Egg on its Face: Agency Could Not Impose Sanctions When its Interpretation of its Regulation Was Granted No Deference

May 27, 2013

By Jessica A. Ritsick

The Fifth Circuit earlier this month, in Elgin Nursing and Rehab Ctr. v. U.S. Dep’t of Health and Human Servs., No. 12-60086, 2013 WL 2149873 (5th Cir. May 17, 2013), struck down a decision by the Department of Health and Human Services (“HHS”) relating to the Centers for Medicare & Medicaid Services’ (“CMS”) interpretation of a regulation concerning serving food safely in a nursing facility.  As a result, the court vacated a fine issued to the nursing facility.

The case arose out of purported violations of sanitary food regulations by Elgin Nursing and Rehabilitation Center in Texas.  The Texas Department of Aging and Disability inspected Elgin, and found smeared egg yolk on some patients’ breakfast plates.  The inspectors concluded that the smeared egg yolks, from unpasteurized shell eggs, were “unsanitary,” and that the nursing home had violated the law.

HHS regulates nursing facilities under 42 U.S.C. § 1320a-7j.  HHS regulations require long-term care facilities to “[s]tore, prepare, distribute, and serve food under sanitary conditions.”  42 C.F.R. § 483.35(i)(2).  “Sanitary conditions” is an ambiguous term, and CMS sought to clarify that term in CMS’ State Operations Manual (“SOM”) Appendix PP, which specifies sanitary cooking conditions for food.  Under CMS’ SOM, unpasteurized shell eggs are required to be cooked to “-145 degrees F for 15 seconds; until the white is completely set and the yolk is congealed.”  CMS argued that this interpretation was conjunctive, and that both the time and temperature, and the consistency requirement, must be met to avoid violation of the regulations.  CMS averred that its conjunctive interpretation of the SOM was entitled to “great deference” by the court.  The court disagreed.

The Fifth Circuit stated that not only would adopting such a policy encourage agencies to write ambiguous requirements, as well as to create and enforce ambiguous interpretations of those requirements, but also that such policy would foreclose agency interpretations from judicial review.  Perhaps most importantly, though, the court stated that such policy would allow agencies to “punish ‘wrongdoers’ without first giving fair notice of the wrong to be avoided.”  Elgin, 2013 WL 2149873, at *4.

“Allowing an agency to apply its own interpretation to an otherwise vague regulation in the context of an enforcement proceeding would unfairly surprise the sanctioned party and ‘seriously undermine the principle that agencies should provide regulated parties ‘fair warning of the conduct [a regulation] prohibits or requires.’”  Id. at *5 (citations omitted) (alteration in original).  Thus, Elgin serves as a cautionary tale to agencies:  where agencies “issue ambiguous interpretive documents and then interpret those in enforcement actions,” id. at *7, courts may not grant the interpretation of the interpretation any deference, and will vacate sanctions that the agency imposes based on such ambiguous interpretive documents.

The court ultimately found that the SOM was disjunctive, that CMS had not adduced any evidence that the eggs served to residents were not cooked to the proper temperature for the proper period of time, and set aside HHS’ decision that Elgin had violated safety requirements related to the cooking of eggs.  As a result, the court vacated the penalty HHS had imposed on Elgin.

Categories: Health Care