Nursing homes, state watching for forced arbitration changes

OKLAHOMA CITY – Oklahoma is facing another health care funding threat, but it is looking as though the risk will soon disappear.

Late last year, under the Obama administration, the federal government adopted a rule that prohibited a practice often referred to as forced arbitration. Nursing homes and other long-term care facilities often require their patients to sign contracts including provisions that they will keep any issues they might have out of court. Several other subsets of the medical industry are still allowed to include the provisions in contracts, but the Centers for Medicare and Medicaid Services outlawed the practice, announcing that when its rule change went into effect, any home requiring those contracts would lose its qualification for federal health funding.

The Trump administration indicated it was interested in overturning the rule, and CMS released a document in June that explains its officials' plan to overturn the Obama-era change.

"It would affect all states, including Oklahoma," said Gina Cheatham, an attorney who represents the nursing home trade association for the state.

She said that the Oklahoma Association of Health Care Providers supports CMS' most recent announcement because arbitration can be more cost-effective for both sides.

In Oklahoma, three of every four nursing home patients use Medicaid to pay for their nursing home services. And as the state struggles to pitch in its share for the federal match, reimbursement rates for providers have dipped so low that many in the industry have expressed the concern that several facilities will soon close.

The state has a statute on the books that prevents forced arbitration, but the topic has still been disputed on both sides, said Don Maisch, general counsel for the Oklahoma State Department of Health.

The Federal Arbitration Act dictates that any contract can mandate that disputes be handled out of court. However, two Oklahoma Supreme Court cases in recent years have ruled in favor of plaintiffs who sued nursing homes on patients' behalf. It seems neither law offers a black-and-white legal landscape.

"We kind of meander all around it," Maisch said.

He said that the Oklahoma cases were very fact-dependent. For example, in one of them, the plaintiff was a family member who sued the nursing facility because her mother had died in it, and she believed the death resulted from neglect. The nursing home administrators argued that the lawsuit needed to be dismissed because the patient had signed an arbitration agreement. The court sided with the plaintiff, noting that the mother had signed that agreement, not the family.

Supporters of last year's measure said it gave protection to some of the country's most vulnerable residents. The Trump administration has discussed its intention to overturn the Obama-era rule change. That would allow nursing homes across the country to accept Medicaid funding, even if their contracts include a forced arbitration provision.

The topic has proved controversial on a federal level. Some health care provider trade associations fought the Obama administration's rule change, arguing that it would be a financial harm to the industry, especially with its quick implementation, which was slated for late November.

The American Health Care Association and other providers sued for an injunction, which the court granted in early November.

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