The Centers for Medicare and Medicaid Services (CMS) removed the 2016 ban on the use of binding arbitration agreements by LTC facilities on July 16. Prior to 2016, the LTC industry widely utilized binding arbitration as the preferred means of resolving resident disputes, offering an informal and cost-effective process for resolving disputes without litigation. In 2016, the federal government banned binding arbitration for LTC facilities that participated in Medicare and Medicaid, despite strong objections from the LTC community. The industry later challenged the CMS ban in federal court and won. CMS then instructed state survey agencies not to enforce the ban pending further evaluation.

In the CMS Final Rule, binding arbitration is back (with some limitations). Some of the restrictions include:

  • The facility cannot condition the resident’s admission on the signing of an arbitration agreement. Indeed, the facility must inform the resident (or legal representative) that he/she does not have to sign. This must be stated clearly in the agreement itself.
  • The agreement must allow the resident to rescind within 30 days of signing. Because the resident can rescind up to 30 days, or not sign at all, it is advisable to document the arbitration agreement separately from other resident agreements.
  • The agreement cannot contain language that prohibits or discourages the resident from communicating grievances to state or federal officials. Some consumer advocates objected that binding arbitration is an inappropriate forum for serious resident injuries or abuse. CMS responded, stating that binding arbitration does not prevent residents from reporting serious injuries or abuse to public authorities, nor does it relieve facilities of their obligation to self-report.
  • The agreement, and any arbitration decision, must be retained by the facility for five years, and available for inspection. This same requirement, however, does not apply to settlement agreements. This may encourage more use of settlement agreements to resolve resident disputes, although any documentation relating to quality of care is likely open to inspection.

In its final rule, CMS acknowledged that it has no authority to annul existing arbitration agreements that are legally valid, and that its restrictions are prospective only. At the same time, CMS will allow facilities to enter into arbitration agreements with existing residents, even if initially banned in 2016. However, the arbitration agreement must meet current CMS requirements, and facilities cannot condition the resident’s continued care upon signing the agreement.

Some in the industry expect further legal challenges to the new CMS rule. Therefore, LTC facilities that believe in the benefits of arbitration should act now to implement CMS-compliant arbitration agreements for new and existing residents. Doing so now may protect these agreements from future legal challenges or changes.

Does it seem fair that you must lose your constitutional right to a jury trial just to get nursing home care?

The Trump Administration issued a final rule allowing forced arbitration agreements in nursing home admission paperwork.  It will keep Obama’s prohibition from requiring residents to sign them as a condition for admission and to inform residents or their representatives that they do not have to sign a binding arbitration agreement.

In addition, the CMS mandated that nursing homes explain the agreement to the resident “in a form and manner that he or she understands.”  In addition to removing the use of “plain language” in arbitration agreements from the final rule, nursing homes will no longer have to post notices describing their arbitration policies for patients and families.

Finally, nursing homes must retain copies of signed binding arbitration for five years after the resolution of any dispute and those documents must be available for inspection upon request by the CMS, accrediting organizations or state surveyors.

The history of binding arbitration agreements has been checkered. In October 2016, the Obama administration banned their use in long-term care facilities, but a legal challenge and subsequent injunction forestalled that effort. Then, in June 2017, under a new administration, CMS proposed a rule that would remove the ban and sought public comment. Long-term care providers are strongly in favor of arbitration agreements because they pay less for neglect and abuse and the results are confidential.

 

A South Carolina nursing facility attempted to avoid accountability by forcing the family of a neglected resident to arbitrate the claim.  Luckily, our client fought back and challenged the enforceability of the arbitration clause in the admission paperwork.

While Hilda Stott did sign the document on behalf of her uncle, Jolly Davis, she did not have the proper authority to make the decision, and was not bound by it, the South Carolina Court of Appeals ruled. We are proud to represent this family and look forward to discovering the truth of his death and get justice for the family.

Davis first entered White Oak of Spartanburg, SC, in January 2013. Niece Stott signed all admission forms on his behalf, despite her uncle possessing intact mental functioning and alertness. He died weeks later and Stott sued, alleging overmedication and dehydration led to his death.

