The use of arbitration clauses by companies in all aspects of daily living has spread immensely across the country. The United States Supreme Court has recently held that the use of arbitration clauses is fully enforceable, and nearly impossible to overturn. With that being said, the Centers for Medicare and Medicaid Services (CMS) has limited the use of these clauses by implementing a new rule that restricts any nursing home receiving federal funding from requiring residents to resolve disputes in arbitration rather than in court. While the rule does not forbid arbitration completely, it does restrict the use of pre-dispute binding arbitration agreements. The rule will take effect over all nursing home admissions agreements signed after November 28, 2016.
The use of arbitration clauses by companies in all aspects of daily living has spread immensely across the country. The United States Supreme Court has recently held that the use of arbitration clauses is fully enforceable, and nearly impossible to overturn. With that being said, the Centers for Medicare and Medicaid Services (CMS) has limited the use of these clauses by implementing a new rule that restricts any nursing home receiving federal funding from requiring residents to resolve disputes in arbitration rather than in court. While the rule does not forbid arbitration completely, it does restrict the use of pre-dispute binding arbitration agreements. The rule will take effect over all nursing home admissions agreements signed after November 28, 2016.
The new rule ensures that a patient is no longer required to settle their dispute in arbitration, which can be costly. Instead, the patient can take their disputes to court which can be a more cost effective route of bringing a claim. A claim brought in arbitration can cost a patient upwards of tree-times as much as bringing an action within the court system due to the increased cost of fees for the arbitrators.
On the other side, nursing homes argue that the Centers for Medicare and Medicaid Services (CMS) stepped outside of their statutory authority as the rule does nothing to protect the residents’ health and safety. The nursing homes also argue that the additional cost to them of fighting these claims in court will force some nursing homes to close.
The New York Times reports that this new rule will not only save patients money in filing a claim, but it will restrict nursing homes from keeping embarrassing practices hidden in arbitration. The switch from arbitration to the court system means that all claims will become public rather than privately adjudicated. It is believed by patients that this transparency will ensure that the nursing homes will provide adequate services.
While the rule only applies to nursing homes receiving federal funding, New York State Public Health Law provides a statutory cause of action for nursing home residents as a result of injuries in any nursing home in New York State. Currently, a case is seeking review from the New York State Court of Appeals to determine whether the New York Statute makes an arbitration clause invalid. In this case, the trial court ruled that the statute invalidated the arbitration clause signed by an elderly woman who sued a nursing home after falling and breaking her hip. The NYS Court of Appeals overturned this decision by stating that the Federal Arbitration Act of preempts the state law because the nursing home engages in interstate commerce. A decision is expected in January 2017 as to whether the NYS Court of Appeals will grant a hearing on the decision.
Taking proper care of the disabled and elderly in our society who depend on us is of the utmost importance. If you have questions about the care of a disabled or elderly loved one, contact the experienced New York elder law attorneys at Hobson-Williams, P.C. at (718) 210-4744 for the quality representation that you deserve.
