When Elisa Zapata died after her stay at the Fredericksburg Caring Co. LP., her family, in Houston, decided to file a lawsuit against the company alleging it had offered inadequate care and had neglected Zapata. But the family soon came up against a roadblock — they were not allowed to move forward with the lawsuit because the nursing home officials had an arbitration clause, an agreement that any legal disputes would be settled out of court and behind closed doors.
The Zapata family fought this rule, pushing to have their day in court over Zapata's treatment, all the way up to the Texas Supreme Court (which sided with the nursing home) and the U.S. Supreme Court, which declined to take the case last year.
But while the Zapatas got knocked to the mat, for a moment there it looked as if the underlying rules that allowed nursing home companies to include arbitration requirements in their contracts with residents were going to be changed to prevent the exact scenario the Zapata family experienced from playing out that way again.
How? By ensuring that any nursing home that continued to include arbitration requirements with residents would be cut off from lucrative federal funding.
Back in September, in the final months of the Obama administration, the federal Centers for Medicare & Medicaid Services changed its rules so that any residential facility for the elderly that required residents to use arbitration to resolve legal disputes would no longer be eligible for federal funds, as we reported.
Advocates for consumers and the elderly celebrated the decision, claiming it would benefit nursing home residents because the cases against nursing homes over allegations of neglect, inadequate care and sexual abuse would no longer simply be steered away from the courts to private arbitration sessions.
This was a particularly big deal in Texas, where a study issued last year pointed out that the state nursing home system has numerous issues. The 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 found 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.)
Under the old rule, people who experienced deficient care often could only opt to settle the issue behind closed doors. However, under the Obama-era change, nursing homes would simply lose funding if they continued to fold arbitration requirements into their contracts.
It was a neat solution to the problem, but it didn't last long. In November, a federal judge blocked the rule from being implemented and now, under the Trump administration, the Centers for Medicare & Medicaid Services is in the process of dropping the rule entirely.
In June, the Centers for Medicare & Medicaid Services announced it was going to eliminate the rule, which choked off Medicare and Medicaid funding to any nursing home that required residents and family members to settle disputes over alleged abuse, neglect or sexual assault via a third party rather than the courts.
And now the agency is moving forward with the plan. This week, the Centers for Medicare & Medicaid Services wrapped up the public comment period over rolling back the rule despite the fact that various consumer groups have repeatedly urged the Trump administration not to do so. More than 75 health, consumer and advocacy groups have come together to form the Fair Arbitration Now Coalition in a bid to build public support for keeping the rule, but it doesn't appear the coalition has gained much traction.
Meanwhile, the American Health Care Association, nursing home companies and the U.S. Chamber of Commerce have grouped together to support undoing the rule, arguing that it costs nursing homes too much money when they are barred from preventing residents from taking cases to court.
Thus, nursing home companies will likely be able to breathe sighs of relief soon — any problems or allegations of abuse involving residents will stay behind closed doors and Medicare and Medicaid will once again stay out of the situation entirely.