[House Hearing, 110 Congress]
[From the U.S. Government Printing Office]
FAIRNESS IN NURSING HOME
ARBITRATION ACT OF 2008
COMMERCIAL AND ADMINISTRATIVE LAW
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
JUNE 10, 2008
Serial No. 110-182
Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://judiciary.house.gov
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COMMITTEE ON THE JUDICIARY
JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California LAMAR SMITH, Texas
RICK BOUCHER, Virginia F. JAMES SENSENBRENNER, Jr.,
JERROLD NADLER, New York Wisconsin
ROBERT C. ``BOBBY'' SCOTT, Virginia HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina ELTON GALLEGLY, California
ZOE LOFGREN, California BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas STEVE CHABOT, Ohio
MAXINE WATERS, California DANIEL E. LUNGREN, California
WILLIAM D. DELAHUNT, Massachusetts CHRIS CANNON, Utah
ROBERT WEXLER, Florida RIC KELLER, Florida
LINDA T. SANCHEZ, California DARRELL ISSA, California
STEVE COHEN, Tennessee MIKE PENCE, Indiana
HANK JOHNSON, Georgia J. RANDY FORBES, Virginia
BETTY SUTTON, Ohio STEVE KING, Iowa
LUIS V. GUTIERREZ, Illinois TOM FEENEY, Florida
BRAD SHERMAN, California TRENT FRANKS, Arizona
TAMMY BALDWIN, Wisconsin LOUIE GOHMERT, Texas
ANTHONY D. WEINER, New York JIM JORDAN, Ohio
ADAM B. SCHIFF, California
ARTUR DAVIS, Alabama
DEBBIE WASSERMAN SCHULTZ, Florida
KEITH ELLISON, Minnesota
Perry Apelbaum, Staff Director and Chief Counsel
Sean McLaughlin, Minority Chief of Staff and General Counsel
Subcommittee on Commercial and Administrative Law
LINDA T. SANCHEZ, California, Chairwoman
JOHN CONYERS, Jr., Michigan CHRIS CANNON, Utah
HANK JOHNSON, Georgia JIM JORDAN, Ohio
ZOE LOFGREN, California RIC KELLER, Florida
WILLIAM D. DELAHUNT, Massachusetts TOM FEENEY, Florida
MELVIN L. WATT, North Carolina TRENT FRANKS, Arizona
STEVE COHEN, Tennessee
Michone Johnson, Chief Counsel
Daniel Flores, Minority Counsel
C O N T E N T S
JUNE 10, 2008
H.R. 6126, the ``Fairness in Nursing Home Arbitration Act of
The Honorable Linda T. Sanchez, a Representative in Congress from
the State of California, and Chairwoman, Subcommittee on
Commercial and Administrative Law.............................. 1
The Honorable Tom Feeney, a Representative in Congress from the
State of Florida, and Member, Subcommittee on Commercial and
Administrative Law............................................. 7
The Honorable Hank Johnson, a Representative in Congress from the
State of Georgia, and Member, Subcommittee on Commercial and
Administrative Law............................................. 8
The Honorable Chris Cannon, a Representative in Congress from the
State of Utah, and Ranking Member, Subcommittee on Commercial
and Administrative Law......................................... 9
Dr. William J. Hall, M.D., AARP, Washington, DC
Oral Testimony................................................. 13
Prepared Statement............................................. 15
Ms. Linda Stewart, RN, MBA, Houston, TX
Oral Testimony................................................. 27
Prepared Statement............................................. 28
Gavin J. Gadberry, Esquire, Underwood, Wilson, Berry, Stein and
Johnson, PC, Amarillo, TX
Oral Testimony................................................. 30
Prepared Statement............................................. 32
Kenneth L. Connor, Esquire, Wilkes & McHugh, P.A., Washington, DC
Oral Testimony................................................. 36
Prepared Statement............................................. 38
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Prepared Statement of the Honorable Chris Cannon, a
Representative in Congress from the State of Utah, and Ranking
Member, Subcommittee on Commercial and Administrative Law...... 10
Prepared Statement of the Honorable John Conyers, Jr., a
Representative in Congress from the State of Michigan,
Chairman, Committee on the Judiciary, and Member, Subcommittee
on Commercial and Administrative Law........................... 11
Prepared Statement of the Honorable Steve Cohen, a Representative
in Congress from the State of Tennessee, and Member,
Subcommittee on Commercial and Administrative Law.............. 12
Material Submitted for the Hearing Record
Prepared Statement of the American Association of Homes and
Services for the Aging (AAHSA)................................. 55
Response to Post-Hearing Questions from William J. Hall, M.D.,
AARP, Washington, DC........................................... 57
Response to Post-Hearing Questions from Linda Stewart, RN, MBA,
Houston, TX.................................................... 62
Response to Post-Hearing Questions from Gavin J. Gadberry,
Esquire, Underwood, Wilson, Berry, Stein and Johnson, PC,
Amarillo, TX................................................... 64
Response to Post-Hearing Questions from Kenneth L. Connor,
Esquire, Wilkes & McHugh, P.A., Washington, DC................. 72
FAIRNESS IN NURSING HOME
ARBITRATION ACT OF 2008
TUESDAY, JUNE 10, 2008
House of Representatives,
Subcommittee on Commercial
and Administrative Law,
Committee on the Judiciary,
The Subcommittee met, pursuant to notice, at 2:11 p.m., in
Room 2141, Rayburn House Office Building, the Honorable Linda
Sanchez (Chairwoman of the Subcommittee) presiding.
Present: Representatives Sanchez, Johnson, Lofgren, Cannon,
Staff present: Norberto Salinas, Majority Counsel; Daniel
Flores, Minority Counsel; and Adam Russell, Majority
Professional Staff Member.
Ms. Sanchez. This hearing of the Committee of the judiciary
Subcommittee on commercial and administrative law will now come
to order. Without objection, the Chair will be authorized to
declare a recess of the hearing at any time. I will now
recognize myself for a short statement.
During this Congress, this Subcommittee has held four
hearings on issues and legislation related to the Federal
Arbitration Act. We have heard from attorneys, professors, and
individuals about unfortunate experiences with the arbitration
Erika Rice, a witness from our auto arbitration hearing,
described her troubling situation of trying to remedy the
purchase of a faulty car from an automobile dealer. Jordan
Fogal, a witness from our consumer hearing, thought she had
purchased her dream home, which turned out to be a poorly
constructed nightmare and a legal headache to repair. And
Deborah Williams, a witness from one of our legislative
hearings, testified that while she thought she had a bright
future after purchasing a Coffee Beanery franchise, the extreme
contractual requirements she could not afford to meet resulted
in her losing the franchise and landing in financial ruin.
Although Ms. Rice, Ms. Fogal, and Ms. Williams initially
experienced emotional distress during their predicaments, it
was in seeking a cure to their problems that they experienced
financial suffering. Each learned that mandatory arbitration
agreements can disadvantage consumers and franchise owners and
make their hope of a fair resolution nearly impossible. Sadly,
the mandatory arbitration clauses in their contracts prevented
them from regaining their previous financial stability, and
with it their emotional security.
Unfortunately, the inclusion of arbitration clauses in
long-term care facility contracts is even more emotionally
heartbreaking. By 2040, the demand for long-term care services
will more than double. The long-term care industry is
increasingly including pre-dispute arbitration clauses in its
``take it or leave it'' admission agreements for prospective
residents. And for desperate family members who are unable to
provide adequate care in their home setting, the need for an
immediate placement for their loved one makes the ``take it or
leave it'' choice really no choice at all.
Families who are in the midst of the heartbreaking decision
to place a parent in a nursing home rarely have the time or
wherewithal to fully and thoughtfully consider mandatory
arbitration clauses. Simply dealing with the emotional and
traumatic process of searching for a long-term care facility
makes it impossible for residents and their families to worry
about the potential loss of their constitutional right to a
jury trial. What is real and immediate is not some future
dispute, but the proper care of a loved one.
The emotional toll and the sense of vulnerability when
moving a loved one into the care of strangers at a nursing home
is something that I am all too familiar with. My father, who
has been diagnosed with Alzheimer's, was recently placed into a
nursing home, and one of the last things I wanted to worry
about when searching for that perfect placement was whether he
was foregoing his legal rights. Instead, I wanted to focus
solely on the quality and range of services the facility would
provide him. As it turned out, my family chose a facility that
met our requirements, but also had a mandatory arbitration
clause in its contract.
Now, I want to make it clearly known that I am completely
supportive of the principles of arbitration and the arbitration
process. However, the process should remain fair. Parties to a
contract should have the option to choose whether or not they
arbitrate their disputes. For these reasons, I introduced H.R.
6126, the Fairness in Nursing Home Arbitration Act of 2008, to
make pre-dispute mandatory arbitration clauses in long-term
care contracts unenforceable, and to restore to residents and
their families their full legal rights. This legislation would
allow families and residents to maintain their peace of mind as
they look for that perfect long-term care facility.
I am proud to note that H.R. 6126 is supported by several
significant groups who advocate on behalf of seniors and
consumers, including AARP, which is providing a witness at this
afternoon's hearing, the National Senior Citizens Law Center,
the Alzheimer's Association, and the National Association for
Consumer Advocates. Additionally, Senators Mel Martinez and
Herb Kohl have introduced a similar bill in the Senate, S.
2838. Accordingly, I look forward to hearing from this
afternoon's witnesses about arbitration agreements in contracts
between long-term care facilities and residents, and about
their views on H.R. 6126.
[The bill, H.R. 6126, follows:]
Ms. Sanchez. At this time I will now recognize my
colleague, Mr. Cannon, for his opening remarks.
Mr. Cannon. Madam Chair, do you expect other Members of the
Committee to make opening statements? I think on our side Mr.
Feeney would like to do that.
Ms. Sanchez. I believe we do have other Members that would
like to make opening statements.
Mr. Cannon. Then I ask unanimous consent that they be
allowed to make an opening statement. If the Chair is willing,
then I would be willing to defer my opening statement block to
Mr. Feeney and other Members of----
Ms. Sanchez. Without objection. Mr. Feeney is recognized
for his opening statement.
Mr. Feeney. Well, thank you. The Ranking Member and the
Chair are very kind, and I appreciate that.
Importantly, I want to recognize a good friend here today,
my friend Ken Connor. And he is a leader in Florida, both in
elder care and compassion, and in a lot of regards, you know, a
great friend of Floridians and people throughout the country.
I want to tell you that no State has a greater interest in
balancing the needs of the elderly than the State of Florida.
We are sort of the demographic bell-weather for the rest of the
country in terms of an aging population, and we are going to
sometimes do it right and sometimes get some things wrong. And
hopefully we can fix it when we get things wrong, but
simultaneously the rest of the country can learn from our
successes and our failures as well.
The question in today's hearing is not so much about the
big picture as to whether or not we ought to essentially
prohibit the use of pre-dispute mandatory binding arbitration
in nursing homes and assisted living contracts. The Fairness
Nursing Home Arbitration Act essentially, as I understand it,
would gut the current balance that Congress has tried to put in
place between the interests of, on the one hand, providing
affordable access to elderly care, and also protecting the
rights of victims of abuse, misdeeds, and some malfeasance in
I will tell you that Florida has seen the effects of costly
litigation on the one side, and at one point had a crisis of
nursing homes going out of business. On the other hand, I think
that there is no more eloquent spokesperson than Mr. Connor for
what happens when the people that are least able to defend
themselves at the last phase of their lives, are abused or
neglected. And there is a balance there.
And let me say this, because I do have to go, but I have
read the testimony and will be interested in the way this
develops. Let me say this about my friend Ken Connor: He sounds
simply like Plato when talking about most things, like Austrian
economics, for example.
But Plato described great rhetoricians, and he said that
there were three parts of any great rhetorical statement. One
is the ethos, the second--or the ethics of the speaker and the
credibility--second is the pathos, or the emotion that they
could solicit, and finally, the logos. I find both on ethos and
pathos, we have an absolute all-star today in my friend Ken
Connor. We just sometimes have differences on the logos and the
logic of how we are getting to a common goal.
And with that, I am grateful to the Ranking Member, to the
Chairman, and again, my friend Ken Connor.
Ms. Sanchez. The gentleman yields back. And I want to say,
Mr. Feeney, somebody who represents the district in Florida, I
understand that these issues are probably at the forefront of
senior issues in your State, and I appreciate your concern
about the bill. I just wanted to make--point out one small
point about the bill: The bill does not gut arbitration, it
merely gives patients the opportunity to choose whether or not
to arbitrate their disputes. We are talking only specifically
about pre-dispute mandatory binding arbitration agreements.
I believe Mr. Johnson has an opening statement. Mr. Johnson
is recognized for 5 minutes.
Mr. Johnson. Thank you, Madam Chair. And again, I would
also like to echo what you have said. H.R. 6126, the ``Fairness
in Nursing Home Arbitration Act of 2008,'' would not gut
arbitration as an alternative dispute resolution; it would
simply bar pre-dispute mandatory arbitration agreements in
nursing home agreements.
