August 3, 2015

Survey: Many Senior Facilities Use Arbitration Pacts

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Grace Living Center Photo

M. Scott Carter/Oklahoma Watch

About a third of Oklahoma nursing homes and nearly half of assisted living centers that responded to a state survey are using binding arbitration agreements in which residents waive their rights to a trial should a dispute arise.

Bill Whited, long-term care ombudsman for the Oklahoma Department of Human Services, conducted the survey, which he said is the first to examine the use of arbitration agreements in admission policies for nursing homes and other facilities. The survey asked each facility for a copy of its admission agreement.

In the survey, conducted over months, 198, or more than 60 percent, of the state’s 326 nursing homes provided copies of their admission policies. Among the state’s 100 assisted living centers, 73, or nearly three-fourths, provided copies.

The responses show that 64 nursing homes and 36 assisted living centers use binding arbitration agreements. The other respondents said they do not use them.

Referring to facilities that didn’t respond, Whited said, “We’re going back to those who haven’t supplied the information and make a second formal request.”

He said he is concerned that many of the non-respondents use arbitration agreements as part of their admission packets.

“I believe we’ll see a large number there,” he said. “I think that’s why they didn’t answer.”

The survey did not ask whether the facilities require that prospective residents sign arbitration agreements in order to be admitted, but Whited said he is aware that a number of facilities do.

Designed to bypass most trials before a judge or jury, arbitration agreements can limit a nursing home’s financial exposure in cases of abuse and neglect. The agreements require that parties resolve a dispute before an arbiter and they often lead to lower damages being awarded. In most cases, a ruling by an arbiter cannot be appealed to a higher court. Arbitration agreements are commonly used by many businesses, including credit card companies and auto dealerships.

Oklahoma’s Nursing Home Care Act prevents the use of arbitration agreements, saying that a resident cannot be forced to sign away any right as a condition for admittance to a nursing home. But state officials say they can’t enforce that provision of the act, pointing to two Oklahoma federal court rulings, both issued in 2008 that handicap the state’s enforcement efforts.

The court orders from the Northern District Federal Court in Tulsa and the Western District Federal Court in Oklahoma City said the use of arbitration agreements by a state long-term care facility is allowed under the Federal Arbitration Act.

Deputy State Health Commissioner Hank Hartsell said both orders prevent the Oklahoma State Department of Health from enforcing those portions of Oklahoma’s Nursing Home Care Act.

“It’s a violation of federal law to cite a violation in a nursing facility survey that a contract between a resident and the nursing facility contains an arbitration clause pursuant to the order in the federal district court case,” Hartsell wrote in an email to Oklahoma Watch.

In addition to the court orders, federal Medicaid policy doesn’t include arbitration agreements as part of a nursing home’s inspection protocol. Those inspections, called ‘surveys’ by federal and state officials, often take a rigorous look at nursing and patient health issues, but don’t ask about the use of arbitration agreements.
Mike Cook, director of long-term care for the state Department of Health, said state inspectors don’t ask about arbitration because federal rules don’t require the question.

“It’s not a part of the survey protocol that’s mandated by the (Centers for Medicare and Medicaid Services),” Cook said.

Whited said state inspectors are focused more on health, nursing issues and residents’ quality of life issues.

“I’m not sure it’s a priority,” Whited said. “Arbitration is an issue with advocates and the ombudsman’s office, but I don’t think it’s a priority with the inspection process.”
The use of the agreements has caused concerns for some federal lawmakers. A new study released in March by the Consumer Financial Protection Bureau found that consumers received less in damages from arbitrations than if the case had gone to court.

According to the study, consumers received an average of $175,000 per case from arbitrators in 2010 and 2011, compared to just under $1 million won by taking companies to court.

In May, 58 members of Congress sent a letter to the bureau’s director Richard Cordray, asking for a rule banning common contact language that requires the use of binding arbitration.

“These clauses force individuals into private, binding arbitration as a condition of buying a product or service,” the lawmakers wrote in a May 21 letter to Cordray. “Forced arbitration clauses, often buried deep within the fine print of financial products and service contracts, harm American consumers by depriving them of their day in court when companies have violated the law.”

Critics of the report, including the U.S. Chamber of Commerce, dismissed the study as “unfair and biased.”

Whited said the issue in Oklahoma could easily be resolved if arbitration were voluntary and not required as a condition for admission to a nursing facility.

“It’s not that arbitration is bad,” Whited said. “But it’s a problem when it’s mandatory and required before a resident be admitted to a nursing home. If it were voluntary, it wouldn’t be a problem.”