Posted: January 20th, 2017
By: Doriyon Glass*| Staff Writer
Centers for Medicare and Medicaid Services (CMS) is an agency within the Health and Human Services Department. CMS is the federal agency that controls over $1 trillion in Medicare and Medicaid funding. In September, the agency promulgated Part 483 to Title 42 of the Code of Federal Regulations, the Requirements for States and Long-Term Care Facilities. These regulations cover many regulatory requirements for long term care facilities and make new compliance obligations for providers.
One of the more controversial obligations involves arbitration agreements. The regulations create a rule that bans the use of pre-dispute binding arbitration agreements by nursing homes and assisted-living facilities that receive federal funds. This does not stop any use of arbitration agreements, and facilities and residents will be permitted to use them on a voluntary basis once disputes arise. The rule only prohibits the use of pre-dispute arbitration agreements at the time a resident is admitted to the facility. Further, the facilities are required to clearly explain these agreements to residents, including that these agreements are voluntary and do not prevent them or their families from talking to authorities about their concerns.
There has been a lot of pressure on CMS to take this action. The use of pre-dispute arbitration agreements can assist nursing homes in preventing the family of residents from receiving justice for fraud, neglect, abuse, and even murder. A case involving a 100-year-old woman who was strangled by her roommate in a nursing home was initially blocked from court. Another concern is that nursing home admission is too stressful a time to deal with these concerns. According to Susan Harley, Deputy Director of Public Citizen’s Congress Watch Division, “They [families] are in no position to evaluate the coercive fine-print terms in contracts, appreciate the critical rights they are giving up by entering into a pre-dispute arbitration agreement or walk away from the contract if they object to rip-off provisions.” These and other concerns pushed CMS to enact these regulations, but nursing homes had some concerns of their own.
The nursing home industry favors arbitration because it is a less costly alternative to court. The industry is concerned that more lawsuits could drive up costs and force some nursing homes to close. These concerns led the American Health Care Association and four other state and local health departments to file a lawsuit against the Secretary of the Health and Human Services Department and the Administrator of CMS. The plaintiffs claim that these regulations are in direct dispute with the Federal Arbitration Act. They contend that the Act mandates that only Congress can change arbitration agreements, and CMS went beyond its jurisdiction. The federal court in the Northern District of Mississippi ordered a preliminary injunction barring enforcement of the regulation while the case is litigated. Although the judge issuing the injunction noted that the rule seems to be sound in policy, he also stated that the court is not willing to allow the agency to overstep its “executive authority.”
Doriyon Glass is a second year law student at Wake Forest University School of Law. She is interested in employment and higher education law. Before law school she studied Legal Studies and Criminal Justice at Gannon University in Erie, Pennsylvania.