CMS Issues Final Rule Allowing Pre-Dispute Nursing Home Arbitration Agreements

The Centers for Medicare & Medicaid Services (“CMS”) has issued a final rule allowing the use of pre-dispute, binding arbitration agreements by nursing homes across the United States.  The rule summary published in the Federal Register on July 18^th states:

This final rule amends the requirements that Long-Term Care (LTC) facilities must meet to participate in the Medicare and Medicaid programs. Specifically, we are repealing the prohibition on the use of pre-dispute, binding arbitration agreements. We are also strengthening the transparency of arbitration agreements and arbitration in LTC facilities. This final rule supports residents’ rights to make informed choices about important aspects of their health care.

In 2016, CMS issued a rule that prohibited “LTC facilities from entering into pre-dispute, binding arbitration agreements with any resident or his or her representative, or requiring that a resident sign an arbitration agreement as a condition of admission to the LTC facility.”  Later that year, however, a federal court in Mississippi issued an injunction on enforcement of the provision.  After that, CMS opted to revisit the issue.

The American Bar Association’s (“ABA”) Commission on Law and Aging reportedly “advocated strongly for a full ban on nursing home arbitration agreements.”   According to a recent ABA publication:

Like many groups, we do not believe that the time of admission to a nursing home is appropriate for informed decision-making about such agreements. Nursing home admission is usually a time of crisis for individuals and their families; the resident is in an impaired condition, the choice of nursing homes may be severely limited, and the resident and family have no idea of the kind of dispute that might be bound by an arbitration clause in the future.  There are advantages and disadvantages to arbitration, but it is only after a dispute arises that those pros and cons can be fully weighed, and an informed and voluntary decision can be made.

Still, the ABA conceded that the new arbitration rule includes helpful guidance:

The most favorable part of the rule is its mandate that arbitration agreements must not be used as a condition of admission to, or as a requirement for, a resident to continue to receive care at the facility.  Moreover, the facility must explicitly inform residents or their representatives of the right to not sign the agreement as a condition of admission, or as a requirement, to continue to receive care at the facility.  And the arbitration agreement itself must expressly state the same.

The CMS final rule on pre-dispute, binding arbitration agreements is scheduled to become effective on September 16, 2019.

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