Sides agree to rule delay in nursing home fight

A contentious federal rule that would ban nursing homes from requiring residents to agree to arbitration as a precondition for care has been delayed until the end of the year, according to a filing Friday in federal court in Fayetteville.

Initially scheduled to take effect on Monday, the rule will be postponed until Dec. 31, according to a motion jointly signed by President Donald Trump’s administration and a pair of Springdale nursing homes that sued to block the rule.

The Arkansas nursing homes on Sept. 4 asked U.S. District Judge Timothy Brooks of Arkansas’ Western District to issue a preliminary injunction, or temporarily block the rule, until their case was heard. The filing Friday acknowledged that request is now “unnecessary.”

“By entering into this agreement, Defendants do not concede that Plaintiffs’ preliminary injunction motion has merit,” a footnote to

the filing says. “Defendants merely believe this is the most efficient way to resolve this case.”

Although the case is playing out in Arkansas, the ramifications will be felt nationwide. The lawsuit is the latest development in a struggle dating back to President Barack Obama’s administration over whether nursing homes are allowed to sign or mandate “pre-dispute arbitration” agreements when residents are admitted.

Arbitration is a private way to decide disputes — such as accusations of negligence or personal injury — outside of public courtrooms. A third-party arbitrator decides the case after weighing evidence and listening to statements. “Pre-dispute” agreements are a pledge to use arbitration in the event a future conflict arises.

Proponents say arbitration is a less-costly way than the courts to settle disputes.

Opponents contend that nursing home residents don’t necessarily understand they’re signing away their rights to legal action.

Administrators of both Springdale facilities filed 12-page affidavits that say those nursing homes’ admission agreements with residents include a “mandatory pre-dispute arbitration provision.”

Springdale Health and Rehabilitation Center and The

Maples at Har-Ber Meadows filed the lawsuit. The motion Friday also revealed that 84 more facilities based in several states intend to join the lawsuit as plaintiffs.

Northport Health Services of Arkansas LLC holds the Springdale Health and Rehabilitation license. Northport, which operates four other nursing homes, is based in Tuscaloosa, Ala.

Conway-based RHC Operations Inc. controls The Maples at Har-Ber Meadows. RHC Operations is co-owned by brothers Anthony and Bryan Adams.

Over the past four years, the Centers for Medicare and Medicaid Services has approached pre-dispute arbitration rules in widely varying fashion, according to a summary from the American Bar Association, which has supported a complete ban on nursing home arbitration.

The first rule, developed in 2015 and scheduled to go into effect the next year, would have prohibited nursing homes from engaging in binding pre-dispute arbitration agreements with residents. Nursing homes in November 2016 won a federal court order in Mississippi blocking enforcement of that rule. Three nursing homes, the national nursing home association and that state’s association filed that suit.

The Centers for Medicare and Medicaid Services later proposed a rule that went in the opposite direction — not only would it have allowed nursing homes to engage residents in arbitration agreements, it would have granted them permission to make it a precondition for admission.

Noting it received more than 1,000 comments on

that version of the rule, the agency later decided to take a different approach. The new course, which is being challenged in Arkansas, would allow pre-dispute arbitration agreements but prohibit nursing homes from making them a prerequisite to care.

“The CMS proposal supports patients and their caregivers by removing the ban on binding arbitration agreements while requiring nursing homes to ensure residents have the ability to choose the method of dispute resolution they want,” the agency said in a July 2019 news release.

The Springdale nursing homes contend that the differences in the 2016 and the current proposal are “more cosmetic than material.”

Their complaint primarily argues that the agency cannot restrict their arbitration mandates without running afoul of the Federal Arbitration Act of 1925 or exceeding its rule-making authority. The argument is similar to what the industry relied on in the 2016 Mississippi case.

“Indeed, nothing in the [new rule] resolves the fundamental problems that the Northern District of Mississippi recognized when it” blocked the 2016 rule, the filing says.

The proposed lawsuit schedule laid out in the joint motion suggests a series of deadlines leading up to Dec. 6.

“The Parties designed this schedule with the hope that it would allow [Brooks] time to render a decision on the motions for summary judgment by the end of calendar year 2019,” it says.

As of Friday evening, Brooks had not yet ruled on the motion.