The American Health Care Association (AHCA) filed a lawsuit late Thursday against the U.S. Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) for exceeding their statutory authority and “arbitrarily and capriciously issuing” a final minimum staffing rule.

The lawsuit asks the court to issue an order and judgment dismissing the new staffing requirements that were finalized by CMS on May 10, a press release issued by AHCA early Friday stated.

The filing in the Northern District of Texas alleges that CMS’ final rule departs significantly from the statutory standards.

“That rule exceeds CMS’s statutory authority, effects a baffling and unexplained departure from the agency’s longstanding position, and creates impossible-to-meet standards that will harm thousands of nursing homes and the vulnerable Americans they serve,” the complaint states. “Dissatisfied with Congress’ judgment, CMS decided to take matters into its own hands. At the direction of the President, the agency proposed and has now adopted a rule that overrides both of Congress’ statutory requirements.”

Currently Congress’ staffing rule for nursing homes that participate in Medicare or Medicaid, or both, require that a nursing home must provide 24-hour licensed nursing service that is sufficient to meet nursing needs of its residents, and that a nursing home must use the services of a registered professional nurse at least 8 consecutive hours a day, 7 days a week.

On the other hand, the final rule mandates a minimum of 3.48 hours per resident per day (HPRD) of total staffing, with specific allocations for registered nurses (RN) and nurse aides. This standard encompasses 0.55 HPRD of direct RN care and 2.45 HPRD of direct nurse aide care. CMS said that facilities can use a mix of nurse staff, including RNs, LPNs/LVNs, or nurse aides, to meet the additional 0.48 HPRD.

“We had hoped it would not come to this; we repeatedly sought to work with the Administration on more productive ways to boost the nursing home workforce,” Mark Parkinson, president and CEO of AHCA, said in the press release. “Unfortunately, federal officials rushed this flawed policy through, ignoring the credible concerns of stakeholders and showing little regard for the negative impact it will have on our nursing home residents, staff, and the larger health care system. We cannot stand idly by when access to care is on the line and federal regulators are overstepping their authority.”

An ‘unjustified about-face’ from CMS’ past position

The complaint further argues that the agencies’ decision to adopt the new minimum staffing standards was arbitrary and capricious, and in violation of the Administrative Procedure Act.

The lawsuit notes that CMS didn’t even try to claim that statutory provisions empower it to enact the mandates, instead saying the power lies in “various provisions” of the Medicare and Medicaid Acts to promulgate requirements promoting resident health and safety.

“That argument runs headlong into basic principles of administrative law, as generic rulemaking provisions do not empower agencies to ‘revise’ legislative enactments and promote their own policy du jour over the policy choices that Congress enacted into federal law,” the filing states.

The filing refers to the rule as an “unjustified about-face” from CMS’ position in the past.

According to the court filing, “It simply makes no sense to impose a blanket 24/7 RN requirement and rigid staffing ratios on thousands and thousands of nursing homes across the country, regardless of each particular facility’s local conditions and unique circumstances … nursing homes care for a wide range of resident populations with greatly divergent needs renders a one-size-fits-all approach manifestly inappropriate.” 

Moreover, the establishment of nationwide minimum-staffing standards is a major policy decision with massive economic and political significance, the plaintiffs contend. The suit cites CMS’ own estimate that the mandate will cost facilities more than $5 billion each year. An AHCA analysis of the final rule using more recent wage data and accounting for inflation found that the mandate would cost closer to $6.5 billion annually.

Finally, AHCA and co-plaintiffs argue that the final rule threatens to drive closures and displace residents from their nursing homes.

“If CMS’ new standards are permitted to take effect, hundreds of nursing homes will likely be forced to downsize or close their doors entirely,” the filing states. “The Final Rule thus promises to be a nightmare not only for owners and operators of nursing homes, but also for the vulnerable residents they serve, in direct derogation of CMS’ statutory mandate.”

In filing the lawsuit, the largest national trade group for the nursing home sector is joined by its Texas affiliate as well as several Texas-based long-term care facilities.

“Hundreds, if not thousands, of nursing homes are at risk of closure over this federal staffing mandate, and nowhere is that truer than in Texas,” said Derek Prince, board chair of the Texas Health Care Association (THCA) and CEO of HMG Healthcare. “Our state’s nursing homes notoriously lack proper Medicaid funding, a key factor in whether a nursing home can comply with this mandate.”

More than two-thirds of Texas facilities cannot meet any of the new requirements, and the state is anticipating a growing shortage of nurses, Prince said.

Operators in Texas would need to hire about 2,579 additional RNs and 7,887 nurse aides, according to the filing. That would be a 46.1% increase in RNs and 28.4% bump in aides.

The state has a relatively high proportion of licensed vocational nurses (LVNs), a term used in Texas and California for licensed practical nurses (LPNs), but they can only count toward 0.48 hours of the total HPRD requirement.

Other plaintiffs named in the lawsuit include Arbrook Plaza, a nursing facility located in Arlington, Texas; Booker Hospital District, which operates Twin Oaks Manor, a nursing facility in Booker, Texas; and,

Harbor Lakes Nursing and Rehabilitation Center located in Granbury, Texas.

Likelihood of lawsuit succeeding

Mark Reagan, managing partner at law firm Hooper, Lundy & Bookman, told Skilled Nursing News that this action by AHCA is extremely important for the industry, and is a strong case with a likelihood of success. 

“The final rule is clearly not implementable and would only serve to devastate the sector and limit access to post-acute and long-term care,” Reagan said in an email. “The complaint lays out the 3-year history of exclusive Congressional involvement in establishing federal minimum staffing and the complete lack of CMS authority to undertake the action in the Final Rule.”

The lawsuit also frames well the arbitrary and capricious nature of the rule, he said, by referencing conclusions in numerous studies that a one-size-fits-all approach doesn’t support better quality. The filing dives into the ongoing workforce crisis and lack of funding too, he said, which are other crucial points that give extra urgency to AHCA’s argument for dismissing CMS’ staffing mandate.

Amy Stulick contributed to the reporting.