Thomas Barker (00:04): 

The fact that a district court judge can issue a nationwide injunction and block a regulation that’s challenged in one judicial district in the United States, can now issue an injunction to block that regulation nationwide, it seems to me really does pose a great deal of uncertainty in the field of administrative law. 

Announcer (00:29): 

Welcome to Hospitals in Focus from the Federation of American Hospitals. Here’s your host, Chip Kahn. 

Chip Kahn (00:39): 

The impact of the Loper Bright Enterprises versus Raimondo case ended 40 years of legal precedent known as the Chevron Doctrine, which gave federal agencies the power to interpret any statute’s ability that falls under its jurisdiction. This enormous decision by the Supreme Court can and will have a ripple effect through the federal government and across most industries which no one can predict, but we must prepare for. 

(01:11): 

One anecdote comes to mind in terms of the breadth of the effect of this. When I worked on Capitol Hill back in the mid-nineties, one of the major pieces of legislation that I was involved in as a staff person on the health subcommittee of Ways and Means was the development of the Health Insurance Portability and Accountability Act, HIPAA of 1996. One of the key provisions in HIPAA was something that’s led to a law that affects all of us today, the HIPAA privacy rules that protects our health information. 

(01:48): 

The implementation of that act really depends on over 400 or 500 pages of regulations. If you look into the law that we wrote that implemented those regulations, that law happened to be a few paragraphs, and there really was in the law no definition of what protected health information actually was. Well, there was references. There was some basis, but that’s a detailed issue. Congress never settled it in the original law, and ultimately Congress told the Secretary of Health and Human Services in the law that you go ahead and implement this if we don’t come up with more, and the secretary back many, many decades ago did that. 

(02:37): 

Those rules today would be subject to question whether or not a court under Chevron, or the lack of Chevron actually, would throw out those rules, I don’t know, but that’s of question, and that’s something that affects all Americans that Congress acted on. And that’s just the beginning of the kind of area area that we need to be concerned about that we’ll see this sea change. 

(03:04): 

Joining me today is Tom Barker, partner at Foley Hoag. I’ve known Tom for years and really appreciate his joining us today. Tom has an extensive background and a unique background working on Capitol Hill and working at high levels of health policy in positions during the Bush administration as general counsel at CMS and acting general counsel at the entire HHS department. So really happy to have you here today with us, Tom. 

Thomas Barker (03:34): 

Thanks very much, Chip. Really happy to be here and looking forward to this conversation. Thanks for inviting me. 

Chip Kahn (03:39): 

So Tom, in my introduction I mentioned this Supreme Court change, really tremendous change in terms of undoing the precedent of something called the Chevron Doctrine. This has such broad potential implications. How are you, as a health attorney, processing this in terms of thinking about healthcare for people and your representation of people who provide healthcare and also set healthcare policy? 

Thomas Barker (04:11): 

I’ll start off by saying you’re absolutely right. It is a major, major change in the field of American administrative law. It’s a forty-year-old doctrine that was initially applied to assess a Reagan administration environmental regulation. And in the original Chevron ruling, the Supreme Court concluded that the agency tasked with implementing a statute is given deference, and their expertise is what a court would rely on in analyzing the appropriateness of a regulation. 

(04:49): 

Over the past 40 years, that doctrine has had its critics. Did the doctrine violate the separation of powers? Did it encourage Congress to write vague laws and then leave the politically unpopular task with an unaccountable government employee? Did it allow an agency to impose a legally binding policy on a regulated entity? And so eventually the Supreme Court overturned the doctrine in the Loper Bright decision a couple of months ago. And I agree with you, Chip, it really is a sea change in the field of administrative law. 

(05:25): 

And what I’m telling my clients in the healthcare space is that an agency is now going to be given much less deference, and it is probably going to be easier to challenge an agency regulation now because now it is up to judges to make a determination over the appropriateness of a regulation and not the agency tasked with implementing it. 

Chip Kahn (05:50): 

Let’s look at this from a number of different angles. First up, let’s look at it from the congressional angle. You and I back in ancient times in the eighties and nineties, worked on Capitol Hill and both of us were involved at various times in drafting legislation for the members of Congress or the committees that we worked for. How do you think it’s going to affect Congress’s work and particularly the way Congress writes legislation? 

Thomas Barker (06:20): 

Well, Chip, let me give you a perfect example of a piece of legislation that you and I both worked on in the 1980s, the EMTALA statute. So EMTALA begins with the words, “In the case of a hospital that has a hospital emergency department,” if any individual comes to the emergency department, the hospital has to provide a medical screening examination. Well, what is a hospital that has a hospital emergency department? What does it mean for an individual to come to the emergency department? Over the succeeding 40 years since EMTALA was enacted, CMS has adopted regulations implementing those terms. 

