Constitutional Law Archives - The National Law Forum

Office Politics: The Basics for Private Employers

In case you haven’t noticed the yard signs popping up like mushrooms, the constant barrage of television and radio advertisements, or the unsolicited text messages from unknown numbers, we are in the homestretch of election season. For those employers with questions on how to handle political speech in the workplace, especially during the last few days before (and hopefully not much beyond) Election Day, here is a refresher on the basics for private employers.

The First Amendment to the U.S. Constitution prevents the government from enacting laws to prohibit the free exercise of speech and assembly, among other liberties. It does not apply to private employers. Where there is no state action involved, there is no unfettered right to free speech in a private place of employment. Quite simply, a private employer can enact rules to keep political expression from its workplace. Some employers prohibit political speech in the workplace to avoid potential disruptions to business operations, customer relations, or employee morale.

If an employer adopts a policy concerning political expression and messaging, it must do so fairly and consistently, and it should be inclusive and consistent to avoid the perception of favoritism or discrimination. In other words, if an employer requires Meghan to remove her Kamala button, it should also direct Dennis not to wear his Trump t-shirt. Remote workers are still “in the workplace” when they participate in virtual meetings, so there are no separate rules for them.

When enacting rules about political expression and messaging in the workplace, private employers should of course remain aware of the National Labor Relations Act (NLRA), which applies to both union and non-union settings, and among other things protects employees’ ability to engage in concerted activity or to discuss the terms and conditions of their employment. Therefore, private employers must be mindful of a potential nexus or overlap between employees’ political speech and discussion of working conditions. Under the NLRA, for instance, employees may distribute information during non-working time about a candidate’s stance on a particular issue that may also constitute a complaint about the employees’ working conditions.

It’s Election Time: Time Off to Vote, Political Activities, and Political Speech in the Workplace

With Election Day quickly approaching, it is the right time for employers to refresh themselves on the various protections that may exist for their employees when it comes to voting and other political activities. Below is an overview of employees’ rights related to voting and other political activities leave, as well as protections for political speech and activity both in and outside the workplace.

Voting Leave Laws

Approximately thirty states require that employers provide their employees with some form of time off to vote. Twenty-one of these states require that the leave be paid. The exact contours of these laws – such as the amount of leave, notice requirements, and whether there is an exception when the employee has sufficient time outside of working hours to vote – vary by state. For example:

In New York, employers must provide leave to employees who do not have sufficient time outside of working hours to vote. An employee is deemed to have sufficient time to vote if the polls are open for four consecutive hours before or after the employee’s shift. Employees who do not have such a four-hour window are eligible to take the amount of leave that will – when added to their voting time outside working hours – enable them to vote, up to two hours of which must be without loss of pay. Employees may take time off for voting only at the beginning or end of their shift, as designated by the employer, unless otherwise mutually agreed to between the employee and employer. Employees are required to notify their employer that working time off to vote is needed between two and ten working days before the election.
Similarly, in California, employees are entitled to sufficient time off to vote, up to two hours of which must be paid. Unless the employer and employee agree otherwise, the employee must take the leave at the beginning or end of the employee’s shift, whichever allows the most time to vote and the least time off from work. Employees are required to provide notice that time off to vote is needed at least two working days before the election.
In the Washington, D.C., employees are entitled to up to two hours of paid leave to vote in either an election held in D.C. if the employee is eligible to vote in D.C., or in an election held in the jurisdiction in which the employee is eligible to vote. Employees must submit requests for leave a reasonable time in advance of the election date. Employers may specify the hours during which employees may take leave to vote, including requiring employees to vote during the early voting period or vote at the beginning or end of their shift during early voting or election day.
In Illinois, employers must provide two hours of paid voting leave to employees whose shifts begin less than two hours after the opening of the polls and end less than two hours before the closing of the polls. Employees must provide notice of the need for leave before the day of the election.
In Maryland, employees are entitled to up to two hours of paid voting leave, unless the employee has at least two non-working hours to vote while the polls are open. Employees must furnish proof to their employers that they either voted or attempted to vote, which can be in the form of a receipt issued by the State Board of Elections.

Certain states, includingNew York, California, and Washington, D.C., require that employers post a notice of an employee’s right to take leave in a conspicuous location before the election. Sample notices have been published by the New York State Board of Elections, the California Secretary of State, and D.C. Board of Elections.

Other Political Leave Laws

Some states require that employers provide leave for political-related reasons beyond just voting. For example:

Alabama, Delaware, Illinois, Kentucky, Nebraska, Ohio, Virginia, and Wisconsin require that certain employers provide unpaid leave for employees to serve as election judges or officials on Election Day. In Minnesota, employees are entitled to paid leave for this reason; however, employers may reduce an employee’s salary or wages by the amount the employee receives as compensation for their service as an election judge.
Minnesota and Texas require that certain employers provide employees with unpaid leave to attend party conventions and/or party committee meetings.
Connecticut, Iowa, Maine, Nevada, Oregon, South Dakota, and Vermont require that certain employers provide employees with an unpaid leave of absence to serve as elected members of state government. In Iowa, employees are also entitled to leave to serve in a municipal, county, or federal office.
In Vermont, employees may take unpaid leave to vote in annual town hall meetings.

Some of these laws only apply to larger employers. For example, in Nevada, employers with at least fifty employees are required to provide leave for employees to serve as members of the state legislature. State laws also vary with respect to the amount of notice that employees must provide to their employers in order to be eligible for leave.

Political Speech in the Workplace

In our current political climate, many employers are concerned with what steps they can take regarding political speech and activity in the workplace. When these discussions or activities occur during working hours, they have the potential to negatively impact performance, productivity, or even possibly cross the line into bullying or unlawful harassment.

When employees publicly attend political rallies or support causes on social media, they may also (intentionally or not) create an actual, or perceived, conflict of interest with their employer. The complicated question of what exactly employers can do around employee political speech and activity is governed by various sources of law, some of which is discussed below.

