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

Supreme Court brief2005

Ask Donna

What actually matters in this document.

Text

“)

APR 29 2005

No. 04-1315 OFFICE OF THE CLERK

IN THE

Supreme Court of the Anited States

LONG ISLAND CARE AT HOME, LTD. AND

MARYANN OSBORNE,

Petitioners,

. P

EVELYN COKE,

Respondent.

On Petition for a Writ of Certiorari to the

Gnited States Court of Appeals

for the Second Circuit

BRIEF OF AMICUS CURIAE HOME CARE

ASSOCIATION OF NEW YORK STATE, INC.

JOHN LONGSTRETH *

PRESTON GATES ELLIS &

ROUVELAS MEEDS LLP

1735 New York Avenue, NW

Washington, DC 20006

(202) 628-1700

Counsel for Amicus Home Care

* Counsel of Record Association of New York, Inc.

April 29, 2005

RETEST EEL AE SRT NLT, SLEEP LH TOE IT ARR RI tN RRR SC

WILSON-EPES PRINTING Co., INC. — (202) 789-0096 -— WASHINGTON, D.C. 20001

TABLE OF AUTHORITIES

INTEREST OF AMICUS

TABLE OF CONTENTS

SUMMARY OF ARGUMENT ..............ccccsssssssersseseesees

PREFLIIIEIINE snaccciaserescsnenssssensccssnsssccncencensesarannesannscesbeenss

II.

THE SECOND CIRCUIT’S DECISION

CONTRAVENES ESTABLISHED PRIN-

CIPLES OF ADMINISTRATIVE REVIEW

AND AGENCY DEFERENCE, AND

THUS IMPROPERLY SUBSTITUTES THE

COURT'S OWN POLICY JUDGMENTS

FOR THOSE OF CONGRESS AND THE

PT le 0 sesitichininntnnvidsndinipivaaimvvinctiaitiinneimneieaiinion

A. The Rule Invalidated By The Second

Circuit Is Fully Consistent With The Text

Of The Statute And Its Legislative History ..

B. The Second Circuit Erred In Not Deferring

To The Agency’s Long-Standing Con-

Stet OP TG SHMUE .ccecinsccicssccescecssessesees

THE SECOND CIRCUIT’S DECISION

WILL CAUSE A MASSIVE DISRUPTION

TO THE PROVISION OF AFFORDABLE

HOME CARE SERVICES IN NEW YORK

(1)

COPECO E EEE HEE EH EEHH EEE EHEOH EERE

COO EEE EEE HEEET ETOH HEE H HEHEHE HEHEHE HOH HEHEHE

ih tii

TABLE OF AUTHORITIES

CASES Page

Alaska Department of Envtl. Conservation vy.

EPA, S48 OS. Or Cae anattaananaincetpensinmnnes 3,7, 14

American Postal Workers’ Union v. USPS, 707

2d S66 CUA... Ge: Ge icictaceieadenensionens 11,12

Appalachian Power Co. v. EPA, 208 F.3d 1015

(D.C. Cop BORD) ..ccanscsiineseaaenamaaiacesens 4,11

Barnhart v. Walton, 535 U.S. 212 (2002).............. A

BedRoc Ltd. v. United States, 541 U.S. 176

(BEE) ...n.aasnisscnakagunna been elie naan eal bbaaaes 8

Chevron U.S.A., Inc. v. National Res. Defense

Council, Inc., 467 U.S. 837 (1984)... eeeeeeees passim

Engine Mfrs. Ass'n v. South Coast Air Quality

Meme. Dist., 541 U.S. 246 (2004).........ccccccceceees 7,8

Hartford Underwriters Ins. Co. v. Union

Planters Bank,. N.A, 530 U.S. 1 (2000).....0.0..... 8

Hibbs v. Winn, 542 U.S. 88, 124 S. Ct. 2277

(ZEA) ......s.wienncsiibaniintncasptunseniadealaaaumadiaaiidadama 7

Lamie v. United States Trustee, 540 U.S. 526

(FEI) ....s0css:svesisiuminietiaieadadahadamasimedaamcaaiiaiiamaseemliae 8

McCune v., Oregon Senior Services Div., 894

F.2d 1 OT Ciba ae, Bae acd eadisctbeaenenvateaies 17

National Family Planning and Reproductive

Health Ass'n, Inc. v. Sullivan, 979 F.2d 227

(D.C. Cie. FSR) . ncictinccadtaateenensieneiomaas 13

North Haven Bd. of Educ. v. Bell, 456 U.S. 512

( TSB) ....n.«-ssisnnsasiinicnssdbdiaiaisalansaaiiadnadaaainmnalenc nas 7

Park ‘N Fly, Inc. v. Dollar Park & Fly, Inc., 469

U.S. FOS (19RD )...cssccseiapnaeelanianenan 8

Pharmaceutical Research & Manufacturers of

Am. v. Thompson, 362 F.3d 817 (D.C. Cir.

