CMS SNF Arbitration Rules Revised

A couple of years ago, the Centers for Medicare and Medicaid Services (CMS), an agency under Health and Human Services (HHS), had essentially barred any skilled nursing facility (SNF) that receives federal funding from requiring that its residents resolve any disputes in arbitration, instead of in court. It was the most significant overhaul of the agency’s rules governing federal funding of long-term care facilities in decades. The nursing home industry maintains arbitration offers a less costly alternative to court. Allowing more lawsuits, the industry says, could drive up costs and force some homes to close. This was the case in the early 2000s, when many excess verdicts were recorded in Florida, forcing players out of the state or out of business altogether. Lawyers who work with the elderly say that people are being admitted to nursing homes at one of the most stressful moments of their lives. When CMS essentially barred any agreements requiring residents to resolve any disputes in arbitration, federal courts were quick to issue injunctions in industry suits. Now, CMS has issued proposed regulations with an effective date this week. The final rule (CMS 3342-F) will allow CMS to regulate SNF arbitration agreements, but this does not apply to agreements signed before September 16, 2019. If a dispute is settled through arbitration, a copy of a signed agreement and arbitration award must be kept for five years and available for inspection by CMS. Some providers went back to court to claim the amended arbitration rule is in violation of the Federal Arbitration Act (FAA) and that neither CMS nor HHS has the “statutory authority” under the Medicare and Medicaid acts to regulate alternative dispute resolution. I have conducted long-term care arbitrations, usually serving as the chair of a panel. These are difficult cases and are sometimes better suited to be resolved in private before knowledgeable and fair neutrals, rather than presented to juries. Arbitration of health care cases can be streamlined for counsel, saving the parties costs and often providing a quicker result than the courts. See more in trade publications here-- https://tinyurl.com/y4v5skyc and https://tinyurl.com/y4yaehk3

SCOTUS Kicks Arbitration Case

This month, the U.S. Supreme Court kicked a Kindred Healthcare arbitration case, declining to review the case for a second time. Last year, the High Court sided with Kindred in Kindred Nursing Ctrs. LP v. Clark, which related to whether an arbitration agreement signed by a Power Of Attorney (POA) is enforceable if not granted explicit permission to sign such a document in the POA. Kindred petitioned for certiorari this time arguing the Kentucky Supreme Court failed to adhere to the decision in its favor. The long term care provider asserted the state refused to honor the Justices’ interpretation of the Federal Arbitration Act (FAA). The state court declined to honor the arbitration agreement signed by power of attorney, without the nursing home resident giving express authority to sign away the right to a trial. The nursing home relied on two provisions in the power of attorney, one giving power to demand or collect money and institute legal proceedings, and another giving the power to make contracts “in relation to both real and personal property.” The court found that the arbitration agreement “was not the enforcement…of something then due or to become due” “nor was it the making of a contract…pertaining to” property. As a result, “that aspect of the Extendicare decision remains undisturbed.” The case rejected by the Supreme Court was one of three others consolidated under Clark, and was bounced back to Kentucky. Interestingly, the Kentucky high court just became the first state to find employers may not require employees to sign arbitration agreements as a condition of their employment, indicating a hostility toward FAA preemption and the arbitration process that may bleed over into this area of law as well. See more here-- https://bit.ly/2S2Wzsx and https://bit.ly/2R28ju1

CMS Reversing Arbitration Ban

The Centers for Medicare & Medicaid Services (CMS) published a final rule for nursing homes just before last fall's election that included a provision prohibiting facilities from requiring pre-dispute binding arbitration to settle disputes over resident care. The final rule, which went into effect November 28, 2016 for facilities participating in the Medicare or Medicaid programs, was seen as a prohibition on regular practice in long-term care facilities of using resident agreement arbitration clauses upon admission. CMS just announced its intention to remove the ban on pre-dispute arbitration agreements. The rule, released after the agency abandoned its appeal in a lawsuit over the matter, would allow arbitration agreements that meet certain standards. For example, such documents would need to be written in plain language, be thoroughly explained to residents and their representatives, and be understood. A party in such agreement waives the rights to sue and to a trial by jury, to participate in a class action lawsuit, or to receive any type of judicial review apart from the very limited grounds applicable to setting aside arbitration decisions. The American Bar Association (ABA) previously commented that in many circumstances arbitration can be advantageous, and residents should continue to have the choice to use it to resolve disputes. Many recent court decisions, including the latest, Kindred v. Clark out of SCOTUS have upheld enforcing such agreements. See more here-- http://bit.ly/2semtQC and http://bit.ly/2s7WlGh and http://bit.ly/2pCk94L

Nursing Home Arbitration Ban Postponed

Last fall, the Centers for Medicare and Medicaid Services (CMS), an agency under Health and Human Services (HHS), 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 was the most significant overhaul of the agency’s rules governing federal funding of long-term care facilities in decades. The nursing home industry maintains arbitration offers a less costly alternative to court. Allowing more lawsuits, the industry says, could drive up costs and force some homes to close. This was the case in the early 2000s, when many excess verdicts were recorded in Florida, forcing players out of the state or out of business altogether. Lawyers who work with the elderly say that people are being admitted to nursing homes at one of the most stressful moments of their lives. When CMS essentially barred any requiring residents to resolve any disputes in arbitration, federal courts were quick to issue injunctions in industry suits. Now CMS has issued a memo that it will not attempt to enforce the ban until the injunction is lifted. With the impending Trump Administration, it seems possible that the new CMS rule will die altogether. Congressional Republicans have vowed to roll back many regulations approved in the final months of the Obama Administration, such as this one. I do a fair amount of long-term care arbitrations, usually serving as the chair of a panel. These are difficult cases and are sometimes better suited to be resolved in private before knowledgeable and fair neutrals, rather than presented to juries. Arbitration of health care cases can be streamlined for counsel, saving the parties costs and often providing a quicker result than the courts. See more here-- http://bit.ly/2ibNZ8G and http://bit.ly/2j5R8XK

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

Long-term Care Arbitration Attacked

This month, a decision by the Supreme Court of Florida and a rule by the federal agency that controls Medicaid and Medicare funding have dealt serious blows to the use of arbitration by long-term care facilities. The Centers for Medicare and Medicaid Services, an agency under Health and Human Services (HHS), essentially bars 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. This was the case over a decade ago, when many excess verdicts were recorded in Florida, forcing players out of the state or out of business altogether. Lawyers who work with the elderly say that people are being admitted to nursing homes at one of the most stressful moments of their lives. Distraught and often desperate for a room, prospective residents do not fully grasp what they are signing. Many times, family members are involved in the admission process. The the Supreme Court of Florida said in a Miami case that a father who was a resident in a nursing home could not be bound by an arbitration requirement that his son had signed without the father’s agreement. However, reportedly, one appeals court refused to throw out an arbitration clause signed by a man who could not read or sign his name, reasoning that “illiteracy alone is not a sufficient basis for the invalidation of an arbitration agreement.” See FL decision in Mendez v. Hampton Court Nursing Center, LLC here-- http://www.floridasupremecourt.org/decisions/2016/sc14-1349.pdf Read more here: http://hrld.us/2dCnHLo and http://nyti.ms/2dCmeVh