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By Marc Antonucci, Esq.
Partner, Iseman, Cunningham, Riester & Hyde LLP

NOTE: On December 9, 2016, the Centers for Medicare & Medicaid Services (CMS) issued a memo announcing that it is suspending enforcement of the new ban on the use of binding pre-dispute arbitration agreements by long-term care facilities unless and until the court-ordered injunction mentioned below is lifted.  Accordingly, CMS directed that its surveyors not survey facilities for compliance with the ban until further notified.

The Centers for Medicare & Medicaid Services (CMS) issued final regulations on September 28, 2016, that bring major changes to long-term care facilities participating in the Medicare and Medicaid programs.  The new regulations, totaling more than 700 pages, impact nearly all aspects of nursing home care, and are targeted at:  reducing unnecessary hospital readmissions and infections; improving the quality of care; and strengthening safety measures for residents in long-term care facilities. They represent the most significant revisions to nursing home regulations since 1991.

One of the new regulations that has garnered much attention is the ban on the use of binding pre-dispute arbitration agreements by long-term care facilities that receive federal funding.  Effective November 28, 2016, nursing homes (and other covered facilities) cannot require or even ask residents to sign such agreements.  Post-dispute arbitration agreements – i.e., agreements entered into after a dispute has arisen between a long-term care facility and a resident – are still permissible, subject to certain conditions.  Both pre- and post-dispute agreements entered into before November 28, 2016, are grandfathered under this new regulation.

Many long-term care facilities currently require patients seeking admission to agree to resolve disputes through binding arbitration.  Accordingly, resident-rights advocates have declared the new regulation a victory for nursing home residents who can now access the court system for wrongs committed against them while in a long-term care facility.

After the final regulations were issued, the American Health Care Association (AHCA), the nation’s largest association of long-term care providers, released a statement claiming that the ban on pre-dispute arbitration agreements “clearly exceeds CMS’s statutory authority and is wholly unnecessary to protect residents’ health and safety.”

Last month, the AHCA and four other providers filed a lawsuit in federal court challenging, among other things, the authority of CMS to regulate how nursing homes handle disputes. They also requested the court to delay the ban from taking effect later this month.

On November 7, 2016, the court granted this request, which has the effect of preventing the ban from being enforced until the court rules on the merits of the legal arguments presented by the parties.  Depending on the outcome of the legal challenge, the new regulation could have far-reaching effects on nursing home administration and litigation.