We reported last month that the Centers for Medicare and Medicaid Services (CMS) issued a new regulation, effective Nov. 28, 2016, relating to nursing-home arbitration agreements. CMS found that arbitration agreements in nursing homes were patently unfair to residents and their family members. It was determined by CMS that any facility that receives Medicare and Medicaid may no longer enter into binding arbitration agreements with residents or their family members after Nov. 28, 2016.

Advocates for patients and their families consider this ruling to be most significant. For all too long, when a family makes a decision to place their loved one in a long-term care facility, they have been compelled by the facility to sign an alternative dispute resolution agreement. Most residents and their family members have no idea that they are potentially signing away their right to a trial by jury. In other words, most families are completely surprised to find out that they cannot file a lawsuit when the nursing home staff injures or kills their loved one.

The pro-nursing home advocacy groups wasted no time in challenging the new CMS ruling. In Mississippi and in other places, nursing home advocacy groups have asked federal judges to stay enforcement of the new rule. The first such order was issued by Judge Michael P. Mills, a United States District Judge from the Northern District of Mississippi. Judge Mills entered a preliminary injunction, determining that the CMS rule could not be enforced until further evidence was taken.

Judge Mills issued a 40-page Order, and in his Order, the judge determined that there are concerns about whether a government agency can ban arbitration agreements where those agreements are otherwise permissible under the Federal Arbitration Act (FAA). Judge Mills determined that the CMS rule banning arbitration may conflict with the FAA, and in doing so, a federal agency may be acting beyond its authority. While lawyers in our firm are extremely disheartened by the ruling, a couple of points can be taken away from this ruling:

  • First, it is unclear whether other federal courts will follow suit and apply the ban in other jurisdictions and states.
  • Second, the issue will not be fully resolved until the appellate courts, and perhaps even the United States Supreme Court, weighs in on this issue.
  •  Finally, Judge Mills correctly noted that nursing-home arbitration litigation is not at all time-saving or favorable to injured patients or their families. In fact, Judge Mills expressed some of his personal observation of cases that have come before his court, and noted in one case that the delay from filing the suit until resolution of the arbitration issue was as much as three years.

Judge Mills also noted the concern of patient-advocates that more than half of all nursing home patients have dementia or Alzheimer’s. Clearly, the patient and their families are not in equal bargaining positions with the nursing homes. Judge Mills also seemed to express his thoughts that Congress might want to consider banning arbitration in nursing home settings.

Regardless of the outcome, we will continue to fight arbitration. We believe strongly that CMS, which oversees the provision of federal funds to nursing homes, acted within its authority. If a nursing home wishes to receive federal funds, then it should take the high road and avoid having patients or their family members to sign arbitration agreements.

If you need additional information on the arbitration issue or Nursing Home litigation generally, contact Ben Locklar, a lawyer in our firm’s Personal Injury and Products liability Section, at 800-898-2034 or by email Ben.Locklar@beasleyallen.com. Ben handles nursing home litigation for our firm.

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