The Obama Administration prohibited pre-dispute arbitration agreements in nursing home admissions contracts in final rules published in October 2016, 81 Fed. Reg. 68688 (Oct. 4, 2016). Nursing facilities sued, American Health Care Association v. Burwell, 217 F. Supp. 3d 921, 926 (N.D. Miss. 2016), and the rule was never implemented.
Final federal regulations promulgated by the Trump Administration on July 18, 2019, 84 Fed. Reg. 34718, and codified at 42 C.F.R. §483.70(n), allow nursing facilities to use binding arbitration agreements in nursing home admissions contracts, with certain resident protections, including the right to rescind the agreement within 30 calendar days of signing it.
Northport Health Services of Arkansas and other nursing facilities filed a lawsuit on September 4, 2019, challenging multiple provisions of the final rules, including the right of rescission. In a summary judgment decision on April 7, 2020, the district court upheld the rule, holding that it
- Did not violate the Federal Arbitration Act (FAA), 9 U.S.C. §1 et seq.,
- Was a permissible exercise of the Department of Health and Human Services’ authority under the Medicare and Medicaid statutes,
- Was not arbitrary and capricious under the Administrative Procedure Act, 5 U.S.C. §706; and,
- Was promulgated in compliance with the Regulatory Flexibility Act, 5 U.S.C. §601 et seq.
Northport Health Services of Arkansas v. United States Department of Health and Human Services, Case No. 5:19-CV-5168 (W.D. Ark., Apr. 7, 2020).
Northport “revives” the same four legal challenges to the 2019 rule that it made in the district court. The 8th Circuit Court of Appeals rejected all of them in an October 1, 2021 decision. Northport Health Services of Arkansas, LLC et al v. U.S. Department of Health and Human Services, No. 20-1799 (8th Cir. Oct. 1, 2021). To read the 8th Circuit decision, go to https://ecf.ca8.uscourts.gov/opndir/21/10/201799P.pdf
Ocotber 21, 2022 – T. Edelman