August 7, 2017
Thomas E. Price Secretary
Department of Health and Human Services
Seema Verma Administrator
Centers for Medicare & Medicaid Services
Department of Health and Human Services
Room 445-G, Hubert H. Humphrey Building
200 Independence Ave., S.W.
Washington, D.C. 20201
Re: Medicare and Medicaid Programs; Revision of Requirements for Long-Term Care Facilities: Arbitration Agreements , 82 Fed. Reg. 26649 (Jun. 8, 2017)
Submitted electronically: http://www.regulation.gov
Dear Dr. Price, Ms. Verma, and CMS Colleagues:
The Center for Medicare Advocacy (Center) is a national, private, non-profit law organization, founded in 1986, that provides education, analysis, advocacy, and legal assistance to assist people nationwide, primarily the elderly and people with disabilities, to obtain necessary health care, therapy, and Medicare. The Center focuses on the needs of Medicare beneficiaries , people with chronic conditions, and those in need of long-term care and provides training regarding Medicare and health care rights throughout the country. It advocates on behalf of beneficiaries in administrative and legislative forums, and serves as legal counsel in litigation of importance to Medicare beneficiaries and others seeking health coverage. These comments are based on our experiences talking with and representing hundreds of Medicare beneficiaries and their families who have been caught in observation status.
The Center strongly opposes the proposal to reverse final regulations that were issued in 2016 after a lengthy public comment process and, now, as proposed , not only to allow nursing facilities to ask residents or their representatives to enter into agreements for binding arbitration before any dispute even arises, but also to allow facilities to require residents to sign such agreements as a condition of admission. We urge you to withdraw the proposed rule and to retain the final rule prohibiting pre-dispute arbitration. The final rule was based on evidence that the proposed rule does not address. Moreover the proposed rule does not identify or cite any new evidence that justifies such a complete reversal of policy and undermining of residents' rights.
The proposed rule represents a giant step backwards. It requires residents and their families to choose: either waive their rights to sue on any dispute that might arise at any time during their stay (or that caused their death) or be denied admission.
By authorizing mandatory pre-dispute arbitration, the proposed regulation sends entirely the wrong message to nursing homes and nursing home residents. Nursing homes will quickly institute policies requiring arbitration agreements from all incoming residents. The rule will likely be seen as a green light to require arbitration agreements very broadly. Existing residents will no doubt receive the message and feel the pressure: sign an arbitration agreement or else.
- The final rule prohibiting mandatory pre-dispute arbitration agreements was carefully drafted, based on overwhelming evidence, and accurately reflects the Nursing Home Reform Law's requirement that the Secretary issue rules that protect residents' health, safety, welfare, and rights
The proposed Requirements of Participation, which included discussion of arbitration agreements, were subject to notice and comment rulemaking.1 In response to public requests, the comment period was extended. The Centers for Medicare & Medicaid Services (CMS) received more than 9800 public comments.2 Members of the public had ample time to comment on the proposed rules and did so.
The preamble to the final rule includes a lengthy discussion of the reasons that led CMS to prohibit pre-dispute mandatory arbitration contracts.3 CMS relied on literature review, review of court decisions involving arbitration and nursing facilities, and public comments it received on the proposed rules. In its careful and measured response to the issue, CMS did not prohibit post dispute arbitration agreements or invalidate existing pre-dispute arbitration agreements. It only prohibited pre-dispute arbitration contracts going forward.
In the final rule, CMS first acknowledged that the nursing home industry urged the agency not to prohibit pre-dispute mandatory arbitration agreements. However, CMS reported that commenters other than the nursing home industry – "members of the public, advocates, and members of the legal community" – predominantly supported a firm prohibition. 4 In addition, 34 Senators, three Representatives, 16 state attorneys general, the American Bar Association, and the American Arbitration Association, among others, all endorsed a prohibition against pre-dispute arbitration contracts.5
The final rule summarized the multiple analyses of arbitration in long-term care facilities that it reviewed that documented
the unequal bargaining power between the resident and the LTC facilities; inadequate explanations of the arbitration agreement; the inappropriateness of presenting the agreement upon admission, an extremely stressful time for the residents and their families; negative incentives on staffing and care as a result of not having the threat of a substantial jury verdict for sub-standard care; and the unfairness of the arbitration process for the resident. 6
From its careful review of this vast body of evidence, CMS concluded that mandatory pre-dispute arbitration clauses have a detrimental effect on patient safety7 and that compared to litigation, arbitration, as a forum for dispute resolution, limits discovery, limits grounds for appeal, is secretive, and does not make decisions publicly available. 8
In light of this overwhelming evidence and public comments, CMS prohibited mandatory pre dispute arbitration agreements. The prohibition implements the statutory directive from the 1987 Nursing Home Reform Law to promulgate rules to protect residents' health, safety, welfare, and rights.9
- The proposed rule reverses the carefully considered policy without evidence
The preamble to the proposed rule does not set out any new facts or studies that support this complete reversal of carefully considered and measured policy. Without citing or even identifying any new evidence or any previously-submitted evidence that supports its proposal, CMS simply presents its conclusion that arbitration has advantages for residents as well as for nursing facilities. Again, without citing any evidence (either new or formerly submitted), CMS argues that arbitration can be less expensive, quicker, and less adversarial than litigation. Most significantly, CMS concludes that the 2016 final rule underestimated the financial burdens of litigation on nursing facilities. 10
CMS cannot reverse carefully considered policy decisions on such skimpy or non-existent evidence. Motor Vehicle Mfrs. Ass'n of the US. v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 43 (1983).
The Center endorses the comments submitted by the National Consumer Voice for Quality Long Term Care, California Advocates for Nursing Home Reform, and the Long Term Care Community Council.
Thank you for the opportunity to submit comments.
Toby S. Edelman
Senior Policy Attorney
1. 180 Fed. Reg. 42168 (Jul. 16, 2015).
2. 81 Fed. Reg. 68688, 68692 (Oct. 4, 2016).
3. 81 Fed. Reg. 68688, 68790-68800.
4. 81 Fed. Reg. 68688, 68790.
5. 81 Fed. Reg. 68688, 68790, 68792.
6. 81 Fed. Reg. 68688, 68793.
7. 81 Fed. Reg. 68688, 68793.
8. 81 Fed. Reg. 68688, 68794.
9. 42 U.S.C. §1395i-3(f)(l ), 1396r(f)( l ), Medicare and Medicaid, respectively.
10. 82 Fed. Reg. 26649, 26650-26651 (Jun. 8, 2017).