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July 8, 2019

Health Headlines – July 8, 2019


Challenges and Growth Opportunities for Academic Medical Centers – King & Spalding understands that the focus of academic medical centers on clinical care, education and research often sets them apart from community hospitals and can present unique challenges to successful affiliations with other healthcare providers. Watch King & Spalding’s Healthcare Partners Torrey McClary and Adam Robison discuss the challenges academic medical centers face and keys for establishing successful affiliations with community hospitals and physicians.

United States Supreme Court Limits Deference Standard in Kisor v. Wilkie Decision – On June 26, 2019, the United States Supreme Court issued its decision in Kisor v. Wilkie. After hearing oral arguments in March, the Court considered whether to overrule the Auer deference standard, the long-standing doctrine of administrative agency lawthat courts should defer to an agency’s reasonable interpretations of its own regulations. Although the Court’s decision did not overturn Auer deference, the Court held that Auer deference should be applied narrowly and in limited circumstances. How lower courts will react to the Court’s opinion and what Kisor deference may look like in practice going forward will be important factors to watch in the near future.

The question in Kisor was whether courts must defer to an administrative agency’s interpretation of its own regulation. Specifically, the petitioner in Kisor, a Vietnam veteran, asked the Court to overturn Auer deference after having his claim for disability benefits rejected by the Veterans Administration (VA) in 1982. After presenting new evidence about his military service and the post-traumatic stress he suffered as a result, the VA granted the petitioner’s request. However, the VA ultimately determined that under current regulations, the petitioner’s benefits would not be retroactive to 1982 but instead would only be effective going forward following the VA’s redetermination of benefits in 2006. The dispute between the petitioner and the VA was centered on whether the agency’s interpretation of its own regulations limiting the petitioner’s benefits was correct.

The Court has long held that if an administrative regulation is questioned, courts should look to the administrative construction of that regulation. Notably, Justice Scalia stated in Auer v. Robbins that an agency’s interpretation of its own regulations is “controlling unless plainly erroneous or inconsistent with the regulation.” Here, the Court chose not to determine whether the VA’s interpretation fell under the scope of Auer deference. Instead, the Court punted the case back to the lower courts to consider multiple factors on whether application of Auer deference was appropriate in this case.

Justice Kagan, writing the opinion of the Court, states that the result of Kisor is “a deference doctrine not quite so tame as some might hope, but not nearly so menacing as they might fear.” These new limitations placed on deference requires courts to consider various factors in determining whether deference should be applied to an agency’s interpretation of its own regulations. Specifically:

  1. Whether the regulation at issue is ambiguous. The Court notes that “[f]irst and foremost, a court should not afford Auer deference unless, after exhausting all the ‘traditional tools’ of construction … the regulation is genuinely ambiguous.” Thus, courts should first try to resolve the issue of ambiguity prior to applying deference.
  2. Whether the agency’s construction of the regulation at issue is reasonable. If a determination is made that the rule is in fact “genuinely ambiguous,” the court must next consider whether the agency’s reading falls “within the bounds of reasonable interpretation.”
  3. Whether the agency has the proper authority. The Court found that prior to applying the deference standard, “a court must also make an independent inquiry into whether the character and context of the agency interpretation entitles it to controlling weight.” According to Kisor, the inquiry should be whether the interpretation at issue is authoritative or an official position of the agency as opposed to a mere ad hoc statement.
  4. Whether the interpretation implicates the agency’s “substantive expertise.” The Court notes that whether the interpretation is within the scope of the agency’s expertise is important as “the basis for deference ebbs when the subject matter of a dispute is distant from the agency’s ordinary duties.”
  5. Whether the interpretation reflects a “fair and considered judgment.” Finally, Kisor provides that courts should “decline to defer to a merely ‘convenient litigating position’ or ‘post hoc rationalizatio[n] advanced’ to ‘defend past agency action against attack.’”  As a part of this fair and considered judgment, the Court notes that warning must be provided by the agency with Justice Kagan specifically noting that Auer deference does not apply “to a new interpretation … that creates unfair surprise to regulated parties.”

According to Justice Gorsuch’s concurrence to the majority opinion, one of the many challenges following Kisor is that the Court’s opinion did not provide adequate instructions for the lower courts to apply the new standard. Justice Gorsuch notes issues with leaving the Auer deference standard at all and goes as far as to say that the majority only retained Auer due to precedent. He states that the majority imposes so many “new and nebulous qualifications and limitations” that even Justice Roberts “claims to see little practical difference between keeping it on life support in this way and overruling it entirely. So the doctrine emerges maimed and enfeebled—in truth, zombified.”

While several of the Justices were in favor of overruling the deference standard altogether (namely Justices Gorsuch, Thomas, Alito and Kavanaugh), Justice Kagan states that “[t]he upshot of all this goes something as follows. When it applies, Auer deference gives an agency significant leeway to say what its own rules mean. In so doing, the doctrine enables the agency to fill out the regulatory scheme Congress has placed under its supervision. But that phrase ‘when it applies’ is important—because it often doesn’t.”

The Court’s opinion in Kisor is available in its entirety here.

Reporter, Kiel Yager, Sacramento, + 916 321 4811, kyager@kslaw.com.

ALSO IN THE NEWS

King & Spalding Roundtable: #Metoo Risks Facing Healthcare Providers – King & Spalding will host a webinar on Tuesday, July 23, 2019 from 1:00 P.M. – 2:30 P.M. ET discussing “#metoo” risks that healthcare providers are facing and how they can minimize those risks. This webinar will address:

  • The legal and business impact of the #metoo movement;
  • Recent sexual misconduct scandals involving healthcare providers;
  • Understanding the risks of sexual misconduct allegations and common themes found in such allegations relating to healthcare providers;
  • Reducing the risks of sexual misconduct scandals through effective policies and practices; and
  • Conducting a #metoo wellness assessment.

Registration for this event is available here.

Atlanta Life Sciences & Healthcare Group Event – The Atlanta Life Sciences & Healthcare Group is an educational, networking and social resource for professionals working in or serving the life sciences and healthcare industry. We invite you to join us for our summer event on July 31, 2019 from 5:30 P.M. – 7:30 P.M. ET to network with others working in this growing area of our economy. The event will be hosted by Parker Hudson at 303 Peachtree Street NE, Suite 3600. Please register here.