Category Archives: Arbitration

Medscape published an article from Margaret R. Nolan, DNP, GNP about taking away nursing home residents’ right to sue for abuse and neglect.  Margaret R. Nolan. Nursing Home Residents: No Right to Sue for Unsafe Care, and It’s Wrong – Medscape – Nov 14, 2017.

Litigation or Arbitration When Nursing Home Care Is Unsafe?

The Centers for Medicare & Medicaid Services, under the new administration, has announced changes to nursing home residents’ and families’ ability to sue for episodes of substandard care. Under this new plan, incoming residents and their families will sign away the right to litigate upon admission and, instead, agree to solve disputes through arbitration rather than through the courts.

Unsafe levels of care in nursing homes are, unfortunately, common. The federal government attempts to provide close oversight of nursing homes; but, in spite of being placed on a strict oversight status, in many states, hundreds of nursing homes still provide unsafe care to patients. The courts are viewed as a fail-safe option for patients’ protection. Litigation is often the only means to force nursing homes to provide standard, safe care.

The new administration is supporting arbitration settlements alone for wrongful care of residents. Many consumer groups and attorneys general strongly oppose this plan and believe that litigation is an effective way to ensure that nursing homes deliver appropriate care to vulnerable residents.

 Viewpoint

The elderly residents of nursing homes or long-term care are highly vulnerable to abuse. The Obama administration attempted to make it easier for nursing home residents to litigate for suspected negligence or abuse, but the bill never became law. A particular concern was that the promise to arbitrate was often buried in nursing home admission documents so that families were often unaware of this option. Under the Trump administration, nursing home residents will continue to sign arbitration agreements instead of having the option of suing. If new residents refuse, they could be denied admission to the facility. The Trump administration has asked for more understandable language for incoming nursing home residents so that they can better understand what they are signing, but opponents argue that without choice, it’s still mandatory for the incoming resident to sign.

On a larger scale, the current administration is trying to cap medical malpractice claims and shorten the statute of limitation to 3 years. Many fear that this will also lead to more deaths and injuries and weaken safety for patients, especially those who reside in nursing homes.

This is a critical time for nursing leaders to speak up about geriatric care, safety, and abuse. Nurses need to help educate our leaders to make good decisions that will protect vulnerable residents in nursing homes.”

The U.S. Court of Appeals for the Eleventh Circuit concluded that a confidentiality provision in an arbitration clause in a bank account holder agreement was substantively unconscionable. Larsen v. Citibank FSB, 871 F.3d 1295 (11th Cir. Sep. 26, 2017). The case concerned a putative class of account holders who challenged the bank’s overdraft policy. The arbitration clause in the account holder agreement required both parties to keep confidential any decision of an arbitrator. The account holder argued that this provision disproportionately favored the bank as a repeat participant in the arbitration process. The court agreed, concluding that where the outcomes of prior arbitration proceedings remain concealed, as the arbitration clause purported to require, prospective claimants have little context in which to assess the value of their cases, to avoid repeating past claimants’ mistakes, or to leverage prior successes. The court further reasoned that the information disadvantage that the bank holds at the outset of a dispute may have the effect of discouraging consumers from pursuing valid claims. The court concluded that severing the confidentiality clause would not significantly alter the tone or nature of arbitration between the account holders and the bank. Accordingly, the court severed the confidentiality clause and enforced the remainder of the clause.

Politico reported that Consumer Financial Protection Bureau Director Richard Cordray made a personal appeal to President Donald Trump to veto a congressional override of a landmark arbitration rule that allows consumers to bring class action suits against financial firms. The consumer bureau’s arbitration rule would allow consumers to fight disputes with their banks, credit unions and credit card companies in court. Many companies insert arbitration clauses into contracts with consumers requiring them to submit to arbitration instead.

In a letter to the president, Cordray said consumers should have the right to bring lawsuits just the way Trump had when he was in business.

“I think you really don’t like to see American families, including veterans and service members, get cheated out of their hard-earned money and be left helpless to fight back,” Cordray said.

“I know that some have made elaborate arguments to pretend like that is not what is happening, ” he wrote. “But you are a smart man, and I think we both know what is really happening here.”

The Senate last week overturned the arbitration rule after Vice President Mike Pence broke the tie.

Banks, credit card issuers and other financial companies will be able to block customers from banding together to sue over disputes, after the Republican Senate narrowly killed a rule banning the firms from using “forced arbitration” clauses.  Republican Vice President Mike Pence  cast the tie-breaking vote.  The prior rule prohibited major financial institutions from using fine print in buried in consumer contracts to block class-action lawsuits by consumers.

Customers now must agree to the clauses as a condition of opening accounts, saying they will take any disputes to closed-door arbitration instead of joining class-action lawsuits, where complainants band together to share litigation costs. The clauses are used for nearly every U.S. consumer product and service since the Supreme Court ruled them legal in 2011.  Arbitration means customers have no recourse but to bring any disputes to private, arbitration panels. In general, that keeps the corporate wrongdoing shrouded in secrecy, and the costly arbitration process itself with limitations on discovery is often stacked against consumers.

