Melody Johnson felt heartbroken at having to bring her 83-year-old mother—who had diabetes, high blood pressure and incontinence—to an Oklahoma nursing home in 2009.
The Anadarko resident wasn't focused on the stack of papers the nursing home handed her family upon admission. She and her family didn't realize a binding arbitration agreement was among those documents. The agreement said any claims against the facility would have to go to arbitration, not to court.
“It was kind of like here's 1,000 papers,” Johnson, now 51, said. “Some they explain, and some they don't.”
The family didn't fully understand what they had signed until they tried to sue Grace Living Center Chickasha after the death of their mother, Arda Lee Churchill, in 2011, which Johnson alleges was a result of neglect.
Ultimately, the matter went to the Oklahoma Supreme Court, which refused to enforce the arbitration agreement, saying that the family member who signed the agreement on Churchill's behalf didn't have the authority to do so. A lower state court is now examining the merits of what has become a wrongful-death case.
Grace Living Center Chickasha said in a statement that it “strongly” denies the allegations and it is “committed to providing quality care to all of our residents.”
Some say the Jones family situation is typical when it comes to binding arbitration agreements. Though some patients, their families, attorneys and patient advocacy groups have been battling binding arbitration agreements in nursing homes for years, the vast majority of nursing homes now use them, said Greg Crist, a spokesman for the American Health Care Association, an industry group. Industry groups and their lawyers argue the agreements are a useful tool for saving patients and facilities time and money—cash that is better spent on patient care.
But families frustrated by the quality of care their loved ones sometimes receive at homes say they often feel pressured to sign them and don't understand what they're agreeing to. They don't realize that awards in arbitration in nursing home cases are usually lower than those reached in court.
Claims settled in arbitration have clearly been a good deal for nursing homes. Agreements reached out of court cost about 16% less on average than claims that do not involve arbitration, according to insurance broker Aon Global Risk Consulting.
Now, a new CMS proposed rule aims to put an end to the long-running feud over the use of binding arbitration agreements in nursing homes. The rule would require nursing homes serving Medicare and Medicaid beneficiaries to explain binding arbitration agreements to patients and families before they sign them.
The rule also would prohibit nursing homes from requiring residents or their families to sign the agreements as a condition of admission. The Obama administration's proposal follows failed bills in Congress to invalidate the agreements in nursing homes and a CMS memo issued more than a decade ago that argued such agreements, when required as conditions of care, might compromise residents' quality of care and could violate federal requirements.
There's general agreement that a rule barring facilities from requiring arbitration agreements is long overdue. But while industry representatives generally support the proposed rule, parts of it have left some trial lawyers and patient advocates fuming.
They say it might create some legal gray areas for patients and facilities, such as leaving room for interpretation when it comes to what might constitute adequate explanation of binding arbitration agreements. They also worry the rule would legitimize even wider use of the agreements in nursing homes.
Indeed, some say the CMS should ban pre-dispute arbitration agreements altogether. They argue that stressed families shouldn't be asked to sign such agreements in the first place and that it's tough to imagine facilities fully explaining all the legal consequences to families. “It's kind of like putting lipstick on a pig,” said Robyn Grant, director of public policy and advocacy for the National Consumer Voice for Quality Long Term Care. “With all due respect to pigs, it's still a pig.”