Mandatory Arbitration in Nursing Home Admission Contracts

A proposed rule change introduced by the Trump administration would authorize mandatory, pre-dispute arbitration in long-term care admissions contracts. The proposed rule is in response to an Obama administration rule that prohibited federal funding for long-term care facilities that required residents to resolve disputes through arbitration.

ABA Writes Letter Opposing Rule Change

In a recent letter, the American Bar Association (ABA) advocates for the Centers for Medicare and Medicaid Services (CMS) to retain its current rule prohibiting long-term care facilities from entering into binding arbitration agreements with residents until after a dispute arises. In the letter sent to CMS administrator Seema Verma, the ABA writes that implementing the proposed rule would harm residents’ rights and interests.

Current Rule Follows Kindred Nursing Centers v. Clark Precedent

The ABA takes the position that the current rule follows the recent United States Supreme Court interpretation of the Federal Arbitration Act in Kindred Nursing Centers v. Clark. Contrasting the view that Kindred Nursing banned pre-dispute binding arbitration in long-term care admissions contracts, the ABA letter states that Kindred held that under the FAA, arbitration agreements may only be found invalid based on legal rules that would apply to any contract. The ABA states that while Kindred prohibits singling out arbitration agreements for disfavored treatment, the Supreme Court did not single out arbitration agreements for favored treatment. CMS is proposing to do exactly that – to implement a “total embrace of mandatory pre-dispute arbitration provisions” in nursing home admissions contracts, wrote Thomas M. Susman, director of the ABA’s Governmental Affairs Office.

Senators Against Forced Arbitration Clauses

In another letter to Verma, 31 U.S. senators ask that the CMS rethink the proposed rule. Their letter states that forced arbitration clauses in nursing home agreements “stack the deck against residents and their families.” The senators maintain that residents face a wide range of potential harms, including physical abuse and neglect, sexual assault, and wrongful death in long-term care facilities. Forced arbitration clauses would prevent the most vulnerable individuals from seeking justice in a court of law. All types of legal claims, no matter how egregious, would be funneled into a “privatized dispute resolution system that is often biased toward the nursing home.” Accountability would be denied to residents and their families.