On September 28, 2016, the Centers for Medicare and Medicaid Services, an agency within the U.S. Department of Health and Human Services, issued a new rule barring any nursing home that receives federal funding from compelling its residents to resolve any disputes with the nursing home via arbitration rather than in court. The new rule is a victory for patient-rights groups, many of which have voiced concern over the increasing prevalence of mandatory arbitration provisions in nursing home admissions contracts.
Mandatory arbitration provisions prevent nursing home residents from going to court to resolve disputes with their nursing homes. Instead, such disputes must be resolved in arbitration, an out-of-court, confidential proceeding, the results of which generally cannot be challenged in court.
The nursing home industry, led by the American Health Care Association, an industry trade group, contends that arbitration offers a less costly alternative to litigating disputes in court.
Those opposed to mandatory arbitration provisions, including lawyers who advocate for the elderly, point out that the confidential nature of arbitration can allow a pattern of abuse to go unrecognized and unpunished. These detractors also emphasize that nursing home residents are often preoccupied with feelings of fear and apprehension at the time of admission and do not realize that they are signing away their right to a day in court.
Some states already have laws that limit the reach of arbitration provisions in nursing home contracts. In Virginia, for instance, patients in medical malpractice cases may opt out of arbitration within a statutorily prescribed period – generally sixty days from termination of the health care at issue. The new federal rule, however, preempts mandatory arbitration provisions altogether for facilities that receive federal funding.