The Centers for Medicare & Medicaid Services (CMS) announced a Proposed Rule scheduled to be published in the Federal Register on June 8, 2017, revising its prior restrictions on binding arbitration provisions between long term care facilities and their residents set forth in a Final Rule published in October 2017. Comments are due sixty days after publication of the Proposed Rule. In the Final Rule published last year, CMS had prohibited pre-dispute binding arbitration agreements and imposed requirements on facilities that asked residents to sign arbitration agreements. The U.S. District Court for the District of Missouri had issued a preliminary injunction against CMS prior to the Final Rule taking effect. After the court ruling, CMS issued a memorandum to states and Medicare contractors notifying them that the Final Rule would not be enforced until the injunction was lifted.
The Proposed Rule also comes on the heels of a closely-watched case we reported on earlier relating to nursing home arbitration agreements, Kindred Nursing Centers Ltd v. Clark, et al. In that case, the U.S. Supreme Court held that the Federal Arbitration Act preempted a rule applied by a state court that had refused to enforce binding arbitration agreements between a nursing home and individuals who held general powers of attorney on behalf of residents.
In the Proposed Rule, CMS would remove the prior prohibition on pre-dispute binding arbitration agreements and other restrictions set forth in last year’s Final Rule, and in their place would require that:
- All agreements for binding arbitration between nursing facilities and their residents be in plain language.
- If signing an agreement for binding arbitration is a condition of admission, the language of the arbitration agreement must be in plain writing and contained in the admissions contract.
- The arbitration agreement must be explained to the resident and his or her representative in a form and manner they understand, and needs to be in a language they understand.
- The resident must acknowledge that he or she understands the arbitration agreement.
- The agreement must not contain any language that prohibits or discourages the resident or anyone else from communicating with federal, state, or local officials (including federal and state surveyors, other federal or state health department employees, or representatives of the State Long-Term Care Ombudsman).
- If a facility resolves a dispute with a resident through arbitration, it must retain a copy of the signed agreement for binding arbitration and the arbitrator’s final decision so it can be inspected by CMS or its designee.
- The facility must post a notice regarding its use of binding arbitration in an area that is visible to both residents and visitors.
Despite its attempt to relax restrictions on arbitration by issuing the Proposed Rule, CMS may still receive push back on certain provisions. For example, the requirement to provide a copy of the arbitrator’s final decision for inspection by CMS could be viewed as overly restrictive, particularly in a situation where the arbitration agreement provides for confidentiality.