Ruling Preserves Nursing Home Residents’ Right to Litigation

A new Centers for Medicare & Medicaid Services rule that bans pre-dispute binding arbitration clauses in nursing home contracts has, at least for now, put a nail in the coffin of nursing homes that sought to limit exposure to high-dollar jury awards and punitive damages, says one Austin health care attorney. Nursing homes have taken the position that these arbitration clauses were inserted into the admission agreements in good faith, to ensure that residents and their families were not coming to the facility with the intent of later suing and reaping financial benefits, says William “Bill” Hopkins of the Austin office of Shackelford, Bowen, McKinley & Norton, LLP. Mr. Hopkins advises both individual health care providers and institutional health care clients on matters involving administrative law, regulatory defense and litigation.

Nursing homes argue that the use of these clauses was out in the open and fully disclosed prior to admission. Therefore, residents and family members who signed the agreement were doing so of their own free will. The homes believe that without these agreements, they are completely vulnerable and subject to the unpredictable whim of a jury and the jurisdiction they are in, which could result in multimillion-dollar lawsuits and verdicts that could close the facility. On the other side, consumers see these arbitration clauses as the ‘fine print’ that is rarely noticed, let alone disclosed and discussed. The argument is that if this agreement is so reasonable and harmless to the consumer, then why do the nursing homes make residents and their family members sign it prior to admission to the nursing facility. Admission into a nursing facility is already a difficult and traumatic time, where emotions are running high and families are just looking to get through the process. As a result, they may not be as diligent in reviewing all of the admission documents. Even if they see the arbitration clause, they might not have a true appreciation of what it means or what they are giving up. Mr. Hopkins adds that since such agreements are a part of the admission packet, and failure to sign typically prevents admission, it is coercive by definition since it is often presented in a take it or leave it manner. If this type of coercion would not be permitted in other contractual situations, why should it be allowed here?

For more information or to set up an interview, contact Rhonda Reddick at 800-559-4534 or

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