The Fight on Arbitration in Nursing Homes

Photo courtesy of Pixabay
Photo courtesy of Pixabay


By Susan Pickup, Staff Writer

The Center for Medicare and Medicaid Services (CMS), an agency within the Department of Health and Human Services (DHS), just enacted a provision forbidding nursing home facilities that receive federal funding to force potential patients to enter into pre-dispute arbitration agreements before receiving care.[1]

Simply put, if the nursing home facility wants federal funding, a patient cannot be turned down for not wishing to sign an arbitration agreement. This is one of the biggest nursing home-related pieces of legislation in the past couple of decades[2] and could bring a major change in the way nursing homes are confronted with lawsuits. The DHS expressly stated, however, that the new rule is not retroactive and would only apply to new patients.[3] Therefore, preexisting arbitration agreements are still valid and will be enforced, according to the CMS.[4]

Pre-dispute arbitration agreements are contractual agreements which enforce having plaintiffs handle their disputes before an arbitrator, rather than through the court system. This includes suits of elder abuse and sexual harassment.[5] This rule would thus allow more nursing home patients to go through the court system, as opposed to having to going through arbitration and publicly expose nursing home abuse.

Furthermore, the rule could increase damages that victims and their families receive in court. According to NPR, “a 2009 study commissioned by the American Health Care Association, which represents most nursing homes, found the average awards after arbitration were 35 percent lower than if the plaintiff had gone to court.”[6]

Government officials and federal departments in favor of CMS’s new provision stated that their goal was to increase disclosure about nursing home abuse — and potentially improve the quality of care that nursing home facilities provide.[7]

Some healthcare organizations and nursing home facilities are not in favor of the rule, as it could allow more lawsuits and disclose more allegations of nursing home abuse. Some, however, claim that their concern is not because of disclosure but because the CMS is acting beyond its legislative authority. Organizations such as the American Health Care Association (AHCA) have expressed their disappointment with the rule.[8] The CEO of the AHCA, Mark Parkinson, said the “provision clearly exceeds CMS’s statutory authority and is wholly unnecessary to protect residents’ health and safety. We are considering the appropriate steps to take in light of this unjustified action by CMS.” Because this rule was enacted by the CMS, it did not require congressional approval but could be challenged in court.[9]

Twenty days prior to becoming effective, the AHCA challenged the rule in a Mississippi federal court.[10] The court granted the AHCA’s preliminary injunction on the reasoning that the organization can sufficiently prove that the CMS went beyond its authority in creating this rule and violated the Federal Arbitration Act.[11]

The court stated that the rule conflicts with the Federal Arbitration Act by barring Medicare and Medicaid funding from these nursing homes.[12] The court’s reasoning was that the rule essentially bars a facility’s right to use arbitration agreements due to many of these nursing home facilities vitally depending on federal funding.[13] Lastly, the court also stated that the CMS failed to provide a sufficient reason for banning of arbitration agreements in nursing home facilities.[14]

As one of the nation’s largest trade associations for nursing home facilities, the AHCA is likely satisfied that this rule has been temporarily stopped from becoming effective in November.[15] It will be interesting where this case goes from here.




[2] Id.

[3] Id.

[4] Id.

[5] Id.

[6] Id.

[7] Id.




[11] Id.

[12] Id.

[13] Id.

[14] Id.

[15] Id.

Comments are closed.