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New Rule Opens Access to Courts


A nursing home resident falls and hits her head due to poor lighting in a hallway. The resident slips into a coma from the traumatic brain injury and dies. Her family has a wrongful death claim but due to a mandatory arbitration clause in the admission contract that the resident signed, they cannot sue the nursing home in court. The family goes forward in arbitration and receives a small award, further reduced by the attorney fees they must pay.

An assisted living resident is assaulted by her roommate. The ensuing investigation reveals that the facility knew the perpetrator was dangerous, and was negligent in its lack of protection of the victim of the assault. The family of the victim wants to sue in open court, not only for monetary compensation but also to make public the facility's lack of proper care toward its residents. However, the victim signed a mandatory arbitration clause in her admission contract to the facility so she was forced to proceed to arbitration instead of court. The case was kept private, and the settlement was smaller than awards in similar cases brought in court.

While the above are hypothetical scenarios, they are nonetheless based on actual cases and show the problems with just compensation and transparency that can result from requiring nursing home and assisted living residents to resolve claims through arbitration.


As of September 28, 2016, all of this changed. On that date, the Centers for Medicare and Medicaid Services (CMS), an agency of the Department of Health and Human Services, issued a new rule that orders the agency to deny federal funding to any nursing home or assisted living facility if it requires its residents to resolve disputes in arbitration rather than court. Put another way, the new rule bans the mandatory arbitration clauses that became standard in admissions contracts, forcing people to choose between care in a long-term facility and their right to sue in court. The new rule will affect approximately 1.5 million residents of nursing homes and assisted living facilities.

Restoring residents' right to present their case in court began in earnest in 2015, when officials in 16 states and D.C. urged CMS to address the issue. Previous attempts by Congress had failed; however, the rule enacted by CMS does not require Congressional approval. Although this fact has allowed the rule to finally be enacted, it does subject it to challenge. Mark Parkinson, the President and Chief Executive of American Health Care Association, a trade group, stated that "the rule exceeds the statutory authority" of CMS, and was "wholly unnecessary to protect residents' health and safety." The AHCA said it is "considering appropriate steps to take" in light of the new rule.

It is important to note that while the rule bans mandatory arbitration clauses, it still allows arbitration to be used as a way to resolve disputes if both parties agree to it. Arbitration does have the advantages of an often expedited and cheaper process. However, on average awards under arbitration are 35% lower than those received by a claimant in court.


The new rule addresses other issues in long-term care facilities as well. The rule requires: new nourishing, palatable dietary options that meet residents' nutritional needs and preferences; an infection prevention and control program to address concerns regarding institutional spread of infections; a plan for monitoring antibiotic use to address concerns regarding antibiotic resistance; and the requirement that a comprehensive person-centered care plan for each resident be developed within 48 hours of admission.

The rule is prospective in application, meaning only future admissions to facilities fall under it. It is scheduled to go into effect in November.


If someone you love becomes a resident of a nursing home or assisted living facility, and suffers harm in that home or facility, contact Dave Thomas at The Thomas Law Firm for a free evaluation of your legal rights.

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