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Case number 15-5018, Home Care Association of America at Elle v. David Will, sued in his official capacity, Administrator, Wage Hour Division at Elle Appellants.

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Ms.

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Klein for the Appellants, Mr. Baskin for the Appellate.

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Good morning.

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Good morning.

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May it please the Court, Elisa Klein for the United States.

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As the Court is aware, the plaintiffs challenge two regulations.

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that implement the 1974 amendments to the Fair Labor Standards Act.

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In relevant part, those amendments extended FLSA coverage to domestic service employees generally, but accepted certain categories of workers, including companionship workers and live-in domestic service employees.

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The district court declared that the regulations are contrary to the plain text of the statute and invalidated the regulations at Chevron step one.

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Those rulings rest on a fundamental misunderstanding of the Supreme Court's decision in Koch.

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In Koch, the Supreme Court specifically addressed the question of third party employment and

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It concluded that the text of the companionship services exception does not decide how to treat workers who are paid by third parties, such as the businesses that plaintiffs represent.

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Instead, the Supreme Court determined that there are a set of complex questions about whether the exception should cover all of those workers paid by third parties, some of them or none of them, and the court said,

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This is an interstitial matter.

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It's a matter in which the Department of Labor has subject matter expertise and can decide in consultation with the affected parties.

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And the court concluded it's therefore reasonable to infer, and we do infer, that Congress delegated authority to answer these questions to the Department of Labor through rulemaking.

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So did, in Coke, did the court have before it any aspect of the live-in part of the statute and regulations?

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No, no.

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And I will separately address live-in.

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Relevant language is the same or almost identical.

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If you look at the first page of the Koch opinion, the language of the companionship services exception, it's quoted to the first sentence of the Koch opinion.

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Any employee employed in domestic service employment.

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And so the parallel language in the live-in exception is any employee employed in domestic service, the same.

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And that was the phrase that was the subject of the briefing in the Supreme Court.

[00:02:50] Speaker 07:
Well, except that the living statute doesn't have the grant of authority for definition and delimitation.

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Your Honor is correct.

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So just two separate points.

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So the question before the Supreme Court in Koch was, does that phrase, any employee employed in domestic service employment, answer the issue of how do you treat

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workers employed by third parties like the plaintiff businesses and the Supreme Court decided it doesn't answer that question and nor does the legislative history answer the question and the Supreme Court in saying that the authority rests with the Department of Labor to answer that question

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not only cited the Define and Delimit language, but also relied on the general grant of rulemaking authority in the 1974 amendments, which is the typical language that vests an agency with legislative rulemaking authority.

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And that grant of authority applies equally to the right.

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What was the record that Department of Labor had before it when it made this, when it said that even live-ins are now going to get the benefit of minimum wage and overtime?

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So this is in the current regulations?

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Yes, yes, yeah.

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Well, so first there's just the statutory question that the authority is the same.

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And then the department reviewed the comments, and there were not a lot of comments about live-in, but to the extent there were comments, they did not provide any basis for carving out and treating differently live-in domestic service employees, because generally the comments reflected a misunderstanding of just the ordinary background rules.

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for how you would compensate live-in domestic service employees.

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There was a suggestion, you know, that they may be sleeping through the night, and the answer is yes.

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And if that's true, that's not hours worked.

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There can be voluntary agreements that exclude those hours.

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There was a suggestion.

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Are there live-in domestic employees who are not hired by third parties?

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I mean, who are non-vocational?

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Probably yes, but the industry, there was a request for data, and the industry did not supply data that focused on live-in domestic service employees.

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And again, as I said, there were relatively few comments on live-in domestic service employees, and to the extent there were comments, they both misunderstood the meaning of live-in, the industry comments,

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tended to equate live-in with a 24-hour shift.

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That's not correct, and this is under long-standing principles.

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And then also misunderstood that they already can take a credit for room and board.

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That can count towards wages.

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So essentially, what was in there provided no basis to differentiate the live-in workers.

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On the authority question, just back on the authority picture one second.

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I guess one way to read Coke is to say that it deals solely with the companionship services aspect of the statute and regulations.

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And it does, when it talks about authority, the first thing it cites understandably is the companionship services provision itself.

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And then it says, C, the background grant of authority.

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So insofar as one were to think that what the court is saying is the relevant grant of authority comes from the statutory language that grants to the secretary the authority to define and to limit.

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And then that authority is reinforced by the background statutory authority, but it's a reinforcement rather than an affirmative and independently sufficient grant of authority.

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Then there would be an open question as to the

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So here's why that's mistaken.

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The FLSA has a long list of exceptions.

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Only two, I believe, companionship services and the exception that the Supreme Court addressed an hour for administrative, executive, professional.

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use that term, the define and delimit language.

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However, it's always been understood that the Department of Labor has general legislative rulemaking authority to fill any gaps left in those provisions.

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It's exercised it specifically with respect to live-in domestic service employees, but also, you know, that long list of exceptions.

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So is that define and delimit language just redundant then?

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I don't know the answer.

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My best inference is that Congress used it to signal that this wasn't a term of art that Congress was intending to define.

