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Faculty Reactions to AHA v. Becerra

June 15, 2022

Prof. Coglianese and Prof. Hoffman share their perspectives on the recent Supreme Court decision.

Two University of Pennsylvania Carey Law School professors have issued statements on the Supreme Court’s unanimous decision in American Hospital Association v. Becerra.

Cary Coglianese, Edward B. Shils Professor of Law and Professor of Political Science:

In AHA v. Becerra, the Court dodged entirely the question of the status of its longstanding precedent in Chevron v. NRDC. The question was teed up by the litigants and received sustained consideration by the justices during oral argument. In fact, the very first question following the petitioner’s opening statement — asked by the otherwise long-quiet Justice Thomas — directly raised the issue of whether the Court should overturn Chevron. But in the end, the Court did not even cite to Chevron in its unanimous decision today in Becerra, let alone give any discussion to it.

Justice Kavanaugh’s opinion for the Court does make what might be seen as an oblique reference to Chevron, stating at its end that, “after employing the traditional tools of statutory interpretation, we do not agree with HHS’s interpretation of the statute.” This “traditional tools” phrasing parrots Chevron without citing it. If Chevron is still alive, this could mean that today’s decision was determined on Chevron Step One grounds. But perhaps the mere fact that the Court says simply that it “does not agree” with HHS means that Chevron is actually dead. Perhaps in the future judges are supposed to conduct their own interpretation of statutes without ever any regard or deference given to the agency’s role under a statute authorizing it to implement its terms.

We simply do not know. It is conceivable still that the Court will provide further clarity about Chevron’s status in another case remaining to be decided this term, such as Becerra v. Empire Health or West Virginia v. EPA. Both these other cases involve disputes involving agencies’ interpretations of statutes. Of course, it is also possible that the Court will in these cases again simply give Chevron the silent treatment. If so, the silence we saw in today’s decision may be part of a deliberate strategy of allowing Chevron to wither on the jurisprudential vine and ultimately die from desuetude. We will have to wait and see.

Professor of Law Allison K. Hoffman:

Today, the Supreme Court decided that the Department of Health and Human Services (HHS) overstepped its statutory bounds in decreasing drug reimbursement for 340B hospitals without collecting survey data on their acquisition costs of certain drugs. The statute provided that HHS must pay hospitals average prices in the absence of such data.

Justice Kavanaugh wrote for a unanimous court: “Under the text and structure of the statute, this case is therefore straightforward: Because HHS did not conduct a survey of hospitals’ acquisition costs, HHS acted unlawfully by reducing the reimbursement rates for 340B hospitals.” The opinion is a straightforward reading of the statute.

The implication of this decision is that HHS will have to repay the 340B hospitals the difference between their lower rate and a higher rate paid other hospital for the two years at issue (2018 and 2019). After that point, HHS collected survey data that will justify lower rates consistent with the Medicare statute. The larger policy issue, which this case leaves unresolved, is how to tailor federal support for hospitals that disproportionally care for underserved populations.

Coglianese is the Director of the Penn Program on Regulation. He specializes in the study of administrative law and regulatory processes, with an emphasis on the empirical evaluation of alternative processes and strategies and the role of public participation, technology, and business-government relations in policy-making.

Hoffman is an expert on health care law and policy and examines some of the most important legal and social issues of our time, including health insurance regulation, the Affordable Care Act, Medicare and retiree healthcare expenses, and long-term care.

Read Coglianese’s and Hoffman’s previous commentary on the case.