Getty Images

Nursing Home Patients Lose Round on Forced Arbitration

Nov 08, 2016

Nursing homes just notched a temporary victory in a legal battle that pits them again patients' advocates and the federal government.

A Mississippi federal judge ruled Monday in favor of nursing homes' right to include mandatory arbitration provisions in patient contracts -- blocking the implementation of a new federal rule that would give nursing home patients and their families more flexibility to sue the facilities when things go wrong.

The rule was set to go into effect on November 28, but Monday’s ruling scuttled that. Under the judge's order, the rule cannot go into effect until a court case challenging the rule wraps up -- and that could take a while. "The rules could be on hold for some time," says Scott Nelson, an attorney with consumer advocacy group Public Citizen.

Hundreds of cases accusing nursing homes of neglect, abuse and wrongful death ended up in arbitration between 2010 and 2014, according to a New York Times investigation of approximately 25,000 arbitration cases.

In September, the Department of Health and Human Services moved to end mandatory arbitration by rolling out a finalized rule that would have banned 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. While 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 decision to block the rule's implementation came as part of a class action filed by industry lobby groups and nursing homes challenging the rule. They claim 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.

It's difficult to predict when the case could reach a conclusion. According to the most recent federal court management statistics, it now takes, on average, over 27 months for a civil case to wrap up. Nelson notes, however, that this lawsuit has moved very fast thus far, with the preliminary injunction ruling coming only weeks after the case was filed.

Regulators can appeal Monday's ruling -- and if that happens, an appeals court could rule as early as next spring. "It is quite possible that the rule could still be subject to an injunction, and the case still be going on in higher courts, two years from now," Nelson says.

The Centers for Medicare and Medicaid Services declined to comment on ruling, saying the agency does not comment on pending litigation.

All products and services featured are based solely on editorial selection. MONEY may receive compensation for some links to products and services on this website.

Quotes delayed at least 15 minutes. Market data provided by Interactive Data. ETF and Mutual Fund data provided by Morningstar, Inc. Dow Jones Terms & Conditions: S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Terms & Conditions. Powered and implemented by Interactive Data Managed Solutions