White Oak attempted to enforce arbitration, but the niece’s durable power of attorney for finance did not give her the authority to sign the original agreement because that power was not in place when Davis entered the home. The healthcare power of attorney designation also did not grant the niece the authority to sign an arbitration pact, the court deemed. That’s because the form used was only effective upon Davis becoming mentally incompetent, which he was not at the time of admission.

White Oak Manor Inc and its subsidiaries/agents have asked the Court of Appeals to reconsider their well-reasoned decision.

A new study, however, finds that most Americans have signed away their constitutional right to a jury trial when it comes to America’s biggest corporations.  The study, published in the UC Davis’ Law Review, says 81 of the 100 biggest companies now have policies that prevent customers from getting their day in court for everything from fraud or personal injury to harassment or discrimination.  Some of the companies with so-called “forced arbitration agreements” include Amazon, Apple, Walmart, CVS and Best Buy, as well as many cable companies, cell providers, banks and credit card companies.

Those clauses are usually hidden in the terms of service. When you buy something, or fill out an application, you’re asked to click accept on those terms. Even if you bother to read the fine print, and most people don’t, you may not understand it. You’re agreeing to go to arbitration, which is a private process that does not involve courts, judges or juries. There’s no appeals process, so the arbitrator’s decision is nearly always final.

Studies show that few consumers win in arbitration. When they do, they get much less money than they would in court.

If you’re going to give up a right like this, you need to understand that before you sign or click “accept.”

Always read that fine print and ask questions, if you don’t understand it.

McKnight’s reported on a recent appeal of an arbitration decision in favor of the nursing home resident.  I find it funny that the nursing home industry pushes for arbitration because it is “cheaper” “faster” and “will provide closure” but still appeals the arbitrator’s decision!

Villa Huntington Drive Healthcare Center neglected Patricia Porter’s avoidable pressure injury causing her wrongful death.  Her doctor had ordered a low-air mattress to help prevent and heal a severe pressure ulcer. The order was made on July 4, 2012 but the mattress did not arrive until July 12. Caregivers failed to alleviate the pressure by turning and repositioning Porter adequately, and left her sitting in a wheelchair for six hours, further worsening her injuries. She died in November 2012 from a septic sore and urinary infections.

After listening to all the relevant evidence introduced, the arbitrator awarded the resident and her family $1 million.  California’s  arbitration awards can be reviewed by a court in limited circumstances, but the California Court of Appeal, Second District, deemed that the case did not meet those requirements. That’s because AG Arcadia did not identify any unwaivable statutory rights that the $1 million award violated, Bloomberg reported.

An appeals court ruled that an arbitrator did not exceed her authority by awarding the patient damages in excess of the $250,000 cap contained in the state’s Medical Injury Compensation Reform Act, Bloomberg Law reported.

According to court documents, the facility had argued that the arbitrator exceeded her powers by awarding non-economic damages in lump sums, rather than in proportion to each defendant’s percentage of fault. It also contended that the arbitrator failed to make any findings against parent company AG Arcadia and its facilities.

Huntington Drive Health also asserted that the arbitrator was prejudiced in the matter and did not grant the SNF added time to present testimony from treating nurses and its medical expert, according to court documents.

 

Vox recently had a great article focusing on Republican support to limit the scope of mandatory arbitration agreements.  In fact, Senate Republicans held a committee hearing last month on corporate America’s alarming abuse of mandatory arbitration clauses, a business practice that requires workers and customers to waive their right to sue the company. Millions of Americans have unknowingly signed or accepted these contract clauses, in which they agree to take legal disputes to private arbitration — a secretive legal forum with no judge, no jury, and practically zero government oversight.

Consumer advocates and labor groups have long opposed forced arbitration, but now several Republican senators are showing new concern about the arbitration system, and seem willing to work with Democrats to fix it.  Sen. Lindsey Graham (R-SC), the chair of the House Judiciary Committee, is one of those arbitration skeptics. He said he scheduled the committee hearing on the topic to discuss the alleged benefits and obvious drawback of this private legal forum, so senators can “develop some solutions.” “I want to be pro-business, but everything that’s good for business may not be the best answer for society,” Graham said during his opening remarks. “In 2019, I want to look long and hard on how the system works; are there any changes we can make?”