Financial services companies have forced consumers to use arbitration in case of disputes because, as analysis has shown, arbitrators rule overwhelmingly in favor of corporations. As part of arbitration requirements, companies like banks have insisted that, to get service, consumers had to give up the right to a jury trial.

“Wall Street won and ordinary people lost,” Richard Cordray, the director of the consumer bureau, said in a statement. “It robs consumers of their most effective legal tool against corporate wrongdoing. As a result, companies like Wells Fargo and Equifax remain free to break the law without fear of legal blowback from their customers.”

Victims of the Equifax Inc. hack were outraged last month when the company included forced arbitration fine print in offering them free credit monitoring.  At the same time, Wells Fargo & Co customers whose identities were used in last year’s phony accounts scandal have had difficulty suing the bank because they are bound by arbitration clauses in contracts they signed for legitimate accounts.

Arbitration clauses are now commonplace in the financial industry: About three-fourths of banks analyzed by Pew Charitable Trusts, for instance, had mandatory arbitration agreements in place.

The Coumbus Dispatch had an article about Trump’s decision to side with the nursing home industry over the vulnerable residents in their care.  Trump has reversed a ban on forced arbitration hidden in nursing home admission contracts.  When the ban is withdrawn, nursing homes will require residents to sign pre-dispute mandatory arbitration agreements before they are provided the care they need.

Consumer advocates, experts, and critics say Trump’s proposal favors nursing homes because residents and their families have unequal bargaining power. They often don’t have time to “shop around” for deals because of the limited number of homes with available beds and the tight time frames to make arrangements for care.  Unlike a court process involving a judge or jury, arbitration usually allows the nursing home to select the arbitrator, a power that is laid out in the nursing home’s contract terms, and the proceedings are conducted in private and kept secret. Arbitration agreements also can set limits on the damages a party can recover. Appeals are not allowed.

The Des Moines Register reported that Iowa’s Republican Senators have been silent as to their position on Trump’s plan to support unfair mandatory arbitration clauses against nursing home residents.  Despite claiming to support vulnerable adults access to courts and protect their constitutional right to a jury trial, neither has joined colleagues in the Senate who are attempting to prevent care facilities from limiting residents’ right to sue for abuse and neglect.

Last year, the federal Centers for Medicare and Medicaid Services notified all nursing homes that receive federal funding a new rule was being proposed to prevent them from including unfair mandatory arbitration clauses in their admissions contracts with residents. The rule would specifically prohibit the “the use of pre-dispute binding arbitration agreements” in care facilities funded by Medicare and Medicaid.

Advocates for consumers, seniors and the disabled have protested CMS’ about-face, arguing that arbitrators, often paid for by the industry itself, tend to side with industry.

Rob Weissman, president of the advocacy group Public Citizen, told the Los Angeles Times the switch to allow forced arbitration was “a heartless and vile act.”

On Aug. 7, 31 U.S. senators, all Democrats, wrote to CMS Administrator Seema Verma and said forced arbitration agreements “stack the deck against residents and their families who face a wide range of potential harms, including physical abuse and neglect, sexual assault and even wrongful death at the hands of those working in and managing long-term care facilities.

 “These clauses prevent many of our country’s most vulnerable individuals from seeking justice in a court of law, and instead funnel all types of legal claims, no matter how egregious, into a privatized dispute resolution system that is often biased toward the nursing home.”

Mandatory-arbitration clauses that prevent consumers from suing for poor quality service has ignited a fierce public debate.  Consumer advocates say they aren’t opposed to arbitration as a voluntary option, but residents shouldn’t be required to relinquish their right to sue to gain access to health care that’s paid for with public money through Medicare and Medicaid.

“The worst time for a vulnerable person or his or her family to decide the means to resolve future disputes is when the contract is being presented at the often-urgent time he or she is being admitted to a nursing home, a time of particular physical and/or emotional stress,” the attorneys general wrote.

“The practice of executing arbitration contracts during the nursing home admissions process raises valid concerns on a public policy level,” Judge Michael P. Mills of the U.S. District Court in Oxford, Miss., wrote, noting that “many residents and their relatives are ‘at wit’s end’ and prepared to sign anything to gain admission.”

Thirty-six advocacy groups, including the National Consumer Voice for Quality Long-Term Care, National Organization for Women and The Arc of the United States have also sent a letter to CMS encouraging adoption of the proposed rule.

NPR had a story on Trump’s reckless decision to side with industry over nursing home residents making it almost impossible for nursing home residents to get their day in court.

Trump is allowing nursing homes to require residents sign arbitration agreements as a condition for getting nursing home care.  “That means that no jury will ever hear his case. The parties hire a private judge and use a different set of rules that can be more restrictive than civil court. Studies also show that awards to plaintiffs can be as much as 35 percent lower.”

That’s why 17 state attorneys general and 31 members of the Senate have urged the Trump administration not to adopt the proposed rule. Arbitration procedures are generally more secretive than civil court. So they’re not just bad for the plaintiff, they’re also bad for everyone else whose victimization could’ve been stopped if they’d have known that this was a bad facility.

