Texas Challenges Biden Administration’s Minimum Staffing Mandate in Court

Previously published in Healthcare News 

The State of Texas filed a lawsuit against the Biden administration on August 16, 2024, seeking to vacate a rule requiring nursing homes that receive federal funding through Medicare and Medicaid to meet certain minimum staffing requirements. The lawsuit alleges that because 97% of all nursing homes participate in these programs, the Final Rule will impact nearly every U.S. nursing home. Texas is considered among those hardest hit by the Final Rule, with Centers for Medicare and Medicaid Services (CMS) estimating the state will have to hire more additional registered nurses (RNs) than any other state and spend half a billion dollars per year to comply with the requirement.

The Final Rule, issued in April 2024, revises 42 CFR § 483.35 to now require a registered nurse to be on-site at a nursing home 24 hours per day/seven days per week to provide direct resident care, with limited exceptions. The Final Rule also specifies that facilities must provide at least 3.48 nurse staffing hours per resident day (HPRD), including a minimum of .55 HPRD of registered nurse staffing and 2.45 HPRD of nurse aide staffing. “Hours per resident day” means the average hours of care that each nursing home resident receives per day.

Previously, federal law required a nursing home to employ an RN for at least eight consecutive hours per day and 24-hour licensed nursing services “sufficient to meet the nursing needs of its residents.” The lawsuit claims that the Secretary of HHS is acting outside his authority in the Final Rule because neither 42 U.S.C. § 1395i-3(b)(4)(C) (Medicare) nor 42 U.S.C. § 1396r(b)(4)(C) (Medicaid) authorizes the Secretary to set an identical number of hours of staffing at every long-term care facility, regardless of their residents’ actual needs and regardless of differing needs for differing facilities.

The Final Rule reflects Biden’s initiative and overall reform plan to address “chronic understaffing” and improve the safety and quality of care concerns for 1.2 million residents receiving long-term care each day. The administration argues that minimum staffing standards can help prevent staff burnout and reduce turnover, thereby leading to more consistent care.

In its recent lawsuit, Texas argues the Final Rule’s requirements exceed CMS’s statutory authority under the federal Administrative Procedure Act and that the laws are arbitrary and capricious since CMS’s longstanding position has been that nursing facilities caring for diverse resident populations with varying needs demands a flexible regulatory approach. The lawsuit claims that the Department of Health and Human Services violates the “major questions doctrine” by imposing an estimated $4.3 billion of costs per year on nursing homes across the U.S. without statutory authorization. The doctrine is a legal theory directing courts to reject agencies’ interpretation of statutes on major questions of political or economic significance without clear authorization from Congress.

The recent SCOTUS decision in Loper Bright Enterprises v Raimondo and the resulting demise of deference afforded under the Chevron doctrine is likely to bolster legal arguments that CMS lacks the broad discretion to promulgate rules as it did in the Final Rule. The Loper Bright decision empowers courts like the U.S. District Court for the Northern District of Texas to overturn regulatory agencies perceived to have acted outside those powers delegated to them by Congress.

In May 2024, in a similar lawsuit requesting that the nursing home staffing mandate be set aside, the American Health Care Association (AHCA), the Texas Health Care Association (THCA), and three skilled nursing providers sued in the same Texas federal court. That case is currently pending in front of Judge Matthew Kacsmaryk, who was appointed by former President Donald Trump and has ruled against the Biden administration in several other cases. Briefing is set to begin soon, with an August 13, 2024, Scheduling Order requiring the Plaintiffs to brief their motion for summary judgment by October 18, 2024. Judge Kacsmaryk will likely also preside over the Texas case since he is the sole judge in the federal court where both cases are pending.

The Texas lawsuit and critics of the Final Rule argue that rural areas will disproportionately bear the burden of compliance despite a phased in implementation approach for rural facilities and temporary exemptions for areas with workforce shortages. Texas alleges there are not enough qualified people to fill these newly required positions. This allegation is supported by recent commentary published by Brookings1, which notes that over the first two years of the pandemic, the U.S. economy lost 400,000 workers in residential care facilities and nursing. Presently, the shortage is estimated at 130,000. Rural areas often rely on scarce foreign national physicians and healthcare workers. Unfortunately, options for such shortage areas are minimal and are not linked to provide relief tied to documented shortages. In addition, due to high demands for foreign workers, the timeline to onboard critical healthcare workers is only increasing.

In response to stakeholder commentary preceding the Final Rule’s issuance, CMS declined to address immigration policies supporting nursing staff’s entry into the U.S. workforce, indicating the issue is outside the scope of its authority.

CMS pledged to commit over $75 million in an initiative to help increase the long-term care workforce and expand the pipeline of new staff, stating that funds will be allocated for items such as tuition reimbursement or technical assistance to facilities through Quality Improvement Organizations. Nursing facilities across the country will be closely watching the allocation of these funds and the progress of both lawsuits filed in Texas as they struggle to find qualified staffing amid a nationwide nursing shortage.

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About the Authors

Peggy Kozal, based in Dickinson Wright’s Denver office, actively helps health care clients navigate the challenges of regulatory compliance, litigation, and data privacy. She works with hospitals, long-term care facilities, and physician practices, providing practical legal advice to help them manage risks and stay compliant with laws like HIPAA. Peggy also assists with whistleblower complaints, government investigations, and reimbursement disputes, and her work extends to employment matters and litigation. Her goal is to support health care providers in finding solutions that keep their operations running smoothly while staying within the bounds of the law. She can be reached at PKozal@dickinsonwright.com. Her full bio can be viewed here.

Kathleen Campbell Walker is chair of the Immigration Practice Group, based in El Paso, Texas.  She is a past president (2007) and general counsel (2009) of the American Immigration Lawyers Association (AILA).  She began practicing immigration law in 1986. In 2014, Ms. Walker received the AILA Founder’s Award, given occasionally to the person or entity having the most substantial impact on immigration law or policy. She is board certified in Immigration and Nationality Law by the Texas Board of Legal Specialization.  In addition, she is recognized in Chambers USA (Band One), Chambers Global (Band One), International Who’s Who of Business Lawyers, Super Lawyers, and Best Lawyers in America. She is rated AV® Preeminent™ in Martindale-Hubbell®.  She can be reached at KWalker@dickinsonwright.com, and her biography can be accessed here.

1Benjamin H. Harris and Liam Marshall, “Immigration to address the caregiving shortfall,” Brookings.edu (April 2, 2024). https://www.brookings.edu/articles/immigration-to-address-the-caregiving-shortfall/