(06:58): 

In theory now an individual or an entity that disagreed with that interpretation has the opportunity to challenge it, and the agency’s not going to get deference that they used to have. And so I think in answer to your question, what’s immediately going to have to happen is that Congress is going to have to

become much more precise when they are drafting legislation in order to ensure that Congress’s intent in drafting the legislation is actually implemented by the agency. 

Chip Kahn (07:27): 

Okay, so that’s the congressional side. And even in a perfect world in which congressional staff understand the details of whatever they’ve been given the mandate by the members they work for to write up in legislative language, it’s hard to imagine that they can anticipate every implication of implementation. So now let’s put your old hat on of being an attorney at HHS. You were one of the key players in the drafting of regulations for many years. As a regulation drafter, even if you get more detail, how do you make sure that you’re not going to trip a wire here? 

Thomas Barker (08:12): 

That’s a great question, and it’s something that I dealt with a lot when I was at HHS because there would be times when my clients, CMS or another component entity of HHS, HRSA, for example, the FDA, would come to me and say, “Well, we want to do X. The statute is a little unclear. Can we do what we want to do?” And many times my advice would be, “Yeah, you can probably do it because you’ll get deference. The Chevron Doctrine will give the agency deference, and a court will defer to the agency’s considered judgment when it’s drafting a regulation.” 

(08:54): 

And now I feel as though succeeding general counsels at the agencies will be a little bit more reluctant to give that advice because they won’t just be able to say, “Oh, you’ll get deference,” and that’s the end of it. I feel that now general counsels and the agencies will have to be a bit more cautious and a bit more circumspect before they allow an agency to do something that is a somewhat risky proposition. 

Chip Kahn (09:19): 

Can you give me an example though of, listen, I’m trying to anticipate some legislation here. I mean, what kind of detail will now have to be in the legislative language that wouldn’t have been before? What will they have to do on Capitol Hill so that general counsel over at HHS will even know what kind of guidance to give? I mean in simple implementations, not even in your question of controversial issues that arise in implementation. 

Thomas Barker (09:50): 

Let’s go back to the EMTALA example again. So again, EMTALA says, “If any individual comes to the emergency department.” In 2003 when I was at CMS, we finalized a regulation that defined the term, “Comes to the emergency department,” to mean any individual who comes onto hospital property and any property within 250 yards of the hospital. But the statute doesn’t say that. It just says, “Comes to the emergency department,” and CMS defined that term to mean hospital property and 250 yards beyond. 

(10:25): 

And you make a great point, Chip. How could Congress possibly write with that specificity rather than saying, “Comes to the emergency department,” instead having to say, “Comes to property that’s within 250 yards of the hospital property.”? Well, what if someone is 251 yards away? What happens then? It becomes a never-ending circle and it makes the task of Congress and the agency much more difficult, it seems to me. 

Chip Kahn (10:55): 

So I think this sets up a guessing game in terms of the judiciary because I brought up the issue of in my introduction HIPAA privacy. And HIPAA privacy, even though it was not specific in its description of what health information was, what other aspects of the law were, it did say if Congress does enact the secretaries to write regulations that implement Congress’s intent here, and so they hopefully carried out what they assumed would be Congress’s intent. How is that law or other laws going to be interpreted? 

(11:31): 

And let me add another wrinkle here, which is part of this question, which is in writing up his decision that the Supreme Court justice seemed to imply that this ruling on Chevron is prospective. So maybe I can assume for a second it wouldn’t affect HIPAA privacy regulations because they were done in the past, but how are the courts going to digest this and is there such a thing as perspective? I know I’m asking two questions here, but it seems to me the two go hand in hand. 

Thomas Barker (12:03): 

Yeah, and I feel as though Justice Kagan picked up on that in her dissenting opinion in Loper Bright. She said, “Well, it’s all well and fine for the court to say it’s perspective only, but in the real world, that’s not going to happen.” And in fact, we saw this a day or two after Loper Bright was decided, there was a hospital that filed a new lawsuit challenging how CMS interprets a portion of the Medicare DSH formula. And it is an issue that the courts had previously decided, and now the hospital that is the plaintiff in this lawsuit is asking the court to set aside a previously affirmed interpretation of the regulation. And so it seems to me that it is very difficult to say that the decision is going to be perspective only because litigants are going to find ways to open it up. 

(12:56): 

And I’ll also say that another decision from this term, the Corner Post decision, which addressed the question of when a statute of limitations begins to toll when challenging an agency regulation, the Supreme Court concluded that the statute begins to toll when the regulation adversely affects a litigant, not when the regulation was finalized. And so, to me, that opens up potentially a 40-year-old CMS regulation. 

