Articles Posted in Arbitration Agreements

800px-Old_Man_in_San_JoseCalifornia law has proven to be a step ahead of federal law when it comes to banning arbitration agreements in nursing homes in order to prevent elder abuse. A recent Medicare final rule has banned nursing homes “from requiring patients to agree to mandatory arbitration prior to admission,” according to an article in Bloomberg BNA. Another article in The New York Times emphasized the importance of this new rule. When the Centers for Medicare & Medicaid Services (CMS) released news of the final rule on September 28, San Diego nursing home residents already were protected against mandatory arbitration agreements under section 1599.81 of the California Health & Safety Code.

Yet the Medicare final rule still has relevance for San Diego residents. First, anyone living in Southern California who has elderly loved ones in another state now can be assured that those seniors, too, are protected against mandatory arbitration agreements. In addition, the new Medicare final rule also does more than protect against mandatory arbitration agreements, and those additional requirements will apply to elderly residents of nursing homes and assisted-living facilities in the San Diego area.

How California Law Compares to CMS Final Rule on Arbitration Agreements

William_Albert_Ackman_signatureFor more than a year, mandatory arbitration agreements have been illegal in California nursing homes. Instead, patients at facilities in San Diego can only be asked to sign voluntary binding arbitration agreements. Over the last year, the Centers for Medicare and Medicaid Services (CMS) has been working on a federal rule that would prohibit forced arbitration agreements in nursing homes across the country, permitting facilities instead to have only voluntary binding arbitration agreements (like those in California). Yet according to a recent article in The New York Times, even voluntary binding arbitration agreements can put a nursing home resident in a vulnerable position in relation to a facility. Should we be talking about banning all arbitration agreements if we want to ensure patients get justice when nursing home abuse happens?

No Legal Recourse for Harmed Patients in Arbitration?

As the article in The New York Times explains, federal rules concerning forced arbitration agreements in nursing homes will soon be finalized. However, are those protections sufficient to ensure that nursing homes are held accountable when nursing home abuse or neglect occurs? As a brief reminder, arbitration agreements—both those that are “forced” or required for a patient to enter a nursing home, as well as those that a patient agrees to voluntarily upon entering a facility—require patients and their families to settle legal issues “through private arbitration rather than through lawsuits.”

There is a growing movement to ban the common practice of requiring nursing home residents to waive their right to file a lawsuit in claims of negligence, abuse, or neglect in favor of arbitration. Last week, several consumer advocates testified before congress and criticized the practice of “forced arbitration.”

Public Citizen released a report alleging that the practice of forced arbitration, essentially requiring a consumer to sign an arbitration agreement as a condition of being provided the service, has become pervasive. The report, “Forced Arbitration: Unfair and Everywhere” found that many industries, including nursing homes, banks, contractors, cable companies and auto sales, will require consumes to waive their right to file a lawsuit before the services will be provided.

For years, attorneys and consumer advocates have questioned the impartiality of arbitration, which usually has a lawyer or retired judge, or a panel of them, sitting as the trier of fact. The Public Citizen report reveals that arbitrators for the National Arbitration Forum (NAF), the largest arbitration firm in the country (but one of many), ruled against consumers 94 percent of the time.

When entering a nursing home, residents or their family are usually presented with a stack of documents that address everything from the fees to be paid to the type of pillow the resident prefers. More than a dozen signatures can be required to complete the admissions process. Often buried within that stack is an arbitration provision, a binding contract wherein the resident agrees that any disputes over nursing home malpractice, negligence, neglect, or abuse will not be resolved in the courts, but via private arbitration. Private arbitration is simply a process where allegations of neglect or abuse are resolved by a private judge (frequently a lawyer) and not a jury.

Last week, the American Association of Justice, the United State’s largest trial bar, announced its support for legislation titled The Fairness in Nursing Home Arbitration Act, which allows the decision to arbitrate to be made after a dispute has arisen, not before in the admissions process.

According to the AAJ, the passage of this act will prevent corporate nursing home owners from manipulating the arbitration system in their favor and at the expense of nursing home residents.

Nursing homes around the country are now requiring prospective residents to agree to binding arbitration before admittance into a home. By signing an agreement to arbitrate, nursing home residents are forever giving up any rights to seek compensation in a court of law for harm caused by caregivers who abuse or neglect a resident, or for any other nursing home malpractice. Those claims would be handled by an arbitrator, usually a retired judge or an experienced (but often jaded) lawyer.

These arbitration clauses have profound implications, and should be avoided when possible. As this Wall Street Journal article points out, they are a part of a nursing-home-industry strategy to use arbitration agreements to reduce litigation costs, take cases away from juries, and lower compensation awards.

Apparently it has worked. According to a nursing home industry study, average costs to settle cases have begun decreasing as claims of poor treatment are increasing. Nursing homes have learned over the years that neglect or abuse of a vulnerable senior citizen is an emotionally charged thing. And when juries get emotionally charged, they tend to take action to right the wrong that has been committed – usually in the form of verdict commensurate with the wrongdoing – exactly as the U.S. Constitution intended.

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