In a regulation issued today, for publication early next week in the Federal Register, the Centers for Medicare and Medicaid Services of the Department of Health and Human Services have banned nursing homes that participate in the Medicare and Medicaid programs from entering into predispute arbitration agreements with patients. The Centers had proposed only to impose certain requirements that would supposedly enhance the "voluntariness" of such agreements, but had requested comment on whether to ban them altogether. The comments received convinced the agency that predispute arbitration agreements are harmful to nursing home residents and reflect disparities in bargaining power and information between nursing homes and patients. The agency strongly rejected industry suggestions that it lacked authority to issue such a rule.
Litigation will doubtlessly follow, but the agency appears to have mustered a strong legal and factual basis for its rule.