Thirty-one senators have sent a letter to Seema Varma, the Trump administration’s newly appointed Administrator of the Department of Health and Human Services’ Centers for Medicare & Medicaid Services (CMS), urging the agency and the Trump administration to rethink overturning a CMS rule preventing mandatory nursing home arbitration – that is, contract language that would prohibit patients from suing the facilities in cases of nursing home abuse.
Pre-Dispute Binding Nursing Home Arbitration
Due to increasing longevity, an estimated 1.4 million Americans currently live in approximately 15,000 nursing homes and long-term care facilities. In recent years, it has become increasingly common practice at many of these facilities to include language in their contracts requiring new residents to resolve any future disputes through “binding arbitration.”
Pre-dispute binding arbitration contracts prevent nursing home residents from pursuing litigation against the facilities for any future damages, even in cases of mental or physical abuse and wrongful death. Once such a contract is signed, all disputes must be presented to and decided by arbitrators, private individuals hired by the companies themselves. The decisions of these arbitrators are not bound by state or federal law, and they are usually final, with no possibility for appeal.
Binding arbitration clauses are common across many industries today. In addition to nursing home contracts, mandatory arbitration clauses are also buried in the fine print of contracts for employment, cell phones, credit cards, retirement accounts, and other everyday agreements.
While industry proponents argue that arbitration offers a more affordable, less drawn-out alternative to litigation that can better resolve any disputes, critics argue that the deck is necessarily stacked against plaintiffs, who generally lack the resources of major companies to mount a successful arbitration case on their own. Critics also point to the fact that arbitrators, who depend upon repeat business from the companies who hire them, might be less likely to be impartial than a judge or a jury.
Consumer advocates further argue that those signing contracts with nursing homes and long-term care facilities may be especially vulnerable to misunderstanding the rights they are signing away, given elder mental impairment and the special stresses involved in placing a loved one with serious health issues in such institutions. Moreover, there is the issue of implied “coercion”: Sign this binding arbitration agreement or find some other place to take care of you or your loved one, all at a time when you are at your most vulnerable.
CMS under the Obama Administration apparently agreed and took steps to remedy the situation last year.
CMS Ruling Prevents Forced Arbitration
On September 28, 2016, towards the end of the Obama presidency, CMS issued a ruling that would prevent nursing homes that receive federal funding in the form of Medicare and Medicaid from forcing their residents to resolve disputes through binding arbitration. While nursing homes and patients can still enter into arbitration if they choose in order to resolve disputes, arbitration cannot be compelled automatically, leaving patients with the opportunity to sue the facilities through the court system. This ruling would have only applied to the future use of pre-dispute binding arbitration agreements. All such agreements previously signed would still have remained in effect.
The ruling was praised by many organizations, including the American Association of Retired Persons (AARP) and American Association for Justice, a national trial lawyers association, which issued a statement that the days of nursing home facilities using binding arbitration agreements “to evade accountability and force residents and their families into signing away their legal rights are nearing an end.”
Litigation, Preliminary Injunction, and a New Administration
The new regulation was to take effect on November 28 of that year, but the American Health Care Association (AHCA), a lobbying group for the nursing home industry, filed suit against the federal government to prevent its implementation. On November 7, a judge granted a preliminary injunction pending resolution of the case, and CMS filed an appeal.
Since taking office, however, the Trump Administration has seemingly supported a complete turnaround on CMS’s position on nursing home arbitration. On June 2, 2017, the Trump-era CMS dismissed its appeal to the injunction. Days later, CMS issued an official statement that “The prohibition of pre-dispute binding arbitration agreements is removed,” albeit with some modifications.
Specifically, CMS stated that binding arbitration agreements must be “in plain language,” that they must be explained to potential residents, that the residents have to acknowledge their understanding of the agreements, and that they cannot contain language discouraging or prohibiting residents from communicating with government officials.
Senate Responds to Proposed Rollback
CMS also said it would be “soliciting comments on whether binding arbitration agreements should be prohibited” at Regulations.gov. The deadline for comments was August 7, 2017. As of that date, 372 comments had been submitted, most in support of extending protections to seniors.
CMS has not specified how long it will take to review the comments and make a final decision about the forced nursing home arbitration ruling, though many critics are concerned about the proposed erosion of the rights of seniors. Among the most visible of these critics are members of the United States Senate.
On the morning of August 7, thirty-one senators, led by Minnesota’s Al Franken and Oregon’s Ron Wyden, sent a letter to CMS Administrator Seema Verma to reconsider this regulatory rollback. The letter reads that pre-dispute binding arbitration clauses “prevent many of our country’s most vulnerable individuals from seeking justice in a court of law, and instead funnel all types of legal claims, no matter how egregious, into a privatized dispute resolution system that is often biased toward the nursing home.”
The letter cites the case of an Alabama family who accused a nursing home of failing to properly supervise the medication for their mother, who suffered from dementia. Even though a toxicology report revealed that the woman had more than twenty times the recommended dosage of diabetes medication in her system at the time of her death, the family was unable to take the case to court because the nursing home contract forced the matter into arbitration.
The senators further expressed concern that, because arbitration is typically confidential and not part of the public record, nursing homes and long-term care facilities may potentially be getting away with widespread Medicaid and Medicare fraud. The private nature of arbitration hearings may also prevent potential patients and their families from learning of past allegations of abuse and neglect at these facilities.
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