Judge blocks rule barring nursing home pre-dispute arbitration agreements

A federal district court issued a preliminary injunction on October 7 barring enforcement of a rule barring the use of pre-dispute arbitration agreements with patients in long-term care facilities that participate in Medicare and Medicaid programs. American Health Care Association v. Burwell (ND Miss 11/07/2016) [Opinion text].

The new rule [Rule text] by the Centers for Medicare & Medicaid Services would have taken effect on November 28, 2016. It would have prohibited (1) entering into pre-dispute arbitration agreements, and (2) requiring signing an arbitration agreement as a condition of admission.

The court said the federal agency "is seeking to engage in a rather unprecedented exercise of agency power in this case."

The governing statute authorizes the Secretary of Health and Human Services to impose "such other requirements relating to the health and safety [and the well-being] of residents . . . as [she] may find necessary." The court found it difficult to connect pre-dispute arbitration agreements to the health and safety of residents. The following quotes will give you the flavor:

CMS relied heavily upon the fact that the admissions process is "an extremely stressful time for the [prospective] resident and his or her family," but this court does not believe that it had much success in tying this stress, in a practical way, to negative health and safety effects impacting residents. For example, this court regards the notion that being asked to sign arbitration agreements during a stressful admissions process will cause residents to make incorrect health care decisions or that the agreements will reduce the flow of "information related to serious quality of care issues" as being quite speculative assertions which are unsupported by objective proof. It is also not clear to this court that, even if these effects were reliably proven, they would be considered sufficiently important to ban the practice of nursing home arbitration entirely.
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As sympathetic as this court may be to the public policy considerations which motivated the Rule, it is unwilling to play a role in countenancing the incremental "creep" of federal agency authority beyond that envisioned by the U.S. Constitution.