So Sue Me! Nursing Home Arbitration Clauses
The Nursing Home Abuse Podcast is dedicated to providing news and information for families whose loved ones have been injured in a nursing home. Here are your hosts, Georgia attorneys Rob Schenk and Will Smith.
Smith: I’m really happy to have you guys after the coveted lunch spot, because I know the last thing anybody wants to do is go to their hotel room and take a nap after eating lunch. But hopefully, we’ll have enough time for questions and we’ll also have enough time to maybe get out and get some coffee.
So my name is Will Smith. I’m a trial attorney from Atlanta, Georgia, and this is my law partner, Rob Schenk. And we have a nursing home abuse podcast. We’re frequent visitors to the Consumer Voice Conference, and we’ve had many of the individuals that you know, Richard Mollot, Robin Grant, on the podcast, and so we love coming here and getting to know you guys. I’m going to jump right into this.
So the objective of this is – is there anybody who’s never heard of arbitration in their life? Right? Most of you kind of have an idea of what it is. It’s kind of a hot button issue. What are you telling? Did I hit myself in the face? Oh, back up. I’ve got a loud mouth, I’m sorry. Is it too loud already? It’d be too loud probably if I didn’t have it up to my face. I can barely hear my own self and I’m constantly being told by my staff, “Will, you’ve got to take it down a notch.”
All right, so the objective is just to give you a 50,000-foot view. And the reason that we want to do this is because the vast majority of you are long-term care ombudsmen. You guys are the backbone of advocacy for the long-term care community. You really are because you deal with every single issue that there is. We deal with very narrow, limited issues, but it’s important that you guys know this kind of stuff, because you’re the ones who go back to your state and you talk to your state legislature, or you come, like last year, we went to the Hill after Consumer Voice and talked to our representative. It’s important that you guys know this stuff so when you guys go and talk to them, you can tell them, which I hope you have this same perspective that I do, that arbitration agreements are bad, right?
And so you knew we’d have a disclaimer. I’ll make it real quick. None of this is legal advice. I’m not your attorney so if any of you go out and murder somebody after this because you’re tired, I’m not your attorney, all right?
What is nursing home arbitration?
So the main thing – we’re going to look at a couple of things. What is arbitration? Does it have any benefits? What are the problems with it? What’s the current CMS rule on arbitration clauses? And what rights do residents have with arbitration clauses?
So in order to talk about arbitration, we have to talk about what a tort is. Does anybody know what this is? It’s a tort. It’s my favorite type of tort, but it’s not the type of tort that we’re talking about. We’re talking about tort reform. We’re talking about personal injury law. Nursing home cases in Georgia and in the vast majority of the United States are medical malpractice cases against a healthcare facility.
What does ‘negligence’ mean?
So in a tort, it’s a civil wrong that’s committed by an individual against another, so an auto accident, for example, is a tort. A doctor leaves a syringe inside you, that’s a tort, right? A nursing home doesn’t turn somebody so Ms. Johnson gets a stage four bedsore that turns septic and she dies, that’s a tort.
It’s not a criminal wrong. It may involve crimes. It’s not a breach of contract, and there are different kinds. There’s intentional, there’s privacy, negligence, products liability. You guys are probably familiar with this from watching television, and some of you have legal backgrounds so you know.
We’re going to be mainly looking at negligence, which doesn’t deal with intent, but a lot of times, abuse can go hand in hand with negligence, and it does. So negligence, in a case of negligence, there is a duty that is owed to somebody. There’s a breach of that duty, so they failed to meet the standard, and that caused damages. The easiest way to remember it is ABCD – you have to be accountable to somebody. You breach that accountability and that caused damages.
Now when it comes to duty on nursing homes, you guys, I would imagine, are intimately familiar with where these regulations come from. A lot of times, they come from the Centers of Medicare and Medicaid Services. A lot of times, they come from – am I getting turned down? I’m a former Marine and I yell a lot. That’s just the way I do.
How do CMS Regulations relate to nursing home negligence?
