New Rule Bars Nursing Homes Receiving Federal Funds From Requiring Arbitration in Disputes

According to a recent report in the New York Times, an agency within the federal Health and Human Services Department issued a rule that bars any nursing home that receives federal funding from requiring that its residents resolve disputes in arbitration as an alternative to a lawsuit in a court.

As in many situations, the admission contracts of nursing home residents encounter clauses within that contract that makes arbitration mandatory should disputes of any kind arise. That includes most often neglect and abuse matters.

The nursing home industry has long preferred arbitration instead of lawsuits that residents raise for neglect and abuse. Arbitration is a benefit to the nursing home industry because the cost of litigating cases in arbitration is much less than might be in a state court. The arbitration clauses that are found in some nursing home admission contracts are designed to limit the amount of recovery for an injured or neglected resident.

In one case reported in this article, a 100-year-old woman was found murdered in her nursing home. She was strangled by her roommate. Initially the case was blocked from a court hearing because of an arbitration clause.

The new rule on arbitration came after officials in 16 states and the District of Columbia urged the U.S. to cut off funding to nursing homes that use arbitration clauses in the admission contracts for new residents. It is argued that arbitration kept the patterns of wrongdoing hidden from prospective residents and their families.

The Centers for Medicare and Medicaid Services (CMMS), which is the agency under Health and Human Services, will now allow millions of nursing home residents to present their abuse and neglect cases in a courtroom rather than in arbitration. The new rule has great impact on nursing homes that rely on federal funding. The final version of the rule cuts off funding to nursing homes that require arbitration clauses as a condition of admission.

When elderly people or disabled individuals are being admitted to a nursing home, it is a stressful time in their lives. It is at that time that the lengthy contract with the hidden arbitration clause is likely overlooked.

In 2011 and 2012, there were two United States Supreme Court decisions that allowed arbitration clauses to be used across the country. The decisions made it impossible to overturn the arbitration clauses — even those signed by the most vulnerable residents.

In the past, arbitration clauses have made abuse and neglect in nursing homes unknown to the general public, but this new rule will allow court cases to be more widely publicized. Potentially, neglect and abuse in nursing homes will be reduced and cases of abuse will be more closely scrutinized under the new rule.

Kreisman Law Offices has been handling nursing home abuse cases, nursing home injury cases and medical malpractice cases for individuals and families who have been harmed, injured or died as a result of the carelessness or negligence of a medical provider for more than 40 years in and around Chicago, Cook County and its surrounding areas, including Alsip, Chicago (Beverly, Roscoe Village, Rogers Park, Garfield Park, Austin, Englewood, Hyde Park), Des Plaines, Morton Grove and Northfield, Ill.