Nursing home admissions and arbitration agreements

Most nursing home admission documents contain arbitration agreements. Arbitration is an alternative dispute resolution method that bypasses the civil justice system. Most nursing homes favor arbitration while almost all consumer groups oppose their requirement. In today’s episode, nursing home abuse lawyers Rob Schenk and Schenk Firm discuss the benefits and problems with arbitration agreements in nursing homes with guest Elizabeth Newman @TigerELN, senior editor at McKnight’s @mcknightsltcn

Schenk: Welcome to this episode. My name is Rob Schenk.

Smith: And I am Schenk Firm.

Schenk: To the name. We are your hosts of this podcast. We’re going to be talking about – this is going to be casual conversation about nursing home admissions and nursing home arbitration agreements with a special guest today, Elizabeth Newman. Will, can you tell us a little bit about Elizabeth Newman?

Smith: Absolutely. We are delighted to have her on. She has been the senior editor of McKnight’s Long Term Care News, which is a publication that caters to the healthcare industry, since March of 2011. She was previously the editorial manager at LifeBridge Health in Baltimore, and before that, she was a reporter for the Capital Gazette newspaper in Annapolis. She is a graduate of Northwestern University’s Medill School of Journalism, and in her spare time, she reads, writes and travels. Although she is originally from Virginia, she now lives in Chicago with her husband, 9-month-old baby and four cats.

Schenk: And Elizabeth, welcome to the show.

Elizabeth: Thanks so much for having me. Happy to be here.

Schenk: Fantastic. Well in our introduction to you, Elizabeth, we mentioned that you are the senior editor of McKnight’s, but I think a lot of the audience might not know what – or maybe some of the audience, I don’t want to say a lot of the audience, some of the audience might not know what McKnight’s is, so can you give us a background of McKnight’s, what it is and what the audience of McKnight’s is?

What is McKnight’s Long Term Care News?

Elizabeth: Absolutely. So McKnight’s Long Term Care News covers the nursing home industry, specifically focused on skilled nursing. We also have a sister magazine, McKnight’s Senior Living, which covers assisted living. So primarily what I work on is related to your traditional nursing homes and news around that, and kind of the issues around arbitration agreements today will mostly be focused on traditional nursing homes. So we’re a B2B publication for nursing home professionals.

Schenk: And you say B2B, that means business to business.

Elizabeth: Business to business, yes.

Schenk: So McKnight’s is covering things from an industry perspective that deal with the industry, so for example, like such and such a nursing home company has been sued by the AG of whatever state, or these two companies are merging or things like that.

Elizabeth: Absolutely. It’s a variety – we do quite a bit of legal news, policy news, but also a little bit of research. Obviously our readers are very interested in the latest in dementia care and other types of best practices around some of those clinical issues among people in nursing homes.

Smith: And there are a lot of issues, and we’ve brought this up before with other podcasts, that the nursing home industry faces. There are a lot of problems that they face. It’s not an easy industry a lot of times. And one of the – we’ll hopefully get into a couple of the problems that they’re having and that they’re facing and the solutions they’re coming up with. One of the issues that’s kind of a hot button topic right now are arbitration agreements.

What are arbitration agreements in nursing home admissions?

Elizabeth: Right.

Smith: So what is your understanding of what arbitration agreements are?

Elizabeth: Absolutely. So of course, arbitration agreements aren’t specific to nursing homes. In any business, there can be a written agreement that says if a dispute arises, the parties have an agreement to avoid court and have a disinterested third party make a decision. And while consumer advocates may disagree with some of the issues, the ins and outs of it, they’re meant to less formal, less time consuming, less expensive and they’re meant to be private. And for many small businesses, which nursing homes may be a part of, they would feel that the arbitration agreements are necessary to protect themselves.

