Court grants AHCA's request for injunction of arbitration ban

CMS still has an opportunity to make a "strong showing" of its authority, the ruling said
CMS still has an opportunity to make a "strong showing" of its authority, the ruling said

A federal court on Monday granted the American Health Care Association's motion to stop the ban on the use of pre-dispute arbitration agreements before it takes effect on Nov. 28.

AHCA filed a request for preliminary injunction in late October, saying it was “appropriate and necessary” to protect long-term care providers while the court hashed out the legal issues in the group's case against the ban.

In his ruling, Judge Michael P. Mills with the United States District Court for the Northern District of Mississippi said the case puts the court in an “undesirable position” since it believes the ban is “based upon sound public policy.” But ultimately, Mills said, the case provokes in-depth legal questions about the Centers for Medicare & Medicaid Services' authority. This needs to be addressed before the rule can take effect, he wrote.

“As sympathetic as this court may be to the public policy considerations which motivated the Rule, it is unwilling to play a role in countenancing the incremental ‘creep' of federal agency authority beyond that envisioned by the U.S. Constitution,” Mills wrote.

In a statement issued Monday, AHCA President and CEO Mark Parkinson said the group is “pleased with the outcome” of their motion, since the Nov. 28 implementation could have caused “real harm to providers as well as to our residents.”

But the victory may be temporary. The court's decision notes that CMS could show that it had the authority to ban the agreements, something it has failed to do so far. It is not known how much the agency might benefit from the court's decision noting sympathy with the public policy considerations, such as the potentially stressful nature of nursing home admissions, which partially motivated the ban.

“The court has actually said that they agree wholeheartedly with the principle behind [a ban on pre-dispute arbitration],” Mario C. Giannettino, a partner at law firm Kaufman Borgeest & Ryan LLP, told McKnight's on Monday. Giannettino specializes in the defense of long-term care providers.

“Where CMS has failed essentially is to support their arguments with actual legal evidence that this really broad, sweeping rule was justifiable under these circumstances,” Giannettino said. “If CMS remedies these defects, could they potentially prevail? The court is saying yes.”

The court's decision indicates no exact period of time for the injunction, just that implementation of the arbitration rule will be halted until “the doubts regarding its legality can be definitively resolved by the courts.” Giannettino estimates challenges to the decision may come “pretty quickly” since the arbitration issue is “such a hot topic.”