Centers for Medicare and Medicaid Service Rule Bans Pre-Dispute Arbitration

As we have written on this blog numerous time over the years, many nursing homes and other long-term care facilities use forced arbitration contracts to prevent their residents from bringing a legal action against the facilities in a court of law, and are instead forced into expensive, secretive arbitration proceedings.  As of this week, a federal government rule looks to put an end to the practice of pre-dispute forced arbitration.

A new Centers for Medicare and Medicaid Services “CMS” rule will bar nursing homes from compelling residents to settle disputes in arbitration as a condition of admission.  Residents and facilities will still be able to use arbitration on a voluntary basis after a conflict occurs, however, CMS says. In these cases, CMS requires that these arbitration agreements be clearly explained to residents, including the understanding that these agreements are voluntary, and that these agreements should not discourage or prevent residents and their loved ones from alerting authorities to concerns about quality of care.  Though again, all of this would occur after an incident or injury in the nursing home has taken place.

“Today’s rules are a major step forward to improve the care and safety of the nearly 1.5 million residents in the more than 15,000 long-term care facilities that participate in the Medicare and Medicaid programs,” Andy Slavitt, said the acting administrator for CMS.  Along with the pre-dispute arbitration ban, the final rule also mandates nursing home operators provide “nourishing, palatable” dietary options that meet residents’ nutritional needs and preferences, create an infection prevention and control program and develop a comprehensive, person-centered care plan for each resident within 48 hours of admission. A nurse aide and a member of the dietary staff must contribute to that care plan, the rule reads.  The rule also includes new and updated regulations on elder abuse, staff competency and discharge planning.

The arbitration agreements, usually hidden deep within a stack of admission papers, are often handed to a family consumed with worry over admitting a loved one to a nursing facility. Families and residents are typically unaware that by signing such an agreement, they’ve given away their right to bring disputes over patient care to court. Susan Harley, Deputy Director of Public Citizen’s Congress Watch Division accurately stated that, “Nursing home admissions can be a stressful and confusing time for seniors and their families. They are in no position to evaluate the coercive fine-print terms in contracts, appreciate the critical rights they are giving up by entering into a pre-dispute arbitration agreement or walk away from the contract if they object to rip-off provisions.”

Quite simply, arbitration agreements force victims of nursing homes out of the legal system, with no real ability to appeal decisions. Nursing homes often use the same arbitrator over and over, while an aggrieved family only sees them once. Many believe this creates a subtle bias, as there are incentives for arbitrators to rule in favor of the nursing home if they want to be hired again for future disputes.

Predictably, the representatives of the nursing home industry reacted strongly against the rule change. Mark Parkinson, the president and chief executive of the American Health Care Association, a lobbying group for nursing homes in the U.S., said in a statement that the change on arbitration “clearly exceeds” the agency’s statutory authority and was “wholly unnecessary to protect residents’ health and safety.”

Conversely, those that are advocating for the rights of nursing home residents feel this rule change is a win for the American public.  “The days of nursing homes using forced arbitration agreements to evade accountability and force residents and their families into signing away their legal rights are nearing an end,” American Association for Justice President Julie Braman Kane said in a prepared statement. “Today the Obama administration finalized regulations prohibiting pre-dispute arbitration clauses, taking a tremendous step toward protecting nursing home residents by ensuring that they can hold facilities accountable in cases of abuse or neglect.”

Many lawmakers, including Vermont Senator Patrick Lahey, applauded the ruling.  “It is simply unacceptable to provide taxpayer dollars to organizations that deny consumers their day in court,” said Leah. “Today’s rule is a small but important victory in the long battle to root out these secretive, complicated arbitration clauses that favor corporate interests over consumer rights.”

We at the Suthers Law Firm feel that this is a huge victory for nursing home residents that we and others fight for on a daily basis and we applaud this much needed ruling from CMS.