On July 18, 2019, the Centers for Medicare & Medicaid Services (CMS) published a Final Rule establishing requirements for arbitration agreements between long-term care (LTC) facilities and their residents. The Final Rule represents a revamping by CMS of a prior rule that had been published in October 2016 that prohibited pre-dispute binding arbitration agreements. CMS undertook to revise the 2016 rule after the U.S. District Court for the Northern District of Mississippi enjoined enforcement of the prohibition on pre-dispute binding arbitration agreements.

The Final Rule provides that a LTC facility must not require any resident or representative to sign a binding arbitration agreement as a condition of admission to the LTC facility, or as a requirement to continue to receive care. In addition, the LTC facility must explicitly inform the resident or representative of the right not to sign the agreement as a condition of admission or for continued care. The LTC facility also must ensure that the agreement is explained to the resident or representative in a form and manner that he or she understands, including the language used, and that the resident or representative acknowledges he or she understands the agreement.

The Final Rule contains specific requirements for binding arbitration agreements—the LTC facility must ensure that each agreement:

  • provides for the selection of a neutral arbitrator agreed upon by both parties;
  • provides for selection of a venue convenient to both parties;
  • explicitly grants the resident or representative the right to rescind the agreement within 30 calendar days of signing;
  • explicitly states that neither the resident nor his or her representative is required to sign a binding arbitration agreement as a condition of admission to the LTC facility or to continue to receive care; and
  • does not contain any language that prohibits or discourages the resident or anyone else from communicating with federal, state, or local government officials, including but not limited to health department employees, surveyors and representatives of the Office of the State LTC Ombudsman.

After an arbitration, the LTC facility must retain a copy of: (1) the signed agreement for binding arbitration between the LTC facility and the resident or representative, and (2) the arbitrator’s final decision. Copies of the documents must be retained for five years after the arbitration and be available for inspection upon request by CMS or its designee. According to CMS, these documentation requirements are intended to make sure that it will be able to “obtain information on how the arbitration process is being used by LTC facilities, and on the outcomes of the arbitrations for residents.”

In announcing the Final Rule, CMS emphasized its rationale to ensure that no LTC resident or representative would have to choose between obtaining skilled nursing care or signing a binding arbitration agreement. In addition, CMS explained its goal that binding arbitration agreements be transparent, and that LTC facility residents and representatives understand what they are agreeing to. CMS also emphasized the need for the agreements to be fair to all parties, particularly the residents. Finally, CMS noted that the Final Rule’s prohibition on language in arbitration agreements that discourages contact with government officials was intended to protect residents and representatives from undue influence by the LTC facility to not discuss the circumstances surrounding a concern, complaint or grievance.