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Companionship services didn't have a predefined meaning, and that instead, just to indicate, this was a term for the Department of Labor to define and delimit.

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But it sounds like your argument not only would raise a question about what work define and delimit was doing, but also what work

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the other provision that gives authority to implement the 1974 amendments we're doing because it sounds like you're talking about the labor labor's authority to implement independent of the 74 amendments even so is there some that that prescribed well now just talking about the 1974

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Act itself gave labor authority to prescribe all necessary regulations to implement the amendments in 1974.

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There's also, of course, there's general rulemaking authority from 1938, 1966, et cetera.

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So Congress, at the very time that it adopted the live-in as well as the companionship services exceptions, generally gave the Department of Labor authority to prescribe all rules and regulations as necessary to implement those amendments.

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And so the fact that the Supreme Court, looking at what is essentially identical language, said this text doesn't decide the question of third party employment for companions, it follows.

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It wasn't specifically said by the Supreme Court, but it follows.

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directly that the exception for live-in domestic service employees, that text doesn't answer the question.

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Do we know why Congress specifically accorded authority for defining the limit of respect to companionship services, but then one might say conspicuously left that authority out with respect to other statutes?

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This was the issue I was saying.

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I don't know the answer.

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But the one thing is it's conspicuous that only two of the very long list of exceptions use that define and delimit.

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And no one has ever thought that means the department lacks ordinary legislative rulemaking authority with respect to firefighters and all of the other exceptions that are the subject of many.

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That may be.

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But I mean, there are certain canons of construction.

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And that's one that Congress has specifically used the phrase define and delimit for only two of the instances and hasn't elsewhere.

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Maybe it hasn't been challenged before, but can there be some justification?

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Well, again, let's go back to Koch itself.

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The briefing in Koch, the petitioner itself stressed that this authority to prescribe all rules and regulations, the general authority, would be an independent and sufficient ground for the Department of Labor to issue a third-party employment regulation.

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The government emphasized that general rulemaking authority.

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The Supreme Court quoted that general rulemaking authority.

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I, you know, it would be a mistake to read into what's just an image site that essentially that the prescribed and, you know, all necessary rules is superfluous and unnecessary.

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This is the basic grant of rulemaking authority.

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It was the same language that was at issue in Brand Act two years earlier.

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This is a very familiar grant of authority.

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And as I recall, Koch didn't make this distinction, though, did it?

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I mean, Koch didn't

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It turned on the Define and Delimit language, didn't it?

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No, not at all.

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Coke quoted the exact age.

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165, I think.

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Yes, thank you.

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So after saying the FLSA explicitly leads gaps, which is obviously the first important point,

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It says it provides the department with the power to fill these gaps through rules and regulations.

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So there's an image site that is citing back to the companionship services provision, both to the gaps and perhaps implicitly to the defined and delimit language.

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But then it also specifically cites the 1974 Amendment, Section 29B, and it says authorizing the Secretary of Labor

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to prescribe necessary rules, regulations, and orders with regard to the amendments made by this act.

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And given the emphasis that the government and the petitioner placed on that provision, which made sense because the Second Circuit, the judgment that was reversed, had not acknowledged that separate grant of authority and it had significance to the way the Second Circuit analyzed the issue.

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I mean, this was not an oversight.

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This was a significant point both for the government and emphasized by the petitioner and then emphasized by the Supreme Court in its decision.

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And if we were on the live in question, satisfied with your textual arguments and looking at this under Chevron step two, the record seems

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clearer and more substantial on the companionship services logic.

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Why would the department treat companionship services differently when the companion is hired by a third-party employer than when the companion is hired directly by the person receiving care?

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It's a little bit less clear just in terms of the justifications in the rulemaking.

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Why the third party, first party distinction for live-in?

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And I understand there's a statutory exception and honor that, but what's the principal logic there?

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Yeah, I'm glad the court asked.

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So again, stepping back to just the overarching justification, because it applies equally to businesses that have a workforce that would include live-in domestic service employees that they're assigning to particular homes.

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So if you go back to the 1974 amendments, so the two committee reports, which are the most relevant history, and you just read the four or five pages about domestic service employees.

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So when Congress was extending these protections to domestic service employees generally, what it said was there's a shortage of domestic service employees notwithstanding what was otherwise high unemployment.

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This is problematic.

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extending the FLSA's protections to this large category of workers not only would help the workers themselves, which was obviously extremely important, but also would create a supply of skilled available workers who could fill this need.

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And then when they got to the exceptions, they said, essentially, don't worry.

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The exceptions are not intended to cover people for whom domestic service is a vocation.

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These aren't the breadwinners.

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This isn't their means of supporting their family.

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So they don't implicate the principal concern.

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Right.

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I understand that.

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And that's helpful to point us back to the overarching purpose.

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But the rule that was the new rule regarding live-ins

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doesn't really track that logic.

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It's more formal, third party employed.

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versus direct employed.

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Many direct employed live-in caregivers are presumably full-time professional people.

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Many of them, I would imagine, aren't.

