When you find out your loved one was neglected, injured or abused in a nursing home, your first course of action is likely to remove him or her from the facility. Then, you consider taking the home to court, only to discover during the intake process that your loved one had signed an arbitration agreement. This document essentially prevents you from pursuing a case in this direction.

This pattern has long put residents and their family members in a bind, redirecting them to an arbitration hearing in a lawyer’s office. In many cases, the arbitration agreement ends up shifting responsibility away from the nursing home.

However, it appears that this process may be coming to an end. In the fall of 2016, the Centers for Medicare and Medicaid Services proposed and has since put into place a rule that now prevents homes receiving federal funding from using arbitration agreements. Officials from 16 states and Washington, D.C., decided that this long-time approach keeps repeat negligence hidden from residents and their families and, because the agreement is often part of a clause included in nursing home contracts, courts won’t budge on the issue. In effect as of November 2016, this change applies to 15,000 government-funded homes holding 1.5 million residents.

If you have to make this difficult decision on behalf of a loved one, what should you know?

How Nursing Home Arbitration Has Worked

mother and daughter Having patients sign an arbitration agreement has been a benefit for nursing homes for a long time. For one, the home has to spend less on legal fees and, should a claim go to arbitration, the settlement is often smaller than if the case ended up in court. Secondly, arbitration processes frequently favor the company that drafts the contract, as it is more familiar with the process.

However, for patients and their families, signing an arbitration agreement feels like an afterthought until something happens. Often, the home’s director of admissions simply tells you to “sign everything”; as a result, this contract gets lost in the shuffle along with other paperwork. In most cases, you simply don’t have time to sit down and review the document or, in a worst-case scenario, your loved one signs it without your knowledge.

What happens when you need to go to arbitration? For family members filing a claim, you’ve got to hire a lawyer and additionally pay the arbitrator’s fee, adding to your costs. While the claim does get resolved quicker than if you took it to court, the settlement amount is frequently lower and the home continues to bear no responsibility for what happened.

In fact, a 2009 study requested by the American Health Care Association revealed that, when settlements between nursing home arbitration and court cases are compared, the plaintiff receives a 35-percent lower amount.

During the admissions process, it’s recommended that you and your loved one avoid signing the agreement, as the American Health Care Association doesn’t consider it a prerequisite for treatment. Additionally, if a home requires you to sign this document for admissions, many arbitration agreements have a 30-day opt-out rule.


Ultimately, the CMS determined that requiring residents or their loved ones to sign these pre-dispute agreements is unfair, concluding that it’s nearly impossible for both parties to give fully informed and voluntary consent. Additionally, past cases have shown that these clauses circumvent a home’s responsibilities in providing quality care, even in the instance of murder.

However, residents and their loved ones should still be aware of a few important points:

  • While the CMS’ changes went into effect in November, they only apply to future admissions. Current arbitration agreements are still binding.
  • Arbitration is still an option, but not the only choice. Rather, both parties are no longer blocked from taking claims to court.
  • The rules only apply to homes that accept Medicaid or Medicare funding. As a result, private facilities may still require you to sign a similar document.
  • The CMS has also instituted a few related changes:
    • Homes can no longer require residents to sign an arbitration agreement to remain in the facility.
    • Any paperwork signed cannot forbid a resident and his or her representative from communicating with federal, state or local officials, or the Office of the State Long-Term Care Ombudsman.
    • While the home can offer an arbitration agreement as an option, its staff must explain the document to the resident and his or her representative in a way that both parties understand its contents. In response, the resident must sign additional paperwork showing he or she understands the agreement.

Whether you’re taking a nursing home negligence claim to court or are opting for arbitration, legal representation is essential in both scenarios. If you believe you have a claim and need further direction, bring it to the attention of our lawyers. To learn more, contact us today.