Long-term care facilities must fully explain predispute arbitration agreements to their residents if they want to continue getting paid by Medicare and Medicaid, as the requirement doesnāt conflict with federal arbitration laws, the Eighth Circuit said.
A U.S. Health and Human Services Department rule placing conditions on payments when nursing homes use such agreements isnāt preempted by the Federal Arbitration Act, is a valid exercise of the agencyās authority, and was adopted in compliance with federal administrative rules, the U.S. Court of Appeals for the Eighth Circuit said.
The rule doesnāt prohibit nursing homes from including predispute arbitration clauses in their residentsā contracts, the court said. This distinguishes it from a 2016 ruleāblocked by a federal district court in Mississippiāthat expressly banned facilities from requiring patients or their representatives to agree to arbitrate any disputes that arose while the patient was being treated there.
The district court in the Mississippi case found the 2016 rule inconsistent with the FAA.
Under the newer rule, nursing homes can continue to insist on such clauses, the court said. But they must fully explain what the arbitration clause means in the patientās or representativeās language and make clear that admission and ongoing care arenāt dependent on their agreement in order to participate in the Medicare and Medicaid programs, it said.
HHS reasonably interpreted the Medicare and Medicaid laws to allow conditioning payments on the arbitration rule, the court said. The agency could reasonably conclude that predispute arbitration clauses could frustrate residentsā access to care āor jeopardize their health and well-being,ā it said.
The rule is āa reasonable exerciseā of the Centers for Medicare and Medicaid Servicesā authority to protect residentsā rights, the court said.
The agency relied on sufficient evidence when adopting the rule, including āacademic literature and court opinionsā suggesting that predispute arbitration clauses are detrimental to residentsā health and safety, it said Oct. 1 in an opinion by Judge Jane Kelly.
The court affirmed summary judgment for HHS and CMS.
Chief Judge Lavenski R. Smith and Judge Ralph R. Erickson joined.
Kirkland & Ellis LLP and Hardin, Jesson and Terry PLC represent the nursing homes. The U.S. Department of Justice represents the government.
The case is Northport Health Servs. of Ark. v. U.S. Depāt of Health & Human Servs., 2021 BL 375572, 8th Cir., No. 20-1799, 10/1/21.
Long-Term Care Facilities Bound by Medicare Arbitration Rule
Bloomberg
October 4, 2021 9:35 am
Long-term care facilities must fully explain predispute arbitration agreements to their residents if they want to continue getting paid by Medicare and Medicaid, as the requirement doesnāt conflict with federal arbitration laws, the Eighth Circuit said.
A U.S. Health and Human Services Department rule placing conditions on payments when nursing homes use such agreements isnāt preempted by the Federal Arbitration Act, is a valid exercise of the agencyās authority, and was adopted in compliance with federal administrative rules, the U.S. Court of Appeals for the Eighth Circuit said.
The rule doesnāt prohibit nursing homes from including predispute arbitration clauses in their residentsā contracts, the court said. This distinguishes it from a 2016 ruleāblocked by a federal district court in Mississippiāthat expressly banned facilities from requiring patients or their representatives to agree to arbitrate any disputes that arose while the patient was being treated there.
The district court in the Mississippi case found the 2016 rule inconsistent with the FAA.
Under the newer rule, nursing homes can continue to insist on such clauses, the court said. But they must fully explain what the arbitration clause means in the patientās or representativeās language and make clear that admission and ongoing care arenāt dependent on their agreement in order to participate in the Medicare and Medicaid programs, it said.
HHS reasonably interpreted the Medicare and Medicaid laws to allow conditioning payments on the arbitration rule, the court said. The agency could reasonably conclude that predispute arbitration clauses could frustrate residentsā access to care āor jeopardize their health and well-being,ā it said.
The rule is āa reasonable exerciseā of the Centers for Medicare and Medicaid Servicesā authority to protect residentsā rights, the court said.
The agency relied on sufficient evidence when adopting the rule, including āacademic literature and court opinionsā suggesting that predispute arbitration clauses are detrimental to residentsā health and safety, it said Oct. 1 in an opinion by Judge Jane Kelly.
The court affirmed summary judgment for HHS and CMS.
Chief Judge Lavenski R. Smith and Judge Ralph R. Erickson joined.
Kirkland & Ellis LLP and Hardin, Jesson and Terry PLC represent the nursing homes. The U.S. Department of Justice represents the government.
The case is Northport Health Servs. of Ark. v. U.S. Depāt of Health & Human Servs., 2021 BL 375572, 8th Cir., No. 20-1799, 10/1/21.