And I want to thank you, Madam Chairwoman, for holding this
hearing today. And throughout this session, the Subcommittee
has held several hearings on pre-dispute mandatory binding
arbitration agreements. We have explored the use of these
agreements in automobile leases and purchases, consumer
employment and franchise agreements, and within the NFL's
And what has resonated throughout all of these hearings is
clear: Pre-dispute mandatory arbitration agreements have been
used across the board by businesses to strip individuals of
their constitutional right to a jury trial. It is an unequal
bargaining relationship that has imposed this pre-dispute
mandatory binding arbitration upon those with less power.
Today we will continue to examine who these contracts of
adhesion have become ubiquitous in a type of case that is of
particular concern to not only you, Madam Chair, but also
millions of families across this country who have and will be
faced with the difficult and emotional decision to place their
loved ones, or loved one, in a nursing home or assisted living
facility. Oftentimes, finding the appropriate facility is at
the forefront of people's minds, not the possibility that they
may be foregoing their legal rights, in the case of a dispute
that may or may not arise.
Yet, as families make these difficult decisions, long-term
care facilities have found yet another way to insulate
themselves from any possible legal action if a dispute should
arise. And we are all aware of the tragic stories of elder care
abuse, neglect, and death. But up until recently, families have
been able to rely upon our judicial system to secure justice.
As we will hear today from our witness, nursing home
facilities have unscrupulously inserted binding pre-dispute
mandatory arbitration agreements into their contracts, which
allow them to divert victims and their families into a private,
for profit judicial system which works mainly for the benefit
of the nursing home industry. This is a place where hearings
are held in secret, discovery is limited. The statistics show
that most of the time individuals lose, and there is no
meaningful right to appeal once they do lose.
What makes this situation even more egregious is that even
if misconduct or neglect is found, arbitrators do not have the
authority to force facilities to make changes to their policies
and practices. And as a result, other lives may be in harm's
way as these facilities remain open for business. As admittance
into nursing home facilities continues to rise because of the
increasing numbers of the elderly, with over 1 million
residents in long-term care today, Congress must step in and
end this shameful practice.
I want to thank the Chairwoman for holding this hearing,
and I look forward to hearing from our witnesses today, and I
will yield back.
Ms. Sanchez. The gentleman yields back.
Mr. Cannon, would you like to make an opening----
I now recognize the Ranking Member of the Subcommittee, Mr.
Cannon, for his opening remarks.
Mr. Cannon. Thank you, Madam Chair, and welcome to our
This hearing marks the fourth time in this Congress we have
met to consider the question of mandatory binding arbitration,
but the industry before us today is new. Today we consider the
use of mandatory binding arbitration clauses in nursing home
and assisted living contracts.
Once again, we find an industry that has promoted the use
of mandatory binding arbitration after abusive tort suits and
runaway jury awards ran up the costs of goods and services,
hurting companies and consumers. Once again, the industry is
taking steps to make sure that mandatory binding arbitration is
used fairly. In this case, nursing homes often do not us
mandatory binding arbitration to resolve quality of care
The American Health Care Association and the National
Center for Assisted Living have developed a model arbitration
agreement and promoted its use for several years. The model
agreement does not alter rights or remedies available under
State tort law. The status of an agreement to arbitration is
not a condition of admission to a nursing home or an assisted
living facility; it also provides a 30-day cooling off period
for a resident or representative to reconsider and in writing
rescind an arbitration agreement, a cooling off period far
longer than found in other sectors.
Other important parts of the picture also have not changed.
Our courts are still overburdened, and arbitration is still
providing an escape valve for citizens hoping to avoid an
unresponsive and drawn out judicial system. We should continue
to do everything we can to protect that, not to undermine it.
In addition, the hard, representative, incredible evidence
that mandatory binding arbitration is being widely abused is
still missing. I expect today that we will hear some testimony
about problem incidents. I welcome that. If there are problems,
I am happy to hear about them, and with the witnesses' help, I
hope that we can understand precisely what they are.
The system may be working well; we all know that no system
is perfect. If we know what problems there are, perhaps we can
help fix them and avoid attempts to fix things that are not
There are two features of this hearing, though, that are
very new. First, proposals to restrict arbitration in nursing
home and assisted living sectors point us straight toward
another perennial issue: tort reform. Because if tort abuse is
what produced mandatory binding arbitration in these sectors,
restricting arbitration will only hand the system back over to
abusive trial lawyers. Second, proposals to restrict
arbitration in these sectors will produce cost increases that
will run us straight into what many consider the biggest
financial crisis looming over the country's future, and that is
exploding Medicare entitlement.
I urge those who seek to restrict arbitration to consider
whether, if they drive up the health care cost in the process,
will Medicare payouts have to increase, not for the betterment
of our seniors, but to pay for trial lawyer pocket-lining, or
will nursing homes have to reduce the number of Medicare
enrollees because historic benefit levels cannot cover the
costs of the care due to abusive lawsuits? Either way, our
seniors lose out.
I thank you, Madam Chair, and I yield back.
[The prepared statement of Mr. Cannon follows]:
Prepared Statement of the Honorable Chris Cannon, a Representative in
Congress from the State of Utah, and Ranking Member, Subcommittee on
Commercial and Administrative Law
Thank you Madam Chair and welcome to our witnesses.
This hearing marks the fourth time this Congress we have met to
consider the question of mandatory binding arbitration, but the
industry before us is new.
Today, we consider the use of mandatory binding arbitration clauses
in nursing home and assisted living contracts.
Once again, we find an industry that has promoted the use of
mandatory binding arbitration after abusive tort suits and runaway jury
awards ran up the costs of goods and services--hurting companies and
Once again, the industry is taking steps to make sure that
mandatory binding arbitration is used fairly. In this case, nursing
homes often do not use mandatory binding arbitration to resolve
The American Health Care Association and the National Center for
Assisted Living have developed a model arbitration agreement and
promoted its use for several years.
The model agreement does not alter rights or remedies available
under state tort law. It states that an agreement to arbitration is not
a condition of admission to a nursing home or an assisted living
facility. It also provides a 30-day ``cooling off period'' for the
resident or a representative to reconsider and, in writing, rescind an
arbitration agreement--a cooling off period far longer than found in
Other important parts of the picture also have not changed. Our
courts are still overburdened, and arbitration is still providing an
escape valve for citizens hoping to avoid an unresponsive judicial
We should continue to do everything we can to protect it--not to
In addition, the hard, representative and credible evidence that
mandatory binding arbitration is being widely abused is still missing.
I expect today that we will hear some testimony about problem
incidents. I welcome that. If there are problems, I am happy to hear
about them, and with the witnesses' help I hope that we can understand
precisely what they are. This system may be working well, but we all
know that no system is perfect. If we know what problems there truly
are, perhaps we can help fix them--and avoid attempts to fix instead
things that aren't broken.
There are two features of this hearing, though, that are very new.
First, proposals to restrict arbitration in the nursing home and
assisted living sectors point us straight toward another perennial
issue--tort reform. Because if tort abuse is what produced mandatory
binding arbitration in these sectors, restricting arbitration will only
hand the system back over to abusive trial lawyers.
Second, proposals to restrict arbitration in these sectors will
produce cost increases that will run us straight into what many
consider the biggest fiscal crisis looming over this country's future--
exploding Medicare entitlements.
I urge those who seek to restrict arbitration to consider whether
if they drive up health care costs in the process will Medicare pay
outs have to increase not for the betterment of our seniors but to pay
for trial lawyer pocket lining, or will nursing homes have to reduce
the number of Medicare enrollees because historic benefit levels cannot
cover the costs of the care due to abusive lawsuits. Either way our
seniors lose out.
I yield back the remainder of my time.
Ms. Sanchez. The gentleman yields back. Without objection,
other Members' opening statements will be included in the
[The prepared statement of Mr. Conyers follows:]
Prepared Statement of the Honorable John Conyers, Jr., a Representative
in Congress from the State of Michigan, Chairman, Committee on the
Judiciary, and Member, Subcommittee on Commercial and Administrative
The decision to place a loved one in a nursing home is probably one
of the most difficult decisions families must face. It's loaded with
emotion, not only for the person being admitted into the facility, but
also for the family members who have realized that they can no longer
adequately care for their loved one by themselves.
When family members put their trust in the hands of the long-term
care provider, they should be able to expect that their parent or
grandparent will be kept safe and watched carefully by trained staff.
Unfortunately, some facilities have broken that trust, by allowing
abusive and neglectful environments that have resulted in harm to many
residents, and sadly, even the premature deaths of some.
Although long-term care facilities are subject to both federal and
State monitoring, we know that does not necessarily ensure that abuse
and neglect in these facilities will not occur. So we must also rely on
other means to encourage the corporations that run these facilities to
provide truly safe environments.
Already, some individuals and groups are doing this through
advocacy, litigation, and by avoiding facilities with records of safety
violations. Nonetheless, this is not enough, because some facilities
have discovered a way to conceal their poor safety records, while also
limiting their legal responsibility.
What some facilities are doing is including a pre-dispute mandatory
binding arbitration clause in their contracts with residents. These
clauses can strip a resident's constitutional right to a jury trial,
and can artificially limit damages obtained in a verdict, and can even
discourage plaintiffs from filing a claim.
Furthermore, these clauses often require that any arbitration
decision be kept secret, which keeps the incidents of neglect and harm
to residents out of the public eye.
Without these restrictive contract clauses, these incidents could
be brought to light in a court proceeding, and prospective residents
and their families would know better whether the nursing home or
facility they are considering does truly provide a safe environment.
To address the concerns from these arbitration clauses in long-term
care facility contracts, Chairwoman Sanchez introduced the ``Fairness
in Nursing Home Arbitration Act of 2008,'' of which I am proud to be an
This bipartisan legislation accomplishes the critical goal of
effectively prohibiting pre-dispute mandatory binding arbitration
agreements in contracts between residents and long-term care facilities
in several meaningful respects.
First, this bill will protect residents' constitutional right to a
jury trial, and the accompanying fairness in the legal system, which is
sometimes not found in arbitration.
Second, this legislation will ensure that nursing homes and
assisted living facilities with poor safety records cannot easily hide
behind the secrecy of arbitration decisions. Instead, disputes about
neglect and abuse by staff may be taken publicly to court.
Third, this legislation will still allow residents and long-term
care facilities to opt for arbitration, but will ensure that it is with
the free consent of all parties, rather than a requirement imposed by
the facility as a pre-condition for admission.
For example, a resident might negotiate that the arbitration
decision be made public, so that prospective residents would have a
clearer picture of the facility.
I very much look forward to hearing from the witnesses today, and
hope that other Members will realize the importance of this
[The prepared statement of Mr. Cohen follows:]
Prepared Statement of the Honorable Steve Cohen, a Representative in
Congress from the State of Tennessee, and Member, Subcommittee on
Commercial and Administrative Law
As someone with a loved one who is a resident of a long-term care
facility, the issue of dispute arbitration between long-term care
facilities and their residents hits close to home for me. As in many
other contexts, the bargaining power between the corporate entity, on
the one hand, and the individual consumer, on the other, is very
unequal. Long-term care facilities should not be permitted to take
advantage of these unequal bargaining positions to force residents to
enter into mandatory pre-dispute arbitration agreements as a condition
of residence. Rather, both parties should be allowed to voluntarily
consent to arbitration only after a dispute has arisen between them.
That is why I am a cosponsor of H.R. 6126, the ``Fairness in Nursing
Home Arbitration Act of 2008,'' which amends the Federal Arbitration
Act to make unenforceable mandatory pre-dispute arbitration agreements
between long-term care facilities and their residents. I thank
Chairwoman Sanchez for her leadership on this issue and urge all of my
colleagues on the Subcommittee on Commercial and Administrative Law to
support this measure.
Ms. Sanchez. I am now pleased to introduce the witnesses on
our panel for today's hearing. Our first witness is William
Hall. Dr. Hall, of Rochester, NY, is a member of the AARP board
of directors. Dr. Hall is director of the Center for Healthy
Aging and previously served as chief of geriatrics at the
University of Rochester School of Medicine, where he is the
Paul Fine professor of medicine.
Dr. Hall's career in geriatrics has largely focused on the
preventative aspect of medical care for older adults. He has
been instrumental in facilitating the development of clinical
and education programs in the field of aging that have had a
Dr. Hall's volunteer experience includes serving as medical
director for the AARP Triumph Classic, a program of exercise
training, preparing older adults to compete in triathlons. He
has extensive experience on numerous professional boards,
including the American College of Physicians, and the American
Geriatrics Society, and is a past president of the American
College of Physicians.
Dr. Hall has testified on numerous health issues before
Congress, the Department of Health and Human Services, and the
National Institutes of Health.
We welcome you to our panel, Dr. Hall.
Our second witness is Linda Stewart, a Houston, TX
resident. Ms. Stewart has been in the nursing profession for 28
years, including 10 years as a captain in the United States Air
Having worked as a critical care and E.R. nurse, Ms.
Stewart is now administering exercise programs for senior
citizens. An MBA graduate, she is currently working toward
another master's degree in nutrition. Ms. Stewart's
grandmother, Hattie Miller, was a victim of nursing home
Welcome, Ms. Stewart.
