Federal Judge Blocks Portion of Federal Rule That Bans Pre-Dispute Arbitration Agreements in Nursing Home Disputes

On Monday, November 7th, U.S. District Court Judge Michael P. Mills, who sits in the Oxford-based Northern District of Mississippi, temporarily blocked enforcement of the federal government’s looming ban on pre-dispute arbitration in nursing home agreements.

Judge Mills said in a 40-page decision that the Centers for Medicare and Medicaid Services (CMS) "does not have the authority to ban nursing home arbitration on general policy grounds,” even if the goal of protecting elderly Americans is a worthy one. Judge Mills also suggested that the solution likely lies with Congress, and not a federal agency.

“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.

In September, the CMS released the final rule for Long-Term Care Facilities, known as the Conditions of Participation. In the final version of the rule, MS sought to ban pre-dispute arbitration in nursing homes, citing allegations that nursing homes may be intentionally burying arbitration clauses in the fine print of admissions contracts. In finalizing the rule, CMS concluded that the Federal Arbitration Act (FAA) did not limit regulators’ ability to put limits on the use of arbitration agreements, which Judge Mills is disagreeing with in his decision. The ban on pre-dispute arbitration agreements would have went into effect on November 28, 2016.

LeadingAge California will continue to monitor developments in this case and update members as more information is released.