Additionally, for employers with designated tax statuses, certain political speech can give pose risk to an organization’s tax-exempt status. Many tax exempt-organizations are subject to significant restrictions on lobbying and political activities. For example, 501I(3) organizations risk losing their tax-exempt status if they engage in political campaign activities or if a substantial part of its activities involves lobbying. Speech by an employee that constitutes political campaign or lobbying activity risks being attributed to an organization if an employee’s speech is seen as representative of the organization and being ratified by the organization. For example, if an employee urges their social media followers to contact their state representative about proposed legislation, this risks carrying the inference that the employee was speaking on behalf of the organization.

Employee “Free Speech”

There is no general right to “free speech” in a private sector workplace. Because the U.S. Constitution is primarily concerned with state actors, the First Amendment does not prevent private employers from prohibiting or restricting political speech in the workplace. Therefore, subject to certain exceptions discussed below, private sector employers are generally able to enact prohibitions around discussing politics at work and discipline employees for violating such policies.

However, as noted, an employer’s ability to restrain political speech in the workplace comes with some restrictions. At the federal level, Section 7 of the National Labor Relations Act (“NLRA”), which applies to both unionized and non-union employees, protects certain “concerted activities” of employees for the purposes of “mutual aid or protection.” Political speech or activity that is unrelated to employment, such as an employee distributing pamphlets generally encouraging co-workers to vote for a candidate or support a political party, would not likely be covered or protected by the NLRA. The NLRA therefore does not universally prevent employers from prohibiting political discussions or activities in the workplace.

However, political speech may be protected by the NLRA when it relates to the terms or conditions of employment, such as communicating about wages, hours, workplace safety, company culture, leaves, and working conditions. Therefore, an employee encouraging co-workers to vote for a candidate because the candidate supports an increase in the minimum wage might claim to come under the protection of the NLRA.

State laws may also place certain limitations on employer attempts to restrict employee political speech. For example, Connecticut law prohibits employers from taking adverse action against employees for exercising their First Amendment rights, provided that such activity does not interfere with the employee’s job performance or the employment relationship.

Lawful Outside Activity/Off-Duty Conduct

Many states have laws that prohibit adverse action against employees based on lawful activities outside the workplace, which may include political activities. For example:

In approximately a dozen states, employers are prohibited from preventing employees from participating in politics or becoming candidates for public office. New York Labor Law § 201-d prohibits employers from discharging or otherwise discriminating against employees because of their “political activities outside of working hours, off of the employer’s premises and without use of the employer’s equipment or other property, if such activities are legal.” Political activities include (1) running for public office, (2) campaigning for a candidate for public office, or (3) participating in fund-raising activities for the benefit of a candidate, political party, or political advocacy group. Similar laws exist in California, Louisiana, and Minnesota, among other states.
Other states – including Delaware, Florida, Massachusetts, and New Jersey– prohibit employers from attempting to influence an employee’s vote in an election. In Florida, “[i]t is unlawful for any person … to discharge or threaten to discharge any employee … for voting or not voting in any election, state, county, or municipal, for any candidate or measure submitted to a vote of the people.” A dozen or so states approach this issue in a more limited fashion by prohibiting employers from attaching political messages to pay envelopes.
At least two states, Illinois and Michigan, prohibit employers from keeping a record of employee’s associations, political activities, publications, or communications without written consent.
Washington, D.C. prohibits discrimination in employment on the basis of political affiliation. Despite its seemingly broad scope, this statute has been interpreted to only protect political party membership and not (1) membership in a political group, or (2) other political activities, such as signing a petition.

These laws vary considerably from state to state, so it is important for employers to consult the laws when considering policies or rules around employee political activity.

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As the election approaches and early voting takes place, employers should review the applicable laws for each jurisdiction in which they operate and ensure that their policies and practices are compliant. Employers should also ensure that managers are well versed in the employer’s policies around voting and political speech and activities so that they can properly respond as situations arise.

Federal District Court in Florida Holds FCA’s Qui Tam Provisions Unconstitutional

In the Supreme Court’s 2022 decision in United States ex rel. Polansky v. Executive Health Resources, Inc., three justices expressed concern that the False Claims Act’s qui tam provisions violate Article II of the Constitution and called for a case presenting that question. Justice Clarence Thomas penned a dissent explaining that private relators wield significant executive authority yet are not appointed as “Officers of the United States” under Article II. Justice Brett Kavanaugh and Justice Amy Coney Barrett, concurring in the main opinion, agreed with Justice Thomas that this constitutional issue should be considered in an appropriate case.

Earlier this year, several defendants in a non-intervened qui tam lawsuit in the Middle District of Florida took up the challenge. The qui tam, styled United States ex rel. Zafirov v. Florida Medical Associates, LLC et al., involves allegations of Medicare Advantage coding fraud. After several years of litigation, the defendants moved for judgment on the pleadings, arguing the relator’s qui tam action was unconstitutional, citing Justice Thomas’s dissent in Polansky.

The defendants’ motion prompted a statement of interest from the United States and participation as amici by the U.S. Chamber of Commerce and the Anti-Fraud Coalition. The Court also asked for supplemental briefs on Founding-era historical evidence regarding federal qui tam enforcement.

On September 30, 2024, Judge Kathryn Kimball Mizelle granted the defendants’ motion, agreeing the relator was unconstitutionally appointed and dismissing her complaint. Judge Mizelle, who clerked for Justice Thomas, held a private FCA relator exercises significant authority that is constitutionally reserved to the executive branch, including the right to bring an enforcement action on behalf of the United States and recover money for the U.S. Treasury. In doing so, a relator chooses which claims to prosecute, which theories to raise, which defendants to sue, and which arguments to make on appeal, resulting in precedent that binds the United States. Yet, a relator is not appointed by the president, a department head, or a court of law under Article II, making the qui tam device unconstitutional.