Our third witness is Gavin Gadberry. Mr. Gadberry is a
shareholder of Underwood, Wilson, Berry, Stein, and Johnson,
PC, one of Texas' oldest and Amarillo's largest firm, which
offers a full service civil practice. He currently serves as
general counsel of and issue lobbyist for the Texas Health Care
Mr. Gadberry's primary areas of practice are Government
relations, long-term care, and health care law, administrative
and regulatory law, and general civil litigation. Mr. Gadberry
has been a speaker on numerous occasions at the American Health
Lawyers Association's annual Long-Term Care and the Law
seminar. He is a contributing author to the Long-Term Care
Handbook: Regulatory, Operational, and Financial Guidepost,
Second Edition. Mr. Gadberry received the chair's award at the
2004 Texas Health Care Association Convention for his efforts
on tort reform in 2003.
We welcome you this afternoon.
And our final witness is Mr. Ken Connor. Mr. Connor co-
founded the Center for a Just Society in 2005, and serves as
the organization's chairman and one of its principal spokesmen.
Affiliated with the law firm of Wilkes & McHugh, P.A., Mr.
Connor recently served as counsel to Governor Jeb Bush in Bush
v. Schiavo, the matter involving Terry Schiavo and the court
order to remove her feeding tube.
Mr. Connor is also an advocate on behalf of nursing home
residents and was appointed to Florida's task force on the
availability and affordability of long-term care. He has served
as the chairman of the State of Florida Commission on Ethics
and is a member of the State Constitution Revision Commission.
Mr. Connor has previously testified before the Subcommittee on
the issue of arbitration.
We welcome you back before the Subcommittee.
I want to thank all of the witnesses for their willingness
to participate in today's hearing. Without objection, your
written statements will be placed into the record, and we are
going to ask that you limit your oral testimony to 5 minutes.
You will note that we have a lighting system that starts
with a green light. Four minutes into your testimony you will
see a yellow light; that gives you a warning you have about a
minute remaining. And then when your time has expired you will
see the red light.
We would ask that if you are caught mid-thought or mid-
sentence when the light turns red, we will give you an
opportunity to finish your final thought before moving on to
the next witness. After each witness has presented her or his
testimony, Subcommittee Members will be permitted to ask
questions subject to the 5-minute limit.
And with that I am going to invite Dr. Hall to please give
his testimony. And please make sure your microphone is on.
TESTIMONY OF WILLIAM J. HALL, M.D., AARP,
Dr. Hall. Chairwoman Sanchez, Ranking Member Cannon, and
Members of the Subcommittee, I am William Hall, with the AARP
board of directors, and I really thank you very much for the
opportunity to testify today.
Pre-dispute arbitration clauses in long-term care facility
contracts are harmful to residents and their families. These
arbitration clauses force a Hobson's choice--waive the right to
seek redress in the courts or get care in another facility,
assuming that, in fact, another facility can be found.
When older adults suffer a decline in health or are
discharged from the hospital and are unable to care for
themselves, these individuals and their families are faced with
a very daunting task of finding nursing home care. More often
than not, these decisions are made in an absolute crisis
situation. Individuals may be pressured to accept the first
available bed without enough time to adequately compare nursing
Moreover, people seeking nursing home admission are among
the frailest of Americans. In 2006, nearly half of all nursing
home residents were diagnosed with dementia. In 2004, nearly 80
percent of residents needed help in four or five of the
customary activities of daily life. Recently, nursing home
residents have had higher disease prevalence and multiple
chronic conditions, indicating an increasingly sicker
population, often on multiple and complex medications.
It is often in this context of crisis and vulnerability
that prospective residents and their families face the nursing
home admissions process, where they are typically given a
lengthy, complicated contract. Many facilities include
provisions in these contracts requiring that residents and
their families agree to forego the use of the court system to
resolve future disputes. Instead, they must agree to submit
their cases to arbitration.
The admissions contract typically is presented as a ``take
it or leave it'' situation. When potential residents and their
families are presented with admissions contracts, they often do
not know that an arbitration requirement is buried in the fine
print of the multi-page document.
Even if prospective residents and their families are aware
these contracts contain an arbitration provision, they often
simply do not understand what it means, nor do they realize the
many rights and protections they would forego in arbitration.
It places severe restrictions on many of their rights,
including the ability to obtain documents and other evidence,
making it difficult to prove their case, and the bases of
appeal are extremely limited.
Consumers do not have equal bargaining power with
facilities, and are virtually powerless to negotiate the
arbitration provisions, nor are they likely to gain admission
to the facility if they want to delete the provision. AARP
believes that it is essential for vulnerable residents to have
access to the courts when they are injured, neglected, or
abused. AARP thus supports the bipartisan Fairness in Nursing
Home Arbitration Act, H.R. 6216, introduced by Chairwoman Linda
Sanchez and Representative Ileana Ros-Lehtinen.
This bill would make pre-dispute arbitration provisions
between long-term care facilities and a resident of the
facility or a person acting on their behalf unenforceable,
ensuring that residents of long-term care facilities and their
families are not forced into arbitration. This legislation
would provide uniform, nationwide protection against such pre-
dispute arbitration provisions.
AARP encourages the Subcommittee to pass this legislation.
As you consider it, we would like to work with you to help
ensure this bill would apply to all current residents of long-
term care facilities, not just those whose pre-dispute
arbitration agreements are made, amended, altered, modified,
renewed, or extended on or after the date of the enactment of
Thank you, and we look forward to working with you on this
very important issue for current and future long-term care
facility residents and their families.
[The prepared statement of Dr. Hall follows:]
Prepared Statement of William J. Hall
Ms. Sanchez. Thank you, Dr. Hall. We appreciate your
Ms. Stewart, I would invite you to give your testimony at
TESTIMONY OF LINDA STEWART, RN, MBA, HOUSTON, TX
Ms. Stewart. Chairwoman Sanchez----
Ms. Sanchez. Is your microphone on?
Ms. Stewart. Testing.
Ms. Sanchez. Perfect. I think you are ready.
Ms. Stewart. Okay.
Chairwoman Sanchez, Ranking Member Cannon, and
distinguished Members of the Subcommittee, thank you for the
invitation to testify at this hearing about my experience with
mandatory arbitration in nursing homes. I would also like to
acknowledge my attorney, Mr. Cunningham, who has accompanied me
here today. I am here to testify in strong support of H.R.
6126, the Fairness in Nursing Home Arbitration Act of 2008, a
bill that would end mandatory arbitration in nursing home
contracts so that no other family has to go through what my
family has been through.
I have a master's degree in business and am a registered
nurse. I have been in the nursing profession for 28 years,
including 10 years as a captain in the United States Air Force.
I have worked as a critical care nurse, a emergency room nurse,
as well as a nursing director in a nursing home. My
professional and personal experience with nursing home care has
left me devastated, and my hope is that by telling you my story
today, other families will be protected in the future.
At the age of 92, my grandmother, Hattie Miller, lived by
herself in Seguin, TX. She was generally very alert and
capable, and had control over her own financial affairs.
However, after she had a mini-stroke and seemed confused, we
decided to put her into a nursing home.
The hospital assigned a social worker to my grandmother who
said that the only home near us with beds available was the
Guadalupe Valley Nursing Center. After working in a nursing
home I can tell you that families have very little or no choice
when it comes to where they have their loved ones admitted
because space is so limited.
On the afternoon that my grandmother was admitted into
Guadalupe Valley, the nursing home called my sister at work.
They told her that she needed to rush down to the nursing home
to sign paperwork or my grandmother would be moved out of the
nursing home. My sister rushed there to sign the paperwork
because she didn't want our grandmother to lose her place at
When she got there, she told the nursing home
administrators that she didn't want to sign anything
financially because she did not have power of attorney over my
grandmother's affairs. They told my sister that there was
nothing in the documents except standard forms that needed to
be signed so that the home could receive my grandmother's
Social Security check and to make sure that she received
medications that she needed. They never once mentioned that the
many documents contained something that would limit our
family's legal rights.
About 3 weeks--and I am telling you, 3 weeks--nursing home
employees were apparently moving my grandmother from her bed to
her wheelchair and her leg was badly injured. No one ever
reported the incident to us or anyone else; they simply put her
back to bed. After we went to see her and she was complaining
of extreme pain in her leg, we brought her to the hospital.
It turns out that my grandmother's leg was broken in two
places. One of these was an oblique or spiral fracture that
results when the bone is completely twisted. Imagine twisting
the cap off of the top of a soda; this is a very similar
The follow-up care she received for her leg at the nursing
home was inadequate, and her injuries were so severe that they
had to amputate my grandmother's leg a couple of weeks later.
We couldn't believe that our grandmother had suffered such a
severe injury in the nursing home and it was never reported to
us or initially treated by the staff.
After we filed a lawsuit, the nursing home tried to force
us into binding arbitration. That was when we learned that
buried in the documents that my sister had signed that day was
a binding mandatory arbitration clause. My attorney worked hard
to have the clause overturned, but the corporation that owned
the nursing home told us that they would appeal all the way to
the Texas Supreme Court unless we agreed to settle.
We couldn't believe that after the way my grandmother was
treated we didn't have the right to try our case to a jury. We
also feared that without being able to try our case to a jury,
no one would know that this had happened. I wonder how many
other incidents there have been like my grandmother's that no
one is able to know about because nursing homes are able to
hide behind these arbitration contracts.
I have seen the nursing home industry from the perspective
of a family member and also as a director of nursing at a
nursing home. Knowing about the quality of care--or lack of
quality of care--it seems just unimaginable to me that
corporations that own these homes are allowed to abuse
residents and not be held accountable in a court of law for
This is unacceptable to the families that I talk to about
this, and it should be unacceptable to the Members of this
Committee. Hopefully my speaking out will assist the effort to
protect nursing home residents and their families in the
Thank you for listening to my story.
[The prepared statement of Ms. Stewart follows:]
Prepared Statement of Linda Stewart
Chairwoman Sanchez, Ranking Member Cannon and distinguished Members
of the Subcommittee, thank you for the invitation to testify at this
hearing about my experience with mandatory arbitration in nursing
homes. I would also like to acknowledge my attorney, Mr. Cunningham,
who has accompanied me here today.
I am here to testify in strong support of H.R.6126, the ``Fairness
in Nursing Home Arbitration Act of 2008,'' a bill that would end
mandatory arbitration in nursing home contracts so that no other family
has to go through what my family has been through.
I have an MBA and am a registered nurse. I have been in the nursing
profession for twenty-eight years, including 10 years as a Captain in
the United States Air Force. I have worked as a critical care and ER
nurse as well as a nursing director in a nursing home. I am now
administering exercise programs for senior citizens and am currently
working towards another Masters degree in Nutrition.
My professional and personal experience with nursing home care has
left me devastated and my hope is that by telling you my story today,
other families will be protected in the future.
At the age of 92 my grandmother, Hattie Miller, lived by herself in
Seguin, Texas, which is just outside of San Antonio. She was generally
very alert and capable, and had control over her own financial affairs.
However, after she had a transient ischemic attack, also known as a
mini-stroke, and seemed confused, we decided to put her into a nursing
The hospital assigned a social worker to my grandmother who said
she would help us find a nursing home close by. The social worker
called all three homes in the area, but the Guadalupe Valley Nursing
Center was the only nursing home that had any open beds. After working
in a nursing home I can tell you that generally families have very
little or no choice when it comes to where they have their loved ones
admitted. Because space is so limited, most families have to take
whatever is available at that time and there is no real choice.
On the afternoon that my grandmother was admitted into Guadalupe
Valley, the nursing home called my sister at work. They told her that
she needed to rush down to the nursing home to sign paperwork or my
grandmother would have to move out of the nursing home. My sister
rushed there to sign the paperwork because she didn't want our
grandmother to lose her place at the home. When she got there, she told
the nursing home administrators that she didn't want to sign anything
financial because she did not have power of attorney over my
grandmother's affairs. They told my sister that there was nothing in
the documents except standard forms that they needed signed just so
they could receive my grandmother's monthly social security check and
to make sure that she received the care and the medicines that she
needed. They never once mentioned that the many documents contained
something that would limit our family's legal rights. In fact, when the
nursing home administrator presented the document that contained the
arbitration clause, my sister asked her, ``What's this?'' The
administrator replied, ``Oh that's nothing. We just need you to sign
all of these documents.'' At no time did the administrator explain the
mandatory arbitration clause. It turns out that the nursing home did
not even comply with current Texas law which says that this type of
clause has to also be signed by our attorney in order for it to be
After about three weeks, nursing home employees were apparently
transporting my grandmother from her bed to her wheelchair and her leg
was badly injured somehow. No one ever reported the incident to us or
anyone else; they simply put her back in bed.
After we went to see her and she was complaining of extreme pain in
her leg, we brought her to the hospital. It turns out that my
grandmother's leg was broken in two places. One of these was an oblique
or spiral fracture which results when the bone is completely twisted--
imagine twisting the cap off a bottle of soda; this is a very similar
motion. The follow up care she received for her leg at the nursing home
was inadequate, and her injuries were so severe that they had to
amputate my grandmother's leg a couple weeks later. We couldn't believe
that our grandmother had suffered such a severe injury in the nursing
home and it was never reported to us or initially treated by the staff.