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Someone's second cousin coming to town, elderly aunt has onset of dementia, will you live with her while you're in graduate school, and whatever.

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So that's more like the analog to your model in the companionship care regulation.

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It's you haven't read it that narrowly in or given that kind of a justification as far as I read it living

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I think I disagree.

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I mean, again, the third party employment regulation, the analysis is the same.

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These are people, it's their vocation.

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This is, and there wasn't a contrary claim made by the industry in any of its comments to the Department of Labor on the proposed rule.

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And so you are talking about now, by definition, the type of people whom we want to attract and have a skilled workforce to increase

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the availability of these services and the quality of care.

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And yes, there may well be some live-in workers who could be a college student who is earning some extra money and is directly hired by the family or just some other informal arrangement.

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Sometimes it's a family member.

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they're not working for these businesses, and so then there's just the separate question of are they providing companionship services.

[00:15:14] Speaker 01:
But if you're... Well, I wasn't talking about companionship services, I was talking about the live-in on its own.

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Right, okay, yes, of course.

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So then, so if they're just, if they are hired directly by the family, if it's, you know, I found a college student to live here and help, or, you know, a paid family member or anything like that,

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then that's not a third party employment situation.

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Right.

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Right.

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Right.

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And so it's not covered.

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So the new rule doesn't change anything.

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The new rule about third party employers... Right.

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But the new rule is drawing a line and the question is the logic of the line.

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And so what you're comparing is what's inside and outside.

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What's getting coverage and what's not.

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I believe it is actually parallel.

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So if you have a neighbor and you just arranged for the neighbor to come sit with your older parent, then as long as it's companionship services, the person is accepted.

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And if you find a college student to come live in your home and assist with whatever domestic service chores, then that person is also a person.

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Right, but so too if you have a highly professionalized placement service.

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not an employer, but a placement service that finds you someone who is a highly professionalized, live-in domestic, that person is also going to be under the exemption in kind of a distinction to the person who's employed by the third party employer, right?

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No, no.

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The third party employment regulation, just like the proposal in 2001, if you have plaintiff's businesses, it doesn't matter whether they're placing a companion or whether they're placing

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a live-in-mate.

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They cannot avail themselves of the exemptions.

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Right.

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But I'm saying someone who is not an employer, who's just a finding service, and is going to find you someone and you're going to employ them.

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I'm just saying that you're going to have in the live-in situation also people who are as highly professional and who are doing it as their full-time job, just as much

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as you are with the third party.

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So I'm exploring the logic of the distinction.

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I understand that it may be that there are individuals who, under the logic of the rulemaking, perhaps should also be covered but aren't covered.

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However, at least in terms of the data and the record, which, as I said, are largely about the home care workers generally, and the industry did not parse out

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their own workers who are live-in workers and nor did anyone else but just in general we have the opposite universe from what we had in 1974 and 1975 as you know the reports to Congress that were cited in the co-briefing explains back at that time again this was

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just about domestic service employees generally.

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The vast majority of domestic service employees generally were hired directly by the household.

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And only 2% were hired through a business like the ones that are the plaintiffs here.

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And the petitioners themselves said it's a fair inference that the same was true of companions.

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They had no reason to address living workers, but there was nothing to suggest any difference.

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And so what's happened now is over the course of many decades,

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you had added on to whatever was happening then, this huge industry in which businesses have workforces, these are all professional employees, and they're assigned to particular homes.

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And it might be, just for a shift, it might be on a live-in basis, but this didn't exist at the time.

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So when Congress said, don't worry, the accepted categories are not going to include workers who have domestic service as their vocation, we know that's not true today for all of these, for this whole workforce that is employed by the businesses the planet's representing.

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So by the way, do we know why the statute with respect to live-ins

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a forged relief only from overtime, but with respect to companion services, a forged relief from both overtime and minimum wage?

[00:19:21] Speaker 02:
There's almost no discussion.

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I mean, there's one line in the committee reports that's like, you know, this may avoid complications in the application of the law.

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We couldn't find anything.

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I did ask the client.

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So there was really, I don't have anything that could explain why there's that particular treatment.

[00:19:40] Speaker 05:
Okay, great.

[00:19:40] Speaker 05:
Thanks very much.

[00:19:40] Speaker 05:
We'll give you back a couple minutes for rebuttal.

[00:19:45] Speaker 05:
Mr. Baskin, good morning.

[00:19:55] Speaker 04:
Good morning, may it please the court.

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Maurice Baskin for the appellees representing the home care industry.

[00:20:00] Speaker 04:
And we appreciate the court's concern about the live-in issue, which is frankly unexplained in the record or in the statute, but certainly unexplained why the department tossed it in and tossed aside third-party employers excluding them from it, when most of the states, even those states that have adopted some form of exemption,

[00:20:20] Speaker 04:
have exempted the live-in employees from the any third party exclusion.

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But before one reaches this issue on either third party or companionship, we really ask the court to address and consider what the district court found, which is that the method

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that the department adopted is in clear violation of the plain language.

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It's a method that in the broader context of the FLSA has never been tried before.

