Within the U.S. Government, the CFPB has gotten most of the attention for trying to regulate consumer arbitration. But this month, the Centers for Medicare & Medicaid Services (CMS) are bumping the CFPB out of the arbitration regulation spotlight. In particular, the CMS issued a rule that will prohibit the use of pre-dispute arbitration agreements in most long term care facilities.
On its blog, the CMS explains the change this way:
The rule makes important changes to strengthen the rights of residents and families in the event that a dispute arises with a facility. Historically, many facilities require residents to agree to binding arbitration clauses when they are admitted to these facilities. These clauses require the resident to settle any dispute that may arise using arbitration rather than the court system. Effective November 28, 2016, our final rule will prohibit the use of pre-dispute binding arbitration agreements. This means that facilities may not require residents to sign pre-dispute arbitration agreements as a condition of admission to that long-term care facility.
The rule applies to all long-term care facilities that participate in the Medicare or Medicaid programs. The prohibition is in keeping with the recommendation of the American Bar Association.
The rule is also in keeping with the decisions of many state courts, which have largely refused to enforce arbitration agreements in nursing home admission documents. For example, the Supreme Court of Florida last month found that an admission document signed by the resident’s son did not bind the resident, and therefore claims of negligence and statutory violations could proceed in court. Mendez v. Hampton Court Nursing Ctr., __ So. 3d __, 2016 WL 5239873 (Fl. Sept. 22, 2016). The highest courts in Pennsylvania, Alabama, South Carolina, Kentucky, and Oklahoma have also refused to enforce arbitration agreements in recent years, for a variety of reasons.
It will be interesting to see whether CMS’ regulation of arbitration draws the same type of challenge that CFPB’s regulation of arbitration has drawn.