Northeast Health Services, L.L.C. v. United States

In the United States Court of Federal Claims

FOR PUBLICATION

No. 24-2096T

(Filed: May 28, 2026)

)

NORTHEAST HEALTH SERVICES, LLC, )

)

Plaintiff, )

)

v. )

)

UNITED STATES, )

)

Defendant. )

)

Christopher N. Moran (argued), Venable LLP, Baltimore, MD, for plaintiff.

Theresa Clardy LaFazia, Venable LLP, Los Angeles, CA, Of Counsel.

Anthony M. Cognasi (argued), Trial Attorney, Tax Litigation Branch, Civil Division,

U.S. Department of Justice, Washington, DC, for defendant. With him on the briefs

were Brett A. Shumate, Assistant Attorney General; Joshua Wu, Deputy Assistant

Attorney General; and Jason E. Bergmann, Assistant Director, and Eric J. Smith,

Trial Attorney, Tax Litigation Branch, Civil Division, U.S. Department of Justice,

Washington, DC.

OPINION AND ORDER

BONILLA, Judge.

This COVID-19–related tax refund claim presents issues of first impression in

this Circuit. Plaintiff Northeast Health Services, LLC (NEHS) claims a nearly

$5 million tax refund for the first three quarters of 2021, attributed to the Employee

Retention Credit (ERC) under section 2301 of the Coronavirus Aid, Relief, and

Economic Security (CARES) Act, Pub. L. No. 116-136, 134 Stat. 281, 347–51 (2020)

(codified as amended at 26 U.S.C. § 3134). Pending before the Court are the parties’

cross-motions for summary judgment under Rule 56(a) of the Rules of the United

States Court of Federal Claims (RCFC). Specifically, the parties seek to resolve the

issue of liability, with NEHS asserting eligible employer status and, conversely, the

government arguing that NEHS was exempted from the cited COVID-19–related

orders and directives or, alternatively, that the healthcare provider’s operations were

not fully or partially suspended “due to” a qualifying governmental order. For the

reasons discussed below, NEHS’s motion is denied, and the government’s dispositive

cross-motion is granted.

BACKGROUND

NEHS is a healthcare provider that offers mental health care services—

including counseling, psychotherapy, psychiatric medication management, and

interventional psychiatry—through outpatient mental health clinics located

throughout the Commonwealth of Massachusetts.1 Its clinics are licensed and

regulated as healthcare facilities by the Massachusetts Department of Public Health

(DPH),2 which is one of eleven state governmental agencies that comprise the

Massachusetts Executive Office of Health and Human Services (EOHHS).3 Prior to

March 2020, NEHS provided its services exclusively in person at nine clinics located

throughout Massachusetts.4

On March 10, 2020, then–Governor of Massachusetts Charles D. Baker Jr.

declared a state of emergency in response to the COVID-19 pandemic, explaining that

he would “from time to time issue recommendations, directives, and orders as

circumstances may require.” ECF 21-1 at 17. Pursuant to that declaration, the

governor issued COVID-19 Order No. 13 on March 23, 2020, titled “Order Assuring

Continued Operation of Essential Services in the Commonwealth, Closing Certain

Workplaces, and Prohibiting Gatherings of More Than 10 People.” Id. at 19–23.

The order designated certain workforces and businesses—including “physicians, . . .

psychologists, . . . nurses and assistants, . . . [and] . . . other providers of mental and

behavioral health care,” id. at 25 (Exhibit A)—as “COVID-19 Essential Services.” Id.

at 20. Order No. 13 “urged [COVID-19 Essential Services] to continue operations

during the state of emergency, but to do so with allowance for social distancing

protocols consistent with guidance provided by [DPH].” Id. Businesses “that d[id]

not provide COVID-19 Essential Services” were told that they “shall close their

1 See About Us, NE. HEALTH SERVS., available at https://perma.cc/3YP3-N58S.

2 The Code of Massachusetts Regulations sets forth standards for the maintenance and operation of

clinics and defines a clinic, in relevant part, as “[a]ny entity, however organized, whether conducted

for profit or not for profit, [that] is advertised, announced, established, or maintained for the purpose

of providing[, among other things,] mental health services.” 105 MASS. CODE REGS. 140.020 (2025).

3 See generally Executive Office of Health and Human Services, MASS.GOV, available at

https://perma.cc/5JUM-SM6X.

4 In its motion for partial summary judgment, NEHS asserts that, “[p]rior to the onset of the COVID-19

pandemic in March 2020, [it] had ten clinic locations in Massachusetts.” ECF 21 at 7 (emphasis added).

One of the clinics, however, never commenced operations. See ECF 23-2 at 32–33 (“[A]t the time of my

coming to the company, there were ten physical locations, one of which was new and to open. That site

never opened for a variety of reasons. It was going to be doing a little bit more of an addiction-focused

service. That was a particularly in-person service. We just never launched that line, and so that site—

we let the lease go.”); ECF 28 at 7–8.

2

physical workplaces and facilities . . .” and were “encouraged to continue operations

where they [we]re able to operate through remote means . . . .” Id. at 20–21.

NEHS submits that it interpreted “mental and behavioral health care” within

the meaning of Order No. 13’s carveout for “COVID-19 Essential Services,” id. at 25,

as referring only to “hospital and inpatient services, not outpatient mental health

clinics such as NEHS’s clinics.” ECF 21 at 8 (citing ECF 21-1 at 6 ¶ 9). NEHS

therefore “closed its outpatient clinics and ceased operations for approximately three

weeks.” Id. (citing ECF 21-1 at 6 ¶ 10). NEHS maintains that, although it was able

to implement telehealth capabilities in late April 2020, those early-pandemic sessions

were limited and often consisted of brief telephonic or virtual patient check-ins,

rather than full-length therapy sessions.

The restrictions imposed by Order No. 13 were extended three times on

March 31, 2020 (COVID-19 Order No. 21), April 28, 2020 (COVID-19 Order No. 30),

and May 15, 2020 (COVID-19 Order No. 32). Then, on May 18, 2020, then-Governor

Baker issued COVID-19 Order No. 33, which instituted a four-phase business

reopening plan and delegated “specific authority to [DPH to] promulgate directives,

regulations, and guidance to implement and enforce the terms of th[e] Order . . . .”5

ECF 21-1 at 35–43. Violations of Order No. 33—or any directives, regulations, or

guidance issued pursuant thereto—were punishable by civil fines of up to $300 per

violation and enforceable via injunctive relief. Of note, the governor’s directive

exempted “[a]ny health care facility or provider licensed by [DPH].” Id. at 41. The

same day, DPH issued its own guidance, outlining instances in which health care

providers could begin implementing “urgent elective invasive procedures.”6 Id. at 45.

Consistent with Order No. 33, DPH and EOHHS proceeded to issue different stages

of reopening guidance between May 2020 and March 2021. The guidance applied to

healthcare providers that offered services for non-emergency procedures prior to the

COVID-19 pandemic but were unable to perform those procedures during the early

days of the pandemic due to restrictions on in-person care.

The DPH and EOHHS guidance placed numerous restrictions on the

healthcare providers required to follow it. For example, DPH required providers to

prioritize telehealth where appropriate. See id. at 78 (explaining, for phase one, that

“[h]ealth care providers should . . . continue to provide services via telehealth to the

greatest extent possible when clinically appropriate, while also recognizing that

telehealth may not be feasible or clinically appropriate for all patients”), 92 (similar

5 Order No. 33 limited the rulemaking authority delegated to DPH to “businesses, organizations, and

workplaces subject to the sanitary code established pursuant to section 127A of chapter 111 of the

General Laws and where DPH otherwise has existing regulatory authority.” ECF 21-1 at 40.

6 The May 18, 2020 DPH order authorized health care providers to “implement procedures published

by [DPH] regarding the scheduling and performance of . . . urgent elective invasive procedures,”

provided the health care providers “submit[] an attestation to the state certifying that they meet

[applicable] clinical, capacity, safety standards, and governance requirements . . . .” ECF 21-1 at 45.

