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By Megan Leonhardt
October 18, 2016

In late September, nursing home patients and their families got a legal leg up when a federal agency finalized a rule that would allow them to sue the facilities when things go wrong.

Now nursing homes and assisted living providers are fighting back.

Industry lobby groups American Health Care Association and the Mississippi Health Care Association, along with four other nursing home and assisted living service providers, filed a class action lawsuit on Monday in Mississippi federal court, challenging the new rule rolled out at the end of September by the Department of Health and Human Services.

The final rule, which is set to go into effect in November, would ban nursing homes and assisted living facilities from forcing patients and their families into private arbitration to resolve disputes — a practice that keeps such conflicts out of the court system.

The long-awaited rule would only apply to new contracts, and only to facilities that accept Medicare or Medicaid — although that is nearly all of them. Although the rule would bar nursing homes from using forced arbitration clauses, it does leave the door open for facilities and consumers to enter into voluntary arbitration agreements.

Monday’s lawsuit claims that in rolling out the rule, two federal regulators — Secretary of Health and Human Services Sylvia Mathews Burwell and Andrew M. Slavitt, the acting administrator for the Centers for Medicare and Medicaid Services — overstepped their authority.

The industry groups claim that neither organization has the power to regulate alternative dispute resolution procedures, and that the rule runs afoul of the Federal Arbitration Act. “Long-term care facilities and their residents and residents’ families should not be deprived of the ability to choose arbitration, a valuable form of dispute resolution,” according to the lawsuit.

The lawsuit is a “last-ditch effort to hang on to forced arbitration,” said Julie Braman Kane, president of plaintiff lawyers group American Association for Justice, on Monday night. “The nursing home industry has hidden behind forced arbitration clauses to cover up abuse and neglect, and now they’re upset that regulators are stepping in,” she added.

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