The Technology Blind Spot 

Maine Medical Center had followed every rule it knew.

In 2022, Edwin George Duffus, an uninsured Jamaican worker, suffered a hemorrhagic stroke and was admitted to the hospital as an inpatient. Twelve days later, the hospital discharged him. Duffus alleged his condition was not stable when he left. Maine Medical Center had a defense it believed was airtight: a Centers for Medicare and Medicaid Services regulation specifying that admission as an inpatient in good faith automatically satisfies the hospital’s stabilization obligations under the Emergency Medical Treatment and Labor Act. That interpretation had governed hospital discharge decisions across America for years.

On July 14, 2025, a federal judge in Maine threw it out. Citing Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024), the court held that EMTALA’s text was clear, that CMS had exceeded its statutory authority, and that the regulation did not control. Duffus v. MaineHealth, No. 2:24-cv-00268-SDN (D. Me. July 14, 2025). The hospital remained a defendant in a federal lawsuit over a discharge it had believed, in good faith, the law permitted.

That is not a story about a hospital cutting corners. It is a story about an institution that organized its operations around a regulatory interpretation that required one Supreme Court doctrine to survive, and then that doctrine was gone.

Twenty-one months after Loper Bright was decided, most of your clients are still operating on the same assumption Maine Medical Center made in 2022: that the regulations they relied upon are the law.

The Doctrine That Held the System Together

The case that changed everything started with a fishing boat.

Loper Bright Enterprises was a family-owned herring fishing company out of Cape May, New Jersey. The National Marine Fisheries Service required the company to carry a federal monitor onboard to verify compliance with fishing regulations. Then the agency required the fishermen to pay for the monitor themselves: $710 per day. Loper Bright argued the Magnuson-Stevens Act did not authorize that cost-shifting. The agency argued its interpretation of the statute was reasonable. Under the doctrine the Supreme Court had established in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), a reasonable agency interpretation of an ambiguous statute was enough. Courts had to defer.

For forty years, Chevron deference was the load-bearing wall of federal administrative law. Federal courts cited the doctrine in more than 18,000 opinions, roughly 450 times a year. The most comprehensive empirical study of how circuit courts applied it analyzed 1,558 agency interpretations reviewed between 2003 and 2013. The conclusion: when courts applied Chevron deference, agencies won 77.3% of the time. Without deference, that win rate dropped to 38.5%. Kent Barnett & Christopher J. Walker, Chevron in the Circuit Courts, 116 Mich. L. Rev. 1 (2017).

Those numbers shaped every compliance program your clients built. They constructed employment agreements, benefit plans, environmental systems, hospital discharge protocols, and financial reporting structures on regulatory interpretations that required Chevron to survive legal challenge. Almost none of them understood they were doing it.

On June 28, 2024, the Supreme Court ruled for the fishermen. Chevron was overruled. Courts must now exercise what Chief Justice Roberts called “independent judgment” in reading federal statutes. Reasonable is no longer enough. The agency’s reading must be the best reading. For any interpretation that lived in the space between “reasonable” and “best,” the protection was gone.

The First Wave: Employment Law

The effects arrived within hours.

On the same day Loper Bright was decided, a federal district court in Texas relied on the reasoning to enjoin the Department of Labor’s new overtime rule, which would have raised the salary threshold for exempt employees from $684 to $1,128 per week. The HR departments that had spent three months reclassifying workers, reprogramming payroll systems, and training supervisors on the new thresholds found out the same way their employees did: through a news alert.

Three days later, the Supreme Court issued Corner Post, Inc. v. Board of Governors of the Federal Reserve System, 603 U.S. ___ (2024), resetting the statute of limitations on federal regulatory challenges. Under the old rule, the clock started when an agency issued a regulation. Under Corner Post, it starts when the plaintiff is injured. A regulation that survived unchallenged for a decade is newly contestable for any entity whose injury is recent.

The wave continued through the summer and fall. On July 3, 2024, a Texas district court blocked the Federal Trade Commission’s rule banning most non-compete agreements, Ryan LLC v. FTC, No. 3:24-CV-00986-E (N.D. Tex.), three days after it took effect. Companies that had restructured employment agreements around its requirements rebuilt them in July. On August 23, 2024, the Fifth Circuit vacated the Department of Labor’s 80/20 tip-credit rule in Restaurant Law Center v. U.S. Department of Labor, 115 F.4th 396 (5th Cir. 2024).

