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Federal Government Prohibits Pre-Dispute Arbitration Agreements in Nursing Homes

San Francisco, September 29, 2016 – An outright ban on the use of pre-dispute binding arbitration agreements highlights the most significant re-write of federal nursing home regulations in 25 years.  Yesterday, the Centers for Medicare and Medicaid Services (CMS) posted its final rule for revising the requirements that nursing homes must meet to receive Medicare and Medicaid funding.  The rule is 713 pages long and affects virtually every aspect of the lives of nursing home residents but one sentence on page 689 will likely have the greatest impact:

A facility must not enter into a pre-dispute agreement for binding arbitration with any resident or resident’s representative

Calling pre-dispute arbitration agreements “unconscionable” by their very nature, CMS has protected nursing home residents from signing away their rights to file lawsuits when they are subjected to abuse or neglect or have their rights violated.  Arbitration agreements are used by nearly all nursing homes to ensure residents have limited options when they are harmed or need justice.

Since CMS and state survey agencies have ditched strong regulatory enforcement in favor of a collaborative, education-oriented approach, private lawsuits are critical for improving nursing home care.  Until CMS’s rule, nursing homes had used arbitration agreements to insulate themselves from accountability.

The pre-dispute arbitration agreement ban goes into effect on November 28, 2016.  Agreements signed prior to that date are unaffected by the rule.  The rule does not apply to assisted living facilities, despite the fact that pre-dispute arbitration agreements are similarly unconscionable to their residents.

Pat McGinnis, CANHR’s Executive Director, stated “This is a long-overdue rule.  No citizen should be required to surrender basic constitutional rights and civil protections to secure a bed in a nursing home as a condition for adequate care.  We are glad that CMS has finally recognized this.”

Aside from the ban on pre-dispute arbitration agreements, the rule includes many provisions that could hurt nursing home residents, including no minimum staffing requirement and no new limitations on the use of chemical restraints on residents.