Injunction Blocks New CMS Arb Ban

The implementation of a new rule prohibiting federal funds for nursing homes that enter binding arbitration agreements with residents has been blocked by U.S. District Court Judge Michael P. Mills of the Northern District of Mississippi, who found in granting a preliminary injunction that the Centers for Medicare & Medicaid Services (CMS) did not have authority to enact the mandate without statutory authority. In an order sympathetic to residents and their families, he opined the rule by CMS, an agency under Health and Human Services (HHS), did appear to be based on “sound public policy.” However, the court was unwilling to play a role in countenancing the incremental “creep” of federal agency authority beyond that envisioned by the U.S. Constitution. CMS essentially barred any nursing home or assisted living facility that receives federal funding from requiring that its residents resolve any disputes in arbitration, instead of in court. It is the most significant overhaul of the agency’s rules governing federal funding of long-term care facilities in more than two decades. The nursing home industry has said that arbitration offers a less costly alternative to court. Allowing more lawsuits, the industry has said, could drive up costs and force some homes to close. The order states, “This court believes that Congress might reasonably consider this inefficiency, as well as the extreme stress many nursing home residents and their families are under during the admissions process, as sufficient reason to decide that arbitration and the nursing home admissions process do not belong together.” See order here-- http://bit.ly/2gd06oL or http://bit.ly/2fOYdvi

Pushback By Nursing Homes On CMS Arbitration Ban

This week, the nursing home industry, consisting of the American Health Care Association (AHCA) and others, filed suit against the Centers for Medicare & Medicaid Services (CMS) within the Department of Health and Human Services (HHS), alleging CMS exceeded its authority and claiming the agency has no authority to regulate the use of arbitration. CMS recently promulgated a rule that prohibits Medicare participating skilled nursing facilities (SNF) from entering into arbitration agreements with residents at their facilities upon admission, no matter how fair or beneficial those agreements may be to residents. The complaint states that the new arbitration ban violates the Federal Arbitration Act (FAA) and exceeds the statutory authority of CMS and HHS under the Medicare and Medicaid Acts, neither of which vests the agencies with the power to regulate alternative dispute resolution procedures. The complaint argues, even if the rule is allowed by law, it is arbitrary and capricious because it would deprive nursing homes and their residents of the benefits of arbitration and result in the siphoning of resources toward litigation costs and away from resident care. The new rule does not prevent residents of a SNF from choosing to enter into arbitration-- it just means the SNF can no longer force the dispute out of the courtroom. However, the complaint contends that parties almost never agree to arbitration in a particular case after a dispute has arisen. See complaint here-- American Health Care Association, et al. v. Sylvia Burwell and Andrew Slavitt Case No. 3:16-cv-00233 http://bit.ly/2dMdKu9 and press release-- http://bit.ly/2ed140y