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New Rule Prevents Nursing Home Patients and Residents from Being Forced into Arbitration


Under a new rule established by the Centers for Medicare and Medicaid Services (CMS), nursing homes and assisted living facilities which receive federal support will no longer be able to require that patients or residents go to arbitration when they have a legal claim against a facility. These injured or otherwise-wronged individuals will now be able to file a lawsuit in court to address their complaint.

Forced arbitration has become increasingly common in consumer contracts in the US. Touted by corporations as a faster and easier alternative to trying claims in court, arbitration is essentially a privatized version of the civil justice system. How arbitration essentially works is that a lawyer or retired judge, often paid by the corporate defendant to a claim, will hear evidence from both parties in a less formal setting than a courtroom. While corporations claim that individuals don’t need attorneys to represent them in these cases, the process of arbitration can still feel foreign and confusing for an inexperienced claimant (though not for the corporate defendant). According to one study, claimants in arbitration receive awards which are 35% less than the average plaintiff would receive from a court award on similar claims.

In recent years, agreements to arbitrate began to appear with increasing frequency in contracts for nursing home or rehabilitation facility residents. Often without realizing it, the elderly and their families were relinquishing their right to go to court in the event of abuse, mistreatment, or breach of contract, and pushed instead into a foreign and often costly private arbitration. Not only do these individuals tend to receive a lower award for their claims, but they are also not able to use a lawsuit to shine light on that facility’s wrongdoing. Arbitrations are private proceedings, so that future prospective residents would not have the chance to uncover prior claims made against the facility before selecting it for themselves or their loved ones.

Since nearly all nursing homes and residential facilities receive some amount of federal funding, the new rule barring mandatory arbitration agreements will apply to nearly all such facilities beginning in November of 2016. The rule will apply only to newly-signed contracts.

If you have been the victim of neglect or abuse in a nursing home or assisted living facility, or need assistance with another long-term care concern or Medicare planning question, contact the compassionate and knowledgeable West Palm Beach elder law attorneys at Shalloway & Shalloway for a consultation, at 561-686-6200.

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