Court Grants Injunction on CMS Ban of Pre-Dispute Arbitration Agreements

Posted by Rebecca Brommel on Friday, November 18, 2016

In earlier blog post, we discussed CMS’s new rule revising the requirements for Long-Term Care facilities.  A particularly controversial part of this new rule is the ban on pre-dispute arbitration agreements with residents.  That portion of the rule was scheduled to go into effect on November 28, 2016.

In late October, 2016, the American Healthcare Association and a number of nursing centers located in Mississippi filed a lawsuit calling into question the legality of the pre-dispute arbitration ban.  As part of the lawsuit, the parties requested an injunction from the Court to stop the pre-dispute arbitration ban from taking effect on November 28, 2016.

On November 7, 2016, a judge in the United States District Court for the Northern District of Mississippi granted the requested injunction.  The Court held that the plaintiffs were likely to succeed on the merits of their claim that the ban violated the Federal Arbitration Act, whose purpose is to encourage arbitration as an alternative to litigation.  The Court also held that nursing homes would suffer irreparable harm if the ban became effective on November 28, because it would change a standard practice and would prevent facilities from entering such agreements while the legality of the ban was litigated.  The Court ultimately held that the balance of the harms and the public interest supported a delay of the effective date until the Court can fully resolve the question of the ban’s legality and enforceability.

Thus, nursing facilities can (and should) continue to enter into pre-dispute arbitration agreements with residents.  However, the Court could ultimately determine that the ban is legal and thus, this part of the rule may become effective at a later date.   

If you would like to discuss any parts of the new rule, please contact Becki Brommel or any BrownWinick attorney in the Health Law Practice Group.