[00:20:47] Speaker 01:
Mr. Baskin, just let me ask you while I'm thinking about it.

[00:20:50] Speaker 01:
Do your members employ, is there anything in the record that shows

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that your members do employ live-in?

[00:20:54] Speaker 04:
Yes, they do.

[00:20:56] Speaker 04:
In terms of card numbers, there's really nothing in the record about the specific percentages.

[00:21:02] Speaker 04:
We know that more than 90% of the caregivers as a whole are employed by third-party employers.

[00:21:11] Speaker 04:
There's not an explicit division between companionship types and live-in types with regard to that.

[00:21:18] Speaker 06:
So yeah, I want to hear your Chevron step one argument.

[00:21:22] Speaker 04:
Absolutely.

[00:21:23] Speaker 06:
Because this is particularly in light of the statutory language of delimit and define, right?

[00:21:28] Speaker 06:
And more importantly, in light of the Supreme Court decision in Koch, which the district court

[00:21:33] Speaker 06:
Do you thoroughly address that out there?

[00:21:35] Speaker 04:
Well, one has to understand that our argument is different fundamentally from what was brought up in code because the department has done something fundamentally different.

[00:21:46] Speaker 04:
It did not attempt even to define or delimit any term in that exemption statute.

[00:21:52] Speaker 04:
they did not define or delimit employees.

[00:21:55] Speaker 04:
So I think they did it this way to try to avoid the problem of the word any employees.

[00:22:00] Speaker 04:
So they said, we have an idea.

[00:22:02] Speaker 04:
We'll go after the employers who are not referenced in that statute.

[00:22:06] Speaker 01:
That's not that convincing, given that Koch already dealt with any employees and said it isn't an obstacle in the way that you're positing they may have perceived it to be an obstacle before Koch.

[00:22:16] Speaker 01:
When they're writing this regulation, they didn't need to worry about that.

[00:22:18] Speaker 01:
And it seems a little

[00:22:19] Speaker 01:
semantic, to say, well, it wasn't framed in terms of definitional.

[00:22:23] Speaker 01:
It is giving meaning to the scope of the exemption.

[00:22:28] Speaker 04:
But in the broader context of the FLSA, if the department takes unto itself the authority, never before expected, not just talking about this provision, anywhere in the Act, to say that certain groups of employers cannot avail themselves of exemptions that Congress has created,

[00:22:45] Speaker 04:
It's in total contradiction to the language of the beginning of 213, which says that 207, the only place for the obligation to pay overtime, simply does not apply if the employees fit within the definition.

[00:22:59] Speaker 04:
So the department is charged with regulating and defining, delimiting employees.

[00:23:05] Speaker 04:
It is not entitled, if that definition stays as it is,

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of employees.

[00:23:09] Speaker 04:
It's not entitled to deny employers access.

[00:23:13] Speaker 07:
So what if the regulation said, with regard to employees of the following employers, and then it says these employers can't avail themselves of the exemption, then the regulation would be making an explicit tie between the employers and the employees.

[00:23:27] Speaker 04:
If it had done that, we could be having a different case, although even in that situation, they're saying employers.

[00:23:33] Speaker 04:
But let me pause close to you.

[00:23:35] Speaker 07:
Well, so did the initial regulation also refer to employers?

[00:23:38] Speaker 07:
The one that fenced in?

[00:23:39] Speaker 04:
No.

[00:23:40] Speaker 04:
If you look at it, it described the employees.

[00:23:42] Speaker 04:
It said employees of the employers.

[00:23:44] Speaker 04:
But it referred to employers.

[00:23:45] Speaker 04:
Exactly.

[00:23:45] Speaker 04:
Employees of the employers will be covered by the exemption.

[00:23:49] Speaker 04:
They have not simply flipped it around here.

[00:23:52] Speaker 04:
They did something different.

[00:23:53] Speaker 07:
So I guess what I'm asking is, I think what I was trying to posit was the flip, which is that they make an explicit link between employers who are explicitly referenced and the employees of those employers who are implicitly referenced.

[00:24:05] Speaker 04:
That would be a closer case.

[00:24:06] Speaker 04:
We're not at that.

[00:24:09] Speaker 04:
Because in this case, they do not redefine employees.

[00:24:12] Speaker 04:
They say employers, and that's all that the section says,

[00:24:16] Speaker 06:
employers talking about employees of third-party employers and not talking about just the employer itself.

[00:24:22] Speaker 04:
Well, that's the whole point.

[00:24:24] Speaker 04:
Let me posit to you this way.

[00:24:25] Speaker 04:
If they had said, we are going to change this definition because we think Congress was flat wrong.

[00:24:31] Speaker 04:
We are doing it in defiance of Congress.

[00:24:33] Speaker 01:
But what if they say, I mean, I think that it feels a little semantic, your point, because it seems like you could easily have framed the same regulation and said, employee in the context of this exemption means an employee that's directly employed by the household.

[00:24:52] Speaker 01:
Same result, right?

[00:24:53] Speaker 04:
One has to ask why they didn't do it that way.

