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Federal Government Bans Pre-Dispute, Binding Arbitration Clauses In Nursing Home And Long Term Care Contracts.

Posted by Lia M. Keller | Oct 05, 2016 | 0 Comments

On September 28, 2016, the Centers for Medicare and Medicaid Services (CMS) issued a 713 page, final, "mega rule" to revise the requirements for long term care facilities, skilled nursing facilities, and nursing facilities participating in the Medicare or Medicaid programs.

CMS will now prohibit these facilities from including a pre-dispute, binding arbitration requirement in any new admission agreements executed on or after November 28, 2016.

The regulatory prohibition is not limited to conditioning a resident's admission to the facility on an agreement to pre-dispute, binding, arbitration. CMS prohibits the inclusion of a binding arbitration clause in the admission agreement, even if the resident is given the opportunity at the time of admission to "opt out" of the arbitration agreement. All facilities subject to the rule must revise any admission agreements to remove any pre-dispute arbitration provisions. The final rule does not directly apply to admission agreements containing mandatory arbitration clauses that were in place prior to November 28, 2016. However, CMS believes that any such agreements are "unconscionable" and potentially unenforceable as well.

The final rule, codified at 42 CFR § 483.70(n) (Binding Arbitration Agreements), provides that:

1) A facility must not enter into a pre-dispute agreement for binding arbitration with any resident or resident's representative;

2) A facility must not require that a resident sign a binding arbitration agreement as a condition of admission; and

3) If, after a dispute between the facility and a resident arises, a facility chooses to ask a resident or the resident's representative to enter into an agreement for binding arbitration, the facility must ensure that the agreement is explained to the resident/resident's representative in a form and manner that he or she understands, including in plain English that the resident/resident's representative understands, and the resident acknowledges that he or she understands the agreement.

Along with the pre-dispute arbitration ban, the final rule also mandates nursing home operators 1) provide "nourishing, palatable" dietary options that meet residents' nutritional needs and preferences, 2) create an infection prevention and control program and 3) develop a comprehensive, person-centered care plan for each resident within 48 hours of admission.

Key Takeaway: Providers should review and revise their form admission agreements now, where necessary, to ensure that on and after November 28, 2016, they do not contain mandatory, pre-dispute, binding arbitration provisions.

The complete rule is available in this link:

As always, Farhang and Medcoff is available to help you with this and all your employment law concerns. Please contact us with your questions.

About the Author

Lia M. Keller

Lia Keller is an attorney and certified Senior Professional in Human Resources. She has advised...


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