A few Republican senators on the committee, who are also lawyers, shared similar concerns, suggesting that arbitration reform may be one of the rare issues in Congress that could lead to a bipartisan compromise.

“What’s really happening is that our judicial system is getting privatized,” David Gottlieb, an employment attorney in New York who often represents workers in arbitration. “It’s being privatized in a way that really only favors one side, the employer.”

The guests invited to testify at the Senate hearing on arbitration included the usual suspects: lawyers aligned with big businesses, an academic expert, and consumer rights advocates. But the inclusion of two unexpected witnesses — a US Navy reservist and a restaurant owner — signals that GOP leaders want to show the impact of arbitration on two of their traditional constituencies: military service members and small business owners.

Kevin Ziober, the Navy reservist, said he had “no choice” but to sign an arbitration agreement when managers at a California company presented one to him after he was hired in 2010. Ziober didn’t want to lose his job so he signed it. Then in 2012, the company fired him the day after he deployed to serve 12 months as a reservist in Afghanistan. He tried to file a lawsuit against the company for violating a federal law that requires employers to hold a job for reservists who are deployed. But because he had signed an arbitration clause, a federal judge ruled that he would have to resolve his complaint in private arbitration.

In taking his case to arbitration, Ziober said he felt completely disempowered:

I would have no access to a federal judge nominated by the President and confirmed by the Senate, I would lose my Seventh Amendment right to a jury trial, I would lose any meaningful right to an appeal, and I would lose my right to a public proceeding of any kind. Along with other servicemembers, I have fought to advance American ideals and values abroad, so it was particularly disheartening to lose these fundamental rights at home.

After hearing his testimony, Sen. Joni Ernst, a conservative Republican from Iowa, seemed sympathetic.

“I am very sorry to hear about what happened to you. You went to serve our country and our country didn’t protect you,” said Ernst, who served in the Army National Guard. “If you had been allowed to litigate your claim in federal court, do you believe you would have been better protected?”

“My voice will basically be silenced,” he said. “ Service members who could benefit from this will never learn from it.”

Alan Carlson, a restaurant owner in Oakland, California, told lawmakers he was “shocked” to find out that he had signed an arbitration agreement in his contract with American Express. The point of the contract was to let customers pay for their meals with the popular credit card, and American Express would charge the restaurant a small fee for each transaction. Carlson said he grew frustrated with American Express and tried to sue the company for its strict rules on business owners. But a lawyer told him it was not worth the cost to challenge a giant company like American Express.

“This cost-prohibitive system means that there is no way one small business can get justice done,” he said during the hearing. “I believe this is un-American.”

 Democrats in Congress want to make arbitration optional, not something forced upon consumers and workers. For example, if an employee believes a company owes her money, she can decide to take their claim to court, or in arbitration.

In October 2017, then-Rep. Beto O’Rourke (D-TX) introduced the Mandatory Arbitration Transparency Act, which prohibits businesses from including a confidentiality clause in their arbitration agreements related to discrimination claims. That December, a bipartisan group of senators and representatives introduced the Ending Forced Arbitration of Sexual Harassment Act, which exempts sexual harassment cases from required arbitration.

Then in March 2018, Sen. Richard Blumenthal (D-CT) and a group of Senate Democrats proposed an even better idea: Don’t let businesses force employees and consumers to take their claims to arbitration. Their bill, the Arbitration Fairness Act, would let workers and consumers decide where to pursue their legal claims. They reintroduced the bill in February, which is now called Forced Arbitration Injustice Repeal Act. It has broad Democratic support, with 172 co-sponsors in the House and 34 in the Senate. But so far, Republicans have not signed on.

The fact that Lindsey Graham organized a committee hearing on the topic is promising and opens the door to possible negotiation. Graham didn’t say what policy changes he would support, but said he was determined to “find a solution.”

Ziober, the Navy reservist who testified on Tuesday, appealed to that sense of bipartisanship.