Chip Kahn (13:24): 

So do you think in terms of the courts that we’re going to see this decision lead to an opening up of the floodgates in terms of providers and consumers and other classes of people coming in and questioning regulatory action that’s been taken over time? 

Thomas Barker (13:43): 

Chip, that’s a great question, and I believe that it is certainly quite possible that litigants are going to reopen presumably well-settled regulations. And Chip, I’ll just give you an example of an issue that I know is of great concern to your members and also to your colleagues at the American Hospital Association. And that’s an issue that I also worked on when I was at HHS, and that is physician-owned hospitals. 

(14:09): 

So Congress has adopted a policy under the Stark rules regarding physician-owned hospitals. And it is Congress adopted a policy, CMS issued regulations implementing that policy, Congress affirmed and CMS reaffirmed that policy in 2009 or 2010. So this is now a regulation that’s 14, 15 years old, but in

theory an entity that disagreed with what seems to be the well-settled policy on physician-owned hospitals could now attempt to reopen those regulations. 

Chip Kahn (14:44): 

Boy, it really could affect a lot of what we do. Let’s take a case study of something that’s really before the courts right now and see how you would process that. As you know, the Federal Trade Commission has a non-compete rule banning non-compete agreements on a nationwide basis. What do you think this decision implies for that? 

Thomas Barker (15:07): 

I feel as though a court is going to look at what the FTC did and say that the FTC took a statute that didn’t clearly grant it the power to ban non-compete agreements and now set aside that regulation. I also would say, Chip, that’s a great case study because it also implicates another administrative law principle that the Supreme Court has addressed in the past couple of years, and that’s the so-called major questions doctrine. Is it possible for an agency to issue a regulation that goes so far beyond what Congress might’ve intended when it granted an agency power to act in the first place that the courts could set aside that regulation as violative of the so-called major questions doctrine. And I think that we might see that also in the context of the FTC non-compete rule. 

Chip Kahn (16:02): 

What do you think in terms of hospitals, doctors, all of those individuals in the healthcare system that are often sitting, waiting for proclamations from HHS on an annual basis on rates and rules regarding quality and measurement? How is this going to change and will it change the life of those who provide services to patients, but in a sense have to navigate the regulatory structure of the country when it provides services under Medicare, Medicaid or ACA or other public programs? 

Thomas Barker (16:41): 

Well, it’s already difficult enough as it is, right? Because for example, your members every single year have to deal with the IPPS rule, the OPPS rule, the Medicare physician fee schedule rule, Medicare Advantage policy and technical rules, the Medicare Advantage and Part D call letter. And it seems to me that at least the one thing in a Chevron world that providers had is some degree of certainty. They knew what the agency’s policy was. They knew that if they didn’t like it, they had an opportunity to challenge it in court, but eventually they would have finality. 

(17:19): 

Now, it seems to me that a regulated entity in the healthcare space doesn’t really have finality because an entity that is adversely affected by an agency regulation always has an opportunity now to challenge it again. Not only because of the repeal of the Chevron doctrine, but also because of doctrines such as the major questions doctrine, and also the flexibility now that a litigant might have with a more liberalized statute of limitations rule. 

Chip Kahn (17:49): 

I guess at the end of the day we always say that in policymaking that the devil’s in the details, and clearly it’s been in the details in terms of regulation, but now it’s really going to be in the details in terms of legislation too. 

Thomas Barker (18:04): 

And also how a particular judge in some district court, really anywhere in the country, could interpret an agency regulation when the agency doesn’t have its hand on the scales anymore because a judge ultimately makes the decision of whether or not a regulation is a faithful interpretation of the statute. And the fact that a district court judge can issue a nationwide injunction and block a regulation that’s challenged in one judicial district in the United States, can now issue an injunction to block that regulation nationwide, it seems to me really does pose a great deal of uncertainty in the field of administrative law. 

(18:47): 

We saw that happen just a week or so ago. The Biden administration issued an immigration regulation, and a day or two after the notice appeared in the Federal Register, it was set aside by a judge in a district court who granted a nationwide injunction. And he relied in part on the fact that the agency, in this case, the Department of Homeland Security, didn’t get any deference in issuing the regulation. 

Chip Kahn (19:12): 

Well, thanks, Tom. This has been so helpful, and I guess my conclusion from it is that whereas generally when regulations come out, you mentioned a lot of them, those of us that try to affect the regulatory process in a sense have to live with what we get. Now, much more it’s going to be I’ll meet you in court, I guess. 

Thomas Barker (19:33): 

I think you’re right. I think you’re right. Thank you for the opportunity to chat with you. 

Chip Kahn (19:37): 

Great. This was terrific.