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New Final Rule May Make it Easier for Residents to Sue Long-Term Care Facilities

October 3, 2016

In what represents one of the biggest overhauls of the requirements applicable to long-term care facilities, on Wednesday, September 28, 2016, The Centers for Medicare and Medicaid Services (“CMS”) issued a Final Rule delineating and revising the requirements that all long-term care facilities must meet in order to participate in the Medicare and Medicaid programs. One provision of the Final Rule will particularly interest long-term care facilities. In the Final Rule, CMS issued a ban on the use of pre-dispute binding arbitration agreements. Starting from November 28, 2016, long-term care facilities may not require residents to sign pre-dispute arbitration agreements as a condition to admission into a long-term care facility.

Many facilities typically place provisions regarding the use of arbitration to settle any disputes in admission contracts. By signing the admission contract, residents and their families agree to use arbitration when a legal dispute arises. However, due to concerns about residents and their families being stymied from pursuing claims through the court system, CMS promulgated the new prohibition against pre-dispute arbitration agreements in order to strengthen the rights of residents and their families when a dispute with a facility arises. Once a dispute does arise, however, facilities and residents and their families are still entitled to agree to arbitration.

The Final Rule does not apply to any admission contracts executed prior to November 28, 2016. However, in order to ensure compliance once the Final Rule goes into effect, long-term care facilities should begin to carefully review admission contracts and remove any provisions obligating residents and their families to settle legal disputes through arbitration. Any agreement executed after November 28, 2016 to utilize arbitration to resolve future disputes could jeopardize the funding a facility receives from the Medicare and Medicaid Programs. If you and your facility have any questions about the new rule, or would like guidance on how best to comply with the new rule, please contact a member of HDJN’s Compliance Team.

The information contained in this advisory is for general educational purposes only. It is presented with the understanding that neither the author nor Hancock, Daniel, Johnson & Nagle, PC, is offering any legal or other professional services. Since the law in many areas is complex and can change rapidly, this information may not apply to a given factual situation and can become outdated. Individuals desiring legal advice should consult legal counsel for up-to-date and fact-specific advice. Under no circumstances will the author or Hancock, Daniel, Johnson & Nagle, PC be liable for any direct, indirect, or consequential damages resulting from the use of this material.