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SHALALA v. ILLINOIS COUNCIL ON LONG
TERM CARE, INC.
Opinion of the Court

I
A

We begin by describing the regulations that the associa-
tion’s lawsuit attacks. Medicare Act Part A provides pay-
ment to nursing homes which provide care to Medicare
beneﬁciaries after a stay in a hospital. To receive payment,
a home must enter into a provider agreement with the Sec-
retary of HHS, and it must comply with numerous statutory
and regulatory requirements. State and federal agencies
enforce those requirements through inspections.
Inspectors
report violations, called “deﬁciencies.” And “deﬁciencies”
lead to the imposition of sanctions or “remedies.” See gen-
erally §§ 1395i–3, 1395cc.

The regulations at issue focus on the imposition of sanc-
tions or remedies. They were promulgated in 1994, 59 Fed.
Reg. 56116, pursuant to a 1987 law that tightened the sub-
stantive standards that Medicare (and Medicaid) imposed
upon nursing homes and that signiﬁcantly broadened the
Secretary’s authority to impose remedies upon violators.
Omnibus Budget Reconciliation Act of 1987, §§ 4201–4218,
101 Stat. 1330–160 to 1330–221 (codiﬁed as amended at 42
U. S. C. § 1395i–3 (1994 ed. and Supp. III)).

The remedial regulations (and a related manual) in effect
tell Medicare-administering agencies how to impose reme-
dies after inspectors ﬁnd that a nursing home has violated
substantive standards. They divide a nursing home’s deﬁ-
ciencies into three categories of seriousness depending
upon a deﬁciency’s severity, its prevalence at the home, its
relation with other deﬁciencies, and the home’s compliance
history. Within each category they list a set of remedies
that the agency may, or must, impose. Where, for example,
deﬁciencies “immediately jeopardize the health or safety
of . . . residents,” the Secretary must terminate the home’s
provider agreement or appoint new, temporary manage-
ment. Where deﬁciencies are less serious, the Secretary