Friday Feature: An End to Arbitration Clauses?

TGIF! It’s been a long week with the eclipse and lots of economic news plus all the stuff going on in the Middle East. My inbox is flooded so weekend reading will need to include a lot of parsing and pitching.

On Tuesday in the Senate, a bill was introduced by Senators Blumenthal (CT) and Hirono (HI) that would end the ability of nursing homes to require residents and/or their legal representative(s) to enter into admission contracts with mandatory arbitration provisions. This legislation is the Senate companion of a bill introduced earlier in the House, that is effectively identical. The Senate version is here: Fairness in Nursing Home Arbitration Bill

Facilities that use arbitration provisions do so to mitigate expensive litigation, individual and class action.  Class action suits against nursing homes are on the rise. Most arbitration clauses in nursing home contracts, seek to bar class action options/actions. Here is an example of a law firm advertising to find plaintiffs that “claim” to have been neglected or abused, in sufficient number to form a class for litigation purposes

Many class action cases have been brought by the same group of plaintiff attorneys primarily in California, Arkansas, Florida, North Carolina, and Washington.  The claims tend to be “templates”.  The generalized, identical allegations include accepting patients in need of higher levels of care, misrepresentations of staffing and service levels in marketing materials, managers with incentives tied to census and revenue, and failure to consider resident needs related to staffing.

Interesting to note, the bill and its House companion, would only provide coverage to Medicaid and Medicare residents.  State laws (if so passed) can address private paying and commercially insured residents. 

A 2022 class action suit in Chicago is a recent example. Residents of six Chicago area nursing facilities filed a class action suit against the Alden Group, one of the largest nursing home groups in Illinois, alleging chronic understaffing. The complaint alleges Alden attracts thousands of residents to its facilities, and then systematically understaffs the facilities, leading to neglect, preventable injuries and illnesses, and dangerous and unsanitary living conditions. According to the complaint, Alden saves millions of dollars each year by not hiring sufficient staff to meet legal staffing requirements and in turn, hiding the actual staffing levels from state surveyors.

The law firm Duane Morris LLP noted that “of all defenses, a defendant’s ability to enforce an arbitration agreement containing a class or collective action waiver may have had the single greatest impact in terms of shifting the pendulum of class action litigation.”

Arbitration clauses don’t necessarily reduce remedies or monetary compensation though they do mitigate risks associated with jury awards.  Most claims however, in nursing home cases, do not end up in trial (Note: My firm H2 Healthcare, LLC has a substantial portion of the practice devoted to clinical compliance, litigation support and expert witness work).  For a facility and in the case of residents, arbitration is definitely more efficient and cost-effective (legal fees) for claims resolution.

TGIF and enjoy the weekend – I certainly will! From his office and a press release, Sen. Blumenthal issued the following regarding the bill (proposed). 

Too many of our nation’s most vulnerable individuals—especially seniors—are exploited by the very people who are supposed to care for them,” said Blumenthal. “Forced arbitration is an unfair and un-American practice, and with this bill, we provide critical protections for these individuals and their families by ensuring they will not be forced into harmful or exploitative contracts.”

“Nursing home residents deserve access to the high-quality care they need without being forced into mandatory arbitration agreements and, oftentimes, unwittingly signing away their rights,” said Hirono. “By prohibiting nursing facilities from enforcing forced arbitration agreements in disputes with residents, the Fairness in Nursing Home Arbitration Act will help to protect older Americans and provide peace of mind for nursing home residents and their loved ones.”


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