That last ruling deserves attention because of how old the rule was. The 80/20 tip-credit standard, which limited employers’ ability to pay tipped workers the $2.13 federal tip-credit rate when those workers spent more than 20% of their time on non-tipped tasks, had existed in various forms since the DOL first published it in its Field Operations Handbook in 1988. Employers in the restaurant and hospitality industries had built their entire payroll compliance systems around tracking which minutes were tip-producing and which were not. The Fifth Circuit found the statute was clear: being “engaged in a tipped occupation” meant being employed in a job, not performing a particular task. The rule that had governed server compensation for thirty-six years had never been authorized by the statute. Nobody in those payroll departments had been wrong. They had been following agency guidance that courts had sustained for decades under a standard that no longer existed.

[See “Stop Playing Politics, Start Building Courts,” Morris Legal Technology Blog, 2025, for analysis of how the post-Loper Bright vacuum is reshaping federal judicial doctrine.]

The Harder Problem: The Clients Who Won Under Deference

The employment law cases drew coverage. Maine Medical Center illustrates a problem that is less visible and more dangerous for your practice.

Hospitals across America had organized discharge decisions around the CMS interpretation at issue in the Duffus case. Not because they were taking shortcuts. Because CMS had published it as guidance, courts had confirmed it under Chevron, and every hospital attorney in the country understood that admission as an inpatient satisfied EMTALA’s stabilization requirement. The rule protected them. Then Loper Bright changed the standard, and a court decided the statute required something different.

Some of your clients built competitive positions on agency interpretations that worked in their favor. Healthcare clients whose billing practices survived CMS scrutiny under interpretations courts confirmed using the old standard. Financial clients whose ERISA benefit design relied on DOL positions that Chevron-era decisions endorsed. Corporate clients whose tax positions were grounded in IRS interpretations that courts sustained as reasonable readings of ambiguous statutory text.

Those favorable interpretations now face the same independent judicial review as the unfavorable ones. In Varian Medical Systems, Inc. v. Commissioner, 163 T.C. No. 4 (Aug. 26, 2024), the Tax Court rejected an IRS attempt to correct what it characterized as a statutory drafting glitch in the Tax Cuts and Jobs Act through regulatory action. Citing Loper Bright, the court ruled for the taxpayer on the plain text of the statute. Varian had organized its tax position around the regulation for years. The court decided the statute required something different from what the IRS had required.

Varian won that case. But the exposure runs both directions. A competitor that lost under a favorable agency interpretation, or a government agency pursuing enforcement under a new administration, now has the same argument that struck down the Maine Medical Center regulation. The protection of automatic deference is gone regardless of which side of the interpretation your client was on.

[See “What Your Client’s Board Gets Wrong About Delaware,” Morris Legal Technology Blog, February 2026, for a parallel analysis of corporate clients building governance structures on regulatory assumptions without examining the doctrine that sustains them.]

The Steelman: Most Regulations Are Fine

The argument that Loper Bright is a crisis deserves honest examination, because the strongest version of the opposing position is more compelling than most coverage suggests.

Twenty months of post-Loper Bright litigation data show courts upholding agency interpretations more than 60% of the time under the new standard. The Impact of Loper Bright v. Raimondo, 109 Minn. L. Rev. 2671 (2025). Courts exercising independent judgment are arriving at conclusions largely consistent with what Chevron would have produced. Prior decisions are protected by stare decisis. The Supreme Court said explicitly that past holdings need not be relitigated simply because the methodology changed.

And the 77%-to-38.5% shift in agency win rates that Barnett and Walker documented was always partly a function of which cases reached Chevron Step Two. Regulations grounded in clear statutory text survived Chevron and continue to survive independent review. The agencies that built their rulemaking on solid statutory foundations are not significantly more exposed than they were before.

This counterargument is largely correct. The Maine Medical Center case is not inevitable. The tip-credit ruling did not collapse restaurant payroll compliance nationwide.

The problem is that neither Maine Medical Center nor any employer in the restaurant industry knew, on the morning of June 27, 2024, that their most relied-upon regulatory positions were in the 40% that would not survive. The Norton Rose Fulbright 2025 Annual Litigation Trends Survey found that 73% of in-house counsel subject to U.S. regulations anticipate greater uncertainty going forward. That uncertainty is the gap between “most regulations survive” and “your client’s regulation survives.” Your clients are not operating in aggregate statistics. They are operating in specific regulatory frameworks, some of which have been litigated and some of which have not.

Regulations sustained at Chevron Step Two are the most vulnerable: those where courts found the statute ambiguous and then found the agency’s reading merely reasonable. Those are the interpretations that lived in the space between “reasonable” and “best,” and that space is now a legal void. The combination of Loper Bright’s new standard with Corner Post’s expanded limitations window means that void can be exploited by a newly formed entity, a new administration, or a competitor who lost under the old interpretation.

The Second Wave: When Agencies Stop Defending

Loper Bright’s effects landed in a regulatory environment where agencies are simultaneously withdrawing rules rather than defending them in court. That creates a different exposure than judicial invalidation.

