Arbitration has been a hot-button issue during the current administration. When President Trump took office back in 2017, there were strict rules set in place by President Obama that prevented nursing homes who used pre-admission arbitration contracts from receiving federal funds. The effect of this rule was to all but eliminate pre-admission arbitration contracts in Maryland nursing homes, as many received these types of funds.
Earlier this year, however, the administration was successful in amending the old rules to allow for nursing homes to include binding arbitration clauses in their pre-admission paperwork. Under the new regulations, nursing homes could use arbitration clauses as long as 1.) it is clear that the resident knew what they were signing, 2.) the document does not discourage residents from reporting non-compliance, and 3.) the arbitrator named in the agreement is neutral and mutually convenient. Nursing homes also had to allow residents a 30-day rescission period in which they could change their minds. While there were some protections for Maryland nursing home residents, most industry experts believe that this was a significant step backward.
According to a recent news report, in September, the U.S. House of Representatives passed the Forced Arbitration Injustice Repeal (FAIR) Act (the “Act”) by a vote of 255 – 186. The premise for the Act, as stated by one congressman, is that arbitration clauses have “seeped into just about every nook and cranny of our lives, including cell phone contracts, medical bills, employee handbooks, credit cards, nursing home contracts – you name it. Supporters of the FAIR Act recognize that the deck is “stacked against American consumers” and has been for far too long. One lawmaker described arbitration as, “just another tool for powerful corporate interests to avoid accountability.” The Act prohibits businesses, including nursing homes, from using binding, pre-dispute arbitration agreements. Under the Act, arbitration is allowed; however, the parties must agree after a dispute arises.