Stark law policies could be more vulnerable to legal challenges after the Supreme Court overturned the 40-year-old legal precedent known as Chevron deference, which said during disputes over regulation of an ambiguous law, judges should defer to federal agency interpretations within reason, National Law Review reported July 23.
The ruling requires courts to exercise independent judgment when reviewing an agency's interpretation of a statute rather than deferring to that agency’s interpretation, which opens the door for different interpretations surrounding Stark law based on prior litigation.
A past challenge to CMS' interpretation of Stark law, where the court previously referred to CMS' ruling, could provide a glimpse into what to expect with future litigation, according to the report.
Here are five things to know:
1. A joint venture of private urologists challenged the CMS definition of "entity furnishing designated health services" under Stark law in 2015, arguing that the regulation wrongly defined the designation to include joint ventures. The U.S. Court of Appeals rejected the challenge, deferring to CMS's interpretation of the Stark law under Chevron.
2. A court facing a similar challenge could disagree with the CMS' definition, according to the report, and potentially exclude joint ventures from the definition. The ruling provides "private litigants with a much stronger tool to test the limits on physician arrangements," the report said.
3. In the ruling, the Supreme Court said that it does not call into question past cases that relied on the Chevron framework, but the caveat does not insulate all existing regulations from challenges. With this, nothing prevents litigants from challenging the definition in another jurisdiction.
4. The ruling instead confirms that existing Supreme Court precedent relying on Chevron continues to bind all federal courts, and that existing precedent from federal courts of appeal continues to bind future panels of those particular courts within their jurisdictional boundaries.
5. These new stipulations increase "the likelihood of success for those in the healthcare industry challenging agency regulations, both existing ones and those yet to come," the report said.