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    American Hospital Association v. Becerra

    From Ballotpedia - Reading time: 12 min
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    Supreme Court of the United States
    American Hospital Association v. Becerra
    Term: 2021
    Important Dates
    Argued: November 30, 2021
    Decided: June 15, 2022
    Outcome
    D.C. Circuit reversed and case remanded
    Vote
    9-0
    Majority
    Chief Justice John Roberts • Clarence Thomas • Stephen Breyer • Samuel Alito • Sonia Sotomayor • Elena Kagan • Neil Gorsuch • Brett Kavanaugh • Amy Coney Barrett

    American Hospital Association v. Becerra was a U.S. Supreme Court case decided on June 15, 2022, that questioned whether the U.S. Department of Health and Human Services (HHS) had acted lawfully when it reduced the reimbursement rate that the agency pays certain hospitals for treating Medicare patients. The court unanimously held that HHS' interpretation of the underlying statute in the case was flawed and that the agency acted in violation of its statutory authority when it reduced the reimbursement rates.[1][2]

    Prior to the ruling, some organizations had suggested that American Hospital Association v. Becerra posed an opportunity for the court to reconsider and potentially narrow its applications of Chevron deference, according to SCOTUSblog. Justice Brett Kavanaugh's majority opinion, however, made no mention of the doctrine.[3]

    The case was argued before the Supreme Court of the United States on November 30, 2021, during the court's October 2021-2022 term.

    HIGHLIGHTS
  • The case: The U.S. Department of Health and Human Services (HHS) reduced the reimbursement rate that the agency pays certain hospitals for treating Medicare patients. Hospitals sued, arguing that HHS interpreted the Medicare statute in an illegal way. The D.C. Circuit ruled that the decision to lower the reimbursement rate was based on a reasonable interpretation of the Medicare statute. Click here to learn more about the case's background.
  • The issue: The case concerned whether the Chevron deference doctrine permitted HHS to interpret the Medicare statute in a way that allowed the agency to lower the reimbursement rate.
  • The questions presented: "The question presented is 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."[4]
  • The outcome: The U.S. Supreme Court ruled unanimously that HHS' interpretation of the underlying statute in the case was flawed and that the agency acted in violation of its statutory authority when it reduced the reimbursement rates. It reversed the D.C. Circuit's ruling and remanded the case for further proceedings.[2]


    • The case came on a writ of certiorari to the United States Court of Appeals for the District of Columbia Circuit. To review the lower court's opinion, click here.

    Why it matters: A decision in this case could have affected the court's approach to applying the Chevron deference doctrine. Instead, the justices declined to mention the doctrine, leading SCOTUSblog analyst James Romoser to question whether "the doctrine may be shunned into oblivion" rather than explicitly overturned.[3]

    Timeline[edit]

    The following timeline details key events in this case:

    • June 15, 2022: The U.S. Supreme Court reversed the decision from the D.C. Circuit and remanded the case for further proceedings.[2]
    • November 30, 2021: The U.S. Supreme Court heard oral argument.
    • July 2, 2021: The U.S. Supreme Court agreed to hear the case.
    • February 10, 2021: The American Hospital Association appealed to the U.S. Supreme Court.
    • July 31, 2020: The D.C. Circuit upheld the HHS decision to lower drug reimbursement rates.[1]

    Background[edit]

    What is deference in the context of the administrative state?

    Deference, or judicial deference, is a principle of judicial review in which a federal court yields to an agency's interpretation of a statute or regulation. The U.S. Supreme Court has developed several forms of deference in reviewing federal agency actions, including Chevron deference, Skidmore deference, and Auer deference. Learn about state-level responses to deference here.


    In 2018, the U.S. Department of Health and Human Services (HHS) reduced the reimbursement rate that the agency would pay certain hospitals for treating Medicare patients. The 340B Drug Pricing Program allowed participating hospitals to get drugs at a much lower price than other hospitals paid and HHS argued that Medicare should not reimburse those hospitals more than they paid for the drugs. Hospitals sued, arguing that HHS interpreted the Medicare statute in an illegal way.[1]

    While a district court agreed with the hospitals, the D.C. Circuit ruled that the decision to lower the reimbursement rate was based on a reasonable interpretation of the Medicare statute.[1]

    Questions presented[edit]

    The petitioner presented the following questions to the court:

    Questions presented:
    “ The question presented is 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.[4]

    [5]

    		”

    Oral argument[edit]

    Oral arguments were held on November 30, 2021.

    Audio[edit]

    Audio of oral argument:[6]



    Transcript[edit]

    Transcript of oral argument:[7]

    Outcome[edit]

    The court ruled unanimously that HHS' interpretation of the underlying statute in the case was flawed and that the agency acted in violation of its statutory authority when it reduced the reimbursement rates. It reversed the D.C. Circuit's ruling and remanded the case for further proceedings. Justice Brett Kavanaugh delivered the opinion of the court.[2]

    Opinion[edit]

    Opinion of the court[edit]

    Justice Brett Kavanaugh delivered the opinion of the court, which found that no statute precluded judicial review of the case, that HHS' interpretation of the underlying statute was inconsistent with the plain text, and that the agency had acted unlawfully when it reduced the reimbursement rates.[2]

    The justices found HHS' interpretation of the law ignored the statutory requirement for the agency to first conduct a survey of hospitals’ acquisition costs for prescription drugs before adjusting reimbursement rates:

    “ The statute thus protects all hospitals by imposing an important procedural prerequisite—namely, a survey of hospitals’ acquisition costs for prescription drugs—before HHS may target particular groups of hospitals for lower reimbursement rates. The survey allows the agency to determine whether there is in fact meaningful, statistically significant variation among hospitals’ acquisition costs. The data regarding variation in hospitals’ acquisition costs in turn help HHS determine whether and how much it should vary the reimbursement rate among hospital groups. See §§1395l(t)(14)(D)(iii)–(iv). But absent that survey data, as Congress determined, HHS may not make 'billion-dollar decisions differentiating among particular hospital groups.' 967 F. 3d, at 837 (Pillard, J., dissenting).[5] ”
    —Brett Kavanaugh, majority opinion in American Hospital Association v. Becerra

    Text of the opinion[edit]

    Read the full opinion here.

