Northport Health Services of Ark. v. Department of Health and Human Services

This case was brought by Northport Health Services of Arkansas and other nursing homes that seek to receive the financial benefits of participation in the Medicare and Medicaid programs while compelling their patients to enter into binding arbitration agreements by denying them admission or treatment if they do not. Northport challenges a federal regulation, 42 C.F.R. § 483.70(n), that restricts Medicare and Medicaid eligibility to nursing homes that comply with modest limits on the use of arbitration agreements—limits designed to make it more likely that patients’ assent to arbitration is voluntary. Northport argues that the regulation restrict the use of arbitration agreements in long-term care facilities, singles out arbitration for disfavored’ treatment, and penalize[s]” the use of arbitration. The district court rejected Northport’s arguments, and Northport appealed.

Public Citizen filed an amicus brief supporting the agency on appeal. Our brief explained that the Rule does not prevent nursing homes from entering into or enforcing arbitration agreements with patients. Rather, to prevent patients from being coerced into agreeing to arbitration and to ensure that they understand any arbitration agreement they may sign, the Rule provides that nursing homes that receive federal financial support through the Medicare and Medicaid programs must, as a condition of their eligibility for those programs, accept a small set of limits on the way they use arbitration agreements. Northport wrongly argues that federal policy favoring arbitration will be thwarted unless nursing homes can use the threat of withholding needed medical care to coerce patients into signing arbitration agreements that they do not understand and cannot rescind. On October 1, 2021, the Eighth Circuit issued a decision upholding the rule. The court’s opinion agrees with our brief’s analysis of the arbitration issues, and further holds that the rule is authorized by the Medicaid and Medicare statutes, that it represents a proper exercise of the discretion under those statutes, and that minor violation of the Regulatory Flexibility Act the agency committed in issuing the rule was harmless.