New Federal Centers for Medicare and Medicaid Rule Bars Nursing Home Contract Arbitration Clauses

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Public Health Watchdog Breaking News
Public Health Watchdog Breaking News

In a striking move, the Federal Centers for Medicare and Medicaid (CMS) rules governing federal funding of long-term care facilities have been changed over arbitration clauses for the first time in 20 years. The rule has been updated to help prevent nursing home facilities from blocking claims due to these clauses.

The CMS rule—the CMS is an agency under Health and Human Services (HHS) that controls more than $1 trillion in Medicare and Medicaid Funding—will enable nursing home abuse victims and their families the right to file a lawsuit against long-term care facilities.

According to the New York State Trial Lawyers Association (NYSTLA), the rule will no longer enable nursing home facilities to enter into a pre-dispute agreement for binding arbitration with a nursing home resident or his/her representative. Nursing homes must not order a resident/representative to sign an arbitration agreement as a condition of admission to the facility.

Should a dispute arise, and if a facility asks a resident/representative to enter into a binding arbitration agreement, that facility must comply with the new rule’s mandates, which include that the agreement must be explained to the resident and resident representative “in a form and manner that he or she understands, including in a language the resident and their representative understands: and that the resident ‘acknowledges that he or she understands the agreement.’” A resident’s right to remain in the facility “must not be contingent upon the resident or the resident’s representative signing a binding arbitration agreement,” nor can the agreement contain language that “prohibits or discourages the resident or anyone else from communicating with federal, state, or local officials.

In essence, the rule prevents nursing homes from forcing claims of elder abuse, sexual harassment, and wrongful death into arbitration, as opposed to allowing the alleged victim his/her day in court. This new rule is viewed as a huge victory for nursing home abuse and neglect victims, their families, and advocates.

Nursing homes arbitration clauses typically appear in the fine print of the admissions contracts. When residents sign these contracts, residents have no option but to take their complaints through the private system of arbitration. According to The New York Times (NYT), forced arbitration has been used in cases involving murder and wrongful death.

Companies who use arbitration clauses argue that the clauses provide a quick, simple, and cheaper alternative to litigation; however, as the NYT notes, allegations are hard to back as arbitrations are confidential. In fact, the NYT conducted a year-long investigation into nursing home arbitration, reviewing the records of over 25,000 arbitrations from 2010 through 2014. The investigation revealed many disturbing examples in which abuse and neglect were never publicized because victims were barred from litigation due to the arbitration clause.

The arbitration rule was issued after officials in 16 states and the District of Columbia called on the government to cut funding from nursing homes that use arbitration clauses. Officials argue that these clauses help hide patterns of abuse and neglect. Should the rule not been challenged in court, it will become effective November 2016.