3

for phase two), 103 (similar for phase three), 113 (similar for phase four). Each phase

of DPH’s four-phase plan also required providers to implement procedures designed

to reduce the spread of disease where possible, including, but not limited to: providing

personal protective equipment and other essential supplies, see, e.g., id. at 78

(phase one), 94 (phase two), 107 (phase three), 111 (phase four); limiting employees

to those “necessary to complete the service or procedure for the patient,” id. at 79

(phase one), 94 (phase two), 107 (phase three), 111 (phase four); promoting social

distancing, id. at 80 (phase one), 94 (phase two), 107 (phase three), 110 (phase four);

and establishing plans to clean and disinfect common and procedural areas, id. at 80

(phase one), 94–95 (phase two), 107 (phase three), 112 (phase four).

On May 28, 2021, then-Governor Baker—citing “sustained improvements in

the public health data” and “the development and effective distribution to the public

of safe, highly effective, and free COVID-19 vaccines”—rescinded the four-phase

business reopening plan, effective May 29, 2021. See id. at 115–17. Health care

providers, however, continued to be subject to DPH guidance on limiting the spread

of COVID-19. See, e.g., id. at 123–26 (“COVID-19 Guidance for Health Care

Providers, effective June 14, 2021”); id. at 128–31 (update to “COVID-19 Guidance

for Health Care Providers,” effective “July 2, 2021”).

NEHS asserts that “the executive orders, DPH reopening orders, DPH phased

guidance, inspection suspensions, and enforcement mechanisms significantly

disrupted NEHS’s operations and limited its ability to provide in-person outpatient

mental health services throughout 2020 and 2021.” ECF 21 at 13. In support, NEHS

provides a list of financial and logistical challenges it experienced while responding

to the COVID-19 pandemic and attempting to comply with state directives and

guidance. First, NEHS details the difficulties experienced in providing consistent

and reliable services throughout the COVID-19 pandemic. The healthcare provider

reports that its clinics were subject to capacity limits and periodic closures during

2020 and 2021 due to COVID-19 exposures. NEHS also notes that it struggled to

treat certain patient populations, including children, while implementing newly

required telehealth treatment methods.

Second, NEHS outlines its inability to implement specialized treatment

modalities during the later stages of the pandemic. In May 2021, NEHS acquired a

West Virginia–based provider of Transcranial Magnetic Stimulation (TMS) and

Spravato (esketamine),7 both of which require in-person administration and post-

administration observation and, therefore, cannot be administered via telehealth.

Although NEHS intended to introduce these treatments at its clinics, it was unable

7 TMS is a non-invasive antidepressant procedure, and Spravato is a nasal spray. See Transcranial

Magnetic Stimulation, MAYO CLINIC (Apr. 7, 2023), available at https://perma.cc/MJ4T-QKN5; What

is Spravato® (esketamine) CIII Nasal Spray?, SPRAVATO (ESKETAMINE) (Dec. 2025), available at

https://perma.cc/Y76Z-5B9D.

4

to do so in 2020 and 2021 due to the clinic opening delays and limitations on in-person

treatment.8

Third, NEHS describes disruptions to its ability to maintain and supervise a

consistent and qualified workforce. For certain services, NEHS previously relied on

employees who could not lawfully practice (or bill) without in-person supervision by

licensed clinicians, including physician assistants and certified nurse practitioners.9

Restrictions and safety constraints designed to combat the spread of COVID-19,

however, complicated or otherwise prevented NEHS from properly supervising and,

consequently, utilizing non-licensed practitioners. Additionally, NEHS experienced

delays in licensing, onboarding, and credentialing clinicians due to “COVID-related

disruptions affecting licensing boards, insurers, and administrative processing.”

ECF 21-1 at 140–41. NEHS also maintains that school closures and the

unavailability of childcare services caused some of its employees to stay home from

work, preventing them from scheduling patient visits at pre-pandemic rates.10

Fourth, NEHS recounts the operational impact it suffered on account of its

unexpected transition to telehealth. Prior to February 2021, NEHS did not have a

universal telehealth platform, and its telehealth capability varied by clinic and

provider. The transition reportedly caused NEHS to “incur[] additional expenses to

implement and maintain telehealth, including per-clinician telehealth licenses and

staff training.” Id. at 141. NEHS also points to increased complexities and

8 NEHS does not explain how it would have introduced the treatments in 2020, before it acquired the

West Virginia–based provider. See ECF 23 at 9 (“[I]n May 2021, NEHS acquired a West Virginia–

based company to help implement two higher-acuity interventional psychiatric services in its

Massachusetts clinics, [TMS] and Spravato® . . . . However, NEHS did not begin offering these

services in a meaningful way until 2022.”). An NEHS employee represented that “[i]n 2020 . . . there

was no TMS at NEHS. We introduced it in 2021.” ECF 23-2 at 22. But see id. (“You should think of

TMS as something that was delayed and affected because it was—it was just not the right time to roll

it out.”).

9 See, e.g., 267 MASS. CODE REGS. § 3.02(2)(b)(4) (2020) (“An unlicensed individual may perform any of

the functions or services specified in [267 MASS. CODE REGS. § 3.02(2)(a)] pursuant to a delegation of

medical services by a duly licensed physician only if: . . . [t]he unlicensed individual performs the

function or service in question in accordance with accepted standards of medical practice and under

the direct, personal, on-site supervision of the licensed physician making that delegation of medical

services . . . .”). NEHS also notes that “[t]he various boards within . . . DPH’s Bureau of Health

Professions Licensure” and “[i]nsurance payers, including Medicare, Medicaid, and commercial payers,

also require that clinicians who are not independently licensed be supervised by a licensed

clinician . . . .” ECF 21-1 at 11–12.

10 See ECF 21-1 at 132–34 (March 15, 2020 “Order Temporarily Closing All Public and Private

Elementary and Secondary Schools”); id. at 135–38 (March 18, 2020 “Order Temporarily Closing All

Child Care Programs and Authorizing the Temporary Creation and Operation of Emergency Child

Care Programs”). During 2020 and 2021, NEHS employed approximately 200 to 250 psychiatric and

therapy professionals, including psychiatrists, nurse practitioners, physician assistants, and social

workers. NEHS explains that “many [of its clinicians and therapists] have child and family

obligations” and were affected by the school closures. Id. at 12.

5

administrative burdens associated with telehealth billing, which delayed revenue

collection and increased claim denials. Explaining the financial impact of the

implementation and utilization of telehealth services, NEHS also points to

aberrations in its employees’ usage of billing codes that corresponded with a decrease

in its expected reimbursement amount per visit: prior to March 2020, only

approximately two percent of patient visits used the billing code for a 30-minute

appointment, but between January 2021 and September 2021, that rate jumped to

approximately eight to ten percent.11

Finally, NEHS reports that it missed revenue opportunities attributable to

delayed clinic openings. Massachusetts regulations require clinics to receive

approval of construction plans and pass an in-person DPH inspection before

constructing and opening new clinics. See 105 MASS. CODE REGS. § 140.103(C), (E)

(detailing “prior approvals” and other steps to follow “[i]n the case of new construction

of a clinic . . . .”). DPH reportedly suspended in-person inspections for new clinic

licensures at the start of the COVID-19 pandemic and only resumed in-person

inspections during late 2020 and 2021 at a limited capacity. As a result,

notwithstanding NEHS’s plans to open seven new clinics and reopen another, the

healthcare provider only opened one new clinic in 2021.12

The government counters that NEHS is not entitled to the ERC because, as a

COVID-19 Essential Service, the healthcare provider was exempted from the state-

imposed restrictions. The government further avers that NEHS’s operations were

not “fully or partially suspended” as that term is defined under the relevant portion

of the CARES Act and, in any case, that any claimed business interruptions were not

“due to” a qualifying government order. Regarding NEHS’s conversion to telehealth,

the government notes that, when NEHS first contracted with a telehealth

implementation service in October 2020,13 the corresponding rollout was

“straightforward” because many of its clinicians had been independently using the

same telehealth service since May 2020. ECF 23 at 12; accord ECF 23-2 at 14–15;

ECF 23-3 at 11. The government also points to deposition testimony indicating that

the administrative burden associated with NEHS’s transition to telehealth was,

at most, minimal. ECF 23 at 13; see ECF 23-2 at 21 (noting that the COVID-19

emergency order “suspended the in-person requirement for initiation of psychotropic

11 The 30-minute billing code reimburses clinics at a materially lower rate than the 45-minute or

60-minute billing codes.

