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November 9, 2016

UPDATE: Preliminary Injunction Temporarily Halts Implementation of Final Rule Prohibiting Pre-Dispute Arbitration Contracts in LTC Facilities

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A regulation scheduled to go into effect on November 28, 2016 has been blocked temporarily by U.S. District Judge Michael P. Mills in the United States District Court for the Northern District of Mississippi, preventing the Centers for Medicare & Medicaid Services (“CMS”) from prohibiting pre-dispute arbitration agreements for residents as a condition of their admission to nursing homes. Judge Mills’ decision in American Health Care Association v. Burwell also casts serious doubts as to whether CMS has the authority to issue a regulation that is contrary to the Federal Arbitration Act. In implementing the final rule, now codified at 42 C.F.R. § 483.70(n)(1), CMS argued that its “middle ground” approach to arbitration would permit residents to independently determine whether arbitration would be advantageous for their individual situation. While the Court questioned the effectiveness and efficiency of nursing home arbitration, ultimately the Court was unwilling to support “federal agency authority beyond that envisioned by the U.S. Constitution.”

The plaintiff, American Health Care Association, seeks to void the new rule, which was scheduled to become effective November 28, 2016. The injunction has halted agency enforcement of the new rule pending a final court ruling based on the merits of the case.

We will continue keep you updated on news surrounding further decisions in AHCA v. Burwell. Click here to read the current order.

Read our previous alert on this subject: Nursing Facilities Sue HHS to Block Ban on Pre-Dispute Binding Arbitration Agreements and HHS Prohibits Long-Term Care Facilities from Using Pre-Dispute Binding Arbitration Agreements.

About the Authors

Andrew Levine

Andrew Levine is a partner and head of the firm's regulatory practice. He provides regulatory guidance, business and corporate legal services, as well as strategic advice to healthcare clients. You can find him on Google+ and LinkedIn.

Crystal Bloom

Crystal Bloom is a partner and a senior healthcare regulatory attorney in Barrett & Singal's Health Law group. She provides state and federal regulatory guidance and corporate legal services to healthcare providers. You can find her on LinkedIn.

Adelita Orefice

Adelita Orefice is an attorney in Barrett & Singal’s Providence office where she focuses on healthcare and corporate law.

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