New Proposed Rules Allow Nursing Homes To Use Pre-Dispute Arbitration Agreements

On June 6, 2017, the Centers For Medicare and Medicaid Services (CMS) proposed a new rule allowing Nursing Homes to use pre-dispute arbitration agreements, including as a condition for admission. CMS had previously issued a ban on such agreements in November of last year. That ban never went into effect due to the issuance of a temporary injunction by a federal judge in Mississippi. The injunction was sought by nursing home advocates who successfully argued that CMS overstepped its authority in issuing the ban, and that the ban violated the Federal Arbitration Act (FAA). CMS initially appealed the issuance of the injunction but withdrew its appeal this past Friday.

CMS's new rules still address arbitration agreements but in a more narrowly tailored way. The new proposed rules require nursing homes to fully explain arbitration agreements to residents and/or their legal representatives. Also, arbitration agreements must be written in plain language rather than complex legal terms so that residents can easily understand them, and they cannot contain language that discourages residents from communicating with federal, state or local officials. Facilities must also post notices describing their arbitration policies in plain language for residents and visitors to see.

The use of arbitration agreements is becoming more commonplace in the nursing home arena given the ever increasing number of costly lawsuits. Nursing home advocates argue that the arbitration process is superior to traditional litigation because it is much faster and allows the parties to be more directly involved in the process and eventual resolution.

CMS advised it will publish its revised rules on June 8, 2017.