CMS Proposes Lifting Ban on Arbitration Agreements for Long-Term Care Facilities

June 28, 2017

By: Sheri L. Pizzi

The Centers for Medicare and Medicaid Services (CMS) recently issued a proposed rule lifting its ban on pre-dispute arbitration provisions that were originally established in the final rule entitled, “The Reform of Requirements for Long Term Care Facilities,” in 2016. Specifically, CMS proposes to remove the following requirements:

  • §483.70(n)(1): provision precluding facilities from entering into pre-dispute agreements for binding arbitration with any resident or resident’s representative
  • §483.70(n)(2)(ii): provision regarding the terms of arbitration agreements
  • §483.70(n)(2)(iii): provision banning facilities from requiring that residents sign arbitration agreements as a condition of admission

“We believe that a policy change regarding pre-dispute arbitration will achieve a better balance between the advantages and disadvantages of pre-dispute arbitration for residents and their providers.” - CMS

After careful review, CMS concluded that arbitration agreements are, in fact, beneficial in providing an efficient resolution of claims, and avoiding the cost and delay associated with litigation. The proposed rule, which also aims to ensure the transparency of arbitration agreements, will require the following:

  • The agreement must be explained to the resident or his/her representative
  • The facility must ensure the agreement is in plain language; and, the resident must acknowledge that he/she understands the agreement
  • The agreement must not contain language that prohibits or discourages the resident or his/her representative from communicating with federal, state or local officials
  • The facility must keep a copy of the signed arbitration agreement for five years, and post notice regarding its use of binding arbitration in a visible area to residents and visitors
  • If the facility requires signing an arbitration agreement as a condition of admission, the agreement must be in plain language and noted in the admissions contract

The proposed rule is in response to a preliminary injunction ordered by the U.S. District Court for the Northern District of Mississippi to block enforcement of the ban on pre-dispute arbitration provisions. Once finalized, Long-Term Care facilities will be required to comply with the requirements set forth by the proposed rule. Until that time, facilities are able to enter into pre-dispute binding arbitration based on the preliminary injunction. Comments on the proposed rule are due by August 7, 2017, with final approval of the rule likely to follow in that same month.

The final proposed rule can be found here. For more information or if you have questions, please contact Sheri Pizzi at spizzi@bartongilman.com or 401.273.7171.

Sheri L. Pizzi is an experienced trial attorney concentrating in the defense of medical and other professional liability lawsuits, with a focus on aging services litigation. She regularly appears in state and federal courts in Rhode Island and Massachusetts, and before arbitration panels to defend skilled nursing facilities, assisted living facilities and other healthcare providers in complex professional negligence claims, including those involving elopements, falls, pressure ulcers, medication errors, aspiration, dehydration, wrongful death, assaults and other negligence claims.