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Medicare’s Final Arbitration Rule Strips Nursing Home Residents of Invaluable Rights

By: Allan M. Siegel

Whether you know it or not, you and your loved ones have likely agreed to hashing out any potential legal claims with a contracted service provider through arbitration rather than the civil justice system.

A form of alternate dispute resolution which keeps matters private and unfairly tips the scales in favor of corporations, forced arbitration has become a favored clause finagled into the fine print of all types of consumer contracts. Its use in nursing home contracts, however, has been a particular point of contention and dispute.

Advocates from across the nation have fought for years to remove arbitration clauses from nursing home contracts, and succeeded in securing a pre-dispute arbitration ban in nursing home agreements in 2016 under the previous administration. However, the following year, under a new administration, CMS’ retraced its steps by publishing a proposed rule to remove the arbitration ban.

On July 16, 2019, the Centers for Medicare and Medicaid Services (CMS) published its long-anticipated final rule on the matter: it allows assisted and long-term care facilities to use forced arbitration agreements in facility admissions forms.

Why Forced Arbitration is No Good for Consumers

The administration’s move to permit the use of forced arbitration agreements is a dangerous blow to some of our society’s most vulnerable citizens.

Although such clauses are common in many consumer contracts – from cell phone plans to employment agreements and, before last year, even Uber and Lyft’s terms and conditions– they are most troubling when used by nursing homes, where studies confirm a lack of transparency has perpetuated risks of abuse, neglect, and exploitation against residents.

Arbitration clauses are favored by corporations. Here are a few ways they puts victim and plaintiffs at an unfair disadvantage:

  • Potential Bias – Private arbitrators, rather than an impartial judge, are often paid for by corporate defendants, or may seek repeat business relationships, which can create bias in their decision making and unfairly tip the scales in favor of defendants.
  • Private Matters – Because the arbitration process is confidential, plaintiffs can lose negotiating leverage against defendants that want claims to remain private.
  • A Lack of Transparency – Private arbitration proceedings mean facts of a case are kept secret, even if they are critical to public health or the safety of other guests who may fall victim to wrongful conduct. A lack of transparency also allows negligence to continue.
  • Restrictions – Many arbitration agreements can include restrictive clauses which further limit victim’s rights, including bars against punitive damages.
  • Evidentiary / Appeal Rules – Unlike matters handled in the civil justice system, arbitration clauses commonly create restrictions which impede victims’ abilities to argue their side of the story. These include limitations pertaining to evidence or appeals.

Victims’ advocates have long waged efforts against binding arbitration, and have worked zealously to raise awareness about their often unfair and restrictive nature in consumer contracts. Unfortunately, Big Business and lobbyists have continually fought back. Their recent victory in stripping CMS’ arbitration ban mirrors the repeal of a Consumer Financial Protection Bureau (CFPB) rule that limited the use of mandatory arbitration in financial contracts – something that earned a spot on the AAJ’s Worst Corporate Conduct of 2017 list.

Though their use is nursing home contracts is especially egregious – given the fragile states of residents’ health and the risks for nursing home abuse and neglect– forced arbitration clauses in all forms are counterproductive to consumer rights. If you’d like to learn more about forced arbitration and nursing homes, or find ways to get involved in advocacy efforts, visit Take Justice Back.

At Chaikin, Sherman, Cammarata & Siegel, P.C., our lawyers know the power of the civil justice system, and are committed to protecting victims’ rights as they bring claims against corporations, powerful defendants, and insurance companies that prioritize their profits and bottom line. If you have questions about a potential case anywhere in the DMV, contact us for a free consultation.