Blog: Key Insights from Today’s Supreme Court Oral Arguments in AHA’s 340B Case

With a few hours to digest this morning’s oral argument in American Hospital Association v. Becerra, I wanted provide a few high-level reactions.

First, the vast majority of the argument focused on the knotty statutory interpretation questions about whether HHS appropriately exercised its authority to “calculate[] and adjust[]” average price as “necessary for purposes of this paragraph.”

The Justices were deep in the weeds of the statutory scheme, although at times they—like all of us listening at home—acknowledged just how complex it is. For example, at one point, Justice Kagan humorously remarked: “Roman ii. I don’t even know how to do this.” And, at another point, Chief Justice Roberts sounded as if he chuckled (it’s never easy to tell when merely listening in) when referencing a statutory provision crammed with lowercase letters, capital letters, Roman numerals, and romanettes (“Section 1395l(t)(14)(A)(iii)(II)”).

But the Chief, Justice Kagan, and their colleagues all carefully drilled down on the statute and pressed both advocates about how best to interpret its many interrelated parts. It was refreshing to hear all of the Justices, regardless of ideology or who appointed them, work together to answer a complicated set of legal questions. In fact, there were moments when multiple Justices spoke up at the same time to ask the same question. It definitely seemed as if there was common cause in untangling this uncommonly complicated statutory scheme.

Second, the Court’s predominant focus on the statutory text and structure is especially noteworthy because of what the Justices focused far less on throughout the argument: (1) the government’s contention that courts cannot review the kinds of adjustments HHS made here and (2) the broader questions about whether and how to apply Chevron deference.

This is not to say that there was no discussion of Chevron. As noted in the live blog, the very first question of the argument from Justice Thomas was about the continuing viability of Chevron, and some of the final questions of the argument, from Justice Gorsuch, were about how to determine whether a statute is sufficiently ambiguous to invoke the Chevron doctrine.

In addition, Justice Alito directly asked counsel for Petitioners, Don Verrilli, whether Chevron should be overturned if that was the only way he could win his case. (Unsurprisingly, he said yes.) And numerous times during the arguments, the Justices mentioned footnote 9 of Chevron, which says: “The judiciary is the final authority on issues of statutory construction and must reject administrative constructions which are contrary to clear congressional intent. . . . If a court, employing traditional tools of statutory construction, ascertains that Congress had an intention on the precise question at issue, that intention is the law and must be given effect.”

For those who follow the Court’s administrative law docket, this was no surprise. This is clearly a Supreme Court that is wrestling with how much deference it owes to administrative agencies as compared to its own role as the ultimate interpreter of federal law.

Third, there is an important connection between these two points that may foretell how this case is ultimately resolved. The usual caveats apply: it is always difficult to predict outcomes based on oral argument.

That said, it did not seem as if the Court believed it needed to — or was even prepared to — overrule Chevron in this case, on these facts, with this statute. The tone and tenor of the argument seemed — at least to me — to feel as if Chevron will live to fight another day.

Instead, the Court may continue to chip away at the Chevron doctrine as it has repeatedly done in recent years, making it harder for lower courts to reflexively defer to agency interpretations of statutes.

One such case was 2019’s Kisor v. Wilkie. As Mr. Verrilli pointed out in response to a question by Justice Kavanaugh, the Court explained in Kisor (while citing footnote 9 of Chevron): “[B]efore concluding that a rule is genuinely ambiguous, a court must exhaust all the ‘traditional tools’ of construction.” As Mr. Verrilli put it: “you have to exhaust the toolkit.” And although Mr. Verrilli did not mention this particular passage, the Court notably went on in Kisor to state:

That means a court cannot wave the ambiguity flag just because it found the regulation impenetrable on first read. Agency regulations can sometimes make the eyes glaze over. But hard interpretive conundrums, even relating to complex rules, can often be solved.”

This may be exactly what we have here: An eye-glazingly complex statute that, with some hard work, nevertheless yields an unambiguous meaning. In the end, the Court may very well agree with Mr. Verrilli’s final words in his rebuttal: “How much ambiguity is enough? I think the answer is waaaaaaay more than you have here.”

If Mr. Verrilli is right, we will now just have to wait a few more months to find how the Court decides to unambiguously interpret the statute.

Chad Golder is an attorney who authored an amicus brief filed by 37 state and regional hospitals associations in support of the AHA’s arguments in the 340B case. If you missed his live blog during the oral arguments, view it here. The views of the author do not necessarily represent the views of the AHA.