<img height="1" width="1" src="https://www.facebook.com/tr?id=1854651628150624&amp;ev=PageView &amp;noscript=1">
eldercounsel-blog-logo-white.png

 
eldercounsel-blog

Chaos Over Long-Term Care Arbitration Clauses

Arbitration agreements are a touchy subject in any context, but particularly so in the emotionally charged, often distressed, situations surrounding entry into a long-term care (LTC) facility.

Anyone attempting to keep up with the flip-flop of positions on permitting or prohibiting arbitration clauses in LTC contracts is likely suffering from a severe case of whiplash. In the last three years, the validity of arbitration clauses has gone from silent, to prohibited, and soon they could become lawful. The future of LTC resident care hangs in the balance.

The Paradox

The executive branch’s position on arbitration clauses in LTC contracts has made a 180-degree turn in recent years. In 2016, the Centers for Medicare & Medicaid Services (CMS) banned pre-dispute arbitration agreements. In 2017, CMS issued proposed revisions eliminating the arbitration prohibition.

Congress has now joined in to voice its opinion. Earlier this year, Sen. Richard Blumenthal (D-Conn) introduced the Forced Arbitration Injustice Repeal Act (FAIR) to Congress. Blumenthal’s position is that “forced arbitration is unfair, unjust, and un-American.”

Furthering the confusion, state courts and federal courts continue to battle over whether arbitration agreements can be enforced. The Supreme Court of the United States has cited the Federal Arbitration Act (FAA) to uphold arbitration agreements. The FAA states, in part, that arbitration agreements “shall be valid, irrevocable, and enforceable.”

However, states have found a loophole in the FAA through a provision stating that such agreements can be invalidated “upon such grounds as exist in law or equity for the revocation of any contract.” Many states that find common flaws in contracting – such as fraud, duress, mutual mistake, competency issues, or lack of authority by acting agents – have refused to enforce arbitration agreements. Some states have also distinguished resident care-based suits from family wrongful-death claims, sending the former to arbitration, but the latter to court.

Possibly curtailing states’ use of this loophole, the Trump administration’s revisions keep and enhance clauses pertaining to transparency of arbitration clauses and require greater explanation to signers by facilities. Thus, arguments that arbitration clauses are void for competency, mistake, fraud, duress, etc. may be diffused due to this heightened requirement for informed consent. CMS’s current proposed regulation also upholds the prohibition of deterring patients and family from reporting concerns to state officials and Ombudsmen.

Benefits of Arbitration Agreement Clauses

Arbitration is typically less costly than taking claims to court. For facilities and claimants alike, the use of arbitrators reduces the costs related to ascertaining a resolution.

Avoiding the court system not only reduces the burden on the judicial branch, but also allows for a more expeditious resolution. Seeking resolution through an arbitrator takes less time than the frequently long and drawn out court process. 

Arbitration is often a private affair. For claimants and facilities that prefer not to disclose embarrassing or inflammatory details about their activities, this benefit can be very advantageous.

Disadvantages of Arbitration Clauses:

Duress is a frequent element in signing LTC contracts. Often, potential residents, and their caretakers, are unprepared for entry into a LTC facility. Many times, they find themselves in this position after unforeseen or traumatic events. The timeline is often so short that having an attorney look over the paperwork is not an option.

In many areas, quality LTC facilities are in short supply. There are often no suitable alternative facilities within a reasonable distance. This leaves families and potential residents with no choice but to sign whatever a facility’s contract encompasses.

In pre-dispute arbitration agreements, how can informed consent truly be obtained? It is improbable for a facility to explain all potential complaints or issues that such an agreement might cover. For instance, some agreements prevent families or residents from seeking remedy in the court system for egregious acts, like sexual or physical abuse.

Some arbitration clauses allow an arbitrator to be selected by the facility. While a legal requirement that a neutral arbitrator exists, it is ethically questionable that a one-sided selection be permitted.

Lack of access to the court system inhibits the incentive for facilities to provide quality care to its residents. A reasonable presumption is that facilities are motivated to take greater care of residents when civil lawsuits risk repercussions on reputations and licensing. Arbitration often shields facilities from some such publicity.

Conclusion

Clearly, the permissibility of arbitration clauses is in a state of mayhem. State and federal court systems are split over the answer. The executive branch is steering one way and the legislative, the other. The American system of checks and balances has generated a tailspin that is not likely to be controlled anytime in the near future.

At its core, the real concern is in the conscionability of pre-dispute versus post-dispute arbitration. Where is the middle ground? Post-dispute arbitration agreements are undeniably judicious and fair in most circumstances. Would it not be more reasonable to permit LTC facilities to seek, but not require, agreement to pre-dispute alternative dispute resolution as a condition of entry? Better yet, let the afflicted party decide how they would like to seek remedy.  But a critical point is roaring from the divide within our branches of government on pre-dispute arbitration clauses – that an agreeable resolution has not yet been offered.

SHARE THIS STORY | |

Subscribe to Blog

Share Article

   

Search

Recent Posts