PUIG ) ..nanccssncsssicuiseilaiaaiaaaianiaiannann eae mee 12, 13

United States Telecom Ass'n v. FCC, 400 F.3d 29

(D.C. Cir. TGR sinicniadasae eee ee 11

——e— ttt tst~—“‘“‘CO™COCSSS

iil

TABLE OF AUTHORITIES—Continued

Page

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

(DOD) seco sccsnsensscesstitisiiciiciiiscicsticatcseseseesanence 3, 12, 13, 14

STATUTES AND RULES

ge aR LT |) | a a 5, 10

I OIE i ictcidescinsiclisnonscrecheadneansieeinianstsecdans 9

Fes © ITEM ccccncsssccsnsieansendenelcshoasoniediciiansecas passim

Fe Oe Macs © ORD cc ccnecsecccnsecsnsessovscbenavanense 18

LEGISLATIVE AND REGULATORY HISTORY

H. Conf. Rep. No. 93-953 (1974), reprinted in

SOP calcite AUN eso icecsnccnssiavonnsassensniaaie 6

H.R. Rep No. 93-913 (1974), reprinted in 1974

SIN MITE ict daisies socinsshsdoincasepadeiode senesades 6

118 Cong. Rec. 24,715 (1972) ......cccccscsccesecsssceseeess 9

40 Fed. Reg. 7404 (February 20, 1975) .....cccccccces. 15

67 Fed. Reg. 16,668 (Apr. 8, 2002) v....cccccccccececeeees 15

OTHER AUTHORITIES

S. Greenhouse, For Home Care Workers, A F ight

for Pay, and Respect, N.Y. Times, May 28,

RM MIN staat ds eckscbncedasakatbinniuoaiesestatncdiceu’,. 17

Michael S. Sparer, Medicaid and the Limits of

State Health Reform, 110-111 (1996) ......ccccc000-. 19

IN THE

Supreme Court of the Anited States

No. 04-1315

LONG ISLAND CARE AT HOME, LTD. AND

MARYANN OSBORNE,

Petitioners,

Vv.

EVELYN COKE,

Respondent.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Second Circuit

BRIEF OF AMICUS CURIAE HOME CARE

ASSOCIATION OF NEW YORK STATE, INC. '

INTEREST OF AMICUS?

Amicus Home Care Association of New York State,

Inc. (“HCA” or “Home Care Association’) is a not-for-profit

organization that promotes and supports high-quality, cost-

' Amicus certifies that this brief was authored in whole by counsel for

Amicus and no part of the brief was authored by any attorney for a party.

No other person or entity made any monetary contribution to the pre-

paration or submission of this brief.

> The written consents of the parties were requested and both parties

have consented in writing to the filing of this brief. Copies of the written

consents have been filed with the Clerk of the Court.

effective home care and community services for the citizens

of New York State. The Association has approximately 250

members, most of which are non-profit and governmental

home care provider agencies, and some of which are for-

profit providers. HCA’s members serve the majority of New

York’s Medicare and Medicaid beneficiaries receiving home

care services, including 250,000 persons in New York City

alone. HCA’s President submitted a declaration in support of

Petitioners’ motion in the court of appeals for a stay of the

mandate, which is included in the Appendix to the Petition

for Certiorari (“Cert. Pet. App.”) at pages 100a to 124a.°

The Second Circuit’s decision imposes a devastating

burden on the ability of HCA’s provider members to provide

high quality, affordable companionship services to elderly

and infirm patients throughout New York State by invalid-

dating a long-standing regulation of the United States Depart-

ment of Labor (“DOL” or “agency”). That rule exempts

home care companionship services from federal wage and

overtime laws under the Fair Labor Standards Act (“FLSA”).

It implements a statutory exemption that Congress enacted for

the express purpose of making these domestic companionship

services more widely available to those who need them, thus

allowing them to avoid less desirable alternatives such as

nursing home placement. The importance of the exemption

in achieving these goals was recognized by the agency based

on extensive rulemaking records it compiled when it promul-

gated the regulation in 1975 and when it determined in

2002 to retain it. The Second Circuit's decision ignored the

extensive agency record, choosing instead to rule on the

pleadings without consideration of any evidence as to the

importance of the exemption to the hundreds of providers

‘HCA and several other parties submitted amicus briefs in support of

Petitioner's motion for rehearing and rehearing en banc in the court of

appeals, but that court denied, without explanation, leave to file any of

these briefs.

who have relied on it for thirty years to develop companion-

ship services that have kept hundreds of thousands of people

in their homes and communities.

The Home Care Association accordingly urges this Court

to grant the Petition for Certiorari in order to eliminate the

serious harms that invalidation of the rule creates for pro-

viders in New York State, and the uncertainties it creates for

providers in other jurisdictions.

