Federal Rule against nursing home arbitration on hold

This is the Nursing Home Abuse Podcast. This show examines the latest legal topics and news facing families whose loved ones have been injured in a nursing home. It is hosted by lawyers Rob Schenk and Schenk Firm of Schenk Smith LLC, a personal injury law firm based in Atlanta, Georgia. Welcome to the show.

Schenk: Hello out there. Welcome and thanks for joining us. I am Rob Schenk.

Smith: And I’m Schenk Firm.

Schenk: And we are trial lawyers and we practice in the areas of nursing home abuse and neglect in the state of Georgia, and we just happen to be your co-hosts for this episode of the Nursing Home Abuse Podcast.

The Nursing Home Abuse Podcast, as always, is a video podcast, meaning that you have multiple ways to consume. You can download the audio on Stitcher or iTunes Radio, or if you like, you can watch this podcast on our website, which is located at NursingHomeAbusePodcast.com – NursingHomeAbusePodcast.com, or check us out on our YouTube channel.

At this point, there’s no difference between the audio, and I’ll be real – we’ll get real on this episode – there really is almost no difference between the audio and the video portion at this point. Maybe one day. You can watch us and that’s awesome because you can see us, what we’re wearing, our suits and how we interact with other, how Will slams his hands onto the microphone every week. You can actually see those things. But in terms of one day – I was thinking about this the other day – one day, I really want to start – we need to start doing graphics, like when we’re talking about this particular Judge Cardozo issued this ruling, and like a picture of Judge Cardozo comes up, you know what I mean, like a true visual experience rather than just two attorneys in suits with microphones talking in a room. You feel me?

Smith: Yeah.

Schenk: Awesome.

Smith: One can dream.

Schenk: Very good.

Smith: Well you know…

Schenk: Thanks a lot, Will. A lot of good things to talk about in this episode. This episode is going to kind of like – you didn’t have television growing up. I did and most of our viewers and listeners did. They didn’t have White County, Georgia in the mountains. You had to basically travel into town, get a video cassette from the Blockbuster, go back to your house that doesn’t have a television and act out what you see on the cover of the box.

Smith: First of all, you wish we had a Blockbuster. What is this, Gainesville?

Schenk: Anyways, to those people who are not residents of Georgia, we apologize. But anyways, this episode is going to kind of remind me of the show “Unsolved Mysteries,” where periodically, you would have an update on a prior segment. So it’d be like, “Update: we found this guy” or “We solved where Amelia Earhart crash landed. She wasn’t taken by aliens.” This episode similarly is going to be an update with where we are on a particular rule that was passed or promulgated by the Centers for Medicare and Medicaid Services. So let’s get into that.

So in September, to be specific, September 28 of 2016, the Center for Medicare and Medicaid Services announced a rule that forbade, that prohibited nursing homes from requiring that new residents sign arbitration agreements. That is to say they didn’t ban arbitration agreements – the CMS just said you cannot make them mandatory upon admission.

Smith: Right.

Schenk: So what does that mean? First of all, what is arbitration? We’ve dealt with this issue in previous podcasts, but it still bears a little bit of explaining if you’re new to the podcast or you want a refresher. Arbitration is an alternative dispute resolution method. It is the alternative to litigation. Arbitration is generally hashing out issues with a neutral third party that acts as the judge in order to resolve a dispute. Most of the time, it can be quicker, but there are a lot of disadvantages to arbitration that we won’t get into in this particular podcast because we’ve done that before. Just suffice it to say that it is a method for resolving conflict between a resident or a resident’s family and the nursing home that has enough disadvantages that CMS has decided to say, “Listen, you cannot require people to forgo their right to trial by jury…”

Smith: Their Seventh Amendment right.

Schenk: “…to be admitted to a nursing home.” So that’s where we’re at in September of 2016. CMS said, “No way, Jose” on requiring arbitration.

Smith: And just as a reminder, arbitration is essentially what Judge Judy is. That is not a real court of law. She may be a real judge, but…

Schenk: That is exactly what Judge Judy is. That is binding arbitration on the show as on the real. That’s how that show works.

Smith: Yeah.

Schenk: So the CMS announced that the rule would go into effect November 28. So see, now that’s exactly what I’m saying. If you’re watching this episode, you would know that Will…

Smith: It was me that hit the microphone.

