The Centers for Medicare and Medicaid Services (CMS), an agency of the Health and Human Services Department, has issued a rule that will prevent nursing homes receiving federal funding from requiring resident’s to sign admission agreements with arbitration clauses. An arbitration clause is a clause in a contract requiring parties to resolve issues through the arbitration process, therefore depriving the resident of his/her right to bring a lawsuit against the nursing home. These clauses have forced claims of sexual harassment, elder abuse and even instances of wrongful death from being handled in an open court.
The fine print of arbitration clauses have also prevented disputes on resident safety and quality of care from being publicly known. This rule will provide new protections to 1.5 million nursing home residents. The agency’s new rule is the most significant overhaul of rules regarding federal funding for long term care facilities, restoring millions of Americans their right to pursue action in an open court. The rule applies to pre-dispute matters, allowing the parties to a dispute the opportunity to seek arbitration after a dispute arises.
The rule was originally proposed in July 2015 with the goal of improving disclosure, but changed after a series of patient groups discussed their concerns about arbitration. The final draft of the rule went further to say all funding will be cut for those homes with arbitration clauses as a condition for admission. Many elder lawyers have said people are being admitted to these homes during a stressful point in their lives, often desperate and distraught, and do not fully comprehend what they are signing.
In November 2015, The New York Times headlined two cases of abuse which were prevented from going to court due to arbitration clauses. In the first case, a 100 year old woman found dead after being strangled by her roommate was blocked from court. In the second case, a 94 year old woman found dead due to a head wound was also blocked from court. Democratic Senator, Patrick Leahy of Vermont released a statement Wednesday stating it is a sad reality that many Americans must choose between “forfeiting their legal rights and getting adequate medical care.”
The nursing home industry strongly disagreed with Senator Leahy’s statement. Mark Parkinson, President and Chief Executive of the American Health Care Association, released a statement saying the change in arbitration exceeds the agency’s authority and is “wholly unnecessary to protect residents’ health and safety”. The new rule on arbitration clauses comes as a result of officials in 16 states and the District of Columbia recommending the government stop funding nursing homes requiring arbitration clause for admission, arguing that arbitration allows patterns of wrongdoing to be hidden from the prospective residents and their families.
Democrats such as Mr. Leahy have been trying to get rid of arbitration through legislation, receiving resistance from various industry groups. Congressional approval is no longer required in these decisions made by consumer agencies and Health and Human Services; however the new rule can be challenged in court. The rule will go into effect beginning in November and will only apply to future admissions. The nursing home industry claims arbitration cuts costs by providing an alternative to court and lawsuits could increase costs significantly, causing some nursing homes to close.
Supreme Court decisions in 2011 and 2013 have bound judges to follow precedent on matters of arbitration clauses, which makes it virtually impossible to find a clause “unconscionable”. For example, an appeals court refused to throw out an arbitration clause for a man who was unable to read or sign his name, reasoning illiteracy is not sufficient to make an arbitration clause invalid. Companies argue that arbitration is simpler, faster and less expensive than court; however those claims are not necessarily true because arbitration is private and there is no federal database of outcomes.
The overhaul of forced arbitration claims is a significant feat for residents of nursing homes and their families. If you or a loved one has experienced abuse in a nursing home, please do not hesitate to contact the dedicated and skilled nursing home abuse attorneys at Gallivan & Gallivan today.