After we filed a lawsuit, the nursing home tried to force us into
binding arbitration. That was when we learned that buried in the
documents my sister had signed that day was a binding mandatory
arbitration clause. My attorney worked hard to have the clause
overturned by the court, but the corporation that owned the nursing
home told us that they would appeal all the way to the Texas Supreme
Court unless we agreed to settle. Because the Texas Supreme Court has a
history of upholding this kind of mandatory clause, we were practically
guaranteed to lose our fight. We were forced to settle the case. We
couldn't believe that after the way my grandmother was treated we
didn't have the right to try our case to a jury. We also feared that
without being able try our case to a jury, no one would know that this
had happened. I wonder now, after having gone through this, how many
other incidents there have been like my grandmother's that no one is
able to know about because the nursing homes are able to hide behind
these arbitration contracts.
I have seen the nursing home industry from the perspective of a
family member and also an employee. As I stated earlier, I was the
Director of Nursing at a nursing home for one year. I quit my job
because of the horrible care I witnessed and the impossible situation
nursing home owners and administrators put their staff members in. To
put it simply, the quality of care is horrible. For example, in the
nursing home where I worked, we would run out of towels for each
resident and the owners and administrators refused to purchase more. As
a result, there were days when residents went without a bath because
there weren't enough towels to go around. The majority of the staff
that worked in the home had minimal education and were barely paid
minimum wage. There was very little by way of training, background
checks, and employee supervision. To make matters worse, the
Administrator of the home that I worked in frequently hired her
relatives as employees. They made it impossible for me to do my job and
serve my patients. The only way to complain or change things was to go
through or around the Administrator, which proved to be an impossible
Knowing all of this about the quality of nursing home care in this
country, it seems just unimaginable to me that the corporations that
own these homes are allowed to abuse residents and not be held
accountable in a court of law for their actions. This is unacceptable
to the families that I talk to about this, and it should be
unacceptable to the members of this Committee. Hopefully my speaking
out will assist the effort to protect nursing home residents and their
families in the future.
Thank you for listening to my story.
Ms. Sanchez. Thank you for your testimony, Ms. Stewart. We
really appreciate it, and I know that is a difficult subject
matter to talk about, but we do appreciate you coming today to
At this time I would invite Mr. Gadberry to please give his
TESTIMONY OF GAVIN J. GADBERRY, ESQUIRE, UNDERWOOD, WILSON,
BERRY, STEIN AND JOHNSON, PC, AMARILLO, TX
Mr. Gadberry. Thank you, Chairwoman Sanchez. Now can you
Thank you, Chairwoman Sanchez, Ranking Member Cannon, and
Members of the Committee. I am grateful for the opportunity to
be here with you today, all the way from Amarillo, Texas, and
to offer the long-term care profession's perspective on
arbitration. My name is Gavin Gadberry, and I am honored to be
here today representing the American Health Care Association
and the National Center for Assisted Living.
A growing number of health care and long-term care
providers, including nursing facilities and assisted living
residences, have incorporated arbitration clauses into their
admissions materials. When legal concerns arise, we believe
that arbitration provides a fair and timely resolution for both
the consumer and the long-term care provider.
Before I address the benefits of arbitration as an
alternative to litigation, allow me to take a moment to assure
the Committee that the troubling anecdotes presented today
present exceptions instead of the rules in the long-term care
community. I am proud of the advances our profession has made
in delivering high quality care, and we remain committed to
sustaining these gains in the future, when the demand for care
will dramatically increase.
We have been actively engaged in a broad range of
activities which seek to enhance the overall performance and
excellence of the long-term care sector. As I detailed more
fully in my written statement, we have partnered with CMS and
others to enhance care through this culture of cooperation.
Quality is improving. While keeping patients and their care
needs at the center of our collaborative efforts, we continue
to challenge ourselves to improve and enhance quality.
And as a side note, I am proud to say in Texas last year
the use of restraints was the largest percentage decrease than
anywhere in the Nation.
In the late 1990's, however, our profession started having
difficulty with increased litigation. Long-term care operators
were forced into making difficult decisions, including
potential closures of facilities and corporate restructuring.
In addition to pursuing tort reform, the profession sought
alternatives to traditional litigation, including use of
In 2002, AHCA was in the lead. It went out, and it said,
``We need to develop--if our membership wants to use an
arbitration provision, we want to go out and develop a
reasonable arbitration clause.'' The model agreement in no way
alters the rights or remedies available to a resident under
State tort law. Not whatsoever.
It still has the same causes of action; it still has the
same damages. The only thing that is taken away is the right to
a jury trial, and it is specifically set out in an agreement.
It is one page; it is in simple, plain-to-read English. More
importantly, the form provides a 30-day out, so if they sign
the agreement and they are pressured into it, they have a 30-
day time period in which to rescind the agreement.
Ms. Stewart's example is unfortunate. I am familiar with
the clause that was involved in her case, and it is one page,
but there was not an out-clause in it. But the AHCA provision
does have that provision.
Also, with regard to Ms. Stewart's explanation today, I am
familiar with the county in which it is located. There are six
facilities in that county; it is close to San Antonio, and the
population is large. It is not like rural Texas.
We support the use of arbitration because unlike
traditional litigation, our members have experienced that
arbitration is more efficient, less adversarial, and has a
reduced time to settlement. A recent Aon report found that
``arbitration reduces the time to settlement by more than 2
months, on average,'' and ``very few claims actually go all the
way to arbitration,'' and as Ms. Stewart's claim, they are
We believe that the Fairness in Nursing Home Arbitration
Act is a misguided attempt to restrict and weaken the Federal
Arbitration Act, a policy of this Nation that has been in place
for more than 80 years. We agree that entering into a nursing
facility or assisted living residence is often a time of
uncertainty and apprehension. The notion that family members
are threatened into signing arbitration agreements are simply
As I stated earlier, AHCA developed a policy where they
give family members or the patient the opportunity to back out
of an arbitration agreement within 30 days. Also, it does not
have an effect on whether the person is admitted to the
It is important for this Committee to recognize that the
Federal Arbitration Act does not inherently foster or sanction
any disregard for traditional notions of fair play. In fact,
State courts have done a good job in looking at agreements
where they are unreasonable, where there are provisions that
limit damages, where there are provisions that require the
loser to pay, where there is a venue that is unreasonable or a
long ways away from the facility.
This bill needlessly discriminates against long-term care
providers, and more importantly, the patients. Pre-dispute
arbitration agreements are a viable legal option for long-term
care consumers and should not be eliminated.
Public sentiment is opposed to eliminating the use of
arbitration to resolve disputes. A U.S. Chamber of Commerce
poll, recently conducted, found that given the choice, voters
would rather have arbitration.
Like the vast majority of Americans, we believe that
legislative proposals to limit arbitration and undermine the
Federal Arbitration Act is bad public policy. We strongly
support the use of arbitration and the policy that has been in
place by this Government since the early 1920's.
Thank you for the opportunity to offer these comments
today, and I look forward to responding to your comments.
[The prepared statement of Mr. Gadberry follows:]
Prepared Statement of Gavin J. Gadberry
Thank you Chairwoman Sanchez, Ranking Member Cannon, and members of
the Committee. I am grateful for the opportunity to be with you here
today--and to offer the long term care profession's perspective on
arbitration. My name is Gavin Gadberry, and I am honored to be here
today representing the American Health Care Association and the
National Center for Assisted Living (AHCA/NCAL).
In the increasingly litigious environment, a growing number of
health care and long term care providers--including nursing facilities
and assisted living residences--have incorporated arbitration clauses
into their admissions materials given to residents when being admitted
to the facility or residence. AHCA/NCAL supports the use of arbitration
agreements as a viable option for long term care providers and their
residents to resolve legal disputes. Arbitration is less adversarial
than traditional litigation, produces quicker results and has been
determined to be both fair and appropriate by our courts.
AHCA/NCAL and our members are committed to ensuring that long term
care facilities place paramount importance on the delivery of high
quality care and provide a safe and secure environment for the millions
of Americans residing in our nation's nursing facilities and assisted
living residences. When legal concerns arise, we believe that
arbitration provides a fair and timely resolution for both the consumer
and long term care provider.
On behalf of the profession responsible for caring for our nation's
most vulnerable citizens, I am proud of the advances we have made in
delivering high quality long term care services and we remain committed
to sustaining these gains in the years and decades ahead--when, as we
all know, demand for long term care will by all accounts dramatically
Americans are living longer and our nation's aging population is
growing--many of whom have significant medical or cognitive conditions
which require care in a nursing facility. Currently more than three
million Americans rely on the care and services delivered in one of the
nation's nearly 16,000 nursing facilities each year, and the demand for
such services is going to increase dramatically every year. A March
2008 report from the National Investment Center for the Seniors Housing
& Care Industry (NIC) indicates that the demand for long term care
services will more than double by 2040.
The efforts and initiatives advanced by the association that I
represent today seek to enhance and improve quality of care and
services provided in our nation's nursing facilities and assisted
living residences each day.
QUALITY--AHCA'S FIRST PRIORITY
Before I address the benefits of arbitration as an alternative to
litigation in resolving disputes, allow me to take a moment to assure
the Committee that the troubling anecdotes presented today represent
the exception instead of the rule within the long term care community.
Long before the words quality and transparency were the catch words of
the federal government and their oversight of healthcare, they were
truly the compass for AHCA/NCAL and its member facilities.
Our association's long-held mission clearly states, ``our goal is
to provide a spectrum of patient/resident-centered care and services
which nurture not only the individual's health, but their lives as
well, by preserving their connections with extended family and friends,
and promoting their dignity, respect, independence, and choice.''
AHCA/NCAL has been working diligently to change the debate
regarding long term care to focus on quality--quality of life for
patients, residents and staff; and quality of care for the millions of
frail, elderly and disabled individuals who require our services. We
have been actively engaged in a broad range of activities which seek to
enhance the overall performance and excellence of the entire long term
care sector. While keeping patients and their care needs at the center
of our collective efforts, we continue to challenge ourselves to
improve, and enhance quality.
THE FACTS SPEAK FOR THEMSELVES--QUALITY & OUTCOMES ARE IMPROVING
The Online Survey, Certification and Reporting (OSCAR) data tracked
by the Centers for Medicare and Medicaid Services (CMS) clearly point
to improvements in patient outcomes, increases in overall direct care
staffing levels, and significant decreases in quality of care survey
deficiencies in our nation's skilled nursing facilities.
A few examples which highlight some of the positive trends in
nursing facility care according to data tracked by CMS:
Nationally, direct care staffing levels (which
include all levels of nursing care: Registered Nurses (RNs),
Licensed Practical Nurses (LPNs) and Certified Nursing
Assistants (CNAs)) have increased 8.7 percent between 2000 and
2007--from 3.12 hours per patient day in 2000 to 3.39 hours in
The Quality Measure \1\ tracking pain for long term
stay residents vastly improved from a rate of 10.7 percent in
2002 to 4.6 percent in 2007--more than a 50 percent decrease;
\1\ Quality Measures track nursing facility residents who have and
are at risk for specific functional problems needing further
evaluation. Improvements in these measures indicate positive trends in
patient outcomes, but it is important to clarify that the quality
measures do not reflect a percentage of the entire population, rather
the percentage of those who are at risk and have the condition.
The Quality Measure tracking the use of physical
restraints for long stay residents dropped from 9.7 percent in
2002 to 5.6 percent in 2007;
The Quality Measure tracking pressure ulcers for
post-acute skilled nursing facility patients (many of whom are
admitted to the nursing facility with a pre-existing pressure
ulcer) improved by 23 percent over the course of four years,
from 20.4 percent in 2003 to 15.8 percent in 2007; and
Substandard Quality of Care Citations as tracked by
CMS surveys were reduced by 30 percent in five years--from 4.4
percent in 2001 to 3.1 percent in 2006.
In January 2006, the Government Accountability Office
stated that from 1999-2005 there was a nearly 50 percent
decrease in the ``proportion of nursing homes with serious
Satisfaction of patients and family members is a critical measure
of quality. AHCA has recognized this vital link between satisfaction
and performance, and has urged facilities to conduct such assessments
for more than a decade. In recent years, we have encouraged assisted
living and nursing facilities to use a nationally-recognized company,
My InnerView, to conduct consumer and staff satisfaction surveys to
establish a national database for benchmarking and trend analysis. The
most recent independent survey of nursing home patients and their
families released a few weeks ago indicates that a vast majority (82%)
of consumers nationwide are very satisfied with the care provided at
our nation's nursing homes and would rate the care as either good or
We remain committed to sustaining--and building upon--these quality
improvements for the future.
CULTURE OF COOPERATION--LEADING TO CONTINUED IMPROVEMENT
Positive trends related to quality are also evidenced by
profession-based initiatives including Quality First and the Advancing
Excellence in America's Nursing Homes campaign--both of which are
having a significant impact on the quality of care and quality of life
for the frail, elderly and disabled citizens who require nursing
Quality First, which was established in 2002, set forth seven core
principles that reflect long term care providers' commitment to
continuous quality improvement, leadership and transparency. This
profession-based initiative led not only to improvements in care and
processes, but to the development of the National Commission for
Quality Long-Term Care. In December 2007, the Commission released its
final report which addressed four critical components of long term
care--quality, workforce, information technology & financing. We
encourage Congress to take the recommendations of this commission under
consideration--and further investigate their feasibility.