Schenk: …attempting to scratch his inner ear, slammed his hand into the microphone.

All right, so the rule would go into effect on November 28 of 2016, so we’re several months back, six months back, whenever this goes to air. On October 17 of 2016, so less than a month later, various nursing home long-term care facility associations gathered together to file a complaint to stop this rule from going into effect. And in my opinion based on my limited research, they did what you would call forum shop. They decided to file this suit in a district suit where they figured they could get a favorable ruling to stop this rule from going into effect. They were requesting an injunction, a court commanding that CMS not enforce this rule.

So that was October, so now we’re getting into November. On November 7 of 2016, the United States District Court for the Northern District of Mississippi issued an order enjoining, meaning issued an order forbidding CMS from enforcing this rule. The order for this case was brought before District Court Judge the Honorable Michael Mills, U.S. District Court for Northern Mississippi.

Again, you have the lawsuit brought in part by the American Healthcare Association, the Mississippi Healthcare Association, Great Oaks Rehabilitation and Healthcare Center, several other long-term care facilities located within this district. It was brought against, which most of the time, it’s not like these particular people have done anything particularly wrong, but generally when you’re seeking an injunction, you’re going to bring it against the heads of the agencies that have promulgated the rule. So in this instance, the lawsuit was brought against Sylvia Burwell in her official capacity as the Secretary of Health and Human Services and Andrew Slavitt, in his official capacity as Administrator of the Centers for Medicare and Medicaid Services. So that’s where we’re at. So you have all these associations that are obviously fighting on behalf of long-term care facilities, and they want arbitration for reasons that we’ll explain.

So on November 7, Judge Mills issued an order in favor of the plaintiffs. So in other words…

Smith: The nursing homes. In favor of the nursing homes.

Schenk: Exactly. So in other words, stopping the rule from going into effect. But what I wanted to draw our fair listeners’ attentions to is that the judge did this in my opinion through clenched teeth.

Smith: Oh yeah.

Schenk: The judge wanted to, I feel like based on most of this order, to side with CMS, but could not.

Smith: Yeah, his order has a huge however right before the ruling because the very first part of it sounds like this guy is really in favor of the order, which he is. He is.

Schenk: Let’s unpack a little bit of this.

Smith: Or the rule. He’s in favor of the rule.

Schenk: Exactly.

Smith: Which he is, however…

Schenk: Exactly. So he goes into the history, the procedural history of the rule itself. So he says, and this is all in the order, that in July of 2015, CMS first proposed the change, the arbitration issue, for the purposes to “improve the quality of life of care and services in long-term care facilities, optimize resident safety…” So what CMS did, and again, this is the background that he used to formulate his opinion. CMS said we’re going to do this – we’re going to request public comment, like Tweet us, Facebook message us, Snapchat, get back to us. Clap back. Is that right?

Smith: Okay.

Schenk: Okay. So CMS received more than 9,800 public comments on the comprehensive revision of the regulation, almost 1,000 of which related to the changes in arbitration. After considering those comments as well as conducting research into scholarly articles, CMS “began convinced that requiring residents to sign predispute arbitration agreements is fundamentally unfair because among other things, it is almost impossible for residents or the decision makers to make a fully-informed, voluntary consent to arbitration before the dispute has arisen.”

So that’s the background and he goes in to shred CMS for that methodology for coming up with the rule. He says, “Guys, what are you doing? This isn’t a…”

Smith: This isn’t American Idol.

Schenk: “This isn’t American Idol. This is not a way in which you want to promulgate any rule,” not to say that people’s opinions on this doesn’t matter, but I mean, hey, where are the studies, the long-term studies on this thing? You’re putting two and two together.

So with the judge saying that, he then goes onto say, “Listen, maybe I don’t like that aspect of this rule, but here’s what I can say as a federal district court judge in the Northern District of Mississippi – Oxford Division.” He says, “Listen, the nursing homes are arguing that arbitration is fast and efficient. Let me give you my opinion on that.”

He says that there is one intractable problem affecting nursing home arbitration. It is it’s not fast, and the reason why is because I’ve seen – and the I being the judge – I’ve seen cases in here which the family has filed a lawsuit and the nursing home is defending on the grounds of either mental capacity of the individual or the power of the family to act on behalf of that person, that is to say basic contract principles of who can contract in terms of are they mentally there to sign the dotted line or who can act on behalf of somebody who can do that.