Smith: And just to remind people who are listening to this, arbitration agreements are consensual agreements where a consumer is getting a product – it could be, like you said, it’s not just nursing homes, anytime you sign up for cell phone service, if you’re riding on a cruise ship, it’s a wide range of different practices and products that you can get where you say to the producer or whoever it is that you’re purchasing something from, even if it’s just skilled nursing. An agreement for you allowing me to use this product and me buying it from you, I promise that if there is a dispute in the future, we’ll have an arbitrator listen to it rather than going through the long process of a jury trial.

How common are arbitration agreements in nursing home admissions?

Elizabeth: Absolutely. And you raised a really good point there, I believe, which is consent, right? A lot of times, you’re talking about employees agreeing to work for a certain business or an agreement about a certain product perhaps, and one of the issues that comes up quite a bit in nursing homes is did the person or parties understand what they were signing? So we can get into that a little bit more, but in a general sense, you would assume that the arbitration agreement is between two parties that understand that they’re agreeing to stay out of court.

Smith: And how common is it for these arbitration agreements to be in these nursing home admissions packages? Is it relatively new?

Elizabeth: That’s a great question and no one really knows the answer. Certainly if you talk to some people, they’ll say, “Oh gosh, in our state, everyone uses them. They’re part of your admissions packet when you enter any sort of senior care facility.” The problem is when I say that no one really knows, and of course, as journalists, we love to have some hard data, most of the data would be based on a small sample. There’s a huge amount of variance from state to state. And these are private. There’s not free data on how often the agreements are set up or how often arbitration proceedings would occur, because believe it or not, no one on either side is eager to call up a journalist and say, “Here’s what we’re fighting about in relationship to our unhappiness to the nursing home.”

Schenk: Right. And so just from a broad standpoint for our audience, where does the nursing home industry, the people that are operating nursing homes, where do they come on arbitration agreements? Are they in favor of it or not in favor of it?

Are nursing homes in favor of arbitration agreements?

Elizabeth: Right. So that’s a very complicated question and I kind of want to get into some of the ins and outs of the controversy about these nursing homes, which is that back in 2016, the Centers for Medicare and Medicaid Services attempted to ban thee arbitration clauses in nursing home agreements, this is part of what we called the “Big Final Rule,” and said if you’re a nursing home that participates in Medicare or Medicaid, which almost all nursing homes would be, cannot have pre-dispute binding arbitration agreements for nursing home residents or their representatives.

So the American Healthcare Association, which is one of the big industry groups that we cover, said, “We object to that ban,” and they filed a lawsuit to enjoin CMS from enforcing it. This was two years ago. Then Trump won. Then in 2017, you have a new administration that wants to get rid of a lot of these regulations, and at that point, in June 2017, CMS said, “Oh, never mind.” So that went away and then you can use arbitration agreements again.

That being said, CMS, as part of that, kind of a nod towards consumers, said any arbitration you’re using now needs to be in plain language. It’s a condition of admission. It has to be in plain writing and the agreement needs to be explained and the resident needs to acknowledge that he or she understands that.

So to get to your point about nursing homes, you know, there’s a feeling that they should be able to use them if that’s what works for them. I also know the other industry group has said, a leading industry group said that they consistently support arbitration agreements that are fair and balanced and are not a requirement of admission and have some kind of what they call common sense recommendations of it should be included in agreements separate from admissions. It should include a period of time where you can reconsider and cancel the agreement, and that it shouldn’t limit the resident’s rights to remedy under the law other than to specify the forum and the proceedings for discrete resolution. So that’s kind of a long answer to your question, that basically the industry recognizes that these are controversial but feel that they are oftentimes needed.

Schenk: And so I guess that would beg the question why from the industry standpoint would they be needed?

Why do nursing homes want arbitration agreements?

Elizabeth: Why are they needed?

Schenk: Correct.

