Legal News for Mon 8/12 - SCOTUS Ruling Shakes Health Agencies Enforcement Ability, Ambush (?) of El Mayo, and Another Block on Biden's Student Loan Relief

Minimum Competence

This Day in Legal History: Swiss Banks Settle with Holocaust Survivors

On August 12, 1998, a landmark settlement was reached when Swiss banks agreed to pay $1.25 billion to Holocaust survivors and their heirs. The settlement resolved lawsuits that accused the banks of withholding millions of dollars deposited by Holocaust victims before and during World War II. For decades, these accounts had been frozen, and the banks had been criticized for their lack of transparency and for making it difficult for survivors and their families to access the funds.

The lawsuits brought to light the complex role that Swiss financial institutions played during the war, often prioritizing financial gain over moral responsibility. This settlement was seen as a significant acknowledgment of the wrongs committed and a step toward justice for the victims. The agreement also marked a broader recognition of the need to address the financial injustices faced by Holocaust survivors, setting a precedent for other restitution efforts globally.

The $1.25 billion fund was distributed to survivors, heirs, and various Jewish organizations, symbolizing a long-overdue attempt to rectify the banks' wartime conduct. The settlement highlighted the intersection of financial institutions, moral responsibility, and historical accountability in the aftermath of one of history's greatest tragedies.

The recent Supreme Court ruling in SEC v. Jarkesy has sent shockwaves through federal health agencies, significantly impacting their ability to impose civil penalties. The decision, which requires a jury trial for civil penalties in SEC cases, is expected to influence how agencies like the Department of Health and Human Services (HHS), the Centers for Medicare & Medicaid Services (CMS), and the Food and Drug Administration (FDA) conduct enforcement actions.

Legal experts suggest that this ruling could lead to increased legal challenges from healthcare entities, such as hospitals and drugmakers, against penalties imposed by these agencies. The ruling has raised questions about the constitutionality of administrative procedures, particularly those handled by administrative law judges, and may force agencies to reassess their enforcement strategies. The decision could also slow down current enforcement actions while agencies evaluate their legal standing. This ruling is likely to embolden those facing civil penalties to challenge the HHS and its agencies in court, especially in areas like Medicare, tobacco regulation, and the 340B Drug Pricing Program.

By way of very brief background, in SEC v. Jarkasy, the Fifth Circuit held that the SEC's administrative enforcement of fraud claims without jury trials violated the Seventh Amendment, as such claims involve traditional common law matters warranting a jury. The court also ruled that the Dodd-Frank Act's broad delegation of authority to the SEC to choose between administrative proceedings and federal court without clear guidelines violated the nondelegation doctrine. Additionally, the protections against removal for administrative law judges (ALJs) were found to infringe on the President’s duty under Article II. The Supreme Court later upheld the Seventh Amendment violation but did not address the other issues.

Health Agency Approach on Civil Penalties Shaken by High Court

Ismael "El Mayo" Zambada, a prominent Mexican drug lord and co-founder of the Sinaloa Cartel, claimed he was deceived and forcibly taken to the United States last month. In a statement released by his lawyer, Zambada alleged that he was lured into a meeting by Joaquin Guzman Lopez, the son of his former partner Joaquin "El Chapo" Guzman, and state officials in Sinaloa. He recounted being ambushed, restrained, and flown to the U.S. under duress. Contrary to Zambada's account, Guzman Lopez’s lawyer and U.S. authorities assert that Guzman Lopez surrendered voluntarily after negotiations. During the incident, Zambada claims that one of the officials involved, Hector Cuen, was killed, and his bodyguard has since disappeared. Both Zambada and Guzman Lopez have pleaded not guilty to drug-trafficking charges in the U.S.

'El Mayo' says he was ambushed in new account of US arrest | Reuters

A federal appeals court has extended an order blocking President Joe Biden's administration from implementing its student debt relief plan, which aimed to lower monthly payments and accelerate loan forgiveness for millions of borrowers. The 8th U.S. Circuit Court of Appeals, responding to an appeal from seven Republican-led states, granted an injunction that halts further implementation of the Saving on a Valuable Education (SAVE) Plan.

This ruling follows a previous order that temporarily blocked parts of the plan. The court's decision means that while loans already forgiven won't be reversed, future implementations are on hold. The Biden administration criticized the ruling, arguing it would increase costs for borrowers, while the Republican-led states contend that the administration exceeded its legal authority with the plan. The SAVE Plan, which had partially taken effect, was projected to benefit over 20 million borrowers but now faces legal hurdles that may delay or alter its future. This development follows earlier challenges to Biden's broader $430 billion debt cancellation initiative, which was blocked by the U.S. Supreme Court in 2023.

Federal court extends block on Biden's student debt relief plan | Reuters

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