“Though I have been a registered Republican for the vast majority of my life, I want to see our elected leaders find common ground to protect the rights that make our lives better —like consumer protection, civil rights, and veterans’ rights,” he said.

Carleigh Newland is a former video intern at the Center for American Progress. Kurt Mueller is a video editing contractor at the Center. Malkie Wall is a research assistant for Economic Policy at the Center. Karla Walter is the director of Employment Policy at the Center. Andy Green is the managing director of Economic Policy at the Center.

The Intelligencer published an editorial from Claudia Whittaker.

“It was the most worrisome week of my life. Seven days earlier I found my 91-year-old father unresponsive and lying over a table. The ambulance was called and he was transported to the local hospital. He was found to have a temperature of 102 degrees, was unable to walk and was not oriented to time, place or person. After an extended discussion with the Emergency Room doctor as to my fathers’ needs he was admitted to the hospital. He would remain there for seven days as they tried to find the source of an infection. Finally they said they had done everything that they could and that he needed to be transported to a nursing home.

A local facility was located, the transfer arranged. As his power of attorney I met with the admissions representative and signed intake paperwork (about an inch and a half of paperwork). I was assured that everything was routine. Time went on, Dad did not prosper but his most of his basic needs were addressed. There were far too frequent calls stating “your father’s fallen” and after a while I came to expect a call, ask if he was injured and I would plan to visit him to see what his most recent fall had done.

One morning, the week after Dad’s 93rd birthday, I got another call. “Come right away, your Dad’s fallen and it doesn’t look good”. I raced to the nursing home and observed a large blue tarp spread on the ground. I recognized my father’s slim ankle sticking out from the tarp. Somehow this slight 93-year-old wheelchair-bound man had gotten outside and fell down cement steps to his death. No one from the nursing home had any idea how this happened but they were all very sorry for my loss.

Little did I know at the time that not only had my father suffered a horrific death but I would learn that with my own hand I had signed away my family’s right to a jury trial for wrongful death.

It seems that when I signed that inch and a half of paperwork back on the day of Dad’s admission I signed a form that stated I agreed to binding arbitration. Not being knowledgeable about arbitration I had taken the admission representative’s word that it was “routine”. At the time I was frantic to find 24-hour care for my father.

I have since learned that a binding arbitration agreement waives a person’s right to a jury trial. The idea was formed to promote judicial economy and resolve disputes outside of the judicial forum. It also discretely keeps the issue out of public view. There will be no day in court, the wrongful death claim will be decided by one person, who may or may not be selected by the nursing home. There is no appeal. My naive belief that as US citizen I am entitled to my day in court has been shredded. I now understand that constitutional rights can be taken away even if you are a victim — and I want to educate people to prevent this from happening to them.

In an article published 8/15/17, AARP reported the Obama administration developed a ruling to stop nursing homes from including arbitration agreements in admission packets. The nursing home industry was challenging it in federal court.

The Trump administration plans to allow mandatory binding arbitration clauses to be a part of any admissions contract for every long-term facility that accepts federal money. This will apply to virtually all nursing home admissions.

Knowledge is power and the need to know about this practice gives everyone the key to stop it. Do not sign an arbitration clause. May your loved one never have the need for you to go to court or their behalf — but if things go wrong and a lawsuit is required retain your constitutional right to a jury trial.”

Claudia Whittaker lives in Buckingham.

Carrie Hoffman and Foley & Lardner wrote a great summary of Adock v. Five Star Rentals/Sales, Inc The plaintiff in Adock was a former employee of Five Star, and he sent a demand letter to his former employer asserting a claim for worker’s compensation retaliation. Adock also requested whether there was an arbitration agreement between himself and his former employer. The letter informed the former employer that Adock would pursue claims in court if there was no arbitration agreement. Five Star failed to respond therefore Adock filed a lawsuit.

Then Five Star produced an employment contract that contained a mandatory arbitration provision. Adock informed Five Star he wanted to move the dispute to arbitration, but Five Star claimed Adock had waived his right to arbitrate by initiating state court litigation.

