Court Blocks New Nursing Home Rule From Taking Effect

A federal district court in Mississippi has issued an injunction blocking a new rule that would preserve the right of patients and their families to sue nursing homes over quality-of-care disputes.

The rule, announced in September by the Centers for Medicare & Medicaid Services, would ban so-called pre-dispute binding arbitration clauses in nursing home contracts, which require patients and families to settle any dispute over care through arbitration, rather than the court system.

The rule was supposed to take effect Nov. 28, but the American Health Care Association, an industry group that represents most nursing homes in the U.S., filed a lawsuit in October to block the rule, which it called "arbitrary and capricious."

The acting administrator for the Centers for Medicare & Medicaid Services argued in a September blog post that the rule improved the "care and safety of the nearly 1.5 million residents in the more than 15,000 long-term care facilities that participate in the Medicare and Medicaid programs."

As we have reported, the rule applies to facilities that receive money from Medicare or Medicaid — which is nearly all of them.

The lawsuit by the AHCA also contests the authority of the Centers for Medicare & Medicaid Services to regulate how nursing homes handle disputes, saying that authority lies solely with Congress.

On Monday, a federal district court granted the injunction, even as it acknowledged that "nursing home arbitration litigation suffers from fundamental defects."

The reason for granting the injunction, the court explained in its order, is that it believes the new rule represents "incremental 'creep' of federal agency authority" — in this case the Centers for Medicare & Medicaid Services — "beyond that envisioned by the U.S. Constitution."

The decision indefinitely postpones the rule from taking effect until the lawsuit is settled.