Pre-Dispute Arbitration in Long Term Care Must not be Implemented

The American Bar Association has asked that a proposed Centers for Medicare & Medicaid rule authorizing mandatory, pre-dispute arbitration in long-term care admissions contracts not be implemented.

In a letter (PDF), sent Monday to administrator Seema Verma, the ABA advocated for CMS retaining its current rule, which prohibits long-term care facilities from entering into binding arbitration agreements with residents until after a dispute arises.

The Trump administration introduced the proposed rule change in June. That was in response to a 2016 Health and Human Services rule under the Obama administration that prohibited federal funding for nursing homes requiring residents to resolve disputes in arbitration. A motion filed by various nursing home groups to block enforcement of the rule was granted in November by a U.S. district court judge in Mississippi. The ruling was appealed, however, in June, the court granted a joint motion to stay (PDF) district court proceedings, pending completion of proposed rulemaking.

If implemented, the proposal would harm residents’ rights and interests, the ABA letter states, and the current rule fits the recent U.S Supreme Court interpretation of the Federal Arbitration Act. Some believe the high court’s May 17 opinion(PDF) in Kindred Nursing Centers v. Clark prohibits bans on pre-dispute binding arbitration in long-term care admissions contracts, but that view is “mistaken,” the ABA letter states. In the Kindred opinion, the court found that under the FAA, arbitration agreements may only be found invalid based on legal rules that would apply to any contract.

“While Kindred clearly prohibits singling out arbitration agreements for disfavored treatment, nothing in the court’s reasoning or under the terms of the Federal Arbitration Act require singling out arbitration agreements for favored treatment. Yet, that is exactly what CMS is doing by its proposed total embrace of mandatory pre-dispute arbitration provisions in admissions contract,” Thomas M. Susman, director of the ABA’s Governmental Affairs Office, wrote in the letter to Verma.

Also, 31 U.S. senators, led by Al Franken, D-Minn., and Ron Wyden, D-Ore., have asked that the CMS rethink the proposed rule.

“Forced arbitration clauses in nursing home agreements stack the deck against residents and their families who face a wide range of potential harms, including physical abuse and neglect, sexual assault, and even wrongful death at the hands of those working in and managing long-term care facilities,” reads the letter (PDF), which was also sent to Verma on Monday. “These clauses prevent many of our country’s most vulnerable individuals from seeking justice in a court of law, and instead funnel all types of legal claims, no matter how egregious, into a privatized dispute resolution system that is often biased toward the nursing home. As a result, victims and their families are frequently denied any accountability for clear instances of wrongdoing.”