Food Law: What Deference Does It Make? The Fifth Circuit And How To Cook A $5,000 Egg

In May 2013, Elgin Nursing and Rehabilitation Center (Elgin) ended a lengthy legal battle over an egg when the Fifth Circuit refused to defer to an agency determination of its own vague regulations. (opinion here).

The saga began in February 2010 when the Texas Department of Aging and Disability ("TDAD") investigated Elgin and "observed two breakfast plates with egg yolk 'smeared around the plate.'" The investigation "confirmed that five of Elgin's residents requested eggs served "soft cooked" and found Elgin residents in "immediate jeopardy."

Elgin's problems got serious when the Center for Medicare and Medicaid Services ("CMS") adopted TDAD's findings and brought the full weight of its substantial enforcement muscle to bear, imposing a number of penalties, including:

a civil monetary fine of $5,000; termination of Elgin's provider-of-care agreement; denial of payment for new admissions; and withdrawal of Elgin's approval to conduct nurse training. An administrative law judge ("ALJ") affirmed the determination by the CMS, and the Department of Health and Human Services ("DHHS") upheld the ruling of ALJ.

What Deference Does It Make?

At issue was whether the Fifth Circuit should defer to agency interpretations of: (1) federal regulations (2) the CMS State Operations Manual (SOM) and (3) "dueling" cooking requirements in the SOM. The Court stated DHHS's interpretation and implementation of the statute promulgated in the CFR is given Chevron deference. (i.e. "if a statute is ambiguous, and if the implementing agency's construction is reasonable, Chevron requires a federal court to accept the agency's construction of the statute, even if the agency's reading differs from what the court believes is the best statutory interpretation." Citing Nat'l Cable & Telecomms. Ass'n v. Brand X Internet Servs., 545 U.S. 967, 980 (2005)).

In reviewing CMS's interpretation of the SOM, the Court found CMS's interpretation was entitled to Seminole Rock deference (Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945). In Seminole Rock, the Supreme Court ruled that "a court must accept an agency's interpretation of its own regulations unless it is "plainly erroneous. Thus, the degree of deference granted the agency's interpretation of its own regulation, was given greater deference.

Limiting the Power of Federal Regulators

According to the Court, CMS went too far in asking the Court to "defer to its interpretation of its manual interpreting its interpretive...