All right, so you guys are familiar with all the regulations, the F-tags, for example? All the F-tags are, are a list of things the nursing home has to do. Right? The ones that we primarily deal with as attorneys, as personal injury attorneys, we deal with negligence, exploitation. We deal with quality of care. You guys deal with all kinds of other areas that have to do. Now these changed recently – for what reason, I don’t know, just to confuse everybody, but this is one of the areas that we get our duty from.
Now we also get it from case law as well. So even if we didn’t have the 1987 act that gave us regulations, doctors and nurses still have to abide by certain standards of care. So even if we didn’t have those regulations, somebody has a stage four bedsore and you’re a doctor and you’re a nurse and you go, “I’m sure it’ll heal on its own,” you’re probably going to commit negligence.
All right. Civil monetary penalties – a lot of times nursing homes will get these. You guys probably know way more about these than I do, but it’s just – that’s one of the that they get punished. Now the way that we in a way punish nursing homes comes from you, the Seventh Amendment. The Seventh Amendment of the federal Constitution says that if any case or controversy exceeds $20 – it’s never been updated, I don’t know if it’s ever going to be updated, but it’s any case at all – you have a right to a trial by jury. And that means that you have the right to have John Cusack and Elliott Guzman – you have the right – it’s the first one I found and later I looked at it again and I was like, “Hey, that’s John Cusack.” But you have a right to a jury trial, right?
Why is a jury trial better than an arbitration panel?
The reason a jury trial’s important is because all of these people belong to the public. So there are six people, there are 12 people, and they are members of the public. They get to hear what the nursing home did. They get to go back to the loved ones and say, “Did you hear about New Horizons or New Beginnings?” – they’re always like New Horizons or New Beginning, right? “Did you hear what they did? Ms. Johnson got a stage four bedsore and the woman died. I don’t want to send my mother there.” And that’s a big deal to these nursing homes. And that is the reason jury trials, one of the reasons that jury trials are so important, because you get to not only have these guys decide whether or not damages are paid out, which oftentimes they are, but also these guys get to hear what happened.
So first let me explain a couple of different -ations, all right? Litigation is when you file a lawsuit, you start the process of civil litigation. Civil litigation is just the procedural process by which you take to get to a jury. In real life, it takes years. I didn’t learn that until after law school. If you watch television, if you watch Law and Order, it’s always let’s arrest this guy. A week later, they’re in court talking to the jury. That doesn’t happen. I just had a jury trial in January that took five years to get in front of a jury. So it takes a long time. We like litigation. Litigation is a good -ation. Litigation is a lawsuit and it ends with a jury trial.
What is the difference between mediation and arbitration?
Now mediation and arbitration have a lot of similarities. They are both alternative dispute resolutions. The difference is mediation is, “Hey, let’s try to work this out before we go to trial.” Nothing wrong with that. In every single litigation, most of the time, a judge is going to say, “Have you guys tried mediation?” So mediation is not a problem.
Arbitration is “Let’s work this out instead of trial,” and this looks like a young Robert de Niro here looking like he’s trying to convince two people to do something. This is mediation – just the plaintiff and a defendant, and the mediator’s like, “Hey guys, Ms. Johnson got a bedsore. She passed away. What can’t they do to make this better?” And if the family says, “Nothing, screw you, I want six people including John Cusack and Elliott Guzman to hear about this so they can tell everybody back home, then that’s fine. That’s what you do.”
And that’s the main difference between arbitration versus a jury trial. In arbitration, an arbitrator listens to both sides. In a jury trial, what you’re given to is that jury, those people in that community, so it’s wherever the nursing home is located, most likely. It’s going to be six or 12 people.
What are some examples of arbitration?
