When Scott Barrow admitted his 94-year-old mother Elizabeth Barrow to Brandon Woods of Dartmouth nursing home in Massachusetts, he signed an agreement that provided for any legal claim to be resolved in binding arbitration.
Some three years later in 2009, Ms. Barrow was allegedly murdered by her roommate and Mr. Barrow filed a wrongful death action in the Massachusetts Superior Court.
After Brandon Woods Dartmouth motioned the court for arbitration, the judge entered an order compelling arbitration, and the arbitrator subsequently ruled that there had been no wrongdoing by Brandon Woods Dartmouth.
Nursing homes, which receive Medicare or Medicaid funds, are required to abide by the standard of care outlined in the Nursing Home Reform Act (NHRA), which is part of the Omnibus Budget Reconciliation Act (OBRA) of 1987. When facilities fail to meet the standards, families have historically filed complaints or lawsuits against the owners and operators of these facilities.
In 2015, the National Long-Term Care Ombudsman Resource Center collected data which showed 11,337 complaints of abuse, gross neglect and exploitation were filed against nursing facilities.
“Part of the problem for nursing homes in particular is that depending on the jurisdiction where you live, in what state, and whether tort reform has been enacted, nursing homes have become a frequent target of ambitious plaintiff’s lawyers and for potential plaintiffs looking for ways to bring cases, push for quick settlements and make money without a lot of litigation,” said Bill Hopkins, an Austin, Texas, attorney and former commissioner with the American Bar Association National Commission on Law and the Aging.
Forced-arbitration clauses not only potentially impede the ability of family members to pursue justice for their elderly family member but also accelerate the speed at which the American civil justice system is being commercialized, according to experts.
“There are a handful of large national and then smaller regional arbitration organizations and they’re all private.”
Among the most popular arbiters are the American Arbitration Association and Judicial Arbitration and Mediation Services (JAMS), which are governed by the Federal Arbitration Act of 1925 (FAA).
The concept of arbitration as an alternative to traditional court proceedings was upheld in Southland Corp. v. Keating, a U.S. Supreme Court case in which Chief Justice Warren Burger wrote that it was clearly the intent of Congress to encourage the use of arbitration as widely as possible. However, Justice Sandra Day O’Connor and Justice William Rehnquist were two that dissented, arguing that arbitration was intended to apply only to contracts executed under federal law.
“The FAA will govern almost all arbitrations handled at the State and Federal level regardless of whether the arbitration agreement specifically lists the FAA or lists some other State law,” Mr. Hopkins told Pacer Monitor in a telephone interview. “The Supreme Court has held that the FAA preempts those State laws and will govern absent some very minor exceptions. FAA governs arbitrations even if the arbitration agreement under question specifically states that it is governed by state arbitration law.”
Between 2010 and 2014, more than 100 cases against nursing homes for wrongful death, medical malpractice and elder abuse were pushed into arbitration, according to a New York Times study.
“Our organization is concerned with this issue because so many of the elderly in our country are being shuttled into court appointed guardianships in which they have no right to refuse arbitration agreements of the nursing homes in which they reside often against their will,” Dr. Sugar told Pacer Monitor in a telephone interview.
Although family members can still file a wrongful death, abuse or medical malpractice suit, if there’s a signed arbitration agreement on file, they are limited to suing in an arbitration court where the case is typically decided by a retired Judge.
“Originally, arbitration clauses were not forced or mandatory,” said Mr. Hopkins, a partner with Shackelford, Bowen, McKinley & Norton. “They were just one of the many pieces of paper in the admissions packet that someone seeking admission in a nursing home was given to consider but with the proliferation of lawsuits and big judgments against nursing homes in recent years, one of the most common sense ways for a nursing home provider to protect itself is to make arbitration mandatory and to remove from the equation the fear of a runaway jury verdict.”
Under the Obama Administration, the Centers for Medicare and Medicaid Services (CMS) issued a ban that stopped contracts with long term care facilities receiving Medicaid or Medicare from compelling or forcing residents into arbitration.
“For transparency to occur, there must be an understanding or agreement between two competent parties with the capacity to agree,” said Dr. Sugar. “That is often not the case with the elderly and especially in urgent situations where a hurried family member or elderly person will sign anything to effect the placement, which happens often.”
At the time of the ban in 2016, it was considered a victory for the long suffering elderly and their family members until a long term care industry trade group, the American Health Care Association, sued and secured an injunction barring CMS from enforcing the rule against forced arbitration on November 7, 2016.
Although lawyers for the U.S. government, who were out going under President Obama, filed a notice of appeal in January 2017, the Department of Health and Human Services under President Donald Trump failed to follow through and the opportunity to defend the rule on appeal was dismissed on June 2, 2017.
“The Arbitration Rule was part of a whole series of reforms under the Obama administration that were very focused on expanding the responsibilities of nursing home operators and implementing more consumer protection and elder abuse protection,” Mr. Nelson told PacerMonitor in a telephone interview. “But the orientation of the current administration is much more sensitive to excessive regulatory burden laid on business owners and operators. They are more business-friendly.”
CMS has since replaced the outright ban with new guidelines which propose, for example, removing the prohibition on mandatory arbitration clauses, allowing forced binding arbitration as a condition of residency as long as the language of the agreement is in plain writing and requiring the arbitrator’s final decision be retained so that CMS or its designee can inspect or review it.
“The provision in the revised rule regarding the CMS review of an arbitrator’s decision puts pressure on the nursing home by letting them know they will potentially be liable for penalties and fines if they violate the requirements,” Mr. Nelson said. “I don’t think this is the last we will see of a complete prohibition on forced arbitration. The CMS revision is just kicking the can down the road.”
The road for Mr. Barrow has been a winding but worthwhile path. He appealed the arbitrator’s ruling that exonerated Brandon Woods Dartmouth on the grounds that the arbitration agreement was unenforceable. The Appeals Court of Massachusetts in Essex subsequently agreed with Mr. Barrow, reversing the decision of the judge that forced Mr. Barrow’s complaint into arbitration.