Hawaii’s long-term care ombudsman is lobbying the federal government to take action that better protects the elderly from inadvertently signing away their right to sue a nursing home should a dispute arise during their stay there.

The U.S. Department of Health and Human Services is apparently listening, not just to him but other advocates for the elderly across the country.

In giving up their right to sue, the elderly often acquiesce to a binding arbitration procedure to settle disputes.

“No facility is going to say, ‘If you don’t sign this, we’re not going to admit you.’ But it’s mixed up in the other paperwork and people don’t know what they’re signing.” — John McDermott, long-term care ombudsman

Federal officials had considered not including any provision concerning arbitration agreements in their first major rewrite of nursing home rules since 1991. But after numerous people spoke up, there are now specific requirements in the draft rules, which are available for public comment until Oct. 14.

John McDermott, Hawaii’s long-term care ombudsman, said the proposal doesn’t go nearly far enough. Instead of new limits on when and how arbitration agreements may be used, he wants an outright ban that some states and members of Congress have sought for years.

But Hawaii nursing home administrators said they support arbitration agreements because they resolve disputes faster, cheaper and more effectively than going to court, and made assurances that they don’t force or trick anyone into signing contracts.

In a binding arbitration agreement, clients waive their constitutional right to resolve a dispute in court. Instead, the remedy is arbitration, a process by which a neutral third party investigates the matter and makes a determination.

Critics argue that prospective nursing home residents, many of whom are in an emotionally fragile state, are pressured to sign the agreements without fully understanding it. They say it ends up being less fair than going to court, which allows for appeals, a more robust discovery process and greater transparency.

“No facility is going to say, ‘If you don’t sign this, we’re not going to admit you,’” McDermott said. “But it’s mixed up in the other paperwork and people don’t know what they’re signing.”

Steve Gold, administrator of the 288-bed Hale Nani Rehabiliation and Nursing Center in Honolulu, one of three Avalon nursing homes in Hawaii, has worked in the industry for the past four decades.

He said arbitration ensures that family members’ rights are truly represented throughout the process. He likes to have residents at Hale Nani agree to arbitration, but respects their right to decline. He said less than 10 percent of the residents there have not signed arbitration agreements.

“If you were to hide papers underneath a stack — unfortunately we have a lot of papers that need to be signed — I can see how someone could miss that,” Gold said. “But we have an obligation to explain every piece of paper.”

‘Hidden from Public View’

It’s hard to know how serious of an issue arbitration agreements may be in Hawaii. The state doesn’t know what nursing homes require the agreements, how often arbitration is used or what the results are.

The arbitration process, by its very nature, happens outside the court system, so there are few public records about the individual cases.

“Because arbitration is confidential, if the representatives of neglected seniors wanted to hold these facilities accountable, their stories would be hidden from public view in the arbitration process.” — Beth Davis, attorney

Washington state attorney Beth Davis, who focuses her practice on nursing home litigation, has raised these concerns in legal papers. In one paper, she explains part of the reason why the public didn’t know about 236 deaths due to neglect or abuse in Washington care homes until the Seattle Times uncovered them in 2010.

“The public’s ignorance of this abuse is, in part, due to the fact that many of the long-term care facilities in Washington have mandatory arbitration agreements in their admission contracts,” she said. “Because arbitration is confidential, if the representatives of neglected seniors wanted to hold these facilities accountable, their stories would be hidden from public view in the arbitration process.”

The state Office of Health Care Assurance, which oversees nursing homes in Hawaii, does not track whether nursing homes use arbitration agreements in any form for admissions, Hawaii Department of Health spokeswoman Janice Okubo said.

But the office is aware of the federal concern and the proposed rule, she said, adding that if it is finalized, OHCA will enforce it during its Medicare recertification surveys.

Specific Requirements Proposed

Federal officials have proposed specific requirements if a nursing home asks a resident to sign a binding arbitration agreement.

“We believe that nursing home residents need to be fully aware of the right they are waiving (the right to seek relief in a court for a dispute between the resident and the facility) if a nursing home requests they sign an agreement for binding arbitration,” Centers for Medicare and Medicaid Services officials wrote in releasing the draft rules in July.

