Arbitration clauses get more scrutiny

The autumn of discontent over pre-event arbitration agreements continued to rage.

While various states challenged the validity of binding agreements in nursing homes, 15 states' attorneys general petitioned federal regulators to ban them outright.

Nursing home residents are often presented with a “take it or leave it” conundrum at a fragile time, the 15 wrote in their missive to the Center for Medicare & Medicaid Services. Consumers are unaware of the consequences, they added.

Proposed regulations by CMS to address issues with pre-dispute clauses are “a good faith effort,” but the only way to “truly” prevent abuse of arbitration clauses is to prohibit them entirely, the attorneys wrote.

Their comments were on the heels of letters to CMS by members of the House of Representatives and the Senate, all calling for legislation against forced arbitration in nursing home contracts.

Meanwhile, a report from the New York Times on
Nov. 1 slammed the agreements. The paper's report found the number of lawsuits forced into arbitration across all industries has been on a steady rise over the past decade, going from less than 100 cases in 2005 to more than 250 in 2014. 

In total, 1,704 federal class actions filed between 2005 and 2014 included motions to compel arbitration.

AARP, the Fair Arbitration Now Coalition and the National Consumer Voice for Quality Long-Term Care are among the groups that submitted formal comments and a petition to CMS in mid-October, asking that the agency ban arbitration agreements from nursing home contracts. 

The American Health Care Association also said CMS should abolish the proposal, but for a different reason. CMS is attempting to “exceed” its authority, executives said.

“These proposals exceed CMS's statutory authority and are not necessary to protect resident health and safety,” said President and CEO Mark Parkinson.