Supreme Court OKs CMS Vaccine Mandate but Blocks OSHA Rule

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UPDATE (1/19/2022):

To align with the US Supreme Court’s January 13, 2022, decision, the Texas injunction referenced below was lifted on January 19, 2022. Accordingly, the CMS vaccination mandate is now enforceable nationwide.


On January 13, 2022, the Supreme Court of the United States released two emergency opinions that change the landscape of the three federal vaccine rules. In summary:

  • A 5-4 Court majority let the Centers for Medicare & Medicaid Services (CMS) enforce its vaccine mandate nationwide, impacting specified healthcare facilities.
  • A 6-3 majority blocked the US Occupational Safety and Health Administration (OSHA) from enforcing its vax-or-test Emergency Temporary Standard (ETS) applicable to large employers.
  • The third federal vaccine rule—the federal contractor vaccine mandate—remains subject to multiple legal challenges and, at this time, the government is blocked from enforcing the mandate nationwide. The Court has not yet weighed in on this mandate.

This On the Subject addresses next steps and strategies for employers, whether covered by the in-effect Interim Final Rule with Comment that creates the CMS vaccine mandate (CMS Rule), or by one of the stayed OSHA or federal contractor rules.

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THE CMS VACCINE MANDATE IS ENFORCEABLE IN EVERY STATE

The CMS Rule is now enforceable in every state except Texas (which has a separate injunction in place), across the full spectrum of the 15 provider types covered by the rule.

Who does this impact? The CMS Rule applies to 15 specific healthcare provider/supplier types (such as hospitals, ASCs, hospices, and other specified facilities and providers) that participate in Medicare and Medicaid programs and are therefore CMS-regulated. Not all Medicare/Medicaid participating providers are covered by this rule—only those operating specified facilities.

What does the CMS Rule require? The facilities covered by the CMS Rule must comply with its requirements within the time frames developed by CMS:

  • All individuals working in covered facilities (including employees, contractors, volunteers, etc.) must have their first vaccine dose (or make an exemption request based on disability/medical or religion) by January 27, 2022 (if in Group 1), or February 14, 2022 (if in Group 2); and
  • The same individuals must have their second vaccine dose for a two-dose vaccine regimen (or exemption approval from the facility) by February 28, 2022 (if in Group 1), or March 15, 2022 (if in Group 2).
  • Group 1 states include: California, Colorado, Connecticut, Delaware, Florida, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Tennessee, Vermont, Virginia, Washington and Wisconsin.
  • Group 2 states include: Alabama, Alaska, Arizona, Arkansas, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Utah, West Virginia and Wyoming.

What should covered providers and suppliers do now? Providers that paused or slowed compliance efforts during the pendency of the stay will now need to re-evaluate their plans and move quickly towards compliance. This movement must occur in an extremely short timeline—unless further extended by CMS—as the first compliance date is only two weeks away. The CMS Quality, Safety and Oversight Group released a memorandum on December 28, 2021 (QSO-22-07-ALL), which set forth modified compliance dates for both “phases” described in the IFR and detailed a graduated enforcement mechanism, as outlined below:

Phase Basic Requirement Enforcement Risks
Phase 1

January 27, 2022 (Group 1; see above)

OR

February 14, 2022 (Group 2; see above)

 

Vaccination policies in place and covered staff have received the first dose of a multi-dose vaccine or requesting a federally recognized exemption
  • Facilities that are not in full compliance upon survey will receive written notice of noncompliance
  • A compliance level at or above 80% with a plan to achieve 100% compliance within 60 days will not be subject to additional enforcement action
  • Facilities with a lesser level of compliance could be subject to additional enforcement action, including operational and financial penalties, depending upon provider type, and ultimately termination of the provider agreement
Phase 2

February 28, 2022 (Group 1; see above)

OR

March 15, 2022 (Group 2; see above)

(unless modified by CMS)

 

Vaccination policies fully implemented and covered staff have received the second dose of a multi-dose vaccine (or a single dose of a single-dose vaccine) or have received a federally recognized exemption
  • Facilities that are not in full compliance upon survey will receive written notice of noncompliance
  • A compliance level at or above 90% with a plan to achieve 100% compliance within 30 days will not be subject to additional enforcement action
  • Facilities that fail to meet these thresholds will be subject to additional enforcement action, as described under Phase 1

(Read more about the graduated enforcement approach, the potential severity level of survey findings and the specific requirements applicable to the various categories of covered providers in our prior On the Subject.)

Note that 90 days after the applicable Phase 2 date has passed (meaning March 28, 2022 (Group 1), or April 14, 2022 (Group 2), any covered provider that is found to have less than 100% compliance with the CMS Rule requirements will be subject to enforcement action.

