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Forced Arbitration Agreements in Long-Term Care Facility Admission Contracts

What is Pre-Dispute Arbitration?

Arbitration is a process in which a dispute is settled through the use of one or more arbitrators who decide the outcome instead of a jury made up of members of the community. “Pre-dispute” arbitration means that the consumer must agree to arbitration before any dispute arises. 

Pre-dispute arbitration agreements are increasingly included in nursing home and other long-term care facility admission contracts presented to consumers and their families. Once signed, these agreements bar consumers from seeking legal action in court should they suffer harm or injury.

Many advocates have challenged the right of facilities to include pre-dispute arbitration agreements within admission contracts. However, on February 21st, 2012, the Supreme Court issued a decision in the case of Marmet Health Care Center v. Brown et al. that allowed for the enforcement of pre-dispute arbitration clauses. In its February decision, the Supreme Court ruled that these clauses were not barred by the Federal Arbitration Act and therefore could be included in consumer contracts. A recently implemented regulation, however, has banned the use of pre-dispute arbitration contracts as a condition of admission or continuation of care in federally-funded nursing facilities.

Why is Prohibiting Forced Pre-Dispute Arbitration Agreements Important to Long-Term Care Consumers? 

These agreements:

  • Prevent informed decision making: An essential aspect of making any important decision is having all of the facts. When a consumer signs a pre-dispute arbitration agreement, they do so without any knowledge of the future dispute. No one can make an informed decision without having all of the facts of the future situation.
  • Take advantage of consumers at their most vulnerable: Nursing home admissions are usually unplanned and often happen when individuals need care as quickly as possible. In addition, there is often little or no choice in facilities. This places individuals and their families under a great deal of pressure and, in some cases, desperation. As a result, individuals and their families are unlikely to be aware of all they are signing – and are further unlikely to fully appreciate the significant and irreversible consequences of relinquishing their right to utilize the traditional legal system.
  • Are inherently unfair to consumers: Arbitrators are private individuals - not publicly elected or appointed officials, like judges. They are often chosen by the long-term care provider, creating a strong incentive for arbitrators to favor the provider in order to ensure a repeat of business. Once a decision is issued, consumers typically cannot appeal it as they can in the court system.
  • Can be expensive: Arbitration can be very costly and can be more expensive than court, despite it often being touted as a lower cost alternative. Residents and families not only have to hire a lawyer, but also generally have to pay a part of the arbitrator's fee. This is like paying the judge - which consumers don't have to do in court! Due to the cost, arbitration may not be possible for many residents and families - leaving them with no legal recourse.
  • Hide poor care: Decisions of the arbitrator are often kept confidential, meaning there is no public record. This allows unsafe practices and abuse to continue if providers are unable or unwilling to fix the issue. When long-term care consumers are denied the option of holding facilities accountable for poor treatment, poor care and abuse through an open and unbiased legal process, the well-being of all individuals receiving long-term services and supports suffers as a result. 

News and Updates

In 2019, Representative Hank Johnson (D-GA-4) introduced the Forced Arbitration Injustice Repeal (FAIR) Act (H.R. 1423). This legislation would prohibit pre-dispute arbitration agreements for a wide-range of disputes, including those affecting residents in nursing homes or other long-term care facilities. Under this bill, it would be illegal to enforce any pre-dispute arbitration agreement in long-term care facility admission contracts. A similar bill under the same name (S. 610) has also been introduced in the Senate.

In the 112th Congress, Congresswoman Linda Sanchez introduced the Fairness in Nursing Home Arbitration Act, which would have ensured residents or their representatives could voluntarily choose arbitration after a dispute arose. The bill would have amended the Federal Arbitration Act to eliminate pre-dispute arbitration agreements in nursing home and other long-term care facility contracts. It is anticipated that a revised version of the bill that would also apply to other providers may be introduced in the fall of 2019.

The Center for Medicare and Medicaid Services (CMS) recently implemented a new rule banning the use of pre-dispute arbitration contracts as a condition of admission or continuation of care in federally-funded nursing facilities. This final rule reverses the provisions in the 2016 requirements that banned pre-dispute arbitration contracts in federally-funded nursing facilities. Even though the final rule permits the use of arbitration agreements, it does require more transparency from nursing facilities and staff in an attempt to ensure consumers and their families understand the agreement. Importantly, it allows consumers or their representatives to rescind a signed pre-dispute arbitration agreement within 30-days.

This rule went into effect on September 16, 2019 for most nursing facilities. For a select number of facilities involved in a recently filed lawsuit against the rule, enforcement of the final rule has been delayed until at least December 31, 2019.  

In April 2020, a federal court in Arkansas ruled that long-term care facilities must comply with the CMS' revised final rule regarding pre-dispute arbitration agreements as a condition of receiving Medicare and Medicaid payments.

Take Action!

  • Urge your U.S. Representative to support the FAIR Act! Urge your family, friends, and fellow advocates to do the same!    
  • Educate your Members of Congress about the need to bar pre-dispute arbitration agreements in long-term care contracts!
  • If you or someone you know has been impacted by a pre-dispute arbitration agreement, tell your story!  Talk with your Members of Congress about its effect on your ability to seek justice and hold the nursing home accountable. Talk with the media too!

To find out who your Members of Congress are, click here for Representatives and here for Senators.

To reach your members by phone, visit their website or contact the U.S. Capitol Switchboard at (202)224-3121 and ask for your Senators' and/or Representative's office.

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