[00:24:55] Speaker 01:
And in my... Because it's common parlance under the Fair Labor Standards Act to talk about employers unfailing themselves of this and that.

[00:25:02] Speaker 01:
Not tip exemptions, for example.

[00:25:05] Speaker 04:
Well, and I guess I'd make this point strongly enough in the Greece.

[00:25:09] Speaker 04:
It has never been done under the FLSA.

[00:25:12] Speaker 04:
They have never used this language before.

[00:25:14] Speaker 07:
Well, can I ask this question?

[00:25:15] Speaker 07:
So that argument,

[00:25:17] Speaker 07:
Even if we think that there's a meaningful difference between employers and employees of employers, that rests on the define and delimit authority granted in the statute.

[00:25:31] Speaker 07:
And part of the argument here is that it's not just the define and delimit authority, there's a background authority to implement the amendments.

[00:25:38] Speaker 07:
And if you have a background authority to implement the amendments and you think that that was doing work in Coke, then I don't know that you have such a strong argument about employees versus employers because at that point you're not talking about defining a term.

[00:25:50] Speaker 04:
Well, there you turn to the Colorado River case, which makes clear, in this court's case, it says that you can't, the general rulemaking authority does not relieve the department of the obligation to do it by the means that Congress set forth.

[00:26:04] Speaker 04:
Congress set forth the means, define and delimit employees and other terms in that section of the statute.

[00:26:10] Speaker 04:
Congress did not give the department the authority to deny categories of employers access.

[00:26:15] Speaker 07:
No, but I'm saying that we're not talking about the define and delimit authority anymore.

[00:26:18] Speaker 04:
Or the general rulemaking.

[00:26:19] Speaker 04:
Colorado actually dealt with specifically the morning type argument of that case, saying, well, they have the general rulemaking authority.

[00:26:28] Speaker 04:
And this court, not only in that case, but in the National Association of Manufacturers case against the NLRB a couple of years ago, said general rulemaking authority, that's not enough if it's going outside the means and methods and the specific goals that Congress set forth.

[00:26:43] Speaker 04:
And that takes us back to something else that Koch did that the department has seemingly ignored.

[00:26:50] Speaker 04:
Koch foreclosed the legislative intent argument.

[00:26:54] Speaker 04:
That's part of the holding.

[00:26:55] Speaker 04:
They said, we're not convinced by these claims that Congress did not intend to include third party employers.

[00:27:01] Speaker 04:
But the rule itself, on no less than 30 occasions, says that the reason for this rule is because the department has decided that, notwithstanding what the Supreme Court said, Congress did not intend

[00:27:13] Speaker 04:
to allow third-party employers to have access to this extension.

[00:27:17] Speaker 01:
That takes it, first of all, that part is foreclosed by code, and it also makes it... I think they're looking at it, well, they could be taken to be looking at it at a level, one higher level of generality.

[00:27:30] Speaker 01:
The Congress didn't have an intention in particular about third party employers versus direct household employment, but it did quite clearly have an intention about professionalism versus more casual workers.

[00:27:46] Speaker 01:
delegation, the work the delegation is doing together with the change circumstances that the department perceives out in the working world is to say, if professionalism is Congress's goal, we the department have it wrong in the 1975 regulation.

[00:28:02] Speaker 01:
We need to capture more of the people that Congress was aiming at to get these protections through the new rulemaking.

[00:28:08] Speaker 04:
Your Honor, it's a charitable reading of what they wish they had said, but I regret, respectfully, they did not say it that way.

[00:28:15] Speaker 04:
Time after time, and one can simply do a word search, so I can go over the number 30, think of the word congressional intent, and just by one example, we are doing this, and this is on page 60455,

[00:28:28] Speaker 04:
We are doing this to give effect to Congress's intent in 1974 to expand coverage to domestic service employees rather than to restrict coverage for a category of workers already covered.

[00:28:39] Speaker 04:
That is exactly the language that the cohort said was not an expression of, was not what Congress intended.

[00:28:47] Speaker 04:
And when the department has acted based on a misunderstanding of congressional intent, you get into the arbitrary and capricious aspect of this case.

[00:28:56] Speaker 04:
They are relying on a factor that Congress did not intend them to rely on.

[00:29:02] Speaker 04:
That's an alternative reason why this rule cannot stand.

[00:29:06] Speaker 04:
It is based on a fundamentally false premise.

[00:29:10] Speaker 04:
They did not say, Koch left us a gap and Congress could have allowed us to go either way, so we'll go this way now.

[00:29:16] Speaker 04:
They said over and over again, we're doing this because, not just biographical or historical, they say they're doing it because Congress intended them to do it and intended to exclude the third party.

[00:29:29] Speaker 07:
You're talking about what happened in the 1970s.

[00:29:31] Speaker 04:
I'm talking about what the department has said in this ruling in referring back to the 19th century, which is the only legislative intent we've got, although it is supplemented by the congressional reenactment doctrine, which we cited numerous cases that the department failed to distinguish other than

[00:29:51] Speaker 04:
the dissenting opinion of another case, but the congressional reenactment doctrine indicates that it's further persuasive evidence of what the original intent was.

