The Centers for Medicare and Medicaid Services (“CMS”) recently published a Final Rule modifying this agency’s arbitration requirements for SNFs and nursing facilities (collectively, “Facilities”) that participate in the Medicare or Medicaid program. 84 C.F.R. 34,718 (July 18, 2019). Previously, on October 4, 2016, CMS published a Final Rule addressing the use of arbitration to resolve disputes between Facilities and their residents, or their family members or other guardians (collectively, “Residents”). 42 C.F.R. 483.70(n) (“483.70(n)”) The October 4 Final Rule stated: “A facility must not enter into a pre-dispute agreement for binding arbitration with any resident or resident’s representative nor require that a resident sign an arbitration agreement as a condition of admission to the LTC [long term care] facility.”   This total ban on pre-dispute arbitration agreements was opposed by a number of parties involved in the long-term care arena and enjoined by the United States District Court for the Northern District of Mississippi, Oxford Division on October 17, 2016. In light of this injunction, as well as the change in administrations, CMS decided to review and revise 483.70(n). The July 18 Final Rule now permits a Facility to offer an incoming Resident the option of binding arbitration, as long as a number of conditions are met, including:
  1. Entering into a binding arbitration agreement may not be a condition of admission, or a requirement to continue receiving care at the facility and must explicitly inform the Resident of his or her right not to enter into the agreement.
  2. It is the Facility’s obligation to make sure the Resident receives an explanation of the agreement in a language he/she understands, the Resident provides written acknowledgment they understand the agreement, the agreement provides for the appointment of a neutral arbitrator, and the arbitration takes place at a location convenient to both parties.
  3. The Resident must have the right to rescind their agreement within 30 calendar days.
  4. The agreement must explicitly state that the Resident is not required to sign it as a condition of admission or to continue receiving care.
  5. The Resident cannot be prohibited or discouraged from communicating with any federal, state, or local officials.
  6. When a dispute between a Facility and a Resident is resolved through arbitration, the Facility must retain a copy of the binding arbitration agreement and the arbitrator’s decision for a period of 5 years thereafter.
CMS has withdrawn the agency’s total ban on the use of pre-dispute arbitration agreements. A Facility that wants to offer this option to new Residents should work with its legal counsel in order to ensure the Facility adheres to the guidelines contained in the Final Rule. Otherwise, a Facility may find itself with an unenforceable arbitration agreement and facing sanctions for attempting to impose such a requirement on Residents.