Quality First and other initiatives have been commended by former
Secretary of Health & Human Services Tommy Thompson, by former
Administrator of CMS Dr. Mark McClellan, and by former CMS Acting
Administrator Leslie Norwalk. Last year Ms. Norwalk stated in a column
she wrote for Provider magazine: ``Nursing home providers have been on
the leading edge of this quality movement. Long before hospitals,
doctors, home health providers, pharmacies, dialysis facilities and
others came to the table, the nursing home industry was out front with
Quality First--a volunteer effort to elevate quality and accountability
. . . Quality measurement has worked in nursing homes. . . .
Collaborating to measure quality of long-term care, report it, support
it, and improve it--that's the best path to a high-quality, patient-
centered, provider-friendly system that everyone can afford.''
AHCA is a founding partner of the Advancing Excellence in America's
Nursing Homes campaign--a coordinated initiative among providers,
caregivers, consumers, government and others that promote quality
around eight measurable goals. This campaign takes a step further than
previous initiatives. It not only measures outcomes, but it establishes
numerical targets and benchmarks. It also promotes best practices and
evidence-based processes that have been proven to enhance patient care
and quality of life.
This voluntary initiative is working--and outcomes and processes
are improving in the nearly 7,000 participating facilities. In December
2007, the campaign announced that for the first three-quarters of the
campaign, there was progress in reducing the incidence of pressure
ulcers in nursing homes, reducing the use of physical restraints,
managing pain for long term nursing home residents, and managing pain
for short stay, post-acute nursing home residents. Our association is
diligently working to increase the number of facilities that actively
participate in this program and embrace the concepts embodied in the
Advancing Excellence in America's Nursing Homes campaign.
In his November 2007 testimony before the U.S. Senate Special
Committee on Aging, Acting CMS Administrator Kerry Weems praised the
Advancing Excellence in America's Nursing Homes campaign, stating,
``This campaign is an exceptional collaboration among government
agencies, advocacy organizations, nursing home associations,
foundations, and many others to improve the quality of nursing homes
across the country.''
Further, in the CMS 2008 Action Plan for (Further Improvement of)
Nursing Home Quality, the agency states that it ``plan[s] to strengthen
our partnerships with non-governmental organizations who are also
committed to quality improvement in nursing homes . . . The
unprecedented, collaborative [Advancing Excellence in America's Nursing
Homes] campaign seeks to better define quantitative goals in nursing
home quality improvement. The purpose of this campaign is to align the
strategies of the many partners who have expressed their commitment to
excellent nursing home quality.''
We applaud CMS for their commitment to further enhance care quality
and outcomes through this partnership of stakeholders. The effort truly
embodies the culture of cooperation which is critical in effectively
enhancing care and sustaining quality improvements.
NCAL also is committed to quality care and services for nearly 1
million assisted living residents. We have developed Guiding Principles
on Quality which serve as a roadmap for our members to ensure quality,
resident-focused care delivery.
In total, the increased focus on resident-centered care, actual
care outcomes, increased transparency and public disclosure, enhanced
stakeholder collaboration and the dissemination of best practices
models of care delivery is working. AHCA/NCAL remains committed to its
long-standing practices and programs which seek to improve the quality
of care for our nation's most frail, elderly and disabled who require
long term care services, and enhance the quality of life for patients
and caregivers alike.
ARBITRATION--A FAIR & EFFICIENT ALTERNATIVE
In the late 1990's, the long term care profession was subject to
excessive liability costs, which were exacerbated by an increasingly
litigious environment. As a result, operators of nursing facilities and
assisted living residences were forced into making difficult decisions
including potential closure or divestiture of facilities, and corporate
restructuring. In addition to pursuing state and national tort reform
legislative initiatives to enable facilities to continue to operate and
provide essential long term care services in a difficult environment,
the profession sought alternatives to traditional litigation including
arbitration. This trend was especially true in states such as Florida,
Arkansas, and my home state of Texas, where state laws fostered an
exponential growth in the number of claims filed against long term care
providers--even those with a history of providing the highest quality
Arbitration is a legal process where the parties enter into an
agreement to resolve disputes by an unbiased, unrelated third party.
AHCA/NCAL represents the vast majority of our nation's nursing
facilities and assisted living residences and supports the use of
arbitration clauses as a viable option for long term care providers to
resolve legal disputes. When legal concerns arise, we believe that fair
and timely resolution--the kind that is often the product of
arbitration--is in the best interest of both the consumers and their
Over the course of the past ten years arbitration has became a more
widely used alternative in long term care. This growth has been across
the board for long term care providers--from single owner facilities to
national chain facilities; and for non-proprietary and for-profit
organizations. As a service to our member facilities and the residents
they serve, in 2002 AHCA/NCAL developed a model arbitration agreement
form for possible use in the admission process.
This model agreement in no way alters the rights or remedies
available to a resident under state tort law. It states in plain
English that entering into the arbitration agreement is not a condition
of admission into the facility. Further, the model form provides a 30-
day window for the resident or their representative to reconsider and,
in writing, rescind the arbitration agreement. This 30-day ``cooling
off period'' far exceeds the period of time found on most arbitration
AHCA/NCAL supports the use of arbitration because unlike
traditional litigation, our members have experienced that arbitration
is more efficient, less adversarial, and has a reduced time to
settlement. As this Committee is no doubt aware, most cases are
resolved through settlement. Arbitration facilitates that process. As a
recent Aon Global Risk Consulting report entitled ``Long Term Care--
2008 General Liability and Professional Liability Actuarial Analysis''
found, ``Arbitration reduces the time to settlement by more than two
months on average.'' It further found that ``very few claims actually
go all the way to arbitration [as] most claims are settled in
Timely resolution of disputes is of unique importance to residents
of long term care facilities and their families. Often the individuals
are very frail elderly in their twilight years and it is a comfort for
families to reach a settlement during their loved one's lifetime.
In addition, because it vastly reduces transaction costs,
arbitration may also enable patients and their families to retain a
greater proportion of any financial settlement than with traditional
litigation. The same report found that ``currently, 55.2% of the total
amount of claims costs paid for GL/PL claims in the long term care
industry is going directly to attorneys. This means that less than half
of the dollars spent on liability is actually going to the patients and
their families.'' The decreased transaction costs associated with
arbitration means more of any award received goes to the party whom is
most deserving--the patient or resident, not their legal
``FAIRNESS IN NURSING HOME ARBITRATION ACT OF 2008''
_AN UNFAIR & INAPPROPRIATE BILL
We believe that the recently introduced Fairness in Nursing Home
Arbitration Act of 2008 (H.R. 6126 and S. 2838) is a misguided attempt
to restrict and weaken the Federal Arbitration Act (FAA), which has
been in place for more than 80 years. The FAA appropriately recognizes
the strong national interest in disputes being resolved in a forum
other than the courts when both parties agree to do so. We firmly
believe that this legislation and other efforts to undermine the FAA is
bad public policy and a step in the wrong direction.
Unfortunately, this debate is colored by anecdotes and
misinformation perpetuated by high-profile trial attorneys who
traditionally oppose any effort to bring balance to the personal injury
playing field, and who give too little consideration to the harmful
consequences on the long term care industry that follow from the high
transaction costs of traditional litigation and the resulting financial
drain on the system. In fact, Mr. Connor's testimony of October 2007
before this same subcommittee inaccurately portrayed the manner in
which arbitration agreements are presented to perspective residents and
their families upon admission to the facility. While we agree that
entering into a nursing facility or assisted living residence often is
a time of uncertainty and apprehension, Mr. Connor's notion that family
members are threatened into signing the arbitration agreement is simply
untrue. As I stated earlier, AHCA/NCAL developed a model arbitration
agreement that was provided to members which clearly states that there
is a 30-day ``out clause'' and that declining to sign the form will not
have an affect on admission to the facility.
It is important for this Committee to recognize that the FAA does
not inherently foster or sanction any disregard for traditional notions
of fair play when it comes to entering an arbitration contract. The FAA
simply requires that an arbitration agreement be enforced ``save upon
such grounds as exist at law or in equity for the revocation of any
contract.'' Numerous courts across this nation have not hesitated to
invalidate nursing home arbitration agreements when they have found
that a representative lacked authority to act for the resident, a
resident lacked the capacity to enter the agreement, or that an
arbitration agreement was otherwise unconscionable, either in the
substance of its terms or in the way it was presented to and signed by
the resident or the resident's representative.
The Fairness in Nursing Home Arbitration Act of 2008 needlessly
discriminates against long term care providers and more importantly the
patients and residents in our nation's nursing facilities and assisted
living residences by eliminating their federal right to agree to
arbitrate future disputes. Pre-dispute arbitration agreements are a
viable legal option for long term care consumers and providers, and
their use should not be eliminated by misguided policies--nor should
the consumer's choice to agree to arbitrate pre-dispute be denied as is
the legislation would do. It is clear that if the legislation were to
become law, even residents who voluntarily chose to submit to pre-
dispute arbitration would have that right to choose denied, a right
that is not denied in any other consumer transaction.
A May 1, 2008, letter to Congress signed by twenty business
organizations including the Business RoundTable and the U.S. Chamber of
Commerce echoes our concerns with this bill--and other legislative
efforts to limit the use of arbitration. The letter states, ``Even
though arbitration has been used to amicably resolve disputes for more
than 80 years, those who wish to dismantle the arbitration system are
attempting to effectively abolish all pre-dispute arbitration by using
anecdotes and a handful of poorly designed or inaccurate studies to
validate their unfounded claim that the system is broken.''
Public sentiment is also opposed to eliminating the use of
arbitration to resolve disputes. In fact, the U.S. Chamber of
Commerce's Institute for Legal Reform recently conducted a national
poll which found that ``given the choice, voters strongly prefer [82%]
arbitration over litigation to resolve any serious dispute with a
company.'' The bipartisan survey, which was released in April 2008,
also concluded that ``voters strongly believe Congress should NOT
remove arbitration agreements from the contracts consumers sign with
companies providing goods and services (71%).''
Like the vast majority of Americans, AHCA/NCAL believes that
legislative proposals to limit arbitration and undermine the FAA is bad
public policy. We strongly support the use of arbitration as a
reasonable, intelligent option for both patients and providers to help
assist in the resolution of legal disputes, and aggressively oppose
efforts to diminish the use of arbitration by American businesses,
especially those unfairly targeting long term care consumers and
Thank you for the opportunity to offer these comments on behalf of
millions of professional, compassionate long term caregivers and the
millions of frail, elderly, and disabled Americans they serve each day.
I look forward to responding to your questions.
Ms. Sanchez. Thank you for your testimony, Mr. Gadberry. We
And I would now invite Mr. Connor to please give his
TESTIMONY OF KENNETH L. CONNOR, ESQUIRE,
WILKES & McHUGH, P.A., WASHINGTON, DC
Mr. Connor. Thank you, Madam Chairman and Ranking Member
Cannon, Members of the Committee. I appreciate this opportunity
to come and share some thoughts with you about this proposed
If you believe that accountability and responsibility run
hand-in-hand, you ought to support this bill. If you believe
that wrongdoers ought to be held fully accountable for the
consequences of their actions and that innocent parties who are
the victims of wrongdoing ought to be fully compensated for
what they have suffered, then you ought to support this bill.
The sad fact of the matter is that we have a crisis of care
in long-term care facilities in this country, not withstanding
what Mr. Gadberry has said. I have seen it up close and
personal for almost 25 years. I have represented victims of
abuse and neglect from Florida to California.
And Mr. Cannon, I can only say that I would hope that the
energy and antipathy that you have for abusive trial lawyers
would be redirected to abusive nursing homes.
I have seen pressure ulcers that were completely avoidable,
that were as big as pie plates, that went all the way to the
bone, that were so putrid and foul-smelling that when you
walked down the hall, you could smell the resident before you
could see him. I have seen residents who have suffered from
malnutrition and dehydration. Their gaunt faces and hollow eyes
were testament to the shortages of staff available in a
facility because the owners of the facility made the decision
to cut labor costs in an attempt to increase profit.
The abuses that we see in long-term care facilities around
this country are horrific, and they are only going to grow, due
to the demographic and economic and cultural pressures that are
coming to bear. The Chair has rightly pointed out that we have
got a veritable ``senior tsunami'' coming with the graying of
America and are rapidly approaching mass geriatric society,
even as we have a reduced resource base available in the
Medicare and Medicaid program, and even as we have shifted from
a sanctity of life ethic in this country to a quality of life
ethic in this country.
Old people don't typically score very well under quality of
life calculus; they don't perform well under functional
capacity studies. And they are more and more vulnerable to
exploitation, and will suffer as these pressures come to bear
in the future.
