On May 17, 2013, the U.S. Court of Appeals for the Fifth Circuit handed an important victory to Elgin Nursing and Rehabilitation Center (Elgin) when it reversed a finding of "immediate jeopardy" and the related penalties. The case began when surveyors observed "smeared egg yolk" on five residents’ plates as they were eating their breakfast. (All five residents had requested eggs that were "over easy," "soft-cooked," or "soft-fried.") The survey team cited Elgin with a deficiency at the "immediate jeopardy" level based on its belief that the facility violated 42 C.F.R. § 483.35(i), which requires facilities such as Elgin to serve food under "sanitary" conditions. Consequently, the Centers for Medicare & Medicaid Services (CMS) imposed a $5,000 civil money penalty; a denial of payment for new admissions; loss of the facility’s nurse aide training and competency evaluation program (NATCEP) for a two-year period; and termination of its Medicare provider agreement.
CMS maintained that serving "unpasteurized eggs with runny yolks" violated the regulation dealing with food preparation. That regulation requires facilities to "store, prepare, distribute, and serve food under sanitary conditions." Because the regulation does not define "sanitary," CMS relied on the interpretation of the regulation in the State Operations Manual (SOM), Appendix PP – Guidance to Surveyors for Long Term Care Facilities for clarification. The SOM provides guidance to surveyors regarding the interpretation of the applicable regulations. As CMS’ guidance document, it does not have the force of law, and lacking the force of law, cannot expand what a regulation requires. The SOM noted that "[c]ooking is a critical control point in preventing foodborne illness "and stated that "[u]npasteurized eggs when cooked in response to a resident request..." should reach a temperature of 145 degrees Fahrenheit for 15 seconds "until the white is completely set and the yoke is congealed." CMS further interpreted the SOM requirement as imposing a conjunctive requirement; that is, the egg must be cooked at 145 degrees Fahrenheit and the white must be completely congealed and the yolk firm.
The facility appealed CMS’ enforcement actions and an Administrative Law Judge (ALJ) upheld CMS’ findings of noncompliance and all remaining enforcement actions. (The termination was rescinded.) The ALJ agreed with the provision of the SOM that requires facilities to "cook unpasteurized eggs until the eggs reach 145 degrees for 15 seconds; until the white is completely set and the yolk is congealed." In so doing, he afforded substantial deference to CMS’ interpretation of the meaning of the term "sanitary conditions," believing it to be a reasonable explanation of the regulatory requirement. By contrast, Elgin argued that the condition of the egg whites described in the SOM is an additional requirement not justified by the regulation. It asserted that the "runniness" or "congealment" of an egg is not a factor that the language of the regulation supports. Unconvinced of Elgin’s position, the ALJ ruled in favor of CMS, holding that "[t]he somber fact is that the eggs at issue were undercooked, and no argument can get around the fact that they were."
Elgin appealed the ALJ’s decision to the Departmental Appeals Board (Board). The Board noted that among the evidence submitted by both CMS and Elgin was a Regional Survey and Certification Letter No. 04-08, authored by the CMS Dallas Regional Office. The title of the letter is "Serving Undercooked or Raw Eggs to Nursing Home Residents." The official CMS Regional Office letter states, "soft-cooked eggs are considered undercooked if the yolk is runny and/or the egg white is not congealed." (Note that the CMS letter was a Regional, not a Central Office position, which raises other potential issues.) Thus, CMS in Region VI considered it a serious deficiency if an egg yolk is runny and/or the egg white "is not congealed." In upholding the ALJ’s decision, the Board relied on CMS’ interpretation of the SOM interpretation of the regulation that facilities must store, prepare, distribute and serve food under sanitary conditions and concluded that CMS had met its burden by showing that substantial evidence supported the ALJ decision. Elgin next appealed to the Court of Appeals for the Fifth Circuit.
The Fifth Circuit set aside the deficiency findings and resultant penalties. It noted that courts generally afford substantial deference to an agency’s interpretations of its own regulations unless an alternative interpretation is compelled by the regulation’s plain language. However, in this case, CMS relied not just on the regulation but rather on its "Interpretive Guidance" in the SOM and the CMS Regional Office letter which provided further interpretation of an interpretation.
In an unequivocal rejection of CMS’ position (and the two decisions below), the court refused to permit CMS to interpret its own interpretation of "sanitary conditions." It noted that the interpretation of the regulation in the SOP was "inherently ambiguous. Further, the court reasoned that accepting CMS’ argument "would make it possible for agencies not only to issue ambiguous regulations, but also to write and enforce ambiguous interpretations of them. It would also require courts to interpret not only interpretations, but interpretations of interpretations."
Reinforcing its repudiation of CMS’ position, the court added, "[a]ffording deference to agency interpretation of ever more ambiguous regulations would allow the agency to function not only as judge, jury and executioner but to do so while crafting new rules." The court refused to permit such "arbitrary" practices.
The holding of this case is important not just for Elgin, but for all nursing facilities. As the court noted, CMS may not issue ambiguous interpretations of the regulation and then interpret its own interpretations of a regulation in the context of enforcement actions. Providers should note that surveyors may not cite a deficiency based solely on the SOM, as they sometimes have. Deficiencies must be based on a regulatory violation. Simply put, the SOM provides guidance to surveyors and as the court recognized, it is not a substitute for the law.1