Covered providers that are located in states that have laws or other restrictions prohibiting vaccine mandates will need to work closely with their counsel to determine how best to manage the conflict between federal and some states’ laws. While CMS has asserted that the CMS Rule preempts inconsistent state and local laws, those states that prohibit healthcare facilities from requiring the COVID-19 vaccine as a condition of employment may still take steps to enforce such state laws notwithstanding the Court’s decision. The January 13 decision will bring this issue to the fore, and the ultimate resolution of this regulatory “catch 22” will almost certainly involve further litigation.

OSHA “VAX-OR-TEST” RULE IS STAYED PENDING SIXTH CIRCUIT RULING ON THE MERITS

The OSHA “vax-or-test” ETS is stayed nationwide and is unlikely to come back into effect prior to its expiration. In other words, the OSHA ETS is dead, and employers need not comply with its requirements at this time.

How did we get here? The OSHA ETS would have required employers with 100 or more employees to require masking and weekly COVID-19 testing of unvaccinated employees, and provide PTO to employees to get vaccinated. The ETS was immediately challenged in multiple forums, and the US Court of Appeals for the Fifth Circuit stayed enforcement nationwide. The cases were then consolidated before the US Court of Appeals for the Sixth Circuit, which dissolved the stay, allowing the ETS to be enforced nationwide. The decision on the stay was then appealed to the Supreme Court, which reinstituted the nationwide stay. Thus far, the litigation has been over whether OSHA should be enjoined from enforcing its ETS, not whether the ETS is definitively enforceable; the stay has been issued pending resolution of the litigation on the merits at the Sixth Circuit.

What happens now? Until the case resolves on the merits, and unless the Sixth Circuit rules in OSHA’s favor, any large employer that would have been covered by this rule no longer needs to comply with its requirements. Moreover, given that the OSHA ETS is a temporary standard lasting only six months, it is unlikely that the Sixth Circuit litigation will come to a close with enough time for OSHA to win and begin any meaningful enforcement prior to the expiration date. This is why the OSHA ETS is effectively dead.

What should large employers do now? With no OSHA ETS enforcement in sight, companies that have already issued OSHA ETS-compliant vaccine and testing policies may choose to withdraw or modify those policies. In addition, companies that wish to continue with their vaccine or testing policies should review their policies with counsel and confirm that these policies remain compliant with all applicable state or local laws, as the OSHA ETS will not take precedent over any conflicting state law given the stay. That said, employers know that these frequent changes in company policy may cause workforce disruption and employee confusion. Therefore, employers must weigh the benefits and risks that further policy changes may garner.

What will happen next? OSHA has not yet issued any statement, but there may be several options for OSHA and its state counterparts in the near future:

  • OSHA could pursue a permanent rule, or simply forego further rulemaking along these lines.
  • OSHA could try its hand at another, narrower ETS. Notably, in the Supreme Court’s majority opinion that stayed the OSHA ETS, it signaled openness to permitting OSHA to promulgate a rule more narrowly tailored to address particular worksites where “the virus poses a special danger because of the particular features of an employee’s job or workplace,” giving examples of researchers who work with the COVID-19 virus, or workers who work in “particularly crowded or cramped environments.” Thus, OSHA may try again at a narrower rule focused on industry-specific dangers.
  • Twenty-two states have their own state-level OSHAs that cover both private and government workers, with another six state plans covering state and local government only. Those state plans could issue their own rules, which would only add to the patchwork of COVID-19 laws and requirements already burdening large, multi-state employers. That said, many state plans have indicated that they would only issue an OSHA ETS-like standard if the OSHA ETS was permitted to go forward, so it may be unlikely that most state OSHAs will do so. Illinois, which adopted the OSHA ETS prior to the Supreme Court’s stay, did so with the caveat that it would rescind the ETS if the Supreme Court issued a stay.

THE FEDERAL CONTRACTOR VACCINE MANDATE REMAINS STAYED NATIONWIDE

Pursuant to a series of court rulings, the federal contractor vaccine mandate is stayed nationwide at this time.

How did we get here? The federal contractor vaccine mandate would have required certain covered federal contractors and subcontractors to impose vaccine mandates on all employees who provide services related to the federal contracts, as well as certain workplace-safety requirements. However, this vaccine mandate faces challenges in multiple federal courts, including a litigation pending before the US Court of Appeals for the Eleventh Circuit in which the Court issued a nationwide injunction blocking the government from enforcing the rule. The litigation matters are all currently pending in Circuit and lower courts, none of which have yet sought Supreme Court review.

What happens now? The contractor mandate remains stayed nationwide and cannot be enforced. The Eleventh Circuit—which issued a nationwide stay of the rule pending further litigation on the merits—has issued an expedited briefing schedule which will conclude on January 24, 2022. Oral arguments will be scheduled during the next available hearing session, but the exact timeline is not yet available as of this On the Subject‘s publishing.

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McDermott Will & Emery is closely tracking developments in these litigation matters and assisting companies across industries with strategy and compliance efforts related to these developments. Please do not hesitate to reach out to the authors of this article or your McDermott Will & Emery lawyer for more information.