Two Arkansas nursing facilities are asking a federal court to declare a rule that prohibits long-term care facilities from requiring residents to sign a binding arbitration agreement as a requirement for being admitted or to continue receiving care as unlawful. 

The lawsuit was filed Wednesday against the Centers for Medicare & Medicaid Services and Department of Health and Human Services by Northport Health Services and NWA Nursing Center in the Western District of Arkansas, Law360 reported. Both companies are based in Springdale, AR, and operate 140-bed skilled nursing facilities. 

The providers claim that the amended arbitration rule is in violation of the Federal Arbitration Act (FAA) and that neither CMS nor HHS has the “statutory authority” under the Medicare and Medicaid acts to regulate alternative dispute resolution. They also asked the court to stay the effective date, Sept. 16, for the arbitration requirements and prohibit the administration from enforcing it. 

“Because the government has long taken the view that existing residents cannot be forced to enter arbitration agreements, the ‘new’ rule still effectively prevents long-term care facilities from insisting on pre-dispute arbitration agreements. At the same time, the Amended Arbitration Rule imposes new requirements — such as a 30-day rescission right — that apply only to arbitration, not to other contractual terms,” the complaint states. 

“Those and other aspects of the Amended Arbitration Rule continue to violate the FAA, which does not tolerate rules that single out arbitration agreements for specially disfavored treatment.”

Providers and the federal government have previously clashed over binding arbitration agreements. In 2016, under the Obama administration, a CMS rule banned binding pre-dispute arbitration agreements in LTC facilities. The rule was prohibited from being enforced by a federal court after a complaint filed by the American Health Care Association and other nursing groups. 

In 2017, under the Trump administration, the agency proposed a rule that would remove the ban. The final rule for arbitration requirements was published in July. 

Representatives for both CMS and AHCA told McKnight’s on Thursday that their organizations don’t comment on active legislation.