Medicare Bans Pre-Dispute Arbitration Agreements for Nursing Homes

We have written here before that nursing homes use binding arbitration agreements with nursing home residents to avoid juries seeing some of the horrible abuse and neglect sustained by the elderly and vulnerable. These agreements are usually buried in admission documents and signed before there is ever a problem.

Medicare has now stepped up to end this practice. The Centers for Medicare and Medicaid Services (CMS) has finalized a rule that will ban nursing homes and long term care facilities from requiring their residents to “agree to” pre-dispute arbitration as a condition for receiving federal money through Medicare and Medicaid.  The new rule prohibits facilities from entering into “an agreement for binding arbitration with a resident or their representative until after a dispute arises between the parties…prohibiting the use of pre-dispute binding arbitration agreements.”

Pre-dispute binding arbitration agreements have been the topic of significant discussion for the last ten years.  These agreements have the effect of: (1) limiting the nursing home residents’ right to access the judicial system, (2) eliminating any right to appeal, (3) restricting the resident’s right to damages – including punitive damages, (4) imposing unfair restrictions on venue and discovery, (5) increasing the cost of bringing a claim, and may be required prior to admission.  Ultimately, these “agreements” actually deter residents from pursuing their claims.  Accordingly, CMS has concluded that “it is unconscionable for LTC [long term care] facilities to demand, as a condition of admission, that residents or their representatives sign a pre-dispute agreement for binding arbitration that covers any type of disputes between the parties for the duration of the resident’s entire stay, which could be for many years.”

This rule does not prohibit the nursing facility from placing pressure on a resident to agree to binding arbitration AFTER a dispute/injury has occurred. So it remains important that residents and their loved ones consult with a lawyer immediately after they have been harmed, and not sign anything before obtaining legal advice.

The new rule 42 CFR §483.70(n) will go into effect on November 28, 2016. Click here to read the CMS Final Rule in its entirety.

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