Operators have good reason to thank Judge Mazzant — twice
When a federal judge in Texas put the Labor Department's overtime rule on hold Tuesday, you could almost hear the industry let out a sigh of relief. If enacted, the measure would have placed massive fiscal and compliance burdens on this nation's 15,000 nursing facilities.
Some quick arithmetic helps explain why operators were suddenly giddy. Labor costs already eat up the lion's share of expenses at most facilities, typically accounting for 55% to 70% of the total. Moreover, most workers in this sector earn far less than $47,476, which means they would have automatically qualified for overtime, beginning this Thursday.
Oh, and there were the additional reporting requirements the measure would have put in place.
You hardly need to be an accountant to see how this could have crushed the bottom line at many communities. For many operators, this wasn't dodging a bullet; it was dodging a heat-seeking missile.
So operators are justified in feeling a sense of gratitude toward Judge Amos L. Mazzant right about now. He has arguably helped them keep billions of dollars in their pockets.
As if that were not reason enough to celebrate, this just might prove to be the gift that keeps on giving. For in issuing his temporary injunction against the rule, Mazzant also wrote that the Labor Department “exceeded its authority.”
Why do those three little words matter? Because from the industry's perspective, that could very well prove to be the phrase that pays.
Remember, it was less than a month ago that an American Health Care Association lawsuit accused the Centers for Medicare & Medicaid Services of the same infraction. The legal action came after the agency issued a rule to ban end the use of arbitration clauses.
At the very least, Mazzant's ruling gives the association's attorneys a shiny new legal precedent to lean on. Put another way, Mazzant may have given the field an instrument that helps preserve arbitration clauses. It's not hard to see how that option could eventually mean hundreds of millions of dollars in legal costs — possibly more — being avoided over the long haul.
Most of the nation celebrated Thanksgiving on Thursday. Skilled care operators might need a bit more time. After all, they suddenly have a lot more to be thankful for.