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Beware Of Nursing Home Pre-Dispute Arbitration Agreements

Moving into a nursing home, whether for short-term therapy and rehabilitation or for long-term care, is a difficult transition for many people and their relatives. Under stress and in physical pain, people rush through the admissions paperwork without reading or fully appreciating what they are signing. If relatives are handling the admissions process under a power of attorney or health care proxy, they are no more likely to understand the paperwork.

It has become commonplace for nursing homes around the country to enter into binding pre-dispute arbitration agreements with their residents. Such agreements waive the resident’s right to a jury trial—before an actual dispute exists. It is easy for people to think such agreement is required for admission, and some nursing homes do not sufficiently explain that the agreement is voluntary.

Nursing homes cannot require a binding pre-dispute arbitration agreement as a condition of admission, expedited admission, or continued care.

Under the federal Nursing Home Reform Act of 1987 and the Massachusetts consumer protection regulations promulgated by the Attorney General, nursing homes cannot require their residents, prospects, or their agents, to sign a pre-dispute arbitration agreement. In 2014, the Massachusetts Supreme Judicial Court ruled in Johnson v. Kindred Health Care and Licata v. GGNSC Maden Dexter LLC, that a health care agent under the state’s health care proxy law lacks the authority to agree to arbitration on behalf of a nursing home resident, because the statutory power is limited to decisions requiring a principal’s informed consent to a medical treatment, service, or procedure.

To address the growing concern over the use of binding pre-dispute arbitration agreements by the nursing home industry, in September the Centers for Medicare and Medicaid Services (CMS) issued a ban prohibiting binding pre-dispute arbitration agreements in nursing homes that accept Medicare or Medicaid payments. This ban was swiftly followed by a lawsuit at a Federal District Court in the Fifth Circuit by the American Health Care Association against the Department of Health and Human Services and CMS, resulting in an injunction against enforcement of the ban, on the grounds that as a federal agency the CMS lacked the authority to regulate the use of arbitration agreements.

Regardless of the final ruling on the CMS ban, remember: a nursing home is prohibited from requiring a pre-dispute arbitration agreement. Furthermore, your health care agent lacks authority under the Massachusetts health care proxy law to sign such an agreement. You, or your attorney-in-fact under a power of attorney, may voluntarily sign such an agreement, but it may not be in your best interest. The time to decide how best to resolve a legal dispute is when an actual dispute arises, so you can consider the nature of the dispute and what’s at stake (billing or wrongful death?) and weigh all your options, including mediation, facilitated negotiation, and a trial by jury—your constitutional right.