Ban on arbitration agreements in nursing homes is placed on hold
Written By: Rheingold, Valet, Rheingold, Ruffo & Giuffra LLP
Earlier this year, the Centers for Medicare and Medicaid Services (CMS) passed a new rule forbidding nursing homes from utilizing arbitration agreements in their resident contracts. Arbitration agreements are often used by large companies to force potential plaintiffs into costly arbitration proceedings that don't offer the same judicial protections as courts. The effect is to try and discourage potential litigants, even if their claim is valid.
The CMS tried to prevent nursing homes from using this tactic. However, a lawsuit filed by the American Health Care Association in Mississippi filed a federal suit in October to prevent implementation of the rule. The federal judge agreed and issued a preliminary injunction against CMS until the case is resolved.
The CMS had hoped to prevent nursing homes from abusing arbitration proceedings to intimidate residents into foregoing their right to recovery for their harm. But their efforts were blocked by a powerful lobbying group.
It was projected that this new rule would cost nursing homes $831 million in the first year and $736 million every year after the rule is implemented.
Source: National Law Review, "CMS Ban on Nursing Home Arbitration Agreements on Hold for Now," Jennifer Anderson Hill and Deva A. Solomon, November 8th, 2016