Elizabeth: So that’s a great question and I think what it comes down to, and I don’t want to speak for the nursing home industry, but nursing home providers often feel as if they have an unfairly deserved poor reputation, that they are delivering good quality of care but that families may not understand how sick their loved one is or have a real fear or nursing homes, and even for the best nursing home in the world, there is oftentimes for families a lot of feelings of guilt of placing their loved one in a nursing home. So the reason, so you’re kind of coming in with the sense of, “Okay, what if people don’t trust us,” and there is some fear that as people enter a nursing home and perhaps towards the end of their life and deteriorate, that there may be things that happen that are just part of the end stage of life and that a long-lost nephew or someone is going to show up and say, “Oh, why does Grandma Betty have dementia?” and sue. So they feel that these are necessary in order to protect themselves from a lawsuit that could potentially bankrupt them as a small business.

Smith: Yeah, because arbitration is it, we should explain because we haven’t, arbitration is generally touted as being less expensive and faster and therefore less expensive than traditional litigation, which can go on for a year or more, involve…

Schenk: A lot of attorneys’ fees.

Smith: …a lot of attorneys’ fees, depositions, things like that.

Why else would nursing homes want arbitration agreements?

Elizabeth: Absolutely. That’s a part of it, and I also do think that it would be unfair not to acknowledge that these are often very emotional cases. Any sort of medical neglect or malpractice cases are often very loaded, so I think that there’s a fear that in front of a jury or in a public court setting that that emotion may win out over what we should call the medical facts of the case and that nursing homes could not, are kind of, the deck is stacked against them in a jury proceeding.

Schenk: Right.

Elizabeth: That’s how they feel. I’m not saying I necessarily agree with that, but that’s some of the logic.

Smith: Oh, it’s understood.

Schenk: There are two sides of everything.

Smith: We’re on the other side of the coin. But no, I totally get where you’re coming from and understand.

Schenk: Another question that we have and sometimes our clients ask this is in your understanding and in your experience, do facilities that have arbitration agreements versus facilities that don’t require them, is there a general tendency for the care to be different?

Is care different in nursing homes that do not use arbitration agreements?

Elizabeth: Not in our reporting or our knowledge. I think that there – no, I will say that oftentimes the cases that we cover are obviously things that have been – essentially that the cases we cover are cases where there have been some sort of neglect, and so then they want to avoid the arbitration agreement so they’re taking take to court. But I would make a pretty strong argument that you would not assume that using an arbitration agreement would in any way impede the quality of care, if for no other reason than that the vast majority of people working in nursing homes are dedicated to your loved ones and want to do a good job, or if they’re not, an arbitration agreement doesn’t impact how they treat a person.

Smith: Right, yeah.

Schenk: In your reporting, have you found, because people throw statistics out there, but you never know where they come from, but it’s our understanding on this side of the aisle that the studies show that arbitration awards tend to be far less than jury verdicts.

Do arbitration awards tend to be less than jury verdicts?

Elizabeth: Yes. I would agree with that and as I mentioned before, certainly for nursing homes is one thing that listeners may not recognize that nursing homes do have pretty thin, small margins because they’re based on reimbursements from the federal and state government. That’s a very different story from perhaps senior living, assisted living, independent living. So nursing homes often feel if there was a million-dollar verdict against them in a jury trial, they would have to shut their doors.

Smith: Yeah.

Schenk: Right. You know, this is kind of on topic but off topic, but as we record this, it’s not when this is published, which will be in April.

Smith: Oh yeah.

Schenk: But recently in the last couple weeks, as we’re recording this, Jay-Z is in the process of arbitrating a matter and he’s actually trying to now get out of that matter based on the fact that the arbitration panel, the company, I’m not quite sure which one it is, lacks diversity.

Elizabeth: Interesting.

Can you challenge an arbitration panel based on diversity?

Schenk: And as a result of that, I think, and I read and I should have brought this with me, but they came out with a new policy of diversity that they make sure that their arbitration panels have enough people of color and women.

