Amicus Curiae Brief — Long Island Care at Home, Ltd. v. Coke

e (D FILED

nen DEC 5 - 2006

FICE OF Tre CLERK

IN THE COPAEME COURT, U.S.

SUPREME COURT OF THE UNITED STATES

LONG ISLAND CARE AT HOME, LTD. and

MARYANN OSBORNE,

Petitioners,

V.

EVELYN COKE,

Respondent.

On Petition for a Writ of Certiorari to the United States

_ Court of Appeals for the Second Circuit

BRIEF OF AMICI CURIAE CITY OF NEW YORK

AND NEW YORK STATE ASSOCIATION OF

COUNTIES IN SUPPORT OF PETITION FORA

WRIT OF CERTIORARI

STEPHEN J.A. ACQUARIO, MICHAEL A. CARDOZO,

General Counsel, Corporation Counsel of the

Attorney for Amicus Curiae City of New York,

NYS Ass'n of Counties, Attorney for Amicus Curiae

11! Pine Street City of New York,

Albany, NY 12207 100 Church Street

(518) 465-1473 New York, NY 10007

(212) 788-1159 or 1065 '

LEONARD J. KOERNER*

PAMELA SEIDER DOLGOW,

SUSAN CHOI-HAUSMAN,

> of Counsel.

*Counsel of Record -

December 5, 2006

TABLE OF CONTENTS

Page

Table of Authorities.................... Setmaceteiaiibalinads ill

Preliminary Statement..................ccccccecceecees l

Interest of the Amici Curiae.......................265. 2

Summary of the Argument........................00e eee 5

REASONS FOR GRANTING THE PETITION. ... 6

[. THE ENFORCEABILITY . OF THE

THIRD-PARTY EMPLOYER

REGULATION IS OF GREAT

sis ctecidicdnniwconssidcossiseniian 6

A. Financial Implications for the

Government of the Circuit's

EEE LTR ala RE Oe EM 6

B. Implications for the

Dc ainciemincncudhondiiaes heaieaeiataianinin 7

1. Privacy m the Home.................0... 9

me errr ee 10

3. Family Compatibility................... 10

D. Implications for the

Ea Oe anne ey moe 1

ll. THERE IS A DIRECT CONFLICT IN THE

CIRCUITS AS TO THE DEGREE OF

DEFERENCE TO BE ACCORDED THE

THIRD-PARTY EMPLOYER

IE <hivcciennsaahenidiiaevadbenindeen 12

Ill. ©THE SECOND CIRCUIT’S DECISION IS

ERRONEOUS AND MISAPPLIED THIS

COURT’S PRECEDENTS REGARDING

THE DEFERENCE TO BE ACCORDED

ADMINISTRATIVE DETERMINATIONS. 13

Se iicsvsvnrsncnisddnavstdisavacmmeneniieabiien 19

TABLE OF AUTHORITIES

Cases Page

Alaska Dep’t of Envtl. Conservation v. Envi.

Protection Agency, 540 U.S. 461 (2004) 00.0. 17

Bamhart v. Walton, 525 U.S. 212 (2002)... eee eens 16

Batterton v. Francis, 432 U.S. 416 (1977) —_ Alcoa apieees 17

Chevron U.S.A., Inc. v. Natural Resources Defense

Council, Inc., 467 U.S. 837 (1984) 0.0.0.0. 12-14

Christensen v. Harris County,

| __—EE ERT ere Dna 12-13, 17

Gonzalez v. Oregon,

SP BDI 17

Johnston v. Volunteers of Am., Inc.,

213 F.3d 559 (10th Cir. 2000),

cert. denied, 531 U.S. 1072 (2001)..................0000 12

Metropolitan Stevedore Co. v. Rambo,

I leaeniinioiin 17

Nat’| Cable & Telecommunications Ass’n v. Brand

Be EE BD UF. FIT vncccccccecsscnvescesencovcsseveees 16

Skidmore v. Swift & Co.,

a OL TO

United States v. Mead Corp.,

iN ge | nem re 12,14

Washington State Dep’t of Social and Health Servs. v.

