Nursing Home Pre-Dispute Arbitration Agreements Have an Uncertain Future
Dec 20, 2016
In September, the Centers for Medicare & Medicaid Services (CMS) issued a rule which banned the use of pre-dispute arbitration agreements between nursing homes and residents, for nursing homes and similar long-term care facilities which receive federal funding. In November, the Northern District Court of Mississippi issued a preliminary injunction blocking the rule from going into effect, leaving nursing home pre-dispute arbitration agreements with an uncertain future. At the center of the court case is what government entity is allowed to regulate arbitration agreements, with the Federal Arbitration Act mandating that arbitration agreements can only be regulated by Congress.
According to Harris Beach health and long-term care attorney Julie Bargnesi, pre-dispute arbitration agreements between nursing homes and residents are not universally mal-intentioned. In a recent article in the Buffalo Law Journal, Bargnesi discussed the pre-dispute arbitration rules as well as what benefits pre-dispute arbitration agreements can bring to providers.
In many cases, pre-dispute arbitration agreements are used to help benefit both care facilities and residents, so that facilities can be “more efficient, cut legal costs, and keep these disputes resolved,” according to Bargnesi. With litigation in elder care at an all-time high, many facilities face closing in light of mounting legal costs, which threatens the sustainability of the long-term care industry.
CMS’ rule, which was set to go into effect on November 28, will not be enforced by State Survey Agency Directors. In fact, the agency issued a letter on December 9 suspending the enforcement of the arbitration rule while the injunction remains in effect.
Based on this, Bargnesi is advising clients to continue using pre-dispute arbitration agreements that are already in place, and to hold off on making major changes to resident agreements until the court case is settled. She does warn, however, that it is possible that Congress could create a law that prohibits these types of agreements in the future.
This posting does not purport to be a substitute for advice of counsel on specific matters