And he’s saying, “Man, I have to resolve these issues so many times that in reality, arbitration is a litigation efficiency killer.” And I’ve highlighted this in the opinion where he says, “While plaintiffs” – in this instance, he’s using plaintiffs as families of nursing home victims – he says, “While the families of nursing home abuse victims ultimately prevailed in the Mississippi Supreme Court cases, their victories may fairly be regarded as pyrrhic, considering the time and expense involved. When a nursing home chooses to litigate arbitration issues at both the trial and appellate level, it can easily delay the underlying suit for years. For nursing homes inclined to use it, this court is unaware of any form of litigation which provides as effective a tool for pure delay while not advancing the underlying litigation as nursing home arbitration.”

Smith: Right.

Schenk: He’s basically saying, all you had to do, CMS, was look at cases around the country at the outset. Whether or not the arbitration is valid kills the speedy process of our judicial system. That’s just one of the arguments against it that he’s saying. But guess what? He goes on to say, “While this court has the above views regarding nursing home arbitration,” that is to say he spends 10 pages talking about how it’s not fast and how it can be very cumbersome and not fair to the families, he says as sympathetic as he is, he can’t use any of his own experience in rendering his own opinion, because this is a lawsuit against an administrative act. He can only look at the record of the agencies, what you would call the record of the agency putting together this rule. And guess what? He hates the way the methodology that CMS used in promulgating this rule.

Smith: As an attorney, as somebody personally who despises arbitration clauses, I hate that this is the way that the case went. As an attorney who appreciates judges who follow the law and are unbiased, this is an extremely good judge. I really like this judge. He’s extremely fair.

Schenk: It’s interesting. From a plaintiff’s attorney’s side, I’m bummed out, but I mean he arrived at this decision in the right way. So anyways, he spends a lot of time talking about how this is a good idea, but it wasn’t rendered correctly, and goes on – I don’t want to get too bogged down in the legal component of this, but generally when you’re requesting an injunction of some sort, you have to meet certain variables in order to achieve the goal of the injunction. And he goes systematically through.

Smith: You’ve got to – what is it, on the merits? We just went through this with the travel ban.

Schenk: Are they going to have success on the merits? And there are three or four different ways that he states it could have potential…

Smith: Irreparable harm.

Schenk: Exactly. But again, in every instance, he makes sure to highlight that they’re going to win based on the ridiculousness that CMS went about…

Smith: Promulgating this rule.

Schenk: Promulgating this rule.

Smith: Putting it together.

Schenk: Yeah, exactly. So the order was given on behalf of the nursing home. They say, “Great. CMS, you are enjoined.” At least in the Northern District of Mississippi, CMS cannot enforce this rule in this district. And that’s how federal law works. In California, in Massachusetts whatever it is, it’s a different concept because they don’t have an order. This is just in this federal district court.

So I’m assuming because of this and they don’t want to cause problems across the country, what happened is that on December 9, 2016, CMS, Centers for Medicare and Medicaid Services, issued a memo stating that they are going to say, “Listen, as long as this injunction is in place in Mississippi, we’re not enforcing it anywhere.”

Smith: Right.

Schenk: So CMS said, “Hey guys, we’re going to wash our hands of this for now until it concludes on appeal or something else happens.” So they say, let’s see here – that’s exactly right. December 9th, CMS says, “We’re out of here. We don’t want to deal with this.”

So where are we at as of this broadcast? Right now, because technically the defendants in this case are the federal government, that is to say Sylvia Burwell.

Smith: It’s an agency of the federal government.

Schenk: Exactly. Sylvia Burwell and Andrew Slavitt are defendants in this case. They have appealed this order by Judge Mills in Mississippi, meaning it is now in front of an appellate court in the 5th Circuit of the United States, the 5th Circuit Court of Appeals.

Smith: Which is in Louisiana.

Schenk: Which is in Louisiana. I was just in Louisiana.

Smith: I was too and I saw it.

Schenk: And so actually I did see it because I was in Lafayette Square.

Smith: Yeah, I walked by it.