SUMMARY OF ARGUMENT

The Second Circuit's decision ignores the sound policy

reasons invoked by Congress and the agency in enacting and

continuing the long-standing exemption for home companion-

ship services, and misapplies this Court's precedent. Reject-

ing the views of every other court to have considered the

matter, including the Tenth Circuit, the Second Circuit

invalidated the regulation even though it was (a) the subject

of two full rounds of notice and comment rulemaking, (b) in

place for thirty years with the acquiescence of Congress, and

The Second Circuit's decision thus conflicts with numerous

decisions of this Court, including United States v. Mead

Corp., 533 U.S. 218 (2001) (“Mead”), which requires full

deference to an agency decision issued after formal proce-

dures such as notice and comment rulemaking; Alaska

Department of Environmental Conservation v. EPA, 540 U.S.

461 (2004) and Barnhart vy. Walton, 535 U.S. 212, 217

(2002), which grant “particular deference” to agency inter-

pretations of “longstanding duration;” and Chevron U.S.A.,

Inc. v. National Resources Defense Council, Inc. (“Chev-

ron” ), 467 U.S. 837 (1984), which requires courts to defer to

reasonable agency constructions of statutes they are charged

to administer. The Second Circuit's assertion that deference

was not appropriate because the agency chose to label the

regulation as an “interpretation” is likewise inconsistent with

a host of sound precedents that reject mechanical invocations

of form over substance. See, e.g., Appalachian Power Co.

v. EPA, 208 F.3d 1015 (D.C. Cir 2000)(finding it “well-

established” that the key question is not the agency’s

“labeling” of the rule, but whether the “interpretation” carries

the “force and effect of law.”)

The Second Circuit decision thus creates the very result

that sound principles of administrative review are intended to

avoid. It upsets a reasonable and longstanding agency rule,

around which important and necessary health care arrange-

ments have been made for decades, without any consideration

of the harmful effects of its ruling. As set out in the agency’s

rulemaking record and in submissions to the Second Circuit

by numerous affected parties, the exemption of domestic

companionship services under the FLSA is critical to the

quality of care. The budgets of the service providers repre-

sented by HCA are severely constrained and are dependent on

government reimbursements, predominantly through Medi-

caid, that are themselves decreasing due to state budget

constraints and significant lag times in reimbursement cal-

culations. See Cert. Pet App. at 101a-102a. Unable to fund

the significantly increased overtime payments the Second

Circuit’s ruling mandates, providers will be forced to staff

home companion cases on shorter shifts, thus requiring more

caregivers per case. /d. at 103a. This will have numerous

negative effects, including reducing the continuity of care to

recipients of home companionship services, increasing the

time needed to train multiple caregivers on the same case,

increasing supervisor visits as new aides are added to cases,

and reducing wages and other compensation to home care

workers who will no longer be offered the opportunity to

work overtime hours. Providers will also be forced to seek

additional workers at a time when staffing shortages already

exist, and when new regulatory requirements are further

limiting the availability of workers. /d.

The Second Circuit’s decision creates a circuit split on an

issue of great significance to the Home Care Association and

others with an interest in the provision of home companion

services, and will effect a massive disruption to the delicately

balanced system that makes home care—a desired alternate to

institutionalization—an affordable and safe option for tens of

thousands of home care patients in New York State. It also

ignores the plain language of the statute, is contrary to Con-

gress’ intent, and violates numerous principles of admin-

istrative review that counsel particular deference to the

agency under the circumstances of this case. This Court

should therefore grant the Petition for Certiorari so that it may

review and reverse the decision.

ARGUMENT

I. THE SECOND CIRCUIT’S DECISION CON-

TRAVENES ESTABLISHED PRINCIPLES OF

ADMINISTRATIVE REVIEW AND AGENCY

DEFERENCE, AND THUS IMPROPERLY SUB-

STITUTES THE COURT’S OWN POLICY

JUDGMENTS FOR THOSE OF CONGRESS

AND THE AGENCY.

A. The Rule Invalidated By The Second Circuit Is

Fully Consistent With The Text Of The Statute

And Its Legislative History.

The statutory exemption at issue, codified at 29 U.S.C.

§ 213 (a)(15), applies to

any employee employed on a casual basis in domestic

service employment to provide babysitting services or

any employee employed in domestic service employ-

ment to provide companionship services for individuals

who (because of age or infirmity) are unable to care for

themselves (as such terms are defined and delimited by

regulations of the Secretary) .. .

This statutory language applies by its terms to any em-

ployee providing companionship services in domestic service

employment. It does not exclude employees from the exemp-

tion merely because they are employed by third parties. Nor,

indeed, is there any statutory language that makes any ref-

erence to third party employers. The descriptions of the

provision in the legislative history are likewise broad and

make no reference to any such limitation of the statutory

exemption.”

