The Centers for Medicare and Medicaid Services (CMS) just issued their final ruling on nursing homes using arbitration agreements. CMS ruled that all nursing homes that accept federal funds through Medicare or Medicaid payments are banned from using forced arbitration agreements against their residents.

Nursing home contracts for residents can be extensive with lots of fine print. When a resident or representative signs the contract, they may not have the opportunity to read the contract in full due to time constraints or they may not fully understand what they are signing. If the resident or representative tries to object to the arbitration clause, the nursing homes usually will not allow any changes to the contract. In such situations, there may not be another suitable home in the area, so the resident is forced to accept the arbitration clause. Once the contract is signed, if the resident is seriously injured while living in the home, they are then forced into a binding arbitration. These arbitrations often heavily benefit or protect the nursing home, while limiting the compensation or recourse of the victim.

This CMS ruling is a step in the right direction for nursing home resident rights. Under this new ruling, federally funded nursing homes cannot enter into a binding arbitration agreement with the resident or representative until after a dispute arises between the two parties. Effectively, this bans the use of pre-dispute binding arbitration agreements most nursing homes because so many of them rely on Medicare or Medicaid payments.

A full copy of the ruling can be found here: https://s3.amazonaws.com/public-inspection.federalregister.gov/2016-23503.pdf