Search form

Long-Term Care Facilities: Recent Developments on Use of Arbitration Agreements

By James A. Shannon
  • November 28, 2016

Three cases making their way through the courts demonstrate that the question of arbitration clauses in long-term care (LTC) facility admission agreements is an active and developing area of the law.

CMS Rule Case

The Centers for Medicare & Medicaid Services (CMS) had issued a final rule prohibiting LTC facilities from requiring individuals seeking admission to agree to mandatory arbitration for subsequent disputes. (For more on the rule, see our article, Long-Term Care Facilities: New Rule Imposes Significant Changes, including Bar on Pre-Dispute Arbitration Agreements.)

This prohibition was due to take effect on November 28, 2016, as one part of a much broader reorganization and revision of the regulations governing LTC facilities.

As expected, a group of health care associations and LTC facilities filed a complaint in the U.S. District Court for the Northern District of Mississippi just weeks after the final rule was issued, challenging the prohibition against pre-dispute arbitration agreements. On November 7, 2016, the court granted the plaintiffs’ motion for preliminarily injunctive relief and enjoined CMS from enforcing the arbitration prohibition in the final rule, pending the court’s entry of a final judgment in that action. American Health Care Association, et al. v. Burwell, et al., No. 3:16-cv-00233-MPM.

The court found that the plaintiffs were likely to eventually succeed on the merits of whether that portion of the final rule is barred by the Federal Arbitration Act and whether CMS lacks the requisite statutory authority under either the Medicare Act or Medicaid Act to prohibit the use of pre-dispute arbitration provisions by LTC facilities.

The preliminary injunction does not affect the implementation of the remaining provisions of the final rule, many of which are due to take effect as scheduled, on November 28, 2016.

Supreme Court Case

On October 28, 2016, the U.S. Supreme Court agreed to review a decision of the Supreme Court of Kentucky unfavorable to the use of arbitration by LTC facilities. Kindred Nursing Centers v. Clark, No. 16-32.

The Supreme Court of Kentucky held that the daughters of two former residents of a LTC facility, both of whom were the attorneys-in-fact for their respective parents pursuant to previously executed powers of attorney, lacked authority to waive their parents’ fundamental personal right to a trial by jury. Rather, the Supreme Court of Kentucky held that the power of attorney would need to explicitly grant such authority for an arbitration agreement to be effective.

The U.S. Supreme Court’s review of Kindred will provide greater clarity on the issue of who can sign an admission agreement and may foreshadow how the Court would rule on the issues raised in the challenge to the CMS prohibition on mandatory arbitration. Even if CMS were to prevail in that case, the prohibition would apply prospectively only — arbitration agreements between LTC facilities and their residents entered into before the effective date will remain in place. Therefore, Kindred will still be important to disputes involving pre-existing arbitration agreements.

New York Case

On November 17, 2016, the New York Court of Appeals, New York’s highest court, declined to review the 2015 intermediate appellate court decision holding valid a client’s arbitration agreement authored by the attorneys now forming the Jackson Lewis Health Law and Transactions Practice. Friedman v. The Hebrew Home for Aged at Riverdale, 2016 NY Slip Op. 91604 (Nov. 17, 2016). This decision provides greater support for the use of arbitration agreements in the State of New York, subject, of course, to the outcome of the challenge to the CMS prohibition.


These three cases show that the question of arbitration clauses in LTC facility admission agreements is not settled. Jackson Lewis will continue to monitor and provide updates.

©2016 Jackson Lewis P.C. This Update is provided for informational purposes only. It is not intended as legal advice nor does it create an attorney/client relationship between Jackson Lewis and any readers or recipients. Readers should consult counsel of their own choosing to discuss how these matters relate to their individual circumstances. Reproduction in whole or in part is prohibited without the express written consent of Jackson Lewis.

This Update may be considered attorney advertising in some states. Furthermore, prior results do not guarantee a similar outcome.

Jackson Lewis P.C. represents management exclusively in workplace law and related litigation. Our attorneys are available to assist employers in their compliance efforts and to represent employers in matters before state and federal courts and administrative agencies. For more information, please contact the attorney(s) listed or the Jackson Lewis attorney with whom you regularly work.

See AllRelated Articles You May Like

December 6, 2017

Bill Would Revise New Jersey Law Against Discrimination to Limit Employment Agreements

December 6, 2017

A bill in the New Jersey State Senate would effectively prohibit jury waivers, arbitration clauses, and non-disclosure provisions related to claims under the New Jersey Law Against Discrimination, N.J.S.A. § 10:5-1, et seq. (LAD). S-3581, introduced in the Senate on December 4, 2017, declares, in no uncertain terms, that provisions in... Read More

October 3, 2017

Supreme Court Hears Argument on Validity of Class Action Waivers in Employment Arbitration Agreements

October 3, 2017

The United States Supreme Court heard a one-hour consolidated oral argument in three arbitration cases involving the intersection of the National Labor Relations Act and the Federal Arbitration Act on October 2, 2017. Epic Systems Corp. v. Lewis, No. 16-285; National Labor Relations Board v. Murphy Oil USA, No. 16-307; Ernst & Young... Read More

October 3, 2017

New York Court: Minimum Wage Due for All On-Premises Hours Required of Non-Resident Home Care Attendants

October 3, 2017

In a significant blow to the home health care industry in New York, non-resident home health care attendants must be paid minimum wage for all hours they are required to remain at the client’s home, including hours when they may be sleeping, eating, or performing other personal tasks, the Brooklyn-based Appellate Division, Second... Read More

Related Practices