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28 Congressman Sponsor Bill to Ban Nursing Home Arbitration Clauses

March 12, 2010

Nursing home residents often sign away rights to sue

By Jessica Fargen  |   Boston Herald - March 8, 2010

Many seniors entering nursing homes in Massachusetts are unwittingly signing away their rights to sue the facilities in the event of neglect or bad medical care, and officials in Washington are seeking to ban what they see as a “hidden” practice.

The seniors are being urged to sign contracts that put disputes in the hands of arbitrators. Advocates say vulnerable elderly patients fail to realize they are giving up their rights to bring cases of slipshod treatment before a judge and jury.

“It gives the nursing home carte blanche to abuse these elderly people because they won’t have to answer to it” in court, said Marlene Owens of South Easton, who successfully challenged an arbitration agreement signed by her “delusional” elderly stepfather in 2003.

She is now suing his former nursing home over bad care.

The Boston Sunday Herald reported yesterday that nearly 40 percent of the state’s nursing homes performed significantly below average, according to annual inspections, and that numerous residents suffer abuse and neglect or receive shoddy care. The Bay State nursing home population is about 45,000.

With nursing homes here and nationwide pressing residents to sign the arbitration agreements - often tucked away in thick and complex admission packages - lawmakers including U.S. Rep. Barney Frank (D-Newton) are weighing federal action.

“Most people don’t see it,” Boston attorney Rebecca Benson said of the arbitration agreements.

Bradley M. Henry, a Boston attorney, called the agreements a “nightmarish” form of trickery. “It is virtually stealing the right of trial by jury out of the hands of our most at-risk citizens,” he said.

Family members and residents are emotional at admission time and overwhelmed by paperwork, said Janet Wells, director of public policy at the National Citizens’ Coalition for Nursing Home Reform.

“They may not be aware the agreement is there. They may feel they don’t have a choice but to agree,” Wells said.

Studies show nursing home arbitration dramatically reduces payouts and attorney’s fees in cases where seniors have been wronged.

Payouts decline

The average nursing home claim amount in the United States shrank from $261,000 in 1998 to an estimated $116,000 in 2008, during a period when tort reform and arbitration increased, according to a 2009 Aon Corp. study for the American Health Care Association, which represents 11,000 senior living and rehabilitation centers.

Part of the decline is attributed to the arbitration agreements.

“Settlements are less costly,” with arbitration, said Chris Coleianne, an actuary with Aon.

A 2009 Aon analysis of data from 2004 to 2008, based on responses from 11 providers, representing about 5 percent of nursing home beds in the country, found:

The average payment in arbitrated cases was $91,000, compared to $138,000 in nonarbitrated cases, about 35 percent less.

The nursing homes’ legal costs were about $33,000, compared to $56,000 in nonarbitrated cases, about 41 percent less.

Patricia Tabloski, associate dean for graduate programs at the Connell School of Nursing at Boston College, said on the surface the agreements seem like a good idea, but she expressed caution.

“Sometimes there is gross negligence or there is something considered malpractice and then the person has really signed their rights away,” she said.

Nursing homes began offering arbitration agreements about nine years ago to rein in high jury awards and legal fees, and so far it’s working, said Susan Feeney, vice president of public affairs for the American Health Care Association. Payouts may be lower, but families pay a lot less in legal fees with arbitration, she said.

Arbitration “doesn’t affect the amount that truly ends up with the family, which is where these funds should go,” she said.

But Frank, who supports federal legislation to ban the agreements in nursing homes, said they have no place in the elder-care facilities.

“With older people you ought to be especially careful. This principle is a bad one,” said Frank.

He said that though arbitration can be a good way to handle disputes, it should be a choice.

“You shouldn’t have to sign one in advance in these one-sided contracts,” he said.

Frank and U.S. Rep. William Delahunt (D-Quincy) are among 28 sponsors of the legislation, which was filed by California Rep. Linda Sanchez. It is pending in front of a House subcommitee.

The nursing home industry has mobilized against the bill.

W. Scott Plumb, senior vice president at the Massachusetts Senior Care Association, which represents about 400 nursing homes, defended the use of the agreements and said the nursing home industry has been singled out.

“They are quicker, less costly and they are very attractive alternatives to expensive, time-consuming litigation,” Plumb said.

Arlene Germain, president of Massachusetts Advocates for Nursing Home Reform, said the agreements capitalize on vulnerable seniors.

“They should not lose the ability to hold nursing homes accountable in the event of abuse or neglect by signing away their constitutional right to have their cases heard by a judge and jury,” she said.