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October 14, 2015

Miller, AGs Convey Opposition to Long-Term Care Facility Pre-Dispute Arbitration Contracts

Attorneys general urge Centers for Medicare and Medicaid Services (CMS) to prohibit binding arbitration clauses in contracts

(DES MOINES, Iowa) Attorney General Tom Miller expressed strong opposition to pre-dispute arbitration clauses in long-term care facility contracts, in a letter that Miller and a group of state attorneys general today submitted to the Centers for Medicare and Medicaid Services (CMS).

In comments submitted to CMS urging stronger consumer protections, Miller and attorneys general from 14 other states and the District of Columbia wrote that pre-dispute arbitration clauses erode the rights of families at a sensitive time and give consumers little bargaining power when disputes occur. CMS solicited feedback on whether binding arbitration agreements should be prohibited in long-term care contracts.

“Pre-dispute binding arbitration agreements in general can be procedurally unfair to consumers, and can jeopardize one of the fundamental rights of Americans: the right to be heard and seek judicial redress for our claims,” the attorneys general wrote. “This is especially true when consumers are making the difficult decisions regarding the long-term care of loved ones. These contractual provisions may be neither voluntary nor readily understandable for most consumers.”

The attorneys general contend that an individual entering a nursing home or other long-term care facility, or family members acting on their behalf, are often making a health care choice under stressful circumstances, and are unlikely to make a rational or informed decision about the resolution of future disputes.

“Arbitration has its place in our judicial system and, in many cases, can even be a preferred method of resolving disputes,” Miller said. “But we shouldn’t take that decision out of the hands of consumers long before a conflict may ever arise,” Miller added. “Going through the difficult process of entering a long-term care facility or making those arrangements on behalf of a loved one is distressing, and it’s a terrible time to foist binding patient rights waivers upon consumers.”

In many instances, a resident or family member discovers the existence of a binding arbitration clause only after a dispute arises or a tragic event happens. It typically requires that claims against the business – even for alleged cases of abuse or neglect – must be brought before a private arbitration provider chosen by the facility, prohibiting consumers from filing suit.

The attorneys generals’ position is consistent with that of the American Arbitration Association, which determined in 2003 that it would not administer healthcare arbitrations between patients and service providers that related to medical services, unless all parties agreed to arbitration after the dispute occurred.

The use of binding arbitration agreements has other negative consequences for consumers: less accountability of the long-term care industry, lower awards when an arbitrator finds in the consumer’s favor--including in cases of severe negligence or mistreatment--and a reduced incentive to change unlawful or harmful practices.

In March, a Consumer Financial Protection Bureau (CFPB) study of arbitration agreements in financial services contracts found that consumers were largely unaware about whether their contracts contained an arbitration clause and that it restricted their ability to sue in court.

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