Leonard Russ, board chairman, American Health Care Association

The American Health Care Association filed a lawsuit on Monday fighting back against the Centers for Medicare & Medicaid Services’ recently issued ban on pre-dispute arbitration agreements in nursing homes.

Entered in the U.S. District Court for the Northern District of Mississippi, claims the ban directly violates the Federal Arbitration Act and goes beyond CMS’ and the Department of Health and Human Services’ authority.

“Moreover, even if such a ban were legally permissible, the Arbitration Rule is arbitrary and capricious — and thus unlawful — because it will needlessly deprive both SNFs/NFs and their residents of the benefits of arbitration and result in the siphoning of resources toward litigation costs and away from resident care,” the complaint reads.

The complaint was filed by AHCA, along with the Mississippi Health Care Association and three Mississippi healthcare facilities that “regularly enter into pre-dispute arbitration agreements” with residents when they’re admitted.

“The merits of allowing individuals in our centers and their families this legal remedy are clear: Study after study shows that arbitration is fair and speeds judgments in a cost-effective manner that benefits those injured more than anyone else,” said AHCA President and CEO Mark Parkinson in a statement.

The groups ask the court for declaratory and injunctive relief, and that it block enforcement of the ban before it goes into effect on Nov 28.

The lawsuit reflects a large number of providers and industry stakeholders who were “disappointed” by the ban, Leonard Russ, principal partner of Bayberry/CPR Associates and former AHCA Chairman told McKnight’s on Monday.

“It’s just another example of the government encroaching,” Russ said. “We’re very confident that we’re going to prevail.”

One organization representing attorneys bashed AHCA’s complaints on Monday, saying in a statement that the arbitration agreements were used to “cover up abuse and neglect,” and that healthcare providers are now “upset that regulators are stepping in.”

“Rather than work to better protect residents and their families, these corporate nursing homes filed a lawsuit in a last-ditch effort to hang on to forced arbitration,” said American Association for Justice President Julie Braman Kane. “Ironically, the nursing home industry is using a lawsuit to try to deprive residents and their families of that same right. The industry is grasping at straws because CMS clearly and accurately stated its legal authority to regulate the use of forced arbitration by nursing homes.”

Click here to read AHCA’s full lawsuit challenging the arbitration ban.