The recent rule by the Centers for Medicare and Medicaid Advocacy (CMS) permitting nursing homes to enter into pre-dispute, binding agreements with residents or their representatives was deeply disappointing to resident advocacy groups, including the ABA and its Commission on Law and Aging, which advocated strongly for a full ban on nursing home arbitration agreements.
Like many groups, we do not believe that the time of admission to a nursing home is appropriate for informed decision-making about such agreements. Nursing home admission is usually a time of crisis for individuals and their families; the resident is in an impaired condition, the choice of nursing homes may be severely limited, and the resident and family have no idea of the kind of dispute that might be bound by an arbitration clause in the future. There are advantages and disadvantages to arbitration, but it is only after a dispute arises that those pros and cons can be fully weighed, and an informed and voluntary decision can be made.
Even so, the CMS final rule contains several key positive features that now put a responsibility on all our shoulders: We must educate residents, their families, and the public more emphatically about these agreements and advise them not to sign these at admission or at any time before a dispute arises.
The most favorable part of the rule is its mandate that arbitration agreements must not be used as a condition of admission to, or as a requirement for, a resident to continue to receive care at the facility. Moreover, the facility must explicitly inform residents or their representatives of the right to not sign the agreement as a condition of admission, or as a requirement, to continue to receive care at the facility. And the arbitration agreement itself must expressly state the same.
The intent is to eliminate any pressure or confusion about the need to sign these agreements so that residents and their representatives can decide freely whether to sign or decline signing without fear of repercussions. Yet, it is impossible to eliminate all the stress, fear and confusion that accompany nursing home admission. Good faith compliance by nursing homes with the intent of the rule should be the norm, but it is not out of the question that we will see a denial of admission for some other reason as a pretext for rejecting an applicant who refuses to sign an arbitration agreement. A larger concern is that the rule applies only prospectively, so it has no effect on the validity of arbitration agreements already signed.
The rule, in addition to banning the condition of admission establishes a very important 30-day right of rescission of arbitration agreements by the resident or resident representative. This is a critical step in countering the confusion and stress surrounding the signing of documents at admission and to provide time to consult with others and reassess options. It also provides an additional window of time for advocates to better inform residents and their families about their rights.
Four other requirements of the final rule are important to understand. Facilities must ensure that:
1. 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;
2. The resident or his or her representative acknowledges that he or she understands the agreement;
3. The agreement provides for (a) the selection of a neutral arbitrator agreed upon by both parties, and (b) the selection of a venue that is convenient to both parties;
4. 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.
The rule does not make arbitration decisions and proceedings public, but when the facility and a resident resolve a dispute through arbitration, the rule requires that a copy of the signed agreement for binding arbitration plus the arbitrator's final decision be retained by the facility for five years after the resolution of the dispute and be available for inspection upon request by CMS or its designee.
The commentary to the rule indicates that CMS expects these records to be reviewed as part of the survey and certification process, and as part of its overall monitoring of the rule’s impact. Advocates will need to make sure CMS performs this action. There is nothing in its procedures yet to accomplish this. The phrasing of “CMS or its designee” hints at the possibility of conducting evaluative research by other governmental or private entities. The accumulated record of arbitration decisions would provide a wealth of data to inform policy makers and the public about the use and impact of arbitration in nursing home settings.
It’s noteworthy that the arc of this rule’s history began in 2016 with an outright ban on the use of pre-dispute, binding agreements for arbitration by nursing homes. Previously, CMS rules were silent on the topic. Almost immediately, the nursing home industry commenced litigation to overturn the 2016 rule, and shortly after, CMS suspended enforcement of the rule. In 2017, CMS issued a new proposed rule that swung 180 degrees in the opposite direction, permitting nursing homes to make signing a pre-dispute, binding arbitration agreement a condition of admission. That proposal hung in limbo until the final rule was issued.
The final rule attempts to strike what CMS describes in its comments as a better balance between the need for resident protections with the potential burden on LTC facilities’ need for efficient and cost-effective operation. Advocates disagree with CMS’s judgment of a better balance, but at least the rule opens a wide door for advocates to make nursing home pre-dispute arbitration agreements a rare occurrence if we use every channel available to educate residents, their families, and the public. Let us set our sights on reaching a 100 percent refusal rate. That would be equivalent to a ban on these agreements.