12 By comparison, NEHS opened six new clinics in 2022, thirteen new clinics in 2023, and

“approximately” twelve new clinics in 2024. ECF 21-1 at 143 ¶ 23.

13 As discussed above, NEHS asserts that it “entered into an enterprise-wide telehealth agreement in

February 2021.” ECF 21-1 at 141 ¶ 13. The different dates—October 2020 versus February 2021—

are not inconsistent. The parties appear to have chosen them based on the scope of NEHS’s agreement

with the telehealth service. In October 2020, the agreement was “for a per clinician, per month fee to

make it available and have them enrolled,” ECF 23-2 at 15, while in February 2021, the agreement

was “enterprise-wide,” ECF 21-1 at 141.

6

medications,” making it possible for NEHS to initiate psychotropic medications via

telehealth); ECF 23-3 at 9 (explaining NEHS did not have the administrative burden

of collecting co-pays for a period of time extending “several months into Covid”).

Finally, the government interprets the increased percentage of appointments that

utilized the 30-minute billing code differently than NEHS does, noting that, while

NEHS did see an increase in 30-minute appointments, NEHS maintained roughly

the same amount of 45-minute and 60-minute appointments.

Notwithstanding NEHS’s claimed operational challenges, the government

points to certain metrics indicating that the healthcare provider’s business grew or

otherwise remained relatively consistent throughout the pandemic. In the first three

quarters of 2021, NEHS gained a net of seventy-four employees, compare ECF 23-6

at 2 (315 compensated employees in Q1), with id. at 10 (389 compensated employees

in Q3), and increased its gross profit per quarter from slightly under $5 million in Q1

to just over $5 million in Q3. Additionally, while it lost about ten percent of its

patients to school closures,14 NEHS did not otherwise suspend or cancel any contracts

during the pandemic.

Against this backdrop, NEHS filed three Forms 941-X (Adjusted Employer’s

Quarterly Federal Tax Return or Claim for Refund) on or about January 19, 2024, for

the employment tax quarters ending March 31, 2021 (Q1), June 30, 2021 (Q2), and

September 30, 2021 (Q3). In each amended return, NEHS explained it was seeking

“[t]o retroactively claim the [ERC]” under Section 2301 of the CARES Act.15 ECF 1-2

at 6, 11, 16; accord ECF 1 at 1. As recently explained by this Court:

The CARES Act was one of several laws that Congress passed in the

spring of 2020 to address the economic impacts of COVID-19. The

CARES Act included the [ERC], a refundable tax credit that subsidized

employers who were forced to close or suspend operations due to

COVID-19–related public health orders. Using the ERC, eligible

employers can reduce the amount paid in employment taxes by 70% of

the amount paid to employees during the pandemic-related shutdowns.

14 NEHS “had contracts with some schools, and those services stopped . . . . [C]linicians would go

on-site, and . . . services were scheduled during the school day. That ended . . . .” ECF 23-2 at 27.

15 Originally, the ERC applied exclusively to tax year 2020. See § 2301(m), 134 Stat. at 351 (“This

section shall only apply to wages paid after March 12, 2020, and before January 1, 2021.”). Congress

extended it twice: first, through the Taxpayer Certainty and Disaster Tax Relief Act of 2020,

Pub. L. No. 116-260, 134 Stat. 1182, 3062 (amending Section 2301(m) of the CARES Act to extend the

ERC to wages paid until July 1, 2021); and second, through the American Rescue Plan Act of 2021,

Pub. L. No. 117-2, 135 Stat. 4, 182 (amending the CARES Act to extend the ERC to wages paid until

January 1, 2022). Congress later amended the CARES Act to eliminate the availability of the ERC

after the third quarter of 2021 for most businesses (including NEHS). See Infrastructure Investment

and Jobs Act, Pub. L. No. 117-58, 135 Stat. 429, 1341 (2021) (amending the CARES Act to terminate

the ERC on October 1, 2021 for eligible employers that do not qualify as recovery startup businesses).

7

If the credit exceeds the amount of employment taxes paid, employers

can claim the difference as a cash refund . . . .

Gravenstein 116, LLC v. United States, 180 Fed. Cl. 292, 294 (2026) (footnote and

additional internal citations omitted) (citing I.R.C. § 3134). NEHS filed this action

after the Internal Revenue Service (IRS) failed to process the requested refunds

within six months.16

DISCUSSION

I. Standard of Review

Summary judgment is appropriate “if the movant shows that there is no

genuine dispute as to any material fact and the movant is entitled to judgment as a

matter of law.” RCFC 56(a). A “genuine” dispute exists where a reasonable factfinder

“could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 248 (1986). “Material” facts, in turn, are those “that might affect the

outcome of the suit.” Id. In deciding motions for summary judgment, the Court must

draw all inferences in the light most favorable to the nonmoving party. Matsushita

Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587–88 (1986) (quoting

United States v. Diebold, Inc., 369 U.S. 654, 655 (1962) (per curiam)).

The moving party bears the initial burden to demonstrate the absence of any

genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

That burden can be met by showing “there is an absence of evidence to support the

nonmoving party’s case.” Dairyland Power Coop. v. United States, 16 F.3d 1197, 1202

(Fed. Cir. 1994) (citing Celotex, 477 U.S. at 325). “Once the moving party has satisfied

its initial burden, the opposing party must establish a genuine issue of material fact

and cannot rest on mere allegations, but must present actual evidence.” Long Island

Sav. Bank, FSB v. United States, 503 F.3d 1234, 1244 (Fed. Cir. 2007) (citing

Anderson, 477 U.S. at 248). Summary judgment is warranted when “the record taken

as a whole could not lead a rational trier of fact to find for the non-moving party . . . .”

Matsushita, 475 U.S. at 587.

II. Eligible Employer

The parties’ principal disagreement is whether NEHS qualifies as an “eligible

employer” under the ERC. The CARES Act defines “eligible employer,” in part, as

“any employer”:

16 Under 26 U.S.C. § 6532(a)(1), “[n]o suit or proceeding under section 7422(a) for the recovery of any

internal revenue tax, penalty, or other sum, shall be begun before the expiration of 6 months from the

date of filing the claim required under such section unless the Secretary renders a decision thereon

within that time . . . .”

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(i) which was carrying on a trade or business during the calendar

quarter for which the credit is determined . . . , and

(ii) with respect to any calendar quarter, for which—

(I) the operation of the trade or business described in clause (i) is

fully or partially suspended during the calendar quarter due to

orders from an appropriate governmental authority limiting

commerce, travel, or group meetings (for commercial, social,

religious, or other purposes) due to [COVID-19], [or]

(II) the gross receipts . . . of such employer for such calendar

quarter are less than 80 percent of the gross receipts of such

employer for the same calendar quarter in calendar year

2019 . . . .

26 U.S.C. § 3134(c)(2)(A). NEHS was undisputedly “carrying on a trade or business

during” the quarters in question. The parties, however, dispute whether NEHS

satisfies clause (ii)(I) of the definition—hereinafter, the “suspension-of-business

prong”—which itself contains three discrete statutory requirements: that the

business was “fully or partially suspended during the calendar quarter”; that there

existed “orders from an appropriate governmental authority limiting commerce,

travel, or group meetings (for commercial, social, religious, or other purposes) due to

[COVID-19]”; and that the suspension of business was caused by (i.e., “due to”) a

qualifying order. 26 U.S.C. § 3134(c)(2)(A)(ii)(I). To prevail on summary judgment,

the government need only demonstrate that there is no genuine dispute that NEHS

fails to meet at least one of the three requirements of the suspension-of-business

prong. See, e.g., In re JSmith Civ., LLC, 674 B.R. 207, 218 (Bankr. E.D.N.C. 2025)

(granting summary judgment to government where there was no genuine issue as to

whether plaintiff was exempted from the government orders in question), appeal

docketed, No. 25-513 (E.D.N.C. Aug. 22, 2025).

