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.

Continue Reading CMS Issues Final Rule Restricting Arbitration Agreements with Long Term Care Facilities

On September 11, 2017, the Ninth Circuit in US and State of Nevada ex rel. Welch v. My Left Foot Children’s Therapy, LLC, upheld the denial of the defendant’s motion to compel arbitration in a False Claims Act (FCA) relator case, holding that an employee-relator’s FCA claims did not fall within the scope of the arbitration agreement with her former employer.  The FCA claims were based on allegations that the employer had filed fraudulent Medicaid claims.

The Court first looked to the Federal Arbitration Act (FAA) in determining that interpretation of the arbitration agreement would generally be a matter of state law.  Nevertheless, the Court also applied certain guiding principles of the FAA, including the rule as interpreted by the U.S. Supreme Court  that “’questions of arbitrability must be addressed with a healthy regard for the federal policy favoring arbitration’” (quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)).

In issuing its ruling, however, the Court did not foreclose the potential for arbitration agreements to include FCA claims within their scope.


Continue Reading Ninth Circuit Denies Arbitration in a False Claims Act Case

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.


Continue Reading CMS Reverses Direction in Proposed Rule on Long Term Care Facility Arbitration Agreements

On May 15, 2017, in a closely-watched case involving arbitration clauses in nursing home contracts and powers of attorney, the U.S. Supreme Court held that the Federal Arbitration Act preempted a rule applied by the Kentucky Supreme Court when it refused to enforce two binding arbitration agreements between a nursing home and individuals holding general powers of attorney on behalf of two former residents of the nursing home.  Kindred Nursing Centers Ltd v. Clark, et al. 

As part of the nursing home’s resident intake process, the two individuals holding powers of attorney entered into arbitration agreements on behalf of their relatives that contained a provision requiring that “[a]ny and all claims or controversies arising out of or in any way relating to . . . the Resident’s stay at the Facility” would be resolved through “binding arbitration.” After the death of their family members, the individuals holding powers of attorney sued in state court, alleging that the nursing home had delivered substandard care, causing the deaths of their family members. The Kentucky Supreme Court applied a “clear-statement rule” in holding that both arbitration agreements were invalid because the powers of attorney did not specifically state that the representatives could enter into an arbitration agreement, and therefore the individuals holding powers of attorney were prohibited from restricting their relatives’ rights of access to the courts and trial by jury guaranteed under the Kentucky Constitution.


Continue Reading U.S. Supreme Court – the FAA Preempts State Court Ruling in Nursing Home Arbitration Case