Sixteen state attorneys general in the United States have written to the Centers for Medicare and Medicaid Services, voicing their opposition to pre-dispute nursing home arbitration agreements, stating that “pre-dispute binding arbitration agreements are harmful to residents of long-term care facilities and that the Centers for Medicare and Medicaid Services (“CMS”) should prohibit binding arbitration clauses in long-term care facility contracts … long-term care facility contracts that include pre-dispute arbitration clauses do not allow consumers seeking long-term care to make an informed decision about the best means of addressing the particular dispute that arises during the term of the contract … long-term care and other health-related services are uniquely unsuited to pre-dispute arbitration agreements.”
The 12-page Comments of State Attorneys General on Mandatory Arbitration Provisions was the official response (comments) to the proposed Medicare and Medicaid Programs; Reform of Requirements for Long-Term Care Facilities, that was published in the Federal Register (80 Fed. Reg. 136 (proposed July 16, 2015)(to be codified at 42 CFR Pts 405, 431, 447, 482, 483, 485, and 488)).
The History Of Arbitration Agreements
The state attorneys general noted in their written comments that the Federal Arbitration Act (“FAA”) was conceived in 1925 to facilitate arbitration of disputes between commercial entities of similar situation and bargaining power but that companies now routinely impose mandatory arbitration in a wide range of consumer contracts where the consumer has little bargaining power, with “take it or leave it” fine print contracts containing pre-dispute arbitration clauses in which consumers are required to waive their right to seek judicial resolution of future disputes in federal or state court, which courts have found to be binding on consumers even if the consumer was unaware of the clause, never saw the provision, and had no opportunity to negotiate or reject the clause (in a study by the Consumer Financial Protection Bureau, more than 75% of consumers surveyed did not know whether they were subject to an arbitration clause in their agreements with financial services providers, and fewer than 7% of those covered by arbitration clauses realized that the clauses restricted their ability to sue in court).
The state attorneys general commented on their specific concerns regarding pre-dispute arbitration agreements at the time particularly vulnerable individuals are entering long-term care facilities and when individuals and their families typically are faced with a large number of documents that are required to be completed in order to receive nursing home care: only after tragic events do many people discover that the nursing home contract contains a binding arbitration clause requiring that all claims against the facility, including claims of nursing home abuse or nursing home neglect, must be brought before a private arbitrator chosen by the nursing home. The state attorneys general noted the unfairness to consumers who are bound by arbitration decisions, the high cost of arbitration proceedings, inconvenient arbitration venues, and the waiver of class actions, which prohibit collective arbitration, deter harmed individuals from pursuing their rights, and fail to encourage systemic changes that protect consumers.
Pre-Dispute Arbitration Agreements
The state attorneys general contend that pre-dispute binding arbitration agreements in general can be procedurally unfair to consumers and can jeopardize the fundamental right of Americans to be heard and seek judicial redress for their claims, especially when consumers are making the difficult decisions regarding the long-term care of loved ones. The state attorneys general further contend that pre-dispute arbitration provisions may be neither voluntary nor readily understandable for most consumers because consumers often do not recognize the significance of these provisions, if they are aware of them at all, especially in the context of nursing home care.
The state attorneys general noted in their comments that studies have shown that arbitrators have a powerful incentive to favor the dominant party in the arbitration, noting that the Minnesota Attorney General filed a lawsuit in 2009 against the largest arbitration company in the United States (National Arbitration Forum), alleging that it misrepresented its independence and hid from consumers and the public its extensive ties to credit card companies and the collection industry. The Minnesota litigation ended with the National Arbitration Forum agreeing to enter into a consent order that barred it from the business of arbitrating credit card and other consumer disputes.
In 2003, the American Arbitration Association (“AAA”) stated that pre-dispute arbitration agreements are not appropriate in the healthcare context, announcing that it would not administer healthcare arbitrations between individual patients and healthcare service providers that relate to medical services, such as negligence and medical malpractice disputes, unless all parties agreed to submit the matter to arbitration after the dispute arose.
The Effect Of Pre-Dispute Arbitration Agreements On The Quality of Nursing Home Care
The states attorney general stated in their comments that pre-dispute binding arbitration clauses can result not only in harm to consumers, but also in a systemic failure to hold accountable long-term care facilities that abuse the trust placed in them by consumers: the few claims that are fully arbitrated are typically only adjudicated as to a single consumer, due to inclusion of class-action prohibitions, and the decisions are often confidential, which means that a decision in favor of one consumer will have no precedential value or binding effect against the long-term care provider with respect to legal or arbitral proceedings brought by other consumers. Thus, a long-term care provider’s loss in one arbitration simply becomes a cost of doing business rather than a mandate to change unlawful or harmful practices (the average costs to nursing homes to settle nursing home injury claims have begun dropping even as claims of poor treatment are on the rise).
The state attorneys general concluded their comments by stating, “We urge CMS to include in its final regulation an outright prohibition against such clauses.”
If you or a loved one suffered injuries (or worse) during a nursing home stay in the United States due to nursing home neglect, nursing home negligence, or nursing home abuse, you should promptly contact a local nursing home claim lawyer in your U.S. state who may investigate your possible nursing home claim for you and file a nursing home claim on your behalf, if appropriate.
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