Elizabeth: That’s fascinating. I have not heard that. That is a fascinating point to make of when you’re talking about why arbitration agreements work in kind of a philosophical context. You would assume that the arbiter is completely neutral on all sides, but who is making those disinterested judgments? I agree, that’s a great point.

Schenk: Yeah, and in Jay-Z’s motion to dismiss or response to the motion to dismiss to compel arbitration, he said it’s not a jury of my peers. It’s not an arbitration panel of my peers.

Elizabeth: Interesting.

Smith: Yeah, and all arbitration is for anybody who’s still confused about it, Judge Judy, Judge Joe Brown, all of those daytime judge shows are arbitration, Judge Wapner, People’s Court. You’ve agreed to binding arbitration. They’ve just got it set up like a courtroom, but it’s arbitration.

Elizabeth: Interesting.

Schenk: Yeah.

Are arbitration generally enforceable in nursing home admissions?

Elizabeth: So one thing I did want to kind of – since we did talk about the cases that do go to court when they’re fighting about arbitration agreements is that in our reporting, I’d say that it comes to a difference between what the person couldn’t understand in relationship to the agreement versus what they did not understand. So a lot of the fear around specifically nursing home residents signing it is that they may be cognitively impaired, that they may be visually impaired and the font isn’t too big or they did not have the capacity to understand what they were signing.

In one recent case we wrote about, the daughter of the resident signed it and the judge essentially said, “Your failure to read and understand does not exempt you from its terms.” So I do think it’s important to kind of understand the difference between what the person couldn’t understand versus what they didn’t understand in the agreement.

Schenk: Well I think that – that’s an excellent point. So there’s kind of two things in that. Number one is absolutely that the cognition and the capacity to understand is important when the resident is the one that is signing. So obviously, if you lack capacity, you can’t sign it. With regard to somebody that does have capacity that is a family member, really the issue in that instance, the first issue, the threshold issue is not whether that family member understands it. It’s whether that family member has the authority under the law to make the decision.

Elizabeth: Absolutely. Yes, that is a case we’ve written about quite a bit recently for both publications is whether the representative holding the power of attorney was bound by the arbitration agreement that they signed on behalf of the resident. This case was recently the wife and the daughter of two nursing home residents separately sued the nursing home provider after the person died. They claimed substandard care and I think that the real takeaway there is who has the valid power of attorney?

Smith: Yeah, it was interesting because at the time that the American Healthcare Association sought the injunction against Sylvia Burwell and the rest of that administration for CMS, there was also – it was slightly around the same time – there was an issue in the Kindred Nursing Home case that also went up to the Supreme Court. Well let me backtrack – only that one went to the Supreme Court. CMS after Trump’s administration dropped the appeal, but both of these cases were going on in federal court at the same time. One had to do with seeking an injunction against this final rule and the other one had to do with powers of attorney on who could be an agent for a nursing home resident.

Schenk: Yeah, and I think specifically, the Kentucky case, the Kindred case, was the fact that the Supreme Court wouldn’t say that a general power of attorney had to specifically say arbitration is added to the powers of attorney because it’s not right that the Seventh Amendment would be any different than the other rights.

Smith: The right to own property or anything else, yeah.

Does Federal Law govern arbitration agreements in nursing homes?

Elizabeth: Of course that brings up the question of the Federal Arbitration Act and the high court’s kind of decision on that. That is often a lot of what we cover is when there are different interpretations of that act, which of course, that’s what the Supreme Court is there to do, but that’s quite a bit of what we cover is people appealing and the Supreme Court saying you didn’t interpret the acts the right way.

Schenk: Right.

Smith: And I think what it comes down to is that just based on – I mean we just gave a talk on this at a conference for Consumer Voice.

Schenk: A few months ago.