Schenk: Awesome. So anyway, so right now, the court is taking briefs on this, meaning they’re accepting papers that contain arguments from the plaintiffs and the defendants in this case, but they can also take what’s called “friend of the court” briefs, and so they’re doing that right now and so that’s where we’re at.

So we don’t know how this is going to shake down, but I can assume that let’s say this order is reversed and that CMS is allowed to enforce this rule. We can assume if there was no administration change, and we’ll get to that in a second, that CMS will reverse their memo and say, “Okay, cool. We’re going to start imposing this rule – no arbitration, no mandatory arbitration.” But something happened on the way to… What’s that…?

Smith: “Something Happened on the Way to the Forum?”

Schenk: Yeah.

Smith: Yeah.

Schenk: What’s that? Star Trek? What is that?

Smith: No…

Schenk: “Who’s Coming to Dinner?” What is that?

Smith: It was Roman times – “Something Happened on the Way to the Forum.”

Schenk: Something happened on the way to the forum – that is to say Donald Trump was elected President. And so while…

Smith: Star Trek?

Schenk: Yeah, like, “Guess Who’s Coming to Dinner?” So I’m confusing a bunch of different things, like I think that in one of the Star Trek movies, they reference that.

Smith: Okay, they probably did.

Schenk: Anyways, so at the time of this lawsuit, an Obama appointee was the defendant, like we’re representing that this rule is good.

Smith: It was recent.

Schenk: So on February 10 of 2017, Tom Price…

Smith: Tom Price from Georgia.

Schenk: …From Georgia, that’s right.

Smith: A doctor in Georgia, went to Emory, practiced in Roswell, represented the state of Georgia in Congress in the 6th District.

Schenk: He was nominated and confirmed as the new Secretary of Health and Human Services, the agency that oversees CMS. So a little bit about Tom Price – Tom Price is not a fan of bureaucracy in the medical industry. He’s not a fan of Medicare and Medicaid as they currently stand now with regard to arbitration agreements being mandatory, or prohibiting mandatory arbitration agreements. I can only assume based on his history that he would be against this.

Smith: We can only assume based on his support of other laws that restrict access to litigation that he probably supports arbitration. So he’s against his predecessor’s rule, we’re assuming.

Schenk: We’re assuming. So what could possibly happen, and again, I’m sure he’s probably busy attempting to dismantle ObamaCare at this point, but it’s possible that he could say…

Smith: Drop the appeal.

Schenk: Exactly. The Secretary of Health and Human Services could say, “We’re going to drop our appeal and let this order stand and not deal with it and keep the memo active that says we’re not going to enforce the rule, basically just disregard the rule entirely.” That’s within his abilities or his power.

So we’re going to stick a plug in that and we’re going to update you on that as it unfolds, but what’s interesting about this is that this is not just isolated in Mississippi. It’s not isolated to CMS. Arbitration is an issue that hits everywhere, and the Supreme Court, actually this year in February, heard arguments about a court case in Kentucky where the Supreme Court said, “Listen,” – the Supreme Court of Kentucky said, “We’re not seeing the benefits of arbitration to the point where we’re going to bend over backwards to make sure that it gets enforced, arbitration provisions.”

So there was a nursing home arbitration agreement that was fought on the grounds of the family did not have enough power or did not have the correct power of attorney to sign the arbitration agreement, so the nursing home said, “Yeah they did. They had power of attorney.” So the Kentucky Supreme Court, extremely paraphrasing this in the time that we have left, the Kentucky Supreme Court said, “Listen, a general power of attorney allows generally a person to contract on behalf of someone else, but if you want the ability to forgo the right to a civil jury trial, that needs to be explicit in the power of attorney.”

Smith: Yep. And it almost never is. We’ve had one arbitration agreement maybe that I can remember in the past that I thought may be enforceable. The vast majority of them, somebody’s sister signs it or somebody’s wife signs it and they don’t have power to do that either.

Schenk: So that’s a big deal. The Kentucky Supreme Court says, “Listen, if you want to be able to sign an arbitration agreement on behalf of someone else, that power of attorney that you’re using must explicitly say that you can do that.” And that’s now up on appeal. Arguments were held in February for the U.S. Supreme Court on that decision, and from my research on this, it actually does not look too good for the family. It looks as though the Supreme Court really hammered the family members in terms of the decision that arbitration should be special and power of attorney.