Judge Mizelle distinguished historical qui tam statutes, which were largely abandoned early in our nation’s history, on the ground that few gave a relator the level of authority the FCA does. And while the FCA itself dates back to the Civil War, the statute largely remained dormant (aside from a flurry of use in the 1930s and 40s) until the 1986 amendments set off a new wave of qui tam litigation.

The ruling is significant for the future of the FCA. As Judge Mizelle’s opinion explains, most FCA actions are brought by relators as opposed to the government itself. If the decision is upheld on appeal, a number of outcomes are possible. If the FCA is to continue as a significant source of revenue generation for the government, the DOJ must devote more resources to bringing FCA actions directly. Congress may also consider amending the FCA’s qui tam provisions to limit relators’ authority to conduct FCA litigation, thereby maintaining the statute as a viable avenue for whistleblowing.

One thing is almost certain, however. FCA defendants across the country will likely raise similar arguments in light of Judge Mizelle’s ruling. Whether in Zafirov or another case, it appears the Supreme Court will get to decide the constitutionality of the FCA’s qui tam provisions sooner rather than later.

Is It the End of the False Claims Act As We Know It? District Court Rules Qui Tam Provisions Unconstitutional

In a first-of-its-kind ruling on 30 September 2024, Judge Kathryn Kimball Mizelle of the US District Court for the Middle District of Florida held in United States ex rel. Zafirov v. Florida Med. Assocs., LLC that the qui tam provisions of the False Claims Act (FCA) are unconstitutional. No. 19-cv-01236, 2024 WL 4349242, at *18 (M.D. Fla. Sept. 30, 2024). Specifically, Judge Mizelle found that qui tam relators in FCA actions qualify as executive branch “Officers” who are not properly appointed, thereby violating the Appointments Clause of Article II of the US Constitution.

The holding adopts Appointments Clause arguments that have been gaining traction in recent Supreme Court opinions. It also addresses some of the “serious constitutional questions” that Justice Clarence Thomas had raised regarding the FCA’s qui tam provisions in his dissent in the Supreme Court’s June 2023 decision in United States ex rel. Polansky v. Exec. Health Res., Inc., 599 U.S. 419, 449 (2024) (Thomas, J., dissenting). Notably, Judge Mizelle’s decision in Zafirov is contrary to a number of other decisions post-Polansky that rejected similar constitutional arguments.

The decision is sure to be appealed to the Eleventh Circuit and it remains to be seen whether Judge Mizelle’s rationale will withstand appellate scrutiny. In any event, for the time being, the defense bar has a new tool in its arsenal to seek dismissal of qui tam FCA actions. Moreover, if the decision stands, it will have broad ramifications on the FCA, which has provided for qui tam actions (a form of “whistleblower” activity) since the FCA’s enactment in 1863. Cases filed by qui tam relators have comprised the largest portion of overall FCA recoveries for years, accounting for 87% of FCA recoveries in the most recent fiscal year. For additional data on qui tam cases, see our firms’ recent white paper here.

Summary of the Decision

In 2019, the relator, a board-certified family care physician, filed a qui tam FCA action against her employer and several other providers, as well as Medicare Advantage Organizations (MAOs). The relator alleged that the providers acted in concert with the MAOs to artificially increase the risk adjustment scores of Medicare Advantage enrollees, in turn increasing the defendants’ capitated payments from the government.

After a lengthy procedural history involving multiple rounds of motions to dismiss, in February 2024, the defendants sought judgment on the pleadings, arguing that the FCA’s qui tam provisions violate the Appointments, Vesting, and Take Care Clauses of Article II of the US Constitution. The defendants also argued that historical practice does not cure the qui tam provisions’ constitutional defects. The United States intervened solely to defend the constitutionality of the FCA’s qui tam provisions, with several amici curiae also filing briefs.

The court did not reach the Vesting and Take Care Clause arguments but agreed with defendants that the qui tam provisions violate the Appointments Clause. Analyzing that question, the court first found that qui tam relators are “Officers of the United States” because: (1) relators exercise significant authority by possessing civil enforcement authority on behalf of the United States; and (2) relators occupy a “continuing position” established by law given that the FCA prescribes their statutory duties, powers, and compensation and the position is analogous to other temporary officials that wield core executive power, such as bank receivers and special prosecutors. Second, the court found that Article II of the US Constitution contains no qui tam exception, rejecting arguments that historical practice confirms the qui tam provisions’ constitutionality. The court stated that “[w]hen the Constitution is clear, no amount of countervailing history overcomes what the States ratified.” Third, the court found that because a relator is an Officer, the relator must be appointed by the president, the head of an executive department, or a court. Because relators are self-appointed by initiating their own FCA actions, the court held that the qui tam provisions violate the Appointments Clause and dismissed the action.

Key Takeaways

Although noteworthy, Zafirov is an outlier among the multiple decisions pre- and post-Polansky that have addressed the qui tam provisions’ constitutionality. The case is also expected to be appealed by both the relator and the United States to the Eleventh Circuit. Of note, the Eleventh Circuit is currently considering an appeal of a separate Appointments Clause ruling that found a special counsel was improperly appointed in United States v. Trump.
This issue could also make its way to the Supreme Court. In addition to Justice Thomas’ comments noted above, Justices Brett Kavanaugh and Amy Coney Barrett (in a concurrence in Polansky) acknowledged that “[t]here are substantial arguments that the qui tam device is inconsistent with Article II” and suggested that the Court consider those arguments in an “appropriate case.” Time will tell whether Zafirov is that case.
The anti-whistleblower holding in Zafirov stands in sharp contrast to other recent notable developments that encourage whistleblower activity, including the US Department of Justice’s Corporate Whistleblower Awards Pilot Program and similar initiatives, as well as recent US Securities and Exchange Commission enforcement actions.
Despite the expected appeals, the success in Zafirov raises important issues for FCA defendants and the defense bar to evaluate, and the decision may open the door to similar arguments in other FCA qui tam actions. For one, it remains to be seen what impact Zafirov should have where a defendant is considering settling in a nonintervened case and whether a conditional settlement that preserves the right to appeal the constitutional issue is appropriate. Other courts may also draw different lines, including if and how the government’s decision to intervene impacts the constitutional analysis. These will all be important issues for affected companies and FCA practitioners to consider and keep an eye on.

