Federal Government Announces New Rule That Abused/Neglected Residents of Nursing Homes Be Allowed Their Right to a Jury Trial
According to the New York Times, on September 28, 2016, the Centers for Medicare and Medicaid Services ("CMS") restored a fundamental right of millions of elderly and/or disabled Americans -- their right to a jury trial. CMS "issued a rule that bars any nursing home that receives federal funding from requiring that its residents resolve any disputes in arbitration, instead of court." Until now, nursing home residents were frequently forced to sign contracts where they agree to compulsory arbitration of all claims--surrendering their right to a jury trial. Just like all consumers with credit card agreements and utility bills--big business has imposed compulsory arbitration clause in the usual consumer-business contracts all of us typically agree to. These arbitration clauses are generally buried in small print on one page of a lengthy consumer contract.
It has long been known that when personal injury claims are forced into arbitration, the plaintiff has a smaller chance of success and, even if successful, arbitrators are less likely than jurors, to award full and fair compensation. The New York Times noted that: "A case involving a 100 year old woman who was found murdered in a nursing home, strangled by her roommate, was initially blocked from court. So was a case brought by the family of a 94 year old woman who died at a nursing home from a head wound." Arbitrators, not jurors decided these cases, and now the Nursing Home industry is howling about this new federal regulation which they fear will reduce their profit margins. They want the federal funding but fear the loss of a huge advantage arbitration brings to big business.
In 1984 the New York State legislature passed General Business Law Section 399-c which prohibits mandatory arbitration clause in consumer contracts for the purchase of goods or services intended for personal use. This law would have prevented nursing homes from taking advantage of its residents who had no option but to sign away their right to a jury trial. However, the U.S. Supreme Court held that the Federal Arbitration Act of 1925, pre-empted any state legislation that sought to preserve the consumer's right to a jury trial. It is quite likely the Nursing Home industry will file suit to challenge this new regulation.