Because the CARES Act does not define the relevant terms or elaborate on the

scope of the requisite causal relationship, the Court must determine the meaning of

those requirements.17 See Loper Bright Enters. v. Raimondo, 603 U.S. 369, 400

17 The Court is aware of two cases aside from this one where federal courts have interpreted the

meaning of “eligible employer” under § 2301 of the CARES Act: In re JSmith, 674 B.R. 207, and JPM

Rest., LLC v. United States, No. 24-357, 2026 WL 561147 (E.D. Tenn. Feb. 27, 2026), notice of appeal

filed, No. 24-357 (E.D. Tenn. Apr. 1, 2026), Dkt. No. 88. In a third case, the United States District

Court for the District of Arizona considered whether Internal Revenue Bulletin 2021-11—published

by the Internal Revenue Service (IRS) to provide guidance on its interpretation of the ERC’s eligibility

requirements, see infra note 20—“was a mere interpretive document . . . or improper legislative

rulemaking that should have been subject to the [Administrative Procedure Act (APA)]’s notice-and-

comment procedures.” Stenson Tamaddon LLC v. IRS, No. 24-1123, 2025 WL 1725942, at *2 (D. Ariz.

June 20, 2025), appeal docketed, No. 25-4217 (9th Cir. July 9, 2025).

9

(2024). In so doing, the Court may look to “the judgment of the Executive Branch” to

“inform [its] inquiry,” but it may not delegate the task of statutory interpretation or

otherwise defer to the relevant agency’s independent analysis. Id. at 388, 412–13

(explaining that the weight of an agency’s “‘interpretations and opinions’ . . . would

‘depend upon the thoroughness evident in its consideration, the validity of its

reasoning, its consistency with earlier and later pronouncements, and all those

factors which give it power to persuade, if lacking power to control.’” (quoting

Skidmore v. Swift & Co., 323 U.S. 134, 139–40 (1944))).

A. Qualifying Government Orders

Although the government concedes that the “COVID-19 Orders issued by the

Governor of the Commonwealth of Massachusetts are governmental orders,”18

ECF 23 at 15–16, it argues the follow-on DPH guidance is not an “order” within the

meaning of the CARES Act. To resolve this issue, the Court must first determine

what “order” means in this context. Because the CARES Act does not define “order,”

see 26 U.S.C. § 3134(c)(2)(A), the Court presumes Congress intended to give that word

its plain and ordinary meaning. Gumpenberger v. Wilkie, 973 F.3d 1379, 1382

(Fed. Cir. 2020) (quoting Gazelle v. Shulkin, 868 F.3d 1006, 1010–11 (Fed. Cir. 2017)).

An “order” is generally considered a “command, direction, or instruction” or a

“written direction or command delivered by a government official . . . .” Order,

BLACK’S LAW DICTIONARY (12th ed. 2024); accord Order, MERRIAM-WEBSTER,

available at https://perma.cc/CNK3-ZMW4 (“specific rule, regulation, or authoritative

direction: command”). “An ‘order’ should be understood in contrast to a

‘recommendation,’ which Black’s Law Dictionary defines as 1. ‘A specific piece of

advice about what to do, esp. when given officially’ and 2. ‘A suggestion that someone

should choose a particular thing or person that one thinks particularly good or

meritorious.’” In re JSmith, 674 B.R. at 214–15 (quoting Recommendation, BLACK’S

LAW DICTIONARY (12th ed. 2024)). Both an “order” and a “recommendation” endorse

a specific course of conduct; the difference lies in whether the endorsement is

enforceable. See id. at 215 (“The key distinction is that ‘an “order” must be

compulsory.’” (citing Lawrence Gen. Hosp. v. Cont’l Cas. Co., 90 F.4th 593, 604

(1st Cir. 2024))).19 Thus, to qualify as an “order” under the suspension-of-business

18 As discussed infra, the fact that a directive qualifies as an “order” under the suspension-of-business

prong does not necessarily require the Court to interpret every provision in the directive to be

mandatory, particularly where the directive qualifies some provisions with permissive language

(e.g., “urge” or “should”) and other provisions with mandatory language (e.g., “shall” or “must”).

19 The parties do not dispute whether an order must be compulsory. Compare ECF 21 at 17 (NEHS:

“[‘]An “order” must be compulsory.’ . . . [T]he focus is on whether the government has the power to

enforce the order.” (citations omitted)), with ECF 23 at 18 (Government: “The directive must be

compulsory.” (citations omitted)); but see ECF 24 at 16 (NEHS: noting that, in defining “order,” “what

matters is whether ‘compliance . . . was not optional under any practical understanding of that term,’”

in contrast to “[d]efendant’s narrower standard, which requires a directive to be ‘compulsory,’ meaning

‘mandatory’ or ‘enforced’ . . . .” (citing Lawrence Gen. Hosp., 90 F.4th at 605)).

10

prong, a government directive must, as a whole, carry enforcement authority or

otherwise have the ability to compel a certain course of conduct through the

imposition of “binding requirements or repercussions for noncompliance.”20 Id.

(quoting Baxter Senior Living, LLC v. Zurich Am. Ins., No. 22-44, 2025 WL 1207151,

at *6 (D. Alaska Apr. 25, 2025)); cf. Appalachian Power Co. v. EPA, 208 F.3d 1015,

1021 (D.C. Cir. 2000) (“If an agency acts as if a document issued at headquarters is

controlling in the field, if it treats the document in the same manner as it treats a

legislative rule, if it bases enforcement actions on the policies or interpretations

formulated in the document, if it leads private parties or State permitting authorities

to believe that it will declare permits invalid unless they comply with the terms of

the document, then the agency’s document is for all practical purposes ‘binding.’”

(citation omitted)); cf., e.g., Lawrence Gen. Hosp., 90 F.4th at 605 (holding—in the

insurance context—that DPH guidance issued during the COVID-19 pandemic and

applicable to inpatient hospitals were orders because the hospital’s “‘choice’ to comply

with the stated conditions or forgo the ability to treat ‘the vast majority of its patients’

for an indefinite period is no choice at all”).

20 In guidance published on March 15, 2021, the IRS explained its understanding of the phrase “orders

from an appropriate governmental authority” as follows:

Orders, proclamations, or decrees from the Federal government or any State or local

government may be taken into account by an employer as “orders from an appropriate

governmental authority” only if they limit “commerce, travel, or group meetings

(for commercial, social, religious, or other purposes) due to [COVID-19]” and relate to

the suspension of an employer’s operation of its trade or business. . . . Whether orders,

proclamations or decrees are governmental orders is determined without regard to the

level of enforcement of the governmental order.

. . . [T]he declaration of a state of emergency . . . that limits commerce, travel, or group

meetings, but does so in a manner that does not relate to the suspension of an

employer’s operation of its trade or business does not rise to the level of a governmental

order for purposes of the employer’s determination of its eligibility for the employee

retention credit.

Internal Revenue Bulletin: 2021-11, IRS (Mar. 15, 2021), available at https://perma.cc/4R4K-G2HU

(emphasis added). The Court declines to follow the IRS’s construction—that, to qualify as an “order,”

a government directive must “relate to the suspension of an employer’s operation of its trade or

business”—for three reasons. First, those words are not present in the statute. Cf. Lamie v. U.S. Tr.,

540 U.S. 526, 538 (2004) (rejecting construction that “would have [the Court] read an absent word into

the statute” because it would “result ‘not [in] a construction of [the] statute, but, in effect, an

enlargement of it by the court, so that what was omitted . . . may be included within its scope.’”

(alterations in original) (quoting Iselin v. United States, 270 U.S. 245, 251 (1926))). Second, the IRS’s

construction appears intended to limit the extent to which businesses can qualify for the ERC by

reading a causal relationship between the “order” and the qualifying suspension into the phrase

“orders from an appropriate governmental authority.” On this point, a causation requirement is much

more readily read into the words, “due to,” than the words, “orders from an appropriate governmental

authority.” Third, the government conceded at oral argument that the IRS’s understanding of a

qualifying order “does go a little bit farther than Congress intended.” ECF 28 at 44.