Our Firm’s FCA lawyers will continue to closely monitor these developments.

Unlocking the Benefits of U.S. Citizenship

Each year, on Sept. 17, Americans celebrate Constitution and Citizenship Day. While there are many paths to citizenship – born in the U.S. or a U.S. territory, born abroad to U.S. citizens or naturalized – we all enjoy the same advantages, and equally important responsibilities. As we reflect on these responsibilities of citizenship and what it means to be a U.S. citizen, we also explore the numerous benefits and incredible opportunities that U.S. citizenship has to offer.

Benefits of U.S. citizenship

Visa-free travel

There are so many advantages when it comes to travel and the ease of travel when you’re a U.S. citizen. For example, you don’t need to prove potentially every time that you intend to make the United States your home. Permanent residents are required to show roots and ties to the U.S., and that they want to be a permanent resident and make the United States their permanent home. In addition, for lawful permanent residents, additional travel documents may be needed if you have long trips outside the U.S. By being a U.S. citizen, those requirements are no longer necessary.

Traveling with a U.S. passport allows for assistance from the government when abroad, as well as possession of one of the most travel-friendly statuses available today. U.S. passport holders can travel to certain countries without a visa. Being a U.S. citizen and having a U.S. passport opens many doors and removes a lot of visa requirements and other challenges when traveling to other countries.

The right to vote

The Constitution and laws of the United States grant numerous rights exclusively to citizens, with one of the most fundamental being the right to participate in federal elections. This right is particularly significant when compared to many countries where citizens lack a voice in their government and cannot effectively communicate their values and what’s important to them by voting. In contrast, U.S. citizens have the power to influence the nation’s future by voting for representatives and leaders who align with their values and priorities.

Keep the family together

U.S. citizenship provides a strong safeguard against family separation with the privilege of helping immediate relatives, such as a spouse, parents and unmarried children, to obtain permanent residency.

Federal employment opportunities

Most jobs within government agencies require U.S. citizenship, so becoming eligible for federal job opportunities can be a significant public service professional opportunity, including running for office to become an elected official.

Access to federal benefits

U.S. citizens are eligible for certain federal scholarships and grants and access to federal public benefits for basic needs, including Social Security benefits, Medicare and Medicaid. Citizens are also eligible for government-sponsored legal aid, which provides free or low-cost legal assistance to ensure all citizens have access to justice regardless of their financial situation.

George Washington’s Whisky Distillery, 21st Century Edition

You might think the laws of King Edward I of England (1239-1307), George Washington’s whisky distillery, and an 1807 “Treatise on the Law of Idiocy and Lunacy” have little to do with the federal criminal code of 2024. And you might think they have even less to do with contemporary federal regulation of cannabis. But the Supreme Court’s test for the Second Amendment right to keep and bear arms requires litigants and courts to become historians scouring the archives. So, the U.S. Court of Appeals for the Fifth Circuit recently held a federal criminal statute barring unlawful users of controlled substances from possessing firearms and ammunition, 18 U.S.C. § 922(g)(3), was unconstitutional as applied. The government’s prosecution of a “non-violent, marijuana smoking gunowner” was dismissed (United States v. Connelly, — F.4th — (5th Cir. 2024).

Those intrigued by the ins and outs of historical firearms regulations, and the back and forth between the Supreme Court and Fifth Circuit on that issue, can study the court’s opinion. The facts, however, were straightforward and seemingly commonplace. The defendant “would at times smoke marijuana as a sleep aid and for anxiety.” So do countless Americans, in full compliance with applicable state laws allowing just such uses. The defendant owned a firearm. Again, nothing remarkable there. Yet federal officials charged the defendant with violating criminal law. The Fifth Circuit put an end to the prosecution, as it did in a similar case last year, United States v. Daniels, 77 F.4th 337 (5th Cir. 2023), vacated, 144 S. Ct. 2707 (2024) (for reconsideration in the light of United States v. Rahimi, 144 S. Ct. 1889 (2024)), which we discussed last year here.

Three takeaways stand out for the industry:

1. The federal classification of cannabis does not trump constitutional rights.

Noticeably absent from the Fifth Circuit’s reasoning was any deference to the federal scheduling of cannabis as a controlled substance. That may be due to the unique historical test applicable to the Second Amendment. Still, the opinion shows the Constitution has no cannabis exception. Judicial statements like “[m]arijuana user or not,” the defendant “is a member of our political community and thus” has constitutional rights are a welcome change in emphasis. When facing an enforcement challenge, industry participants should evaluate constitutional challenges they may have. The Constitution may just win the day.

2. Analogies to regulation of alcohol carried more weight than analogies to other regulatory schemes.

The government tried to analogize cannabis users to several regulatory schemes, including a tenuous (at best) analogy to mental health. Nothing doing there. The Fifth Circuit instead analogized to alcohol regulation, concluding that both alcohol and cannabis can cause a temporary, potentially “impairing influence.” So, just as the federal government does not charge firearms owners with violating 18 U.S.C. § 922(g)(3) because they occasionally consume alcohol, the government could not prosecute the defendant because she occasionally consumed cannabis.

