New Medicare Regulation will help California nursing home residents

One of the most pernicious clauses which nursing homes put into their admission agreements are arbitration provisions.  The arbitration agreement takes away the rights of the nursing home resident or her family to have a judge or jury decide any legal claim against the nursing home.  This would include claims for elder abuse, neglect, and negligence which cause personal injury or even death. Instead, a private arbitrator must hear the claim. Medicare has recognized the unfairness of these agreements and has instituted new regulations to prohibit nursing homes from compelling residents to sign arbitration agreements.

The new regulation, 42 CFR§ 483.70(n), provides:  “We are requiring that facilities must not enter into an agreement for binding arbitration with a resident or their representative until after a dispute arises between the parties.  Thus, we are prohibiting the use of pre-dispute binding arbitration agreements.

In the past, nursing homes would typically have arbitration agreements signed by the resident or a family member before the person was admitted to the facility. In California, it has been the law that residents could not be required to sign such agreements as a prerequisite to admission.  California Health & Safety Code§ 1599.81, Title 22 California Code of Regulations § 73518, however, many unsuspecting people signed such agreements anyway because of the way they were presented to them by the nursing home administrator.  Often, these agreements were sold as an economical and quick way to resolve disputes with the nursing home should problems arising.  In reality, the agreements were taking away people’s constitutional right to a jury trial, and people did not realize the drawbacks of the arbitration process until it was too late. Finally, this practice will be stopped.

What’s the problem with arbitration clauses?

You may be thinking that arbitration is a good thing and a viable alternative to the traditional court system. Nothing could be further from the truth.

Economically, an arbitration is more costly. In either case, you will probably need a lawyer to represent you.  Therefore, there is no savings in terms of attorneys fees.  However, the costs of going to arbitration are often much higher because the parties must pay for the time of a private arbitrator.  These arbitrators bill their time at $500 per hour and up.  In a complex, nursing home abuse case the arbitration time could easily exceed 100 hours, resulting in arbitration fees of over $50,000.00.  These exorbitant fees are not incurred when your case is heard by a judge or jury.

Arbitrations take longer. There are no time deadlines for sending a case to arbitration.  Accordingly, it is a common technique for insurance companies that are defending nursing homes to drag the case out as long as possible.  The strategy is designed to wear down the resident and their family in the hopes that the case is dropped, or even more cynically, hope that the resident who is usually elderly, passes away before the case can proceed to a hearing.  In the court system however, the defendants cannot delay coming to justice in a timely manner. California, elders (those over the age of 70) have a priority to have their case heard before others They can have their case heard within 120 days from the date which the court recognizes the party’s right to the priority (Civil Code of Procedure § 36 (a)).

With arbitration, you give up your right to a jury trial, and your right to have your case heard by your peers. Instead, the hired arbitrators can be biased against your case before they have heard any evidence.  The financial reality of the situation is that the insurance companies will use the same arbitrators or arbitration companies over and over in their disputes.  This generates huge fees for the arbitrators.  The individual plaintiff will most likely never use the arbitration process again. So there is an inherent bias in the process, in that the person deciding the case is consistently being paid large sums of money by one side. Unfortunately, this can influence the way cases are decided.

Arbitration clauses are proliferating in the consumer setting as more and more consumers are being denied the right to a jury trial  by banks, credit card companies, etc. (See Arbitration Everywhere, Stacking the Deck of Justice).  As an Alameda nursing home attorney, I am glad to see that Medicare is taking steps to prohibit the use of these pre-admission arbitration clauses in  nursing home settings.  California nursing home residents and their families will be better off for it.

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