Smith: And just researching this and looking at the case law and kind of reading the writing on the wall, I think arbitration agreements are going to be here to stay. I think that they’re on firm ground. I don’t know – perhaps another administration might look at a different way to address it, but you know, it seems like they’re on pretty strong footing right now on allowing arbitration. It’s just going to come down to what you were talking about earlier, which is what the federal courts will always say, which is certain contract defenses will always apply. So if there’s not a meeting of the minds, if somebody isn’t cognitively aware or they didn’t understand something, if it’s not very obvious, then they might have some way to defend against it. But I think they’re probably here to stay.

Elizabeth: I tend to concur with that. I do think that, as you said, the court is often looking at was there an issue of fraud in terms of misleading someone into signing this agreement. And if there wasn’t, then they tend to say, “Well it’s valid. You need to stick with it.” Certainly in this era right now, the administration’s really focused on repealing regulations. I would say the courts overall tend to uphold them in those cases. I also, quite honestly, don’t anticipate this being something that is politically an issue that a lot of people would want to fight for, and you kind of, if you’re a consumer advocate, you might kind of at the state level want to say, “Okay, we need to get rid of these,” but it’s a really complicated issue, and nursing homes are businesses, and you potentially run of afoul of people like the Chamber of Commerce when you say they should go away.

Smith: You know, I’ll be honest with you. I have noticed, and this is just my perspective, but I have noticed in discussing and researching this and talking with attorneys and journalists and nurses and lawmakers that this is a pretty equal bipartisan issue, and oddly enough, both sides of the aisle are equally either passionate or ambivalent about this.

Elizabeth: Yeah, because you have to understand the issue to have a feeling about it, right? And when you say a ban on pre-dispute arbitration agreements in long-term care facilities, I mean try being me at a party and talking about what you’re talking about today.

Smith: Oh, it’s not something I use when I go to holiday parties to talk to members of the other sex at all, no.

Schenk: No.

Elizabeth: And you’re absolutely right. And certainly there was a big push from senators a couple years ago to try to push this through. I think right now, even if you take a step back from arbitration agreements, even if you talk about long-term care issues in general, right, there’s not a lot of oxygen in the room right now politically when you talk about Medicare or Medicaid reform. You have so many other hot button issues right now that I anticipate it being a few years before we circle back to what’s the future of long-term care.

Schenk: Yeah, and I think that what’s interesting though is that for a minute in late 2018 when #MeToo was flaring up and Stormy Daniels was going on, that was an arbitration case.

Elizabeth: That’s a great point.

Schenk: And there was the issue with nondisclosure agreements and I think either the Senate or the House of Representatives had the thing where if you had any allegations of sexual harassment was always arbitrated and never – it was always non-disclosed, and so people were kind of fighting back against both of those concepts, but that kind of dissolved after those things happened.

Smith: Yeah, and that’s the great thing. They don’t have a lot of staying power because it’s like Elizabeth is saying – they don’t sound interesting.

Schenk: Yeah.

Elizabeth: I’m sorry, I was going to say that’s a great point about when you have kind of these cases involving big political figures or stuff like that, they’re meant to be private, but certainly as journalists, we always want more transparency, we want there to be records, we want there to be a court proceeding that we can have access to. So kind of on that level of are these private deals that kind of go on in back rooms may make some people more uncomfortable than others.

Schenk: Right. So Elizabeth, can you tell us how did you end up becoming the senior editor of McKnight’s? What was your journey towards that or do you have a background in nursing or anything like that?

Elizabeth: Oh, so I’m a Medill School of Journalism graduate from Northwestern University. I started as a newspaper reporter at Capital Gazette newspapers in Maryland, was there for a number of years, and then I found that my passion was really related to healthcare reporting, so I worked in Baltimore for a number of years, and then in 2011, I accepted the job at McKnight’s and came out here. I primarily, I obviously write quite a bit of policy and other tech news for both our website and our magazine, but a lot of what I handle is our digital content and doing fun things like this.

Schenk: Excellent. And so if somebody had a hot scoop, a hot story for you, how would they get a hold of you?