Guardianship Estate of Keffeler,

SSF Ua: BTU Cee isctvisssceminiesteinnamaaae 16-17

Welding v. Bios Corp., .

353 F.3d 1214 (10" Cir. 2004) oooccceccccccsceeseeeneeee 13n.2

Yellow Transp., Inc. v. Michigan,

S57 UD. Fe Cree ir vncr:cevininnernatmesivimuammaaa 16

Statutes and Other Authority

la) 5 ee aeeneRe Ep 2

WUBL. SAUDI ceacesasesincncriremnrssanceee 2,15

Richard J. Pierce, Admin. L. Treatise (4"" ed. 2002)......... 16

iv

No. 06-593

IN THE

SUPREME COURT OF THE UNITED STATES

LONG ISLAND CARE AT HOME, LTD. and

MARYANN OSBORNE,

Petitioners,

EVELYN COKE,

Respondent.

On Petition for a Writ of Certiorari to the United States

Court of Appeals for the Second Circuit

BRIEF OF AMICI CURIAE CITY OF NEW YORK

AND NEW YORK STATE ASSOCIATION OF

COUNTIES IN SUPPORT OF PETITION FOR A

WRIT OF CERTIORARI

+.

PRELIMINARY STATEMENT

The City of New York (the “City”) and the New

York State Association of Counties (“NYSAC”) submit

this brief in support of the petition for a writ of certiorari in

this case. Both parties have consented to the filing of this

brief, and their consent letters are being filed herewith.

' Counsel for the parties in this case did not author this

brief in whole or in part. No person or entity, other than

amici curiae and their counsel, made a monetary

contribution to the preparation and submission of this brief.

INTEREST OF THE AMICI CURIAE

The City and NYSAC have a significant interest

in having this Court grant the petition and determine the

validity of 29 C.F.R. 552.109(a) -- a longstanding United

States Department of Labor regulation (hereinafter the

“third-party employer regulation”) that applied the

“companionship services” exemption in the Fair Labor

Standards’ Act (“FLSA”), 29 U.S.C. §213(a)(15), to

employees engaged in providing companionship services

and “employed by an employer or agency other than the

family or household using their services.”

The provision of health care services in the home

has increased significantly in recent years. Since the carly

1980’s, hospital services have become much more

intensive, and daily costs have escalated enormously. At

the same time, many aspects of care formerly provided in

hospitals and in long term care institutions can be

effectively provided in the home. Vulnerable individuals

most frequently prefer to receive care at home if possible,

and this has resulted in the development of a number of

programs to facilitate their ability to do so. The cost of

these programs is largely covered by various forms of

health insurance, including Medicaid.

| The City, the nation’s largest municipality, oversees

a Medicaid-funded program, which provides personal care

services to approximately 50,000 low-income frail elderly

and disabled individuals, annually, through the use of

approximately 60,000 personal care aides, commonly

referred to as home attendants. These personal care

services are delivered through contracts with over 90

provider agencies throughout the City. |

Pursuant to this Personal Care Services program,

Medicaid-eligible individuals can obtain assistance with

activities of daily living (bathing, toileting, transferring,

walking and nutrition) when these services are medically

needed to allow them to continue to live at home. Personal

care services must be ordered by a client’s personal

physician, and the determination of the medically-

necessary level of care to be provided to Medicaid clients is

the responsibility of the City’s Human _ Resources

Administration.

Medicaid clients may be authorized to receive

personal care services for periods of time ranging from 2 or

3 hours, two or three times per week, to continuous

oversight, 24 hours each day, for more significantly

impaired individuals. A home attendant may be required to

sleep in the home and, in many ways, become a member of

the household. The home attendant may accordingly be

scheduled to deliver service for many more than 40 hours

per week, and while these services must be medically

required, they also require a substantive level of

compatibility with the client and the client’s family.

