Before a resident is admitted to a nursing home, a contract must be signed. The contract outlines both parties’ rights and responsibilities, as well as setting out some ground rules in the event that the resident or their family sues the nursing home. Over the past decade, more and more nursing homes have included arbitration clauses in these contracts, forcing residents to resolve all disputes through a third-party arbitration company rather than use the court system.
In these contracts, the forum of the arbitration is often chosen by the nursing home, and the outcomes of disagreements have historically favored nursing homes. However, in a very important new rule announced by the Department of Health and Human Services, nursing homes that require residents and their families to submit to arbitration rather than the court system will no longer receive federal funding. It is estimated that this new rule will affect 1.5 million nursing home residents nationwide.
Since the nursing home industry has benefited greatly from these arbitration clauses, the industry has reacted negatively to the new announcement. In fact, one spokesperson attacked the Department of Health and Human Services’ legal authority to implement such a rule, saying that the rule “clearly exceeds” the agency’s authority. He also claimed that the rule was “wholly unnecessary to protect residents’ health and safety.”