Agency Rulemaking Curtailed by Supreme Court Decision

The U.S. Supreme Court issued a major ruling today, effectively overturning the legal precedent of “Chevron Deference” established in the 1984 decision Chevron v. Natural Resources Defense Council, which provides for courts to defer to agencies to interpret ambiguous statutes in their rulemaking. The 6-3 decision issued today in Loper Bright Enterprises v. Raimondo states that courts may not defer to an agency interpretation of the law simply because a statute is ambiguous.

The ruling does not apply retroactively to previous cases that the Court has decided based on Chevron Deference. However, it is possible that with today’s ruling the Court may consider other cases involving agency interpretation of ambiguous laws, and therefore today's decision may have significant and long-lasting impacts to all federal rulemaking moving forward.

The ruling applies only to federal agencies, and does not overturn Chevron Deference policies that have been adopted by some states, but it could bring additional momentum for states to challenge these deferential policies. While some states have adopted a Chevron Deference framework for state regulators to interpret ambiguous statutes, other states do not have this policy, and several states have begun eroding deference to regulators through state statutes, court opinions, and state constitutional amendment. Additionally, several states filed amicus briefs in support of the plaintiff in today's Supreme Court case.

Argentum will be closely following the impact of today's ruling on recent federal rulemaking, including several rules issued this Spring by the Biden Administration with direct or indirect impacts on senior living communities:

• Ensuring Access to Medicaid Services (CMS), requires 80% of state Medicaid payments go toward compensation of workers;
• Minimum Staffing Standards for Long-Term Care Facilities and Medicaid Institutional Payment Transparency Reporting (CMS), establishes federal staffing requirements for certain long-term care facilities;
• Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees (DOL), expands overtime eligibility for certain salaried workers;
• Non-Compete Clause Rule (FTC); bans non-compete agreements with limited exceptions.

Most notably, the CMS "Ensuring Access" rule imposes sweeping new regulations that require 80 percent of state payments for certain home and community-based services (HCBS) be allocated to compensation for direct care workers. We believe that this rule could force assisted living communities to either reduce HCBS services they are currently providing, or cease participation in the Medicaid program altogether, which ultimately would have a negative impact on direct care workforce participation and Medicaid beneficiary access to care. The implementation date for the rule was pushed back from four years to six.