CMS Bans Nursing Homes’ Use of Pre-Dispute Arbitration Agreements

December 26, 2016

In late September, as part of the first major overhaul of federal nursing home regulations in a quarter-century, the Centers for Medicare and Medicaid Services (CMS) issued a final rule prohibiting binding pre-dispute arbitration agreements in facilities that accept Medicare and Medicaid patients. Attorney Franklin Drazen explains what this means for families.

Families often turn to us for help when they’re looking for a nursing home for a loved one. That’s why a new ruling by The Centers for Medicare and Medicaid Services (CMS) is worth sharing. CMS has ruled that nursing homes can no longer force claims of negligence, elder abuse, sexual harassment, wrongful death, and other disputes into the private system of justice known as arbitration. For families, this represents a major victory because it means that arbitration clauses imbedded in the fine print of nursing home admission contracts can no longer keep patterns of wrongdoing out of the public eye. 

The final rule goes a giant step further than the draft rule proposed last year, which simply required nursing homes that included binding arbitration agreements in their admission contracts to explain the agreements and ensure that patients acknowledge their understanding of them.  

CMS said it received a “significant number” of comments on its proposed rule, with commenters from the long-term care facility industry asking the agency to withdraw the proposal, while members of the public, advocates, and members of the legal community, wanted a blanket prohibition on pre-dispute arbitration agreements. Those supporting an outright ban included 34 senators and 16 state attorneys general.

Ultimately, CMS determined that there “is a significant differential in bargaining power between long-term care facility residents and long-term care facilities,” and went with a total ban. After a dispute arises, the resident and the long-term care facility will still have the option to enter into a binding arbitration agreement if both parties agree.

Industry executives warn that the new rule will trigger more lawsuits that could increase costs and force some long-term care facilities to close. Many believe that CMS has overstepped its authority.  

Although the rule could be challenged in court, it took effect on November 28 and will affect only future nursing home admissions; pre-existing arbitration agreements will still be enforceable.

Will the long-term care industry push back on the new CMS rules? Probably. For now, as the New York Times wrote in its coverage, “[CMS] has restored a fundamental right of millions of elderly Americans across the country: their day in court.”

It’s worth noting that when you’re choosing a long-term care facility for a loved one, having an attorney review admissions documents can help you avoid problems down the road. At Drazen Law Group, we have decades of experience helping families as their loved ones enter the nursing home. We can help you determine which facility is most appropriate, review the admissions documents, reduce the family’s potential liability to the nursing home, help you avoid mistakes while qualifying your loved one for public benefits, and preserve assets for other family members to the greatest extent possible. When we work with families, the money we save them usually more than offsets our fee.

If you would like help, just give us a call at 203.877.7511.


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