Now the easiest way to explain what an arbitration is, is it’s the People’s Court. Legit, that’s what arbitration is. Every single one of those daytime talk shows, People’s Court, Judge Judy, we had Judge Hatchett down in Georgia, all of those cases are literally arbitration. They aren’t like arbitrations. They are 100 percent arbitrations. When Doug Llewelyn tells people the litigants are real, they have real cases pending in a California municipal court and they’ve agreed to dismiss the court cases to have their dispute settled here in our court, I have memorized that in childhood. But what he’s saying is they have agreed to arbitration. So Judge Walker doesn’t have to wear the suit. Rusty, I hate to break it to you, is not a real bailiff. I know – well he was in a previous life, but he shouldn’t have – well this was in the ‘80s, so he did have a gun, but he shouldn’t have a gun in his place, because arbitration, really, a lot of times, the plaintiff will sit over here, the defendant will sit here in a room like this, and it’ll be some guy who looks like me sitting down going, “All right, so what happened? Ms. Johnson, she passed away. What do you have to say?” That’s literally what it is and it can be as fast and as slow as he wants it to. And at the end of it, he goes, “All right, here’s my decision.”
Are arbitration proceedings public?
The end result is, and this is what I want to keep stressing, you don’t have this. This is the biggest deal, because not only did these people make the decision about what Ms. Johnson’s life is worth since she died of a bedsore, but they know what a place for Mom, a New Beginning, a New Horizon, did. When you have arbitration, it’s secret. Oftentimes, probably 99 percent of the time, if not even 99.999 percent of the time, no one ever finds out what happens in arbitration. So these people don’t go home and say to their neighbor at a barbecue, “Oh, don’t put your Mom in that place. It’s shitty. It’s horrible. They don’t have enough staff. It’s terrible.
This is an example of what you see. It’s any action, dispute, claim or controversy will be settled by binding arbitration. What you’ll hear a lot when CMS talks about this is predispute binding arbitration. What that means is before something happens, you agree without knowing what it is – could be anything, literally could be anything – the administrator could come in with a flamethrower and set the entire place on fire, and it doesn’t matter. You’ve agreed ahead of time to arbitration.
Now here’s another thing that realizes that everybody in this room, and I’m including the attorneys that are in here right now, at some point, you’ve signed that cell phone contract that has arbitration, and I will tell you, even as an attorney, I don’t have time to read all that and I’m too tired, but what am I going to do? Yeah, I’ve got to get my iPhone.
All right, but the end of the day, I take a look back at this – I can’t remember this guy’s name. Anybody remember his name? What is this movie? “Runaway Jury?” Yeah, I thought so. All right, at the end of the day, what you’re agreeing to, what is so important is that the Constitution of the United States and every single state constitution has a clause that says you have a right to a jury trial. In Georgia, it’s Article 1, Section 3, Paragraph 11. In your state, it’s somewhere. In the federal government, it’s the Seventh Amendment. It’s set in stone. It’s inalienable. It’s not even litigated that much. That’s why it’s still $20 – it hasn’t been updated for over 200 years. But this is an important right and you’re giving it up.
So to get to the history of this, and I didn’t print this off because I don’t hate the environment, but it’s on the website of the Consumer Voice website, there’s a paper on there that we’ve written that has a more in-depth analysis of the history of the arbitration and CMS. When you’re by yourself, go to the website, read it or you can print it off, whatever you want to do.
What is the history of arbitration?
But in 2003, under George Bush, CMS came out and addressed arbitration and that was their perspective was, look, we don’t like arbitration, all right, because the resident gives up his or her right to sue, and that’s a big deal. However, we’re going to stay out of it for now, because we believe that the right to enter arbitration should be between the resident and the nursing home.
Now as it relates to Medicaid, we’re going to let the states tackle that one – and that’s been an important issue because traditionally, states don’t like arbitration agreements. They really don’t.
Now in 2015, new regulations came out and Consumer Voice and LTCCC, you guys know Nursing Home 411 with Richard Mollot, if you don’t know that website, you really need to go check out Richard’s website because it has a ton of useful information on it. But Richard’s LTCCC, the American Bar Association, the AAJ, all these consumer advocacy groups including certain attorneys general of different states commented to CMS about arbitration, because at first CMS was just going to make them more transparent. They got 10,000 different comments – 1,000 of those were directly related to arbitration, and most of them said, “Get rid of it. Get rid of it completely. You guys are the ones that give money to these places. Under the Social Security Act, you have the power to prohibit them.”