Elizabeth: So you are always welcome to email me. My email is Elizabeth.Newman@mcknights.com. On Twitter, I’m @TigerELN, but certainly, if anyone has a case or a situation where they want to tip me off or talk to me about something going on at a nursing home, they can reach me there.

Schenk: Excellent. Well Elizabeth, this has been I think a really good – I’m going to say this, I’m going to be honest – we’ve had episodes about arbitration where it’s just me and Will mouthing off about how much we hate it, so we talked about – we go, “We’ve got to get somebody on. We’ve got to talk about it with a different perspective and just have both sides,” an episode where we just talk about it without casting judgment.

Smith: Because there’s always two sides.

Elizabeth: Absolutely, and like I said before, as a journalist, I do – I’m not going to take a position one way or the other. All I can tell you is why our readers and why nursing homes tend to favor arbitration agreements, why they tend to be controversial and why consumers and perhaps lawyers do not care for them.

Schenk: Right. Right, right. Well great, Elizabeth. Thank you so much for coming on the show. We really appreciate it.

Elizabeth: Well thanks so much for inviting me. I hope you all have a great day.

Schenk: You too.

Smith: You too.

Elizabeth: Okay, take care. Bye.

Schenk: McKnight’s.

Smith: Yes.

Schenk: Opposite of McDays.

Smith: Yes. McKnight Rider. But that was interesting. It’s always interesting to have – and it’s not as though she’s diametrically opposed to anything at all.

Schenk: No, she’s a journalist so theoretically she’s reporting and she happens to be reporting on the side of the industry that supports arbitration agreements.

Smith: Yes, and I am against them, but at the same time, I’m not so polarized that I can’t understand what the other side’s perspective is. As an attorney, my job is to understand what the other side is thinking and what their best arguments are, not their worst strawman arguments, but their absolute best arguments. And they do have some good arguments.

Schenk: I, myself personally, have been against arbitration agreements since I was 21 when I was fired from a place because I refused to sign an arbitration agreement.

Smith: And I just recently discovered, I already knew this story…

Schenk: Yes, so we won’t go into it again.

Smith: I just recently discovered that Rob’s band, which I have mentioned before Cab Over Pete, actually had a song called “Arbitration.”

Schenk: That’s right. So we were like a politically motivated rock band, of course.

Smith: Late ‘90s.

Schenk: Late ‘90s.

Smith: Rage Against the Machine.

Schenk: Rage Against the Machine.

Smith: Two guys on drums.

Schenk: Two guys on drums. So we had a song that I wrote that was based on the anger I had about arbitration, how I considered that a violation of my Seventh Amendment rights, which is also why we didn’t have a very big audience. So actually, Gene, can we cue up a little bit of that music? This is going to be awesome. This is going to be awesome. Maybe even a picture of Cab Over Pete from back in the day. So let’s listen. This is a good riff. I wrote this riff.

Smith: That’s very impressive. You’re a very talented musician.

Schenk: Thank you.

Smith: It’s just too bad it was the late ‘90s.

Schenk: And no one wanted to hear about arbitration in their rock songs.

Smith: No one wanted to hear about arbitration. No one wants to hear about it now.

Schenk: I’m 20 years ahead. I’m 20 years – whenever we go – next time we talk, we give presentations to people, I’m going to bring this song.

Smith: You really need to.

Schenk: And have people listen. But anyways, with that slice of Americana, that’s going to conclude this particular episode of the Nursing Home Abuse Podcast. This podcast is available for – new episodes are available every Monday morning either on your favorite podcast app like Pod Puppies, Stitcher, iTunes, Spotify, Google Play, or you can watch us at NursingHomeAbusePodcast.com or on our YouTube channel. If you do watch on YouTube, be sure to like and subscribe. Actually like and subscribe on all those methods of consumption. But with that, have a great day and we will see you next time.

Smith: See you next time.