Elder Law

Judge blocks federal rule that would ban arbitration in nursing home disputes

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nursing home bed.

The implementation of a new rule prohibiting federal funds for nursing homes that enter binding arbitration agreements with residents has been blocked by a U.S. district court judge, who found that the Centers for Medicare & Medicaid Services (CMS) did not have authority to enact the mandate without statutory authority.

The order was granted Monday by U.S. District Court Judge Michael P. Mills, who sits in the Oxford-based Northern District of Mississippi, Modern Healthcare reports. CMS introduced the rule in September, amidst allegations that nursing homes bury arbitration clauses in the fine print of admissions contracts, and prevent residents, or their families, from getting justice in the event of abuse, the New York Times reported.

The filing was brought by various nursing home groups, including the American Health Care Association. Besides arguing that it exceeded the CMS’ statutory authority, plaintiffs contended that the rule isn’t needed to protect residents’ health and safety.

The CMS rule does appear to be based on “sound public policy,” Mills wrote in his Nov. 7 order (PDF) granting the plaintiffs’ motion for a preliminary injunction enjoining enforcement of the rule. His writing notes that some nursing home residents with ailments like dementia no longer have the capacity to grasp what an arbitration agreement entails.

“This court believes that Congress might reasonably consider this inefficiency, as well as the extreme stress many nursing home residents and their families are under during the admissions process, as sufficient reason to decide that arbitration and the nursing home admissions process do not belong together,” the order states.

Federal bills with language restricting arbitration for nursing home residents have been brought previously, but none have passed, Joseph L. Bianculli, an Arlington, Virginia, lawyer who defends nursing homes in federal hearings, told the ABA Journal.

“The judge seems to be sending a signal to the CMS saying ‘If you want to this, you’ve got to jump through some hoops,’ ” says Bianculli, who estimates that 50 percent of nursing homes have pre-dispute arbitration agreements with residents.

“It’s long been law that you can’t require someone to enter arbitration as a condition of entry,” he says. “Every client of mine that universally offers (arbitration agreements) to prospective residents typically will have a provision where you could opt out, or make an exception.”

The commonality of arbitration clauses for nursing home entry varies by state, says Antonio Romanucci, a Chicago plaintiff lawyer who handles nursing-home-abuse lawsuits. The agreements are not common in Illinois, according to him, but you see them frequently in other states.

“That’s why these arbitration are against public policy, because (in some places) you really don’t have a choice,” he says.

See also:

ABAJournal.com: “Federal rule barring forced arbitration of nursing home disputes is likely to be challenged”

ABA Journal: “Lawsuits fail to bring improvements to nursing homes”

ABA Journal: “Fines against unsafe nursing homes are considered a slap on the wrist”

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