As a result of the third-party employer regulation,

prior to the Second Circuit’s decision declining to enforce

that regulation, the home attendants were not subject to the

wage and overtime requirements of the FLSA, and the

annual cost to the Medicaid program of the City’s Personal

Care Services program was approximately $1.6 billion

dollars. The program’s cost is covered 50% by the federal

government, 40% by the state, and 10% by the City. The

City negotiates the hourly rates for each provider

prospectively and then submits them to the state for

approval. Commencing in January 2006, state legislation

capped localities’ Medicaid expenses, and the vast majority

of any increases in costs over expenditures from 2005,

including any costs of complying with the FLSA, will have

to be borne by the state and federal governments. See 2005

N.Y. LAWS ch. 58 §1 Part C(1)(b)-(f).

Other than the above-discussed Medicaid-funded

Personal Care Services program, which is overseen by the

City, there are several other, Medicaid-funded programs,

which provide non-institutional long term care to the City’s

frail elderly and disabled citizens and are jointly

administered by the City and the State of New York. Of

these programs, the programs that service the largest

number of clients in the City are the Long Term Home

Health Care program and the Managed Long Term Care

program. The combined current caseload of these two

programs is approximately 28,000 clients. Like the

Personal Care Services program, the weekly service hours

for these alternative programs are based primarily on the

client’s clinical requirements, and the programs also use

home attendants. The provider agencies subcontract with

Licensed Home Care Service Agencies, which employ the

home attendants, who typically serve several clients per

week, providing up to 60 hours of service. The Licensed

Home Care Service Agencies pass their costs to the

authorized providers, which are reimbursed retroactively by

the state on an allowable cost basis. Like the Personal Care

Services program, these programs’ costs are covered 50%

by the federal government, 40% by the state, and 10% by

the City, and the state legislation capping localities’

Medicaid expenses also applies.

NYSAC is a not-for-profit municipal corporation

incorporated pursuant to the laws of the State of New York.

The sole membership of NYSAC consists of the 62

counties in New York State. NYSAC is the only statewide

municipal association representing elected county

executives, county supervisors, legislators, representatives,

commissioners, and administrators from the 62 counties,

including the 5 counties comprising the City. NYSAC’s

activities involve essential governmental functions, and all

of its activities, including the filing of this amicus brief,

accrue to the benefit of all county governments in the state.

Outside the City, each of NYSAC’s member counties

provides Medicaid-funded personal care services in its

respective jurisdiction throughout the state.

The Second Circuit’s decision declining to enforce

the third-party employer regulation will have serious

ramifications for the Medicaid-funded programs, in terms

of both cost and the provision of care, for everyone

involved in the program, including the government, the

providers of service, the home attendants, and individuals

receiving services. Therefore, the enforceability of the

third-party employer regulation is of vital importance to the

City and NYSAC. :

SUMMARY OF THE ARGUMENT

The petition should be granted for three reasons.

First, the enforceability of the third-party employer

regulation is of profound importance, because it has serious

implications for the above-discussed Medicaid-funded

programs, such as those administered by the City and the

counties. The Second Circuit’s decision is expected to

tremendously increase the annual cost of the programs, and

it is unclear whether additional funding will be available to

cover these cost increases. While the costs arguably could

be limited somewhat by capping each home attendant’s

hours of service at 40 hours per week, the intimate and

ongoing nature of the home attendant/client relationship, as

well as clients’ general unwillingness to have more than

one or two attendants in the home, limit the ability to have

multiple home attendants providing care to a client without

jeopardizing the client’s welfare.

Second, there is a direct conflict in the Circuits as to

the degree of deference to be accorded the third-party

employer regulation, with the result that the Tenth Circuit

has upheld the regulation, while the Second Circuit

declined to enforce the regulation. The Second Circuit’s

decision also conflicts with the Advisory Memorandum of

the Department of Labor, which indicated that the

Department will continue to apply the third-party employer

regulation in states outside the Second Circuit. Third, the

Second Circuit’s decision is erroneous and misapplied this

Court’s precedents regarding the amount of judicial

deference to be accorded administrative determinations.

This case merits this Court’s guidance and the

exercise of this Court’s supervisory powers.

