Administrative Agency Interpretation, the Affordable Care Act, and ERISA

By Joseph A. Garofolo

On June 25, 2015, the Supreme Court decided King v. Burwell, 576 U.S. ____, 192 L. Ed. 2d 483 (2015).  The Court held that the Patient Protection and Affordable Care Act (the “Affordable Care Act”) permits tax credits in states in which the federal government has established health care exchanges.  While most of the focus of commentators, understandably, has been on this substantive result, King is also interesting because of the Court’s analysis of Chevron deference.

Chevron deference is the principle articulated by the Court in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), that, under certain circumstances, courts must defer to reasonable interpretations of agencies when a statute is ambiguous.  In King, Chief Justice Roberts, writing for the Court, explained that Chevron deference assumes that Congress implicitly delegated authority to an agency to interpret “statutory gaps.”  192 L. Ed. 2d at 493 (internal quotations and citation omitted).  But, in “extraordinary cases, . . . there may be reasons to hesitate before concluding that Congress has intended such an implicit delegation.” Id. at 493-94 (internal quotations and citations omitted).  With regard to the availability of tax credits in states where exchanges have been established by the federal government, if Congress had desired to delegate authority to an agency, “it surely would have done so expressly.”  Id. at 494.  Moreover, the Court reasoned that Congress would not likely have delegated such an important decision to the Internal Revenue Service because of its lack of expertise regarding the subject matter.  Accordingly, the Court decided King without any deference to the Internal Revenue Service’s interpretation of the Affordable Care Act.

This is not the first time that the Court has invoked what has come to be known as the “major questions doctrine.”  See Adam White, Symposium: Defining deference down, SCOTUSblog, June 25, 2015,  And although the result was necessary in King to avoid the possibility that a different administration could change its interpretation of the Affordable Care Act, it is also possible that King could signal a broader retreat from the Court’s application of Chevron deference.  See id. 

Is this likely to occur in the field of ERISA?  There are a number of places in the statute where Congress expressly delegated interpretative authority to the Secretary of Labor.  For example, ERISA § 503, which addresses the claims procedure that must be provided by employee benefit plans (including retirement and health and welfare plans), expressly grants the Secretary authority to promulgate a regulation.  Perhaps more importantly, ERISA § 505 grants broad authority to the Secretary to promulgate regulations relating to Title I.  Therefore, the major questions doctrine is not likely to play a role with regard to the Secretary’s interpretative authority as it pertains to most significant ERISA issues.

Finally, one quick note regarding a previous post is necessary to close the book for now on King.  The prior post discussed a method of predicting the outcome of Supreme Court cases based on the number of questions asked by the Justices to each side.  This method predicted the wrong outcome in King.  However, in fairness, the professor who has been collecting data on the method had placed the case in the toss-up category.  And Justice Roberts asked only one question.  So, from an empirical standpoint, the case probably does not tell us much about the ultimate ability of the method to consistently predict the outcome of Supreme Court decisions.