ?
Speaker 3:I expect not to be practicing in 2064 myself though,
Speaker 2:<laugh> . So someone will have to update you, Randy, on how it all went down. Well, Shane , Randy, thank you so much again for your insights. And thank you to the American Health Law Association for providing us this platform for discussion. Time will tell how Loper Bright Corner Post and ESY will impact the healthcare space. And , uh, certainly there's more to come, especially with emerging constitutional challenges to the False Claims Act related provisions under the appointments clause, and also with the trouble damages provisions under the Eighth Amendment's, excessive fines, prohibition. We'll be here to dissect it all. And on behalf of our panelists, thank you for listening.
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