The new rule prohibits nursing homes that participate in Medicare and Medicaid from requiring patients to sign contracts that include pre-dispute arbitration clauses.
The Department of Health and Human Services (HHS) recently issued a rule that will go a long way toward holding long-term care facilities accountable for substandard care of vulnerable patients.
The new rule prohibits federally-funded long-term care facilities from requiring patients to work out disputes with a facility through arbitration. Mandatory arbitration agreements prevent patients from challenging abusive and negligent care in court and deprive the public of information about such charges.
The use of what are known as “pre-dispute” arbitration clauses by nursing homes is particularly problematic. Those clauses force patients, usually as a condition of residency, to agree to arbitration before any issue even arises. Nursing homes typically bury these clauses deep within the pages of applications and contract documents so many residents do not even know what they are signing.
The new rule prohibits nursing homes that participate in Medicare and Medicaid from requiring patients to sign contracts with pre-dispute arbitration clauses. However, the rule does not affect existing nursing home agreements with residents that require arbitration.
These arbitration clauses have been used to try to block lawsuits by representatives of patients who were victims of malpractice or violent crimes, including a case by a 100-year-old woman whose nursing home roommate murdered her. Because arbitrations are typically confidential, the public may not learn about abusive practices or failure to protect vulnerable patients.
Nursing homes will be allowed to propose arbitration clauses only once a dispute has arisen, and even then the rule will ensure certain protections. For example, a patient who refuses to sign an arbitration agreement cannot be kicked out of the facility because of such refusal.
HHS is not alone in seeking to tamp down on abusive arbitration agreements. This spring, the Consumer Financial Protection Bureau issued a proposed rule that would prohibit banks, payday lenders, and other financial service providers from using pre-dispute arbitration agreements to prevent consumers from filing and participating in class action lawsuits.