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INJUNCTION GRANTED: AHCA Jumps the First Hurdle in Overturning CMS's Ban on Pre-Dispute Arbitration

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Judge Michael P. Mills granted a preliminary injunction in favor of the American Healthcare Association (AHCA) earlier today in the case of AHCA v. Burwell. A copy of the court's injunction order can be accessed here. The injunction – which will last until there is a trial on the merits of the case – postpones the Centers for Medicare & Medicaid Services' (CMS's) new regulation from going into effect on November 28. This is big news for long term care facilities that participate in the Medicare/Medicaid program. If implemented, CMS's new regulation would prohibit such facilities from entering into pre-dispute arbitration agreements – a practice in which many long term care facilities participate.

In his opinion, Judge Mills found that AHCA was entitled to preliminary relief. Judge Mills wrote that AHCA would likely prevail on the merits of the lawsuit because, based on the record presented, CMS did not have the authority to issue a regulation that overrides the Federal Arbitration Act. Judge Mills was clear, however, that CMS's regulation was "based upon sound public policy" because of mental competency issues that may exist when contracting with nursing home residents. Despite Judge Mills' sympathies to CMS's position, the court ultimately granted the injunction.

The injunction applies nationwide and prohibits CMS from punishing any long term care facility that continues to use pre-dispute arbitration agreements after November 28, 2016. We anticipate that the government will appeal Judge Mills' ruling to the Fifth Circuit Court of Appeals. We will continue to pay close attention to this case.

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