Judge Blocks Federal Rule That Would Have Made It Easier to Sue Nursing Homes

It's going to continue to be hard for elderly nursing home residents and their families to have their day in court.

After a series of troubling cases in which elderly people or their survivors were not allowed to sue a nursing home because of the pre-arbitration contracts that most nursing homes have residents sign when they decide to move in, the federal government stepped in. Or at least tried to.

Back in September, elderly-rights activists scored a big win when the federal government intervened and made it harder for nursing homes to keep complaints from patients out of court, as we reported.  But now the rule that was supposed to bar any nursing homes that required residents to sign contracts agreeing to arbitrate, not sue in court, if any issues arose, has been put on hold by a U.S. district court judge.

This hits home in Texas, where the nursing home system has a plethora of issues. A recent study commissioned by the Texas Health Care Association found that homes for the elderly have managed to get worse when it comes to care in recent years. The study, issued in September, says that the state's 1,200 nursing homes reported 3 percent more “severe deficiencies” in nursing home care from 2010 to 2014. (A "severe deficiency" is the kind that might lead to serious injury of a resident.) What makes this study all the more worrisome is it can be very difficult to actually sue a nursing home if something does go wrong.

The Centers for Medicare and Medicaid Services, an agency under the Health and Human Services Department, started reviewing the guidelines for how long-term care facilities participate in Medicaid and Medicare. At the start of the review, the agency officials had some concerns about the arbitration requirements. Then CMS representatives asked for public comments on their proposed rule changes and they got more than 9,800 responses, with almost 1,000 of those comments focused on arbitration.

CMS officials became "convinced that requiring residents to sign pre-dispute arbitration agreements is fundamentally unfair because, among other things, it is almost impossible for residents or their decision-makers to give fully informed and voluntary consent to arbitration before a dispute has arisen," according to court documents.

So the feds stepped up and changed the rules. According to the CMS revisions, long-term care facilities receiving government funds could "not enter into a predispute agreement for binding arbitration with any resident or resident’s representative nor require that a resident sign an arbitration agreement as a condition of admission to the [long-term care] facility.” The rule was set to take effect on November 28.

CMS viewed this as a "middle ground approach" since it wasn't banning all arbitration, but was simply going to yank federal funding from any nursing home that made arbitration the only legal recourse patients would have if anything went wrong.

The thing is, the nursing home industry was less than thrilled by this change, and a pack of nursing homes filed a lawsuit asking for a judge to determine the new rule to be unlawful and prevent it from taking effect at the end of the month.

Last week, U.S. District Court Judge Michael Mills, who sits in the Northern District of Mississippi, decided that the CMS rule is not based on "sound public policy" and issued a preliminary injunction to block the rule from going into action.

However, the rule, or the potential for laws along this line, is not gone with the wind quite yet. Mills wrote that considering that roughly half the people living in nursing homes have dementia, Alzheimer's or some form of mental incapacity, the odds are too high that many are signing pre-dispute arbitration agreements without understanding what they mean. Between that and the amount of stress many nursing home patients and their families are under during the admissions process, Mills said it seemed clear there is a real issue at the heart of this matter.

“This court believes that Congress might reasonably consider this sufficient reason to decide that arbitration and the nursing home admissions process do not belong together,” the order states.

However, Mills says that this is a job for Congress, not CMS. The problem is, the federal bills with language in them restricting nursing home arbitration agreements have all failed to get through Congress, so there's no telling if another attempt will have different results.

In other words, it may be more proper to go through Congress, but that doesn't mean it will actually happen. And meanwhile, the nursing home industry gets to ignore the CMS rule, as if the whole thing never happened.
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Dianna Wray is a nationally award-winning journalist. Born and raised in Houston, she writes about everything from NASA to oil to horse races.
Contact: Dianna Wray