Arbitration Agreements in Long-Term Care Facilities – Part 2

HNWElder Law, Medicaid Eligibility and Asset Protection Planning

In our last blog, I discussed the requirements that the Centers for Medicare and Medicaid Services (CMS) placed on long term care facilities that accept the funds as to requiring arbitration as a precondition to entering a facility and how it was restricted.  It wasn’t the last time they heard about this rule from nursing homes, as its legality was challenged.

A group of nursing homes challenged this rule in federal court.  NORTHPORT HEALTH SERVICES OF ARKANSAS, LLC d/b/a SPRINGDALE HEALTH AND REHABILITATION CENTER; NWA NURSING CENTER, LLC d/b/a THE MAPLES; et al. PLAINTIFFS v. UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES; ALEX M. AZAR II, in his official capacity as Sec’y of the United States Dep’t of Health & Human Services; CENTERS FOR MEDICARE & MEDICAID SERVICES; & SEEMA VERMA, in her official capacity as the Adm’r of the Centers for Medicare & Medicaid Servs. DEFENDANTS, 5:19-CV-5168, 2020 WL 1696009 (W.D. Ark. Apr. 7, 2020)

They first claimed it violated the federal arbitration act, which states that an arbitration provision is enforceable unless otherwise provided for by law or it is inequitable to do so, because it “imposes special requirements on the formation of enforceable arbitration agreements that do not apply to any other kind of contract.”  Id. at *4.  The court rejected this argument, holding that the nursing home could still require that arbitration agreements be a condition for admission, but that they wouldn’t get any Medicare or Medicaid funds to do so.  The statutory power given to CMS allows the Center to condition funding based on use of arbitration agreements as conditions for admission, and even though there was a heavy financial incentive to participate, a nursing home doesn’t have to participate in the program in order for it to get patients.  So the court rejected the nursing home’s argument of it being coerced to adopt this policy by CMS.

CMS had determined that the “restrictions on the use of pre-dispute arbitration agreements are intended to protect the resident by preventing the nursing home from leveraging the resident’s need to access care to achieve other goals not related to that resident’s medical care.”  Id. at *2.  Thus, “recognizing that an agreement to arbitrate can be valuable to both parties if entered into knowingly and voluntarily, [CMS] has reasonably chosen not to prohibit such agreements altogether, but to use regulations to protect the patient’s health, safety, welfare, and rights by decoupling the resident’s ability to receive care in a particular…facility from her decision whether or not to sign a pre-dispute arbitration agreement.”  The court thus concluded that the regulation was neither arbitrary nor capricious based on these findings the CMS made, dismissed the complaint and allowed these regulations to take effect April 17, 2020.  Id. at *4.

It will be interesting to see if facilities decouple their arbitration agreements from their admission agreements whether residents will sign off on them.  Many admission agreements don’t contain their grievance policy in them, and so I would hope this new rule would allow the facility to spell out their grievance policy for any issues that may come up in full detail, even if the end result of the grievance is the filing of an arbitration request.

To discuss your NJ arbitration matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at  Please ask us about our video conferencing consultations if you are unable to come to our office.

Written by Stephen W. Kornas, Esq. of Hanlon Niemann & Wright

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