Nursing Home Arbitration Clauses: New Rule to Protect Residents

nursing home arbitration

What is nursing home arbitration?

Arbitration is a private process for resolving legal disputes. Nursing home contracts commonly contain mandatory arbitration clauses. They require residents to resolve disputes via arbitration versus a lawsuit.

Why do advocates consider nursing home arbitration a potential problem?

Arbitration generally removes the courtroom process involving a jury and allows a qualified arbitrator (usually an attorney) to resolve the claim. Studies show that arbitration awards are often substantially less than jury verdicts, particularly in injury/abuse cases involving a “sympathetic plaintiff” like a child or elderly person.

Arbitration may limit the amount of information that can be discovered from a defendant. Advocates also argue this private, “parallel system of justice” keeps wrongdoing out of the public eye, thus hurting consumers beyond just those harmed directly.

Many residents and families don’t fully understand the “fine print” in contracts, specifically this nursing home arbitration clause. We do recommend assistance when you go through the admissions process. An advocate can review your contract with you so you understand it more fully. Nursing home admission is a very stressful time. The potential resident is often too unwell and rushed to digest and question contract details. Yet, it has proven very difficult to overturn arbitration clauses even when signed by vulnerable individuals.

Nursing homes and other parties using (and requiring) arbitration claim it is a simpler, quicker method to resolve disputes. More and more consumer and medical services include arbitration clauses. It has been seen as a tool for keeping costs down.

New Rule Barring Nursing Home Arbitration

A new rule from CMS (Centers for Medicare and Medicaid Services), issued this week, will take effect in November if it is not successfully challenged in court.

The rule bars any nursing home that receives federal funding (most) from requiring that its residents resolve disputes in arbitration. This rule will only affect future admissions (new contracts).

Nursing home residents with current contracts can review them and try to renegotiate if they contain such clauses. Also, regardless of the rule, the nursing home can ask you to agree to nursing home arbitration if a dispute arises. However, now you will be able to decide if that is the best option at the time, rather than being contractually obligated.

There are many other new regulations going into effect as part of a big overhaul from CMS. We’ll be keeping you posted and sharing much more on nursing home advocacy/support. Make sure to sign up for our newsletter for the latest!