New Ruling Bans Pre-Dispute Arbitration Agreements for Nursing Homes that Accept Medicare or Medicaid Funding

Until recently, a claim against a nursing home for abuse, neglect, serious injury or death would most likely be forced into arbitration. Many nursing homes request or require incoming residents to sign an arbitration agreement prior to admission. Once signed, the resident’s right to a trial before a judge or jury is waived. In September, however, that all changed.

The Center for Medicare and Medicaid Services, a federal agency within the U.S. Health and Human Services Department, issued a final ruling that bans the use of pre-dispute arbitration agreements. The ruling affects all nursing homes that participate in the Medicare or Medicaid programs and applies to new contracts finalized on or after November 28, 2016. Nursing homes that fail to comply will be cut off from Medicare and Medicaid funding.

The Problem With Mandatory Arbitration

For many years the pre-dispute arbitration clauses in nursing home contracts caused significant issues for the injured and the public at large. Waiving the right to a trial by jury affects an injured person’s ability to recover fair compensation and seek justice. Moreover, the waiver of the right to a jury trial and the arbitration process results in the dispute, the alleged wrongdoing, and the outcome being kept from of the public. The secrecy of arbitration hearings prohibits future nursing home residents and their families from being able to discover a history of wrongdoing at a facility.

New Ruling May be Challenged

Proponents of the pre-dispute arbitration clause argue that the agency does not have statutory authority to create such rulings. They maintain that arbitration keeps costs down for the nursing homes, which keeps costs down for the patients. Some critics have also stated that the ruling is in violation of the Federal Arbitration Act, which allows for pre-dispute arbitration agreements.

The Centers for Medicare & Medicaid Services has countered those arguments stating, “We have only prohibited pre-dispute arbitration agreements between facilities and residents as a condition of participation in Medicare and Medicaid. If a facility wishes to continue to utilize pre-dispute agreements, it is free to continue in business without Medicare or Medicaid residents.” Of note, 16 state attorneys general signed a letter supporting the Agency’s rule change, stating that pre-dispute arbitration agreements were harmful to nursing home residents.

Choosing to place your loved one into a nursing home is stressful and difficult enough without having to worry about the legal ramifications of fine print. Before you enter into a legal agreement of any kind, it is wise to have an attorney review the documents. Sometimes, hidden clauses can wind up costing you in the long run.

Reference articles:

Hamphill, J. C., Kaplinksy, A. S., & Levin, M. J. (2016, October 3). U.S. Agency Prohibits Nursing Home Arbitration Agreements | JD Supra. Retrieved October 03, 2016, from http://www.jdsupra.com/legalnews/u-s-agency-prohibits-nursing-home-27813/

Rosenblatt, C. (2016, September 29). The End Of Secrecy In Nursing Home Wrongdoing. Retrieved October 03, 2016, from http://www.forbes.com/sites/carolynrosenblatt/2016/09/29/the-end-of-secrecy-in-nursing-home-wrongdoing/#4534c8d05f6e

Silver-greenberg, J., & Corkery, M. (2016, September 28). U.S. Just Made It a Lot Less Difficult to Sue Nursing Homes. Retrieved October 03, 2016, from http://www.nytimes.com/2016/09/29/business/dealbook/arbitration-nursing-homes-elder-abuse-harassment-claims.html?_r=1