Many long-term care facilities must eliminate arbitration clauses from resident under a new federal rule. The rule, which takes effect on November 28, 2016, only applies to facilities that accept Medicare and Medicaid. However, additional facilities may experience pressure from consumers or state regulators to follow suit.
The new rule prohibits all pre-dispute binding arbitration agreements. It was adopted due to concern that individuals moving into senior housing or long-term care facilities may be especially vulnerable and therefore, might not read the “fine print” in their agreements or might not understand the ramifications of agreeing to arbitration. Some people also were worried that the privacy of arbitration might help nursing homes and other facilities to keep disputes involving elder abuse and poor treatment from the public eye.
In reality, nursing homes and assisted living communities are already heavily regulated by the states. Resident injuries and elder abuse must promptly be reported to the government. Most licensed facilities also are required to report a host of other, less serious, incidents, including even accidental injuries in no way caused by the facility or its staff.
Regulators can and do review incident reports. The state agency investigates reports of abuse and serious injury, and findings against the facility are public. Consumers already are able to check on a facility’s regulatory record before moving in.
Even though the new rule prohibits pre-dispute agreements to binding arbitration, a senior or his/her family can still agree to arbitration after a dispute has arisen. The new rule also does not impact pre-dispute agreements to non-binding arbitration and mediation, both of which can aid in resolving disputes short of litigation.
Once a dispute has arisen, there may be benefits to arbitration to both the consumer and the facility. Arbitration can resolve a dispute more quickly than litigation, which may lead to a cost savings. Frequently, arbitration permits selection of an arbitrator who is familiar with the industry and standards of care. Relaxed evidence rules can make it easier to get helpful information in front of the decision-maker. Further, the relative privacy provided by arbitration can be welcome not only to a facility but also to a senior or family members seeking to avoid public testimony about an emotional incident involving private medical concerns.
Although facility operators accepting government benefits must modify their resident agreements by November 28, that does not mean that facilities should not work with residents and their families to resolve disputes fairly short of litigation. Likewise, consumers of long-term care services should keep in mind that there can be a significant financial and emotional cost to “having one’s day in court.”
The new rule may change the timing of agreements to binding arbitration. However, once a dispute has come up, even though rock, paper, scissors might not be an option, the facility and the consumer still can and should consider negotiation, mediation, and arbitration before going to Court.