Among the papers a family signs on the day a parent moves into a nursing home, there is often one that has nothing to do with care. It is an agreement to settle any future dispute, including one over an injury or a death, in private arbitration rather than in court. Federal regulators tried to ban these in October 2016. A district court in Mississippi blocked the ban three weeks later, Medicare told its surveyors to stop enforcing it, and in July 2019 the agency replaced the prohibition with a set of conditions.
Those conditions are now the whole of the federal protection, and they are more useful than most families realize. The facility may not require the agreement as a condition of admission or of continued care, and must say so explicitly. It must explain the document in a form and manner the resident understands. And the resident has 30 calendar days after signing to rescind it.
What the Rule Actually Requires
The current text sits in the long-term care facility regulations and runs to six requirements. The agreement must provide for a neutral arbitrator chosen by agreement of both parties, not one named in advance by the facility, and a venue convenient to both. It must explicitly grant the 30-day rescission right and explicitly state that signing is not a condition of admission or continued care. It may not contain language that prohibits or discourages the resident, or anyone else, from communicating with federal, state or local officials, including state surveyors and the long-term care ombudsman.
The last of the six gives the rule teeth after the fact. When a dispute is resolved by arbitration, the facility must keep the signed agreement and the arbitrator's final decision for five years and make both available for inspection by Medicare. Surveyors began checking for compliance with all of this in October 2022, under revised guidance issued that June.
The Mechanics of a Contract That Survives State Law
The reason regulators regulate these agreements rather than voiding them is that voiding them is not available to a state. The Federal Arbitration Act sits above state law, and the Supreme Court has twice said so in nursing home cases specifically.
In February 2012 the Court decided a West Virginia case in which that state's highest court had refused, as a matter of public policy, to enforce pre-dispute arbitration clauses in nursing home admission agreements covering negligence claims. The decision was unsigned: a categorical state rule against arbitrating this one kind of claim conflicts with the federal statute and is displaced by it. The judgment was vacated, with one question left open, whether the particular clauses might still fail under ordinary contract principles not specific to arbitration.
In May 2017 the Court went further, in a Kentucky case decided seven to one. Kentucky had held that a relative holding power of attorney could sign an arbitration agreement only if the power of attorney expressly authorized giving up access to the courts and the right to a jury. The Court held that singling out arbitration agreements for that extra requirement violated the federal statute, and that the statute reaches the formation of a contract and not merely its enforcement. A signature by an adult child under an ordinary power of attorney can therefore bind the resident, unless state agency law independent of arbitration says otherwise.
What Is Not Known
Two things a reader might expect to find do not exist in any form worth citing. There is no national count of how many admission packets contain one of these agreements. The closest figure is a 2015 survey by Oklahoma's long-term care ombudsman, in which 198 of the state's 326 nursing homes responded and 64 of them, about a third, said they used them.
There is also no study comparing arbitration outcomes with jury verdicts in nursing home negligence cases. Medicare said as much in the 2019 rule, noting there was little solid social science evidence on the question. One structural detail is worth knowing instead: the largest arbitration administrator in the country adopted a policy in 2003 that it will not administer disputes between individual patients and health care providers over medical services unless both sides agree to arbitrate after the dispute has arisen.
What a Family Can Do on the Day
The regulation does not stop a facility from putting the agreement in the stack; it stops the facility from making it matter whether you sign, which means the protection only works if someone notices the difference. Three things follow. The document can be declined outright, and the facility must have told you so in writing. If it was signed in the rush of an admission, there are 30 days to rescind it, which is the single most useful fact in this article. And the arbitrator is supposed to be chosen jointly, so an agreement that names the administrator in advance does not meet the federal requirement.
— John Stone