The federal agency that controls more than $1 trillion in Medicare and Medicaid funding has moved to prevent nursing homes from forcing claims of elder abuse, sexual harassment and even wrongful death into the private system of justice known as arbitration.
An agency within the Health and Human Services Department on Wednesday issued a rule that bars any nursing home or assisted-living facility that receives federal funding from requiring that its residents resolve any disputes in arbitration, instead of court.
The rule, which would affect nursing homes with 1.5 million residents, promises to deliver major new protections.
Clauses embedded in the fine print of nursing home admissions contracts have pushed disputes about safety and the quality of care out of public view. The system has helped the nursing home industry reduce its legal costs, but it has stymied the families of nursing home residents from getting justice, even in the case of murder.
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 in Murrysville, Pa., from a head wound. The cases were the subject of a front-page article in the New York Times last November.
"The sad reality is that today too many Americans must choose between forfeiting their legal rights and getting adequate medical care," Senator Patrick Leahy, a Democrat of Vermont, said in a statement on Wednesday.
The nursing home industry reacted strongly against the change. Mark Parkinson, the president and chief executive of the American Health Care Association, a trade group, said in a statement on Wednesday that the change on arbitration "clearly exceeds" the agency's statutory authority and was "wholly unnecessary to protect residents' health and safety."
The new rule on arbitration came after officials in 16 states and the District of Columbia urged the government to cut off funding to nursing homes that use the clauses, arguing that arbitration kept patterns of wrongdoing hidden from prospective residents and their families.
With its decision, the Centers for Medicare and Medicaid Services, an agency under Health and Human Services, has restored a fundamental right of millions of elderly Americans across the country: their day in court.
It is the most significant overhaul of the agency's rules governing federal funding of long-term care facilities in more than two decades.
And the new rule is the latest effort by the Obama administration to rein in arbitration's parallel system of justice that was quietly built over more than a decade.