Mandatory Arbitration Banned in Nursing Homes

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The Center for Medicare & Medicaid Services issued a rule prohibiting the use of pre-dispute binding arbitration agreements for all nursing homes that accept Medicare and/or Medicaid recipients. Arbitration is still allowed in nursing home disputes, but the agreement to arbitrate must occur after a dispute arises between the nursing home and the resident. This rule drastically changes the landscape for nursing home litigation. 

Historically, many nursing homes have used mandatory, pre-dispute, binding arbitration agreements to force residents into resolving their dispute in front of an arbitrator and avoid having to litigate cases in front of juries.  These pre-dispute arbitration clauses have pushed disputes about nursing home safety and quality of care away from the public view and into the hands of professional arbitrators. This practice had allowed the nursing home industry to reduce its legal costs, but it has stagnated a nursing home resident’s ability to receive just compensation for their injuries.

Most of these pre-dispute arbitration agreements were a condition of residency. This means that a new resident had to agree to arbitrate any dispute or they would not be allowed to enter the nursing home. This left many aging individuals with the unenvious position of choosing between forfeiting their constitutionally protected legal right to a trial by jury or being unable to receive adequate medical treatment in their twilight years. This ruling has restored the right to a “day in court” to thousands of residents who have had to fight their legal battles in private arbitration proceedings.