2016 Was a Busy Year: Developments in Nursing Facility Arbitration Law

Nursing home arbitration agreements get a bad rap. But as most practitioners in the field know, nursing facility arbitration agreements seem here to stay, at least (possibly) until recently.  Arbitration is thought by many to offer significant flexibility and efficiency vis-à-vis litigation, and proponents in the skilled nursing industry cite arbitration as an important tool to reduce litigation costs – including, of course, the costs associated with “runaway jury” punitive and noneconomic damages verdicts, which can be crippling to industry participants.

The enforceability of nursing facility arbitration agreements has long been a hotly contested issue.  It probably is fair to say that, in general, courts broadly view these agreements as enforceable in a vacuum, but they will approach any particular instance with a healthy degree of skepticism.  Occasionally, state courts have tried to go one step further than analyzing and rejecting nursing facility arbitration agreements on an ad hoc basis and have announced a per se rule against enforceability of such agreements.  That typically does not end well for those courts.

The relatively recent Marmet decision is a good example of this latter scenario.  There, the West Virginia Supreme Court issued a decision in a consolidated group of cases holding that pre-dispute nursing facility arbitration agreements were void as against public policy under state law  The decision was appealed to the U.S. Supreme Court, which granted certiorari and promptly slapped down the state court.  In a (relatively) scathing per curiam opinion, the Court emphasized:  “As this Court reaffirmed last Term, ‘[w]hen state law prohibits outright the arbitration of a particular type of claim, the analysis is straightforward:  The conflicting rule is displaced by the FAA.’  … That rule resolves these cases.  Since that decision, state courts seem to be somewhat more receptive to honoring and enforcing nursing facility arbitration agreements.

In 2016, however, federal regulators attempted to throw a curveball to the skilled nursing industry.  On September 28, 2016, the Centers for Medicare and Medicaid Systems (“CMS”) announced a new rule ostensibly intended “to make major changes to improve the care and safety of the nearly 1.5 million residents in the more than 15,000 long-term care facilities that participate in the Medicare and Medicaid programs.”  As part of this new rule, which would go into effect on November 28, 2016, CMS banned the use of pre-dispute arbitration agreements by nursing homes on a going-forward basis.  It noted that the rule did not apply to existing arbitration agreements (thus avoiding running afoul of the Federal Arbitration Act), and it specifically allowed nursing facilities and plaintiff-residents to agree to arbitrate after a dispute has arisen.  But the sort of prospective arbitration agreement that is presented to residents and potential residents at the time of admission would be prohibited from now on.  Although the rule technically only applied to nursing homes that accepted Medicare and Medicaid funds, as a practical matter, that included virtually all such facilities.

Needless to say, this was a controversial measure.  And the industry did not take it lying down.  On October 17, 2016, a group of trade organizations and nursing facility operators filed a lawsuit in the U.S. District Court for the Northern District of Mississippi challenged the pre-dispute arbitration rule.  On November 7, 2016, the court ultimately agreed with the challengers and entered an order preliminarily enjoining it.  It held in relevant part that a federal agency regulation effectively banning a certain type of arbitration agreement, even on a prospective-only basis, would be flatly inconsistent with the overarching pro-arbitration policy and purpose embodied by the FAA.  On December 9, 2016, CMS capitulated and sent a memorandum to Medicaid state survey administrators announcing that the rule should not be enforced unless and until the litigation was resolved and the injunction was lifted.  Especially in light of the change in administrations, the ultimate status of the pre-dispute arbitration rule is uncertain at best, and it is currently not being enforced.

So where does that leave nursing facility arbitration agreements?  Are facilities free to include them in admissions packets without fear that they will be unenforceable?  The answer to those questions necessarily is a qualified one.  Pre-dispute nursing home arbitration agreements still are not unenforceable per se, but at the same time, they will be looked upon with varying degrees of skepticism by courts.  As noted above, many post-Marmet state courts seem to have gotten the message that animus towards nursing home arbitration agreements will not be tolerated by the federal judiciary.  But “many” does not mean “all” (or even, necessarily, “most”), and there are still a number of states and jurisdictions in which courts appear likely to continue to go out of their way to find reasons as to why any particular arbitration agreement should not be enforced.

As such, it is crucial that any nursing facility or operator of facilities that wants to institute (or continue to use) an arbitration program go to great lengths to dot every “i” and cross every “t” when offering residents the opportunity to enter into an arbitration agreement.  This includes proactively reviewing the form arbitration agreement currently in use to ensure it complies with state contract law requirements, and training admissions staff so that the avoid typical pitfalls when presenting arbitration agreements to residents or prospective residents to sign (e.g., making sure that the resident has capacity to sign or that there is sufficient documentation for a representative to sign on behalf of that individual, making sure that the agreement is properly witnessed and countersigned, etc.).

Litigation over the arbitrability of a nursing facility dispute can itself be so costly and time-consuming that it removes many of the efficiencies and related advantages of arbitration. As is usually the case, it is best to try to address that potential issue on the front end of things.



