In the case of Bowen, Otis R., Secretary of Health and Human Services v. Georgetown University Hospital et al., 1988, the U.S. Supreme Court ruled that federal agencies cannot apply rules retroactively unless Congress has explicitly granted them this power in a statute. The Department of Health and Human Services had attempted to implement Medicare reimbursement regulations retroactively, which would have resulted in hospitals receiving less money for services provided to patients covered by Medicare. Georgetown University Hospital challenged this action on grounds that it was not permissible under existing law because there was no explicit statutory authority allowing such retrospective rulemaking. The court agreed with Georgetown's argument and held that an agency can't make rules retroactive without clear congressional authorization.

In the dissenting opinion for Bowen, Otis R., Secretary of Health and Human Services v. Georgetown University Hospital et al., Justice Antonin Scalia disagreed with the majority's decision that retroactive rulemaking was not permissible under the Medicare Act. He argued that nothing in the language or structure of the Act explicitly prohibited such action by administrative agencies. Furthermore, he contended that it is a common practice for agencies to apply rules retroactively as part of their function to interpret and implement statutory provisions. In his view, denying this power would undermine agency effectiveness and disrupt established legal norms regarding administrative authority. Therefore, he believed that unless Congress expressly forbids it in specific legislation, courts should presume an agency has discretion to apply its rules retroactively when necessary.