Federal Judge Blocks Rule that Barred Arbitration for Long-Term Care Facilities that Receive Federal Funds

On September 28, 2016, the Centers for Medicare and Medicaid Services (“CMS”), an agency under the U.S. Department of Health and Human Services, issued a rule that barred long-term care facilities that receive federal funding from requiring that its residents resolve any dispute in arbitration, rather than in a court of law.  Specifically, this rule required that long-term care facilities must not enter into an agreement for binding arbitration with a resident (or their representative) until after a dispute arises between the parties. Thus, the rule prohibits the use of pre-dispute binding arbitration agreements.  However, on November 7, 2016, U.S. District Judge Michael Mills of the Northern District of Mississippi issued a preliminary injunction blocking enforcement of the CMS rule. The court did not definitively hold the rule unlawful, but found it likely enough that he will ultimately do so that the rule should be blocked pending final adjudication of the challenge to its legality.

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