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Forced Arbitration Agreements in Long-Term Care Facility Admission Contracts – What You Need To Know

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Until late 2019, pre-dispute arbitration agreements had been common in admissions packets at long-term care facilities. These are legally-binding contracts, often presented to consumers and their families at times of great uncertainty and stress. Once signed, forced arbitration agreements strip consumers of their right to pursue legal action in a court of law, should they ever suffer injury or harm.

What is pre-dispute arbitration?

“Arbitration” is a non-legal process by which disputes can be settled. As opposed to a judge or jury, the arbitrators are the ones who decide on the resolution to any given situation. “Pre-dispute arbitration” means the consumer agrees to settle, via arbitration, any dispute that arises in the future… before it ever even comes up. 

As you might expect, consumer advocates have challenged the practice of these facilities including pre-dispute arbitration agreements in their admissions contracts. One would think this would be an open and shut case, but on February 21, 2012, the US Supreme Court ruled on the case of Marmet Health Care Center v. Brown, et al. They voted in favor of continuing to allow for pre-dispute arbitration clauses. 

Because these clauses were not barred by the Federal Arbitration Act, the Supreme Court decided that they could, therefore, be included in consumer contracts. 

But a regulation implemented in September of 2019 called the Forced Arbitration Injustice Repeal (FAIR) Act (H.R. 1423), or FAIR Act, now bans the use of pre-dispute arbitration contracts as a condition of admission or continuation of care. The FAIR Act extends to any federally-funded nursing facilities.

Why is this important to be aware of?

Pre-dispute arbitration agreements can be significantly damaging in several key ways:

  • They prevent consumers from being able to make informed choices. No one can predict the future, so an agreement that requires them to relinquish their future legal rights is unfair.
  • Pre-dispute arbitration agreements are predatory. They take advantage of consumers at their most vulnerable. At this stressful time in their lives, people are unlikely to be aware of all they are signing. They may not fully appreciate the consequences of abandoning their right to utilize the traditional legal system. In addition, once a decision is issued, typically it cannot be appealed, unlike a typical court of law.
  • They inherently favor the long-term care providers. Arbitrators are private individuals – not publicly-appointed officials, like judges. Typically these individuals are chosen by the long-term care provider. In order to ensure repeat business, this of course creates a strong incentive for arbitrators to favor the provider in their decisions.
  • Arbitration can be expensive. For some reason, many people have the impression that arbitration is the cheaper way to go, but that is not true. Arbitration can be a lot more expensive than going to court. Not only must the family often hire a lawyer anyway, they generally have to pay a part of the arbitrator’s fee too. Because of the cost, arbitration may not be an option for some consumers, leaving them with no recourse at all in the event they suffer damages.

They make it easy to hide poor care. Often, arbitration decisions are not a matter of public record. This makes them confidential, creating a loophole that can allow unsafe practices and abuse to run rampant. The well-being of individuals receiving care may suffer greatly when they are denied their legal right to hold a facility accountable for poor care, and abuse. 

Some Good News

Thankfully, bills like the FAIR Act and the Fairness in Nursing Home Arbitration Act have been brought before Congress, with some heartening results. The FAIR Act passed the House of Representatives on September 20, 2019, by a vote of 225 to 186, which is wonderful news for families who are facing the tough decisions that come along with choosing to place a loved one in long-term care. Not having to worry about an unfair and predatory document lurking in that stack of admissions contracts, is a huge win for patients and families all across the US.

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