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Trump Administration Gives First Peek Into Its Arbitration Strategy

By Liz Kramer | June 7, 2017 in Year In Review

In a first indication of the Trump Administration’s stance on consumer arbitration, the Centers for Medicare & Medicaid Services (CMS) this week issued a new proposed rule that rolls back the Obama Administration’s regulation, which precluded pre-dispute arbitration agreements in nursing homes.  (Too many negatives in that sentence… in other words, the Trump Administration wants to ensure that nursing homes can have arbitration agreements in their admission documents.)

For context, CMS just issued the regulation it is now retracting in October of 2016.  The 2016 rule applied to any new agreements between residents and long-term care facilities that receive dollars through Medicare or Medicaid, and prohibited the centers from requiring residents to sign arbitration agreements as a condition of admission.  Before the 2016 rule could even take effect, though, its legality was challenged and a federal court stayed implementation of the new regulation during the case.

Seven months and a new president later, the agency is changing course.  Why?  The announcement suggests it is for three reasons.  First, because a federal court found merit to the challenges to the rule.  Second, because President Trump’s January 30, 2017 Executive Order “Reducing Regulation and Controlling Regulatory Costs” encouraged all agencies to repeal two existing regulations for every new regulation.  And finally, “[u]pon reconsideration, we believe that arbitration agreements are, in fact, advantageous to both providers and beneficiaries because they allow for the expeditious resolution of claims without the costs and expense of litigation.”  Those second and third points could support the roll back of most, if not all, of the Obama Administration’s regulations relating to arbitration.

The new proposed CMS rule offers an olive branch to those who lobbied for the 2016 rule.  It proposes to require that arbitration agreements be written in plain language, explained clearly to prospective residents of long term care facilities, and that the resident acknowledge his/her understanding.  The new rule also prohibits any language that would discourage a resident from contacting governmental authorities, and requires facilities to keep copies of arbitration awards for five years (suggesting CMS may request inspection).   The announcement summarizes that the new rule “would . . . strengthen requirements regarding the transparency of arbitration agreements in LTC facilities. This proposal would support the resident’s right to make informed choices about important aspects of his or her health care. In addition, this proposal is consistent with our approach to eliminating unnecessary burden on providers.”

If you are curious how other arbitration rules proposed or passed during the Obama Administration have fared so far, Bloomberg BNA has done a great summary of where things stand.  (Short answer: most are on hold.)

**Many thanks to Mark Kantor for alerting me to this development.

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