Mandatory Arbitration Clauses to Remain for Now

Posted On: December 6, 2016 under

A Mississippi federal judge recently ruled that the prohibition of arbitration clauses in nursing home agreements, put into law in September of this year, cannot be enforced. Due to go into effect in stages starting on November 28, a major part of the new law would have prevented nursing homes from requiring residents to sign clauses agreeing to arbitration rather than trials by jury if ever a dispute arose. Proponents of the law say that it will prevent abuses in nursing homes and residential care facilities by allowing residents and their families to sue and hold the homes and facilities accountable if residents are injured, mistreated, or killed while living there.

The goal is to bring transparency to the process of prosecuting negligent or criminal activities at these locations; when complaints are addressed through arbitration, often the details of the settlement are kept private so that the public never even know the dispute occurred. The lack of public scrutiny can allow unsafe or even criminal conditions to go unnoticed and thus continue.

However, many nursing homes themselves and the industry lobby groups in the American Health Care Association (AHCA) opposed this new law because they claim that it was put into place by two federal legislators who don’t have the authority to make such decisions. Judge Michael Mills sided with them, saying that forced arbitration should be handled through congressional action rather than a law enforcing a ban.

The future of forced arbitration clauses is now uncertain as it could take up to two years or even longer resolve the case, although appeals against Mills’s decision can be filed immediately. Although this victory for the AHCA may be only temporary, it is likely to feel almost permanent to those in the midst of the fight.