Hunt & Associates P.C.

Long-Term Care Facilities’ Use of Arbitration Restricted by New Federal Rule

Elder to rest homeMore than 1.4 million Americans reside in one of the more than 15,000 long-term care (LTC) facilities in the U.S.[1]  Late last month, the Centers for Medicare and Medicaid Services (CMS), the federal agency responsible for those federal programs, issued new rules affecting LTC facilities which participate in Medicare or Medicaid.  Included among these new rules is a prohibition against pre-dispute arbitration provisions.

Up until now, most LTC facilities required their residents to sign contracts which included arbitration provisions.  As a result, any dispute between a resident and the facility was referred to an arbitrator instead of being decided in court by a judge or jury.  Not surprisingly, LTC facilities favored arbitration as an alternative to being in court, where damage awards tended to be more favorable to residents. The facilities were able to obtain the resident’s consent to these arbitration provisions given the relative disparity in the parties’ bargaining power and by virtue of the fragile mental and emotional state of the incoming resident upon admission to the facility.

This new rule becomes effective on November 28, 2016.  Thereafter, LTC facilities will no longer be able to require residents or their representatives to sign pre-dispute arbitration agreements.  This rule does not apply to LTC facilities that do not participate in the Medicare or Medicaid programs.  Nor will this new rule prohibit a resident from voluntarily agreeing to arbitration with a LTC after a dispute arises.

It will be interesting to see whether this new rule spawns litigation as the rule’s detractors claim or results in a better level of care for residents as hoped for by its proponents.

© 10/27/2016 Charles A. Ford of Hunt & Associates, P.C.  All rights reserved.

[1] Statistics are from the National Center for Health Statistics, Centers for Disease Control and Prevention for year 2014.

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