I think it is important to understand that historically the
courts have been one of the key means of holding wrongdoers
accountable and ensuring that they were required to compensate
innocent victims for the consequences of their wrongdoing. What
has happened in the long-term care industry is that having been
faced with the high price of that kind of accountability, the
long-term care industry has taken advantage of the elderly and
their families at perhaps their most vulnerable point in time,
which is when they bring their loved one for admission to a
long-term care facility.
It is a time that is fraught with tension and anxiety;
emotions run high. The prospective resident is fearful of being
placed in an institution. The family feels guilt and grief at
the fact that they can't meet their needs.
The families and residents are commonly presented with a 50
to 60-page admissions packet. The arbitration agreement--the
pre-dispute arbitration agreement--is sandwiched toward the
end. It is rarely ever explained, or if explained, is not in
terms unlike those Mr. Cannon used; it is to prevent having to
involve greedy trial lawyers to save time when in fact, the
purpose is to cover the flanks of abusive nursing homes and to
limit their liability and minimize their exposure for their
wrongdoing against the frailest and most vulnerable members of
I urge you with every fiber of my being to stop this
inequitable and unjust practice. There is nothing wrong--in
fact, I would encourage, as would the Chair, arbitration as an
alternative dispute resolution once the dispute arises and the
parties know what is at stake.
I, for one, having practiced law for 35 years, and being a
conservative Republican, continue to retain confidence in our
fellow members of our society. I believe that the good sense
and ordinary judgment of common, ordinary people who are
members of our society is really quite excellent. They
understand when someone has been wronged, and they understand
how to assess and value that wrong, and they understand the
importance of holding wrongdoers fully accountable for the
consequences of their actions.
Thank you, Madam Chair.
[The prepared statement of Mr. Connor follows:]
Prepared Statement of Kenneth L. Connor
Madam Chairwoman, Ranking Member Cannon, and Members of the
I want to express my appreciation to you and to your colleagues and
to Senator Martinez for taking the lead in sponsoring the ``Fairness in
Nursing Home Arbitration Act of 2008.'' This legislation is vitally
important to protect the rights of frail, vulnerable nursing home
residents who have suffered abuse or neglect at the hands of their
caregivers. The current system which allows for pre-dispute mandatory
binding arbitration results in a gross miscarriage of justice to
victims and their families and promotes irresponsible and reckless
conduct on the part of providers who are not held fully accountable for
the consequences of their wrongdoing.
We have an unacknowledged crisis of care in this country when it
comes to the institutionalized elderly. I know this because I have seen
it first hand. For almost 25 years, I have represented victims of abuse
and neglect in long term care institutions across America. All too
often, the story is the same: avoidable pressure ulcers (bed sores)
penetrating to the bone; wounds with dirty bandages that are infected
and foul smelling; patients languishing in urine and feces for hours on
end; hollow-eyed residents suffering from avoidable malnutrition,
unable to ask for help because their tongues are parched and swollen
from preventable dehydration; dirty catheters clogged with crystalline
sediment and yellow-green urine in the bag; residents who are victims
of sexual and physical abuse from caregivers; short-handed staff who
are harried and overworked because their employers decided to increase
profits by decreasing labor costs; ``charting parties'' where these
same staff ``doctor'' charts to make it appear that care was given even
though there was no time to give it; ``ghost aids'' or ``dummy aids''
who were never on the floor, but whose names appear on assignment
sheets just in case state inspectors ask to see staffing records.
These problems are not isolated. They are systemic and they are
going to get worse. We are on the threshold of a veritable ``Senior
Tsunami.'' America is graying and as Dr. Leon Kass has said, we are
rapidly becoming a ``mass geriatric society.'' The over 85 age group is
the fastest growing age group in America. Millions of Americans will
need long term care, even as our Medicare and Medicaid resources are
shrinking. Our society is rapidly embracing a ``quality of life'' ethic
in the place of a sanctity of life ethic. But, old people do not score
well using quality of life calculus and they perform poorly on
functional capacity studies. They cost more to maintain than they
produce and they are vulnerable to abuse and neglect by unscrupulous
nursing home operators who are willing to put profits over people.
Historically, victims of nursing home abuse and their families have
been able to resort to the courts to secure justice. In recent years,
however, nursing home operators have bypassed the courts and cleverly
limited their liability for wrongdoing by requiring nursing home
residents or their families to sign their rights away through the
execution of agreements requiring pre-dispute binding mandatory
arbitration. An admissions packet of 50-60 pages is often presented for
review by the patient or their family. The briefest of explanations is
offered and the patient or their representative is asked to sign on
multiple pages. The agreement for pre-dispute binding mandatory
arbitration is commonly sandwiched toward the end of the documents and
is explained, if at all, in the briefest of terms and in the most
soothing of tones. Prospective new residents frequently suffer from
dementia, or are on medication, or are otherwise mentally compromised.
Often they suffer from poor vision or illiteracy. Rarely do they have
the capacity to understand the significant and complex documentation
with which they are presented. Many times, the nursing home
representative doesn't even understand the significance of the
arbitration agreement they are asking the resident or their family
member to sign. That, however, is inconsequential. The goal is to get
the patient's or family member's signature or mark on the document. If
the family balks, they are told that admission will be denied. That is
not acceptable to most family members since the next nearest available
nursing home is often miles away and it will be extremely difficult to
visit their loved one on a regular basis. Equality of bargaining
position between the nursing home and the resident or their family does
The admissions process is stressful for the resident and their
family. They don't have a clue about the problems that persist in the
nursing home industry. Protecting their legal rights is the last thing
on their radar screen. No lawyer is present to advise them. They don't
expect to be confronted with a waiver of their legal rights. They just
know that the family can no longer provide the care needed by their
aging parent or grandparent and their local nursing home has assured
them that it can do so. They need the nursing home's help and they need
The terms of the binding mandatory arbitration agreement are often
as unconscionable as the circumstances under which the agreement is
executed. There is no mutuality. The residents and their families
typically aren't afforded an opportunity to negotiate the terms. The
agreements are drawn by the nursing home's attorneys who craft the
terms so as to favor the nursing home and disadvantage the residents.
As to the proposed agreement, the resident or their family must ``take
or leave it.'' The nursing home often retains the right to modify the
contract, but that same right is not afforded to the resident or her
family. The nursing home reserves the right to pursue a collection
action in the courts against the resident or their family, but the
resident is usually left with only the right to pursue any claims
against the facility through arbitration.
Discovery pursuant to the agreement is emasculated. The agreement
typically imposes draconian limits on (1) the number of witnesses who
can be deposed or called at the arbitration, (2) the number of experts
who can be called, (3) the number of interrogatories, requests for
admission and requests for production that can be filed, and (4) the
length of time to be allotted for the arbitration hearing. These
limitations do not permit the claimants to adequately present their
case. The arbitrator or arbitral forum is typically selected by the
nursing home and often the home (or the chain of which it is a part)
provides repeat business for the decision maker. This is a process
which hardly leads to a fair and just result for the resident who is a
victim of abuse and neglect in a nursing home. Not surprisingly,
therefore, arbitration awards are usually substantially lower than
court awarded jury verdicts.
Nursing home residents should not be required to check their rights
at the door of the nursing home. Nevertheless, that is exactly what
pre-dispute binding mandatory arbitration agreements do. By their
terms, the residents and their families are typically required to waive
their right to a jury trial, their right to attorney fees, their right
to the full measure of their compensatory damages, and their right to
punitive damages. The net effect is that residents are short-changed by
the agreement and their caregivers are relieved of the consequences of
In a just society, wrongdoers are held fully accountable for their
conduct and innocent victims are compensated for the full measure of
their loss. The failure to require such an accounting or to punish
wrongdoers for their reckless conduct means that the wrongful conduct
will multiply in the future. Congress should act swiftly and decisively
to outlaw pre-dispute binding mandatory agreements in nursing home
settings. Their continued use and approval means that victims of abuse
and neglect in nursing homes will be abused yet again by the very
people who were supposed to take care of them.
Ms. Sanchez. Thank you, Mr. Connor.
We appreciate all of your testimony. We are going to begin
our round of questioning, and I am going to begin by
recognizing myself first for 5 minutes of questions.
Dr. Hall, I would like to start with you. In your written
testimony, which I read last night, you discussed a very sad
situation involving the death of Ruth Painter soon after she
was admitted into a New Mexico nursing home. And based on your
experience, I am curious to know, is the example of Ruth
Painter common where an arbitration clause is included in the
admission documents, the death of the nursing home resident is
caused by staff negligence, and the family then successfully
appeals to a court to declare the arbitration clause
unenforceable? Is that the typical scenario?
Dr. Hall. Well, I can't say that it is the typical
scenario, but it is very clear that there is a great
variability in how the courts look at these arbitration
agreements, so that there is no uniform national standard. So
it varies tremendously. But in point of fact, there is enough
precedence to suggest that in many cases, the limitations put
on individuals and their families with pre-dispute arbitration
agreements severely limits their ability to get any redress
Ms. Sanchez. Thank you, Dr. Hall.
Ms. Stewart, I really again want to thank you for being
here today and telling us your story. We have had other
witnesses appear before the Subcommittee to tell us about their
horror stories with mandatory binding arbitration, but none of
them have had the experience that you have had with the death
of a family member because of it, and I really think it shows
an incredible degree of strength to come and testify.
Now that you are aware of the arbitration clauses in
nursing home contracts generally, have you spoken with other
people, other families, and shared similar experiences with
those--you know, who have had similar experiences with those
types of clauses? Because I believe Mr. Gadberry said that
stories like yours are the exception and not the rule. And so I
am interested in knowing if you have had contact with other
families who have had similar types of situations.
Ms. Stewart. Well, as a matter of fact, I have. There was
another patient in this same nursing home that had had some
issues and had--the family members wanted to sue, and they
found out also, in that same nursing home, that they had signed
that same paper. So it does take place probably more frequently
than we are willing to admit. And so there are other people,
yes, that have had the same experience.
Ms. Sanchez. Thank you, Ms. Stewart.
Mr. Connor, do you think that stories like Ms. Stewart's
are the exception rather than the rule?
Mr. Connor. They are not the exception, and they are sadly
the rule. And I would like to controvert, if I may, two points
that Mr. Gadberry made. First of all, I think it is important
to understand Federal Arbitration Act trumps State law. And as
a practical matter, the provisions of State law that would
provide greater protection for nursing home residents are often
preempted by the Federal Arbitration Act and the provisions of
the arbitration agreements that are entered into.
Secondly, with respect to the so called ``30-day cooling
off period,'' when people have an opportunity to rescind the
agreement, the first time that most families learn that they or
a member of their family signed an arbitration agreement is
after a lawsuit has been filed and a motion to compel
arbitration is filed by the defense. They----
Ms. Sanchez. They don't typically discover it 30 days after
Mr. Connor. They do not. And they do not understand what
they have signed, and that is by design, in my experience, on
the part of the nursing homes. Again, if they view arbitration
as such a great means of alternative dispute resolution, then
they should embrace it after the dispute has arisen, not
before. It is absolutely unconscionable the way it is handled
Ms. Sanchez. Thank you, Mr. Connor.
Mr. Gadberry, you indicated in your written statement, and
also in your oral testimony, that public sentiment is opposed
to eliminating the use of arbitration to resolve disputes, and
I just want to draw your attention to a poll that the AARP
conducted. They conducted a poll of Arkansas residents in
January 2007 which found that 85 percent of respondents
strongly support the right of nursing home residents and their
families to take nursing homes to court for neglecting and
abusing nursing home residents. And a more recent May 1, 2008
Peter Hart Research Associates, Incorporated poll revealed that
when given neutral information about arbitration, 66 percent of
respondents disapproved of mandatory binding arbitration.
So I just want to point that out because I think that, to
say generally speaking that public sentiment is opposed to
eliminating the use of arbitration, that may have been the
results of polling that you did, but a with many statistics,
the way the questions are framed and the way that information
is given to the respondents, I think, affects their response to
the polling question. So I just want to again reiterate that
when given neutral information about arbitration, 66 percent of
respondents disapprove of binding arbitration.
My time has expired, so at this time I will recognize Chris
Cannon for 5 minutes of questions.
Mr. Cannon. Thank you, Madam Chair. I appreciate that.
This is a complicated subject, and let me point out, Mr.
Connor, that I actually don't have antipathy toward trial
lawyers, but I really am concerned about how we use our
resources appropriately. The purpose of this hearing is to try
and figure out how we can do that, and it is a complicated
issue. It is clear that there is much abuse in nursing homes,
and you said that it is the rule, in fact, not just the
If that is the case, then our concerns are probably much
deeper and greater. And of course you have Ms. Stewart----
In fact, Ms. Stewart, your grandmother suffered this injury
and the person who inflicted it upon her wasn't known. I
suspect you couldn't even find out who had been the person that
did it, right?
Ms. Stewart. They never knew.
Mr. Cannon. And how long after it happened could you tell--
obviously you wouldn't know the time it happened or you would
know the person, but how long after it happened did your family
discover that your grandmother was in pain?
Ms. Stewart. Yes. My grandmother was only in the nursing
home approximately 3 weeks when they actually--we discovered
that there was something wrong with her leg, so in response to
what he said, she didn't even make the 30-day period. She was
there 3 weeks when they broke the leg.
