What Amount of Deference, If Any, Is Accorded To CMS' Interpretation Of The State Operations Manual?

>On May 17, 2013, the United States Court of Appeals for the Fifth Circuit (Court) ruled on a Petition for Review of a Decision of the United States Department of Health and Human Services (DHHS) in the case styled, Elgin Nursing and Rehabilitation Center v. United States Department of Health and Human Services, Docket No. C-10-679, Decision No. CR2376 (May 26, 2011).

In a refreshing decision for the industry, the Court analyzed what amount of deference, if any, is accorded to DHHS' Centers for Medicare and Medicaid Services' (CMS) interpretation of the State Operations Manual (SOM).

The Texas Department of Aging and Disability (TDAD) conducted an investigation in February 2010 at Elgin Nursing and Rehabilitation Center (Elgin) and, after observations of two breakfast plates with egg yolks "smeared around the plate," and interviews, TDAD's surveyors determined that five residents had requested that the unpasteurized eggs that Elgin had purchased be served "soft cooked." TDAD concluded that "nonpasteurized shell eggs when served 'soft-cooked' ... could lead to" serious illness and even death, and determined that Elgin violated 42 C.F.R. § 483.35(i) (food to be served in a "sanitary" manner) and that the deficiency constituted an immediate jeopardy.

CMS adopted TDAD's findings and imposed a civil monetary penalty (CMP) of $5,000, denial of payments for new admissions, prohibition from offering or sponsoring a nurse aide training and competency evaluation program, and threatened termination of the facility's provider agreements. After a resurvey, CMS rescinded or did not impose the majority of the remedies, with the exception of the CMP. Elgin requested a hearing with an Administrative Law Judge (ALJ) of DHHS' Departmental Appeals Board (DAB).

After an evidentiary hearing, which included an affidavit from the cook who had prepared the eggs; a video of a registered dietitian and food-safety instructor; and evidence that no TDAD surveyor had observed the cook cooking eggs, spoke with him, or took temperatures during the survey, the matter was presented to the ALJ without live testimony. The ALJ upheld CMS' finding of a deficiency and concluded that the CMP was reasonable. The DAB affirmed the ALJ's decision, and Elgin appealed to the Court.

On appeal, the Court discussed what level of deference to accord DHHS' legal interpretations. According to the Court's analysis, "[t]here are three levels of interpretation nested within one another." The...