What Am I Signing? – New Ruling on Arbitration Clauses in Admission Agreements
When a family member enters a nursing home or assisted living, it is an emotional and overwhelming time. So, generally, a careful review of the admission contract and related documents is not a top priority. Moreover, potential residents or family members who have concerns about certain provisions assume they have little choice, and the contracts are “take it or leave it.”
Arbitration Agreement Regulations
Long-term care facilities have historically used their superior bargaining power to limit their liability by including binding arbitration provisions in their admission agreements. In 2016, the Centers for Medicare and Medicaid Services (CMS) issued regulations that prohibited nursing homes from including pre-dispute, binding arbitration agreements in their admission agreements. The regulation was challenged, and a federal court issued a nationwide stay of the regulation. In 2019, CMS revised its regulation to remove the ban on pre-dispute binding arbitration provisions in nursing home admission agreements. Instead, it provided that admission agreements could include binding arbitration clauses as long as the agreement specified that the arbitration clause was voluntary.
The 2019 regulation was also challenged, and enforcement was stayed until the 8th Circuit upheld the regulation in a decision issued Oct. 1, 2021, Northport Health Services of Arkansas v. Dept. of Health & Human Services (8th Cir. 2021).
Arbitration Clauses in Admission Agreements
The Court held that the federal government had the authority to regulate admission practices in facilities that participate in the Medicare and Medicaid programs, including the use of binding arbitration clauses. The regulation (42 C.F.R. § 483.70(n)) provides as follows:
(1) The facility must not require any resident or his or her representative to sign an agreement for binding arbitration as a condition of admission to, or as a requirement to continue to receive care at, the facility and must explicitly inform the resident or his or her representative of his or her right not to sign the agreement as a condition of admission to, or as a requirement to continue to receive care at, the facility.
(2) The facility must ensure that: (i) The agreement is explained to the resident and his or her representative in a form and manner that he or she understands, including in a language the resident and his or her representative understands; (ii) The resident or his or her representative acknowledges that he or she understands the agreement; (iii) The agreement provides for the selection of a neutral arbitrator agreed upon by both parties; and (iv) The agreement provides for the selection of a venue that is convenient to both parties.
(3) The agreement must explicitly grant the resident or his or her representative the right to rescind the agreement within 30 calendar days of signing it.
(4) The agreement must explicitly state that neither the resident nor his or her representative is required to sign an agreement for binding arbitration as a condition of admission to, or as a requirement to continue to receive care at, the facility.
(5) The agreement may not contain any language that prohibits or discourages the resident or anyone else from communicating with federal, state, or local officials, including but not limited to, federal and state surveyors, other federal or state health department employees, and representatives of the Office of the State Long-Term Care Ombudsman, in accordance with § 483.10(k).
(6) When the facility and a resident resolve a dispute through arbitration, a copy of the signed agreement for binding arbitration and the arbitrator’s final decision must be retained by the facility for five years after the resolution of that dispute and be available for inspection upon request by CMS or its designee.
Arbitration clauses are unlikely to disappear from long term care agreements, but this decision means that they must include clear direction regarding the voluntary nature of the clause. This should help residents and families make thoughtful choices about their rights.