Yesterday, the federal government drastically rolled back protections for some of the country’s most vulnerable people by overturning an Obama-era rule that protected seniors and other nursing home residents from being forced into secretive arbitration proceedings when they are harmed by a long-term care (LTC) facility. Forced arbitration clauses have become ubiquitous in society and are slipped into the fine print of many contracts. These clauses force consumers to waive their right to settle disputes in open court in front of a neutral judge and jury, a legal move that often favors defendant businesses’ interests.
In 2016, the Obama administration released a rule that would have prevented LTC facilities that receive federal funding from forcing their residents into arbitration. The rule would also have prohibited LTC facilities, such as nursing homes, from conditioning admission or the continuation of care on signing an arbitration agreement. The corporate-run nursing home industry sued the Obama administration shortly after the rule was released and received a temporary order blocking the administration from implementing the rule.
The Trump administration, which has made no secret of its cozy relationships with big business, proposed a new, drastic rule in 2017. Public Citizen mobilized dozens of organizations to fight the proposal. While ultimately a huge setback for LTC residents, today’s final rule is at least a partial win when compared to the 2017 version. The agency’s retreat from implementing some of the worst features of the proposed rule is a testament to Public Citizen and our allies’ advocacy against the Trump administration’s rollback of the Obama-era protections.
Unfortunately, however, the final rule will still allow nursing homes to impose arbitration agreements on unsuspecting parties. This predatory practice compromises the wellbeing of LTC facility residents and ensures that systemic incidents of abuse and neglect are hidden from public view.
The rule promulgated today by the Centers for Medicare and Medicaid Services (CMS), an agency within the U.S. Department of Health and Human Services, does not protect seniors. Although it requires that nursing homes explain arbitration agreements to residents or their representatives and confirm that they acknowledge that they understand the agreement, there is little reason to believe that corporate-run nursing homes will actually do that—especially since enforcement of these vague disclosure standards is almost certain to be lacking. And given that most people are unfamiliar with the problems associated with forced arbitration, prospective residents or their loved ones are unlikely to ask questions about the arbitration provisions buried in admissions contracts, especially during the typically stressful experience of transitioning yourself or a loved one into a nursing home.
By permitting the nursing home industry to enforce binding arbitration agreements against elderly and vulnerable residents, CMS is actively siding with corporate-backed nursing facilities over seniors. In 2016, the Obama administration concluded that “there is significant evidence that pre-dispute arbitration agreements have a deleterious impact on the quality of care for … patients,” particularly by creating “negative incentives on staffing and care as a result of not having the threat of a substantial jury verdict for sub-standard care.” In finalizing the new rule, the Trump administration provided no contradictory evidence to these important findings.
Because arbitration proceedings are almost always kept secret, the new rule will allow nursing homes to shield their systemic abuse and neglect from public scrutiny. This will make it impossible for people looking at nursing homes to be aware of past incidents, and prevent them from making informed decisions about their and their loves ones’ long-term care. Sadly, the all too many instances of harm and neglect that have filled the papers are just the tip of the iceberg when it comes to injuries that were hidden because disputes were heard in secret arbitration hearings.
CMS’s new rule gives another free pass to an industry that has been found time and again to be guilty of wantonly abusing some of the most vulnerable members of society. Congress, however, has the power to correct this egregious wrong. Rep. Loretta Sanchez (D-CA) is planning to reintroduce legislation that would protect LTC residents from being forced into arbitration. And in February, Sen. Richard Blumenthal (D-CT) and Rep. Hank Johnson (D-GA) introduced the Forced Arbitration Injustice Repeal (FAIR) Act. This legislation would prohibit companies from forcing consumers (including nursing home residents), workers, and small businesses into arbitration before a dispute has even occurred.
Not only is passing the FAIR Act the right thing to do, but a recent survey showed that more than 80 percent of both Republicans and Democrats support ending the practice of forcing individuals to arbitrate their claims against businesses and employers outside of court. The bill is expected to receive a House markup in September, so now is the time to tell your Representative to make companies put people before profits by voting for the FAIR Act!