This decision suggests that future enforcement targets might find success in analogizing cannabis to alcohol. Subject to appropriate regulatory control and responsible personal use, alcohol consumption is an accepted part of American society. Indeed, as the Fifth Circuit took pains to note, American acceptance of alcohol consumption dates to the colonial period. Just ask George Washington. And it’s still going strong today. Manufacturers and distributors of alcoholic beverages can advertise their products widely — watch the Super Bowl — and they benefit from access to the banking system, stock market, and other financial opportunities closed to the cannabis industry. Situating the cannabis industry in that established history may help show that cannabis should follow a similar pattern. And it may call into question differential regulatory treatment of the two industries.

3. Supposed “dangerousness” cannot justify treating cannabis differently.

The Fifth Circuit declined the government’s invitations to analogize cannabis users to “dangerous” persons, like political traitors, whom the Constitution might permit disarming. That is, of course, a marked shift from the historical justification for the federal ban on cannabis — a supposed propensity to “incite[] violent crimes,” that modern medicine shows is false.

Rejecting the supposed “dangerousness” of occasional cannabis users furthers questions about whether prohibitions on cannabis serve a legitimate purpose. Recall Justice Clarence Thomas’s 2021 statement questioning the federal approach as a contradictory and unstable “half-in, half-out regime” that “strains basic principles of federalism and conceals traps for the unwary” (Standing Akimbo, LLC v. United States, 594 U.S. 2236 (2021) (Thomas, J., statement respecting denial of certiorari)). As more courts reject federal attempts to treat cannabis users differently from other citizens, future litigants may consider asserting constitutional due process or equal protection challenges to regulations. After all, as Connelly shows, courts stand ready to vindicate constitutional rights, “[m]arijunana user or not.”

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Supreme Court Ruling on Affirmative Action and Impact on Companies’ DEI Programs

In June 2023, the US Supreme Court voted 6-3 in a decision that significantly changed the way colleges and universities used affirmative action in their admissions. The targets of the lawsuit were Harvard University and University of North Carolina for alleged racial discrimination in admissions.

The Ruling

The Court ruled that race conscious college admission policies aimed at maintaining racially diverse student bodies violated the Equal Protection Clause of the Fourteenth Amendment. The court, though ruling out admissions solely based on race, did state, “Nothing in the opinion should be construed as prohibiting universities from considering an applicant’s discussion of how race affected his or her life.” It should be noted that court did not impose the same ruling on military academies because of their “distinct interest” in the benefits of a diverse officer corp. Though the ruling has caused an uproar in both academic and business communities, we need to remember the ruling does not significantly impact effect corporate America, yet.

Race Based Employment

The affirmative action ruling only applies to colleges and universities admissions processes. Employers are subject to Title VII of the Civil Rights Act of 1964, which is a federal law that prohibits employment discrimination based on certain factors which include race, color, religion sex (including pregnancy, sexual orientation, and gender identity) and national origin. Further, Title VII applies to all aspects of employment, including, but not limited to recruiting, hiring, promoting training and discharge. Several states, like Massachusetts, have their own version of Title VII to protect both employers and employees. Despite these protections, employers are still cautious with implementing and maintaining diversity equity and inclusion (DEI) programs. This is probably true because most companies do not see the difference between the two. Though they are similar, Title VII protects the employer and employee, while DEI programs aim to enhance the workplace experience and to some extent maximize profits. Plus, most DEI programs go beyond race based concerns and tend to embrace various other aspects of people’s lives that may be subject to bias.

Attack on DEI

Since the ruling by the Supreme Court, several state attorney generals sent letters to Fortune 500 companies stating that race-based preferences “whether under the label of diversity, equity and inclusion or otherwise” may violate federal and state antidiscrimination laws. In addition, corporations like Amazon and Comcast have had their DEI practices challenged. Several states like Florida have proposed and passed anti-DEI legislation banning certain DEI practices in state agencies. All this fervor has created the concern that the “right case” can outright destroy DEI practices and programs. Most recently, which seems like an act out of an abundance of caution, the well-known longstanding Society for Human Resources Management (SHRM) changed their focus from Inclusion, Equity and Diversity (IE&D) to Inclusion and Diversity (I&D). The concern relating to the future of DEI is palatable.

Safety Net for DEI Programs

The DEI movement is far from defeated, we must remember DEI and Affirmative Action are not the same. DEI programs, though want to ensure that various races feel accepted in the workplace, should focus on anti-bias, inclusion of all employees from various backgrounds, allyship and the appreciation of everyone’s professional and personal life experiences. You can call your program whatever you want, but it is really the approach used by employers that will survive future legal scrutiny.

Top Questions Health Care Providers Should Consider in a Post-Chevron World – A Polsinelli Round Table Discussion

Health Care is one of the most regulated industries in the country, and for many years, one of the key administrative agencies overseeing health care in the United States, the Department of Health and Human Services’ (“HHS”) Centers for Medicare & Medicaid Services (“CMS”), has enjoyed broad authority to regulate health care under the “Chevron doctrine.” Under this doctrine, CMS and other federal agencies were granted broad discretion to interpret and implement the law, thus allowing them to drive how care is delivered and paid for in the United States. It was difficult for providers to successfully challenge agency rulemaking in federal court, even if they thought the agency’s interpretation of the law was incorrect. The Supreme Court’s dismantling of Chevron doctrine will have a significant impact on health care providers, which we may begin to see as we move into CMS’s annual rulemaking cycle.

The Supreme Court’s decision to overturn Chevron was expected, but it is still too soon to truly understand the full impact of the decisions on the health care industry. A round table of attorneys and policy advisors from Polsinelli’s Health Care, Public Policy and Government Investigations Department discussed the potential short and long-term implications of the decision and offer the following insights for health care providers across this ever-changing industry for navigating the web of statutes, rules and other sub-regulatory guidance post-Chevron.

1. What do the Loper/Relentless Decisions Change for Health Care Organizations in the Short-Term? Has CMS’s Authority to Regulate Health Care Gone Away or Been Substantially Limited?

