Lawsuit Filed Against the Centers for Medicare and Medicaid Following New Arbitration Regulation

The American Health Care Association (ACHA) filed a lawsuit against the Centers for Medicare and Medicaid Services (CMS) on Monday, October 17 in the U.S. District Court for the Northern District of Mississippi. The suit was filed after CMS finalized a regulation barring nursing homes from forcing residents to enter into arbitration agreements. ACHA and four long-term care providers filed a lawsuit against the secretary of Health and Human Services as well as the acting administrator of CMS.

An arbitration clause is a clause in a contract requiring parties to resolve issues through the arbitration process, therefore preventing disputes from being litigated in court. These clauses have forced claims of sexual harassment, elder abuse and even instances of wrongful death from being handled in an open court. CMS has issued a rule that will prevent nursing homes receiving federal funding from requiring arbitration clauses be signed in their contracts.

Plaintiffs claim the regulation takes a step too far in prohibiting nursing facilities from entering into pre-dispute arbitration agreements. They also said the regulation oversteps the mandated Federal Arbitration Act which states changes in arbitration agreements can only be made by Congress. The President and CEO of ACHA, Mark Parkinson stated that studies show arbitration is fair and speeds up judgment in a cost-effective manner, concluding this process is most beneficial to residents.

Plaintiffs requested the Court stop the enforcement of the regulation before it goes into effect on November 28, 2016.

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