So again, and in this case, in the briefs for the Kentucky case, they cited the CMS rule as an argument that, “Hey listen, we can all agree that arbitration sucks in terms of nursing home admissions.”

Smith: So the bottom line is just don’t sign it.

Schenk: Yeah.

Smith: And if they, which they’re not supposed to – it’s not supposed to be contingent on your admission, but go somewhere else, but at the end of the day…

Schenk: In Georgia.

Smith: Yeah, in Georgia – do not sign it.

Schenk: All right. So in the few minutes that we have left, let’s talk about I guess not necessarily strange news, but something that you don’t hear too much about, but in Fresno, California, a Fresno County health official said Monday a nursing home resident has died of Legionnaire’s Disease. And I actually had to look up a little bit about Legionnaire’s Disease. I have to confess that my first encounter with the term Legionnaire’s Disease was because of that terrible show “Entourage.” And one of the characters on the show had to get a medical marijuana license and he used Legionnaire’s Disease as a region to get it.

But anyways, Legionnaire’s Disease is a bacteria, like a pneumonia bacteria that’s found naturally in fresh water, and from that water, it can contaminate hot water tanks, hot tubs and cooling towers of AC units, and do you know as a veteran, as a Marine, do you know how Legionnaire’s Disease got its name?

Smith: Well it actually happened in the birthplace of the Marine Corps, Philadelphia.

Schenk: Okay, so I guess you do know.

Smith: I know that one because it always seemed like a Robin Cook-esque plot where through the AC unit or the heating unit or something like that…

Schenk: AC unit, that’s right.

Smith: It infected everyone in a crowd of some veterans.

Schenk: The American Legion. A 1976 meeting of the American Legion Commission in Philadelphia were 25 died and 125 were hospitalized. But anyways, there’s no vaccine. You treat it with antibiotics. Okay, so in this case, people that are most at risk are those that have chronic health conditions like diabetes or immune disorders, smokers or anyone basically over the age of 50-55 years old. So this can be a very big problem for nursing homes.

So how did it get in here – we don’t know. But the interesting component of this is what does Medicare and Medicaid have to say about protecting your facility, your long-term care facility, protecting itself from the spread of Legionnaire’s Disease? And what I found interesting in this article is the health officials say, “Listen, you need to make sure you use – once the Legionnaire’s Disease is identified – filters, water filters. No showers. Use bed baths with bottled water, wipes for cleaning – not showers. No use of ice machines. Got to use bottled water and it’s got to make sure there’s sterile water for all respiratory machines.” That’s interesting. That’s how you prevent the spread once you’ve identified it.

Smith: Sterile water for all respiratory machines.

Schenk: Respiratory machines, yeah.

Smith: But they typically have sterile water anyways. What that means is if you go to a nursing home and you see somebody who has the oxygen tube around their neck, that oxygen tube is attached to a bottle of sterile water that attaches to the air. It’s an air tank as well. It’s so their nose doesn’t dry out. That’s what it’s for.

Schenk: This article goes on to say – this is from the Fresno Bee – the article says, “In the past couple of years, Legionnaire’s Disease cases have been increasing nationwide.” I think that’s interesting. So you have two different nursing homes in Fresno that have been infected with Legionnaire’s Disease. So that’s something you don’t see every day, thought it’d be interesting to share that with the viewer.

Smith: Yeah, that’s interesting.

Schenk: And on that note, we have reached the conclusion of this particular episode of the Nursing Home Abuse Podcast. This is the time in which Will goes to his phone and spaces out, goes to places that I don’t know where he goes. But anyways, the Nursing Home Abuse Podcast can be consumed through various mediums. You can download the audio on Stitcher or iTunes, or you can watch us online on our website, which is NursingHomeAbusePodcast.com, or on our YouTube channel. And with that, we will see you next time.

Smith: See you next time.

Thanks for tuning into the Nursing Home Abuse Podcast. Please be sure to subscribe to this podcast on iTunes or Stitcher and feel free to leave us some feedback. And for more information about the topics discussed in this episode, check out the show website – NursingHomeAbusePodcast.com, that’s NursingHomeAbusePodcast.com. See you next time.