As summarized above and set out in detail in the materials

submitted in the appendix to the Petition for Certiorari, the

Second Circuit’s ruling will greatly disrupt the provision of

home companionship services in New York (and other states

governed by the ruling), and adversely affect the very health

care workers the decision purportedly seeks to protect by

reducing their opportunities for overtime and hence their

overall compensation. Yet this ruling is not based on either

the plain language of the statute or any direct evidence of

Congressional intent from the legislative history. Instead, the

Second Circuit purported to find a basis for its decision in the

“context of the entire statutory and regulatory scheme,” Cert.

* See H.R. Rep. No. 93-913, (1974) reprinted in 1974 U.S.C.C.A.N.

*2811, 2821 (noting that “the provision does not apply to a person who,

on an intermittent basis, provides baby sitting services, or who provides

companion services.”); id. at 2842 (“the bill exempts from both the

minimum wage and overtime requirements, however, babysitters em-

ployed on a casual basis and employees employed in the capacity of

companion to an individual who, by reason of older age or infirmity,

necessitates a companion.”); id. at 2845 (“the exemption reflects the intent

of the committee to exclude from coverage babysitters for whom domestic

service is a casual form of employment and companions for individuals

who are unable because of age and infirmity to care for themselves.”’);

H. Conf. Rep. No. 93-953 (1974), reprinted in 1974 U.S.C.C.A.N. 2862,

2865 (“The conference substitute retains the exemption for casual baby-

sitters and companions contained in both bills and retains the overtime

exemption for “live in” domestic employees.”’)

Pet. App. at 3a-4a, and in its assertion—again unsupported by

anything in the Act’s text or legislative history—that it is

“implausible” Congress “would have wanted” any other re-

sult. /d. at 27a.

In concluding that it was “implausible” Congress “would

have wanted” the rule, the Second Circuit side-stepped the

undisputed fact that Congress has amended the Act seven

times since the rule was promulgated in 1975, without

disturbing the rule in any way.” Nor did the appeals court

grant the agency’s actions any appreciable deference, not-

withstanding this Court’s repeated admonitions that long-.

Standing agency interpretations are to be given “particular

deference.” See, e.g., Alaska Department of Environmental

Conservation v. EPA, 540 U.S. at 487 (quoting Barnhart

v. Walton, 535 U.S. at 220, and North Haven Board of

Education v. Bell, 456 U.S. 512, 522 n.i2 (1982)). Instead,

the court of appeals simply substituted its own view of

Congress’ purpose for that of the agency.

This Court has repeatedly held that the best evidence of

Congressional intent is the words of the statute Congress

enacted, not a court’s own notion of what is or is not “plau-

sible.” “Statutory construction must begin with the language

employed by Congress and the assumption that the ordinary

meaning of that language accurately expresses the legislative

purpose.” Engine Mfrs. Ass'n v. South Coast Air Quality

“It merits emphasis, however, that prolonged congressional silence in

response to a settled interpretation of a federal statute provides powerful

support for maintaining the status quo. In statutory mauers, judicial re-

straint strorigly counsels waiting for Congress to take the initiative in

| modifying rules on which judges and litigants have relied.” Hibbs v.

Winn, 542 U.S. 88, 124 S. Ct. 2277, 2292 (2004) (Stevens, J., concurring).

Rather than give any weight to this farniliar principle, the Second Circuit

suggested that it somehow loses force if the entire statute is not reenacted,

a mon-sequiter for which the court offered no support. See Pet. Cert. App.

21an.5.

Mgmt. Dist. 541 U.S. 246, 252 (2004)(quoting Park ‘N Fly,

Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 194 (1985)).

See BedRoc Ltd. v. United States, 541 U.S. 176, 183 (2004)

(“The preeminent canon of statutory interpretation requires us

to ‘presume that [the] legislature says in a statute what it

means and means in a statute what it says there.’”’). “It is

well established that “when the statute’s language is plain, the

sole function of the courts—at least where the disposition

required by the text is not absurd—is to enforce it according

to its terms.” Lamie v. United States Trustee, 540 U.S. 526,

534 (2004)(quoting Hartford Underwriters Ins. Co. v. Union

Planters Bank, N.A, 530 U.S. 1 (2000)). See also Chevron,

467 U.S. at 845 (when Congress has not directly spoken to

preclude an agency’s policy choice, a court may not overturn

agency action based on “its view the concept is ‘inappro-

priate’ in the general context”).

The Second Circuit’s discussion of “Congressional pur-

pose” does not refer to the statutory language or legislative

history at all, choosing instead to rely on the law “before the

1974 amendments” and on a single law review article. See

Cert. Pet. App. at 26a-27a.° However, as this Court has

noted, “[t]he starting point in discerning congressional intent

is the existing statutory text, and not the predecessor

statutes.” Lamie, 540 U.S. at 534 (citation omitted). The

statutory exemption contains no limitation denying the ex-

emption for companionship services simply because the

patient or his family prefers to use a third party provider.