“Likely, not. Many of the health care regulations are based on clear statutory language and will continue to give providers the rules for the road from a compliance standpoint. More controversial rules – like mental health parity, payment cuts, surprise billing, antidiscrimination, etc. – may be further delayed or even tabled for the short term while we learn more about how these challenges will be viewed by the courts. To the extent health care providers are struggling with a rulemaking negatively impacting them, it is worth beginning to evaluate whether challenging it may be warranted.” – Bragg Hemme

“CMS’s authority to regulate today is just like yesterday and probably tomorrow. Without a challenger to a rule, any rule continues unchanged – at least for the short-term. We have already seen; however, some regulated entities challenge a particular rule to a federal court and get some immediate regulatory relief. Members of Congress who want to see large scale changes to regulatory authority may well pursue identification of rules that were upheld in lower courts citing Chevron with an eye towards vitiating those rules with broad Congressional action. There are thousands of such cases and potentially impacted rules.” – Jennifer Evans

“Where the crux of Loper Bright unravels the courts’ existing practice of deferring to regulators’ interpretation of a statute that is unclear or ambiguous, we can expect to see increased litigation that challenges agency action arguing that the foundational law for such action was ambiguous and the agency has exceeded its statutory authority. It is unlikely we will see any change in regulator action or regulatory enforcement unless and until courts begin to overturn agency action on the basis that a statute is ambiguous and the agency that interpretated the statute was incorrect. We can also expect to see increased legislation explicitly delegating more authority to agencies.” – Meredith Duncan and Sara Avakian

2. What are Some Specific Areas of Health Care Regulation that may be Impacted?

Health Care Fraud, Waste, and Abuse Laws

“The overruling of Chevron may have a significant effect on the application of the health care fraud and abuse laws, particularly the Physician Self-Referral Law (“Stark Law”) and Anti-Kickback Statute (“AKS”). Over the years, agencies including the HHS Office of Inspector General (“OIG”) and CMS have published hundreds of pages of rules, preamble language, and explanatory sub-regulatory guidance regarding the application of these laws. Some of these interpretations favor regulated entities, while others favor enforcers. To the extent Loper Bright represents a fundamental change in the role of agencies in clarifying or refining the scope and effect of statutory language, these implementing regulations and, thus, some longstanding health care industry practices could be impacted.” – Neal Shah

Reimbursement

“Coverage and payment rules from CMS (Medicare and Medicaid) and DHA (TriCare) may be ripe for attack. It will be interesting to see if the agencies are able or willing to engage in active negotiations to avoid or settle litigation that they did not face with Chevron deference.” – Jennifer Evans

“I anticipate that many of the routine Medicare reimbursement-related rulemakings (e.g., IPPS, OPPS, Physician Fee Schedule) will continue as they have in the past. Certain aspects of those rules or any controversial rulemakings may now be up for challenge. For instance, rules related to Disproportionate Share Hospitals have already been challenged since the Loper Bright decision. Any type of payment cut or agency effort to rein in health care costs, like Medicare drug pricing rules, surprise billing, mental health parity will also be closely scrutinized and likely challenged.” – Bragg Hemme

FDA

“Immediate impact is likely to be felt by the Lab Developed Test rule FDA is trying to finalize. Congress tried, but failed, to give the FDA statutory authority in this space via the VALID Act. The FDA went ahead and went through the rulemaking process in one year. This was lightspeed for the FDA. The rule was challenged prior to the reversal of Chevron. I expect to see the plaintiff amending their complaint now.” – Michael Gaba

Surprise Billing

“I expect the Loper/Relentless decisions will impact the continued rollout of the regulations implementing the No Surprises Act. Since the law went into effect in 2022, regulations and guidance implementing the No Surprises Act have been vacated following challenges under the Administrative Procedures Act on four separate occasions – and that was under the prior Chevron standard, which of course was more deferential to agency decisions. But there are more rules that the Agencies are expected to issue – both as a result of the prior lawsuits and as part of their ongoing obligation to implement the law – that will have a significant impact on how the No Surprises Act functions in practice. These rules will also likely depend on the Departments’ interpretation of the No Surprises Act, and such interpretation will now not be afforded the deference that existed in the pre-Loper/Relentless landscape.” – Josh Arters

3. What Areas of Health Care Regulation are less Likely to be Impacted?

HIPAA

“From an HHS data privacy/security/breach perspective, the Jarkesy and Chevron decisions will arguably have very little impact unless parties are willing to challenge HHS HIPAA decisions in court. In other words, HHS OCR is proceeding as normal, and will continue to do so, particularly given that the HIPAA Rules were codified and specifically modified by Congress in the HITECH Act in 2009. However, to the extent a client would like to appeal a civil money penalty directly to a district court (Jarkesy) or attack a specific provision of sub regulatory guidance post-Chevron (Loper Bright), we could certainly attempt to do so.” – Iliana Peters

Long-Term Care

“Long term care providers are unlikely to see any immediate changes in regulation or enforcement. In most authorizing statutes, Congress delegated authority to CMS to develop and implement conditions of participation, and the guidance that has been provided interpreting those rules. It is unlikely the Loper Bright decision will cause CMS to change its survey process or the remedies imposed therefrom. However, any regulation or sub-regulatory guidance, such as the State Operations Manual, which is not expressly authorized by statute or otherwise interprets an ambiguous statute could be ripe for litigation to challenge CMS’ authority and/or CMS’ interpretation of the statute. To determine whether specific regulations and guidance is subject to challenge will require careful consideration of the Social Security Act and the deference, if any, afforded to CMS for rulemaking.” – Meredith Duncan and Sara Avakian

State Licensing & Practice Rules

“Many of the laws that impact health care providers, such as professional or facility licensing requirements and corporate practice of medicine prohibitions, are state laws that are unlikely to be immediately impacted by Loper Bright. However, Loper Bright may become a catalyst for new challenges to state-level administrative actions, which could create uncertainty related to state agency actions, such as Medical Board rules or guidance.” – Kathleen Sutton