Mr. Cannon. Could it have been, like, in the first week and
she suffered for 2 weeks?
Ms. Stewart. Oh yes, at least. Because even on the
documentation in the nurse's notes, no one, you know, even
wrote up an incident that it happened.
Mr. Cannon. She complained to you----
Ms. Stewart. Yes.
Mr. Cannon [continuing]. Or your family, so you knew that
she was in pain----
Ms. Stewart. Yes.
Mr. Cannon [continuing]. She had been complaining to the
nursing home, and they didn't keep track of her complaints.
Ms. Stewart. Yes. She had already been complaining to the
nursing home when we decided that something was wrong and we
needed to take her to the hospital. And that is when we
discovered it was fractured.
Mr. Cannon. Did you have to work with the nursing home to
get her to the hospital?
Ms. Stewart. Oh no. I just told her they were going to take
her to the hospital. I am a nurse. I knew she was going to go.
Mr. Cannon. You put her in a wheelchair and just took her
out to your car or something?
Ms. Stewart. Oh no, no. I mean, I told the Administration
that she needed to go and someone needs to release x-rays to
see what was wrong. And that is when we found out it was broken
in two places.
Mr. Cannon. Were the x-rays done by the nursing home or
were they done at the----
Ms. Stewart. Oh no. At the hospital.
Mr. Cannon. So you got her physically out of the hospital--
or out of the nursing home--and took her to a hospital?
Ms. Stewart. To the hospital, and the hospital did the x-
ray, and that is when they found it was fractured.
Mr. Cannon. And I take it, Mr. Connor, these are the kinds
of--the failure of reporting an injury and letting a patient
suffer for maybe two or 3 weeks with a painful injury--are the
kinds of things that you are suggesting are the rule at the
Mr. Connor. I am not saying they are the rule; I am saying
that the problems are systemic and pervasive. There are many
nursing homes that provide good care, but there are many, many
instances all over this country where instances of abuse and
reckless conduct occur.
The nursing homes that are providing good care don't need a
pre-dispute arbitration agreement. That is inherently a system
that is precooked and that is going to weigh favorably in terms
of the outcome for the nursing home and against the resident.
What I am suggesting simply is that in those instances,
where nursing hoe residents suffer from abuse and neglect,
there ought to be a level playing field through which they can
fully recover for the injuries----
Mr. Cannon. I understand that is your position. What I am
wondering is if there is not a way that we can do something
that creates a system that works better than just either
opening the door for every trial lawyer and every minor
complaint, but on the other hand closes the door to the kind of
injuries that Ms. Stewart's grandmother suffered.
You suggested something that I am actually quite interested
in. You said that a quality nursing home doesn't need mandatory
Mr. Connor. Pre-dispute. Pre-dispute.
Mr. Cannon. Are there nursing homes that hold themselves
out as not having, or do you think that the market would
encourage people who--nursing homes--to come forward and say,
``We take good care of people that come into our care, and
therefore we don't need this,'' and advertise the fact that
they give the kind of quality care that would avoid that?
Mr. Connor. Well look, I think nursing homes ought to be
willing to trust the members of their community to make
judgments about whether or not----
Mr. Cannon. The time is almost up, but I would really
like--it seems to me that this would be a great way to get in
the business, and that is to say, ``We don't do mandatory
arbitration because we take good care.
Mr. Connor. Well, I would certainly encourage that. But
further, for those that wish to use arbitration as an
alternative form of dispute resolution, I think it is a viable
alternative. It ought to be used in situations after the
dispute arises so that people can----
Mr. Cannon. Let me make some sense, because you do
alternative dispute resolution----
Mr. Connor. Sure.
Mr. Cannon [continuing]. You get the solution much faster.
So in the case of Ms. Stewart, her family may have said, ``You
know, look, Grandma is old, and if she is going to have some
benefit we probably ought to do it quickly.''
And what was inflicted upon her is so clear, so you are
suggesting that they worked.
Mr. Connor. Yes. There are advantages to arbitration. The
inequity here is in deceiving the prospective resident and
their family about what is at stake at the very beginning, and
before a dispute arises.
Mr. Cannon. Madam Chair, if you would indulge me in just
one more question, are you aware of any nursing homes that
would actually promote the idea of not using pre-dispute
mandatory arbitration because they promote quality of care that
means it is not necessary?
Mr. Connor. I am not aware of any that have that view, and
in fact, I think that they feel it is to their economic
advantage to continue to use this policy and to fall back on
the Federal policy embodied in the Federal Arbitration Act, and
to use that to their advantage and to the disadvantage of their
frail, vulnerable residents.
Mr. Cannon. Thank you, Madam Chair, for your indulgence,
and I yield back.
Ms. Sanchez. The gentleman yields back. I would recognize
the gentleman from Georgia for 5 minutes for his questions.
Mr. Johnson. Thank you, Madam Chair.
Ms. Stewart, why did you agree to settle your dispute with
the nursing home rather than continue to fight the battle in
Ms. Stewart. Well, I stated earlier they said they would
take it all the way to the Supreme Court if we didn't settle,
so we went back--to dispute, and my attorney--if you would like
to ask any things that are more legal he would answer them for
me. But it is because they just refused to negotiate with us.
Mr. Johnson. Did it appear to your lawyer that if it went
all the way through the court system that you would lose----
Ms. Stewart. Lose.
Mr. Johnson [continuing]. If forced into the arbitration
Ms. Stewart. Yes. It was pretty much understood that the
chances of winning were slim, so that was sort of one of the
Mr. Johnson. All right. And in your opinion, did you take
less in settlement than you felt was fair?
Ms. Stewart. Well yes, because my grandmother was still
active. You know, I think sometimes when people say they are 90
years old you think that they are not responsible, but my
grandmother was actually still cooking. And so when we took her
to the nursing home, and within 3 weeks they took her from a
viable adult to amputating her leg. So I think we shouldn't
have had a one size fit all sort of litigation here.
Mr. Johnson. Okay. Well let me ask Mr. Connor the question
this way: How does mandatory dispute resolution and arbitration
of these nursing homes--how does that force settlements in
terms of what Ms. Stewart went through?
Mr. Connor. Mr. Johnson, the reality of pre-dispute binding
mandatory arbitration is that the awards are going to come at a
tremendous discount to what juries ordinarily would award. Our
experience has been, typically, that these awards are about 10
percent of what would be recoverable by a jury. Bringing
nursing home cases often can cost several hundreds of thousands
of dollars. They are very expensive, they are very complex, and
they are often very protracted.
And our experience has been that jurors are mortified and
horrified at what these people suffer at the hands of the
people that they are supposed to be caring for. And oftentimes
they will award punitive damages in an attempt to send a
message to the nursing home that it is going to cost more to do
business the wrong way than it does to do it the right way.
None of that takes place in the arbitration setting.
Mr. Johnson. All right. Thank you.
And this arbitration setting, Mr. Gadberry, is pretty much
held in private, correct?
Mr. Gadberry. That is one of the concepts with arbitration,
Mr. Johnson. It is a secret process?
Mr. Gadberry. No. It is not a secret process----
Mr. Johnson. Well, there are no published calendars so that
the public can come in and observe a public trial, if you will.
Mr. Gadberry. Well, like Mr. Connor, I have tried lawsuits
and been involved in litigation, and a lot of times that is the
exception that a case goes to trial----
Mr. Johnson. Well, no, no, no. I am saying that in an
arbitration proceeding there is not going to be a published
trial calendar, and the public doesn't have notice that this
may be something that I would like to come and take a look at,
just to see how the system works.
Mr. Gadberry. There is not a public docket that would be
available. However, nursing homes are one of the most highly
regulated professions in the country----
Mr. Johnson. And I understand that, and we are talking
about, dispute that arises that has to go and be settled,
either by judge and jury or by an arbitration panelist or
panel. And this arbitrator is pretty much selected by the
nursing home industry, correct?
Mr. Gadberry. In our form, we offered up several different
Mr. Johnson. And those on your preferred list, or actually
your list that limits the arbitration groups that can hear the
arbitration case, those groups depend on the nursing home
industry for the referrals, and the nursing home industry pays
them. Isn't that correct?
Mr. Gadberry. There are fees associated with arbitration
just like anything else.
Mr. Johnson. And they are paid by the----
Mr. Gadberry [continuing]. For the service.
Mr. Johnson. They are paid for the service, and they are
paid by the nursing homes and they would not have that stream
of income were it not for the referrals from the nursing home
industry. Isn't that correct?
Mr. Gadberry. That is a broad brush, because there are a
lot of services to choose from, and to use, and----
Mr. Johnson. Well, you are typically limited to only two,
maybe three forums in the arbitration agreement, correct?
Mr. Gadberry. They could choose whoever they would like to
Mr. Johnson. Within the context of the selectees that have
already been decided by the nursing home. But now let me ask
you something: In these nursing home proceedings, the rules of
evidence don't apply, necessarily?
Mr. Gadberry. It depends on the service that you use. The
one we recommend----
Mr. Johnson. It is not mandatory.
Mr. Gadberry. The one we recommend uses--has procedures,
has notice provisions, and has evidentiary provisions. There
are also rules that go into great detail about discovery----
Mr. Johnson. But that is not required--is it?
Mr. Gadberry. The most important thing about arbitration is
that the parties are supposed to cooperate and exchange stock,
and then if there is a need----
Mr. Johnson. If it doesn't happen and the arbitrator
perhaps may not even be an attorney, it certainly has no
judicial code of ethics to abide by, does he or she?
Mr. Gadberry. Most arbitration services require their
arbiters to sign an agreement that they will comply with their
arbitration rules, but more importantly they have to comply
with the party's rules. If, like, the AHCA arbitration
provision has language in it that says that the State law--
there is no limitation on recovery or the remedies that are
available in litigation.
Mr. Johnson. And most of the time----
Ms. Sanchez. The time of the gentleman has expired. I am
Mr. Johnson. Thank you, Madam Chair.
Ms. Sanchez. Perhaps we will do a second round of questions
if there is interest in further questions.
At this time I would like to recognize the gentlewoman from
California, Zoe Lofgren, for 5 minutes of questions.
Ms. Lofgren. Thank you, Madam Chairwoman. I am glad that
this hearing is being held; I think it is a very important
issue. As America ages, this issue of quality of nursing home
care is more and more on the minds of Americans, and I actually
hear about it a lot from people who have older parents and who
worry about whether they are going to be treated properly or
not. And sometimes they are not.
You know, the testimony, Dr. Hall, that you provided to us
indicates--on page seven you indicate that decisions and facts
about the dispute typically are confidential, an issue that Mr.
Gadberry has just given a contrary point of view on. Can you
tell me what you base that testimony upon?
Dr. Hall. Well, in the surveys that AARP has done, and
speaking as the representative of AARP for our 40 million
members, it is pretty clear that all of the data, all of the
determinations, all of the rationale is very rarely available
to families without recourse to some kind of very expensive
legal help, which very, very, very few of them can afford.
Ms. Lofgren. You know, I think there is value, oftentimes,
in having some public information out there, and these--you
know, if people know things, they can make decisions
accordingly. So I think, you know, that is a serious downside
for arbitration. I am not opposed to arbitration in every case.
There is a real value sometimes for arbitration quickly getting
to a solution, but usually it is the arbitrations where the
parties agree to arbitrate.
And I am troubled, and I am glad I am a co-sponsor of the
bill, that, you know, to do this, especially for people who
are, you know, they wouldn't be going into the facility if they
weren't in trouble in some way--there is an inherent power
differential there that is disadvantageous to the nursing home
resident. And I just think, you know, understanding that there
can be value in arbitration, that would be served, you know, if
there were an incident.
And I also think, you know, people--it is expensive to
bring lawsuits, and if you don't win you have to pay for it.
And so there really is a disincentive to proceed in a frivolous
manner. And I, you know, I think there are some just built-in
protections in our system.
So I think certainly, Mr. Connor, your testimony is
riveting. I no longer have either one of my parents, but I
was--my father-in-law is 90 years old, and the saying, ``It is
not how old you are, but how you are old,'' couldn't be more
true about him. I mean, he is just tremendously fit; he works
half-time. I mean, he is just awesome.
But, you know, there are many people his age who aren't so
fortunate, and to think that you would have that kind of
experience is really chilling. And certainly I have had family
members in facilities that were excellent, and I don't want to
over-par the nursing home industry. I mean, obviously we need
that sector of our country to be well run, but I think that for
those who would not really adequately care for a vulnerable
older person who is so dependant on the care, I mean, there has
to be a deterrent from that.
And yes, there are regulations, but, you know, I earlier
this year looked at, really, at the request of many of my
constituents, some additional nursing home provisions because
of problems. And the regulatory scheme, although well intended,
in many cases in various States is not working that well.
And I don't know, Mr. Connor, if you would have a comment
on that, but in some of the States where we have looked, I
mean, it is not really very tight.
Mr. Connor. Well in fact, Consumer Reports did a study a
couple years ago and reported that since their previous study,
they had found that nursing home care declined, that
inspections were down, that citations were down, that the
gravity of the citations were down, that the survey system was
being relaxed for the benefit of the homes, that in many
instances this relaxation stemmed from political motivation.
