Public Outcry Over Skilled Nursing Arbitration Rule Grows

The skilled nursing industry cheered earlier this year when the Centers for Medicare & Medicaid Services (CMS) announced that it would reverse course on a plan to ban arbitration agreements between SNF operators and residents. But as the public learns more about the issue, the backlash has been harsh — and national publications are taking notice.

“These companies would have nothing to worry about if they did an adequate job of keeping people safe,” columnist David Lazarus wrote in a Tuesday piece for the Los Angeles Times, echoing the sentiment of many critics who say arbitration deprives residents of their rights to seek relief through the courts — and thus allows SNFs to get away with abuse and substandard care.

Those skeptical voices include 31 Democratic and independent U.S. senators who wrote to CMS administrator Seema Verma earlier this month, asking her to keep the arbitration ban in place.

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“These clauses prevent many of our country’s most vulnerable individuals from seeking justice in a court of law, and instead funnel all types of legal claims, no matter how egregious, into a privatized dispute resolution system that is often biased toward the nursing home,” the group of lawmakers wrote. “As a result, victims and their families are frequently denied any accountability for clear instances of wrongdoing.”

The senators referenced the story of an Alabama nursing-home resident who had allegedly died of an overdose of diabetes medication. Her family received no financial compensation at the end of a third-party arbitration process.

“The current CMS proposal… once again places residents’ health and safety at significant risk, and leaves potential residents and their families in the dark about facilities’ past negligence and abuse,” the senators — including Elizabeth Warren of Massachusetts, Al Franken of Minnesota, and former presidential candidate Bernie Sanders of Vermont — wrote.

The skilled nursing industry had fought back against the Obama-era arbitration ban in court, with the American Health Care Association winning an injunction against the action last November, just before the presidential election. Late this spring, now under the Trump administration’s control, CMS moved to roll back the ban, citing a desire to reduce “unnecessary burden” on providers and “support the resident’s right to make informed choices.”

AHCA applauded the move at the time.

“Arbitration produces swifter resolution to disputes, compensates residents without undue litigation expense for either party, and reduces the funding burden on the Medicare and Medicaid programs,” AHCA president and CEO Mark Parkinson said in a press release back in June. “We greatly appreciate CMS and the Trump administration making the determination that this ban is not in the best interest of our nation’s millions of patients, residents, and families, and the providers who care for them.”

But in addition to the senators, a variety of advocacy groups have opposed the move, and the issue has been highlighted in mainstream publications such as the Los Angeles Times and the New York Times.

In his column, Lazarus accused AHCA of “exquisite irony” in using the court system to prevent nursing home residents from seeking the same course of action, and expressed concern over the private nature of arbitration proceedings.

“Litigation provides a public record that other families can use in making their own decisions,” he wrote. “Ask yourself: Would you be comfortable placing your parent in a facility that settled a lawsuit over patient abuse?”

A more straightforward news piece in the New York Times last week laid out both sides of the case, but acknowledged that the response to the arbitration reinstatement was “overwhelmingly negative” outside of the skilled nursing industry. In addition to the group of senators, the New York Times cited a similar letter from 16 state attorneys general, including Brian Frosh of Maryland and Xavier Becerra of California, also both Democrats.

The state AGs claimed that arbitration agreements can be potentially difficult for residents to understand or enter into voluntarily.

“This is especially true when consumers are making the difficult decisions regarding the long-term care of loved ones,” the letter read, according to the Times.

The comment period for the proposed lifting of the ban ended August 7. Despite the backlash, the preservation of arbitration rights has legal precedent, a prominent Chicago health lawyer told Skilled Nursing News earlier this month. The lawyer, Neville M. Bilimoria, predicted that any attempt to ban arbitration would run afoul of a 2017 Supreme Court ruling and thus eventually fail.

Written by Alex Spanko

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