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When big businesses can write their own rules and insulate themselves from being held accountable for wrongdoing, it is hardly impartial, is it? That has been the case with nursing homes where residents were required to sign a binding arbitration agreement for admissions.

A binding arbitration clause is usually buried in the fine print at the bottom of a document. The purpose has been to generally insulate and protect the nursing home corporation from being held fully accountable for their negligence and the harm they cause residents. Under such agreements victims or their families are banned from filing a personal injury or wrongful death case due to nursing home negligence or abuse. This means that instead of the issue being heard by a judge and jury of peers, the claim is resolved in arbitration, in most cases, one chosen and paid by the nursing home, and subject to rules and procedures dictated by the nursing home. For families, that could mean a denial of justice for their loved ones and less compensation for their loss.

Last month, the federal government issued a new rule barring nursing homes from escaping accountability for negligence by requiring binding arbitration agreement. Prepared by the Center for Medicare & Medicaid Services (CMS), the rule says that if a nursing home wants to accept Medicare or Medicaid, it will have to stop putting forced arbitration clauses in the agreements, but only for new contracts; previously signed agreements that contain these clauses would not be affected. Thirty-four Senators and attorneys general from 15 states called for an end to forced arbitration agreements before the rule was issued.

Although the ban is set to go into effect on November 28, the nursing home operators and industry trade groups are challenging that rule by, ironically, doing the one thing they want to prevent their patients from doing — going to court.

In a lawsuit filed by the American Health Care Association and others, the nursing home industry alleges that CMS exceeded its authority, claiming that the law gives the agency no authority to regulate facilities’ use of arbitration. They argue that the ruling would deprive nursing homes and their residents of the “benefits of arbitration and result in the siphoning of resources toward litigation costs and away from resident care.”

The new rule does not prevent nursing home residents of choosing to enter into arbitration; it just means the nursing home can’t force the dispute out of the hands of a jury of peers. Aren’t all citizens are entitled to the same civil rights, regardless of age?

Arbitration agreements keeps negligence and abuse out of the public eye while lawsuits help shine a spotlight on the bad behavior. No one should ever deal with the legal consequences of a loved one harmed by nursing home negligence, but if it happens, the family deserves the rights to our justice system as guaranteed by the Constitution.

Whether the ban goes into effect on November 28 remains to be seen. Massive nursing home corporations have managed to block similar rules in recent years. In the meantime, Lawsuit Financial advises consumers to always be mindful of what you are singing and to protect your rights. Avoid signing any document with an arbitration clause. Ask yourself this – why would the corporation you are about to use not want to stand behind its service or product?

Mark Bello is the CEO and General Counsel of Lawsuit Financial Corporation, a pro-justice lawsuit funding company.


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