Providers may challenge rules and regulations established by federal agencies that they believe violate the Medicare and Medicaid Acts, thanks to a ruling this week by a federal court. 

Brian M. Feldman

The U.S. Court of Appeals for the Second Circuit ruled on Tuesday that a group of New York long-term care facilities can challenge a Department of Health and Human Services administrative rule in federal court if it believes it violates the law. 

The providers are challenging a regulation codified by HHS in 2017 that no longer makes it a requirement for survey teams to include a registered nurse while conducting inspections of nursing homes. 

The original case stems from a 2013 incident at Avon Nursing & Rehabilitation in Avon, NY, where a resident accidentally burned herself while eating hot soup. The survey team that visited the facility afterward included dietitians — but not a registered nurse — and ended up citing the facility with the most serious possible violation. 

An administrative law judge ruled that an RN must be present since it was a requirement of the Medicaid Act. HHS in 2017 countered the ruling by establishing a final rule stating that certain compliance surveys didn’t require an RN’s participation, court documents explained. 

“The survey team has two important responsibilities: the first is to assess substantial compliance with all the rules and regulations that are imposed by Medicare and Medicaid programs. The second is when there is a finding of noncompliance is to scope out the severity of the noncompliance,” Brian M. Feldman, a partner at Harter Secrest & Emery who argued the case on behalf of the facilities, told McKnight’s Long-Term Care News on Thursday. 

“It’s a problem for [providers] who can be pushed into unfair ratings [and] doing things that don’t make any clinical sense, which isn’t good for them or the residents,” he added. 

“The problem at the end of the day is poor surveys as a result of not having that expertise on the [team],” he said.

Prior to the ruling, Feldman noted that providers basically could challenge federal rulemaking only by appealing survey finding decisions, which can be an expensive process and hasn’t proven in the past to be an effective challenge.  

Feldman said “in some ways, the bigger battle has already been won” with the court’s opinion. 

“By opening up the door to pre-enforcement relief, what the Second Circuit’s done is now anytime there’s a rule or issue that violates the Medicaid Act, these facilities can go preemptively to court if they’re aggrieved and challenge it in federal court,” Feldman said.