[00:30:01] Speaker 04:
And we have both active and inactive, we have enactment of new statutory exemptions,

[00:30:07] Speaker 04:
And we have rejection of specific attempts by the minority party to overrule Koch, which failed, never made it out of committee.

[00:30:17] Speaker 04:
But it's not just that rejection.

[00:30:19] Speaker 04:
It's the reenactment.

[00:30:20] Speaker 04:
It's the longstanding interpretation.

[00:30:22] Speaker 04:
It fits exactly within Bell Aerospace, the Auburn Medical, cases decided by this court.

[00:30:29] Speaker 04:
All the factors are together.

[00:30:30] Speaker 04:
And so it contradicts the congressional intent that the department relied on.

[00:30:36] Speaker 04:
And again, did not just casually mention.

[00:30:39] Speaker 01:
Yes?

[00:30:42] Speaker 01:
If your organization has standing to raise the interest of the CDAP providers, we have several amicus briefs talking about how this can interact with publicly funded care providers.

[00:30:58] Speaker 04:
Well, it goes to the arbitrary and capricious aspect.

[00:31:03] Speaker 01:
Do you, just the narrower question, do you

[00:31:07] Speaker 01:
Do your members provide caregivers under the CDAP programs?

[00:31:11] Speaker 04:
Yes, they can.

[00:31:13] Speaker 04:
And because it's consumer-directed programs, the consumer could direct to use a third-party employer.

[00:31:18] Speaker 04:
Sorry, misunderstood your question.

[00:31:20] Speaker 04:
No doubt about that.

[00:31:21] Speaker 04:
And in fact, it raises the whole issue, another aspect of the arbitrariness of this rule, the failure of the department to make sure there's funding in place for it.

[00:31:29] Speaker 04:
The Medicaid issue that the department said, and Senator Amica said, well, we don't have to consider that now.

[00:31:35] Speaker 04:
We don't have to solve that problem now.

[00:31:37] Speaker 04:
But that is what the consumers are relying on, many of them, for their lives.

[00:31:43] Speaker 04:
And without that funding, the states are strapped.

[00:31:46] Speaker 04:
They are not ready.

[00:31:48] Speaker 04:
There is chaos threatened in this industry.

[00:31:51] Speaker 01:
So if under CDAP, Medicare is the employer, you would also be a joint employer?

[00:31:56] Speaker 04:
There is a distinct possibility of joint employment status, not only by us, but by the state governments.

[00:32:01] Speaker 04:
They're worried about that.

[00:32:03] Speaker 04:
Again, it's sort of alluded to.

[00:32:05] Speaker 04:
The department says, well, it's a risk we'll take, easy for them to say.

[00:32:09] Speaker 04:
But they are required to address all aspects of the problem.

[00:32:12] Speaker 04:
That's another factor from the State Farm case that they have failed to address here.

[00:32:17] Speaker 04:
The bottom line is they would have you believe that Congress went to all the trouble

[00:32:21] Speaker 04:
to create this exemption in 1974, just so that the department could come back 40 years later and eradicate it, repeal it, and make no mistake, that's what they've done.

[00:32:35] Speaker 07:
If you look at that paragraph on pages 167 and 168 of the opinion in Koch, it looks like the Supreme Court contemplated, at least contemplated, exactly that result.

[00:32:43] Speaker 07:
Because it said it could be some, could be none, could be all.

[00:32:47] Speaker 04:
It certainly didn't say that we're not going to review it if it comes back to us in one of those extreme forms.

[00:32:53] Speaker 04:
Of course they'd review it.

[00:32:54] Speaker 04:
And that they would have to meet all the reasonable standards of arbitrary and capriciousness.

[00:32:59] Speaker 04:
And, of course, I'll reiterate that the court was not considering.

[00:33:03] Speaker 04:
They were considering a law that exempted people.

[00:33:07] Speaker 04:
And they said that rule, rather, was valid and binding.

[00:33:10] Speaker 04:
And that was the holding of the case.

[00:33:12] Speaker 04:
But they also indicated... They certainly went on and asked a series of other questions and left these openings for the department to drive a truck through.

[00:33:20] Speaker 04:
But it's not a highway that leads in a positive direction.

[00:33:26] Speaker 04:
for the entire industry and for the disabled and elderly people who are desperate need of these services.

[00:33:33] Speaker 04:
They've taken an industry that has been a great success story to achieve exactly what Congress wanted, which was to allow people to no longer re-institutionalize.

[00:33:41] Speaker 04:
and to come stay in their homes and get help.

[00:33:44] Speaker 04:
And now they are threatening to destroy it.

[00:33:47] Speaker 07:
Which is in the vein, I don't take those arguments lightly by any stretch, but that's in the vein of a step two argument, not a step one argument.

[00:33:54] Speaker 04:
Yes it is.

[00:33:55] Speaker 04:
Absolutely.

[00:33:56] Speaker 04:
But you don't have to reach step two, and you really should not reach step two, for multiple reasons.