REASONS FOR GRANTING THE PETITION

l THE ENFORCEABILITY OF

THE THIRD-PARTY

EMPLOYER REGULATION 1S

OF GREAT IMPORTANCE.

The Second Circuit’s decision, declining to enforce

the third-party employer regulation, is of profound

importance, in that it has serious implications for the

above-discussed Medicaid-funded programs administered

by the City and the counties in New York state, in terms of

both cost and the provision of care.

A. Financial Implications for the

Government of the Circuit’s

Decision

As to the City’s Personal Care Services program

alone, the Second Circuit’s decision is estimated to increase

the annual cost of the program and required Medicaid

funding by over $279 million annually. The City’s

Medicaid funding will need to increase from $1.592 billion

to about $1.871 billion annually in order to. sustain its

current client service levels.

The estimated additional $279 million annual cost

consists primarily of: (1) $103 million overtime pay at time

and one-half for home attendants who work in excess of 40

6 °

>

hours weekly; (2) an increase of $160.9 million in billable

and overtime hours for 24 hour daily care provided by

“sleep-in” home attendants, because non-paid “sleep-in”

hours would be limited to 8 hours daily under the FLSA,

see 20 C.F.R. 785.22, whereas under the City’s current

program, non-paid “‘sleep-in” hours consist of 12 hours

daily, with a paid sleep-in shift differential; and (3) $13.3

million in travel time, which will now have to be paid to

attendants who serve more than one client and travel

between cases, see 29 C.F.R. 785.38.

Similarly, as to the other Medicaid-funded

programs administered jointly by the City and State, or by

the counties, while cost projections are not currently

available, compliance with the Second Circuit’s decision

will significantly increase the costs of these programs.

In short, the economic impact of complying with

the Second Circuit’s decision and continuing to provide

services to clients currently receiving long term care

services -- approximately 80,000 in the City alone -- is

tremendous. The government will either have to pay for

the increased costs of complying with the FLSA or assume

the burden of implementing costly new program controls,

such as limiting consumer access and capping service

levels.

B. Implications for the Providers

As to the City’s Personal Care Services program, it

is unclear whether the additional funding to cover the

increased costs will be available. If the City’s request to

the State for increased rates is not approved and additional

funding is not appropriated by the State in its budget, the

- providers will have no funding source to pay the additional

costs to comply with the FLSA. Moreover, even if the

funding is approved by the State, there likely would be a

significant time lag from submission of the request to

approval.

Many Personal Care Services program providers

subject to the new expenses of complying with the FLSA,

without the incremental funding to meet these needs, will

experience cash flow difficulties. The majority of

providers are community based not-for-profit organizations

that are funded at cost and operate with limited cash flow,

without the backing of a parent organization with

significant resources. Providers might find its necessary to

increase their workforce to minimize each home attendant’s

hours in excess of 40 hours per week and, thereby, avoid

overtime payment. Providers will then incur additional

administrative costs associated with the hiring and

maintenance of this increased workforce. Additionally,

some providers might need to ask the City to reduce their

client caseload and might not be able to accept new cases,

especially high-hour cases. Further, some providers might

find it difficult to meet payroll and become insolvent.

Thus, the implications for providers include cash flow

difficulties and potential insolvency.

C. Implications for Clients and Their

Families

The above-discussed potential provider insolvency

and efforts to reduce costs, such as limiting consumer

access, Capping scrvice levels, and limiting each home

attendant to 40 hours per week to avoid overtime, will have

unfortunate impacts on individual clients. In the worst

case, some clients, especially those with high-hour needs,

might no longer be able to be serviced in the community

and might have to be institutionalized.

Some clients with high-hour needs would be served

by multiple home attendants. There are substantive

reasons, however, why limiting each home attendant to 40

hours and providing multiple home attendants to clients is

not readily doable. The relationship between a home

attendant and client, while not limited to delivery of

companionship, nonetheless is one of special intimacy and

confidentiality. Building such a relationship is not a simple

matter, and clients are in general unwilling to enter into

such a relationship with more than one or two individuals.

Some of the issues affecting this relationship are discussed

below.

