Master The Supreme Court held that agencies may not promulgate retroactive legislative rules absent express congressional authorization. with this comprehensive case brief.
Bowen v. Georgetown University Hospital is a foundational Supreme Court decision on the limits of agency power to adopt retroactive rules. The case articulates a core administrative law principle: absent a clear statement from Congress, agencies cannot make legislative rules that alter the legal consequences of past actions. The Court linked this principle to a long-standing presumption against retroactivity in American law and clarified that neither the Administrative Procedure Act (APA) nor broad delegations of rulemaking authority silently authorize retroactive rulemaking.
For students of administrative law, Bowen is doubly significant. First, it establishes the governing default rule for agency retroactivity and narrows agencies’ ability to "fix" past policy failures or circumvent adverse court rulings by backdating rules. Second, the case is cited for an important Chevron-adjacent proposition: courts do not defer to an agency’s litigating positions offered for the first time in court. Together, these holdings shape how agencies write rules, how courts review them, and how regulated parties can plan their affairs with reliance on existing legal frameworks.
Bowen v. Georgetown University Hospital, 488 U.S. 204 (1988) (U.S. Supreme Court)
Medicare reimburses hospitals for the "reasonable cost" of services, subject to cost limits established by the Secretary of Health and Human Services (HHS) by regulation. For cost year 1981, HHS promulgated cost-limit regulations that, among other things, used a wage index to adjust reimbursement limits based on area wage levels. After aspects of those 1981 limits were challenged and invalidated in separate litigation for procedural defects, hospitals received reimbursements calculated without the invalidated limitations. In 1984, HHS attempted to cure the earlier problem and recoup what it characterized as overpayments by issuing a new regulation that purported to establish revised cost limits for 1981 and to apply them retroactively (i.e., with an effective date in 1981). Georgetown University Hospital and other providers sued, arguing that the Secretary lacked statutory authority to promulgate retroactive legislative rules. The government defended the retroactivity principally by invoking the Medicare Act’s "retroactive corrective adjustments" language in 42 U.S.C. § 1395x(v)(1)(A) and by suggesting that the APA permitted the retroactive rule. The district court and the D.C. Circuit invalidated the retroactive rule, and the Supreme Court granted certiorari.
Does the Secretary of Health and Human Services have authority under the Medicare Act or the Administrative Procedure Act to promulgate a retroactive legislative rule that sets cost limits for a past cost year and thereby alters the legal consequences of past reimbursements?
Retroactivity is not favored in the law. Congressional enactments and administrative rules will not be construed to have retroactive effect unless their language requires this result. Agencies lack authority to promulgate retroactive legislative rules absent express congressional authorization. The Medicare Act’s directive to provide for "retroactive corrective adjustments" authorizes provider-specific reimbursement adjustments after the fact, not the issuance of retroactive rules of general applicability. The APA does not itself confer retroactive rulemaking power, nor does it imply such authority through its timing provisions. Courts do not accord Chevron deference to an agency counsel’s litigating position first advanced in litigation.
No. The Secretary lacked authority to promulgate a retroactive cost-limit regulation. Neither the Medicare Act nor the APA authorizes retroactive rulemaking, and the "retroactive corrective adjustments" provision does not supply such authority. The 1984 rule’s retroactive application to 1981 was invalid.
