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Arbitration Agreements and Long-term Care Facilities

September 7, 2019

 

Can a long-term care facility require its residents to sign an arbitration agreement before they are admitted? This question has been a hot topic for several years, now, and it appears that regulators have now reached a compromise with the industry and patient advocates on the issue.

 

To understand the compromise, a little history on the issue is helpful. The use of arbitration agreements by long-term care facilities was banned by The Centers for Medicare & Medicaid Services (CMS) in October 2016. A few days later, the American Health Care Association and a collection of nursing homes filed suit. They were awarded an injunction.

 

In response, in June 2017, CMS published a new proposed final rule regarding the use of arbitration agreements by nursing homes. CMS opened the requisite comment period and collected thoughts and suggestions from the public. As of July 2019, CMS has revised the rule, based on the consideration of those public comments, and has issued a new proposed final rule regarding the use of pre-dispute, binding arbitration agreements by long-term care facilities. The new rule takes effect on September 16, 2019. While arbitration agreements are now allowed, there are several restrictions on them.

The proposed final rule includes:

  • A nursing home may not, as a condition of admission to the nursing home (or as a condition to continued care), require a resident to sign a binding arbitration agreement.

  • A nursing home must explicitly notify the resident of their right not to sign the agreement, and the agreement must explicitly state that the resident is not required to sign it.

  • The agreement must explicitly provide that the resident has the right to rescind the agreement within 30 calendar days of execution of the agreement.

  • The arbitration agreement must be explained to the resident in a language in which they understand.

  • If a resident chooses to sign the pre-dispute, binding arbitration agreement, the nursing home must ensure that the resident acknowledged that he or she understands the agreement.

  • The agreement cannot contain any language that dissuades the resident from communicating with state or federal officials regarding any matter.

  • The arbitration agreement must specify that if arbitration is entered into, a neutral arbitrator will be agreed upon by both parties.

  • If arbitration is sought, the venue must be convenient to both parties.

  • If a nursing home facility and a resident enter into arbitration, a copy of the binding decision must be retained by the facility for five years, and make that decision available for inspection by CMS.

Any rule that applies to a resident also applies to his or her legal representative. For example, if a patient with advanced dementia is admitted by her son, the son also has all of the same rights under these rules. 

 

Some clarity as we move forward is helpful. In litigating the enforceability of arbitration agreements in Abilene, Texas and the surrounding area over the years, it has been my experience that disputes over arbitration agreements can often be just as expensive, or even more costly than the litigation they are supposed to avoid.

 

A representative of CMS stated, “The overall impact of this final rule is to provide transparency in the arbitration process in nursing homes to the residents, his or her family and representatives, and the government.” The proposed rule is a part of CMS’s five-part plan to overhaul the oversight of nursing homes. Seema Verma, Administrator of CMS, has indicated she intends to strengthen oversight, enhance enforcement, increase transparency, improve quality, and put patients above paperwork.

 

Stand by, as more developments seem to be on the horizon.

 

Sources

https://s3.amazonaws.com/public-inspection.federalregister.gov/2016-23503.pdf

https://www.federalregister.gov/public-inspection/current

https://www.law.cornell.edu/uscode/text/42/1395i-3

https://ltcombudsman.org/issues/residents-rights

https://downloads.cms.gov/medicare/Your_Resident_Rights_and_Protections_section.pdf

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