Nursing Home Arbitration Agreements

CMS Removes Arbitration Ban In Nursing Home Agreements


On June 5, 2017, the Trump Administration proposed rescinding a CMS rule that banned nursing homes from requiring patients and their families to sign binding arbitration agreements as a condition of admission. The rule was implemented in September 2016 during the Obama Administration. CMS indicated in June that it would prohibit this aspect of the Obama-era rule from being implemented.

The CMS rule originally sought to prevent nursing homes requiring consumers (e.g., patients and their representative family members) to sign binding arbitration agreements which required resolution of disputes through arbitration and not litigation.  Patient advocates, attorneys, and others who have represented nursing home residents have criticized mandatory arbitration because they view the language in the agreements as dense and difficult to understand. In their view, this resulted in the patient and their family members making uninformed decisions when signing the binding arbitration agreements and would subsequently lead them to receiving lower settlement amounts because the case was not presented before a jury.

The American Health Care Association, a leading nursing home industry group, applauded the effort to roll back the enforcement of CMS’ rule because in their view, mandatory arbitration provisions typically save both parties from paying the costs associated with litigation. However, CMS’ new rule still requires nursing homes to: (1) post signage in public areas regarding the use of arbitration agreements at their facility, and (2) explain the existence of a mandatory arbitration agreement, what it means, and have the resident and their families agree to the clause. Additionally, the arbitration clauses must be written in “plain language” that is easy for the patient and their relatives to understand. These new requirements proposed by the Trump administration, however, were criticized by the American Health Care Association as being vague.

Sixteen state attorneys general and 31 U.S. Senators also opposed the rescission of the CMS rule from 2016, arguing that family members and patients would still be unable to understand what signing a binding arbitration agreement would mean if a dispute were to arise.

As illustrated above, CMS, federal courts, nursing homes, patient advocates, and patients continue to grapple with resolution of disputes. More updates on this topic will be provided in the future as they arise.

The new CMS provision regarding nursing homes can be found at:

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