11

The DPH guidance promulgated pursuant to Order Nos. 13 and 33 qualifies as

an “order” under the suspension-of-business prong.21 Order Nos. 13 and 33

authorized DPH to issue compulsory guidance: they directed DPH to “issue guidance

. . . to implement the[ir] terms” and explained that “[v]iolation of . . . the DPH

Guidance may result in a criminal penalty . . . or a civil fine . . . .” ECF 21-1 at 21–22

(Order No. 13); see id. at 40–41 (Order No. 33). In other words, if businesses failed to

comply with mandatory directives in DPH guidance issued in accordance with the

governor’s directives, they risked enforcement action. For the same reason, the DPH

guidance promulgated pursuant to the May 28, 2021 modified declaration of public

health emergency likely qualifies as an “order” under the suspension-of-business

prong as well.22 The May 28, 2021 declaration contained language suggesting that

DPH could, if necessary, issue compulsory orders, see id. at 121 (“[DPH] . . . may rely

on this declaration . . . to mandate special measures to protect higher risk populations

or to effectuate continued surveillance of COVID-19 in the Commonwealth . . . .”

(emphasis added)). To the extent businesses failed to comply with mandatory

directives contained in that guidance, they similarly risked civil penalties, criminal

penalties, and loss of their clinic licenses.23

B. Causation

Having established that at least some directives cited by NEHS qualify as

“orders” under the suspension-of-business prong, the Court turns to whether NEHS

suffered a full or partial suspension “due to” the qualifying orders. NEHS asserts

21 For clarity, this includes the DPH order “regarding the scheduling and performance of urgent and

elective invasive procedures,” ECF 21-1 at 44–45, the EOHHS “reopening approach” guidance, id.

at 46–69, the May 18, 2020 EOHHS memorandum regarding elective procedures, id. at 70–73, and the

DPH phase-in implementation guidance, id. at 74–113.

22 For clarity, this includes the June 14, 2021 DPH guidance, ECF 21-1 at 122–26, and the July 2, 2021

DPH guidance, id. at 127–131.

23 As discussed infra, for the purposes of considering whether an employer qualified for the ERC, an

analysis of the extent to which each of the individual directives in the DPH guidance were mandatory

is better addressed when determining whether those individual directives caused NEHS’s allegedly

qualifying suspensions (i.e., whether the allegedly qualifying suspensions were “due to” the qualifying

orders). Under the suspension-of-business prong, a business can satisfy the “orders from an

appropriate governmental authority” requirement by pointing to a directive that contained compulsory

instructions or otherwise had the authority to issue compulsory instructions. Whether those directives

exercised that authority and actually did issue compulsory instructions meant to require (i.e., factually

and proximately cause) a business to suspend its operations is better addressed under the separate

“due to” requirement. If the Court addressed whether the individual directives contained in the DPH

guidance were mandatory under the “order” requirement, then it would risk conflating the “order”

requirement with the separate “due to” requirement. Cf. JPM Rest., 2026 WL 561147, at *4–5

(discussing “order” and “due to” as separate requirements). In any case, even if the “due to”

requirement and the “order” requirement were indistinct—as IRS Bulletin 2021-11 suggests, see supra

note 20—NEHS would still fail to show that a reasonable factfinder could find in its favor because, as

discussed infra, the relevant directives either exempted NEHS from compliance or implied that

compliance was voluntary.

12

that the qualifying orders required it to modify the administration of its services,

prevented it from expanding its business, and caused it to face operational

disruptions. While the orders may have contributed to NEHS’s struggles during the

pandemic, they did not proximately cause any suspensions NEHS may have endured.

Even assuming NEHS suffered a qualifying full or partial suspension of its

operations during the pandemic, it must still show that the suspension was “due to”

a qualifying order.24 NEHS argues that the suspension-of-business prong’s “due to”

prerequisite “requires only but-for causation . . . .” ECF 24 at 28. Courts have

grappled with the meaning of “due to” and characterized it as an ambiguous phrase,

with definitions ranging from but-for cause (or contributing factor), to proximate

cause, to even sole cause. See Easom v. US Well Servs., Inc., 37 F.4th 238, 245 n.2

(5th Cir. 2022) (collecting cases for the proposition “that the phrase, ‘due to’ is

ambiguous”); U.S. Postal Serv. v. Postal Regul. Comm’n, 640 F.3d 1263, 1268

(D.C. Cir. 2011) (“[T]he phrase ‘due to’ is ambiguous[]” because it “has been given a

broad variety of meanings in the law ranging from sole and proximate cause at one

end of the spectrum to contributing cause at the other.” (quoting Kimber v. Thiokol

Corp., 196 F.3d 1092, 1100 (10th Cir. 1999))). The debate typically centers on

whether and to what extent “due to” incorporates a causal relationship beyond but-for

causation. See, e.g., Kimber, 196 F.3d at 1100 (“[Plaintiff-appellant] claims that ‘due

to’ requires that the mental condition be the sole cause of the disability before benefits

can be limited. We disagree. . . . Requiring a ‘significant’ relationship between the

condition and the disability is a rational interpretation.”); Penland v. Metro. Life Ins.

Co., No. 24-1772, 2025 WL 1672861, at *3 (4th Cir. June 13, 2025) (“[Plaintiff-

appellant] believes that the limitation provision only takes effect if limited conditions

are the sole cause of a claimant’s disability. But . . . the ordinary meaning of ‘due to’

is ‘because of,’ which, in turn, ‘connotes a but-for causation standard.’” (citation

omitted)); Adams v. Director, OWCP, 886 F.2d 818, 820 (6th Cir. 1989) (“The only

24 The parties dispute whether a reasonable factfinder could conclude that NEHS suffered a qualifying

suspension. See ECF 23 at 20–25 (“Even assuming that NEHS’s pandemic-era operational changes

were caused by government order, they did not result in a ‘partial suspension’ of their business.”). But

their disputes concern facts that can reasonably be interpreted to support more than one conclusion.

Cf. Ferring B.V. v. Allergan, Inc., 980 F.3d 841, 857 (Fed. Cir. 2020) (vacating and remanding grant of

summary judgment “in view of the varying reasonable interpretations of the [relevant]

correspondence . . . .”). Take, for example, the parties’ dispute over the import of the fact that,

throughout the tax quarters in question, the number of 30-minute appointments increased in

comparison to the number of 45- and 60-minute appointments. NEHS asserts that this fact reflects

an increased “difficulty in engaging patients via telehealth,” proves that telehealth caused NEHS to

face “shorter session lengths,” and directly caused NEHS to face “reduced . . . reimbursement[s] per

visit.” ECF 21 at 24. The government counters that the same fact “show[s] that NEHS was able to

continue comparable operations in the quarters at issue.” ECF 23 at 21. Both interpretations are

reasonable, and rational factfinders can likely disagree over whether the increase in 30-minute

appointments supports a finding that NEHS suffered a full or partial suspension during the periods

in question. The Court need not decide this issue, however, because—as discussed infra—NEHS has

not shown that a reasonable factfinder could conclude that any full or partial suspension it suffered

would have been “due to” a qualifying order.

13

issue in dispute on this petition to review, therefore, is whether [petitioner] is totally

disabled ‘due to’ pneumoconiosis. More specifically, the narrow question presented

concerns the degree of causation necessary . . . .”); New York v. U.S. Dep’t of Lab., 477

F. Supp. 3d 1, 12 (S.D.N.Y. 2020) (“[The agency] is correct, of course, that the

traditional meaning of ‘because’ (and ‘due to’) implies a but-for causal relationship.

But to say that these terms usually connote but-for causation is not to say that they

unambiguously do.” (citation omitted)). The only consistent throughline in these

cases is that the meaning of “due to” is, in large part, context dependent. See, e.g.,

U.S. Postal Serv., 640 F.3d at 1268 (remanding matter to determine “which meaning

of ‘due to’ the Congress intended”); Kimber, 196 F.3d at 1100 (“When a plan

administrator is given authority to interpret the plan language, and more than one

interpretation is rational, the administrator can choose any rational alternative.”

(citation omitted)); see also Burrage v. United States, 571 U.S. 204, 212 (2014) (“Where

there is no textual or contextual indication to the contrary, courts regularly read

phrases like ‘results from’ [or ‘because of’] to require but-for causality.” (emphasis

added)).