1. Privacy in the Home

Although the home attendant’s role is to provide

paraprofessional service to a client, the service setting

differs significantly from a hospital or a doctor’s office, in

that the service is rendered in the client’s home, and the

nature of the service is intensely personal. The home

attendant spends up to 24 hours each day in the client’s

home, tending to needs of an extremely personal nature,

such as bathing or toileting. It is therefore essential for the

home attendant to build a trusting personal relationship

with the client, as otherwise the attendant’s presence will

be seen as being overly intrusive, and the client will not

. cooperate or allow the necessary level of personal

intervention.

Home attendants are trained and assisted to present

themselves professionally to the client. However, to carry

out personal care services appropriately also requires

acceptance of the home attendant by the client. In many

instances it takes a considerable time to build such a

relationship, and clients often are very unwilling to enter

into such a relationship with more than one or two such

individuals. Experience shows that clients often are

unwilling to accept alternative coverage when a home

attendant takes vacation or sick leave, preferring to suffer

lack of what may often be very necessary care until the

person with whom the client is comfortable returns from

leave.

2. Continuity of Care

Although the services provided by the home

attendant are limited to assistance with activities of daily

living, clients receiving this care are frail elderly and/or

disabled, and the service has been determined to be

medically necessary. Clearly, all clients are impaired to

some extent through ongoing illness and disability, and

these problems may well result in additional, immediate

clinical needs. The home attendant is required to become

familiar with the client’s medical circumstances, to assist

the client in making physician visits, and to promptly

identify and report any changes in. the client’s clinical

status. The home attendant must engage in ongoing

interaction with the client regarding the client’s health

status: to do this requires that the client is comfortable with

the home attendant and has confidence in sharing intimate

information. The home attendant must be knowledgeable

about the client’s clinical arrangements, and must be able to

contact the relevant medical professional if necessary.

3. Family Compatibility

In many instances, clients live in the home with

other family members. The home attendant’s services are

limited to caring for the client, but the attendant must be

able to render these services in a way that does not result in

problems in the household. Building such domestic

relationships can be difficult and time-consuming. In other

instances, the client may live alone. It then becomes the

responsibility of the home attendant to assure that the client

maintains adequate relationships with children, siblings,

etc., and to assist with family relationships in a way that

meets the client’s requirements and expectations. Such

relationships can be demanding and difficult, and the home

10

attendant is required always to place the client’s needs

before those of the family members who may be placing

pressures on both the attendant and the client. Further, if

providers find it necessary to contain costs by introducing

_ additional home attendants to the home, and if the client or

client’s family is unwilling to allow multiple attendants in

the home, the ability to provide a safe plan of care may be

compromised. In such circumstance, the final outcome

may be that the client is transferred to a nursing home.

In short, the inherently intimate and ongoing nature

of. the relationship between the home attendant and the

‘client, as well as clients’ unwillingness to have multiple

attendants in the home, limit the ability to provide multiple

attendants for each client, in order to keep costs down.

Introducing multiple home attendants can create undue

stress for clients and adversely impact their quality of life.

D. Implications for the Workforce

If home attendants are limited to working 40 hours

per week, many current longstanding home attendants who

now work more than 40 hours weckly might seek

opportunities in other industries, further putting client

service at risk. It is much simpler for home attendants to

work for a single provider, rather than having to find

employment with two or three different provider agencies

so that their time with each provider does not exceed 40

hours per week.

In short, this Court should review the Second

Circuit’s decision, given the serious implications in terms

of both cost and the provision of care for the Medicaid-

funded programs administered by the City and the counties

in New York State.

ll

Il. THERE IS A DIRECT CONFLICT IN

THE CIRCUITS AS TO THE

DEGREE OF DEFERENCE TO BE

ACCORDED THE THIRD-PARTY

EMPLOYER REGULATION.

