The Centers for Medicare & Medicaid Services’ (CMS) issuance of civil monetary penalties is in the crosshairs of litigators, as increasingly gained enforcement power comes up against a Supreme Court decision.

In the Securities and Exchange Commission (SEC) v. Jarkesy case, SCOTUS ruled that defendants have a constitutional right to make their case to a federal jury when the agency is seeking financial penalties, according to a report from Bloomberg News. The decision could reduce federal leverage to extract high-dollar settlements. The ruling comes a day before another Supreme Court ruling, Loper Bright Enterprises v. Raimondo, which rolled back Chevron doctrine, or judicial deference to rulemaking decisions in court.

CMS and its parent agency, the U.S. Department of Health and Human Services (HHS) are prime targets for lawsuits as their actions come under close scrutiny, according to another article in Bloomberg Law. HHS’ list of CMP authorities spans more than 20 pages in the Federal Register, and the agency created a division within the Office for Civil Rights to keep up with enforcement, Bloomberg found.

Legal experts told Bloomberg that it would be a missed opportunity, were they not to challenge CMS in court over CMPs. Nursing home operators in July saw an expansion of CMPs as part of the 2025 Skilled Nursing Facility Prospective Payment System (SNF PPS) final rule.

Brian Ellsworth, vice president for public policy and payment transformation with Health Dimensions Group (HDG), told Skilled Nursing News earlier that more litigation creates risk for facilities, rather than investing in systems of care and systemic quality improvement.

Along with a rise in litigation, a slow down of administrative enforcement actions is expected while agencies figure out what exactly they can do to shore up the constitutionality of their processes, Jamie L.M. Jones told Bloomberg. Jones is partner and co-leader of law firm Sidley Austin’s health care practice.

CMS and HHS usually rely on administrative law judges (ALJs) to oversee in-house administrative procedures – a reliance that will be on shaky ground with the SCOTUS ruling.

“It shines a light on what these administrative law judges actually are, and what the limit of their authority is,” Andrew Tsui, a former litigator in the Office of General Counsel for CMS, and now of counsel with Greenberg Traurig, told Bloomberg. “All of these agencies are going to have to undertake a fairly profound review of the practices and authorities bestowed upon their ALJ corps in order to make sure that they are acting in accordance with the court’s decision in Jarkesy.”

Jones expects health care providers, including nursing homes, to challenge actions that agencies bring against them. Federal health agencies generally have had increased enforcement power – issuing CMPs, yes, but also when it comes to nursing home oversight, Affordable Care Act measures and prescription drug plans, the report found.

CMPs are driven by the HHS Office of the Inspector General, and penalties target false record statements or failure to report overpayments in the skilled nursing industry. Those coming from CMS deal with violations in billing rules or the No Surprises Act, mostly falling under Medicare Part B, the article found.