In ruling on the pending motion to compel arbitration by Adock, the court found that the parties had superseded their earlier arbitration agreement by entering into a new agreement not to arbitrate, and that Adock waived his right to arbitrate by invoking the judicial process.  The Texas Court held that Adock’s letter provided Five Star thirty days to provide a copy of a signed agreement to arbitrate and that the failure to do so would be considered an agreement to resolve the dispute in court. Based on Five Star’s failure to provide Adock a copy of the arbitration agreement within the specified demanded timeframe, the Court found that the parties “entered into a subsequent agreement not to arbitrate.” The later agreement, the Court found, superseded the original agreement to arbitrate.

Generally, silence will not be considered acceptance of contractual terms unless one of four conditions exist. See National Union Fire Insurance Co. v. Ehrlich, 122 Misc. 682 (N.Y. App. Div. 1924).

  1. Silence will constitute acceptance if the offeree gives the offeror the impression that silence will be considered an acceptance.
  2. Silence will constitute acceptance where the offeror has told the offeree that silence will constitute acceptance.
  3. Silence will constitute acceptance where an offeree improperly exercised dominion over goods sent to him for approval or inspection. In such an instance, the offeree is contractually bound to buy the goods at the stated price. The offeree will be forced to buy the goods even if he never had any intention of buying them in the first place.
  4. Late acceptance of an offer has the legal weight of a counteroffer. In other words, where an offeror makes an offer to an offeree and the offeree accepts in an untimely manner, that acceptance is not a valid acceptance.

Parties should review their files and respond to informal inquiries about the existence of such arbitration agreements or they will be deemed to have nullified their earlier agreement, or possibly have waived their right to enforce an arbitration agreement.

Matthew Christian is an attorney and partner at Christian & Davis LLC. His primary focus area is nursing home abuse and neglect.  He recently wrote the below editorial for the Greenville News.

“If you’re reading this, chances are you’ve been required to sign a document with “fine print.”

This can be anything from credit card contracts, to your own employee handbook, to nursing home admissions forms. Any good lawyer would tell you to read the fine print, but few people actually do. That absence of understanding is where many problems can lurk for the average person signing their lives away to corporate giants.

One of the biggest problems that could result from that fine print is forced arbitration – the practice of forcing a consumer, an employee or a patient into closed-door “dispute resolution” outside of a court of law. This strips the individual of the right to seek public justice, hold the powerful accountable, and prevent the same corporate bad actors from harming other individuals.

I’ve spent my legal career fighting for justice for individuals who’ve been physically or financially victimized in the fields of elder abuse, personal injury and medical malpractice. I’ve consoled families whose elderly loved ones were abused physically and sexually by nursing home caregivers but are not able to seek justice against the nursing home in court because they signed on the dotted line below a forced arbitration clause.

You may remember reading about nearly 3,000 Chipotle workers barred by the Supreme Court from participating in a wage-theft lawsuit against the company. They had been forced to sign a class-action waiver before they were hired. So, consequently, they were removed from the lawsuit and stiffed of their hard-earned money.

I was reminded of that case recently when Upstate company Whiteford’s Inc. was ordered to pay back $32,000 in back wages to workers at 30 fast-food establishments operated by the company. Fortunately, nearly 300 workers will now be able to get their due wages, but imagine if red tape kept them from being able to fight for justice.

 You may know one of these people – they are your neighbors, in your Sunday School class, or the person who walks his/her dog by your house in the evenings.

Why should they be denied money due to them because a corporate giant wants to save a few bucks on litigation?

Forced arbitration is a travesty that strips people of a Constitutional right to a trial by a jury that is fundamental in our country. Fortunately, Congressional representatives have recently introduced the Forced Arbitration Injustice Repeal (FAIR) Act of 2019, seeking to end this unfair practice of mandatory arbitration in “consumer, civil rights, employment, and antitrust’ actions.”

This important bill, introduced in the US House and Senate, would give people back their voice, their rights, and their day in court when physically or financially hurt by a corporation.

I urge you to to contact members of the South Carolina Congressional Delegation and ask them to support the FAIR Act. This isn’t about politics. This is about common sense and protecting our neighbors. It’s about what is fair.”