Supreme Court Decides Major Chevron Case Without Citing Chevron
Today, the Supreme Court decided American Health Association v. Becerra, unanimously rejecting reimbursement rates for certain prescription drugs set by the Department of Health and Human Services in 2018 and 2019 as contrary to statute. AHA was a closely watched case because some saw as it as an opportunity for the Court to revisit, and potentially narrow or even overturn, the Chevron doctrine, under which courts are to defer to agency interpretations of ambiguous statutory provisions. Yet the Court ultimately resolved the case without citing Chevron at all — and this should send a message to lower courts about how Chevron should be applied.
In AHA the Court had accepted certiorari on two questions:
- 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.
- Whether petitioners’ suit challenging HHS’s adjustments is precluded by 42 U. S. C. §1395l(t).
In an unanimous opinion by Justice Kavanaugh, the Court answered both questions in the negative — the suit challenging the reimbursement rates was not precluded, and HHS may not vary reimbursement rates by hospital group without having first collected survey data — but never once mentioned Chevron. What happened? The Court actually applied Chevron rigorously.
The Chevron doctrine has two steps. First, always, is to examine the relevant statutory text to see whether the statute is clear, and answers the question issue. If the statute is clear, the statute controls. If, however, the statute is ambiguous on the question at issue (here, whether HHS may vary reimbursement rates by hospital group in the absence of survey data), courts are to defer to a reasonable agency interpretation of the statutory language. As articulated by the Court, these are separate steps, and an agency’s interpretation of the statue is only relevant if the Court first concludes that the statutory text is ambiguous on the question at hand. Further, as the Court has emphasized in recent opinions (and Justice Kennedy stressed in one of his final opinions on the Court), this initial inquiry should be a serious one, in which courts are to apply all the traditional tools of statutory interpretation to see whether Congress has answered the issue.
In AHA, the Court never had cause to co
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