Nursing homes laying it on the line over arbitration

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James M. Berklan
James M. Berklan

Sometimes the speakers, excessive food and carnival-like atmosphere are enough to make a national long-term care conference memorable.

This week, the American Health Care Association added a rare treat: breaking news.

As we reported, the nation's largest nursing home association filed suit on Monday against the Centers for Medicare & Medicaid Services, alleging the agency overstepped its authority in banning pre-dispute arbitration clauses.

Talk about dramatic. Talk about chutzpah. This is, after all, picking a fight with the source that funds salaries for the overwhelming majority of your members and the care they provide.

But the stakes are high enough to warrant it, AHCA President and CEO Mark Parkinson assured me Tuesday.

“CMS is the largest payer for services. CMS is not the enemy,” he said. “But from time to time, it takes a position we can't ignore.”

No one is going to ignore this battle. Announcement of the arbitration ban in late September came after various scathing commentary from both chambers of Congress, other stakeholders and mainstream media, including the Wall Street Journal.

The overwhelming tenor was moral outrage that nursing homes have been trying to “dupe” their own residents, or potential residents, and their family members. So when the ban was announced, it received solid support — from the non-provider world.

Although Parkinson and colleagues have expressed confidence in the lawsuit's chances, they must realize that in the court of public opinion, this is a losing cause. If you win the bid for a preliminary injunction, you'll be portrayed as craven caregivers of the elderly. If you lose the bid (and subsequent appeals), it's Katie, bar the door. You think there are a lot of negative headlines about providers getting sued now? Just watch the floodgates open if arbitration clauses aren't allowed.

Parkinson emphasized it's “too important for the sector, too important for residents” to not fight back. The former litigator cites reasons that other fans of arbitration commonly refer to: “Data tells” that consumers receive compensation quicker and more efficiently than if a case goes to trial. It costs the entire system less, they add.

“If you go with [trials], you get some damages awards so out of the ordinary … “ Parkinson noted.

Yes, this is America, land of big dreamers, a place where winning the lottery can overtake even the most otherwise logical psyche. It's a gold rush mentality, providers believe, even if the public sees it differently.

Parkinson and his officers add that this isn't just a numbers game. There's a “philosophic side” to it too. It amounts to CMS saying the government is smarter than the participants themselves, even when both sides feel they know well enough.

Privately, various participants at the AHCA convention in Nashville this week were divided almost evenly between between thinking AHCA has picked a fight it can't win and a fight it can't lose.

“It's all politics,” Parkinson complained. “The plaintiff attorneys' lobby is very powerful. They won [the campaign to ban pre-dispute arbitration] on politics, not policy.”

Providers have turned to high-powered legal representation themselves. Leading their charge is Washington attorney Andrew Pincus, a former Assistant to the Solicitor General in the Department of Justice. He has a variety of high-profile wins and a bevy of federal court experience, including 25 appearance in the Supreme Court of the United States.

Yes, this is the big time, providers.

While there was no open speculation about the case going to the Supreme Court (not yet, at least), we do have a specific timeline to follow.

First, providers are hoping a preliminary injunction will be granted by Nov. 27, before the ban goes into effect. They filed their suit in Mississippi, carefully choosing a venue where they believe they'll encounter justices more likely to be sympathetic to the cause. 

If the injunction doesn't come through, the arbitration ban will go into effect immediately. The case would then be taken to the U.S. Court of Appeals for the Federal Circuit. This would likely happen, no matter which side prevails on the injunction bid. A circuit court decision could take three to six months, Parkinson noted.

“If we don't get the injunction, it's not over,” he said, his body language revealing he'd rather not test that hypothesis.

He is resolute, however, that AHCA is fighting the good fight. He's backed by a board that voted unanimously to litigate. 

Parkinson doesn't see how the government and the plaintiffs' lawyers can prevail. Congress passed the federal arbitration act more than 90 years ago and “the Executive Branch of the government can't just undo it,” he explained.

One way or another, the outcome of this legal battle is liable to be a significant milepost in his term as the leader of the nation's largest nursing home association. He was named to the post in 2010 and since then quietly signed a contract extension until 2020, when it's expected among inner circles that he will pass the baton to another.

Interestingly, Parkinson at speaking engagements around the country over the past couple of years, he has tabbed 2020 as a watershed year. He believes that is when the “benefits of the aging population” will turn solidly in providers' favor.

Until that demographic gift arrives, however, there will be plenty of heavy-lifting to execute. Regulatory pressures and reimbursement challenges are expected to continue, in waves.

“I'm excited to be a part of it,” Parkinson stressed, leaning forward in his chair as if ready to engage in policy battles then and there. “I'll be very disappointed if we get to 2020 and we don't have a rational, outcomes-based model in place.”

Now managing to get that done would indeed be memorable.

Follow James M. Berklan @JimBerklan.



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Daily Editors' Notes

McKnight's Daily Editors' Notes features commentary on the latest in long-term care news and issues. Entries are written by Editorial Director John O'Connor, Editor James M. Berklan, Senior Editor Elizabeth Newman and Staff Writer Marty Stempniak.