Deadline 9/14/2015: Comments Due to CMS re “Binding Arbitration” in Nursing Home Admission Agreements

Erica Wood, a director for the ABA Commission on Law and Aging,  writing for the August 2015 issue of the ABA’s Bifocal Journal, reminds us that the Centers for Medicare and Medicaid Services (CMS) is seeking comments on proposed changes to rules affecting Long-Term Care Facilities that participate in Medicare and Medicaid programs, including the issue of whether CMS should prohibit “binding” pre-dispute arbitration provisions in nursing home contracts.  The deadline for public comments is 5 p.m., on Monday, September 14, 2015.  Electronic comments, using the file code CMS-2360-P, can be submitted through this portal: http://www.regulations.gov. 

How do you feel about pre-dispute “agreements” binding consumers, including consumers of long-term care, to arbitration? Your comments to CMS can make a difference! 

I remember my first encounter with “binding” pre-dispute arbitration provisions in care facilities. In the early years of my law school’s Elder Protection Clinic, a resident of a nursing home had purportedly “given away” possessions to an aide at nursing home, who promptly sold them on EBay.  The resident was lonely and the “friendship” included the aide taking her out the front door of the facility, via a wheel chair, on little outings, including trips where the resident could visit her beloved house, still full of a life-time of antiques and jewelry.  (The resident might have recovered enough to go home — although eventually a second stroke intervened.)

One day the aide disappeared from the facility, and that’s when her family realized that so had most of the more valuable items from the house. When our Clinic reviewed the nursing home contract to consider its effect on a claim for negligence in supervision, we found that there was a “mandatory” arbitration clause that had been “approved” with a signature of the resident’s agent, her granddaughter, when her grandmother was admitted to the nursing home for rehab following the first serious hospitalization.

We also learned that it was mostly a “one way” arbitration clause.  The facility could have sued the resident or her family members in court for breach of contract (the most common reason why a facility would sue) but the resident had purportedly waived her right to use courts in a long list of claims. 

We’ve reported often on this Blog about the effect of  “mandatory” or “binding” arbitration agreements on consumers, including here, here, and here. 

In the Clinic matter, whether such a signature was effective in binding the resident was complicated — as anyone knows who has litigated this separate issue — but more importantly, this was a consumer who had limited financial resources and limited time.  The granddaughter had signed because she had been persuaded by the nursing home officials that this agreement was “good” for her grandmother. 

Over the years, in talking with lawyers on both sides of “binding arbitration” clauses in nursing home agreements, it soon became clear to me that arbitration clauses were primarily an attempt to restrict access by residents (or their families) to justice, rather than to promote efficiency or mutual cost savings, the reasons offered to families for why they should say “yes” to arbitration at the time of admission.  (If both parties believed arbitration was better, they could agree to arbitration after any dispute arises — and indeed, I have occasionally seen parties do so, as where both sides wanted privacy during the dispute process.)   Nursing homes that are unhappy about  residents or their family members usually go to the courts, not arbitration, in seeking their own financial justice, recognizing clear discovery procedures, the right of appeal, the possible need for a jury are all important options through the court system. 

For more, read “Should CMS Prohibit Arbitration in Nursing Home Admission Contracts?” by Erica Woods.  Also, for the full array of issues addressed in CMS’ proposed regulatory changes, see the Federal Register announcement, linked here. 

In addition, the August issue of Bifocal, has lots of other great topics, including an update on the laws governing health-care decision making powers by guardians and agents.