Effective November 28, 2016, long-term care facilities that participate in Medicare and Medicaid will no longer be able to enter into “pre-dispute” agreements for binding arbitration with their residents.  The Centers for Medicare & Medicaid Services (CMS) issued the final rule on September 28, 2016, after consideration of extensive comments from key stakeholders in the long-term care community regarding proposed revisions.

Under the rule, a facility can ask a resident or a resident’s representative to enter into an arbitration agreement after a dispute arises.  However, the facility must comply with several requirements, such as ensuring that the agreement provides for the selection of a neutral arbitrator and a venue convenient to both parties.  Further, a resident’s right to remain in the facility cannot be contingent upon entering into the arbitration agreement and the agreement cannot contain language that discourages communications with federal, state or local surveyors and other officials.

As one of the more controversial changes, critics of the new arbitration rule have reacted strongly against the change and have commented that this part of the rule “clearly exceeds” CMS’s statutory authority.  In its response to public comments, CMS explains that the Secretary of Health and Human Services has the authority to administer the program under the Social Security Act by setting general practice parameters for payment under Medicare and Medicaid.  CMS further cites to its authority to promulgate regulations for residents’ health, safety and well-being and states that there is “significant evidence that pre-dispute arbitration agreements have a deleterious impact on the quality of care for Medicare and Medicaid patients.”  Nevertheless, there are several legal bases upon which to challenge the agency’s ability to preclude an arbitration agreement.

While CMS’s comments cite to a resident’s waiver of the right to a jury trial as a major factor considered in its decision to disallow pre-dispute arbitration agreements, the final rule does not expressly preclude jury trial waiver provisions within facility admissions agreements.  Jury waivers may help to address runaway verdicts that have become a concern in negligence cases in past years, while still respecting expressed concerns that arbitration presents undue costs to residents and creates an environment of “secrecy.”  Note that state law may vary on whether such waivers are enforceable.

Also remarkable is CMS’s comment that it will not address waiver of class-action litigation in this rule, but rather reserve the issue for consideration during future rulemaking.

The broad-sweeping final rule also contains several other provisions that directly affect compliance programs, training of nursing staff, updating infection and control programs, and other key requirements that long-term care facilities must comply with in order to participate in the Medicare and Medicaid programs.  It is advisable for long-term care facilities to promptly consult with a knowledgeable healthcare attorney to assess modifications to admissions packets and to otherwise establish the framework necessary to comply with the revised Requirements of Participation.

Developing a New Way to Detect Pressure Ulcers

Hospitals and nursing homes frequently encounter patients and residents with or at risk of developing pressure ulcers.  Although hospitals and nursing homes make great efforts to prevent pressure ulcers from developing or worsening, there is no method to detect early tissue damage before it is visible. However, interesting new research may develop in to a promising way to confront the challenges of pressure ulcer prevention.

Researchers at the University of California—Berkeley and the University of California—San Francisco have developed an automated sensing device to detect pressure ulcers before they are visible. This early warning device could assist treatment of high risk patients. The automatic sensing device—dubbed a “Smart Bandage”—uses electrical currents to detect early tissue damage from pressure ulcers before they are visible and when early intervention is possible. The Smart Bandage has electrodes that are printed on to a piece of plastic that measure the strength of the electrical signals on the skin. Detecting the change in electrical resistance that occurs when a pressure ulcer has started to form but is not yet visible will allow early detection and treatment of pressure ulcers. According to an article recently published in the journal Nature Communications, the device was tested on a rat model and demonstrated the feasibility of a Smart Bandage for early detection of pressure ulcers.

The Smart Bandage is an interesting development for health care facilities that treat patients or residents who are at risk for pressure ulcers. Pressure ulcers are particularly challenging for nursing homes and are the focus of the Centers for Medicare and Medicaid Services’ (CMS) quality measures rating system for nursing homes. Pressure ulcers are also often a focus of patient or resident litigation against a health care facility. The Smart Bandage could greatly assist health care providers in the challenge of preventing and treating pressure ulcers.

Responding to Medical Record Requests: Changes in Colorado Law Affect Health Care Facilities

Last year Colorado, like many other states, passed new legislation that affects patient requests for medical records and the fees that may be charged for copies of the medical records.  House Bill 14-1186, codified at C.R.S. § 25-1-801, with related regulations at 6 CCR 1011-1, Ch. 1, Part 5.  The law changes the fees that may be charged for providing copies of records and adds provisions relating to the delivery of records in electronic format.  These provisions apply to medical records in the custody of a broad range of health care facilities (see C.R.S. § 25-1.5-103(1)) , including hospitals, nursing homes, assisted living residences, and hospice.

Colorado law requires that health care facilities make medical records available for inspection by a current patient or the patient’s personal representative at reasonable times and upon reasonable notice, except for certain records withheld in accordance with 45 § C.F.R. 164.524(a).  A reasonable time for inspection should normally not exceed 24 hours from the date of the request (excluding weekends and holidays) for an inpatient or current resident.  The patient or designated representative may not be charged for inspecting the records.

