The American Health Care Association is the paid lobbying group for the profitable nursing home industry that represents most nursing homes in the U.S. The lobbying group has filed a lawsuit against the federal government over a new rule that protects the right of patients and their families to sue nursing homes in court.
The new rule prohibits the unfair use of mandatory pre-dispute binding arbitration clauses in nursing home admission contracts, which require patients and their families to settle any dispute over care outside the court system via arbitration. The rule does not prohibit arbitration after a dispute arises. Residents and their family members still maintain the right to agree to arbitration.
The frivolous lawsuit filed in Mississippi by the American Health Care Association calls the arbitration clause ban “arbitrary and capricious” and contests the authority of the Centers for Medicare & Medicaid Services to regulate how nursing homes handle disputes. Of course, CMS can regulate nursing homes–that is their whole purpose. The prohibition is not arbitrary or capricious.
The lawsuit repeats false claims by the American Health Care Association that arbitration is “an equally fair — yet far simpler and less costly — means of seeking redress as compared to the complicated and slow-moving court system.” However, consumer advocates, legal experts, and residents all know that arbitration awards are lower than jury verdicts; that the cost of arbitration is excessive compared to using the judicial system; that there is no appeal to an arbitration award; that arbitration limits discovery making it difficult for residents to prove their case; and that arbitration is confidential so the public is not aware of the abuse, neglect, and fraud occuring in nursing homes in their community.
In fact, a 2009 study commissioned by the American Health Care Association found the average awards after arbitration in nursing home cases were 35 percent lower than if the plaintiff had gone to court.