The Obama administration tried to ban such agreements, saying it was “almost impossible for residents or their decision-makers to give fully informed and voluntary consent to arbitration before a dispute has arisen.” Poor or negligent care at some nursing homes has persisted, even after the facilities have attracted regulatory scrutiny.
But the Trump administration says the ban on arbitration agreements imposes “unnecessary or excessive costs on providers” of nursing home care. It noted that President Trump, in an executive order, had directed agencies to roll back rules and reduce “regulatory costs.” The Centers for Medicare and Medicaid Services cited that guidance from the White House in issuing the new proposal.
“Upon reconsideration,” the Trump administration said of the proposed nursing home rule, “we believe that arbitration agreements are, in fact, advantageous to both providers and beneficiaries because they allow for the expeditious resolution of claims without the costs and expense of litigation.” The money that nursing homes spend on lawsuits could be better used caring for patients, it said.
Nursing homes generally welcomed the proposal, but other reaction has been overwhelmingly negative.
The attorneys general of 16 states, led by Brian E. Frosh of Maryland and Xavier Becerra of California, strongly opposed the Trump administration proposal.
Binding arbitration agreements “may be neither voluntary nor readily understandable,” and “this is especially true when consumers are making the difficult decisions regarding the long-term care of loved ones,” the attorneys general said in a recent letter to the federal Centers for Medicare and Medicaid Services.
Thirty-one senators, led by Ron Wyden of Oregon and Al Franken of Minnesota, both Democrats, also objected to the Trump administration proposal. With Medicaid and Medicare spending more than $80 billion a year on nursing home care, they said, nursing homes should not be able to cover up wrongdoing by forcing patients to relinquish the right to sue.
A typical arbitration agreement warns prospective nursing home residents, “By signing this contract, you are agreeing to have any issue of medical malpractice decided by neutral arbitration, and you are giving up your right to a jury or court trial.”
Nursing home inspectors have documented many cases in which patients were injured as a result of infected bedsores, medication errors, malnutrition, dehydration or sexual assault.
The ban on arbitration agreements was issued by the Obama administration in September 2016. Nursing homes challenged it in court, and Judge Michael P. Mills of the Federal District Court in Oxford, Miss., blocked enforcement, pending a trial on the merits of the case.
But, Judge Mills said, “the practice of executing arbitration contracts during the nursing home admissions process raises valid concerns, on a public policy level, since many residents and their relatives are ‘at wit’s end’ and prepared to sign anything to gain admission.”
Long-term care ombudsmen, who receive federal funds to serve as advocates for nursing home residents in each state, are skeptical of the new initiative. “The proposed rule would undermine the rights of people living in nursing homes — rights established in a 1987 law,” said Patty Ducayet, the Texas ombudswoman, who is a state employee.
The Trump administration has also proposed several requirements to protect nursing home residents who agree to binding arbitration. For example, arbitration agreements would have to be written in “plain language” and be explained to the consumer “in a form and manner that he or she understands.”
But the nursing home industry, represented by the American Health Care Association, has objected to the proposed requirements, saying they were “hopelessly vague.”
“There is no justification for singling out arbitration in this manner,” Mark V. Parkinson, the president and chief executive of the association, said in a letter to federal officials. He asserted that the federal government had no legal authority to regulate arbitration agreements between nursing homes and their residents.
Federal officials recently issued guidance to nursing home inspectors that could have the effect of reducing civil monetary penalties for violations of federal health and safety standards.
In a letter in March to Tom Price, the secretary of Health and Human Services, the industry complained that the use of such penalties was “out of control.” Mr. Parkinson said the penalties were being used as punishment, rather than as incentives for nursing homes to correct problems, and were “generating immense financial strain for even some of the highest-quality care providers.”
“The current system is both punitive and combative,” Mr. Parkinson wrote. “We need a system that is collaborative. We need fundamental change.”
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