Nursing Home Mega Rule Finalized: Pre-Dispute Arbitration Agreements Not Permitted

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In the final rule overhauling skilled nursing facility federal regulations for the first time since 1991, CMS prohibits all arbitration agreements at the time of admission. According to CMS, such pre-dispute agreements are "fundamentally unfair" because "it is almost impossible for residents or their decision-makers to give fully informed and voluntary consent to arbitration before a dispute has arisen." Once a dispute arises, a facility and a resident may enter into a binding arbitration agreement so long as several requirements are met including voluntary participation by the resident/decision-maker and resident/decision-maker acknowledgment of understanding of the agreement after the facility fully explains it. For providers with existing pre-dispute arbitration agreements, those agreements will not be impacted by this final rule.

The arbitration portion of the final rule takes effect on November 28, 2016. The complete 712-page rule can be found here.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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