The Federal Government has issued a final rule that limits the use of pre-dispute arbitration agreements between nursing facilities and their residents. The final rule was published on July 16, 2019 by the Centers for Medicare and Medicaid Services (CMS) the government agency that regulates Medicare and Medicaid program providers.
When someone is admitted to a long-term nursing facility there is a lot of paperwork to be signed. Along with the admission contract and various information forms and authorizations, most nursing facilities include an agreement that requires the resident to arbitrate disputes that may arise in the future.
Such pre-dispute binding arbitration agreements mean that disputes will be resolved by persons appointed as arbitrators according to arbitration rules. By signing the agreement, the resident gives up his or her right to sue the facility in court in the event that the resident is, for example, harmed due to the negligence of the facility and its employees.
Lawyers for nursing home residents often feel that their clients will get better results from a court-lawsuit than from arbitration. And advocates point out that a better time to make an informed decision as to whether or not to arbitrate a dispute is after the dispute has arisen.
There is often great stress involved at the time of a nursing home admission and most people probably just sign all the forms they are handed, including the pre-dispute arbitration agreement, without reading them or understanding the implications. They may feel that they are required to sign all of the forms to get a loved-one admitted to the facility. It is not a good time to make a decision that will limit your future legal rights.
The CMS final rule allows long-term care facilities to continue to request that residents and their representatives agree to pre-dispute binding arbitration, but includes a few important safeguards that attempt to provide some measure of protection of a resident’s rights to make informed decisions.
The new rule requires that the facility explain the arbitration agreement to residents and their representatives and advise them that they are not required to sign it and that their admission to and stay in the facility is not contingent on their signing it. I expect this requirement to be a point of litigation in the future. Lawyers trying to void an arbitration agreement that was signed by their injured client will seek to show that the facility failed to adequately explain it to the resident.
The rule also specifies that the resident is given 30 calendar days to rescind the agreement.
In addition to advising their clients not to sign a pre-dispute arbitration agreement, elder law attorneys may want to recommend that clients meet with the lawyer within the first 30 calendar days after any nursing home admission. If an arbitration agreement was signed, the lawyer can help the client make certain that it is properly rescinded.
The new rule takes effect on September 16, 2019.
Here are the specific provisions of the new rule:
 2.Section 483.70 is amended by revising paragraph (n) to read as follows:
Administration.
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(n) Binding arbitration agreements. If a facility chooses to ask a resident or his or her representative to enter into an agreement for binding arbitration, the facility must comply with all of the requirements in this section.
(1) The facility must not require any resident or his or her representative to sign an agreement for binding arbitration as a condition of admission to, or as a requirement to continue to receive care at, the facility and must explicitly inform the resident or his or her representative of his or her right not to sign the agreement as a condition of admission to, or as a requirement to continue to receive care at, the facility.
(2) The facility must ensure that:
(i) The agreement is explained to the resident and his or her representative in a form and manner that he or she understands, including in a language the resident and his or her representative understands;
(ii) The resident or his or her representative acknowledges that he or she understands the agreement;
(iii) The agreement provides for the selection of a neutral arbitrator agreed upon by both parties; and
(iv) The agreement provides for the selection of a venue that is convenient to both parties.
(3) The agreement must explicitly grant the resident or his or her representative the right to rescind the agreement within 30 calendar days of signing it.
(4) The agreement must explicitly state that neither the resident nor his or her representative is required to sign an agreement for binding arbitration as a condition of admission to, or as a requirement to continue to receive care at, the facility.
(5) The agreement may not contain any language that prohibits or discourages the resident or anyone else from communicating with federal, state, or local officials, including but not limited to, federal and state surveyors, other federal or state health department employees, and representatives of the Office of the State Long-Term Care Ombudsman, in accordance with § 483.10(k).
(6) When the facility and a resident resolve a dispute through arbitration, a copy of the signed agreement for binding arbitration and the arbitrator’s final decision must be retained by the facility for 5 years after the resolution of that dispute on and be available for inspection upon request by CMS or its designee.
Further Reading
The Final Rule and Related Commentary
Our New Nursing Home Arbitration Mandate: Educate, Educate, Educate, Charlie Sabatino, American Bar Association, July 24, 2019
Be Wary when Signing Nursing Home Admission Paperwork, Jeffrey Marshall, Marshall, Parker and Weber, July 16, 2017
CMS Regs on Pre-Dispute Arbitration Clauses in SNF Contracts, Rebecca C. Morgan, Elder Law Prof Blog, July 29, 2019
