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In June 2016, AmSurg Corp. and Envision Healthcare Holdings, Inc. (Envision) announced they have signed a definitive merger agreement pursuant to which the companies will combine in an all-stock transaction. Upon completion of the merger, which is expected to be tax-free to the shareholders of both organizations, the combined company will be named Envision Healthcare Corporation and co-headquartered in Nashville, Tennessee and Greenwood Village, Colorado. The company's common stock is expected to trade on the New York Stock Exchange under the ticker symbol: EVHC. Bass, Berry & Sims served as lead counsel on the transaction, led by Jim Jenkins. Read more.

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Inside the FCA blogInside the FCA blog features ongoing updates related to the False Claims Act (FCA), including insight on the latest legal decisions, regulatory developments and FCA settlements. The blog provides timely updates for corporate boards, directors, compliance managers, general counsel and other parties interested in the organizational impact and legal developments stemming from issues potentially giving rise to FCA liability.

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Consumer Financial Protection Bureau Proposed Rule Bans Arbitration Class Action Waivers

Firm Publication


May 6, 2016

On Thursday, the Consumer Financial Protection Bureau (CFPB) released its long-awaited proposed regulation banning consumer financial companies and their affiliates from including in their contracts arbitration provisions that customers agree to arbitrate individually their complaints rather than bringing or being part of a class action lawsuit.  The CFPB first announced it was considering such a ban in October of last year.

Although arbitration provisions have been challenged on multiple grounds, including unconscionability and violation of state consumer protection acts, the U.S. Supreme Court and lower courts have consistently upheld their legality.  In the face of those decisions, and the authorization of such provisions in the Federal Arbitration Act, the CFPB nonetheless has concluded that its proposed Rule is in "the public interest and for the protection of consumers" (Dodd-Frank Act, Sec. 1028 (b)) because such arbitration provisions result in consumer financial companies getting a "free pass" to "side step the legal system, avoid big refunds, and continue to pursue profitable practices that may violate the law and harm countless consumers." (CFPB press release, October 7, 2015) (CFPB press release, May 5, 2016).

The proposed Rule:

1) Prohibits use of pre-dispute arbitration provisions that compel a consumer to arbitrate claims individually rather than by participating in a class action lawsuit.

2) Requires covered consumer financial companies  providing financial and consumer products and services include the following in their arbitration agreements:

We agree that neither we nor anyone else will use this agreement to stop you from being part of a class action case in court. You may file a class action in court or you may be a member of a class action even if you do not file it.

3) If several products or services are being provided, but some of are not covered by the Rule, the following notice may be included:

We are providing you with more than one product or service, only some of which are covered by the Arbitration Agreements Rule issued by the Consumer Financial Protection Bureau. We agree that neither we nor anyone else will use this agreement to stop you from being part of a class action case in court. You may file a class action in court or you may be a member of a class action even if you do not file it. This provision applies only to class action claims concerning the products or services covered by that Rule.

4) Requires consumer financial companies provide to the CFPB records relating to all arbitrationsconcerning consumer financial products and services within 60 days of filing or receipt.

5) Applies not only to covered consumer financial companies, but also their affiliates.

A challenge to the CFPB's regulation is inevitable. CFPB's efforts to eliminate class action waivers in consumer arbitration agreements depends upon a determination it did not exceed its rule making authority by restricting or prohibiting the use of arbitration agreements.

The CFPB justifies the Rule based on data used and conclusions reached in its March 2015 Arbitration Study Report to Congress.  This  empirical study is certain to be analyzed and tested  by the consumer financial services industry to determine whether it supports the CFPB's view that the public interest and protection of consumers requires a regulation restricting, or even outlawing, otherwise enforceable arbitration terms in consumer contracts.

The CFPB's Proposed Rule and interpretation can be found here.

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