[00:34:02] Speaker 04:
One is that the rule here is not the flip side.

[00:34:07] Speaker 04:
I just can't say that strongly enough.

[00:34:08] Speaker 04:
If one reads the overall context of the act,

[00:34:11] Speaker 04:
They live in issue, no justification at all, no defined and delimited language.

[00:34:17] Speaker 04:
You have congressional intent completely mischaracterized by the department in this brief and in the rule itself.

[00:34:25] Speaker 04:
and failure to address the very serious problems that are resulting from this rule.

[00:34:31] Speaker 04:
And we haven't even gotten into the definition.

[00:34:33] Speaker 04:
When I said all, when I said repeal and eradicate, 90% are third party employees.

[00:34:39] Speaker 04:
But whatever's left is wiped out by the reduction to 20% of the care provision.

[00:34:44] Speaker 01:
Do your client's members employ

[00:34:49] Speaker 01:
people who fit under the revised and narrowed companionship care definition?

[00:34:54] Speaker 04:
Oh, absolutely.

[00:34:55] Speaker 04:
That's why we go on to that.

[00:34:57] Speaker 01:
Who would continue to qualify for the exemption under the revised.

[00:35:02] Speaker 04:
Oh, no, the opposite.

[00:35:03] Speaker 04:
Sorry, misunderstood what you're asking.

[00:35:04] Speaker 01:
You're not really providing people who are mainly there for companionship and fellowship and protection and not for also care.

[00:35:13] Speaker 04:
The record, and I can't say never said never, there are thousands of employees and employers around the country, but the testimony of all of the plaintiffs and many others is that

[00:35:23] Speaker 04:
at care, the type of basic grooming and we're not talking about nursing care, we're talking about dressing the ADL and IADL.

[00:35:31] Speaker 04:
Day-to-day care, right.

[00:35:32] Speaker 04:
Correct.

[00:35:32] Speaker 04:
And that is what it consists of now.

[00:35:35] Speaker 01:
What is now in the 20% under the leadership regulation.

[00:35:38] Speaker 01:
Absolutely.

[00:35:39] Speaker 04:
You can't get that care.

[00:35:41] Speaker 04:
And that is what it consisted of then.

[00:35:42] Speaker 04:
I want to talk about some changes in the industries that really amounted to that there are more older people and more disabled people who are getting more quality home care.

[00:35:52] Speaker 04:
But in terms of the type of things that people are doing, these are not professionals.

[00:35:56] Speaker 04:
They are simply better trained and better certified.

[00:36:00] Speaker 04:
If they were professionals, they would be under a different exemption.

[00:36:03] Speaker 04:
They are doing basic room maintenance.

[00:36:05] Speaker 01:
Not professionals in that sense, but people who are working people for whom this is.

[00:36:11] Speaker 01:
their vocation and their career.

[00:36:13] Speaker 04:
Yes, but, you know, they refer to that, but there's nothing in the legislative history of the exemption that excludes, uses that term, vocation.

[00:36:21] Speaker 04:
It's only under the domestic services section, not under the companionship exemption.

[00:36:25] Speaker 04:
So it's another mischaracterization, I'm afraid, of what Congress intended.

[00:36:29] Speaker 04:
But we shouldn't even be talking about what Congress intended because the Supreme Court already settled that question.

[00:36:34] Speaker 04:
Congress did not intend to exclude third party inclusion.

[00:36:37] Speaker 01:
I think you're really mixing apples and oranges there, because the court is saying, can we rely on this congressional intent?

[00:36:47] Speaker 01:
for us, the court, to override what the agency with delegated authority is deeming to be, given the facts in the world, a carrying out of congressional intent.

[00:36:58] Speaker 01:
Whereas here, we're talking about the agency exercising its delegated authority.

[00:37:02] Speaker 01:
Those are very, very different questions.

[00:37:04] Speaker 01:
What level of clarity of congressional intent the court would require to override a regulation

[00:37:09] Speaker 01:
versus what level of congressional intention an agency would need to carry out the purposes of the Act.

[00:37:16] Speaker 01:
Those are really two different questions.

[00:37:17] Speaker 01:
They're not unrelated.

[00:37:18] Speaker 01:
I understand that.

[00:37:20] Speaker 04:
Well, but when, you're right that they're two different questions, but when the agency declares that they are acting because of a misguided notion of congressional intent that the Supreme Court said in, look, I'm looking at the paragraph, these on page, my page,

[00:37:36] Speaker 04:
It's the Supreme Court version 2347, where the respondent said what she was saying about the legislative intent.

[00:37:43] Speaker 04:
It's exactly the same thing that the department is saying here in the rule.

[00:37:47] Speaker 04:
And the department says because of that, which the Supreme Court found unconvincing.

[00:37:51] Speaker 04:
I'm sorry, I believe those are very relevant.

[00:37:53] Speaker 01:
The reason she's saying that is because we've read the congressional reports, and indeed it was Congress's intent.

[00:37:59] Speaker 01:
in the entire domestic service provision to give wage and hour protection to people who were doing this as their bread and butter in their full job.

