Changes Coming for Nursing Home Arbitration

Earlier this month the Centers for Medicare and Medicaid Services (CMS) announced it is working to change the government regulations covering nursing homes.

Here’s a quick explainer of what this means: the government pays nursing homes to take care of Medicare or Medicaid patients. If a nursing home agrees to be paid by the government for taking care of those patients, it has to also agree to follow the rules and regulations put out by the government regarding things like:

  • Minimum training requirements for personnel
  • Admissions procedures
  • Minimum standards of care

Nearly every nursing home accepts Medicare or Medicaid patients, and many state laws governing nursing homes are based on the federal government’s regulations.

So when the government announces it’s going to change those regulations, it’s a big deal.

The proposed regulations are aimed at doing the following:

  • Making sure the nursing home has staff trained to deal with dementia;
  • Making sure the nursing home has the proper number of staff members on-hand to take care of patients;
  • Updating infection control and antibiotic use programs; and, among other things,
  • Putting limits on the use of binding arbitration.

Nursing Home Arbitration

So what’s the big deal with changing up the rules on binding arbitration? It matters because more and more nursing home companies are using binding arbitration as a way of managing disputes, mainly in place of civil lawsuits alleging that the nursing home hurt or even killed one of their patients.

The nursing home companies are the ones thinking up these agreements, and then asking patients or their family members to sign them on admission to the nursing home.

In the civil justice system the parties have the ability to do things like get documents through discovery, subpoena witnesses for a deposition and make them testify about what happened under oath, and have their case tried in front of a judge and a jury of their peers. The discovery process in civil courts is actually a very powerful tool – the attorneys have the “power of subpoena” through the courts, essentially giving them the ability to use the court’s power to get information and take testimony from witnesses and the other parties.

In many arbitration agreements these abilities are either extremely limited or non-existent. The parties are limited to only getting certain documents, and can only take a handful of depositions, no matter how many witnesses have information about what happened. Instead of having a judge and jury, the case is tried in front of an “arbitration panel” of three arbitrators, who are usually other lawyers. Arbitration agreements can also put limits on how much a party can recover in damages if they win.

There are some cases where arbitration is the best and most efficient way of resolving a dispute. Disagreements over billing practices, allegations of theft by staff members, and those types of cases.

But most, if not all, nursing home negligence cases involve complicated medical issues and intensive fact-gathering through discovery. In these cases the limitations of an arbitration agreement benefits only one side – the nursing home company – because the less information the injured party can get, the less evidence they have to present to the arbitration panel. Additionally, arbitration agreements deprive people of one of their most important rights – the right to have a jury of their peers (not a panel of lawyers picked by an insurance company or nursing home) decide their case.

Proposed Arbitration Changes

Here’s what CMS is concerned about with nursing home arbitration agreements:

Thus, we have proposed specific requirements if a nursing home chooses to request that a resident sign an agreement for binding arbitration. These requirements include, among other things, that the nursing home must explain the agreement to the resident in a form and manner that he or she understands, and that the resident acknowledge that they understand the agreement.

We have also proposed specific requirements for the agreement, including that admission to the facility cannot be contingent upon the resident signing the agreement, the agreement must be entered into voluntarily, and the arbitration must be conducted by a neutral arbitrator in a venue convenient to both parties.

In addition, we have also proposed that the agreement not contain any language that prohibits or discourages the resident or anyone else from communicating with Federal, State, or local officials, including but not limited to surveyors, health department employees, and representatives of the Office of the State Long-Term Care Ombudsman. We believe this requirement is essential so that residents and others who have knowledge of their care are not discouraged from speaking with surveyors and others from whom the resident can seek assistance.

In addition, another individual can sign the agreement for the resident only if allowed by state law and the individual has no interest in the facility. Thus, we believe these comprehensive requirements are needed so that residents understand the right they are waiving by signing an agreement for binding arbitration and that the arbitration will be conducted in a neutral and fair manner.

CMS is also considering whether or not it should just ban nursing homes from using binding arbitration agreements altogether:

We also considered prohibiting binding arbitration agreements. … we are concerned that despite the protections we have proposed in this rule, some nursing home residents and potential residents may feel pressured to sign these agreements.

For example, in cases where a potential resident or their family have the time to do research and visit multiple homes, a resident may feel he or she can more easily refuse to sign an agreement for binding arbitration.

However, if the resident is hospitalized and needs to locate a facility quickly, they may feel more pressure to accept such an agreement.

Most nursing home patients aren’t admitted after being able to research and visit different facilities. Many are admitted after a hospital stay, and are funneled into a nursing home that works with the hospital.

Many times it’s only once the patient is in a room and feels like they can’t go anywhere else that they are asked to sign the admissions paperwork. These kind of tactics turn the arbitration agreement into a “take it or leave” type of agreement, even though the nursing homes will tell you that the residents aren’t required to sign them.

Hopefully CMS will either completely prohibit arbitration agreements for nursing home negligence and injury cases, or at least force nursing homes to provide more protections to injured patients. No matter what happens this is, at least, a step in the right direction.