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Federal agency prohibits nursing home arbitration agreements, P.1

Nursing home care is something most Americans have to deal with at some point, whether for a relative or loved one, or for themselves. For many, there can be apprehensiveness about entrusting oneself or a loved one to nursing home care, not only because it is a new environment, but because we know that things can go wrong in nursing home care, that the quality of care isn’t always high.

Unfortunately, many nursing homes have added to the problem in recent years by requiring new residents to sign arbitration agreements, which limit residents’ right to sue the nursing home in court for negligent care. Arbitration agreements have come to be the subject of a great deal of criticism because they can really put residents at a disadvantage. Pennsylvania, like many other states, will enforce these agreements as long as the contract is valid. Arguably, they aren’t valid in a certain number of cases, but in many cases they are. 

Fortunately, federal regulators appreciate the problem and have now taken steps to address it. Specifically, the federal Department of Health and Human Services recently passed a new rule that prohibits nursing homes receiving federal dollars from mandating that residents resolve disputes in arbitration. This includes nursing homes which receive funding from Medicare and Medicaid. It is estimated that nursing homes caring for roughly 1.5 million residents will be affected by the new rule.

Not surprisingly, the nursing home industry has expressed opposition to the rule, arguing that arbitration helps reduce costs, that prohibiting arbitration is unnecessary to protect residents’ health and safety, and that there may even be legal problems with the agency’s passage of the rule.

In our next post, we’ll continue looking at this issue and the validity of arbitration agreements in general. 

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