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Pre-Dispute Arbitration Agreements Again Allowed

7-27-2019 -The Trump administration this week issued a final rule that allows nursing homes to resume inserting pre-dispute arbitration agreements into admissions contracts. When a resident (or representative of the resident) signs an arbitration agreement, the resident waives his/her right to sue the facility for abuse or mistreatment, and agrees to settle disputes in arbitration.

An Obama era rule to ban these agreements, set to go into effect in 2016, was challenged in court by the American Health Care Association, which alleged that the Centers for Medicare and Medicaid Services had overstepped its legal authority. Others in the health care industry argued that arbitration agreements resolve disputes more quickly and effectively, and thus keep down the cost of care. Consumer advocates, on the other hand, claim arbitration agreements drive down quality of care, allowing nursing homes to hide their misdeeds from the public. and deny residents their day in court.

This week’s decision concludes a two-year review of this issue by the Trump Administration. The rollback of the ban on pre-arbitration does, however, include some additional protections for consumers:

  • Facilities must inform patients that they cannot be denied admission if they do not sign the arbitration clause. This information must also appear in print within the agreement. 
  • A resident has 30 days after signing to rescind the agreement.
  • Nursing homes cannot have any language in the agreement that discourages or prohibits individuals from contacting federal, state or local officials.
  • The information in the agreement must be in a "form" and "manner" that the resident can understand.
  • The resident must acknowledge that he/she understands the agreement.
  • Both resident and nursing home must agree upon the neutral arbitor as well as the venue.

The new rule goes into effect September 16, 2019.  

Critics and champions of the final rule are lined up as you might expect:

  • The American Health Care Association has stated: “We are still reviewing and evaluating the final rule but we applaud the CMS for allowing skilled nursing facilities to use pre-dispute arbitration agreements.” 
  • Consumer advocacy organization, Justice in Aging, states that pre-dispute arbitration agreements are “unfair to residents and their families and will harm the rights, safety, and quality of care.” 
  • A joint statement from Sen. Ron Wyden (D-Oregon) and Rep. Richard Neal (D-Massachusetts) reads: The administration’s finalization of this rule eliminates important protections for patients who suffer harm in nursing homes and other long-term care facilities... Despite the final rule’s prohibition on requiring these agreements as a condition of admission, patients may still be coerced into signing away their rights given that many do not have a choice of provider and are vulnerable from suffering a medical condition or incident. These clauses stack the deck against patients and threaten access to safe and high-quality nursing home care.”
  • The Center for Medicare Advocacy and Long-Term Care Community Coalition are urging a return to the 2016 rule. It also urges that the 30-day period for rescinding the arbitration agreement should not commence on the date the agreement is signed, but instead should commence on the date the incident occurs that gives rise to a dispute.

If you admit a loved one to a nursing home, be aware that there may be a pre-arbitration clause in the admissions paperwork. Read carefully and remember that your loved one cannot be denied admission if you do not sign the clause.

To read the text of the final rule (Medicare and Medicaid Programs; Revision of Requirements for Long-Term Care Facilities: Arbitration Agreements), click here.  

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