Exploring Opportunities for Private Litigants in Health Care-Related Agency Actions Under the Stark Law

The US Supreme Court’s recent opinion in Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce has opened up new opportunities for private litigants to challenge health care-related agency actions, particularly with respect to the Stark Law. This landmark decision requires courts to exercise “independent judgment” when reviewing an agency’s interpretation of a statute, rather than deferring to the agency’s interpretation under Chevron.

The Stark Law prohibits physicians from referring patients for designated health services to entities in which they have a financial relationship, and it prohibits those entities from submitting claims for reimbursement by CMS resulting from such referrals unless certain exceptions apply. The Court’s opinion in Loper Bright increases the likelihood of success for those challenging broad agency enforcement regulations in the health care industry.

One recent case, United States ex rel. Raven v. Georgia Cancer Specialists I, P.C., provides insight into how providers could use Loper Bright as a shield in Stark Law litigation. The case involved allegations of improper referral arrangements, with the physician group arguing that their arrangements met certain Stark Law exceptions. However, the district court disagreed, citing Chevron and determining that the regulations were a permissible interpretation of the Stark Law by CMS.

Despite the opportunities presented by Loper Bright, there are important limitations to keep in mind. The Court’s decision only applies to agency actions under Chevron, and decisions by federal district courts are nonprecedential. Additionally, the Stark Law specifically grants HHS the authority to promulgate exceptions for certain arrangements, which may impact how courts review regulations in the future.

Overall, Loper Bright offers new opportunities for those in the health care industry to challenge agency enforcement and seek greater protections. It opens the door for challenges in various areas of health care law, including agency oversight, fraud and abuse, data privacy, and more. The industry is poised for a new era of legal battles and regulatory scrutiny in light of this groundbreaking decision.