The proposed requirements include:

• The nursing home must explain the agreement to the resident in a form and manner that he or she understands
• The resident must acknowledge that they understand the agreement
• Admission to the facility cannot be contingent upon the resident signing the agreement
• The agreement must be entered into voluntarily
• The arbitration must be conducted by a neutral arbitrator in a venue convenient to both parties
• The agreement can’t contain any language that prohibits or discourages the resident or anyone else from communicating with government officials, including inspectors and the ombudsman
• Another individual can sign the agreement for the resident only if allowed by state law and the individual has no interest in the facility

The feds considered prohibiting binding arbitration agreements, but decided that would be more burdensome on long-term care facilities and that residents should have the choice.

Gold said if the federal government prohibited arbitration agreements, the court system would be flooded with cases dealing with minor issues that shouldn’t be tying up a judge’s time.

“I don’t think administratively that our jurisprudence system can handle that kind of volume,” he said.

Some states, including Illinois and New Jersey, have tried to ban mandatory arbitration agreements in nursing home contracts, but courts have struck down those laws, citing federal pre-emption.

U.S. Rep. Hank Johnson Jr. of Georgia has tried for years to pass a law banning arbitration agreements as a condition to enter a nursing facility. His proposed Arbitration Fairness Act died in 2009, 2011 and 2013.

He reintroduced it again in April with 67 Democratic cosponsors, but it’s expected to die again this year. Sen. Al Franken, a Minnesota Democrat, introduced an identical copy of the bill on the Senate side, but it’s not moving forward either.

Imbalance of Power

DHS Secretary Sylvia Burwell and the Centers for Medicare and Medicaid Services Acting Administrator Andrew Slavitt wrote in the draft rules that alternative dispute resolution, which includes arbitration, is favored by the courts and provides both parties — the resident and the nursing home — with advantages.

“Arbitration can result in disputes being resolved faster and in a less burdensome manner for both parties,” they said.

But the officials noted their concern that “the facilities’ superior bargaining power could result in a resident feeling coerced into signing the agreement.”

That’s a concern that University of Hawaii Professor James Pietsch is familiar with. He directs the UH Elder Law Program and said he has come to learn about issues involving arbitration agreements anecdotally.

“If you were to hide papers underneath a stack — unfortunately we have a lot of papers that need to be signed — I can see how someone could miss that. But we have an obligation to explain every piece of paper.” — Steve Gold, Hale Nani Rehabiliation and Nursing Center

He’s talked to distraught family members who have called about a grandparent who was mistreated in a nursing home to the point that they felt entitled to sue for damages, only to learn that an arbitration agreement had been signed and a court remedy was no longer on the table.

“Many people just don’t do anything or give up because the process is just so difficult,” Pietsch said.

In general, he said there’s an imbalance of power between the nursing facility and the person entering it, especially as more nursing homes are owned by big corporations.

“They have all the power of their attorneys and resources against an individual who’s in a nursing facility who has significant health problems and is unable to protect themselves,” he said.

Pietsch said he’s glad the federal government is re-examining the issue.

“There needs to be a better balance in favor of the nursing home resident,” he said.

Gayle Lau, the administrator at Nuuanu Hale, a 75-bed facility in Honolulu, said the draft rules for nursing homes are being discussed as a group by the providers.

“It’s a hot topic nationwide,” she said. “Some of the proposals have far-reaching effects.”

Lau deferred further comment to the Healthcare Association of Hawaii, which is compiling responses to the draft rules that Hawaii nursing homes are sending to the feds.

Andrew Garrett, who she said is heading up that effort, could not be reached for comment this week. He serves as HAH’s vice president of post-acute care and operations.

The public comment period on the proposed reform of requirements for long-term care facilities was initially set to end Sept. 14. The deadline was extended until Oct. 14 in part because the feds specifically asked the public for its input on arbitration agreements and other aspects of the draft rules, and because hospital associations and national industry groups sought additional time.

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