So in September of 2016, CMS issued a final rule and said, “All right, here is what we’re going to do. No more arbitration agreements. If you take money from us, so it doesn’t apply to certain assisted-living facilities, if you take Medicare, if you take Medicaid, you’re not going to be able to do this.”
The nursing home industry wants arbitration agreements
They issued it and then immediately, the American Healthcare Association fought back. You guys may have heard about this case. Sylvia Burwell was the Secretary of Health and Human Services at the time, and so what happened with this so everybody is very clear is that the healthcare industry, the American Healthcare Association are the Captain Planet bad guys of the long-term care industry. I mean they really are, right? I can’t tell you how many times I’ve gone to visit a loved one or a family of a resident of a nursing home and I see this on the outside of it, this sticker, and I go, “Oh, here we go again.”
But these guys sued a preliminary injunction, right? In other words, they just sued in federal court in Mississippi to ask the court to stop the implementation of this rule. Now the Mississippi court allowed it, meaning for preliminary injunction, the basic standard is, “Are you likely to succeed on the merits?” They allowed it. But it never went up to the appeals court.
But at the same time, there was another case that was going to the Supreme Court, Kindred Nursing folks. If you hear someone talking about that one, all that has to do is whether or not a general power of attorney is strong enough to waive a Seventh Amendment right.
So the reason why I bring these up is I have talked with lawmakers before and they seem to be very confused about what these cases are, because they’ll tell me, “Well didn’t the Supreme Court already say you can ban arbitration agreements?” No, they didn’t say that. This was in the federal district of Mississippi, which does not make the ultimate law in America. The Supreme Court does. Thank God Mississippi doesn’t. And hey, I’m from the South, so I know.
But this other one that was in the Supreme Court, all they said was, “Look, we don’t hold any other inalienable right to the same standard that you guys in Kentucky are holding the right to waive the Seventh Amendment.” So a general power of attorney is sufficient to waive the Seventh Amendment. So that’s a big deal. Make sure that family members understand that.
Arbitration is not a right. Civil jury trials are protected by the Constitution.
What will happen a lot of times, and I’m thinking you guys probably see this, is the nursing home and the people – and look, I’ve worked in a nursing home for eight years. I have the most love for people who do it, but sometimes people who work in the admissions office are not really that concerned about their jobs or they’re not really well trained. It doesn’t look like I’m offending any of you talking about it. But they’ll have anybody sign their mother and father in. A child could walk in with their grandmother and it’s, “Here, have your grandmother.” It doesn’t matter. “Medicare? Medicaid? Yeah, give it to us.”
And sometimes you’ll have someone like, “Well I have a power of attorney,” and it was the case, even in Georgia, that a lot of state courts are saying the Seventh Amendment is way too important. A general power of attorney is so you can go to Bank of America and go, “Hey look, how much money does my mom have in her account? She’s in a nursing home. I need to help her.” That’s what we all expected it to be. Nobody thought it would be, “Oh, I have the power to waive her constitutional right to a jury trial.” But the Supreme Court has said that you do.
Now so that is a separate issue. That’s the reason I bring it up. Don’t let anybody tell you, “Well the Supreme Court has decided on this,” because this is not the Supreme Court. Now what happened with this case is in January of 2017, Sylvia Burwell appealed it to the Fifth Circuit Court of Appeals, right, and then something happened. I’m not really sure what it was, but CMS all of a sudden just had a change of heart. I don’t know what they did.
I don’t know if any of you were here last year, but did you see Robin had a come to Jesus meeting with the CMS people? Because at that time, with the new administration, like it or not, and Tom Price from Georgia has been the head of Health and Human Services, they’ve declined to continue the appeal for arbitration.
So where are we now? The main thing I want you to take away from this is you’re back in your home states and you’re talking to lawmakers, and a lot of them for some reason don’t know the law and don’t know what happened, they may tell you things that I’ve heard like, “Well the Supreme Court’s already decided that you can have arbitration agreements.” No, that’s not the same thing. The Supreme Court decided an issue of general powers of attorney, and the other case, dead in its tracks. It never went up there.
