Arbitration Agreements in Long-Term Care Facilities- Part 1

HNWElder Law, Medicaid Eligibility and Asset Protection Planning

In addition to various provisions within a nursing home or assisted living admission agreement, arbitration provisions have come under scrutiny by federal and state governments.  While arbitration is sometimes a more inexpensive and efficient way to resolve a dispute between two parties then using the court system, it has often been criticized by litigants because the arbitrators are not as well-versed about the law as some courts are, and the grounds to appeal an arbitration award are limited.  This is because a court would only set aside an arbitrator’s award if it finds that “(1) the award was procured by corruption, fraud, or undue means; (2) there was evident partiality or corruption in the arbitrators; (3) the arbitrators were guilty of misconduct in refusing to postpone the hearing, or in refusing to hear evidence which prejudiced the rights of the parties; or (4) the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.”  9 U.S.C. §10.

So because of these concerns, the Centers for Medicare and Medicaid Services (“CMS”) were naturally concerned that nursing homes and assisted living facilities were conditioning acceptance into their facility in their admission agreements by requiring residents to arbitrate any of their claims they may have with the facility and waive any rights they may have to go to a court and have a trial by jury.  While they did not disallow facilities to require residents to arbitrate claims, they promulgated a regulation disallowing the facilities to make arbitration a condition of admission into a facility.  They also required that the arbitration agreement be written clearly in plain English for the resident to understand, have the ability to be rescinded by the resident for 30 days after entered into, let the resident know that they still have the right to communicate with other officials, including the Long-Term Care Ombudsman, about any adverse situation, and requires facilities to hold decisions of arbitrators for a minimum of five years from the date of the decision for CMS inspections.

Some nursing homes who receive Medicare and Medicaid benefits challenged this in court.  In our next blog, we will discuss this challenge to the rule and whether the court allowed this regulation to take effect.

In Part 2 of this blog, we will discuss how the legality of this rule was challenged.

To discuss your NJ arbitration matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at  Please ask us about our video conferencing consultations if you are unable to come to our office.

Written by Stephen W. Kornas, Esq. of Hanlon Niemann & Wright

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