Judge throws wrench into new nursing home rule

Adina Genn

Whether families of nursing home residents get their day in court when disputing quality-of-care issues may ultimately come down to who becomes the Supreme Court’s ninth justice.

That’s according to John Dalli, a founding member of Dalli & Marino, a law firm in Mineola.

Dalli has been following the matter closely – especially since a federal judge issued an injunction blocking a new federal rule prohibiting clauses in nursing home admissions contracts that forced residents and their families to accept binding arbitration to resolve disputes, rather than in a court of law. That rule was to take effect Nov. 28.

But the federal judge issued an injunction this week blocking that rule in response to a challenge from the American Health Care Association, an industry trade group. The group’s president and CEO, Mark Parkinson, said the organization was “pleased with the outcome of this ruling.”

But the matter is far from settled.

Dalli expects that the Justice Department under President Barack Obama “will file an opposition to overturn the judge’s injunction,” and that the matter will wind up in a higher circuit court to challenge the injunction.

“I’m pretty confident this will go to the Supreme Court, no matter who wins at the lower level,” Dalli said, pointing to the importance of the selection of the ninth justice.

The leanings of that justice may play a big role in the final outcome.

“Arbitration is favored by big business, and big companies don’t favor the little guy,” Dalli said. Any argument that it does, he added, is “completely false.”

The rule was announced earlier this year by the Centers for Medicare and Medicaid Services, or CMS, which controls more than $1 trillion in Medicare and Medicaid funding. It was one of several measures aimed at improving the care and safety of the estimated 1.5 million residents in the more than 15,000 long-term care facilities participating in the Medicare and Medicaid programs, according to CMS.

That rule change may have benefitted families of the elderly going forward.

The arbitration clauses “deprive nursing home residents of their constitutional rights,” Dalli said.

Family members often sign these agreements under duress, when a loved one needs to get into a facility immediately, he added.

But in New York, that predicament may be less dire than elsewhere in the nation, according to Jennifer Cona, managing partner of Cona Elder Law, an elder law and estate-planning firm in Melville, which represents about 100 skilled nursing facilities.

“It’s not the practice standard” in New York and more of an issue in other states, Cona said of the arbitration clause. Still, she added, some facilities may have the clauses in their admissions agreements.

But Dalli said that arbitration clauses are becoming more prevalent in New York, ever since a court decision in 2015 permitted the clauses in the state.

Still, Cona said that disallowing arbitration clauses is “not doing anything that moves the needle in terms of residents’ health and safety in New York.”

“In New York, we have such amazing safety protections and health laws that protect residents,” she added. In addition, information about skilled nursing facilities is readily accessible online, she added.

For example, Medicare.gov has a five-star quality rating system based on health inspections, staffing and other measures. And skilled nursing facilities are bound by stringent reporting requirements, Department of Health surveys and unannounced audits. Still, Dalli said, nothing replaces visiting a site personally, and at different times, and also speaking with stakeholders at a facility.

For some families, the arbitration agreement may come as a surprise. The clause may be “buried” in a 25-page document, signed by a family member at a time that is “trying and stressful,” Dalli noted.

“It’s a really stressful time for sure,” Cona said. “It’s a highly charged situation – it’s up to the nursing home to walk the family through the agreement and key points, [before] signing and initialing. Some are hit with too much information to absorb” everything at once.

Cona suggested if there is something in the agreement that is surprising, “to go back and ask questions.”

In challenging the rule, the American Health Care Association filed a lawsuit against the Department of Health and Human Services.

Mark Parkinson, AHCA president and CEO called the rule “a clear overreach by CMS.”

“Federal law plainly prohibits CMS from issuing this arbitration regulation,” he added in a statement. “The merits of allowing individuals in our centers and their families this legal remedy are clear: Study after study shows that arbitration is fair and speeds judgments in a cost-effective manner that benefits those injured more than anyone else.”

Cona noted that “arbitration, very often, is more cost effective” and offers “quicker resolution.”

But Dalli pointed out instances where arbitration is not cost-effective.

For example, if a parent were to fall in a nursing home and the family wanted to file a lawsuit for negligence, an attorney might take the case on contingency, collecting fees only when there is a payable result.

But arbitration requires fees for conducting discovery, Dalli noted.

“There can be tremendous expenses,” he pointed out. “Most families cannot come up with tens of thousands of dollars to bring these types of cases. It can shut people out of court.”

And the day in court, Dalli said, is not always about settlement amounts.

“Most people do not bring lawsuits because they are looking to get money but want someone to answer for what they did to a loved one,” Dalli added.

In his decision this week in Mississippi, Judge Michael Mills acknowledged that “nursing home arbitration litigation suffers from fundamental defects.”

Still, he added, “As sympathetic as this court may be to the public policy considerations which motivated the rule, it is unwilling to play a role in countenancing the incremental ‘creep’ of federal agency authority beyond that envisioned by the U.S. Constitution.”

Now, the rule is in limbo until the case is decided.