Amicus Brief: American Hospital Association, et al. v. Xavier Becerra, et al.
AMICUS BRIEF SUMMARY
NCLA argued that the D.C. Circuit improperly applied Chevron deference to HHS’s interpretation of a statute that allowed the agency to set reimbursement rates for the plaintiffs, a group of hospitals participating in the Section 340B Drug Pricing Program.
NCLA’s amicus brief focused on the improperly truncated nature of the appeals court’s Chevron analysis. The district court held in December 2018 that HHS’s reimbursement rates were based on an improper construction of Medicare statutes. But in July 2020, a divided D.C. Circuit panel reversed the ruling, holding that HHS’s statutory construction was entitled to Chevron deference because it was “reasonable” and was not excluded by the statutory language. In doing so, the D.C. Circuit upheld HHS’s decision to lower drug reimbursement rates for Section 340B hospitals. Rather than undertaking a thorough statutory analysis and determining which side had the stronger arguments, the D.C. Circuit simply threw up its hands and declared, “when competing readings of a statute would each occasion their own notable superfluity, that manifests the kind of statutory ambiguity that Chevron permits the agency to weigh and resolve.” Dodging the Chevron deference issue entirely, the U.S. Supreme Court held that HHS plainly violated the Medicare statute by authorizing different reimbursement rates for hospitals based on “the hospital group” involved.
Under the Chevron doctrine, courts defer to an administrative agency’s “reasonable” interpretation of a statute, even if the reviewing court thinks that there is a better, competing interpretation. Chevron deference compels judges to abandon their duties of independent judgment, thereby undermining separation-of-powers principles.
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COURT: U.S. Supreme Court
DOCUMENT: No. 20-1114
COUNSEL FOR AMICUS CURIAE: Richard A. Samp, Kara Rollins, Mark Chenoweth
FILED: September 10, 2021
PRESS RELEASES
June 15, 2022 | Supreme Court Rules Against HHS’s Lowering of Reimbursements to Hospitals, in NCLA Amicus Win
Washington, DC (June 15, 2022) – Today, a unanimous Supreme Court ruled that the Department of Health and Human Services (HHS) violated the 2003 Medicare Act by lowering drug reimbursement rates for specific hospitals. The New Civil Liberties Alliance, a nonpartisan, nonprofit civil rights group, filed an amicus brief in support of petitioners in American Hospital Association v. Becerra. NCLA agreed with the petitioners’ argument that HHS’s authority under the Medicare statute to “adjust[ ]” average sales price when calculating reimbursement rates does not include wholesale authority to substitute acquisition costs for average sales price.
Dodging the Chevron deference issue entirely, the opinion held that HHS plainly violated the Medicare statute by authorizing different reimbursement rates for hospitals based on “the hospital group” involved. The statute authorizes HHS to vary reimbursement rates based on the hospital only if it first conducts a survey and concludes that some hospital groups have lower acquisition costs for some drugs than do other hospital groups, but HHS never conducted such a survey. HHS nonetheless concluded that Section 340B hospitals were paying considerably less for drugs than other hospitals, leading the agency to mandate lower reimbursement rates for that one type of hospital. HHS changed the methodology used to calculate reimbursements, and it lowered the reimbursement rate for the hospitals participating in the 340B Drug Pricing Program. The district court granted the hospitals’ motion for a permanent injunction against HHS, but a divided D.C. Circuit panel reversed the ruling, holding that HHS’s decision “rests on a reasonable interpretation of the Medicare statute.”
Writing for the Court, Justice Brett Kavanaugh stated, “The statute expressly authorizes HHS to vary rates by hospital group if HHS has conducted such a survey. But the statute does not authorize such a variance in rates if HHS has not conducted a survey.” The Court further ruled that the Medicare statute requires reimbursement rates to be set “drug by drug, not hospital by hospital or hospital group by hospital group.”
NCLA had also argued in its amicus curiae brief that the U.S. Court of Appeals for the District of Columbia Circuit improperly applied Chevron deference to HHS’s interpretation of the Medicare statute covering the setting of reimbursement rates. Disappointingly, likely because “the text and structure of the statute make this a straightforward case,” the Supreme Court did not address the Chevron deference concerns NCLA raised.