When a court strikes down a regulation, the compliance landscape is at least clear: the rule is gone. When an agency withdraws a rule without judicial resolution, clients who organized their operations around it have neither a valid regulation to follow nor a court ruling defining the void. They have a gap and no map.

CFPB interpretive guidance, EPA remediation frameworks, DOL contractor classification rules: each faces both judicial challenge and administrative withdrawal in an environment where neither the agency nor the courts are providing clear answers quickly. Clients in those gaps are making compliance decisions without a regulatory floor. The question is not whether the uncertainty is real. It is whether your clients have identified which of their compliance programs are exposed to it.

What to Do by Thursday

This is not a call for a firm-wide regulatory audit. It is a call for one specific conversation.

Identify two or three clients whose core operations involve significant federal regulatory compliance: healthcare, employment, financial services, environmental. For each of those clients, ask one question: which specific agency interpretations does their current compliance program rely upon that courts upheld at Chevron Step Two in the past fifteen years?

If you don’t know the answer, your client doesn’t either. That gap is where their exposure lives.

For employment clients, start with FLSA exemption classifications, NLRB interpretations governing labor practices, and any compensation structure built around DOL guidance. For healthcare clients, examine discharge protocols and billing interpretations courts confirmed under the old standard. For corporate clients with ERISA programs, review benefit design decisions built against DOL positions that Chevron-era courts endorsed.

You don’t need to complete that analysis by Thursday. You need to begin the conversation. The clients who are ahead of this exposure are asking the question now. The ones who are not are building compliance structures on regulatory interpretations that may already be in litigation, or may never be litigated at all, but are operating without the protection they once had.

The Close

Maine Medical Center did not discharge Edwin George Duffus carelessly. It followed a regulatory framework that CMS had published, courts had confirmed, and every hospital attorney in the country recognized as governing law. The hospital did what compliant institutions do: it read the rule, understood the rule, and applied the rule.

Then a court in Portland, Maine, decided that the rule was not actually authorized by the statute. The statute’s text was clear, the court said. CMS had exceeded its authority. The protection the hospital had relied upon for years had never been grounded in the statute at all, only in the doctrine that required courts to defer to the agency’s reading of it.

That doctrine is gone.

Your clients are not, in most cases, doing anything wrong. They are following the rules as written, issued by the agencies authorized to write them, confirmed by courts that were obligated to defer. That is exactly what Maine Medical Center was doing.

The question Loper Bright forces is not whether your clients are compliant with the rules they know. The question is whether the rules they know were ever authorized by the statutes they came from. Twenty-one months in, most of those clients have not asked that question. Most of their lawyers have not asked it for them.

That is the gap. It is not inevitable. But it is open.

About the Author

JD Morris is Co-Founder and COO of LexAxiom, an AI platform for the business of law. He holds a Master of Legal Studies from Texas A&M University School of Law, a Master of Engineering from George Washington University, and dual MBAs from Columbia Business School and UC Berkeley Haas. He writes the Morris Legal Technology Blog under the series banner “The Technology Blind Spot.” Connect with him on LinkedIn at http://www.linkedin.com/in/jdavidmorris, on X at @JDMorris_LTech, or on Bluesky at @JDMorris-ltech.bsky.social.

References

1. Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024).

2. Corner Post, Inc. v. Board of Governors of the Federal Reserve System, 603 U.S. ___ (2024).

3. Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).

4. Duffus v. MaineHealth, No. 2:24-cv-00268-SDN, 2025 WL 1928339 (D. Me. July 14, 2025).

5. Restaurant Law Center v. U.S. Department of Labor, 115 F.4th 396 (5th Cir. Aug. 23, 2024).

6. Ryan LLC v. FTC, No. 3:24-CV-00986-E (N.D. Tex. July 3, 2024).

7. Varian Medical Systems, Inc. v. Commissioner, 163 T.C. No. 4 (Aug. 26, 2024).

8. Rieth-Riley Construction Co. v. National Labor Relations Board, 114 F.4th 519 (6th Cir. 2024).

9. Barnett, Kent, and Christopher J. Walker. “Chevron in the Circuit Courts.” 116 Michigan Law Review 1 (2017).

10. The Impact of Loper Bright v. Raimondo. 109 Minnesota Law Review 2671 (2025).

11. Norton Rose Fulbright. 2025 Annual Litigation Trends Survey. 2025.

12. Skidmore v. Swift & Co., 323 U.S. 134 (1944).

13. Administrative Procedure Act, 5 U.S.C. §§ 551 et seq.

14. Emergency Medical Treatment and Labor Act (EMTALA), 42 U.S.C. § 1395dd. 15. 42 C.F.R. § 489.24(d)(2)(i) (CMS EMTALA inpatient admission regulation