Does Arbitration Belong in the Nursing Home World?

Posted by Kate Layman on March 07, 2016
CMS / No Comments

shutterstock_336389885As part of admission into a nursing home, a facility typically requires prospective residents to agree to binding arbitration. Arbitrating disputes generally allows nursing facilities to handle disputes without incurring the onerous costs – both of time and money – associated with litigation. Nursing facilities, which operate on razor thin margins, consider the costs of litigation to be an unnecessary burden for resolving disputes that could be resolved more efficiently and just as fairly in the arbitration context. Moreover, nursing facilities fear believe that they are not operating on a level playing field in a jury trial, because juries are typically biased in favor of residents and do not understand the constraints under which facilities operate. At the same time, nursing home resident advocates have long argued that use of arbitration in the nursing home setting is a legitimate concern because residents may feel coerced into signing them and may not fully understand the implications of signing such an agreement–that it means they are waiving their right to a jury trial.

Since last year, the use of arbitration agreements in nursing facilities has been in the forefront, both in state courts, and in the July 16, 2015 CMS proposed rule regarding the regulation of nursing homes, where the Centers for Medicare & Medicaid Services (“CMS”) proposed specific requirements regarding arbitration agreements (“Proposed Rule”).

For example, in Wert v. Manorcare of Carlisle PA, LLC (2015 WL 6499141, No. 62 MAP 2014 (Pa. Oct. 27, 2015)), the Pennsylvania Supreme Court addressed the enforceability of a nursing home’s arbitration agreement. While the Wert Court did not squarely address the issue of whether the arbitration clause is void as against public policy, the Wert Court stated it “recognize[s that premising the integrality of a contractual term on the subjective understanding of a far less sophisticated non-drafting party is ill-advised public policy that would further distort an already lopsided balance of power.” Despite the Wert Court’s acknowledgement of this being a public policy concern, the decision turned on the procedural validity of the clause because it required the use of the National Arbitration Forum’s code, which the Wert Court found the clause unenforceable. However, the brief reference to the public policy implications of arbitration agreements suggests that if the actual clause is called into question—other than for procedural reasons—Pennsylvania courts may void them as against public policy. On February 29, 2016, the United States Supreme Court (GGNSC Gettysburg LP v. Wert, U.S., No. 15-820) refused to review the Wert decision. The United States Supreme Court’s refusal is in line with other states as well, which like Pennsylvania, have found such agreements requiring the use of the National Arbitration Forum’s code to govern and address disputes between nursing homes and residents unenforceable.

In contrast, in Carrigan v. Live Oak Nursing Ctr., LLC (2015 WL6692199, No. 2:15–CV–319 (S.D. Tex. Nov. 3, 2015)), a Texas federal court decided late last year that an arbitration agreement signed along with the resident admission agreement was enforceable and that the parties would have to resolve their dispute through arbitration. The Carrigan Court further found that all parties who benefited from the resident admission agreement would be bound by the arbitration clause even though they did not sign it, that is, those parties who were suing to enforce duties under the resident admission agreement—that existed because of the relationship between the former resident and facility under the resident admission agreement—would also be bound by the arbitration agreement.

In the Proposed Rule, CMS expressed concern about the use of arbitration agreements in nursing homes. While soliciting comments on whether binding arbitration agreements should be prohibited, CMS nevertheless proposed a new regulation (42 C.F.R. 483.70(n)) with the following requirements:

  • The agreement is to be explained to the residents who acknowledge that they understand the agreement;
  • The agreement is to be entered into voluntarily;
  • Arbitration sessions be conducted by a neutral arbitrator in a location that is convenient to both parties.
  • Admission to the facility is not contingent upon the resident or the resident representative signing a binding arbitration agreement.
  • The agreement could not prohibit or discourage the resident or anyone else from communicating with federal, state, or local health care or health-related officials, including representatives of the Office of the State Long-Term Care Ombudsman.

Both the Wert case and the Proposed Rule highlight concerns about the use of arbitration agreements in the nursing home world. Given CMS’ expressed concern about them, nursing homes who ask residents to sign binding arbitration agreements would be well advised to look carefully at the process by which the residents agree to binding arbitration and to implement policies that ensure that residents clearly understand what they are signing and that they are not pressured to sign these agreements.

For more information regarding the use of arbitration agreements in the nursing home context, contact J. Nicole Martin or any member of Cozen O’Connor’s healthcare law team.

 

 

Kate Layman

Kate Layman

Kate Layman is a member of the firm and practices in the Health Law Group. Her practice includes compliance and regulatory advice, often in connection with ongoing litigation or transactions. Kate has significant experience in HIPAA and related privacy issues as well as application of the Medicare Secondary Payer Act with respect to non-group health plans.

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Highlights of the Omnibus HIPAA/HITECH Final Rule

Posted by Kate Layman on March 12, 2013
Affordable Care Act, HIPAA, HITECH / No Comments

On January 25, 2013, the Office of Civil Rights (OCR) of the Department of Health & Human Services (HHS) published the long-awaited omnibus final regulation governing health data privacy, security and enforcement (Omnibus Rule).[i]  The Omnibus Rule is a group of regulations that finalizes four sets of proposed or interim final rules, including changes to the Health Insurance Portability and Accountability Act (HIPAA) Privacy and Security Rules mandated by the Health Information Technology for Economic and Clinical Health (HITECH) Act[ii] and proposed in 2010;[iii] changes to the interim final breach notification rule;[iv] modifications to the interim final enforcement rule; and implementation of changes to the Genetic Information Nondiscrimination Act of 2008 (GINA).  The Omnibus Rule goes into effect on March 26, 2013, and compliance is required by September 23, 2013.  As expected, the Omnibus Rule did not finalize the May 31, 2011 proposed regulation regarding accounting for disclosures. Continue reading…

Kate Layman

Kate Layman

Kate Layman is a member of the firm and practices in the Health Law Group. Her practice includes compliance and regulatory advice, often in connection with ongoing litigation or transactions. Kate has significant experience in HIPAA and related privacy issues as well as application of the Medicare Secondary Payer Act with respect to non-group health plans.

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Business Associates Face Challenges on All Fronts

Posted by Kate Layman on December 10, 2012
Uncategorized / No Comments

Since the implementation of the privacy and security regulations of the Health Insurance Portability and Accountability Act (“HIPAA”) in 2003 and 2005 respectively, business associates (“BAs”) – those entities that perform services for or on behalf of covered entities – had been a weak link in the overall protection of protected health information (“PHI”).   BAs were not directly subject to HIPAA, but were only indirectly subject to its requirements through the business associate agreements – which were generally boilerplate – that covered entities were required to maintain as a condition of sharing PHI.  Thus, under the original regulatory structure, the only risk for a BA was for a breach of contract. Continue reading…

Kate Layman

Kate Layman

Kate Layman is a member of the firm and practices in the Health Law Group. Her practice includes compliance and regulatory advice, often in connection with ongoing litigation or transactions. Kate has significant experience in HIPAA and related privacy issues as well as application of the Medicare Secondary Payer Act with respect to non-group health plans.

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