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Nursing Home Arbitration Ban Blocked by Judge

Saturday, December, 24, 2016


CMS announced a final ruling in September concerning a ban on pre-dispute binding arbitration agreements for residents of long-term care facilities. The rule made sure the right of patients and their families to sue the facilities would be preserved and that nobody would be forced to settle a legal dispute concerning quality of care through arbitration only.

The rule was to go into effect at the end of November, but recently, the American Health Care Association attempted to block the rule. The AHCA is an industry group representing nursing homes in the United States. A federal judge in Mississippi ruled in favor of the AHCA and issued a preliminary injunction blocking the rule until the lawsuit is settled.

According to the court order, CMS proposed the rule in July 2015 in an effort to improve the quality of life, care, and services and to optimize resident safety and reflect current professional standards. The organization requested public comment on the rule and after receiving and reviewing more than 1000 comments it received regarding arbitration, the organization was convinced requiring residents to sign a pre-dispute arbitration agreement was unfair and made it almost impossible for residents and family members to give fully informed and voluntary consent to arbitration.

The court believed the rule was based on sound public policy and felt nursing home arbitration suffers from “fundamental defects” and is inefficient and a wasteful form of litigation. However, the court found CMS had exceeded its authority in issuing the anti-arbitration rule and did not want to play a role in the “incremental creep” of federal agency authority.

Now, the injunction is appealable and time will tell how this will all work out.