The Second Circuit’s decision as to the degree of

deference to be accorded the third-party employer

regulation conflicts directly with that of the Tenth Circuit

in Johnston v. Volunteers of Am., Inc., 213 F.3d 559 (10"

Cir. 2000), cert. denied, 531 U.S. 1072 (2001). In

Johnston, the Tenth Circuit accorded the third-party

employer regulation deference pursuant to this Court’s

decision in Chevron U.S.A., Inc. v. Natural Resources

Defense Council, Inc., 467 U.S. 837 (1984), and upheld the

regulation. See Johnston, 213 F.3d at 561-62. In this case,

by contrast, the Second Circuit declined to accord the third-

party employer regulation Chevron deference, applied the

less-deferential standard of Skidmore v. Swift & Co., 323

U.S. 134 (1944), and declined to enforce the regulation. See

Coke, Pet App. at la-6a (Coke // decision after remand,

adhering to the reasoning and results in ‘Coke /), 23a-32a

(Coke I decision).

While the Second Circuit attempted to distinguish

Johnston on the ground that it pre-dated this Court’s

decision in United States v. Mead Corp., 533 U.S. 218

(2001) (see Pet. App. at 25a, Coke /), as explained by this

Court in Mead, “Chevron did nothing to eliminate

Skidmore’s holding that an agency’s interpretation may

merit some deference whatever its form,” or “to eliminate

Skidmore’s recognition of various justifications for

deference depending on statutory circumstances and agency

action.” Mead, 533 U.S. at 234, 236-38.

Indeed, in cases following Chevron but pre-dating

the Tenth Circuit’s decision in Johnston, this Court applied

the less-deferential Skidmore standard, in reviewing certain

administrative determinations. See, e.g., Christensen v.

12 :

Harris County, 529 U.S. 576, 586-87 (2000) (applying the

less-deferential Skidmore standard in reviewing a

Department of Labor opinion letter). _

Thus, the fact that the Tenth Circuit’s decision in

Johnston pre-dated this Court’s decision in Mead does not

in any way minimize the direct conflict between the

Circuits.’

In addition to conflicting with the decision of the

Tenth Circuit, the Second Circuit’s decision conflicts with

the December 1, 2005 Advisory Memorandum of the

Department of Labor. The Advisory Memorandum

rejected the Coke analysis and instructed Regional

Administrators and District Directors to continue to apply

the third-party employer regulation in states outside the

Second Circuit. See Pet. App. at 50a-64a.

Il. THE SECOND CIRCUIT’S DECISION

IS ERRONEOUS AND MISAPPLIED

THIS COURT’S PRECEDENTS

REGARDING THE DEFERENCE TO

BE ACCORDED ADMINISTRATIVE

DETERMINATIONS.

The Second Circuit’s decision is erroneous and

misapplied this Court’s precedents regarding the deference

to be accorded administrative determinations. |

In Chevron U.S.A., Inc. v. Natural Resources

Defense Council, Inc., 467 U.S. 837 (1984), this Court

2 In fact, a post-Mead Tenth Circuit case has continued to

follow the holding in Johnston. See Welding v. Bios Corp.,

353 F.3d 1214, 1217 & n3 (10" Cir. 2004) (noting

_ Johnston and that the FLSA companionship services

exemption can apply even when the domestic service

employee is employed by a service agency, such as the

defendant corporate provider in that case).

13

upheld a regulation of the Environmental Protection

Agency, on the ground that it was a_ permissible

construction of the Clean Air Act. This Court explained

that, if Congress has not directly spoken to the precise

‘question at issue and has delegated to an agency to

elucidate a specific statutory provision, the agency’s

regulation, which is then considered legislative, must be

given controlling weight, unless it is arbitrary, capricious,

or manifestly contrary to the statute. /d. at 842-44. This

Court noted that the fact that the agency has from time to

time changed its interpretation does not mean that the

agency’s interpretation is not entitled to deference. This

Court emphasized that an agency, to engage in informed

rulemaking, must consider varying interpretations and the

wisdom of its policy on a continuing basis. /d. at 863-64.

