Keeping track of the rules and regulations around health benefits administration can be a big job, and it just got a bit more complicated. For the past forty years, U.S. Supreme Court precedent instructed courts interpreting federal rules and regulations to often defer to the interpretation of the relevant federal agency (assuming its interpretation was reasonable). This was known as the “Chevron Doctrine.” as it was established in the case Chevron v. NRDC. Since 1984, it has shaped the relationship between the courts, federal government agencies, and the businesses that they regulate.
This year, however, the Supreme Court delivered a landmark decision overturning the Chevron Doctrine, finding instead that lower courts must now independently interpret statutory language without being required to defer to the agencies' reasonable interpretations. This could have major implications for employer-sponsored employee benefits plans and health benefits administration in general.
Employee health benefit plans are governed by a myriad of federal regulations. The Loper Bright decision may lead to a patchwork of judicial interpretations, where different federal circuit courts might reach different conclusions about the same regulation. For instance, one circuit court could invalidate a regulation that another upholds, leading to inconsistent application across states. This could be particularly relevant to employers with associates spread across the country.
Employers might also need to navigate varied judicial interpretations depending on the jurisdiction, emphasizing the importance of monitoring legal developments and seeking legal counsel to ensure compliance with evolving standards.
This year, however, the Supreme Court delivered a landmark decision overturning the Chevron Doctrine, finding instead that lower courts must now independently interpret statutory language without being required to defer to the agencies' reasonable interpretations. This could have major implications for employer-sponsored employee benefits plans and health benefits administration in general.
Background on the Loper Bright Case
The Court was deciding the consolidated cases of Loper Bright v. Raimondo and Relentless v. Department of Commerce. The primary issue was that fisheries were challenging a regulation by the National Marine Fisheries Service (NMFS), which required them to cover the costs of observers on their vessels. They asserted that the regulation was based on an ambiguous statute that did not explicitly mandate such payments. Relying on the Chevron Doctrine, lower courts upheld the regulation and deferred to NMFS's interpretation. The Supreme Court's decision rejecting the Chevron Doctrine now instructs courts evaluating a regulation to exercise their independent judgment in deciding whether an agency has acted within its statutory authority.Implications for Health Benefits Administration
Although the Loper Bright decision does not directly address employee benefits, it establishes a new framework that will likely have significant impact how courts evaluate regulations issued by agencies such as the Department of Labor, IRS, and Health and Human Services. At a minimum, it opens the door to possible litigation challenging various health and welfare benefit plan regulations.Employee health benefit plans are governed by a myriad of federal regulations. The Loper Bright decision may lead to a patchwork of judicial interpretations, where different federal circuit courts might reach different conclusions about the same regulation. For instance, one circuit court could invalidate a regulation that another upholds, leading to inconsistent application across states. This could be particularly relevant to employers with associates spread across the country.
What This Means for Employers
Employers should be aware that existing regulations remain in effect, but they should also anticipate increased legal challenges and potential shifts in regulatory landscapes. The decision underscores the need for employers to stay engaged in the legislative and regulatory process, as statutory language will become even more crucial in determining compliance requirements, and to work with trusted TPAs who keep abreast of important changes and challenges to laws.Employers might also need to navigate varied judicial interpretations depending on the jurisdiction, emphasizing the importance of monitoring legal developments and seeking legal counsel to ensure compliance with evolving standards.