All right, so what we are going to probably see though, and I think this has a good chance of becoming a rule – now whether that rule actually gets enforced, who knows, like they’re not even enforcing the rules that they have now, but there’s a very good chance that – I mean, it’s true. There’s a very good chance that this is going to develop into an actual rule, and this is good. It’s not the best, but at least the agreements have to be in plain language, which is not a huge problem now, but the agreement must be explained to a resident. They must acknowledge they understand it. They can’t say anything like, “You’re not going to talk to any ombudsmen,” or anything like that. And there’s got to be a sign up that says, “Hey, we use arbitration agreements.”
So these are good things in theory. Whether they actually take place in practice, I have no idea because like I said, what ends up happening is these people go – and you’ve seen these admissions packages – you sign it and go, “Oh, what’s this?” “Just sign it. Just sign it. We need your note here. There you go.” Whether or not they actually stop and go, “Hey, I want to make sure you understand something here, that if we kill your mom, you agree that you’re not going to be able to sue us, right?” I seriously doubt that that’s going to happen. So the good, the bad, the ugly.
What is the status of arbitration in nursing homes now?
Smith: No, the CMS rule was struck down by the Mississippi court. It wasn’t taken up to the Fifth Circuit Court of Appeals, but it’s not being enforced and it’s going to be eradicated by a new rule. So there technically is a rule on the book from 2016 that you will not find this administration enforcing at all. So it might as well be a dead rule, like the rules that you see that say, “Hey, you can’t tie up a horse on Thursday,” in law, it doesn’t do anything because it has no effect whatsoever. So the current rule is you can’t have them. The current administration won’t enforce it and it’s going to be taken out completely. Everybody on the same sheet of music now?
All right, so I want to talk about why we’re talking about these and why I don’t like them, okay? So what nursing homes say is that it’s good for the resident, because you’ll remember me talking about civil litigation, right? It takes years to get to a jury trial, and more often than not, the people I’m representing don’t have years and years and years. A lot of times they’ve already passed and their families want to move on. That’s understandable. So this is actually not a bad argument. Arbitration is typically a lot quicker.
However, you’ve got to weigh that with the bad. Not only are the awards in arbitration up to 30 percent less or more, again, you don’t have these people listening to and telling other people about the nursing home, and that is the biggest issue because it’s already hard enough, and I know when I’m preaching to the choir – it’s already hard enough to get them to do what they’re supposed to do. If they don’t have an incentive of, “Uh guys, Ms. Johnson passed away because she got sepsis from a bedsore that she shouldn’t have gotten. Maybe we need to hire more people,” all they do now is factor it into the cost of business. They go, “All right, well we can have fewer CNAs and fewer charge nurses. It doesn’t matter because it’s going to take so long to get to a trial that most people aren’t going to wait until we get to a verdict.”
As a matter of fact, in Georgia, in the past 20 years, there have been maybe 10 or 15 jury verdicts on nursing home cases. Let me explain to you how insane that is. In 20 years, there have probably been over 10,000 auto accident verdicts. Why that is, I don’t know, but it’s already very little. If you’re a nursing home and you know that if you screw up and kill Ms. Johnson because you didn’t have enough staff and you end up paying a million dollars, you’re going to probably say, “Economically, this is a bad idea,” and you’re going to hire more staff. So it’s incentive for them.
The other – and I was talking about this with somebody recently, what a tragedy this is, is that you have horrible things going on in nursing homes like rape. That is beyond comprehension why that is a problem in a nursing home. But when you have rape, you have guys like this who I don’t mind posting up here, Trent Tolbert – he pays himself 36,000 a month at New Beginnings – I didn’t just make that name up. But this is the insanity of it, is that a guy like this is making 36,000 a month. He doesn’t have enough staff. They keep getting shut down and hit with lawsuits, right? This guy doesn’t need any more incentive to try to be greedy. Pigs are cute, hogs get slaughtered. If there’s no way to slaughter a hog, they just keep getting fatter. And that’s what happens with guys like this. So that’s why these things are important.