Here, context requires proximate causation. Interpreting “due to” to require

only but-for causation would not conform to the broader statutory scheme to which

the ERC contributed and through which Congress provided economic relief during

the pandemic. Importantly, the ERC “is a ‘presumption-out’ statute, where everyone

starts outside of eligibility for the stated relief, and claimants must show why they

fit within and satisfy applicable statutory definitions to get ‘in’ and qualify for the

relief.” In re JSmith, 674 B.R. at 213. Were the Court to interpret the suspension-

of-business prong to require but-for causation without a proximate causation

requirement, “[l]engthy causal chains that could arise from a but-for test . . . would

risk turning the ERC into a presumption-in statute.” JPM Rest., 2026 WL 561147,

at *5 (emphasis added).

Moreover, the CARES Act already provides broad employment tax relief to

businesses that suffered significant economic loss during the pandemic—regardless

of what caused the loss—through clause (ii)(II) of the “eligible employer” definition

(hereinafter, the “decline-in-receipts prong”). See 26 U.S.C. § 3134(c)(2)(A)(ii)(II)

(allowing business to qualify as an “eligible employer” by showing that its “gross

receipts . . . for [a qualifying] calendar quarter are less than 80 percent of the gross

receipts of such employer for the same calendar quarter in calendar year 2019”).

Congress—through its utilization of disjunctive qualification prongs—expressed an

intent to provide employment tax relief to businesses that either suffered quantifiably

significant losses that were generally attributable to the pandemic (through the

decline-in-receipts prong) or were forced by the government to shut their doors to the

public (through the suspension-of-business prong). To be clear, there is conceivable—

and permissible—overlap between the two: a business forced to shut its doors to the

public could be expected to suffer a significant decline in revenue. But one prong

should not be construed so as to practically subsume the other. Interpreting “due to”

in the suspension-of-business prong to merely require but-for causation would allow

14

businesses to point to a qualifying government order, list operational difficulties

incidentally related to the qualifying government order (but more directly

attributable to the pandemic as a whole), and collect the ERC on that basis—

effectively rendering the decline-in-receipts prong superfluous.25 An interpretation

that permits one qualification requirement to supersede an alternative qualification

requirement must be rejected. See Yates v. United States, 574 U.S. 528, 543 (2015)

(“resist[ing]” interpretation of a statute “that would render superfluous an entire

provision passed in proximity as part of the same Act.” (citation omitted)).

NEHS asserts that, as a remedial statute, the CARES Act should be construed

broadly.26 See ECF 24 at 8 (citing Consumers Power Co. v. Comm’r of Internal

Revenue, 89 T.C. 710, 722 (1987) (“remedial nature” of a statute “justifies a broad

construction of the statutory language to effectuate its purpose”)); accord Miller v.

Robertson, 266 U.S. 243, 248 (1924) (“This provision is highly remedial and should be

liberally construed to effect the purposes of Congress and to give remedy in all cases

intended to be covered.” (citations omitted)). The interpretive canon NEHS relies on,

though—that statutory language in remedial legislation should be construed

broadly—has been aptly described as “one of the least persuasive of the canons” and

“useless”:

25 This interpretation would be particularly problematic where, as here, Congress expressly includes

an easily identifiable, bright-line limit on the availability of the more-general relief. See 26 U.S.C.

§ 3134(c)(2)(A)(ii)(II) (decline-in-receipts prong requiring businesses to realize gross receipts more

than 20% lower than gross receipts in the same calendar quarter in 2019). Through the decline-in-

receipts prong, Congress expressed an intent to limit general pandemic-related relief to businesses

with a specific, easily identifiable quantum of economic loss. Interpreting the suspension-of-business

prong to effectively allow businesses to receive general pandemic-related relief without the requisite

economic loss—indeed, even where the business experienced an economic gain—would ignore the limit

Congress intended to place on that type of relief.

26 The parties dispute whether the CARES Act is a remedial statute. Compare ECF 24 at 8–13 (“The

CARES Act is remedial legislation entitled to broad construction[.]”), with ECF 25 at 5–8 (“The CARES

Act and its successors were not remedial statutes.”). The Court need not weigh in on this debate. Even

if the CARES Act is a remedial statute, it would not be susceptible to an interpretation that would

entitle more businesses to the ERC than Congress intended on the basis that it was “designed to

correct an existing oversight in the law, redress an existing grievance, introduce regulations conducive

to the public good, or . . . reform or extend existing rights.” Karissa B. v. O’Malley, 733 F. Supp. 3d 57,

60 n.5 (D.R.I. 2024) (quoting Perlin v. Time Inc., 237 F. Supp. 3d 623, 633–34 (E.D. Mich. 2017)). As

discussed infra,

[N]o legislation pursues its purposes at all costs. Deciding what competing values will

or will not be sacrificed to the achievement of a particular objective is the very essence

of legislative choice—and it frustrates rather than effectuates legislative intent

simplistically to assume that whatever furthers the statute’s primary objective must

be the law.

Rodriguez v. United States, 480 U.S. 522, 525–26 (1987) (per curiam) (emphasis in original).

15

There is no presumption that when a legislature legislates against some

abuse . . . , it means to resolve all difficult questions in favor of liability,

thus disregarding every value other than that of providing remedies for

injuries and every interest other than that of prospective victims.

Remedial statutes[,] like other statutes[,] are typically compromises,

and a court would upset the compromise if it nudged such a statute

closer to the victim side of the line than the words and history and other

indications of the statute’s meaning pointed.

Bushendorf v. Freightliner Corp., 13 F.3d 1024, 1026 (7th Cir. 1993) (quoting Cont.

Courier Servs., Inc. v. Rsch. & Special Programs Admin., 924 F.2d 112, 115 (7th Cir.

1991) (“An agency cannot treat a statute as authorizing an indefinite march in a

single direction.”)). In any case, even assuming this canon should be given any

weight, it “appears to be most often applied to the remedies created, not the parties

permitted to invoke the statute.” Collinsgru v. Palmyra Bd. of Educ., 161 F.3d 225,

232 (3d Cir. 1998) (emphasis added) (citation omitted) (citing Miller, 266 U.S. at 248),

abrogated on other grounds by Winkelman ex rel. Winkelman v. Parma City Sch. Dist.,

550 U.S. 516 (2007). Here, NEHS mistakenly attempts to use this canon to adjust

the limits Congress placed on which businesses were permitted to invoke the ERC.

This misplaced use of an unreliable canon must be rejected.

In advocating for an expansive reading of the suspension-of-business prong,

NEHS also relies on the CARES Act’s legislative history. Specifically, NEHS posits

that when Congress amended the ERC’s qualification requirements by adding

available tax quarters, increasing the amount of the credit, and removing barriers to

qualification, it expressed an intent to expand the availability of the ERC. Upon that

premise, NEHS asserts that the Court should keep Congress’s expansive intent in

mind while interpreting the meaning of the suspension-of-business prong. This line

of reasoning is similarly unavailing. The methods Congress used to expand the ERC’s

availability had nothing to do with the suspension-of-business prong. Indeed, the fact

that Congress removed other barriers to qualification but did not change the

language of the suspension-of-business prong equally supports the riposte: by leaving

the suspension-of-business prong untouched, Congress evidenced an intent not to

expand or otherwise alter the suspension-of-business prong’s eligibility requirements.

Cf. Am. Hosp. Ass’n v. NLRB, 499 U.S. 606, 613–14 (1991) (rejecting suggested

interpretation, in part because the Court “would expect to find some expression of

[Congress’s] intent [to adopt that interpretation] in the legislative history.” (citing

Harrison v. PPG Indus., Inc., 446 U.S. 578, 600–01 (1980) (Rehnquist, J.,

dissenting))).

Finally, NEHS argues that a comparison to the decline-in-receipts prong is

unavailing because “the two prongs serve different purposes and reach different

employers” and, consequently, “neither renders the other superfluous.” ECF 24 at 21.

