Senior Housing Sticks Up for Controversial Contract Provisions

Several parties want the federal government to ban pre-dispute arbitration agreements in nursing home contracts, sparking pushback among those in the senior living industry who regard the documents as essential.

The Centers for Medicare & Medicaid Services (CMS) is currently considering regulations on how arbitration agreements are presented to nursing home residents upon admission, but more than 50 labor, legal, medical and consumer organizations, along with 34 U.S. senators and attorneys general from 15 states and the District of Columbia, don’t believe that’s enough. Instead, they’re calling for CMS to completely prohibit their use in the nursing home setting, and some believe the ban should apply in other areas of senior living.

When signed, the agreements require that cases be brought to private, closed-door arbitration sessions as opposed to court. They’re prevalent in contracts where direct care is involved, including for assisted living communities.


“Our view is that these clauses should not exist in any setting,” said Susan Harley, deputy director for Public Citizen’s Congress Watch division, during a press call in October.

Those in agreement with Harley view arbitration clauses as a means of stripping residents of their legal rights and preventing families from holding companies accountable. Others, however, don’t see a need to legislate or regulate, leaving the industry at odds over their inclusion in senior living contracts overall.

A Working System


Horror stories abound when it comes to arbitration agreements. A recent New York Times article details how arbitration has been used and abused by businesses and nursing homes to shrug off responsibility to their patients, employees or customers. And NPR reported about a case in which a man was moved to a nursing home and died within the month due to the facility’s negligence.

But such cases are few and far between in the senior living space, and the industry has adjusted as problems arose, Aric Martin, an attorney with Rolf Law, a firm focusing on post-acute, long-term care and senior living providers, tells Senior Housing News.

“Over time, arbitration agreements have evolved to be imminently fair, to address all of the issues that people have raised,” Martin says. “There’s attention now not because of an uptick in use, nor because of significant miscarriages of judgment.”

In fact, a CMS proposed rule on the matter stemmed from a single scenario of arbitration gone awry, revealed following a Freedom of Information Act request filed by the American Health Care Association.

“Obviously you’re always concerned about that 1% that uses these in the wrong way, but 99% of what we’ve heard is that these are good and used properly,” Paul Williams, vice president of credentialing and certification programs for the Assisted Living Federation of America, known now as Argentum, tells SHN.

A Question of Authority

The intention behind the regulations proposed by CMS isn’t deplorable, most agree. Instead, the issues lie within implementing rules unnecessarily and granting power to unqualified parties.

“My objection to the CMS rule has nothing to do with the spirit or substance of the comments,” Martin says. “It’s who should be the oversight person making the determination. CMS shouldn’t be—it should be the courts.”

And moving forward with a ban would involve the agency overstepping its bounds even further, Dianne De La Mare, vice president of legal affairs for the National Center for Assisted Living, tells SHN.

“I personally don’t think that CMS has the statutory authority to proceed with [a ban],” she says.

Rules of Thumb

Aside from a few outliers, most companies have become more transparent about the clauses over the years, employing best practices and consulting with lawyers.

“What’s happening in nursing homes and assisted living isn’t all that different,” De La Mare says. “I think without regulation, it’s been working as it should.”

NCAL, for example, has a template it provides to members after which they can model their own clauses. And Argentum supports pre-dispute arbitration agreements that uphold pro-consumer standards, Williams says.

Across the board, a select few guidelines have generally been agreed upon for the clauses, coming in direct response to various court rulings, Martin says. Common elements include:

  • Optional: Many senior living providers have nixed any stipulations that make signing an arbitration agreement a condition of a move-in.
  • Separate: As opposed to burying an arbitration clause within a senior living contract, it has become more common to separate it from the overall admission agreement. Documents drafted by Rolf are added as a cover sheet, Martin says.
  • 30-Day Rescission Period: Whereas arbitration clauses may have once been binding immediately upon signing, nowadays they grant an average of 30 days to opt out, if a resident or responsible party so chooses.
  • Maintain Resident Rights: Argentum, in particular, promotes arbitration agreements that don’t strip residents of their rights in any sense or violate any standing laws.

“We think that if consumers and providers want to enter these agreements, then they should have the right to be able to do that,” Williams says. “The system works.”

Written by Kourtney Liepelt

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