Nursing Home Group Sues U.S. Government Over New Lawsuit Rule

The American Health Care Association, an industry group that represents most nursing homes in the U.S., has filed a lawsuit against the federal government over a new rule that protects the right of patients and their families to sue nursing homes in court.

The new rule, which is part of a set of regulatory reforms set to take effect on Nov. 28, bans so-called pre-dispute binding arbitration clauses in nursing home contracts, which require patients and their families to settle any dispute over care outside the court system via arbitration.

As The Two-Way has reported, "The rule applies to facilities that receive money from Medicare or Medicaid — which is nearly all of them."

The lawsuit filed Monday in Mississippi by the American Health Care Association calls the arbitration clause ban "arbitrary and capricious" and contests the authority of the Centers for Medicare & Medicaid Services, which drafted the rule, to regulate how nursing homes handle disputes. The suit asks a federal court at least to delay the ban from taking effect when the rest of the rules become law in November, while the court considers the industry group's challenge.

The lawsuit also echoes comments made to NPR by an American Health Care Association spokesman in arguing that arbitration is "an equally fair — yet far simpler and less costly — means of seeking redress as compared to the complicated and slow-moving court system."

The American Bar Association noted in 2014 that "arbitration has a number of elements that lend to its reputation for efficiency and expediency, including traditionally faster timelines and therefore lower costs for case resolution." A 2009 study commissioned by the American Health Care Association found the average awards after arbitration in nursing home cases were 35 percent lower than if the plaintiff had gone to court.

"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," the suit states.

As we reported when the new rule was announced in September, it does not prevent patients and their families from pursuing arbitration if both sides agree to it.

The heads of the Department of Health and Human Services and Centers for Medicare & Medicaid Services, who are both named as plaintiffs, have not commented on the case since the lawsuit was filed.