Additionally, this Court noted that an agency to which

Congress has delegated policymaking responsibilities may,

within the limits of its delegation, properly rely on the

incumbent administration’s view of wise policy to inform

— its judgments. /d. at 865-66. ©

In United States v. Mead Corp., 533 U.S. 218

(2001), this Court held that a tariff classification in a U.S.

Customs Service ruling letter regarding day planners was

not entitled to Chevron deference. This Court explained

that Chevron deference applies when the statute is

ambiguous, Congress has delegated authority to the agency

to make rules carrying the force of law, and the agency

interpretation was promulgated in the exercise of that

authority. /d. at 226-27, 229.

This Court, in holding that Chevron deference did

not apply, relied on the facts that there was no indication

that Congress meant to delegate authority to Customs to

issue ruling letters with the force of law and that the ruling

letter: was not subject to a notice and comment procedure;

did not go beyond the specific case under review and did

not bind third parties; was subject to modification without

14

notice, except to those persons to whom the letter was

addressed; could be issued by any of 46 different Customs

offices, which issued approximately 10,000 to 15,000 such

letters per year; and did not have to be published. /d. at

223-24, 230-34.

In this case, pursuant to the above standards, the

third-party employer regulation was entitled to Chevron

deference. There is no dispute that the companionship

services exemption expressly delegated authority to the

Department of Labor to define and delimit the terms

“companionship services” and “domestic service

employment.” See 29 U.S.C. §213(a)(15); Coke J & II, Pet.

App. at 2a-3a, 23a-24a, 26a. Additionally, as explained by

petitioners and the Department of Labor, the third-party

employer regulation was promulgated in the exercise of

that authority, where, inter alia: the third-party employer

regulation expressly relies on the delegation of authority in

the companionship services exemption; Part 552 of the

regulations indicates that the companionship services

exemption was the authority for all of the regulations in

that part; and the Department of Labor, in its Advisory

Memorandum, has reaffirmed that the third-party employer

regulation is a legislative rule and was not merely intended

to be an advisory interpretation and that the Department

considers the third-party employer regulation authoritative

and legally binding. See Pet. at 16-23; Sla, 63a-64a.

Unlike in Mead, the administrative determination at

issue here is a regulation, not a letter ruling, and carries the

force of law, in that it: is published and was subject to the

notice and comment procedures; goes beyond one case and

binds all employees of third-party employers; and has been

in force for more than thirty years without change,

notwithstanding that Congress has on numerous occasions —

amended 29 USC. §213, which contains the

companionship services exemption. Thus, the Second

Circuit misconstrued Mead in erroneously declining to

15

accord the third-party employer regulation Chevron

deference. See also Richard J. Pierce, Admin. L. Treatise

$6.4 at 324-25 (4"" ed. 2002) (explaining that legislative

rules have binding effect, are required to be promulgated

pursuant to notice and comment procedures, are within the

scope of rulemaking authority conferred by Congress, and

impose distinct obligations on members of the public).

Indeed, further supporting the proposition that the

Second Circuit misapplied this Court’s decision in Mead is

the fact that, following Mead, this Court does not appear to

have declined Chevron deference to any similar regulation.

See, e.g., Washington State Dep't of Social and Health

Servs. v. Guardianship Estate of Keffeler, 537 U.S. 371,

382, 390 (2003) (holding that Chevron deference was owed

to the regulations of the Commissioner of Social Security);

Barnhart v. Walton, 535 U.S. 212, 217-22, 224-25 (2002)

(same and explaining that Chevron was the appropriate

standard, given “the interstitial nature of the legal question,

the related expertise of the Agency, the importance of the

question to the administration of the statute, the complexity

of that administration, and the careful consideration the

Agency has given the question over a long period of time”);

Yellow Transp., Inc. v. Michigan, 537 U.S. 36, 41, 45-48

(2002) (according Chevron deference to _ Interstate

Commerce Commission regulations, which were issued

pursuant to an express delegation by Congress, after notice

and comment proceedings, and differed from the regulation

originally proposed). See also Natl Cable &

Telecommunications Ass'n v. Brand X Internet Servs., 545

U.S. 967; 125 S. Ct. 2688, 2697-2700 (2005) (according

Chevron deference to the Federal Communications

Commission’s interpretation of a term in a Declaratory

Ruling, issued pursuant to rulemaking procedures, and

emphasizing that agency inconsistency is not a basis for

declining to analyze the agency’s interpretation under

Chevron, as the whole point of Chevron is to leave the

16

discretion provided by the ambiguities of a statute with the |

implementing agency).

