I am firmly convinced that a clause requiring mandatory forced arbitration has no place in a nursing home resident’s admission contract with the facility. A study commissioned by the American Health Care Association, the largest trade association for the country’s nursing home industry, showed that when nursing home disputes are settled through arbitration, they are 35 percent lower than when residents take their claims before a judge or jury, according to the Des Moines Register. It is no wonder the industry is fighting to roll back a rule announced last year by the Centers for Medicare and Medicaid Services (CMS) that would have prohibited federally funded nursing homes from demanding residents and their families sign arbitration admission agreements, relinquishing their Constitutional right to go to court when abuses occur.

As part of the admitting process, nursing homes often exploit a resident or their caregiver at a time when the need for care is critical and urgent. Forced arbitration agreements are included as part of an extensive contract. Most consumers will not realize the arbitration clause even exists or, if they do, won’t know what it is asking them to give up. Others, faced with stress due to emotional turmoil as well as limited time and alternatives, yield to the pressure of signing away their rights.

The CMS rule, as we have discussed in a prior issue of the Report, was part of a 713-page document that revamped nursing home care standards, rules and regulations. The changes are to be implemented in three phases and the first phase, which included implementing the ban on arbitration clauses, began last November.

The nursing home industry has been fighting the rule since its inception including filing a federal lawsuit a month before the rule was to take effect. The American Health Care Association and other groups “filed a lawsuit challenging the federal government’s authority to tell the industry it can’t block people from [doing the same thing].”

Earlier this summer, Judge Michael P. Mills, in the Northern District of Mississippi, temporarily blocked the CMS rule, holding that it could not be enforced until further evidence was taken. CMS defended the rule saying that arbitration agreements in nursing homes were clearly unfair to residents and their family members.

However, the change in administrations in Washington was accompanied by an about-face from CMS. The agency withdrew the rule, acting in favor of nursing homes as opposed to being concerned for the health and safety of residents. It proposed a much weaker alternative rule that once again allows nursing homes to make admittance contingent upon signing an arbitration agreement.

The nursing home industry argues that arbitration is more effective for all parties involved in a dispute. But that is not so, according to a New York Times commentary by Richard Cordray, who heads the Consumer Financial Protection Bureau (CFPB).

The CFPB is a government agency created after the 2008 financial crises to protect consumers. The agency has studied mandatory arbitration and recently created a rule blocking companies from denying consumers the option to go to court when they are treated unfairly. The research indicates “that group lawsuits help consumers recover money they otherwise would forfeit” while protecting other consumers “by halting and deterring harmful behavior.”

Following CMS’ reversal on the rule, 31 U.S. Senators sent a letter to CMS Administrator Seema Verma voicing their opposition to CMS’ rollback of the rule. Other lawmakers like Senator Charles Grassley (R-Iowa) believe “[t]he nursing home industry should do a better job of following the law,” but has refused to join the efforts to protect nursing home residents’ safety and Constitutional rights.

CMS allowed the public to weigh in on the rule, according to AARP, and more than 1,000 comments were filed. CMS has not indicated when it will issue a final rule, though. In the meantime, the rule remains in limbo with the deck stacked against some of the most vulnerable consumers in the country.

Sources: Des Moines Register, National Public Radio, The LA Times, Consumer Financial Protection Bureau

Jere L. Beasley, Beasley Allen Founder
Jere Beasley

Jere Beasley, the founding member of Beasley Allen Law Firm, has practiced law as an advocate for victims of wrongdoing since 1962. He was the lead Beasley Allen attorney in the record $11.9 billion award against ExxonMobil Corp. on behalf of the state of Alabama.

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