The Second Circuit also ignored relevant legislative history

that expressly recognizes the need to allow elderly and infirm

individuals to remain in their own homes rather than being

* Although in a later portion of the opinion the Second Circuit chided

the agency for supposedly ignoring the “plain language of the statute,”

the language to which it referred was not the language of the statutory

exemption, but rather the language of an agency regulation that does not

address the companionship exclusion. See Cert. Pet. App at 29a.

displaced to nursing homes. As noted in floor debate on the

bill, compliance with federal wage and overtime requirements

would “increase tremendously the cost of taking care of our

older people, perhaps forc[ing] into nursing homes some of

them who otherwise could be taken care of perfectly well in

their own homes.” 118 Cong. Rec. 24,715 (1972)(comments

of Sen. Taft).’ The rule invalidated by the Second Circuit is

fully consistent with this purpose for the exemption.

In sum, the Second Circuit’s discussion of Congress’

supposed purpose was untethered to the actual language of

the statutory exemption itself, or to any relevant legislative

history of that provision. Indeed, far from precluding the

agency's rule, both the statutory text and the legislative

history support it, as neither suggests any limitation of the

exemption based on whether the domestic companions are

employed by the patient, the family, or a third party.

B. The Second Circuit Erred In Not Deferring To

The Agency’s Long-Standing Construction Of

The Statute.

Implicitly recognizing that neither the plain language of the

Statute nor any statement in the legislative history precluded

the result the agency reached in the rule, the Second Circuit

devoted much of its opinion to a discussion of the appropriate

level of deference owed the agency. See Chevron, 467

U.S. at 842-43 & n.9 (deference to the agency is required if

“Congress has not directly addressed the precise question at

issue”). The Second Circuit acknowledged that “[a]ll courts

that have considered § 552.109(a) have accorded it Chevron

deference.” Cert Pet. App. at 21a. Nonetheless, the Second

Circuit held that Chevron deference was not appropriate, and

then proceeded to give the agency’s rule effectively no

The Second Circuit did, by contrast, explicitly consider statements

from the legislative history in its discussion of 29 C.F.R. § 552.6, and up-

held that regulation. See Cert. Pet. App. at 14a-15Sa, 17a-18a.

deference at all. The Second Circuit’s analysis on this point

was erroneous and inconsistent with the precedents of this

Court and the rulings of other courts.

The Second Circuit’s determination that Chevron deference

was not required was based on its findings that the rule was

“interpretive,” rather than legislative, and that the notice and

comment procedure undertaken by the agency “was not

required.” Cert. Pet. App. at 24a. Both of these conclusions

were wrong, as was the Second Circuit’s illogical leap from

them- to the further conclusion that the use of notice and

comment procedures should not confer Chevron deference

under Mead if the notice and comment is_ undertaken

voluntarily.

The Second Circuit's holding that the rule was “inter-

pretive’” was based on the agency’s placement of the rule

under the heading “Subpart B- Interpretations,” and on the

agency's supposedly “self-conscious” admission that the rule

was not issued under the delegated authority of 29 U.S.C.

§ 213(a)(15). Cert. Pet. App. At 22a-23a. The Second

Circuit conceded, however, that the rule ‘grants rights,

imposes obligations, or produces other significant effects on

private interests,” as legislative regulations do,” id. at 22a,

and that it “was promulgated following notice and comment

procedures.” /d. at 21a. Moreover, the effect of the rule is to

define which employees providing companionship services

are subject to the exemption—precisely the task that Con-

gress delegated to the agency by statute. Other than its

reliance on the agency’s label, however, the Second Circuit

did not explain why the rule defining companionship services

should be considered legislative, while the rule exempting

such services if provided in the home should be considered

non-legislative. Indeed, under the Second Circuit’s reason-

ing, the agency could have achieved full deference merely by

relabeling the rule and adding a citation in the Federal

The Second Circuit erred in relying on the agency's

labeling of its rule, rather than on its substance and the actual

circumstances of its issuance. Courts have made clear in a

variety of contexts that the substance of an agency’s rule

governs, not its label. See United States Telecom Ass'n v.

FCC, 400 F.3d 29, 35 (D.C. Cir. 2005), (“fidelity to the

rulemaking requirements of the APA bars courts from

permitting agencies to avoid those requirements by calling a

substantive regulatory change an_ interpretative rule’);

Appalachian Power 208 F.3d at 1024 (it is “well-established

that an agency may not escape the notice and comment

requirements . . . by labeling a major substantive legal

addition to a rule a mere interpretation; question is whether

the “interpretation” carries the “force and effect of law.”)

The Second Circuit was thus wrong to conclude that, because

the rule was labeled “interpretive,” the notice and comment

procedures provided by the agency were gratuitous, and not

required by law.