Chevron deference appears to have been declined

only to internal guidance memoranda and interpretations

contained in publicly available operating instructions for

processing social security claims, which were not the

product of formal rulemaking. See Alaska Dep't of Envil.

Conservation v. Envil. Protection Agency, 540 U.S. 461,

487-88 (2004); Washington State Dep't of Social and

Health Servs., 537 U.S. 371, 385-86 (2003). Additionally,

Chevron deference was also denied to an Interpretive Rule

of the United States Attorney General, issued without any

formal procedure, on the ground that it was beyond the

limited authority delegated by Congress. Gonzalez v.

Oregon, _US. _, 126 S.Ct. 904, 913-22 (2006). In this

case, as previously mentioned, there is no dispute that there

was an express delegation by Congress to the Department

of Labor to promulgate legislative rules.

This post-Mead treatment of such regulations is

consistent with other pre-Mead cases. See, e.g., Christensen

v. Harris County, 529 U.S. 576, 586-88 (2000)

(emphasizing that “[o]f course, the framework of deference

set forth in Chevron does apply to an agency interpretation

contained in a regulation’’); Metropolitan Stevedore Co. v.

Rambo, 521 U.S. 121, 137 n.9 (1997) (noting that no

deference was required to the interpretation of the

Administrative Procedure Act by the Director of the Office

of Workers’ Compensation Programs, where, inter alia,

that interpretation was not embodied in any regulation or

similar binding policy pronouncement to which Chevron

deference would apply); Batterton v. Francis, 432 U.S.

416, 425-26 & n.9 (1977) (a pre-Chevron case noting that

courts are not required to give effect to interpretive

regulations, but emphasizing that where Congress expressly

delegated to an agency to prescribe standards or interpret

statutory terms, the agency adopts regulations with

17

legislative effect, which are entitled to review under the

arbitrary and capricious standard).

In short, the Second Circuit erred and misapplied

this Court’s precedents when it declined to accord Chevron

deference to the Department of Labor’s third-party

employer regulation. The third-party employer regulation

is reasonable, especially where, as noted by the District

Court and explained by the Department of Labor, part of

the reasoning behind the FLSA companionship services

exemption is to allow those in need of such services to find

assistance at a price they can afford and prevent them from

unnecessarily being forced into long-term care institutions.

As emphasized by the District Court and the Department of

Labor, whether the services are provided by direct hiring or

through the use of an agency, the objective is still the same:

to allow the procurement of companionship services

without being required to meet the minimum wage and

overtime provisions of the FLSA. See Pet. App. at 46a-47a,

52a.

In order to avoid repetition, the amici curiae adopt

the other arguments made by petitioners in support of a ©

grant of certiorari.

18

CONCLUSION

THE PETITION FOR A WRIT OF

CERTIORARI

GRANTED.

STEPHEN J.A. ACQUARIO,

Genera! Counsel,

Attorney for Amicus Curiae

NYS Ass’n of Counties,

Ltt Pine Street

Albany, NY 12207

(518) 465-1473

SHOULD BE

Respectfully submitted,

_ MICHAEL A. CARDOZO,

Corporation Counsel of the

City of New York,

Attorney for Amicus Curiae

City of New York,

100 Church Street

New York, NY 10007

(212) 788-1159 or 1065

LEONARD J. KOERNER*

PAMELA SEIDER DOLGOW,

SUSAN CHOI-HAUSMAN,

of Counsel.

*Counsel of Record

19

pe tei

. re s 7

, ae

a7 >

Aen

= oa

ae) -

aye ts

ta

——

| i. ine 7 : -

ve a, 7) al: “mark

wd

ul ee >

.

sw

(ie

=

7 rm ys