    Commentary about the case[edit]

    Pre-decision commentary[edit]

    Eli Nachmany, editor-in-chief of the Harvard Journal of Law & Public Policy, wrote that the justices would question Chevron deference in American Hospital Association v. Becerra but that the following three obstacles might block the court from overturning the deference doctrine:[8]

    • The court has to consider first whether the challenged HHS interpretation of a Medicare-related statute is subject to judicial review.
    • The court might decide to restrict Chevron deference in cases involving agency interpretations of appropriations provisions instead of eliminating the doctrine altogether.
    • The court might not be ready to overturn Chevron yet.

    The Federation of American Hospitals, a group representing over 1000 hospitals and health systems across the United States, filed a brief in the case defending the HHS policy and arguing that the U.S. Supreme Court has no need to "engage in a searching examination of the principles established in Chevron as requested" by the other parties in the case.[9]

    The New Civil Liberties Alliance (NCLA), a pro bono law firm with a focus on the administrative state, filed a brief in the case arguing that Chevron deference should not apply to HHS's interpretive decision and that the court should abandon Chevron altogether because the deference doctrine "is inconsistent with separation-of-powers and due-process principles embedded in the Constitution."[10]

    Post-decision commentary[edit]

    SCOTUSblog analyst James Romoser questioned whether the ruling signaled the justices' intent to ignore Chevron deference in future cases rather than overturn the doctrine altogether:[3]

    “ Notably, the opinion does not invoke Chevron deference, the 38-year-old doctrine under which courts generally defer to agencies’ statutory interpretations. Some business organizations and conservative groups had called on the court to use American Hospital Association to reconsider or even overturn Chevron.


    The court declined that invitation. Instead, Kavanaugh’s opinion simply ignored Chevron. He did not cite the case even once, instead opting to reject the agency’s interpretation under ordinary principles of statutory analysis. For a court that is increasingly skeptical of the administrative state, Chevron’s absence speaks volumes. There may not be five votes to scrap Chevron altogether, but if the court simply stops applying it, the doctrine may be shunned into oblivion.[5]

    		”

    October term 2021-2022[edit]

    See also: Supreme Court cases, October term 2021-2022

    The Supreme Court began hearing cases for the term on October 4, 2021. The court's yearly term begins on the first Monday in October and lasts until the first Monday in October the following year. The court generally releases the majority of its decisions in mid-June.[11]

    The court agreed to hear 68 cases during its 2021-2022 term.[12] Four cases were dismissed and one case was removed from the argument calendar.[13]

    The court issued decisions in 66 cases during its 2021-2022 term. Three cases were decided without argument. Between 2007 and 2021, SCOTUS released opinions in 1,128 cases, averaging 75 cases per year.


    See also[edit]

    External links[edit]

    Footnotes[edit]

    1. ↑ 1.0 1.1 1.2 1.3 Casetext, "American Hospital Association v. Azar, Opinion," July 31, 2020
    2. ↑ 2.0 2.1 2.2 2.3 2.4 U.S. Supreme Court, "American Hospital Association v. Becerra," June 15, 2022
    3. ↑ 3.0 3.1 3.2 SCOTUSblog, "In an opinion that shuns Chevron, the court rejects a Medicare cut for hospital drugs," June 15, 2022
    4. ↑ 4.0 4.1 U.S. Supreme Court, "American Hospital Association v. Becerra, Petition for a Writ of Certiorari," February 10, 2021
    5. ↑ 5.0 5.1 5.2 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
    6. ↑ Supreme Court of the United States, "Oral Argument - Audio," accessed December 1, 2021
    7. ↑ Supreme Court of the United States, "Oral Argument - Transcript," accessed December 1, 2021
    8. ↑ Notice & Comment, "SCOTUS Faces a Chevron Decision Tree in American Hospital Association v. Becerra," August 9, 2021
    9. ↑ U.S. Supreme Court, "American Hospital Association v. Xavier Becerra, Brief of Amicus Curiae Federation of American Hospitals in Support of Respondents," March 31, 2021
    10. ↑ U.S. Supreme Court, "American Hospital Association v. Xavier Becerra, Brief of the New Civil Liberties Alliance as Amicus Curiae in Support of Petitioners," September 10, 2021
    11. ↑ SupremeCourt.gov, "The Supreme Court at Work: The Term and Caseload," accessed February 4, 2021
    12. ↑ Consolidated cases are counted as one case for purposes of this number.
    13. ↑ U.S. Supreme Court, "Order List: 593 U.S.," May 17, 2021
    Licensed under CC BY-SA 3.0 | Original source: https://ballotpedia.org/American_Hospital_Association_v._Becerra
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