With regard to a discharged patient or resident, a health care facility must make a copy of the record available or make the record available for inspection within a reasonable time from the date of the signed request, normally not to exceed ten days, excluding weekends and holidays.  However, if the health care provider or designated representative is not available to acknowledge the request, the facility shall inform the patient of the situation and provide the records as soon as possible.  Discharged patients or their representatives cannot be charged for inspecting patient records.

Health care facilities should be aware of certain provisions of Colorado law relating to electronic records and films.  Medical records must be delivered in electronic format if the records are requested in electronic format, they are stored in electronic format, and are readily producible in electronic format.  Finally, a health care facility must release the original film if a licensed health care professional determines that a copy is not sufficient for diagnostic or other treatment purposes.

The amount that may be charged for medical records varies, depending upon the requesting party.  When a patient or a personal representative requests a copy of medical records, the fees are set in accordance with HIPAA.  Under HIPAA, a covered entity may charge a patient or a personal representative a reasonable, cost-based fee for providing a copy of medical records; this fee may encompass the cost of copying (including the cost of supplies for and labor of copying) and postage.  However, health care facilities may charge third parties fees that are established under state law.  Thus, the HIPAA fee limitations do not apply  when records are released under other HIPAA-compliant situations, such as requests that are based on an individual’s authorization.

Colorado law establishes the following reasonable fees that a health care facility may charge a third party.  The fees may not exceed the following:

  • For the first ten pages:  $18.53
  • For the next thirty pages (pages 11 through 40):  85 cents per page
  • Each additional page after page 40 :  57 cents per page (all records except those stored on microfilm) or $1.50 per page (records stored on microfilm)
  • Actual reproduction costs for each copy of a radiograph
  • Certification of medical records, if requested:  $10.00 fee
  • Actual postage and electronic media costs if applicable
  • Applicable taxes

Under certain circumstances, third parties may not be required to pay any fees or a different fee schedule may apply.  If a patient record is requested under the Laura Hershey Disability-Benefit Support Act, C.R.S. §§ 24-30-2201 through 2207, the third party may obtain one free copy of the record for the application process or for an appeal or reapplication when required by the disability benefits administrator.  Where a statute or rule for a state or local government entity establishes maximum rates, these rates prevail.  Finally, the statutory fee schedule does not apply to coroners requesting medical records.

Health care facilities should review their policies on releasing and charging for copies of medical records to ensure that they are in compliance with recent changes in Colorado law.

Balancing the Tension Between Treating an Ebola Patient and Protecting Staff and Other Patients

Well, the Ebola scare is all everyone is talking about.  A colleague brought up an interesting question earlier in the week: What sort of potential liability do health care facilities face from it?

There are lawsuits anticipated from the family of the first victim as well as at least one of the infected health care workers who treated him.  With respect to the first of those, from what I read, the potential lawsuit seems doomed.  With respect to the health care workers, if the treatment protocols were as inconsistent and ineffective as claimed, then they likely will have a better chance of success under OSHA or workers’ comp laws.

HC BLOG_ebolaI’m more interested in what might happen if other patients become sick.  Hospital-acquired infection cases are not novel; they’ve been tried for decades.  The general consensus of plaintiffs’ lawyers is that they are difficult but not impossible to win.  That difficulty only increases with the publication of comprehensive Ebola treatment guidelines by the Centers for Disease Control and Prevention (assuming hospitals follow them, of course).

But “difficult” is not “impossible.”  And, even setting aside liability concerns, hospitals and other health care facilities understandably may be reluctant to expose their health care workers to Ebola patients.  One way to address this concern is to systematically transfer patients to specialized care facilities designed to contain Ebola and similar viruses – and indeed, it appears that the federal government already is going down that road.  But if the crisis grows, there is no guarantee that beds will be available in those bio-containment units, and in any event, a transfer takes time, and it is likely that an Ebola patient will require on-site treatment for hours or days before the patient can be transferred.

That’s the important point to note.  Treatment will be required.  Hospitals cannot just isolate patients and wait – without treating them – until they can be transferred, or they die (if no transfer is available).  If nothing else, as the victim’s family’s potential lawsuit shows, hospitals are at risk of being sued for malpractice if they fail to provide adequate care.  So a facility is going to have to balance the competing obligations of minimizing contact between the Ebola patient and health care workers and providing a sufficient level of care.

What is the proper balance on that score?  I’m afraid I don’t have a good answer, probably because there isn’t one.  A lot of it will have to do with how many new patients present with Ebola, and what their acuity levels are.  But health care facilities need to recognize that it’s a “damned if you do, and damned if you don’t” situation.  If nothing else, it’s probably advisable for hospitals to start thinking now about how they will respond to that unenviable dilemma.

Image courtesy of Flickr by CDC Global