The U.S. House of Representatives recently introduced the Forced Arbitration Injustice Repeal Act, known as the FAIR Act, that would limit private arbitration agreements. The Act as proposed would prohibit companies from requiring workers and consumers to resolve legal disputes through arbitration. Proponents of the Act claim that forcing arbitration tricks consumers into agreeing to arbitration by using fine-print arbitration clauses and deprives them of their right to seek damages in court from a jury. The proposed legislation would include a ban on forced arbitration agreements for residents in Maryland nursing homes by prohibiting pre-dispute arbitration agreements in long-term care facility admission contracts. The Act was previously introduced in 2019 but did not become law.
In October 2016, the Obama administration banned the use of pre-dispute arbitration agreements in long-term care settings. However, a judge struck down the ban and prevented it from being enforced. The Trump administration later issued a new rule, which went into effect in September 2019. That rule reversed the previous ban on pre-dispute arbitration agreements in nursing facilities but required certain conditions to be met. The recently introduced legislation seeks to address the issue once again.
What Is Arbitration?