Federal Judge Grants Injunction as to CMS Rule Barring Pre-Dispute Arbitration Clauses in Long-Term Care Facility / Nursing Home Contracts for Facilities Receiving Federal Funding
Published: December 9, 2016
I previously reported in a post that on September 28, 2016, the Centers for Medicare and Medicaid Services (“CMS”), which is part of the U.S. Department of Health and Human Services, announced that it issued a final rule prohibiting the use of pre-dispute binding arbitration agreements with regard to long-term care facilities / nursing homes that receive federal funding from Medicare and Medicaid. Not long after CMS announced the final rule, the American Health Care Association, which is an association for long-term care providers, and other plaintiffs filed a motion in the United States District Court for the Northern District of Mississippi seeking a preliminary injunction to enjoin CMS from enforcing the final rule. See American Health Care Association et al. v. Sylvia Mathews Burwell, in her official capacity as Secretary of Health and Human Services et al., Civil Action No. 3:16-cv-00233, U.S. District Court for the N.D. Miss.
On November 7, 2016, District Judge Michael P. Mills of the United States District Court for the Northern District of Mississippi granted the motion for preliminary injunction in favor of the plaintiffs. This was a win for long-tem care facility and nursing homes, as the final rule regarding arbitration provisions did not go into effect on November 28, 2016. Although Judge Mills stated that CMS’s final rule was based on sound public policy, he ultimately found that the plaintiffs had made a sufficient showing that CMS did not have the authority to enact the final rule. One of the factors Judge Mills had to consider in granting the preliminary injunction was whether there existed a substantial likelihood of success on the merits. Judge Mills found that to be the case.
Despite the ruling, the parties will continue to litigate the issue of whether CMS had the authority to enter the rule, although the federal government will have an uphill battle.
On December 5, 2016, a Case Management Order was entered setting a schedule for the filing of pleadings in the case. Oral argument is also scheduled for July 20, 2017 before Judge Mills.
Thus, you should expect to continue to see pre-dispute arbitration agreements in the admission documents for long-term care facilities / nursing homes.