As noted above, the Second Circuit conceded that the rule

affected substantive rights and obligations “as legislative

regulations do.” Cert. Pet. App. at 22a. Moreover, the binding

nature of the rule is attested to by the Second Circuit's

finding that its enforcement would preclude plaintiff's claims

for minimum wage and overtime compensation, and the court

of appeals’ resulting need to declare that the rule “cannot be

enforced.” Cert. Pet. App. at 2a, 4a. The Second Circuit cited

no authority supporting its conclusion that, under such cir-

cumstances, the rule was properly classified as “interpretive”

and thus was not subject to notice and comment rulemaking.”

* The only case the Second Circuit cited on the point, American Postal

Workers’ Union (“APWU” ) v. USPS, 707 F.2d 548 (D.C. Cir. 1983), was

decided before Chevron and did not deal with the question of deference at

ail. Unlike the present case, the rule at issue in APWU was not subjected

to notice and comment rulemaking, and did not “fill in the gaps” because

Congress had set out a detailed formula on the matter at issue rather than

In any event, even if there were a sound legal basis for the

Second Circuit's conclusion that the agency's “self-con-

scious” labeling of the rule should be given effect, which

there is not, the Second Circuit was simply wrong as a matter

of fact in concluding that the agency did not issue the rule

pursuant to the statutory authority it was expressly given by

Congress to implement the companionship services exemp-

tion of the Act. As set forth in the Petition, at pages 17 to 21

& footnote 10, the agency has repeatedly and expressly main-

tained that it exercised its statutory authority in promulgating

§ 552.10%a).

The Second Circuit likewise offered no sound authority for

its conclusion that Mead deference is inappropriate when

notice and comment rulemaking is undertaken voluntarily,

citing only a law review article that described the question as

expressly leaving the matter to agency rulemaking. See APWU, 707 F.2d

at 559. Moreover, in APWU, the agency conceded it was not acting

pursuant to statutory authority and was merely implementing a prior

interpretation by the Comptroller General. Here, by contrast, the agency

has expressly asserted that the rule “serves to ‘define and delimit’ the

terms of the ‘companionship services’ exception under Congress’ express

delegation of authority,” and provided full notice and comment. See Cert.

Pet. App. at 66a. Moreover, even the case cited by the Second Circuit

noted that “an agency's characterization of its own action is not

conclusive,” APWU, 707 F.2d at 559; yet as noted above, the Second

Circuit relied on nothing else for its conclusion that the rule was

interpretive and did not require notice and comment. The Second Circuit's

reliance on the APWU case for this point is also inconsistent with later

federal appellate precedent. See, e.g., Pharmaceutical Research & Manu-

facturers of Am. v. Thompson, (“PRMA”), 362 F.3d 817, 822 (D.C. Cir.

2004) (“Through this ‘express delegation of specific interpretive au-

thority,’ Mead, 533 U.S. at 229, the Congress manifested its intent that the

Secretary's determinations, based on interpretation of the relevant statu-

tory provisions, should have the force of law. The Secretary's interpret-

tations of the Medicaid Act are therefore entitled to Chevron deference.”’)

“within an area of uncertainty.” Cert. Pet. App. at 25a & n.6.”

Mead distinguished agency interpretations that result from

considered determinations based on formal procedures, aid

that are intended to have precedential effect, from ad hoc

determinations using informal procedures. See, e.¢., PRMA,

362 F.3d at 822 n.5 (distinguishing the 10,000 to 15,000 ad

hoc decisions per year, from 49 different offices, at issue in

Mead from a uniform policy adopted through statutory

interpretation that was entitled to Chevron deference). Mead

does not suggest that the agency's use of formal precedures

should be discounted merely because they are undertaken

voluntarily.

The goal of the APA’s notice and comment procedures is

to “increase public participation and fairness in agency

decisionmaking and to establish a mechanism by which an

agency can improve its own information base.” National

Family Planning and Reproductive Health Ass'n, Inc. v.

Sullivan 979 F.2d 227, 240 (D.C. Cir. 1992). That goal was

met in this case when the agency, expressly charged by

statute to define and delimit the scope of the domestic com-

panionship exemption, increased public participation and

improved its own information base through notice and com-

ment rulemaking proceedings. The agency received sub-

stantial information as to the harms that would result if the

exemption were applied to companionship services, and took

this into account in its final rule. The resulting rule is fully

deserving of Chevron deference under Mead.

Finally, the Second Circuit's suggestion that the agency's

notice and comment procedures here were “idiosyncratic”

and “insufficient” because the agency changed its mind

” Indeed, the court cited, but chose not to follow, another law review

article concluding that an agency's use of notice and comment rulemaking

procedures should offer it a “safe harbor” entitlement to Chevron de-

ference under Mead.

during rulemaking is simply perverse. See Cert. Pet. App. at

24a. The point of public notice and comment procedures is

that the agency can and should take the information it gains

into account in a meanmgful way. Rulemaking procedures

would be empty exercises if an agency were not allowed to

change its mind. As set out in the Petition, at page 20,

footnote 11, as long as the agency identifies the matters at

issue in its notice of rulemaking, which it indisputably did

here, it is not required to set off a new round of rulemaking

because it reaches a different result in the final rule from that

it proposed. The notice of proposed rulemaking identifies the

issues to be discussed; it does not compel a specific result.

