CMS Finalizes Rule Allowing Arbitration Agreements in Nursing Homes

The Centers for Medicare and Medicaid Services (CMS) announced arbitration agreements would be allowed in nursing home agreements which receive federal funding. Under President Obama’s administration, CMS barred nursing homes from inserting mandatory arbitration clauses into their agreements. Mandatory arbitration agreements bar nursing home residents from bringing any legal grievance against their nursing home in a courtroom. Since nursing home residents are particularly vulnerable and nursing homes have a poor record of abuse and neglect, President Obama’s administration reasoned that mandatory arbitration clauses should be banned in all nursing home contracts.

Predictably, the nursing home chain did not support the federal government’s ban on arbitration clauses. The elder care industry said that arbitration provides a faster, more efficient resolution of claims for everyone involved. When President Trump came into office, his administration took a more industry-friendly approach to regulating nursing homes. In addition to sharp drops in fines on nursing homes, CMS also began deregulating the nursing home industry and appears to have reached a compromise on the mandatory arbitration agreement. Under the rule finalized this month, nursing homes will be allowed to include arbitration agreements in their default contracts with nursing home residents. However, nursing homes cannot deny admission to any resident because of their refusal to include a mandatory arbitration clause in their contract.

Elder care advocates say the “right to object” to the arbitration clause is a hollow promise. According to these critics of the nursing home industry, nursing homes will likely just find another ‘reason’ to deny admission to any resident. Either way, these elder care experts argue, senior citizens seeking admittance to a nursing home are unlikely to possess the legal sophistication to even recognize the arbitration clause in the agreement.

Like many other Americans, nursing home residents will see the legal boilerplate and only find out about their limited rights to sue their nursing home when it is too late. In addition to providing potential residents a “right to object” to an arbitration clause, CMS will also forbid any arbitration agreement from preventing nursing home residents from “communicating” prohibited conditions at their nursing home to any legal authorities.

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