Illinois Attorney General Calls to Eliminate Arbitration Agreements in Nursing Homes

End of Nursing Home Arbitration AgreementsEfforts by Attorneys General from 15 states including Illinois and the District of Columbia urging the Centers for Medicare and Medicaid Services (CMS) to prohibit binding arbitration agreement clauses affecting long-term care contracts appear to be successful. Illinois Attorney General Lisa Madigan told CMS said that stronger consumer protections are necessary to maintain family rights and provide bargaining power over long-term care facility contracts.

Through collective submissions, the Attorneys General from different states made claims that when individuals become residents of long-term care facilities and nursing homes, family members are required to make significant health care decisions for their loved one during stressful circumstances. As a result, many family members are unable to anticipate any future problems or have the ability to make an accurate informed decision to resolve any future dispute.

Currently, CMS includes provisions in nursing home contracts that require binding arbitration to handle disputes. Atty. Gen. Madigan believes family members are taken advantage of when having to agree to the provision and might not even understand exactly what is being asked before giving up their rights to have any dispute heard in court, even if their loved one has been neglected or abused at the facility.

Families Unaware of Contractual Restrictions

Many families and nursing home residents only become aware that they have agreed to binding arbitration through the nursing home contract once the tragic event or dispute occurs. The binding arbitration clause in the contract usually requires every claim against the facility to be resolved through private arbitration by a mediator chosen by the nursing home. The clause typically prohibits residents and family members from filing a lawsuit against the facility, even if the claim involves neglect or abuse.

Requiring family members and residents to sign the binding arbitrary clause as a part of admission to the facility places family members at a disadvantage. This is because the families are unable to evaluate and decide the best avenues to resolve specific disputes that occur. The Attorneys General who called on CMS to make changes believe that binding arbitration agreements agreed to before any dispute are often procedurally unfair to residents and family members, and jeopardize the fundamental right in the United States to be heard and seek judicial compensation when filing a lawsuit or claim.

Denying Nursing Home Residents Their Rights

The Attorneys General claim that this denial of rights can be especially daunting on families who are given the task of making difficult decisions dealing with their loved one’s long-term care. In many incidences, the consumer either does not readily understand the contractual provision or is not given the opportunity to sign a contract without the provision enforced.

The participating Attorneys General are in line with the determination made by the American Arbitration Association in 2003 that they would avoid administering health care arbitrations between service providers and patients as it relates to medical services unless every party agreed to participate in arbitration to settle a dispute.

Negative Consequences to Consumers

There are other serious negative consequences to the consumer who agrees to binding arbitration agreements in contracts for admission to nursing homes and long-term care facilities. Some of these include reduced accountability of the health care provider and limited monetary awards should the arbitrator side in the favor of the consumer, even in cases involving neglect, mistreatment or abuse. In addition, the binding arbitrary agreements diminish incentives for long-term care facilities and nursing homes to eliminate harmful and unlawful practices.

A study conducted by the Consumer Financial Protection Bureau found that many residents and families were unaware that the arbitration agreement clauses existed in contracts for admission into nursing facilities. These individuals were largely uninformed that the clause restricted their capacity to file a lawsuit seeking redress in court.

In addition to Attorneys General in Illinois and the District of Columbia, the other states that submitted comments included California, Delaware, Connecticut, Iowa, Hawaii, Massachusetts, Maine, Minnesota, Maryland, Oregon, New York, Vermont, Rhode Island and Washington.