Federal Nursing Home Rule Change Restores Residents’ Right to Day in Court

In the most significant change to rules governing federal funding of nursing homes in 20 years, the Centers for Medicare and Medicaid Services (CMS) will help prevent facilities from blocking claims of elder abuse through arbitration clauses.

CMS, an agency within Health and Human Services, controls more than $1 trillion in federal Medicare and Medicaid funding. The rules change will prevent nursing homes from handling claims of elder abuse, sexual harassment, and even wrongful death claims through arbitration, the New York Times reports.

On September 28, CMS, issued a rule that bars any nursing home that receives federal funding from requiring that residents to resolve disputes in arbitration, instead of in court, according to the Times.

Clauses embedded in many nursing home admissions contracts, move disputes about safety and the quality of care out of public view and into the private realm of arbitration. This system reduces the industry’s legal costs, but it has denied justice to many nursing home residents and their families. Arbitration proceedings are confidential and the outcomes are not recorded in any public database, the Times reports. Vermont Senator Patrick Leahy noted, “The sad reality is that today too many Americans must choose between forfeiting their legal rights and getting adequate medical care.”

According to New York State Trial Lawyers Association, the rule change does not allow a facility to enter into a pre-dispute agreement for binding arbitration with a resident or resident’s representative and must not mandate that a resident sign an arbitration agreement as a condition of admission to the facility.

The rule change came after officials in 16 states and the District of Columbia urged the government to cut off funding to nursing homes that use arbitration clauses. They argued that arbitration can conceal patterns of abuse and other wrongdoing hidden from prospective residents and their families. A New York Times report from November 2015 highlighted two cases that helped spur the rule change. One case involved a 100-year-old woman who was found strangled by her roommate; the other case involved a 94-year-old woman who died of a head wound at a Pennsylvania nursing home.

The rule could be challenged in court, but if it not challenged, it would go into effect by November. Only future admissions would fall under the new rule.

Mark Parkinson, president and chief executive of the American Health Care Association, a trade group, said in a statement that the rule change “clearly exceeds” the agency’s statutory authority and was “wholly unnecessary to protect residents’ health and safety,” according to the Times. The nursing home industry says arbitration offers a less costly alternative to court. If more lawsuits are allowed, costs would go up and some nursing homes could be forced to close. But government officials and elder care experts say the motivation behind arbitration clauses could be the wish to keep negative information from the public.

The use of arbitration clauses has grown in the last decade, affecting things like cell phone contracts, employment agreements and student loans. Companies argue that arbitration is simpler, quicker, and less expensive. But consumers bound by arbitration clauses often feel their claims are too easily dismissed or they receive inadequate compensation.

Nursing home residents and their families have been forced to settle out of court even in cases of serious abuse and neglect because an arbitration clause was part of the admission agreement. Serious issues of abuse and neglect never became public because they were blocked from court, the Times reports.