New CMS Rule Bars Nursing Home Arbitration Clauses in Admission Contracts

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Beginning November 28, 2016, nursing homes can no longer require residents or their families to sign a mandatory arbitration agreement as part of the admission contract.

Pursuant to a ruling announced September 28th, regulators for the Centers for Medicare and Medicaid Services (CMS) have barred all nursing homes that receive either Medicare or Medicaid funding from requiring residents to agree to give up their legal right to sue in court and to pursue dispute resolution in binding arbitration.  This is good news for nursing home residents and their families and will end a long practice of the nursing home industry which often resulted in shielding facilities from liability for claims involving abuse or neglect of the resident which resulted in injury without fair compensation.

This is a decision that has been widely applauded by consumer and nursing home advocacy groups. George Slover, senior policy counsel at Consumers Union, the policy and mobilization arm of Consumer Reports, calls the recently announced decision “a tremendous advance in helping ensure effective protections for nursing home residents. This is a particularly vulnerable consumer population – the elderly and disabled confined to nursing homes.  This rule will help ensure that nursing homes are held accountable when there is neglect and abuse, and it will help give nursing homes the right incentives to make sure that they are taking care of their residents like they should be.”

Of course, as you might imagine, the nursing home industry is more than a little displeased by the new CMS rule.  For example, Mark Parkinson, spokesperson and CEO of the American Health Care Association, recently claimed that the mandatory arbitration ban “clearly exceeds CMS’s statutory authority and is wholly unnecessary to protect residents’ health and safety.”

Stay tuned for further developments on this issue.  But for now, as of November 28th, nursing homes can no longer force nursing home residents to give up their right to trial by jury in cases where the resident or their family alleges injury as a result of neglect or abuse by nursing homes.


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