[00:38:09] Speaker 04:
Except in the companionship exemption.

[00:38:13] Speaker 04:
They did not have that intent.

[00:38:15] Speaker 04:
And every court that's looked at it has said that they did not have that intent.

[00:38:19] Speaker 04:
And now the department is saying,

[00:38:21] Speaker 04:
No, no, all the courts are wrong, including the Supreme Court.

[00:38:24] Speaker 04:
They did have that intent, and that is why.

[00:38:26] Speaker 04:
That is the reason.

[00:38:27] Speaker 04:
That's the number one, if not the only reason, why they're doing this.

[00:38:30] Speaker 04:
They are changing all the rules and essentially repealing the exemption that Congress actually wrote.

[00:38:37] Speaker 04:
I see my time is kind of up, but happy to answer any other questions.

[00:38:41] Speaker 04:
Thank you.

[00:38:44] Speaker 05:
Ms.

[00:38:45] Speaker 02:
Klein, we'll give you two minutes to- Yes, just very briefly address the questions that have been raised.

[00:38:50] Speaker 02:
Starting with the last point,

[00:38:52] Speaker 02:
In Koch, the Supreme Court concluded that the legislative history doesn't dictate the answer as a textual matter.

[00:38:59] Speaker 02:
It's not a Chevron step one basis for invalidating the prior third party employment regulation.

[00:39:06] Speaker 02:
But that's extremely different from saying that the agency can't consider the explicit discussion in the House and Senate committee reports in making the type of policy determinations that the Supreme Court anticipate.

[00:39:19] Speaker 02:
This is why the Supreme Court is saying, go consult with affected entities and inform your determination of which third party workers are included on the basis of those consultations.

[00:39:32] Speaker 02:
And of course, a critical question for the agency addressed at length in the rulemaking record was,

[00:39:39] Speaker 02:
what would the effect be not only on the workers but on the consumers and that's why you have comments from AARP and lots of other consumer groups all of which were taken into account and there was substantial evidence for the department's findings that the new rule would not merely help the workers which is of course very important but would also

[00:40:01] Speaker 02:
increase the availability and access to home care workers.

[00:40:07] Speaker 02:
And this is reiterating the type of reasoning that the congressional committees had in the 1974 reports that accompanied the legislation.

[00:40:17] Speaker 02:
Just very briefly on Medicaid funding, the CDAP question, we did not frame this as a standing issue because we thought it was possible that some of the businesses could have some involvement with CDAP programs.

[00:40:32] Speaker 02:
Our point is that this suit, this is a general suit brought by the businesses and seeking an across-the-board invalidation of the third-party employment regulation.

[00:40:43] Speaker 02:
The specific concerns that the National Association of Medicaid Directors raised about the CDAP, the Consumer Directive Programs, said

[00:40:53] Speaker 02:
We're not talking about the circumstances in which businesses are the employers.

[00:40:59] Speaker 02:
We're talking instead about the circumstance where it's just the relationship between the Medicaid recipient or family member and the Medicaid program and so our point is that, you know,

[00:41:11] Speaker 02:
There's no occasion for this court to opine on the specific application to consumer-directed programs because that would not provide any basis for the relief they're seeking here.

[00:41:20] Speaker 01:
Now, one of the amici said that the department had said that Medicaid would be treated as employers for purposes of the third party regulation.

[00:41:30] Speaker 01:
Is that an announced position?

[00:41:32] Speaker 02:
Yes.

[00:41:33] Speaker 02:
No, that is correct.

[00:41:34] Speaker 02:
That's in both the final rule

[00:41:36] Speaker 02:
but then refer the court to docket number 27-5.

[00:41:42] Speaker 02:
which was our irreparable harm declaration in district court.

[00:41:46] Speaker 02:
And we didn't brief irreparable harm on appeal because the issue fell out when the district court converted the PI hearing to a merits hearing.

[00:41:53] Speaker 02:
But what it does do, this document, it provides additional information about what's been happening on the ground since the final rule was issued.

[00:42:01] Speaker 02:
And of course, we had this long 15-month delay between the issuance of the rule

[00:42:07] Speaker 02:
and it's effective day plus more time since then in which HHS has provided guidance to state Medicaid programs that's cited in that R27-5.

[00:42:18] Speaker 02:
Our Civil Rights Division has provided guidance that's also cited in the same document.

[00:42:24] Speaker 02:
And also the document discusses what, for example, California has done that has the largest by far consumer directed program and their legislature authorized payment of overtime under the Medicaid program up to 66 hours a week.

[00:42:40] Speaker 02:
And the reason this was in our irreparable harm declaration is that that was linked to the effective date of the final rule, so that money is not being spent right now.

[00:42:49] Speaker 02:
So even though, you know, we obviously did not seek a say, we sought expedition, I don't want to suggest that there aren't very real problems on the ground that are undermining the implementation by a variety of private and public actors.

[00:43:02] Speaker 06:
Thank you.

[00:43:03] Speaker 06:
Thank you very much.

[00:43:04] Speaker 06:
The case is submitted.