1) Presumption against retroactivity: The Court emphasized a strong background rule: retroactive lawmaking is disfavored. As applied to agencies, this means rulemaking delegations are presumed to authorize only prospective rules unless Congress clearly provides otherwise. The 1984 regulation expressly backdated its effective date to 1981 and altered the legal consequences of past conduct (hospitals’ prior cost reporting and payments). Without clear statutory authorization, that is impermissible. 2) Medicare Act text and structure: The Secretary relied on 42 U.S.C. § 1395x(v)(1)(A), which instructs HHS to issue regulations that "provide for the making of suitable retroactive corrective adjustments" where reimbursements prove inadequate or excessive. The Court read this language to authorize individualized, provider-specific adjustments after cost reports are audited and settled—not to empower the agency to promulgate retroactive rules of general applicability. The statute’s structure, which provides for annual prospective cost limits and post hoc settlements, reinforced this interpretation. Where Congress has intended to grant retroactive rulemaking authority in other contexts, it has done so explicitly; no such grant appears here. 3) APA provides no backdating power: The government pointed to APA provisions concerning the effective date of rules (e.g., the 30-day requirement and exceptions) to suggest that retroactivity is implicitly allowed. The Court rejected that view, explaining that those provisions govern how quickly rules can become effective after publication, not whether they can be given an effective date in the past. The APA neither grants nor implies retroactive rulemaking authority. 4) Chevron and litigating positions: The Court declined to defer to the government’s litigation-driven interpretation of the Medicare Act. Chevron deference applies, if at all, to an agency’s authoritative interpretations made in the exercise of delegated lawmaking powers, not to post hoc positions advanced by agency counsel in court. 5) Policy considerations: Allowing retroactive rules absent clear authorization would upset settled expectations and undermine notice-and-comment rulemaking’s reliance and participation values. Agencies may address past over- or under-payments through the statute’s settlement mechanisms, but they may not rewrite the past by retroactive regulation.
Bowen is the canonical statement that agencies cannot engage in retroactive rulemaking without an express congressional grant. It protects reliance interests in administrative law and channels agencies toward prospective policymaking and individualized, statutorily authorized adjustments. The case is also frequently cited to limit Chevron deference, underscoring that courts do not defer to agency interpretations first advanced in litigation. For students, Bowen frames how to analyze retroactivity problems: identify the nature of the agency action (rule vs. adjudication), determine whether the rule is truly retroactive, and look for a clear statement of authority. It also supplies a toolkit for challenging agency attempts to backdate rules after losing litigation or discovering past errors.
Retroactive rulemaking occurs when an agency issues a legislative rule that changes the legal consequences of past conduct or past periods. Retroactive adjudication involves case-by-case decision-making that applies a new interpretation to past conduct in the context of an enforcement or benefits determination. Bowen bars retroactive legislative rules absent express authorization, but it does not categorically prohibit retroactive adjudication; agencies may sometimes apply new principles in adjudication, subject to fairness limits and reasoned explanation.
No. The Supreme Court interpreted that clause to permit provider-specific adjustments after cost reports are reviewed—essentially, individualized settlements to reconcile payments with actual costs. It did not authorize HHS to promulgate a rule of general applicability that retroactively set cost limits for a past year.
No. The APA sets procedural requirements for rulemaking and addresses the timing of a rule’s effective date after publication, but it does not itself grant power to make rules retroactive. An agency needs an independent, clear statutory grant to promulgate retroactive rules.
Bowen clarifies that courts do not defer to agency interpretations presented for the first time in litigation; Chevron deference attaches, if at all, to authoritative agency interpretations adopted through recognized policymaking processes (e.g., notice-and-comment rulemaking or formal adjudication). Bowen thus cabins Chevron and underscores the importance of process and timing for deference.
Yes. Bowen’s default presumption yields to a clear statement from Congress. If a statute expressly authorizes retroactive rulemaking, an agency may promulgate a retroactive rule consistent with that authorization and the APA, and subject to arbitrary-and-capricious review and other constraints.
Agencies should address past overpayments or errors through statutory settlement mechanisms or prospective rules rather than backdating regulations. Regulated entities can rely on the presumption against retroactivity and challenge rules that alter past legal consequences absent clear statutory authority. Bowen encourages clearer statutory drafting by Congress when retroactivity is intended.
Bowen v. Georgetown University Hospital cements the presumption against retroactivity in administrative law and makes clear that agencies cannot rewrite the past through retroactive legislative rules without an unmistakable grant from Congress. By distinguishing provider-specific adjustments from rulemaking of general applicability, the Court preserved the integrity of Medicare’s settlement mechanisms while preventing agencies from using retroactive rules to cure prior procedural or substantive defects.
For law students, Bowen provides a durable analytic framework: identify whether an agency is acting through rulemaking or adjudication; determine whether the action is truly retroactive; and ask whether Congress clearly authorized retroactivity. It also highlights the limits of Chevron deference and the importance of agency procedure, reinforcing that legitimacy in administrative law depends on both statutory authority and fair notice.