4. What Issues Should Health Care Organizations Anticipate in the Long-Term?

“It is unclear if there will be rule/no rule ‘chaos’ for health care organizations. When we think of all of the arrangements that default to ‘compliance with laws’ those provisions may lose meaning and effectiveness if the underlying legal rule-structure is threatened” – Jennifer Evans

“With the rise of litigation to combat potentially adverse rulemakings, we may see disagreement within the provider community to the extent some providers are ’winners’ and others are ‘losers.’ Further, we could see the same rulemaking get treated differently by courts depending on where the rules are being challenged. This will be very difficult to navigate for national providers. Hopefully, this ruling will cause regulatory agencies to take more shareholder feedback in their rulemaking. We will likely see more work needed at a Congressional level, however, if a statute is required for things that have historically been dealt with at a regulatory level, causing a slowdown. This will be a challenge, particularly for innovative providers that are changing care models or adopting new technology, for instance. Health care rules often were behind the evolution of health care. Requiring Congressional action may present some opportunities but will not make things move faster.” – Bragg Hemme

“In the long-term, health care organizations should anticipate an increased opportunity to challenge unlawful regulations that run afoul of Congressional action. That is generally a good thing. But a negative consequence of the Loper Bright decisions is the likely impact on the agency rulemaking process, and the time it might take for agencies to issue regulations. Agencies are likely to move a bit slower when issuing new regulations in light of the dramatic change to how their rulemaking will be scrutinized by the courts going forward.” – Josh Arters

“It is likely that Congress will carefully craft new statutes and delegate more clear authority to the administrative agencies charged with enforcement. We also anticipate agencies taking more time to carefully craft their rules and guidance to mitigate the challenges that could arise based on these decisions. For providers, this will only further delay an already backlogged process.” – Meredith Duncan and Sara Avakian

“Loper Bright creates opportunities for health care organizations to challenge agency actions, but this opportunity comes at the expense of clarity and certainty that came from deference to agencies. The health care regulatory landscape is already complex and ever-changing, but the lack of uniformity that may result from different courts interpreting the same set of rules is going to create further complexity and confusion. The aftermath of Loper Bright may create a chilling effect for innovation or growth for health care businesses. Health care organizations will have to be strategic and stay up-to-date on the changing laws to maintain and grow their businesses while navigating this uncertainty.” – Kathleen Sutton

5. What can Health Care Organizations do if a CMS Rulemaking Has a Significant Impact on their Organization?

“If a rule isn’t working and there is a reasonable interpretation that the statue enabling the rule offers a better outcome, it may be time for health care organizations to start their engines and challenge rules that don’t match specific statutory requirements and fundamental principles. For example, think about adequate reimbursement and access to care. Does this reopen a provider’s ability to litigate payment rules that do not ensure access to care? Maybe.” – Jennifer Evans

“When faced with rulemaking that has a significant impact on operations, health care organizations might be presented with an opportunity to work with federal agencies to find a resolution without having to resort to litigation. Now that agencies understand that their rulemaking may be challenged under a less deferential standard, and, at least for now, most courts have held that a district court may vacate unlawful rules nationally, agencies might be more willing to find more creative and/or individualized solutions to the unique impact their rules might have on a particular health care organization.” – Josh Arters

6. Does this Decision Provide a Greater Ability for Health Care Providers to Advocate for Laws and Regulations to CMS and/or Congress?

“Providers have always had the opportunity to make a contribution in the public policy process; Loper means it is even more important. Engagement in the public policy process does not guarantee success, but lack of involvement almost certainly means a loss. Both the legislature and agencies may be more open to negotiated laws and regulations. These processes will take longer, however.” – Julius Hobson

“Being part of the debate in the US Congress on health care legislation (and any legislation for that matter) is now more crucial than ever. Members of Congress will no longer be able to write laws that are ambiguous, which would give the agency of jurisdiction the authority to legislate through regulatory fiat. Congress now will be required to be more prescriptive in their laws, outlining specifically in statute the intent of the law. Congress currently relies on ‘report language’ that accompanies legislation, which expresses the legislative intent; however, the report language is not the black letter of the law and more often than not, the agency of jurisdiction ignores report language. Finally, now that the Congress will need to be more prescriptive in its drafting of legislation Congress will be required be even more deliberative in crafting a bill. This will mean that laws will require more consensus to get the bills it works on approved.” – Harry Sporidis

“In 2019, when the Supreme Court issued the Azar v. Allina Health Services decision, every component in CMS was tasked with reviewing, analyzing, and verifying that all the guidance materials had regulatory and/or statutory support. For a few years after the decision, CMS went through the rulemaking process for any guidance/policy that was not clearly articulated or supported by regulation. Now that the Supreme Court has overturned Chevron, CMS will likely conduct a similar exercise to determine all of the policy areas where the law is ambiguous, and the Agency has made the determination on how best to carry out the law. CMS will also likely consult with its legislative arm to work with Congress to clarify such laws. This undertaking will take CMS several years to complete. While CMS is engaged its review, there is an opportunity for health care organizations to engage with CMS to review policy position that result from an ambiguous statute and reconsider a more favorable interpretation on of the law.” – Ronke Fabayo

Sara Avakian, Iliana L. Peters, Kathleen Snow Sutton, Julius W. Hobson, Jr., Harry Sporidis, and Ronke Fabayo also contributed to this article.

© Polsinelli PC, Polsinelli LLP in California
by: Bragg E. Hemme, Jennifer L. Evans, Meredith A. Duncan, Neal D. Shah , Michael M. Gaba, and Joshua D. Arters of Polsinelli PC

For more news on the Health Care Industry Post-Chevron, visit the NLR Health Law & Managed Care section.

