Trump Rolls Back Obama-Era Regulations on Arbitration Agreements for Nursing Home Residents

The Center for Medicare and Medicaid Services has dropped its appeal of a court ruling blocking its prohibition on pre-dispute arbitration clauses, thus rolling back an Obama-era regulation which sought to ban pre-dispute arbitration agreements for nursing home residents. Arbitration clauses force the persons in a contract (in this instance, the nursing home and its residents) from seeking relief from the courts. Instead, an arbitration clause requires that both parties submit to an “arbitration agency” – which are generally more corporate-friendly, usually offer lower monetary awards, and most importantly limit the right of a person to appeal an arbitration decision.

Arbitration agreements often prevent families, who believe that their loved ones have been mistreated or received poor care, from seeking legal remedies in the court system. In addition, nursing home residents are generally in a weakened negotiating position and lack full knowledge of the implication arbitration agreements. Thus, they generally only find out at a later point in time that they have signed away their rights.

The roll-back of the regulation prohibiting arbitration clauses is a win for the American Healthcare Association, which viewed the regulation as burdensome and unnecessary. It also fulfills a promise by the Trump administration to dramatically lower regulatory burdens on businesses – and this rule in particular has been vociferously opposed by the nursing home industry.

After rolling back the Obama-era regulations, the Trump administration has also set certain guidelines to prevent nursing home residents from being taken advantage of, those include:

  1. Arbitration agreements must be written in plain language and clearly explained to residents “in a manner that they understand,” and the resident must “acknowledge that they understand the agreement.”
  2. If the agreement is a condition of the admission, then the language must be in “plain writing” and part of the admission contract.
  3. The proposal is prohibited from discouraging nursing home residents from communicating with governmental officials or attorneys.
  4. Long-term facilities will be required to retain a copy of the signed arbitration agreement and the arbitrator’s final decision – so that it may be inspected, at will, by the Centers for Medicare and Medicaid Services
  5. Finally, long-term care facilities (a la nursing homes) must post a notice of their binding arbitration agreements in area “where it’s visible to both residents and visitors.”


Contact Information