For Immediate Release - October 15, 2015

AG Healey Opposes Binding Arbitration Clauses in Long-Term Care Contracts

Joins Multistate Effort Urging the Centers for Medicare and Medicaid Services to Put Stronger Consumer Protections in Place

BOSTON – In order to better protect patients in long-term care facilities and their families, Attorney General Maura Healey joined a coalition of states in urging the Centers for Medicare and Medicaid Services (CMS) to prohibit binding arbitrary clauses and implement stronger consumer protections.

AG Healey, along with 14 other states and the District of Columbia, submitted comments urging CMS to remove these clauses from long-term care contracts. The attorneys general argue that the use of binding arbitration clauses takes away from consumers the ability to assert their claims in court when disputes or incidents at the facilities occur.   

“Making the decision to enter long-term care and nursing home facilities can be an emotional time for our most vulnerable populations and their families,” AG Healey said. “In these difficult circumstances, consumers need to be able to hold providers accountable for any wrongdoing in the care of themselves or their loved ones.”

The attorneys general argue that an individual entering a nursing home or other long-term care facility, or family members acting on their behalf, are often making a health care choice under stressful circumstances, and are unlikely to make an informed decision about the best method to resolve future disputes. These particular situations are unlike business negotiations between commercial parties that are the more usual place for binding arbitration clauses.

In many instances, a resident or family member only discovers the existence of a binding arbitration clause after a dispute arises or a tragic event happens. It typically requires that claims against the business – even for cases of abuse or neglect – must be brought before a private arbitration provider chosen by the facility, prohibiting consumers from filing suit.

The comments are consistent with the position of the American Arbitration Association, which determined in 2003 that it would not administer healthcare arbitrations between patients and service providers that related to medical services, unless all parties agreed to arbitration after the dispute occurred.

A Consumer Financial Protection Bureau (CFPB) study of arbitration agreements in financial services contracts found that consumers were largely unaware about whether their contracts contained an arbitration clause and that it restricted their ability to sue in court. In November 2014, the AG’s Office lead a multistate effort urging the CFPB to restore consumer protections, rights and bargaining power by regulating arbitration clauses that are often inserted by financial institutions into contracts for credit card, payday loan and checking account agreements.

Other states that signed on to today’s comments to the Centers for Medicare and Medicaid Services, drafted by Maryland Attorney General Brian E. Frosh include California, Connecticut, Delaware, Hawaii, Illinois, Iowa, Maine, Minnesota, New York, Oregon, Rhode Island, Vermont, Washington and the District of Columbia.