Nursing Homes Can No Longer Hide Behind Arbitration | Elder Law Attorneys NJ

Nursing Homes Can No Longer Hide Behind Arbitration

Nursing Homes Can No Longer Hide Behind Arbitration

Nursing Homes Can No Longer Hide Behind Arbitration...or Can They?

The Centers for Medicare and Medicaid Services (CMS), an agency under Health and Human Services that administers the federal side of Medicare and Medicaid regulation, has long struggled with the question of whether nursing homes and other long-term care facilities can require that disputes be submitted to binding arbitration as opposed to the court systems. When such an agreement is signed before a claim arises, the agreement is referred to a “pre-dispute binding arbitration” agreement. Nursing homes favor this solution because it lowers costs and the uncertainty of litigation. Residents and their advocates criticize pre-dispute arbitration as a way to prevent juries from seeing cases where the recovery would be much greater in court than in front of arbitrators, many of whom are industry professionals. They also see it as another way that facilities can consolidate the leverage and bargaining power they hold over residents and their families.

In 2016, CMS issued a rule aimed at blocking nursing homes from using arbitration when dealing with matters of elder abuse, sexual harassment and wrongful death. By doing so, the agency hoped to provide new protections for 1.5 million elderly residents and restoring their fundamental right to have their case heard in a court of law. Initially proposed in 2015, the new rule took effect in early November 2016 prohibiting arbitration clauses as a condition of admission (residents can agree to one later). Litigation immediately ensued (as it often does when CMS implements regulations) and a federal court issued an injunction, effectively putting a stop to the rule. In June of 2017, CMS issued new guidance essentially bowing to the court decision, and allowing pre-dispute regulation provided that it provides certain consumer protections in the nursing home contract. Here are some other facts you need to know.


 Read Your Loved One’s Rights in a Nursing Home

What is arbitration?

Essentially, arbitration bears little resemblance to court. In fact, the proceedings are often carried out in a lawyer’s office rather than a courtroom. Instead of a judge, they are presided over by an independent third party known as an arbitrator or a group of arbitrators known as a tribunal. Despite these differences, arbitration is still just as binding as litigation. It is only when you begin to understand the general principles of arbitration that it becomes clearer why facilities like arbitration as a forum. The general principles of arbitration include:

  • Arbitration aims to resolve disputes via an impartial third party without unnecessary expense or delay.
  • Arbitration leaves both sides free to agree on how their dispute is to be resolved. The only safeguards required are those necessary in the public interest.
  • Courts should not interfere.

The primary benefit of arbitration being claimed by nursing homes is that it is cost-effective and more efficient. Litigation is costly and can be drawn out. It also can involve a jury, which is often not sympathetic to a nursing facility. Arbitration proceedings often involve impartial professionals who have experience working with, or even on behalf of, nursing homes.

Why again do nursing homes prefer arbitration?

As previously stated, plenty of businesses elect to use arbitration for dispute resolution but since we are focusing on the elder care industry and how it benefits from the process, let us zero in on just a few of the major advantages for nursing homes. Focusing on these three in particular should make it perfectly clear why these homes prefer arbitration:

  • PrivacyArbitration hearings are confidential. They are private. Media and members are the public cannot attend these meetings. No one can directly access the final decisions, which are not published anywhere. Thus, arbitration can be quite appealing to an employer who does not want any ‘dirty laundry’ to be aired. Just imagine what ‘dirty laundry’ may entail in a nursing home and what that might mean for business.
  • ‘Splitting the Baby’The phrase signifies that arbitrators aim to please everyone and, thus, end up pleasing no one. In other words, no one gets complete relief because the process tends to grant each side part of their requests, out of a sense of equity, or fairness. The underlying factor here is a relaxed attitude toward evidence. Fairness sounds nice but legal outcomes are not based on fairness. So we can see that arbitration lets parties off the hook in terms of producing or defending against actual proof. 
  • No Appeal/Finality – Finally, we have finality. The most important stage of a potentially damning case for any company is when it is closed shut. That is why when such a case is resolved through arbitration, said company can rest assured that there will be no appeal. Even if the arbitrator makes a mistake, the outcome is final. 

What is an arbitration clause? 

And so, we arrive at the arbitration clause. Many nursing homes now include a clause in their applications that prevent elders and their families from making any undesirable conflict a matter of public record. Notably, the arbitration clauses often prevent the resident or their family from bringing litigation, but allow the facility to pursue breaches of contract (i.e. collections cases and evictions) in court, where the result is quicker and more advantageous. Arbitration clauses have also begun to appear in cell phone contracts, employee agreements and student loans. When it comes to the duty so many feel regarding caring for their elders, one would assume that topics such as safety and quality of care would be important to millions of Americans.

It is important to note that any federal agency decision can only bind facilities receiving federal funding as far as their arbitration practices. Private facilities are not part of the conversation, and that is important (although most facilities in New Jersey receive Medicare/Medicaid funding). Regardless, it will always be in the best interest of the elder care industry to maintain an image of self-sufficiency and self-regulation. An essential part of the industry is a certain level of trust in the organization’s ability to keep the child safe and take care of his or her basic needs. The same goes for placing an elder in an elder care facility. The fear is that CMS’s current regulations will allow facilities to exercise the same kind of outsized influence and power they currently hold over residents, and restrict their rights. This firm, and others like it, exist in large part to make sure that residents and their families have a voice when they feel they need one.

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Pam Michaelson - January 15, 2017 Reply

I will be needing advice in placing my mom in a nursing home.

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