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White House Option for Virus Response Could Set Legal Precedent

March 17, 2020, 3:59 PM

President Donald Trump has suggested that he could designate the coronavirus pandemic a “major disaster,” a move that would open many more avenues of federal assistance, including funds for health care infrastructure. But it would come with a catch: A virus has never before been declared a natural disaster.

Trump on March 13 declared the pandemic a “national emergency,” a designation that provides significant funding for states but includes more restrictions than what is allowed for recovery efforts when a natural disaster strikes. A White House declaration of a “major disaster” would allow state and local officials to tap into a wider range of federal assistance programs for individuals and public infrastructure, including funds for both emergency and permanent work.

Trump appears to be looking in that direction, even if there is no precedent. “I believe that the disaster is of such severity and magnitude nationwide that requests for a declaration of a major disaster as set forth in section 401(a) of the Stafford Act may be appropriate,” the president wrote in a March 13 letter to agency heads.

While Trump’s statement suggests this step is on the table, White House consideration of such a move is likely to be influenced by efforts on Capitol Hill to pass legislation to provide additional economic aid. The White House on Tuesday was set to request that Congress approve $850 billion in economic-relief funding, a proposal that would be in addition to pending legislation that seeks to provide another $100 billion in assistance, including in the form of paid sick leave for workers affected by Covid-19, the disease caused by the virus.

Pursuing a declaration of a major disaster in addition to big-ticket legislation would come with legal and political considerations.

“It remains unclear if a pandemic could qualify as a major disaster within the text and meaning of the Stafford Act, as pandemics are not one of the specific catastrophes listed, nor has this been tested,” said Mark Nevitt, professor of leadership and law at the U.S. Naval Academy.

The Stafford Act specifically defines major disasters as any natural catastrophe, such as a hurricane, tornado, storm, high water, tsunami, earthquake, volcanic eruption, landslide, mudslide, snowstorm, or drought; as well as any fire, flood, or explosion, regardless of cause.

The Federal Emergency Management Agency could get around this by using its discretion to interpret the law and conclude that a pandemic virus is a natural event, said Alexandra Phelan, a member of the Center for Global Health Science and Security and a faculty research instructor in the Department of Microbiology and Immunology at Georgetown University School of Medicine.

If challenged, FEMA could rely on Chevron deference, a longstanding administrative law doctrine holding that when the law is ambiguous, courts must defer to the expertise of the relevant agency. Many Capitol Hill Republicans oppose this doctrine, arguing it is used to justify administrative overreach, and have introduced bills over the years to overturn it. Yet the doctrine could work to their advantage now as Congress scrambles to shore up the economy and provide additional resources to combat the pandemic.

“I can’t imagine in a pandemic like this that there would be any real argument that this was inappropriate,” Phelan, who also teaches law at Georgetown University Law Center, told Bloomberg Law.

Typically, disaster funds are used for infrastructure. FEMA could use funds made available by a declaration of a major disaster to help medical facilities prepare for a surge in patients, Phelan said. FEMA funds could be used to convert non-hospital facilities into medical facilities or to build temporary treatment centers, particularly for intensive care, triage, or testing, she said.

“Given the unique challenges of this particular virus—and the infrastructure challenges it’s going to pose on our healthcare system—that argument makes sense,” Phelan said.

Waiving Regulations

A national emergency designation was still needed, however, to allow the Department of Health and Human Services to waive regulations under the Social Security Act, Trump said last week. Under that emergency designation, several departments and agencies will be able to waive additional regulations at Trump’s direction.

The Department of Transportation’s Federal Motor Carrier Safety Administration, for example, issued a national emergency declaration to provide hours-of-service regulatory relief to commercial vehicle drivers. That marked the first time the FMCSA has issued an order for nationwide relief, and it followed the president’s declaration of a national emergency in response to the virus, the agency said.

The proclamation Trump issued March 13 conferred broad new authority on the HHS secretary to immediately waive provisions of applicable laws and regulations to give doctors and hospitals flexibility to care for patients.

Those powers, Trump said, include the ability to waive laws to enable telehealth; certain federal licensing requirements to allow doctors to practice across state lines; requirements that critical-access hospitals limit the number of beds to 25 and the length of stay to 96 hours; the requirement of a three-day hospital stay prior to admission to a nursing home; rules that slow hospitals’ ability to add additional physicians or to obtain needed office space; and rules that restrict where hospitals can care for patients within the hospital itself, ensuring that emergency capacity can be quickly established.

The president’s emergency designation also triggered two major new areas of waiver authority that states will be able to use, said Eliot Fishman, senior director of health policy at Families USA, a nonprofit, nonpartisan consumer health-advocacy organization. States can tailor their Medicaid programs to make changes like allowing more people to enroll under Section 1115 of the Social Security Act, while Section 1135 of the law gives states flexibility to adjust their Medicaid program as well as Medicare and the Children’s Health Insurance Program.

Under Section 1135, the HHS secretary can waive certain requirements to ensure that sufficient health-care items and services are available to meet the needs of Medicare, Medicaid, and Children’s Health Insurance Program enrollees in affected areas. These waivers allow states, on a temporary basis, to do things like simplify their Medicaid application processes or waive cost-sharing for certain services in Medicaid, Fishman said.

Section 1115 would allow states to do things like expand who is eligible for Medicaid coverage, Fishman said. Under the emergency designation, section 1115 waivers can avoid the public comment process and budget-neutrality provisions.

Florida on Tuesday became the first state to have a Section 1135 waiver approved. The state requested to waive requirements that patients get authorization from their insurer before seeking treatment, streamline provider enrollment processes to ensure access to care for beneficiaries, and allow care to be provided in alternative settings in the event patients at one facility are evacuated to an unlicensed facility.

The emergency designation seems to provide a fair amount of flexibility, yet states have to take up those options, said Jocelyn Guyer, managing director of Manatt Health, a professional services firm. The administration is “sending signals that they really want states to use it” and that it will “stand down on nitpicky program oversight” requirements, she said.

To contact the reporters on this story: Cheryl Bolen in Washington at cbolen@bgov.com; Shira Stein in Washington at sstein@bloomberglaw.com

To contact the editor responsible for this story: John Lauinger at jlauinger@bloomberglaw.com

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