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Nursing Home Industry Group Files Lawsuit to Protect Arbitration Agreements

Following the enactment of a new federal rule that prohibits the enforcement of arbitration agreements by nursing homes that accept federal funding (virtually all of them), a group of nursing home operators and industry trade groups are challenging the rule. Interestingly, they are doing so through the very avenue of recourse they are seeking to deny nursing home abuse and neglect victims: A lawsuit. gavel

In case you aren’t familiar with arbitration, it is procedure whereby legal disagreements and disputes are resolved by an arbitrator rather than a judge. The process is often secretive and arbitrators, rewarded handsomely with contracts from large nursing home corporations, often decide cases in favor of the companies. Even when the terms are more or less favorable to the plaintiff, damages awarded are often a fraction of what they would be had the matter been resolved in court. Arbitration agreements are binding contracts that patients and family members enter into by signing documents often buried in nursing home admission paperwork.

The lawsuit, American Health Care Assn. et al v. Burwell et al, was filed in the U.S. District Court for the Northern District of Mississippi, Oxford Division. The lawsuit, which names the Secretary of Health and Human Services and the acting administrator of the Centers for Medicare and Medicaid Services (CMS), labels the arbitration clause ban as capricious and arbitrary. The measure also contests the authority of CMS to act as a regulatory agency calling the shots on how nursing homes handle disputes. Plaintiffs in the litigation are asking the federal court to, at the very least, delay the enactment of the ban (the rest of the rule solidifies as law this month) while the court weighs the challenge by the industry group. 

Plaintiffs further rail against the notion that arbitration agreements are inherently unfair to patients. The American Health Care Association has argued before that arbitration is a process that is equally fair and yet fair simpler and less expensive than seeking justice through the court system.

Our nursing home injury lawyers in Orlando will concede that the process of litigation in court takes longer and can be more complicated than those cases resolved through arbitration. However, we have to ask ourselves – less expensive for whom? First of all, while courts do charge some fees, they are considerably lower for a plaintiff than what one would pay an arbitrator. Secondly, a 2009 study commissioned by the AHCA revealed that the average damage awards after arbitration in nursing home cases were more than a third lower than if plaintiff’s case had gone to court.

The lawsuit says that residents of long-term care facilities should not be “deprived” of the ability to “choose” arbitration as a means of dispute resolution. Firstly, the problem is that mandatory arbitration agreements – which is what so many of these cases involve – do not give residents a choice. Further, the new rule doesn’t actually stop patients and families from using an arbitrator if both sides agree to it.

What the rule does is give nursing home patients and their families the opportunity to avail themselves of their constitutional right to a court proceeding if they so wish.

Call Freeman Injury Law — 1-800-561-7777 for a free appointment to discuss your rights. Now serving Orlando, West Palm Beach, Port St. Lucie and Fort Lauderdale.

Additional Resources:

American Health Care Assn. et al v. Burwell et al, Oct. 17, 2016, Northern District of Mississippi, Oxford Division

More Blog Entries:

DHHS: No More Nursing Home Arbitration Agreements, Oct. 29, 2016, Orlando Nursing Home Lawyer Blog

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