Indeed, as explained supra, the two prongs do serve different purposes and reach

different employers. But NEHS’s proposed construction would elide those

16

differences. The practical result of NEHS’s reading would be to broaden the

suspension-of-business prong such that employers could virtually always rely on it

and would almost never have to rely on the decline-in-receipts prong. It is more

reasonable to analogize the relationship between the two prongs to a Venn diagram,

where some employers may satisfy both prongs, but many satisfy only one or the

other. NEHS’s interpretation of “due to”—allowing for an employer to utilize

attenuated causal chains to qualify under the suspension-of-business prong—would

practically convert that Venn diagram into a pair of concentric circles, where the

universe of employers that qualify for the suspension-of-business prong would

envelope the universe of employers that qualify for the decline-in-receipts prong.

Cf. JPM Rest., 2026 WL 561147, at *5 (“The breadth of other relief available in the

same Act suggests that Congress did not intend the ERC to provide the same

expansive relief that could arise from a mere factual causation requirement.”). The

Court must resist adopting that interpretation. See Yates, 574 U.S. at 543.

Accordingly, entitlement to the ERC under the suspension-of-business prong is

limited to businesses that can show that a qualifying governmental order was both

the factual and proximate cause of a full or partial suspension.27

Having determined the meaning of “due to” in the suspension-of-business

prong, the Court is left to evaluate whether any of the qualifying orders factually and

proximately caused the suspensions NEHS claims it suffered. As mentioned, NEHS

describes three categories of suspensions that were apparently “due to” qualifying

government orders: first, disruption to its delivery of mental health services; second,

interference with its plans to open new clinics; and third, miscellaneous operational

difficulties related to telehealth, billing, and staffing. A close look at the allegedly

qualifying suspensions, however, shows that they were not proximately caused by

any of the qualifying orders because the orders generally exempted mental and

behavior health providers, did not compel NEHS to follow their directives, and did

not induce the reported disruptions to NEHS’s business operations that were more

accurately attributable to “general pandemic conditions,” In re JSmith, 674 B.R. at

218.

For the first category of suspensions, NEHS argues that the disruptions were

“due to” (1) Order Nos. 13 and 33, (2) the EOHHS guidance and DPH phase-in

implementation guidance promulgated under Order No. 33, and (3) the DPH

guidance promulgated under the May 28, 2021 modified declaration of public health

emergency. NEHS submits that those qualifying orders forced NEHS to close its

27 Other courts that have considered the meaning of “due to” in the suspension-of-business prong have

come to similar conclusions. See In re JSmith, 674 B.R. at 215, 218 (“[T]he suspension must be ‘due

to,’ in other words, because of the order. . . . [W]hile there is no doubt various delays, quarantines,

sicknesses, and other disruptions occurred, general pandemic conditions caused those closures, not

shut down orders.”); JPM Rest., 2026 WL 561147, at *5 (“‘[D]ue to’ requires both factual and proximate

causation—meaning that the order must have been the ‘but-for’ cause and a foreseeable cause of the

full or partial shutdown.”).

17

doors and, later, transition to or otherwise prioritize telehealth. The orders, however,

did not force NEHS to do anything. Order Nos. 13 and 33 exempted NEHS from

complying with their directives and the follow-on DPH and EOHHS guidance.

Although Order No. 13 required certain businesses and organizations to temporarily

close their physical workspaces and facilities, it expressly exempted those that

provided “COVID-19 Essential Services,” which included “providers of mental and

behavioral health care.”28 ECF 21-1 at 25. Given NEHS’s self-description as a

commercial operation “in the trade or business of providing quality mental health

care,” such as “counseling and therapy, psychiatry, and medication management,”

ECF 1 at 3 ¶ 11, NEHS was among the COVID-19 Essential Services exempted from

Order No. 13. The same holds for Order No. 33, which expressly exempted “[a]ny

health care facility or provider licensed by [DPH]” from the requirements listed in

and guidance issued under that order. ECF 21-1 at 41. As a DPH-licensed clinic,

NEHS was not required to comply with Order No. 33 or any DPH guidance

promulgated thereunder.29

28 Businesses providing “COVID-19 Essential Services” were “urged to continue operations during the

state of emergency, but to do so with allowance for social distancing protocols consistent with [DPH]

guidance . . . .” ECF 21-1 at 20 (emphasis added). NEHS does not reference this portion of Order

No. 13 in its briefs, instead arguing that it was compelled to follow the order and the follow-on DPH

guidance because it was not a “COVID-19 Essential Service.” But even if NEHS understood it was a

“COVID-19 Essential Service,” this portion of Order No. 13 would not have proximately caused NEHS’s

disruptions because it merely encouraged—rather than required—NEHS to follow “social distancing

protocols.” Although “urge” more often than not “suggest[s] an impelling beyond mere persuasion,”

United States v. Dellinger, 472 F.2d 340, 362 (7th Cir. 1972), when read in the context of Order No. 13,

it “mean[s] little more than an effort at persuasion . . . ,” id. at 361. Importantly, Order No. 13 is

riddled with requirements that are expressly mandatory, as made evident through its use of the word

“shall.” E.g. ECF 21-1 at 20 (“[E]stablishments that offer food or beverages to the public shall not

permit on-premises consumption of food or beverages.” (emphasis added)). Through the repeated use

of the word “shall”—which “is mandatory and leaves no room for discretion,” Gilda Indus., Inc. v.

United States, 622 F.3d 1358, 1364 (Fed. Cir. 2010)—Order No. 13 manifested an intent to impose

mandatory requirements through consistent, unambiguous language. The fact that businesses

providing “COVID-19 Essential Services” were comparatively “urged”—and not told that they “shall”—

allow for “social distancing protocols” indicates that Order No. 13 intended for the word “urged” to

imply persuasion, rather than compulsion. The Court “refrain[s] from concluding here that the

differing language in the two [sentences] has the same meaning in each.” Rusello v. United States,

464 U.S. 16, 23 (1983). To the extent NEHS complied with the portion of Order No. 13 that “urged” it

to allow for social distancing protocols, it did so voluntarily. As discussed infra, an action taken

voluntarily is not an action that is proximately caused by (i.e., “due to”) a qualifying government order

in this context.

29 Order No. 33 also directed businesses previously designated as “COVID-19 Essential Service[s] . . .

to comply with and certify [their] compliance with any COVID-19 workplace safety rule issued

pursuant to this Order or with the public notice provisions specified above.” ECF 21-1 at 39. That

said, Order No. 33’s express carveout of health care facilities licensed by the DPH—one of many

services designated as a “COVID-19 Essential Service” by Order No. 13—supplants that requirement

as to NEHS. NEHS does not offer any compelling reason to think that Order No. 33’s carveout for

DPH-licensed facilities is inapplicable.

18

NEHS represents that it “interpreted the designation of ‘mental and

behavioral health services’ in . . . Order No. 13 as referring to hospital and inpatient

services, not outpatient mental health clinics such as NEHS’s clinics.” ECF 21 at 8.

But Order No. 13 makes no such distinction. In fact, Order No. 13 suggests the

opposite: it expressly lists “[c]omprehensive [o]utpatient rehabilitation” as an

example of “[w]orkers in other medical facilities,” which it also designated as

“COVID-19 Essential Services.” ECF 21-1 at 25. The only support proffered by

NEHS for the inpatient/outpatient distinction is a PowerPoint slide published by

EOHHS, titled “Current State: Three Categories of Services Within HHS,” which

contains “no[n-]exhaustive” lists of “services currently operating,” “delayed / deferred

services,” and “services delivered remotely / via tele[health].” ECF 21-1 at 50. The

slide lists “outpatient behavioral health” among the “services delivered remotely / via

tele[health],” id., but an EOHHS PowerPoint slide documenting a contemporaneous

state of affairs is of minimal probative value to the question of what the governor’s

order means.

NEHS alternatively argues that, even if Order No. 13 designated NEHS a

“COVID-19 Essential Service,” such a designation would not carry the day because

the suspension-of-business prong is not limited to businesses deemed non-essential

by qualifying orders. See ECF 24 at 13–14 (noting the suspension-of-business prong

uses the words “any employer”—rather than “any non-essential employer” or

“any employer other than those deemed essential”—and, therefore, is not limited to

businesses deemed non-essential by qualifying orders). This argument is true so far

as it goes, but it does not address the issue at hand. The ERC is not available to just

“any employer”; rather, the claimed tax credit is available to “any employer” that

suffers a suspension of business “due to” a qualifying order. The Court must give

meaning to the terms the statute uses to qualify “any employer,” and—as discussed

supra—those words lead to the conclusion that NEHS did not suffer any suspensions

“due to” Order No. 13, as it was exempted from the governor’s mandate.