The New York Times published an editorial explaining how arbitration is a “rigged” system.  “Arbitration and class action waiver clauses effectively immunize companies from illegal and fraudulent conduct. Virtually every sizable company has such clauses.”

“There are several reasons that companies have these provisions: 1) arbitrations are almost impossible for customers to pursue because they are too expensive (class actions allow costs to be shared over thousands of wronged individuals); 2) arbitrations do not allow discovery of the institution’s internal records (as lawsuits do); 3) arbitrations are often required to be held in a city far from the wronged party; and 4) the arbitrators tend to favor the institutions, which can offer them repeat business. This is a perfect example of what many have called a system rigged against the average person.”

Congress (Democrats and Republicans alike) could not find the gumption to act on the proposed Arbitration Fairness Act, first introduced in 2009, which would have outlawed such provisions in consumer and employment contracts. Finally, years later the Consumer Financial Protection Bureau adopted a rule that would achieve some of that goal, and now the Republicans in Congress are trying to undo that rule before it goes into effect.

Until and unless wrongdoers know that they face the risk of having to actually answer to those they wrong, they will never change their conduct.

 

AARP’s statement on forced arbitration:

Often lurking in the fine print of nursing home contracts is a binding arbitration clause that has serious implications for unsuspecting consumers. Now the federal government plans to give facilities free rein to require residents to agree to such clauses, giving up the right to take their grievances to court.

The Trump administration plans to allow mandatory binding arbitration clauses to be a part of any admission contract for every long-term care facility that accepts federal money. Because nursing homes get federal Medicaid or Medicare funding for virtually all of their residents, that’s pretty much all of them.

Consumer groups say mandatory arbitration clauses stack the deck against nursing home residents, preying on them at a time fraught with anxiety when they and their families are grappling with a serious illness or trying to find a long-term care solution. The consumer groups have been fighting against such clauses for years.

Once consumers sign on the dotted line, they give up the right to sue the facility, no matter what the grievance is — sexual abuse, neglect, mismanaged medication, even wrongful death.

Instead, complaints would be handled through negotiations with an arbitrator — not a judge or a jury. Whatever the outcome, the nursing home resident would have to accept it, with only the most limited right to appeal. Such proceedings are conducted in private with a cloak of secrecy that protects potential offenders from the public exposure that might force them to change their ways.

Advocates, including AARP, thought they had successfully beaten back mandatory arbitration clauses when the Obama administration issued a regulation that prohibited long-term care facilities from forcing residents to sign them before any dispute arose. That regulation was scheduled to take effect in November 2016, but it was delayed after the nursing home industry challenged it in federal court.

The Centers for Medicare and Medicaid Services (CMS) has reversed the Obama administration policy and issued a proposal that would allow facilities to require the arbitration clause as a condition of admission. In addition, the new proposal would make a bad situation even worse, advocates say, by overriding state laws that protect nursing home residents from lopsided arbitration agreements.

AARP has expressed grave concerns over this about-face. “We are alarmed that CMS’ decision to remove provisions prohibiting binding pre-dispute arbitration will very likely have dangerous and harmful impacts on nursing facility residents, as well as their families,” David Certner, AARP legislative counsel and legislative policy director, said in a letter to CMS Administrator Seema Verma.

Senators also are pushing back against the CMS rule. “With Medicare and Medicaid spending over $82 billion on nursing home care in 2015, prospective residents, their families, and the public deserve greater accountability and transparency from these facilities, not less,” said 31 Democratic senators in a letter to Verma.

The nursing home industry insists that arbitration saves money and time for residents who have complaints. Yet when it comes to cost, residents usually have to pay their lawyer and a share of the arbitrator’s fees.

Among other consumer disadvantages AARP has identified:

  • Consumers may have to travel far to attend arbitration proceedings.
  • The facility that imposed arbitration in the contract may be allowed to also choose the arbitrator.
  • Arbitrators are not required to issue written decisions.
  • Grounds for appealing an arbitrator’s decision are extremely limited.

More than 1,000 comments were filed with CMS about this proposed regulation, most opposing the rule. CMS has not indicated how long it will take to review the comments and when a final regulation might be issued.

The National Law Review had an article about the American Bar Association’s views on forced arbitration in nursing home admission contracts.  “In a recent letter, the American Bar Association (ABA) advocates for the Centers for Medicare and Medicaid Services (CMS) to retain its current rule prohibiting long-term care facilities from entering into binding arbitration agreements with residents until after a dispute arises. In the letter sent to CMS administrator Seema Verma, the ABA writes that implementing the proposed rule would harm residents’ rights and interests.”

The ABA takes the position that the current rule follows the recent United States Supreme Court interpretation of the Federal Arbitration Act in Kindred Nursing Centers v. Clark.  The ABA states that while Kindred prohibits singling out arbitration agreements for disfavored treatment, the Supreme Court did not single out arbitration agreements for favored treatment. Trump is proposing to implement a “total embrace of mandatory pre-dispute arbitration provisions” in nursing home admissions contracts, wrote Thomas M. Susman, director of the ABA’s Governmental Affairs Office.