In sum, the Second Circuit's analysis of the deference issue

went seriously awry. Not only did it misapply Chevron and

Mead, it ignored the substantial deference the agency’s rule

was due even under Skidmore, given that it had been in place

without change for thirty years, and had been left undisturbed

seven times by Congress. See Alaska Department of Environ-

mental Conservation, 540 U.S. at 492-93 (affirming agency

interpretation of “longstanding duration” under Skidmore

because it was a “rational interpretation” of the statute.) The

requirement of substantial deference to long-standing agency

interpretations would be rendered meaningless if courts

could, as occurred here, reject agency interpretations fully

consistent with the statutory language by substituting their

own views as to which Congressional purpose is most

“plausible.”

Unless corrected by this Court, the Second Circuit's

erroneous deference analysis will apply to all APA cases in

that circuit, and retain the potential to confuse courts in other

circuits as well. The Petition thus raises an important question

with respect to judicial review of the administrative con-

struction of statutes generally, as well as presenting a matter

of great importance to the many parties that have relied on the

specific agency rule that the Second Circuit improperly

invalidated.

Il. THE SECOND CIRCUIT’S DECISION WILL

CAUSE A MASSIVE DISRUPTION TO THE

PROVISION OF AFFORDABLE HOME CARE

SERVICES IN NEW YORK STATE.

The agency issued 29 C.F.R. § 552.109(a) based on an

extensive rulemaking record compiled in 1974 and 1975, see

40 Fed. Reg. 7404 (February 20, 1975), and reaffirmed it

after taking extensive comments on a proposed amendment to

the rule in 2001. See 67 Fed. Reg. 16,668 (April 8, 2002)

(withdrawing proposed amendment). The rulemaking records

contained substantial evidence of the harms that would ensue

if the statutory exemption were construed to exclude pro-

viders of companionship services employed by third parties,

and the agency noted that including such employees in the

exemption was fully consistent with the statutory language.

ld.

The court of appeals’ decision, by contrast, was made on

the basis of virtually no record, and does not discuss or even

acknowledge the adverse effects of its ruling on providers and

recipients of companionship services. Instead, its ruling was

made on the basis of the pleadings alone, which as the

District Court recognized, “provide little factual background.”

Cert. Pet. App. at 37a. As noted in the Petition, at pages 13,

23-26, the Second Circuit thus reached its ruling without

considering numerous facts relevant to the regulation’s

“power to persuade” under Skidmore." Moreover, when a

’ Respondent opposed Petitioner's motion for judgment on the plead-

ings before the district court, but did not, at least as far as the district court

opinion discloses, itself move for judgment on the pleadings or for sum-

mary judgment. Thus, at no point in the proceedings was Petitioner on

notice that it had to advance all factual arguments in support of the

regulation or face entry of judgment against it.

wide spectrum of governmental, nonprofit, and for-profit

providers, including HCA, the City of New York, the Home

Care Counsel of New York City, Inc.. the National As-

sociation for Home Care & Hospice, Inc., the New York State

Association of Health Care Providers, Inc., and the Con-

tinuing Care Leadership Coalition, learned of the Second

Circuit's decision, and moved to file amicus briefs in support

of the Petition for Rehearing setting out the numerous dele-

terious consequences of that decision, their motions were

denied without explanation."

As HCA and other entities attempted to set out in their

amicus briefs in support of rehearing, and did set out in the

declarations and other material supporting Petitioner's motion

for stay of the mandate (which was granted), the Second

Circuit's decision will decrease the availability of high

quality home companionship services. For example, HCA

President Carol Rodat has averred that “the effect of the

Panel's decision would be to burden third-party employers

providing home companionship services, to the extent that

they will be unable to continue providing quality, afford-

able companionship services to elderly and infirm patients

throughout New York State.” Declaration of Carol Rodat ¢ 3,

Cert. Pet. App. at 101a.

As noted in Ms. Rodat’s declaration, the HCA’s provider

members already face severely constrained budgets due to

their reliance on government reinioursement, predominantly

through Medicaid, which is calculated on historical rather

than current health care costs, and to overall deceases in

government spending over the last decade. /d. ¥¢ 4-6, Cert.

See Court of Appeals Docket No. 03-7666-cv, Orders of January 10,

2005, noting denials “endorsed on motion.” Plaintiff brought this action

as a “test case” against a small provider with limited resources, and HCA

and other entities severely affected by the court of appeals’ decision were

unaware of the appeal until after the panel's decision issued.

