CMS Issues a Proposed Rule to Allow for Pre-Dispute Arbitration Agreements at Long-Term Care Facilities

On June 8, 2017, the Centers for Medicare & Medicaid Services (CMS) published a proposed rule that would remove the ban on pre-dispute arbitration agreements previously instituted in an October 2016 final rule titled “Reform of Requirements for Long-Term Care Facilities.” This proposed rule provides that long-term care facilities may enter into pre-dispute arbitration agreements as long as there is transparency in the arbitration process. CMS proposes to remove the provision prohibiting long-term care facilities from entering into pre-dispute arbitration agreements with any resident or his or her representative. CMS also proposes to remove the provision that precludes such facilities from requiring residents to sign an arbitration agreement as a condition of admission to a long-term care facility. CMS, upon reconsideration, believes that the 2016 final rule underestimated the financial burdens placed on providers who are forced to litigate claims in court. Further, CMS believes that arbitration agreements are advantageous to both providers and beneficiaries because they allow for the expeditious resolution of claims without the costs and expense of litigation. The United States District Court for the Northern District of Mississippi has issued a decision granting a preliminary injunction against enforcement of the 2016 final rule that prohibits pre-dispute arbitration agreements.