law gavel with courthouse backgroundThe Trump Administration, through announcements released by the Centers for Medicare and Medicaid Services, illustrated its intent to roll back legal rights enacted under the Obama Administration that made it easier for patients to sue nursing homes for abuse and other violations. Nursing home patients’ rights have come under increasing fire in the Republican-dominated Congress and by the Trump Administration.

The Problem: Arbitration agreements inhibit patient rights

Nursing homes often require patients to sign arbitration agreements before they are allowed to reside within the facility. An arbitration agreement reduces patient rights because it removes the ability to seek judicial review of the nursing home’s actions. Arbitration agreements are hailed as a voluntary way to reduce pressure on the courts and keep down costs. However, these agreements are also used to bully potential victims into withholding their right to sue.

Arbitration panels, unlike judges, are paid by the parties involved. There is institutional pressure on the arbitrator to give the nursing home (with whom the arbitrator does a substantial amount of business) the fairest possible settlement because the nursing home can use its marketplace power to switch arbitrators. Since patients are likely only going to use the arbitrator once in their entire lives, the arbitrator does not owe the patient as much economic deference as the nursing home.

Finally, mandatory arbitration agreements are often bound by confidentiality clauses. Nursing homes are arguably one of the industries that should never be permitted to settle any dispute confidentially. Nursing homes provide a public service by caring for the most vulnerable members of society. The only way that families can make an informed decision on which home to select is if there is accurate information about the staff, error rates, and patient history. Confidentiality agreements allow nursing homes to pay out settlements without undergoing the scrutiny that could impress upon them the need to improve.

The Solution: Remove mandatory arbitration

The solution envisioned under the Obama Administration was to revoke mandatory arbitration agreements from any nursing home that receives federal funding (which is the vast majority). The Trump Administration, with little explanation, announced that it would revoke the rule. The announcement sparked a fierce backlash from patient advocacy groups who submitted over 1,000 public comments concerning the proposed changes.

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