Supreme Court Holds That the Eighth Amendment Does Not Prevent Enforcement of Local Camping Bans, Authorizing a Significant Shift in Local Policies on Homelessness

Until recently, local policies on homelessness have been guided by two controversial rulings from the Ninth Circuit Court of Appeals: Martin v. Boise (9th Cir. 2019) 920 F.3d 584 and Johnson v. City of Grants Pass (9th Cir. 2022) 50 F.4th 787.[1] However, the Supreme Court’s decision in City of Grants Pass v. Johnson(2024) 603 U.S. ____, is likely to transform local jurisdictions’ policy approaches to managing homelessness. In a 6-3 decision, the Supreme Court upheld the city’s ban on camping and parking overnight on public property.

By way of background, in Martin, the Ninth Circuit held that the Eighth Amendment’s restriction against cruel and unusual punishment barred cities from imposing criminal penalties for violations of public-camping ordinances whenever the number of homeless individuals exceeds the number of “practically available” shelter beds in a jurisdiction. In Johnson, the Ninth Circuit expanded on Martin and held that a city cannot enforce its camping ban or impose fines or civil penalties unless the city has enough shelter beds for its entire population. Since then, affected cities and states have widely criticized these two Ninth Circuit rulings, which effectively blocked the enforcement of local ordinances prohibiting or regulating camping and sleeping outdoors.

In the Supreme Court’s decision in Johnson, the Court rejected the Ninth Circuit’s rulings and held that ordinances prohibiting camping, overnight parking, or sleeping outdoors do not violate the Eighth Amendment’s protections against cruel and unusual punishment because these ordinances regulate “conduct” and “actions”, rather than “mere status.”

The Court focused on the practical implications of Martin and Johnson, finding that the Ninth Circuit created an unworkable and confusing test to evaluate public camping ordinances, based on subjective and vague determinations of who is “involuntarily” homeless. The Court also criticized judicial injunctions prohibiting the enforcement of public camping ordinances, finding that these determinations are “public policy responses” best handled by local governments and the legislature (not courts).

In doing so, the Court agreed with local jurisdictions that complained that the Ninth Circuit inappropriately limited available policymaking tools and “undermined” local efforts to address homelessness. The Court emphasized that local governments have “broad power” over the substance and enforcement of their laws and must be afforded “wide latitude” and “flexibility” to address homelessness.

Although the Court’s ruling authorizes the enforcement of public camping ordinances, it does not grant unfettered power to local jurisdictions. The Court acknowledges that public camping ordinances could still implicate other constitutional concerns, including potential violations under the Due Process Clause. The Court further notes that local governments are not required to adopt public camping ordinances, and may choose to narrow such laws by imposing relevant time, place, and manner restrictions.

Even with these limitations, the Court’s decision is likely to significantly alter the future of local policies on homelessness, especially throughout California. Local governments are now authorized to take more aggressive actions to enforce existing ordinances (or enact new ones) prohibiting or otherwise regulating overnight camping and parking on public property. Ordinances that include relevant time, place and manner restrictions (e.g., regulating when, where, and how people sleep in public) are likely to be particularly insulated from constitutional challenges.

We will continue to monitor updates to local policies on the homeless in response to this decision and provide updates as they become available.

FOOTNOTES

[1] See prior article here.

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by: Alexander L. Merritt, Kathryn C. Kafka of Sheppard, Mullin, Richter & Hampton LLP

For more news on the Supreme Court’s decision in City of Grants Pass v. Johnson, visit the NLR Real Estate section.

Supreme Court Decision Overturns Chevron: Impact on Cannabis Industry

Last month, the United States Supreme Court issued its decision and opinion in Loper Bright Enterprises v. Raimondo, significantly overruling the nearly 40-year-old precedent set by Chevron. The Chevron decision required federal courts to defer to a government agency’s interpretation of an ambiguous statute unless that interpretation was “arbitrary, capricious, or manifestly contrary” to the statute. This meant that if an agency such as the DEA published a bulletin or letter interpreting an ambiguous law, courts were generally bound to follow this interpretation due to the agency’s presumed expertise.

The Shift in Legal Interpretation

Loper Bright Enterprises has fundamentally changed this legal landscape. Now courts, rather than government agencies, are considered the best equipped to interpret ambiguous statutes. This shift means that a government agency’s interpretation of an ambiguous statute is now merely persuasive and not binding on the courts. This can be likened to a Pennsylvania court interpreting a Pennsylvania law and considering, but not being bound by, a Delaware state court’s interpretation of a similar corporate law. Just as Pennsylvania courts can choose to defer to, distinguish from, or disregard Delaware court decisions, federal courts now have the same discretion regarding agency interpretations of ambiguous statutes.

Impact on the Cannabis Industry

This change has significant implications for the cannabis industry. The Drug Enforcement Administration (DEA) enforces federal drug laws and has issued numerous letters and bulletins determining the legality of various cannabis substances. For example, the DEA issued opinions that seemingly argued that Delta-8 THC products and THCA products were not allowed under the 2018 Farm Bill. I have generally disagreed with these interpretations, believing that the DEA incorrectly cited statutes related to hemp at harvest rather than downstream products.

With Loper Bright Enterprises, these DEA letters will lose their authoritative value. Courts are no longer bound to follow DEA interpretations and can more readily consider arguments opposing the DEA’s stance. This development is critical for the cannabis industry, as it opens the door for courts to reinterpret federal drug laws and potentially challenge the DEA’s restrictive interpretations of the 2018 Farm Bill.

The Importance of This Shift

The overruling of Chevron by Loper Bright Enterprises marks a pivotal change in administrative law, particularly impacting the cannabis industry. This shift of interpretive authority from government agencies to the courts means there is now greater potential for legal challenges to restrictive interpretations of cannabis laws. This change enhances the ability of cannabis businesses and advocates to contest adverse decisions and interpretations by the DEA and other agencies, potentially leading to more favorable outcomes for the industry.

Category: Constitutional Law

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