Trial Magazine

After years of careful research and dialogue with industry members and patients’ rights advocates, the Centers for Medicare and Medicaid Services (CMS) issued a comprehensive overhaul of the federal regulations governing conduct in nursing homes in October 2016. Importantly, the new rule had a provision prohibiting many nursing homes from including mandatory pre-dispute (“forced”) arbitration clauses in contracts. For years, nursing homes used these clauses to strip residents and their families of their rights to hold facilities legally accountable when residents suffer harm—no matter how egregious the conduct.

The rule would have put an end to the use of forced arbitration by certain facilities that receive federal funding. When CMS originally promulgated the proposed rule, a vast array of organizations representing almost every element of the nursing home experience submitted comments supporting CMS’ interest in banning forced arbitration. These organizations included patients’ advocacy organizations such as the National Consumer Voice for Quality Long-Term Care,¹ the Center for Medicare Advocacy,² AARP,³ New Yorkers for Patient & Family Empowerment,⁴ and the Center for Independence of the Disabled⁵; consumer advocacy organizations such as Public Citizen’s 21,000 consumer activists⁶ and the Empire State Consumer Project⁷; unions representing health care employees such as the Service Employees International Union (SEIU)⁸; and the attorneys general of 16 states.⁹

In fact, the only entities that submitted comments supporting continued use of forced arbitration clauses were nursing home corporations and their insurers.¹⁰ Patients, their families, and health care employees also submitted voluminous comments in support of the ban.

But almost immediately after CMS issued the final regulation, the American Health Care Association, the nation’s largest nursing home- and hospital-lobbying organization, sued to enjoin implementation of the ban, arguing that CMS had exceeded its statutory authority.

On Nov. 7, 2016, Judge Michael Mills agreed and issued a preliminary injunction.¹¹ While the Obama administration appealed the ruling to the Fifth Circuit in January, the current administration directed CMS to drop its appeal—which it did in June. The decision to abandon the appeal effectively prevents CMS from implementing the rule as written.

While recent public scandals have shed light on the negative consequences of forced arbitration clauses, the Trump administration’s continued refusal to address these issues does not bode well for nursing home reform advocates. The administration’s newest proposal, a rule that would lift the ban on forced arbitration clauses, is even worse than existing law for patients and their families.¹² CMS will now review the proposed rule—to which AAJ has submitted comments—and fashion it into a final rule that will likely override the previous administration’s efforts to protect nursing home residents and continue to allow nursing homes to include forced arbitration clauses in their admission contracts.

These contracts, signed by patients and families during one of the most emotionally challenging times in their lives, stack the deck against injured parties and deny justice to those most in need. AAJ will continue to fight for the rights of patients and their families to hold bad actors publicly accountable for their misconduct. Justice demands no less.

Gabe Lezra is AAJ’s regulatory and federal relations counsel. He can be reached at gabe.lezra@justice.org.

Notes

1. Nat’l Consumer Voice for Quality Long-Term Care, Comment re: Medicare and Medicaid Programs; Reform of Requirements for Long-Term Care Facilities, 80 Fed. Reg. 42168 (Oct. 14, 2015), www.regulations.gov/document?D=CMS-2015-0083-8992. 
2. Ctr. for Medicare Advocacy, Comment re: Medicare and Medicaid Programs; Reform of Requirements for Long-Term Care Facilities, 80 Fed. Reg. 42168 (Oct. 14, 2015), www.regulations.gov/document?D=CMS-2015-0083-8377. 
3. AARP, Comment re: Medicare and Medicaid Programs; Reform of Requirements for Long-Term Care Facilities, 80 Fed. Reg. 42168 (Sep. 28, 2015), www.regulations.gov/document?D=CMS-2015-0083-4472. 
4. New Yorkers for Patient & Family Empowerment, Comment re: Medicare and Medicaid Programs; Reform of Requirements for Long-Term Care Facilities, 80 Fed. Reg. 42168 (Sep. 14, 2015), www.regulations.gov/document?D=CMS-2015-0083-5465. 
5. Ctr. for Independence of the Disabled in New York, Comment re: Medicare and Medicaid Programs; Reform of Requirements for Long-Term Care Facilities, 80 Fed. Reg. 42168 (Sep. 14, 2015), www.regulations.gov/document?D=CMS-2015-0083-5465. 
6. Public Citizen, Letter to CMS re: Medicare and Medicaid Programs; Reform of Requirements for Long-Term Care Facilities, 80 Fed. Reg. 42168 (Oct. 14, 2015), www.regulations.gov/document?D=CMS-2015-0083-8427.  
7. Empire State Consumer Project, Comment re: Medicare and Medicaid Programs; Reform of Requirements for Long-Term Care Facilities, 80 Fed. Reg. 42168 (Sep. 14, 2015), www.regulations.gov/document?D=CMS-2015-0083-9761. 
8. SEIU, Comment re: Medicare and Medicaid Programs; Reform of Requirements for Long-Term Care Facilities, 80 Fed. Reg. 42168 (Oct. 14, 2015), www.regulations.gov/document?D=CMS-2015-0083-9181. 
9. Letter From 16 State Attorneys General, Comment re: Medicare and Medicaid Programs; Reform of Requirements for Long-Term Care Facilities, 80 Fed. Reg. 42168 (Oct. 14, 2015), www.regulations.gov/document?D=CMS-2015-0083-8382. 
10. See, e.g., Physician Insurers Ass’n of Am., Comment re: Medicare and Medicaid Programs; Reform of Requirements for Long-Term Care Facilities, 80 Fed. Reg. 42168 (Sept. 14, 2015), www.regulations.gov/document?D=CMS-2015-0083-5492.
11. Am. Health Care Ass’n v. Burwell, 217 F. Supp. 3d 921 (N.D. Miss. Nov. 7, 2016).
12. Ctrs. for Medicare & Medicaid Servs., CMS Issues Proposed Revision Requirements for Long-Term Care Facilities’ Arbitration Agreements (June 5, 2017), www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2017-Fact-Sheet-items/2017-06-05.html.