Pet. App. at 10la-102a.'" Providers’ inability to fund in-

creased overtime will require them to staff cases on shorter

shifts, using a limited pool of workers willing to work those

shifts. This will likely lead to gaps in coverage and hurt

continuity of care as patients must contend with increased

turnover in caregivers. /d. 9§ 7-8, Cert. Pet. App. at 103a.

Patients suffering from Alzheimer’s Disease and other forms

of dementia generally receive full time care, and benefit

particularly from close interaction with familiar caregivers.

Increased turnover among health care workers also increases

the burdei on skilled nurses required to supervise each work-

er serving a client, further taxing the resources of provider

agencies.

Ms. Rodat’s declaration also notes that “[mJany patients

may be forced into nursing homes if home care providers can

no longer assure adequate and safe services.” /d. § 8, Cert.

Pet. App. at 103a. Such a result is directly contrary to Con-

gress’ intent in exempting companionship services from the

minimum wage and overtime requirements of the Act. As

noted by the Ninth Circuit in McCune v. Oregon Senior

Services Division, 894 F.2d 1107, 1110 (9th Cir. 1990),

there are also sound policy reasons for applying the

exemption to companions as defined by the Secretary.

We are informed that these critical services reach more

elderly or infirm individuals than they otherwise would

precisely because the care-providers are exempt from

the FLSA. We also note that many private individuals,

who do not benefit from federal and state assistance,

may also be forced to forego the option of receiving

these services in their homes if the cost of the services

increases. The only alternative for these individuals may

be institutionalization.

'? HCA has lobbied the State for increased funding to pay increased

salaries for home care workers. See S. Greenhouse, For Home Care

Workers, A Fight for Pay, and Respect, N.Y. Times, May 28, 2002, at BS.

The companionship exemption protects those who are dis-

abled or chronically or acutely ill, as they can retain service

for the hours needed with little, if any, disruption.

Recent developments further increase the pressures created

by the Second Circuit's decision. This month, New York

State implemented a requirement that all unlicensed per-

sonnel who have direct contact with patients in home care

(and nursing homes) must be fingerprinted for a criminal

history record check. See 10 N.Y.C.R.R. § 400.23. The new

regulations also forbid the operator of a home care agency

from hiring or using employees who have been convicted of

certain crimes within the ten years prior to April 1, 2005.

Employers may hire workers on a provisional basis while

awaiting these background checks, but if they do so, the

workers must be subject to random direct observation every

week.

These requirements add new costs on providers and will

exacerbate the shortage of home care workers, as the process

is likely to take anywhere from 35 to 120 days or longer.

Attrition will also increase as fewer home health care workers

are given the opportunity to earn overtime. See Rodat Decl.

4 9, Cert. Pet. App. at 103a (“Limiting their hours will

result in reduced wages as well as loss of benefits in certain

situations, likely causing employee attrition and thus height-

ening the staffing shortage that already exists.”’)

The Second Circuit’s decision will also harm those re-

cipients of home companion services, and their families, who

need those services provided in their homes, but who are

unable or unwilling to act as the direct employer of the ser-

vice provider. See Letter from Sen. Christopher S. Bond to

Mr. Thomas M. Markey, dated July 26, 2001, Cert. Pet. App.

at 120a-121a (“Many elderly do not care to be in this role,

preferring the simplicity and reliability of using a third party

who is in the business of supplying home care personnel. The

reason for the proliferation of these companies is the sim-

plicity and reliability of service provided by them.”). Many

individuals are not physically or mentally able to engage in

all the activities required to employ individuals directly to

provide companionship services, including finding caregiv-

ers, confirming their qualifications and suitability, arranging

to pay their wages and benefits, handling the required tax and

other regulatory paperwork, and making sure that shifts are

covered when the companion is sick or otherwise unavailable.

Yet, under the Second Circuit’s ruling, if those persons use a

third party to handle these tasks they are now subject to

dramatically increased costs through the application of fed-

eral wage and overtime laws. The agency has determined in

the course of two extended rulemakings concerning 29 C.F.R.

552.109(a) that neither the statute nor sound policy require

such a result.

In sum, the Second Circuit’s ruling will create a massive

and wholly unnecessary disruption to the system through

which New York has provided important home care services

for decades. In reliance on the agency’s long-standing exemp-

tion of home companionship services from the Act, whether

or not those services are provided by third party employers,

and on Congress’ long-standing refusal to upset this rule,

New York has developed an effective network through which

county social service agencies administer and supervise

government-funded personal care programs, and under which

Medicaid home care recipients are, with limited exceptions,

receiving service from aides employed by home care

providers licensed by the State of New York.'* By reviewing

and overturning the Second Circuit's erroneous ruling in-

validating the rule, this Court would prevent significant

- disruptions to this system.

'* See Michael S. Sparer, Medicaid and the Limits of State Health

Reform 110-111 (1996)(describing New York City’s efforts to channel

government—funded home care services through third-party agencies).

CONCLUSION

Amicus respectfully submits that petition for a writ of

certiorari should be granted.

Respectfully submitted,