U.S. to Stop Arbitration Clauses in Nursing Home Contracts

Because of a case involving a 100-year-old woman who was murdered in a nursing home, was blocked from court, the federal agency that controls Medicare and Medicaid funds will now prevent nursing homes from forcing claims of elder abuse, and nursing home neglect into private arbitration. An agency of Health and Human Services Department issued a rule that bars any nursing home that receives federal funding from requiring that its residents resolve their claims by arbitration, instead of in court. The rule, which would affect nursing homes with 1.5 million residents, promises to deliver important new protections. The fine print in nursing home admissions contracts have pushed disputes about safety and the quality of care out of the protection of our court system.

The system has helped the nursing home industry reduce compensation for victims even in the case of murder. One case involving a 100-year-old woman who was found murdered in a nursing home, strangled by her roommate. Another case involved the family of a 94-year-old woman who died at a nursing home in Murrysville, Pa., from a head wound. Both cases were forced into arbitration. “The sad reality is that today too many Americans must choose between forfeiting their legal rights and getting adequate medical care,” Senator Patrick Leahy, a Democrat of Vermont, said in a statement. The nursing home industry reacted strongly against the change.

Officials in 16 states and the District of Columbia urged the government to cut off funding to nursing homes that use the clauses, arguing that arbitration kept patterns of wrongdoing hidden from prospective residents and their families. With its decision, the Centers for Medicare and Medicaid Services has restored a fundamental right of millions of elderly Americans: their day in court. The efforts by the consumer agency and now Health and Human Services do not require congressional approval.

The rule on nursing homes that receive federal funding could be challenged in court. The rule is scheduled to go into effect by November. Only future admissions would fall under the new rule. The nursing home industry has said that arbitration offers a less costly alternative to court. The agency began to re-examine the rule after a large number of patient groups raised concerns about the widespread use of mandatory arbitration. The final version of the rule cut off funding to facilities that require arbitration clauses as a condition of admission. Lawyers who work with the elderly say that people are being admitted to nursing homes at one of the most stressful moments of their lives. Prospective residents do not fully grasp what they are signing, the lawyers say. Judges are bound by a pair of Supreme Court decisions, in 2011 and 2013, that blessed the widespread use of arbitration clauses. Those decisions have made it virtually impossible to overturn clauses, even those signed by the most vulnerable nursing home residents.

An appeals court even refused to throw out an arbitration clause signed by a man who could not read or sign his name, reasoning that “illiteracy alone is not a sufficient basis for the invalidation of an arbitration agreement.” In the last decade, arbitration clauses have affected things like cellphone contracts, employment agreements and student loans In a yearlong investigation, The New York Times tried to pierce the veil, getting inside the secretive proceedings. To do that, The Times examined records from more than 25,000 arbitrations between 2010 and 2014 and interviewed hundreds of lawyers, arbitrators, plaintiffs and judges in 35 states. The proceedings were found to bear little resemblance to court. They have been conducted in the offices of lawyers who represent the companies accused of wrongdoing. In the case of nursing homes, The Times found many troubling examples where issues of abuse and potential neglect never made it into the public light because they were blocked from court. In May 2014, for example, a woman with Alzheimer’s was sexually assaulted two times in two days by residents at a nursing home in Lemon Grove, Calif. A subsequent investigation by the state’s department of public health found the nursing home “failed to protect” the woman. But when her family tried to hold the nursing home accountable in court, their case was scuttled because of an arbitration clause. Ultimately, they gave up and settled with the nursing home.

At Liever, Hyman & Potter we believe in the rights of the elderly. When they are in nursing homes they are vulnerable and need to be treated fairly and with dignity. If you have a family member who has suffered harm from bad care, there are laws in Pennsylvania that allow for fair compensation. We were established in 1959 and for the last 57 years our firm has stood with the citizens of central Pennsylvania including those who live in Berks County, Schuylkill County, Montgomery County, Lebanon County and the surrounding area. From the desk of John R. Badal, President of the Firm.

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