Important Client Announcement

Published Wednesday, July 9, 2008


In recent years nursing homes around the country have been requiring patients to sign mandatory arbitration provisions as part of their admission agreements.

Such clauses typically require all disputes arising out of the patient’s admission at the nursing home to be subject to binding arbitration, in lieu of civil litigation. However, a bill is presently pending before Congress which, if passed, would invalidate such mandatory arbitration clauses in nursing home admission agreements and would make it easier for residents to file claims for alleged improper care or wrongdoing.  Senate bill 2838, known as the “Fairness in Nursing Home Arbitration Act,” specifically states that “a pre-dispute arbitration agreement between a long-term care facility and a resident of a long-term care facility (or anyone acting on behalf of such a resident, including a person with financial responsibility for that resident) shall not be valid or specifically enforceable."

Hence, the bill does not seek to ban the arbitration of disputes with nursing homes, but instead seeks to invalidate a binding agreement to arbitrate which is entered into prior to the ripening of a dispute.

According to the bill’s sponsors, Senator Herb Kohl (D-WI) and Senator Mel Martinez (R-FL), such arbitration agreements result in nursing homes not being held publicly accountable for substandard care.  The sponsors believe that admission agreements, which contain such clauses, are presented on a take-it-or-leave it basis, and residents have little or no opportunity to fully consider and understand the consequences of such a provision.

On June 18, 2008, Senator Kohl chaired a hearing before the Senate Special Committee on Aging during which testimony was received from industry spokespeople and affected families, amongst others.  Opponents of the bill testified that such arbitration agreements help reduce liability costs for nursing homes, and reduce the time required to settle quality of care disputes.

If you have any questions about this Alert or would like a copy of the bill, please contact us.