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CMS Reverses Ban on Arbitration Agreements for Nursing Home Residents

Last year, the Centers for Medicare and Medicaid Services (“CMS”) enacted a federal regulation banning the use of pre-dispute arbitration agreements for nursing home residents.  Through such an arbitration agreement, a nursing home resident agrees to give up his or her right to have any disputes, including those related to injuries resulting from abuse or neglect, resolved by a jury.  Instead, one or more arbitrators will decide the outcome.  The arbitrators are usually attorneys who have practiced in the field of healthcare related injuries.

Awards in arbitration cases are often more limited than those provided by juries.  This results in part due to the fact that the discovery allowed in arbitrated cases is much more limited than in a lawsuit.  As a result, the most damming of evidence is often never found.  This is because much of the nursing home neglect that occurs is not the result of a simple mistake by a nurse or nursing assistant.  Instead, nursing home neglect usually results from a corporation’s systemic effort to cut staffing, training and supplies to a bare minimum in order to maximize profits. Without the ability to conduct thorough discovery, this type of information cannot be uncovered.  As a result, a full measure of justice is often avoided by a neglectful nursing home if the case is arbitrated.

In November of 2017, we reported that a federal court ruled that CMS’ rule banning arbitration agreements was invalid as it overstepped the rule-making authority of CMS. In short, an agency is entitled to make regulations for the implementation of laws provided the rules are consistent with the authority granted by the legislation.  However, an agency cannot create rules beyond the scope of that authority.

The federal court’s decision was on appeal at the time CMS enacted the new rules.  The new rules essentially render the appeal moot as the new regulations remove the ban on pre-dispute arbitration agreements.  This is unfortunate for nursing home residents.

The new rules do provide some additional measures a nursing home must take in order for an arbitration agreement to be binding; however, these measures are more form than function. The new measures include:

  1.  The arbitration agreement must be in plain language;
  2. If signing the agreement is a condition of admission, the agreement must make that clear;
  3.  The arbitration agreement must be explained “in a form and manner” understandable to the resident;
  4.  The resident acknowledges that he or she understands the agreement; and
  5. The nursing home must post a notice in a visible area advising of its use of arbitration agreements.

These additional requirements do little to help.  For the most part, they mirror already existing case law that our lawyers use to challenge the enforceability of a nursing home arbitration agreement.  Further, the requirement that the resident acknowledge understanding the agreement will likely be addressed by a signature line next to a sentence that affirms something to the tune of “I understand the terms of this agreement and I willingly and knowingly enter into the agreement.  I have been provided the opportunity to ask questions about the agreement and to consult with a lawyer regarding the agreement.”

Since these forms are routinely signed as part of a volume of admission documents that are all signed at once, adding such a signature line actually does nothing to demonstrate the resident understood the agreement at all.  Illustratively, it is estimated that fifty percent or more of nursing home residents suffer from some degree of dementia.

It appears that federal legislation will be necessary if pre-dispute arbitration agreements are going to be banned for nursing home residents. With the current makeup of Congress, this is not likely to happen anytime soon.

If you suspect nursing home abuse or neglect, we encourage you to call Florida’s Department of Children and Families’ hotline at 1(800)962-2873.

The Lawrence Law Group prosecutes nursing home neglect or abuse that results injuries or death.  We accept cases on a contingency basis throughout the Northeast Florida and Jacksonville area.  Consultations are always free.