Arbitration rules prey on seniors

Washington Watch

The federal government is trying to stop nursing homes from forcing people into using private arbitration instead of lawsuits when people bring cases of elder abuse, wrongful death and sexual harassment.

The private arbitration issue is actually much larger than just a problem for seniors. Over the last 10 years, thousands of businesses across the country – from big corporations to storefront shops – have used arbitration to create an alternate system of justice.

You probably haven’t noticed or paid attention to the notices buried in written documents. But arbitration clauses are routinely used in cellphone contracts, employment agreements and student loans, as examples.

When arbitration is used, it tends to favor business. Judges and juries have been replaced by arbitrators who commonly consider the companies their clients, according to a recent series of stories in the New York Times about this problem. “The change has been swift and virtually unnoticed, even though it has meant that tens of millions of Americans have lost a fundamental right – their day in court.”

This is happening with all kinds of products and for all kinds of services. Companies love forced arbitration because it overwhelmingly tilts in their favor and often shields them from liability. But in the process, consumers, investors and, in the case of nursing homes, patients and families, are often denied justice because they have no legal recourse when wronged.

Forced arbitration is particularly egregious when it comes to resolving nursing home disputes because these are often about care, not money. That’s because Medicare and Medicaid often pay most of the bills. Typical claims involve neglect or abuse leading to broken limbs, dehydration and untreated pains.

But the Centers for Medicare and Medicaid Services (CMS), which govern both Medicare and Medicaid and controls more than $1 trillion in funding for the two agencies, recently issued new rules cutting off funding to nursing facilities that require arbitration clauses as a condition of admission.

The rules stop people from being forced into using arbitration by preventing any nursing home that receives federal funding from requiring that its residents resolve any disputes in arbitration, instead of court.

Some horrific situations involving seniors in nursing homes plus pressure from Congress and state legislatures led CMS to fix the problem. But the nursing home industry is expected to fight this aggressively.

Clauses embedded in the fine print of nursing home admissions contracts have pushed disputes about safety and the quality of care out of public view. In one case, Elizabeth Barrow, a 100-year-old woman, was found murdered in a nursing home in 2009, strangled by her roommate. Her case was initially blocked from court and sent to private arbitration.

So was a more recent case brought by the family of a 94-year-old woman who died at a nursing home in Murrysville, Pa., from a head wound that had been left to fester. That case was also ordered to go to arbitration.

“The sad reality is that today too many Americans must choose between forfeiting their legal rights and getting adequate medical care,” Senator Patrick Leahy, a Democrat of Vermont, said in a recent statement. Leahy and other Democrats have tried to get rid of arbitration through legislation, but have met strong resistance from various industry groups. But the rule by the Health and Human Services department does not require congressional approval.

Under existing rules, families are in effect being asked to anticipate the possibility of serious harm to their loved ones and to give up their legal options – as if moving a loved one into a nursing home isn’t stressful enough.

The new rule, which, the New York Times calls “the most significant overhaul of the agency’s rules governing federal funding of long-term care facilities in more than two decades,” is expected to be challenged in court by the nursing home industry.

Mark Parkinson, the president and chief executive of the American Health Care Association, a trade group for the industry, charges that the change on arbitration “clearly

exceeds” the agency’s statutory authority and was “wholly unnecessary to protect residents’ health and safety.”

The rules are scheduled to go into effect in November, 2016, are not retroactive – which means they would only affect new nursing home admissions. As a result, current arbitration contracts would remain in effect. The ruling affects the safety of nearly 1.5 million residents in the more than 15,000 long-term care facilities that participate in Medicare and Medicaid.

The agency has been under a lot of pressure to deal with this issue. In a September letter, a group of 34 Democratic U.S. Senators, led by Sen. Al Franken, D- Minn., asked the federal government to deny Medicare and Medicaid funding to nursing homes that employ arbitration clauses.

“All too often, only after a resident has suffered an injury or death, do families truly understand the impact of the arbitration agreement they have already signed,” the lawmakers wrote.

Pressure has also come from state governments, where officials in 16 states and the District of Columbia urged the government to cut off funding to nursing homes that use the clauses, arguing that arbitration kept patterns of wrongdoing hidden from prospective residents and their families.

In the New York Times’ stories, it’s clear that the elderly have been vulnerable to pressure to go to arbitration without a chance to take an issue to court. Between 2010 and 2014, more than 100 cases against nursing homes for wrongful death, medical malpractice and elder abuse were pushed into arbitration, according to the newspaper.

Daniel Deneen told the newspaper he was incredulous when he got a fax from a nursing home in McLean, Ill., about a client for whom he was a legal guardian. The client, a 90-year-old woman with dementia, needed immediate care for bed sores. Unless Deneen agreed to arbitration, he said, doctors working at the nursing home would not treat her there.

“It was the most obnoxious, unfair document I have ever been presented with in over 30 years of practicing law,” Deneen said.

Once contracts with arbitration clauses are signed, nursing homes can also use them to force civil cases involving sexual assault and wrongful death out of the courts. The newspaper cited a May 2014 situation involving a woman with Alzheimer’s who was sexually assaulted twice in two days by other residents at the Bella Vista Health Center, a nursing home in Lemon Grove, Ca., according to an investigation by the state’s department of public health.

California’s investigation found that the nursing home “failed to protect” the woman. The nursing home disputed the state’s findings saying the health and safety of its patients are “their top priority.” After unsuccessfully battling to have the arbitration clause in their agreement voided, the woman’s family settled with the nursing home.

There are also several situations where the arbitration goes the way of the nursing home, something contrary to how things would go if it went to a jury in a court.

Roschelle Powers said she found her mother, Roberta, who had diabetes and dementia, vomiting and disoriented one day in May, 2014 at a Birmingham, Ala., nursing home. She told about the folks at the facility, Greenbriar at the Altamont, specifically mentioning pills she had found in her mother’s hand, according to a deposition. A few days later, Roberta’s son, Larry, said he called 911 after finding his mom alone and unresponsive.

A day after the ambulance took his mother to the hospital, she was dead. An autopsy found Roberta had more than 20 times the recommended dose of metformin, a diabetes drug, in her blood. During the arbitration, the nursing home acknowledged the blood test results but said they had been the result of renal dysfunction. The arbitrator ruled in favor of Greenbriar. The nursing home’s lawyer, Joseph L. Reese Jr., said “there was no evidence to support the allegation that Ms. Powers somehow gained access to, and then took, more than her prescribed amount of metformin.”

But the family’s lawyer, Perry Shuttleworth, said “it was only because of forced arbitration that the nursing home got away with this.” A jury, he said “would not have let this happen.”

The nursing home industry has said that arbitration offers a less costly alternative to court. Allowing more lawsuits, the industry warns, could drive up costs and force some nursing homes to close.

But some government officials and elder care lawyers see a different rationale. For corporations, they say, arbitration also potentially keeps embarrassing practices, or patterns of wrongdoing under wraps or at least hidden from prospective residents and their families.

Figuring out which view is accurate is difficult because arbitrations are confidential and there is no federal database that records their outcomes. So in a year-long investigation, the New York Times tried to pierce the veil, examining records from more than 25,000 arbitrations between 2010 and 2014, as well as interviews with hundreds of lawyers, arbitrators, plaintiffs, and judges in 35 states. Among those arbitrations, the Times found more than 100 cases against nursing homes as mentioned above.

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