Supreme Court Ruling Is a ‘Game Changer’ for Challenging Nursing Home Staffing Mandate, CMS Authority

A Supreme Court decision on Friday could significantly weaken federal agencies’ authority to regulate industries, including powers of the Centers for Medicare & Medicaid Services (CMS), with wide implications for the recently finalized federal minimum staffing rule for nursing homes.

The Supreme Court’s decision to discard the long-standing so-called Chevron doctrine is a “game changer,” when it comes to upholding the federal staffing mandate against litigation, legal sources told Skilled Nursing News. It further opens the door for the American Health Care Association (AHCA) to challenge the rule, among other possible challenges to CMS authority.

“This decision amplifies and justifies our concern that government agencies are overextending their authority by implementing sweeping staffing mandates over the entire nursing home profession,” Mark Parkinson, president and CEO of AHCA and the National Centers for Assisted Living (NCAL) said in an emailed statement.

In light of the decision, AHCA/NCAL urged the Biden administration to rescind the minimum staffing rule and work in partnership with providers and stakeholders to develop more meaningful solutions, he said.

The ruling’s wider impact

The latest court decision will likely impinge on the powers wielded by federal agencies following the 1984 Chevron ruling involving the energy giant. Then, the court found that government agencies were best positioned to interpret the federal statutes, provided the interpretation was reasonable, according to the Harvard Gazette.

With the SCOTUS throwing out the Chevron doctrine, legal experts told SNN that CMS’ influence over reimbursement rates, staffing levels and other areas of regulation can now be more easily challenged.

Jonathan Lips, vice president of legal affairs with LeadingAge, agreed that the decision will have an expansive impact on federal regulation and legislation, including interpretation of programs like Medicaid and Medicare. There will likely be additional litigation by parties seeking to challenge certain federal regulations governing health care and statutes that underlie those rules, he said in an email.

The decision could also influence how Congressional lawmakers draft bills, Lips said, forcing addition of more detailed requirements or definitions addressing specifically what authority or discretion is delegated to a federal agency.

With the latest ruling, courts’ decades-long deference to government agencies in interpreting federal statutes was discarded as well. Such deference has been misguided, since “agencies have no special competence in resolving statutory ambiguities,” Chief Justice John Roberts wrote in the decision.

Mark Reagan, managing shareholder at Hooper Lundy & Bookman, told SNN that there will no longer be guaranteed deference to claims of jurisdiction by CMS.

“Deference to the bureaucracy in the face of ambiguity is over. Respect is due but courts are to decide,” said Reagan. While the Chevron decision was made in a case on fishing regulations, it will ripple across all government agencies.

Craig Conley, shareholder with Baker Donelson Bearman Caldwell & Berkowitz, said in an email that the Chevron decision will change the landscape of how CMS operates within the nursing home sector.

And going forward, health care providers should have an increased ability to defend their rights when it comes to reimbursement rates and other critical areas, Mark Johnson, partner with Hooper Lundy, told SNN.

Fate of the lawsuit against the staffing mandate

As for how the Chevron decision will weigh on CMS’ staffing mandate, Johnson said it was a “significant shot in the arm” to AHCA’s challenge, and a “seismic shift” in judicial review of agency regulations. It essentially directs the District Court to review CMS’ actions and curtail them based solely on its own interpretation of the statutory authority granted by Congress, rather than deferring to the agency.

In other words, courts reviewing AHCA’s lawsuit will no longer need to defer to CMS’ sole interpretation as a result of the decision. They can instead use their own interpretation of the underlying statute to decide whether the agency engaged in “reasoned decision-making” to arrive at its conclusions, Jacob Harper, partner with Morgan Lewis & Bockius in Washington DC, told SNN. 

“In particular, the Chevron decision suggests that courts should revert to the Skidmore standard, which would involve an assessment of ‘thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control,’” Harper said.

The Skidmore standard allows a federal court to determine the appropriate level of deference for each case based on the federal agency’s ability to support its position.

However, the latest ruling on the Chevron doctrine doesn’t automatically result in a win for those challenging the staffing mandate, added Harper. If CMS can show the harmful effects of not having this staffing standard, along with data to show improvements in care the standard would bring, it could persuade the court in its favor.

That said, whether CMS will succeed in the end is another matter.

“But, CMS is yet to show that type of data and, even if it could, it is not clear that it would adequately support Congress’s intent,” said Harper. “Perhaps even more telling is the issue of consistency in interpreting the same statute. CMS has previously asserted that a uniform staffing standard was unworkable. The agency’s changed position will likely hamper its ability to defend the final rule.”

In the face of the latest ruling, CMS’ own study on the matter could come back to haunt it. The study found that no solitary staffing measure would ensure high quality care while also saying elevated staffing levels would result in reduced hospitalizations and emergency room admissions, along with faster care delivery and a decrease in instances of care omission.

“As for the seriousness of this ruling, it is a significant blow to several agencies, including CMS,” noted Conley. “For nursing home operators, this should be seen as a victory.”

There may eventually be some relief from overly stringent mandates, rules and regulations, he said, that are oftentimes unworkable and unachievable given the current economic climate.