Federal judge blocks rule giving nursing home residents right to sue

A federal judge in Mississippi issued an order Monday temporarily blocking a new rule from the Obama administration that gives patients at federally funded nursing homes the right to settle disputes in court.

Judge Michael Mills of the U.S. District Court for the Northern District of Mississippi granted a request from members of the nursing home industry to stop the rule from taking effect on Nov. 28 while it’s being challenged in court.

{mosads}The new rule from the Centers for Medicare and Medicaid Services (CMS) prohibits any nursing home that accepts Medicare or Medicaid funds from putting pre-dispute arbitration clauses in resident contracts.

Such language – often slipped into the fine print – forces residents to settle disputes privately with an arbitrator rather than through the courts.

In their lawsuit, the American Health Care Association and four other state and local health care groups, are claiming that CMS and the Department of Health and Human Services overstepped their authority in issuing the rule since Congress has repeatedly rejected legislation to invalidate arbitration agreements.

Supporters, meanwhile, say the rule is needed to protect seniors, who are forced to sign contracts during one of the most stressful and vulnerable times of their life. 

In the 40-page order, Judge Mills argued that as sympathetic as the court may be to the public policy considerations that motivated the rule, it’s not willing to allow an agency to overstep it’s executive authority.

“This court believes that Congress might reasonably consider this inefficiency, as well as the extreme stress many nursing home residents and their families are under during the admissions process, as sufficient reason to decide that arbitration and the nursing home admissions process do not belong together,” he wrote.

“Nevertheless, Congress did not enact the Rule in this case; a federal agency did, and therein lies the rub.”