Significant Regulations Added Regarding Arbitration Agreements in Long-Term Care Facilities that Accept Medicare and Medicaid Patients

Long-term care facilities, i.e., nursing homes, that accept Medicare and Medicaid patients will be subject to some significant changes in regulations on their ability to enter into arbitration agreements with patients.

New Rules and Requirements:

The changes are as follows:

  1. Pre-dispute binding arbitration agreements are prohibited;
  2. The facility cannot require the resident to sign a post-dispute arbitration agreement as a condition of the resident’s continuing to stay at the facility;
  3. The ability to enter into post-dispute arbitration agreements with patients are subject to the following regulations:
    1. The facility must explain the agreement to the resident in a form, manner, and language that the resident understands and have the resident acknowledge that he or she understands the agreement;
    2. Guardians or representatives of the resident cannot consent to an agreement for binding arbitration on the resident’s behalf unless that person was allowed to do so under state law and has no financial interest in the facility;
    3.  The agreement cannot contain any language prohibiting or discouraging the resident or any other person from communicating with federal, state, or local officials regarding any matter;
    4.  The facility must inform the resident that he or she is waiving his or her right to a jury trial;
    5.  The facility must provide for the selection of a neutral arbitrator and a venue convenient to both parties; and
    6.  Any agreement for binding arbitration must be separate and distinct from any other agreement or paperwork addressing any other issues.

The new rules, when first proposed by the Department of Health and Human Services, met with a myriad of comments from the public – legal officials, medical care providers, and politicians.  The Department stood firm in its proposal, and the new regulations will take effect on November 28, 2016.

Looking Ahead:

The Department addressed one comment in a manner that leads us to believe that we should be on the lookout for similar changes in the next few years.  The commenter pointed out that other Medicare and Medicaid healthcare providers utilize arbitration agreements regularly.  Therefore, the commenter asked, why were other providers not subject to the same requirements as long-term care facilities?  In response, the Department stated that regulations on the use of arbitration agreements by other providers are “beyond the scope of this rule.”  However, it continued, “we will retain this comment for review in case there is future rulemaking in this area.”

As always, medical professionals and facilities providing care to Medicare and Medicaid patients need to be vigilant about new and/or changing regulations affecting their practice.

Georgia Court of Appeals Vacates Ruling that Nursing Home Arbitration Agreement Invalid

The Georgia Court of Appeals recently vacated a lower court ruling that a nursing home resident lacked capacity to enter into an agreement to arbitrate her disputes. The Court did not reverse the trial court, but rather sent the case back to the trial court for more hearings, concluding the trial court used the wrong standard and shifted the burden of proof when ruling on the motion to compel arbitration.

The patient was living home alone when she fell. After surgery, she was admitted to the nursing home. On admission, the patient had a number of chronic medical conditions and a “history of some cognitive impairments.” The month before she fell, she had two visits to the emergency department for feeling “loopy and out of sorts, with some memory loss.” On neurological exam, she was noted to have mild cognitive impairment, depression, and amnesia. But, on admission to the hospital, she was able to give treatment consent.

On admission to the nursing home, she was taking narcotic pain medication. After admission, she was assessed as having episodes of confusion, forgetfulness, anxiety, and other cognitive deficits. The patient passed away and her family and estate sued the nursing home. The nursing home moved to compel arbitration based on the patient’s election to arbitrate in the admission agreement. In ruling on the motion, the trial court used a summary judgment standard and ruled that the nursing home bore the burden of proving the absence of evidence for the plaintiffs’ claims that the patient lacked capacity. In other words, the trial court required the nursing home to point out that the plaintiffs couldn’t prove the negative.

The Court of Appeals concluded the trial court used the wrong legal standard. The law in Georgia is that a party may seek an order compelling arbitration and the trial court shall “summarily hear and determine the issue.” O.C.G.A. §9-9-6 (a). The law governing contract formation applies, which means the issues are generally for the court to determine as a matter of law, as opposed to determining whether there are issues of fact for a jury to consider, like on summary judgment. In this case, the nursing home produced a valid, signed arbitration agreement. Thus, the burden of proof shifted to the plaintiffs to prove that the patient was not competent when she signed it, as opposed to requiring the defense to show that the plaintiff did not have evidence to support their claim.

The case is Kindred Nursing Centers v. Chrzanowski, __ S.E.2d ___ (Ga.Ct.App. September 28, 2016). The panel deciding the case was Presiding Judge Yvette Miller and Judges Christopher McFadden and Carla Wong McMillan.

Georgia Court of Appeals Holds No Arbitration for Wrongful Death Claim

The Georgia Court of Appeals recently held that a nursing home could not compel arbitration of a wrongful death claim. The decedent was a resident of a long term care facility. On admission, her daughter signed an arbitration provision as power of attorney for the decedent. The provision specifically included a wrongful death claim. After her death, decedent’s husband and daughter (as power of attorney) sued for medical malpractice, wrongful death, and violation of the Patient’s Bill of Rights. The trial court stayed the case and compelled arbitration.

The Court of Appeals reversed as to the wrongful death claim. In so doing, the Court held that the holders of the wrongful death claim – the survivors – did not consent to arbitration and, conversely, the daughter as power of attorney for the decedent had no authority to bind the survivors. Thus, while the medical malpractice and statutory claims were barred by the arbitration provision, the wrongful death claim was not.

This case could have far reaching implications for health care arbitration claims in Georgia. In particular, claims could be split between those subject to arbitration and those that are not, creating a potential “whipsaw” with inconsistent rulings and outcomes for the same alleged acts or omissions.

The case is Norton v. United Health Services of Georgia, Inc., ___ S.E.2d ___ (March 2, 2016).