NCLA released the following statements:
“NCLA urged the Court to overrule Chevron deference—to hold that Courts should stop deferring to a federal agency’s interpretation of a statute simply because the statute’s meaning isn’t absolutely clear. But the Court had no need to address Chevron deference in order to rule against Medicare bureaucrats. It held that the government’s interpretation of the Medicare statute was so obviously wrong—the Court unanimously rejected that interpretation—that there was no need to consider whether courts should ever be deferring to government interpretations in close cases.”
— Rich Samp, Senior Litigation Counsel, NCLA
“Yet again the U.S. Supreme Court has dodged revisiting its abhorrent Chevron precedent. While NCLA agrees with the substance of today’s decision, we know all too well that misguided statutory interpretations—like the one invoking Chevron deference adopted by the District of Columbia Circuit below—will continue to crop up in federal courts of appeals unless and until the U.S. Supreme Court puts Chevron out of its misery.”
— Mark Chenoweth, President and General Counsel, NCLA
For more information visit the case page here.
ABOUT NCLA
NCLA is a nonpartisan, nonprofit civil rights group founded by prominent legal scholar Philip Hamburger to protect constitutional freedoms from violations by the Administrative State. NCLA’s public-interest litigation and other pro bono advocacy strive to tame the unlawful power of state and federal agencies and to foster a new civil liberties movement that will help restore Americans’ fundamental rights.
September 10, 2021 | Chevron Deference Should Be Abandoned Says NCLA in Hospital Reimbursement Lawsuit Amicus Brief
Washington, DC (September 10, 2021) – A case on the Supreme Court’s docket for its 2021-22 term could spell the beginning of the end of Chevron deference. In an amicus brief filed today in American Hospital Association, et al. v. Xavier Becerra, et al., the New Civil Liberties Alliance argues that the D.C. Circuit improperly applied Chevron deference to HHS’s interpretation of a statute that allowed the agency to set reimbursement rates for the plaintiffs, a group of hospitals that participate in the Section 340B Drug Pricing Program.
NCLA’s amicus brief focuses on the improperly truncated nature of the appeals court’s Chevron analysis. The district court held in December 2018 that HHS’s reimbursement rates were based on an improper construction of Medicare statutes. But in July 2020, a divided D.C. Circuit panel reversed the ruling, holding that HHS’s statutory construction was entitled to Chevron deference because it was “reasonable” and was not excluded by the statutory language. In doing so, the D.C. Circuit upheld HHS’s decision to lower drug reimbursement rates for Section 340B hospitals. Rather than undertaking a thorough statutory analysis and determining which side had the stronger arguments, the D.C. Circuit simply threw up its hands and declared, “when competing readings of a statute would each occasion their own notable superfluity, that manifests the kind of statutory ambiguity that Chevron permits the agency to weigh and resolve.” This abdication of judicial decision-making responsibility should be corrected by the Supreme Court.
Under the Chevron doctrine, courts defer to an administrative agency’s “reasonable” interpretation of a statute, even if the reviewing court thinks that there is a better, competing interpretation. Chevron deference compels judges to abandon their duties of independent judgment, thereby undermining separation-of-powers principles. It has been more than five years since the Supreme Court has relied on Chevron deference to uphold an agency’s interpretation of a federal statute. The Court should not only reverse the D.C. Circuit’s decision, but also call into question the constitutional underpinnings of Chevron and express a willingness to consider overruling it.
NCLA released the following statement:
“It is the duty of independent judges to decide what the law is. They should determine a statute’s meaning by applying all traditional rules of statutory construction, not take the easy way out by parroting an administrative agency’s construction of the statute.”
— Rich Samp, Senior Litigation Counsel, NCLA
For more information visit the case page here.
ABOUT NCLA
NCLA is a nonpartisan, nonprofit civil rights group founded by prominent legal scholar Philip Hamburger to protect constitutional freedoms from violations by the Administrative State. NCLA’s public-interest litigation and other pro bono advocacy strive to tame the unlawful power of state and federal agencies and to foster a new civil liberties movement that will help restore Americans’ fundamental rights.