On Monday the American Health Care Association, Mississippi Health Care Association and several nursing homes sued the federal government in federal court in Oxford. The suit challenges the recent ban on pre-dispute arbitration provisions in nursing home admission agreements. I wrote about the ban in this post.

Here is the Complaint.

This is a real issue and the nursing industry deserves its day in Court. Unfortunately, the Complaint is filled with statements that will make a lot of people roll their eyes.

  • the ban on arbitration will result in the siphoning of resources toward litigation costs and away from resident care (para. 2);
  • for residents and their families, arbitration is an equally fair–yet far simpler and less costly–means of seeking redress as compared to the complicated and slow-moving court system (para. 3);
  • facilities pass on the cost savings to their residents (para. 3);
  • these benefits can be realized only when parties are free to enter into arbitration agreements before disputes arise (para. 3);
  • lawyers talk their clients out of agreeing to arbitration after a dispute arises because lawyers are more comfortable in court and convince their clients to litigate in court (para. 3);
  • arbitration takes only months to resolve (para. 69);
  • arbitration procedure is simpler and allows individuals to proceed without a lawyer (para. 70);
  • without arbitration, residents will be priced out of the judicial system (para. 70);
  • the increase in the cost of dispute resolution will cause an increase in insurance premiums (para. 71) [many institutions carry no insurance];
  • the increased cost of services will be a financial burden on the residents (para. 72); and
  • arbitration has been repeatedly shown to be fair to both sides and a preferable alternative to court proceedings (para. 75).

John Maxey locally and Mayer Brown out of D.C. represent the industry.

My Take:

One of the things people hate about the nursing home industry is the rampant dishonesty. These statements are ridiculous. It would be embarrassing for an attorney to try to defend them in court before a hot bench.

Nursing homes can’t just reduce resident care. They have to provide sufficient care to meet the residents’ needs. There are minimum staffing levels. Nursing homes that are worried about arbitration/lawsuits staff at the minimum levels. They send employees home if the resident count drops. They don’t provide more care. This is about profits–not resident care.

Arbitration is less fair, less simple and more expensive than litigation. How is it less costly for the resident when she has to pay the arbitrator? Claiming that arbitration is less expensive than litigation is the biggest lie arbitration proponents make.

The so called benefits of arbitration can’t ‘only’ be realized if the agreement is made pre-admission and pre-suit. That’s just stupid. If it was so great people would agree when the dispute arose. Also, saying lawyers are more comfortable in court is disingenuous. If arbitration is so fast, cheap and simple that residents don’t need lawyers how could it be so hard on lawyers to arbitrate?

Months to resolve?  Ha ha ha ha ha! At least they have a sense of humor.

Residents don’t need lawyers in arbitration? How do they get the experts lined up? They don’t explain. A resident/ family who tried to handle their case themselves would get steamrolled.

Without arbitration residents are priced out of the judicial system? Actually, the reverse is true.

Insurance rates will rise? They don’t carry insurance.

Increase cost of services?  For what exactly?

Arbitration shown to be fair [to nursing homes] and preferable to court [for nursing homes]? Remember the National Arbitration Forum, which was the go-to arbitration service for nursing homes? You can read about it here and here. 

They could have drafted a Complaint making the same legal claims and left out the nonsense. Judges know that these assertions are not true. The industry does not have to prove these allegations to win. It just makes them look sleazy.

An intellectually honest argument would be that under the FAA, pre-dispute arbitration clauses should be legally enforceable. Too bad if you don’t like it. Nursing home operators love it and are free to jam it in their admission agreements as long as the FAA applies.

I hope that whoever represents the government uses these allegations as a basis to conduct extensive discovery on these claims. Evidence would show that the statements that are not totally untrue are really misleading.

  • Richard

    That’s one of the most bloviated complaints I have ever read. I guess the fine folks at Mayer Brown never bothered to read Rule 8.

  • Terminator

    in my 35 years of practice, I participated in one arbitration. it was about a stockbroker making excessive trades to churn fees for his cocaine habit. it was a complete joke, a kangaroo court rigged for the investment company and broker.

    • PhilipThomas

      Those FINRA arbitrations with industry insiders as the arbitrators have a really bad reputation as far as fairness goes. Supposedly FINRA is trying to make it a little less one-sided. Not fair mind you–just less unfair.

  • Philip, a great many of the complaint’s claims about arbitration are pretty much lifted from Supreme Court decisions. The SCOTUS has been crazy in love with arbitration for 20+years now.

    I’m puzzled why this got filed in MS, and why in N.D. Miss. – did no one tell Mayer Brown that the N.D. judges run a bit more plaintiff-friendly? Or do they just not care, because this is going to the 5th Circuit and the Supreme Court regardless?

    • PhilipThomas

      I’m not offended by the contractual arguments for arbitration. I don’t agree with them, but they’re real arguments. The policy arguments, on the other hand, are baloney.

      When I first saw the filing I thought maybe they were filing these all over. But with a Texas nursing home as one of the plaintiffs that seems wrong. I guess they wanted 5th Circuit. But don’t know why here rather than Texas or Louisiana. N.D. is a little more understandable. It could get, uh, bogged down in the S.D.

      • Avoiding Wingate makes sense, I guess.

        My point about the policy arguments is just that, right or wrong (& permit me to doubt), they’ve been embraced by the federal courts.