Nebraska Supreme Court rules for plaintiff in nursing home arbitration case

Two Arkansas skilled nursing facilities asked a federal court in September 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 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. The providers claim that the recently amended arbitration rule was in violation of the Federal Arbitration Act and that neither CMS nor HHS had the “statutory authority” under the Medicare and Medicaid acts to regulate alternative dispute resolutions. They also asked the court to stay the effective date 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 stated. 

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. 

CMS and AHCA both declined comment.