CMS Proposes Restrictions on Arbitration Provisions in Nursing Home Resident Agreements

By:  I. Paul Mandelkern

The use of a binding arbitration provision in the pre-admission agreement between a senior living facility and its resident has become quite common. If properly drafted and presented to the resident or his or her representative binding arbitration provisions have been upheld by the Florida courts. However, this past summer the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would, for the first time, impose restrictions on the use of arbitration provisions by nursing facilities that participate in the Medicare and Medicaid programs.

The proposed rule sets forth certain requirements that must be met if a nursing home chooses to have a resident sign an agreement for binding arbitration. These requirements include, among other things, that:

·      the nursing home must explain the arbitration agreement to the resident in a form, manner and language that the resident understands, and the resident must acknowledge that he or she understands the agreement;

·      the admission to the facility cannot be contingent upon the resident signing the agreement;

·      the arbitration agreement must be entered into voluntarily;

·      the arbitration must be conducted by a neutral arbitrator in a venue convenient to both parties;

·      the arbitration agreement cannot contain language that prohibits or discourages the resident or anyone else from communicating with federal, state or local officials, including surveyors or health department employees; and

·      another individual can sign the arbitration agreement on behalf of the resident only if allowed by state law and the individual has no interest in the facility.

In the preamble to the proposed rule, CMS stated that it considered prohibiting binding arbitration agreements altogether, and that it is concerned that despite the protections imposed by the proposed rule some nursing home residents and potential residents will feel pressure to sign arbitration agreements. As a result, CMS also requested comments on whether agreements for binding arbitration between nursing homes and their residents should be prohibited.

The 90 day comment period to the proposed rule ended on October 14th. According to one report over 50 labor, legal, medical and consumer organizations, along with 34 U.S. Senators and 15 state Attorney Generals submitted comments calling for CMS to completely prohibit the use of binding arbitration agreements between nursing homes and their residents. The American Health Care Association submitted a comment asserting that CMS has no legal authority to issue the proposed rule and the proposed rule was not necessary to protect the rights of residents.

In light of CMS’ proposed rule and the comments to the proposed rule, senior living facilities should be aware that if they use a binding arbitration provision in their pre-admission resident agreement the provision should be fair, and not one-sided, and entered into voluntarily by the resident or his or her representative.

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