Nursing Homes Can’t Force Arbitration

A new rule issued on Wednesday prohibits long-term care facilities that receive Medicare or Medicaid funds (i.e., the vast majority of facilities) from forcing residents to agree to mandatory arbitration as the price of admission. The regulation – issued by the Centers for Medicare and Medicaid Services (CMS) – will force nursing homes to face claims of elder abuse, wrongful death, sexual harassment, etc. in court and in public, rather than behind the closed doors of an arbitration proceeding. In short, if they want federal funds the facilities cannot embed arbitration provisions in their admission agreements.

The industry is girding for a fight against the new regulation, with the president of the American Health Care Association claiming CMS exceeded its authority in promulgating the new rule.

For now, it’s a win for residents and a blow to operators who will likely face an explosion of expensive, public litigation; it is estimated that the rule will affect about 1.5 million residents around the country.

(And in the spirit of “read the fine print,” the new rule only applies to new admission contracts. CMS has made clear that the regulation does not affect existing agreements already in effect, though as the linked article states, “[t]he question is whether or not CMS will use its leverage to alter existing agreements when it comes time for facilities to re-certify with Medicaid and Medicare.”)

For anyone in the healthcare field, this is an issue worth close attention. If CMS can force nursing homes not to embed arbitration agreements, who’s next?