Next, NEHS was not required to adhere to the standards in the DPH guidance

promulgated under the May 28, 2021 modified declaration of public health

emergency. Those standards were expressly permissive. See ECF 21-1 at 122–26

(beginning each standard by explaining that “[h]ealth care providers should . . . ”

(emphasis added)); ECF 21-1 at 127–31 (same); see also CGS-ASP Sec., JV, LLC v.

United States, 162 Fed. Cl. 783, 805 n.4 (2022) (“‘Should’ sometimes is substituted for

‘may’ as a permissive word.” (citing Union Elec. Co. v. Consolidation Coal Co.,

188 F.3d 998, 1001 (8th Cir. 1999))), appeal dismissed, No. 23-1471, 2024 WL

4003396 (Fed. Cir. Aug. 30, 2024) (mem.). NEHS’s assertion that “noncompliance”

with the individual instructions in the DPH guidance “risked enforcement action and

loss of licensure,” ECF 21 at 22, is unsupported by evidence and at odds with the

unambiguously permissive language in the guidance. Contrary to NEHS’s assertion

that this interpretation would “create a regulatory vacuum,” see ECF 24 at 15, NEHS

was still subject to other DPH regulations and safety standards as a licensed mental

health care clinic. See generally 105 MASS. CODE REGS. § 140.001–1300 (2025)

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(setting forth “standards for the maintenance and operation of clinics” in

Massachusetts).30

In sum and substance, none of the qualifying orders cited by NEHS as causing

the first category of disruptions required NEHS to do anything, as they expressly

exempted NEHS from compliance or otherwise gave NEHS permission not to follow

them. To the extent NEHS complied with those orders, it did so voluntarily, and no

reasonable factfinder could conclude that the resulting suspensions were “due to” the

qualifying government orders. Under any exacting standard of proximate cause,

“there always lurks the idea of responsibility . . . .” RESTATEMENT (SECOND) OF TORTS

§ 431 cmt. A (2025). Because NEHS was not required to follow the regulations at

issue, the Court cannot find those regulations responsible for NEHS’s conduct to the

extent necessary to conclude they were a proximate cause of any allegedly qualifying

suspensions. Cf. In re JSmith, 674 B.R. at 216 (holding construction company could

not “rely on [an order] as a governmental order to justify its suspension of operations

under Section 2301” of the CARES Act where “[t]he entire category of construction

work was specifically exempted” from the order); Stenson Tamaddon, 2025 WL

1725942, at *9 (“[T]he most obvious and natural interpretation of the [relevant]

language in the ERC statute” is that “[a] business voluntarily suspending its own

operations has not been suspended due to orders from an appropriate governmental

authority but rather has suspended operations of its own volition.” (emphasis in

original)).

For the second category of suspensions, NEHS argues its inability to “expand[]

its operations through new clinic openings” was caused by DPH’s suspension of

in-person inspections for new clinics “[i]n response to the COVID-19 public health

emergency and the closure of non-essential businesses in COVID-19 Order No. 13.”

ECF 21 at 25. Yet NEHS does not tie these disruptions to qualifying orders. NEHS

does not point to—and the Court has not identified—any provision in any qualifying

order that required DPH to suspend or otherwise limit in-person inspections of

planned clinics. In fact, the list of “COVID-19 Essential Services” suggests that the

qualifying orders expressed a willingness—if not an authorization—for inspections to

continue. Order No. 13 designated “[c]onstruction [w]orkers who support the . . .

inspection . . . of construction sites and construction projects” as “COVID-19 Essential

Services.” ECF 21-1 at 32 (emphasis added). Therefore, to the extent DPH delayed

inspections and approval of NEHS’s construction plans, NEHS has not identified any

evidence that such delay was attributable to qualifying orders.

Although NEHS points to the “stark” contrast between “clinic openings during

the period of governmental orders and the period immediately following” as evidence

30 To the extent NEHS alleges that it faced qualifying suspensions that were due to regulations and

safety standards issued under DPH’s general authority to supervise the maintenance and operation of

clinics in Massachusetts, those suspensions would not have entitled NEHS to the ERC because they

were not promulgated “due to [COVID-19].” 26 U.S.C. § 3134(c)(2)(A)(ii)(I).

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that the orders were the direct cause of the delay, ECF 21 at 26, that contrast cannot,

on its own, prove that the delays were caused by qualifying government orders.

NEHS’s reduced expansion rate may well have resulted from general pandemic

conditions, economic uncertainty, government inaction having nothing to do with

qualifying government orders, or any number of other confounding variables. Under

these circumstances, the identified correlation is not evidence of causation. See In re

JSmith, 674 B.R. at 218 (“[W]hile there is no doubt various delays, quarantines,

sicknesses, and other disruptions occurred, general pandemic conditions caused those

closures, not shut down orders. Under the ERC, however, only businesses whose

operations were suspended due to a qualifying governmental order qualify for credit.”

(emphasis added)).

Finally, NEHS fails to show that the third category of suspensions was directly

caused by any of the qualifying orders for largely the same reason: the disruptions

were not directly attributable to the qualifying orders. NEHS asserts that the “forced

transition to telehealth” reduced its capacity to supervise its non-independently

licensed clinicians, imposed significant operational burdens, and “impaired its ability

to provide and bill for services . . . .” ECF 21 at 26–27. But, as discussed supra, the

qualifying orders did not force NEHS to transition to telehealth. NEHS also points

to school and childcare closures during the early stages of the pandemic,31 explaining

that they “directly limited NEHS’s operational capacity by reducing clinician

availability.” ECF 21 at 27. Relatedly, NEHS maintains that delays in licensing,

onboarding, and credentialing clinicians “were exacerbated by COVID-19–related

disruptions affecting licensing boards, insurers, and administrative processing.” Id.

Again, though, “[t]he causal chain between the orders and the reason for the [delays]

is too attenuated to meet the definition of ‘due to’ . . . .” JPM Rest., 2026 WL 561147,

at *9. Pointing to “COVID-19–related disruptions” is insufficient to qualify a

business as an eligible employer under the suspension-of-business prong. Other

factors—such as increased rates of illness among employees and government officials,

the need for affected employees to quarantine until asymptomatic, and general

uncertainty about the safety and efficacy of returning to work—could have, and likely

did, contribute to the administrative delays and decreases in employee productivity

that NEHS endured.

In short, to qualify for the ERC, businesses must show that a qualifying order

directly caused the full or partial suspension. NEHS has not demonstrated that a

reasonable factfinder could conclude that this was the case for any of its assertedly

qualifying suspensions. Accordingly, the Court must end its inquiry there and grant

summary judgment in the government’s favor.

31 See supra note 10.

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* * *

The Court is sympathetic to NEHS’s plight. To say that the COVID-19

pandemic presented difficult decisions to the nation, its citizens, and businesses

looking to navigate their way through times of great uncertainty would be an

understatement. In the face of the unpredictable and dangerous public health

emergency, state and local governments employed complex and, at times, difficult

measures meant to combat the spread of disease and limit the unprecedented strain

on the economy. Erring on the side of caution in the face of those measures was a

commendable course of action, and Congress provided significant, widely available

relief to businesses who did so involuntarily or at the cost of their bottom line. But

that relief was not unlimited. Where Congress restricts the availability of certain

relief—however significant and remedial the relief is intended to be—the Court is

bound to observe those restrictions. Here, Congress placed clear limits on the

availability of the ERC. Because the disruptions to NEHS’s business fell outside the

bounds of those limits, NEHS is not entitled to the tax credit.

CONCLUSION

For the foregoing reasons, plaintiff’s motion for partial summary judgment

(ECF 21) is DENIED, and defendant’s cross-motion for summary judgment (ECF 23)

is GRANTED. The Clerk of Court is directed to ENTER judgment accordingly.

No costs.

It is so ORDERED.

___________________

Armando O. Bonilla

Judge

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