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Arbitration Agreements and Long-term Care Facilities

May 4, 2021Elder Law

Nursing Homes and Arbitration Agreements

Moving a loved one into a long-term care facility can be fraught with emotion. Whether the choice has been looming for some time or a catastrophic event brought it on suddenly, there are often difficult decisions that must be made quickly.

Regardless of the situation, families and residents are often under a great deal of stress. Adding to the stress is the overwhelming paperwork to complete. For decades, part of that paperwork was usually a pre-dispute arbitration agreement designed to protect the facility in the event of a dispute over patient care.

So, what are arbitration agreements, and why have they been at the forefront of conversations regarding long-term care facilities?

What is an Arbitration Agreement?

Much like mediation, arbitration is designed to bring in a third-party to resolve disputes.  However, when two parties choose to pursue mediation, if they cannot come to an agreement, or if one party feels the result was not just, they can choose to move forward with a lawsuit to pursue a more equitable outcome.

With arbitration, however, the result is binding, and there is no opportunity for a court to append the decision.  An Arbitration Agreement makes arbitration mandatory. The injured party, or his or her representatives, have no choice in how to seek a remedy for their injury.

Pros and Cons of Arbitration

Arbitration does have benefits. Results are usually obtained much faster than through a court proceeding. The matter is also kept private, which is preferable for many on both sides of a conflict. This helps both parties avoid what can often be questions and stigma that can sometimes be associated with litigation.

In the case of nursing homes, however, this can mean that the facility avoids much needed public scrutiny that would lead to improved treatment of residents. Conversely, a civil lawsuit would draw public scrutiny of a facility’s practices and potentially lead to improved conditions for patients and families.

A final downside to arbitration is the absence of the rules that have been adopted by our legal system to help forward justice. For example, hearsay may be presented without evidence to support its accuracy. The right to appeal a decision is lost, as well.

The End of Mandatory Arbitration Agreements?

In recent decades, concern was raised for nursing home residents. Many felt that they were being taken advantage of through facilities’ use of these agreements.  Many of these institutions even required patients and/or representatives to sign the agreements in order to receive care, leaving patients in a no-win situation.

Those that did not require the agreements were often either intentionally or inadvertently vague about patients’ right to refuse to sign. All of these concerns put arbitration agreements the forefront of discussion in for senior advocates.

A New Rule Regarding Arbitration Agreements

In 2016, the Centers for Medicare & Medicaid Services (CMS) banned the use of arbitration agreements in long-term care facilities. Within days, the American Health Care Association and a number of nursing homes filed a complaint and a Federal court prohibited the rule from being enforced.

The following year, CMS issued a new proposed final rule on the subject. Following, the organization opened the rule up to public comments and suggestions, as is required. The proposed rule was released in July of 2019, and by September, the new rule was to take effect.

The proposed final rule includes:

  • A nursing home may not, as a condition of admission to the nursing home (or as a condition to continued care), require a resident to sign a binding arbitration agreement.
  • A nursing home must explicitly notify the resident of their right not to sign the agreement, and the agreement must explicitly state that the resident is not required to sign it.
  • The agreement must explicitly provide that the resident has the right to rescind the agreement within 30 calendar days of execution of the agreement.
  • The arbitration agreement must be explained to the resident in a language in which they understand.
  • If a resident chooses to sign the pre-dispute, binding arbitration agreement, the nursing home must ensure that the resident acknowledges that he or she understands the agreement.
  • The agreement cannot contain any language that dissuades the resident from communicating with state or federal officials regarding any matter.
  • The arbitration agreement must specify that if arbitration is entered into, a neutral arbitrator will be agreed upon by both parties.
  • If arbitration is sought, the venue must be convenient to both parties.
  • If a nursing home facility and a resident enter into arbitration, a copy of the binding decision must be retained by the facility for five years, and make that decision available for inspection by CMS.

Any rule that applies to a resident also applies to his or her legal representative.

The proposed rule is just a portion of CMS’s five-part plan. The goal of this plan is to overhaul the oversight of nursing homes and transparency in the arbitration process.

Seema Verma, Administrator of CMS, intends to strengthen oversight, enhance enforcement, increase transparency, improve quality, and put patients above paperwork. All of these changes are intended to help protect nursing home residents and their families.

The new rule came under scrutiny almost immediately and was contested in a district court by several nursing homes in Arkansas. However, the court struck down the challenge, ruling that the proposed changes are within the rights of CMS and the Department of Health and Human Services. Further, the judge ruled that the rulemaking was not in violation of any existing acts or statutes and was not arbitrary or capricious. 

This is likely to remain a hotly debated issue in the senior care community, and it may be that there will be further challenges to this most recent rule. It is important to have help from someone who is closely watching this to be sure that you are fully aware of your rights and responsibilities. 

Should I Sign An Arbitration Agreement?

No one should sign a mandatory arbitration agreement without serious consideration and consultation from an attorney. Often, in the confusion of trying to have a loved one admitted to a long-term care facility, family members are overwhelmed by the stacks of paperwork. They simply do not have the time or legal knowledge to process what they are signing.

Specifically, when moving a loved one into a nursing home, an elder care counselor can help families fully understand and process the details of such agreements. If you are faced with this decision, it is best to work with an elder law attorney who can help you and your family understand these processes and protect your loved one.

Arbitration Agreements and Nursing Homes | JLW Law Group | Statesboro and Savannah, GA

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About the Author

Jeffrey L. Williamson | Founder

Jeffrey L. Williamson is the founder of J. L. Williamson Law Group, LLC. The Firm specializes in asset protection, elder law, tax planning, and tax controversy.