Scholar warns that the fall of Chevron deference could destabilize health care fraud enforcement
In June of last year, federal prosecutors charged over a dozen individuals with perpetrating a scheme involving $10.6 billion in fraudulent health care claims—the largest case of alleged health care fraud ever uncovered in the United States
Although this case illustrates federal prosecutors’ vigilance in seeking to tamp out health care fraud, scholars express concerns that the U.S. Supreme Court’s 2024 decision in Loper Bright v. Raimondo could undermine future enforcement of health care fraud laws. In a forthcoming article, Joan H. Krause of the University of North Carolina School of Law argues that Loper Bright will prompt enforcement agencies to rely on informal guidance documents to share their interpretations of health care fraud laws, creating instability in future enforcement.
Krause explains that, for forty years, federal courts deferred to agency interpretations of ambiguous statutes, following an approach announced by the Supreme Court in Chevron v. Natural Reht decision, the Supreme Court rejected this deferential framework, holding that judges—not administrative agencies—must resolve statutory ambiguities, even in technical contexts
This shift in judicial deference has the potential to transform health care fraud enforcement, Krause contends. She explains that the U.S. Department of Justice and the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) both bear the responsibility of enforcing health care fraud statutes, such as the Anti-Kickback Statute, Stark Law, and False Claims Act
These broad, overlapping laws, Krause writes, allow the Justice Department and the HHS-OIG to issue criminal charges, civil penalties, or disqualifications from federal health care programs. Yet Krause notes that the health care fraud statutes contain vague terms, such as “material fact” and “reasonable,” making it difficult for the health care industry to understand the scope of the laws without clarification from the HHS-OIG or the Justice Department
The Justice Department and the HHS-OIG have historically sought to clarify statutory ambiguities by issuing legally binding rules under the notice-and-comment process of the Administrative Procedure Act. Under this process, agencies cannot finalize rules until they give the public an opportunity to provide feedback
Across the federal government, enforcement agencies have relied on rules to underpin many prosecutions, Krause explains. She argues that, after Loper Bright,defendants may feel emboldened to challenge agency rules, because courts no longer owe deference to agencies’ statutory interpretations
In response to litigation fears, Krause predicts that enforcement agencies will turn to non-binding, interpretive guidance to share their views on health care fraud enforcement. She defines interpretive guidance as documents that agencies issue to communicate statutory interpretations outside of notice-and-comment rulemaking
Krause emphasizes that, although interpretive guidance does not have the direct force of law, the health care industry relies on such guidance to understand how the HHS-OIG and the Justice Department will enforce health care fraud statutes. She observes that the HHS-OIG already publishes guidance materials in the form of advisory opinions and “alerts” that warn the health care sector about potential fraud risks. Because interpretive guidance is easier to issue and faces fewer litigation risks than do binding agency rules, Krause contends that the HHS-OIG and the Justice Department will rely on such guidance more frequently in an era of reduced judicial deference to agencies.
Although reliance on interpretive guidance could reduce the risk of litigation for the Justice Department and the HHS-OIG, Krause warns that greater dependence on such guidance could impose fluctuating compliance burdens on leaders in the health care industry
Krause argues that with agencies’ increased reliance on interpretive guidance, health care leaders will need to review a greater volume of materials to comply with laws governing health care fraud. Krause suggests that this review process will be burdensome, especially because the HHS-OIG and the Justice Department sometimes try to oversimplify guidance materials, which makes agency expectations unclear to the public. And because enforcement agencies can modify or withdraw interpretive guidance without public input, Krause cautions that the health care industry may face shifting obligations with little notice. Changing guidance could make it more difficult to comply with health care fraud laws, Krause urges.
Krause warns her readers that smaller actors in the health care sector may have an especially difficult time navigating the potential growth in interpretive guidance. With limited legal and compliance rees to interpretive guidance
Furthermore, when private health care actors face enforcement lawsuits, Krause contends that they may not find success from relying on agencies’ interpretive guidance to defend their conduct. She acknowledges that some federal courts have found interpretive guidance persuasive when defendants show that they have strictly followed it. Still, she indicates that few federal court opinions on health care fraud cite guidance from the HHS-OIG, suggesting that courts give weight to interpretive guidance in limited cases.
Health care fraud enforcement operates in a maze of complex, overlapping laws, regulations, and subregulatory guidance, Krause observes. She argues that Loper Bright may further complicate enforcement efforts as the health care industry struggles to keep pace with ever-changing interpretive guidance. Krause concludes that the end of Chevron may spell legal instability for the nation’s health care system
Tagged: Administrative Procedure Act, Health Care, health care regulation, HHS, Loper Bright
