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Nursing-home arbitration debate rages on

OWNERS SAY THEY HELP LIMIT HARMFUL LAWSUITS; ADVOCATES CITE FAIRNESS

CALIFORNIA – In the coming months, the California Department of Health will attempt to revive a regulation nursing-home owners say hinders their right to include arbitration clauses with admission contracts – a practice federal legislators are now trying to ban completely.

The California regulation does not actually prohibit owners from soliciting the agreements, but experts say it will make them more difficult to design and is part of a greater movement to abolish mandatory arbitration from the nursing home arena all together.

The state rule has been in the works since 1997, when the California Advocates for Nursing Home Reform helped craft Senate Bill 1061, which was passed by legislators and requires nursing homes to use a standard admission agreement that was to be implemented by January 2000.

The reform group said the rule would help protect consumers from inadvertently agreeing to things they don’t understand by making the document simple and the same no matter what facility they apply to.

“Admission agreements should only include things that are appropriate or required for admission, but often times providers can make them 40 or 50 pages long, making it easier to slip in things consumers might not realize they are agreeing to,” said Eric Carlson, director of the Long-Term Care Project for the National Senior Citizens Law Center and attorney for the reform group.

So far, the regulation has been successfully deferred by providers for more than a decade. Delays in the Department of Health resulted in a draft standard admission agreement that was not finalized until 2005 and later implemented in 2006.

About a month into the roll-out, a group of nursing home officials and the California Association of Health Facilities filed suit against the department saying the standard admission forms violate their rights, once again suspending implementation.

The nursing home owners said the regulation obstructs their ability to solicit the arbitration agreements as a way of resolving disputes rather than a court trial.

“Mandatory arbitration contracts have become an extremely common practice. It’s not untypical. All health plans have it, all hospitals have it, all credit card companies have them. All we are asking for is the same rights that other businesses have,” said Nancy Reagan, director of legislative affairs for the association.

“We found when you talk to folks about how to settle disputes, people don’t want to be battling in a court room. Arbitration is a lot less of a hostile environment and it’s more cost effective.”

According to veteran elder-law attorney Sanford Horowitz of Sonoma, most, if not all, nursing homes have an arbitration agreement as part of their admission contracts. By law, they are not allowed to include them in the admission document or make them a condition of entry, but many add them as an attachment.

Mr. Carlson said the standard admission agreement would likely make it more difficult to present the arbitration agreement as something separate from the admission contract.

“On the consumer side, people have no problem with post dispute arbitration and there are conditions where it is a more-effective way of solving a dispute. But it should be voluntarily. There is no reason to agree to it beforehand and when people are entering a nursing home the last thing they are thinking about is waiving their right to a jury trial,” Mr. Carlson said.

The court ended the lawsuit in March of last year, mandating that the department revise the regulation to address six of the petitioners’ concerns – not including their claim that the regulation hinders their ability to present arbitration agreements at the same time as the admission contract.

Now advocates of the regulation just have to wait until the state rewrites the rule, which could be anytime in the next year. Officials with the California Advocates for Nursing Home Reform said they have not decided whether they will dispute the rule again when the department releases the new version.

Arbitration has actually been in practice since the Federal Arbitration Act was passed in 1925 as a way to reduce backlogs in the court system. But in recent decades, businesses have implemented arbitration clauses as way to protect against expensive law suits.

Cases debating the practice of writing pre-dispute arbitration clauses have shown up in a multitude of industries, but no definitive position has been taken on the constitutionality of the clauses in any type of business, including nursing homes.

“In the late ‘90s, the elder-abuse law was given some real teeth and lawsuits began popping up everywhere, causing multimillions in damages to nursing homes,” Mr. Horowitz said.

Arbitration panels, which generally are comprised of attorneys in California, are “less likely to rule in favor of the plaintiff, or if they do, the reward is much smaller,” Mr. Horowitz said. “Thus, arbitration contracts began appearing in just about every nursing-home contract as a way to protect against million-dollar damages. … Most of the time when I see cases disputing the arbitration contracts, I can prove from the person who explained the contract’s deposition that the agreement was not properly explained to the resident.”

The federal Fairness in Nursing Home Arbitration Act introduced April 9 by Sens. Mel Martinez, R-Fla., and Herb Kohl, D-Wis., would be the first law banning mandatory arbitration laws in a business contract. Similar attempts have been tried and failed in the past, but in an election year, the bill might have a surviving chance. “Politicians don’t want it recorded that they voted against the elderly. … We’ll just have to wait and see what happens,” Mr. Horowitz said.