And the sad reality is--and I think we have to keep in mind--
that human nature is such that if wrongdoers aren't held fully
accountable for the consequences of their actions, they are
likely to repeat it.
And the problem is that when you start out with somebody
who is frail and vulnerable in the beginning, the magnitude of
the damages they suffer escalate very, very quickly. And I
promise you that if these injuries and damages were to be
manifest at places like Guantanamo or Abu Ghraib, there would
be no end----
Ms. Lofgren. Yes.
Mr. Connor [continuing]. To the congressional hearings or
the headlines that would be covering that.
Ms. Lofgren. My time has expired. Thank you.
Ms. Sanchez. The time of the gentlewoman has expired, but I
will grant the gentlelady, under unanimous consent, one
additional minute for questions if she would be so kind to
Ms. Lofgren. Oh no, I am fine. This is very helpful.
I will yield it to you. Yes, I will do that. I was a little
slow on the uptake there.
Ms. Sanchez. Thank you. I just have one final question that
I want to close the hearing with, and I am going to pose it to
all of our witnesses.
What is so wrong with saying to the consumer or the
potential resident or patient, ``If you want to choose to
arbitrate--if something should happen to you in your care and
you should want to choose to arbitrate, you can choose to do
that at a later time, but we are not going to force you to
arbitrate should something arise regarding your standard of
care while you are in the facility''?
Dr. Hall, do you think that that is----
Dr. Hall. Well, we are talking about----
Ms. Sanchez [continuing]. That that is an unreasonable
Dr. Hall [continuing]. Post-dispute arbitration that is
willingly entered into by the patient and the family and the
facility. Well, you know, our position there is that if people
can become informed and still have not given up the right of
legal redress, of course that is an option and it might work in
many circumstances. It is really the pre-dispute binding
arbitration that bothers us and bothers the organization.
It is indescribable to--the situation that people are in
when they make this decision. There are many perversities. The
Medicare system, in an acute hospital, really insists that
people leave the hospital when there is no legitimate acute
medical reason why they should be there. This often comes as a
surprise to patients, even those who are completely lucid, and
often isn't the situation.
And this entire sort of decision has to be made in 24 hours
in a situation that none of us would tolerate in any other
venue that I am aware of. So that is what makes this special
and why, in particular, the pre-dispute arbitration binding
clauses really bother us a great deal.
Ms. Sanchez. Thank you, Dr. Hall.
Ms. Stewart, you were forced into mandatory binding
arbitration. Would you have preferred, after a situation arose
with your grandmother, to have the choice whether or not you
wanted to pursue litigation or arbitration?
Ms. Stewart. Yes, and I think that is the problem I have
with it. I mean, I don't think arbitration is wrong. It is just
the way of the deception that they put the paper in there and
let us sign it, and then didn't tell us.
And I also told the nurse, because I am a nurse, I told the
nurse on duty, ``You know, this was an accident until they
covered it up; then it became a crime.'' And she looked at me
as thought she had seen a ghost because, you know, maybe the
person that did break her leg didn't mean to do it, but they
put her back to bed and did nothing with it, then the crime was
So I have no trouble with the arbitration. It is just that
you put papers--we left my grandmother's, she had dentures, two
pairs of shoes, three gowns, and then arbitration, in the same
list--they were listing her clothes and possessions, and
something as important as an arbitration agreement along with
it. So I just think that that is more deception which, in the
medical community, it just boggles my mind as a nurse that I
would give you a medication and deceive you and make you think
that it was one medicine, and I was giving you something else.
I think the deception is what bothers me.
Ms. Sanchez. Thank you, Ms. Stewart.
Mr. Gadberry, what is the problem? You are such an ardent
supporter of arbitration and it is such a great thing. Why not
let residents choose whether or not they want to arbitrate if
they think it will save them time and money and effort? Why not
let them make an informed choice?
Mr. Gadberry. They have that opportunity, and if--you know,
I can't tell you that all of AHCA's members or all nursing home
facilities follow the concept contained in the arbitration
provisions that we have developed as a model. But, you know,
the Supreme Court, they said, ``We agree with Congress, that
when they enacted this law, it had the needs of the consumers
as well as others in mind.'' So not just business was intended
back in 1924 when the Federal Arbitration Act was created.
What we are doing with this bill is, you are saying that
there will be no pre-dispute arbitration----
Ms. Sanchez. But it doesn't preclude arbitration.
Mr. Gadberry. There is pre-dispute arbitration in all other
consumer contexts--in credit cards, you have had hearings on
that, on mortgage loans, though, on banking agreements you have
those type of pre-dispute arbitration agreements in place.
Ms. Sanchez. But you don't agree with Dr. Hall, that this
is perhaps a unique case where you have to make quick decisions
or forego the opportunity to have certain, and oftentimes the
arbitration agreement--consumers aren't even aware that they
are there, and they are worried about their health?
Mr. Gadberry. Yes. I would love to respond to that.
Chairwoman Sanchez, I have a grandmother in a nursing
facility, and my parents went through the process of placing
her. And it is a process; it doesn't usually happen overnight.
You don't show up to a nursing home like you show up to an
emergency room in an ambulance with the siren and the lights
flashing. It is a process.
Generally, most nursing facilities will allow you, for
coming to visit and looking for a facility, will let you look
at the packet and may even give you a copy to take home. So
they have the opportunity to look at the packet.
One of the things that was said today is that an admissions
packet is about 50 pages long. I want your help. I am asking
for your help there. One of the reasons the admissions packet
is so long is that the Federal regulations and State
regulations require all sorts of disclosures involving Medicare
And one of the things that is interesting--Medicare and
Medicaid are so complex, and I beg for your help there for
nursing home residents. Medicare and Medicaid Part A, Part B,
Part D--there are all other provisions in there--they have to
be explained and signed off by the family, responsible party of
the patient, or the patient themselves in that process.
Ms. Sanchez. Your point is well taken, although I will say,
however, there is generally no explanation given of the
mandatory binding arbitration agreements that are slipped into
these very long contracts, and that being the difference
between those two.
Mr. Gadberry. If I may respond, they are not generally
slipped in. In our recommendations to the nursing facilities,
to our membership, is that you set up a process and a policy
where they are explained to the membership.
Ms. Sanchez. But the recommendations that you make aren't
binding upon your membership. They don't have to follow them.
They can throw them out the window if they----
Mr. Gadberry [continuing]. Of the association are made up
of members that are nursing facilities, and that leadership
directed us to come up with a reasonable approach, and that is
what we did.
Ms. Sanchez. But they are not bound by the recommended
Mr. Gadberry. I can give no assurance that they are going
to be bound by that----
Ms. Sanchez. Thank you.
Mr. Connor, what is wrong with allowing the resident to
choose whether or not they want to arbitrate if a dispute
Mr. Connor. Nothing is wrong with it after the dispute has
arisen. Congress passed the Omnibus Budget Reconciliation Act
in 1997, and rules were adopted pursuant thereto aimed at
protecting residents' rights. Congress recognized that among
all of the cohorts in our society, this one is very vulnerable
and is in special need of protection.
In any other setting, if someone were to prey upon a frail,
weak, vulnerable person whose eyes were dim and whose hearing
was bad, and whose competency was in question, and who might be
on medication that impaired their judgment, and deprive them of
their money or substantial legal rights, we would be
prosecuting. But thanks to the shelter of the Federal
Arbitration Act and the case law that has been construing that
act, we are allowing nursing homes pre-dispute to take
advantage of the frailest and weakest members of our society.
It is an outrage, and Congress ought not to permit that
practice to exist anymore.
Ms. Sanchez. Thank you, Mr. Connor.
I would recognize Chris Cannon for additional questions.
Mr. Cannon. Thank you, Madam Chair.
This is a complex issue, and I think, Mr. Gadberry, you
probably haven't had an opportunity to actually respond to some
of the issues that have been thrown in your direction. Would
you mind--I know there are some things you would like to talk
about--would you also mind talking about Federal preemption and
how that works in your contract?
Mr. Gadberry. Well, the Federal Arbitration Act, that is
its full purpose is to seek out or prevent States from enacting
laws that discourage arbitration. What the Federal Arbitration
Act has done in certain States that have restrictions or
provisions that discourage arbitration, it prevents them. Not
all States have those.
In fact, most States have a general arbitration provision
that is very similar to the Federal Arbitration, which says
that an agreement will be construed based on the contract law
of that State. And that occurs right now. The Federal
Arbitration Act only preempts in situations, laws that States
have passed that discourage arbitration.
The States themselves still control what the enforceability
of the Arbitration Act. And what we are setting up here is a
provision under the Federal Arbitration Act that targets a
specific industry and discourages use of pre-dispute
arbitration, whenever they are encouraged everywhere else.
That, I think, is one of the main things I wanted to say.
Didn't get a correct chance to say it----
Mr. Cannon. Thank you.
Dr. Hall, it would seem to me that AARP has gone through a
process, because you talked about the conclusions. In that
process, have you considered the costs of litigation, vs.
alternative ways of helping take care of the people Mr. Connor
calls the most vulnerable in our society?
Dr. Hall. Absolutely. And we are very concerned about it
now, and even more concerned for the future. It is one of the
important challenges to our generation, to begin to solve this
problem for the next 50 years.
We--on the backs of the nursing home residents' families.
They shouldn't be victimized. There are other approaches to
reducing the cost of long-term care, and it doesn't have to be
entirely dependent on pre-dispute arbitration contracts.
Mr. Cannon. Thank you. I know that my staff would like to
work with you on those alternatives. This is a serious problem.
Dr. Hall. Yes.
Mr. Cannon. I think the--and maybe, Mr. Connor, you would
like to respond to this, which we might have is that you think
that lawyers are going to come in and protect the most
vulnerable when in fact, what they will do is come in and take
the most lucrative cases and that provides a motivation to
nursing homes to not allow processes----
But I don't see a system that actually helps nursing homes
avoid or develop practices that would eliminate problems that
are going to result in lawsuits.
Mr. Connor. I think, Congressman Cannon, if you adopt the--
arbitration policy, to the extent that there is a benefit to
those who suffer--and who have lower case values----
The reality is, lawyers are business people too, and they
simply, from an economic feasibility standpoint, can't handle a
case that is not likely to yield back a return to the client
and to the lawyer who represents him.
Now, there would be nothing that would prevent people from
being presented in----
Mr. Cannon. Sure, except that what you are going to get is
a heavy cost to a system that is going to have to be borne by
Dr. Hall's members.
Mr. Connor. I don't think the cost----
Mr. Cannon. Pardon me.
Mr. Connor. Yes, sir.
Mr. Cannon. Let me just ask Mr. Gadberry, because at this
point it seems to me that representing not just as a lawyer
here, but representing the industry, there have to be attempts
of people looking at ways to help avoid the kind of problems
that Ms. Stewart is talking about. That is, you have to have a
group of people that are looking at this and saying, ``What can
In the first place, you have got an information system that
we didn't have 10 years ago. The Internet provides a great deal
of information. Secondly, there are interests that your people
have in promoting the understanding of arbitration or dispute
resolution, and if that becomes a competitive issue, all the
better for people.
In the third place, you know, Ms. Stewart could have,
depending upon her grandmother's status, you know, if you have
got a robust person, you don't want to be spying on them, but
if you have got a person who is incapable of turning herself,
you could have a camera in the room and the family could watch.
Are you, as an industry, looking at those kinds of issues, that
help you guys figure out how to take care of people who range
from robust to incapable?
Mr. Gadberry. Absolutely. The nursing home profession is
made up of people. It is not like a production line or anything
else where you can go fix something. You have to train people,
and you have to count on people. And when people fail, bad
things happen. And I can't help but think that if it is as if
Ms. Stewart said, then there are multiple failures that
The regulations already have requirements that you report
injuries of unknown occurrence. There regulations are already
there, and it should have been reported. If it wasn't, then
there was somewhere along the way a failure--a human failure--
to make that report.
Second, there are things that the association has done
through--with our governmental partners to try to improve care.
Finally, you are right about the information out there and the
transparency that is so much better than it was many, many
In my State, we have what is called a quality reporting
system. It is a very detailed reporting system that ranks, it
puts up the survey history, not only health, but life, and life
safety code history for that facility. It lists whenever
ownership changes so you know when there are things going on
with the corporate ownership. It also keeps running track of
how the performance of the facility has been in the past, and
if there has been bad performance in the past it is listed, but
it also lists if you have had zero deficiencies.
There is also Nursing Home Compare, which is a Medicare
site, and that site is something relatively new in that it
lists, similarly, all the deficiencies, the location of the
facility. But more importantly, recently they started putting
staffing time periods and amount of staffing that is being put
in place by the facility. That is one of the most important
tools, is how many human beings we have out there taking care
of our patients.
And we are so far where we were back before OBR 87 went
into effect. And when OBR 87 went into effect it was a whole
new ballgame. Things have changed, and things are continuing to
improve, and our association is improving and embracing, trying
to get to quality profession.
Ms. Sanchez. The time of the gentleman has expired----
Mr. Cannon. Would the Chair indulge me in one additional
Ms. Sanchez. Very briefly, one additional question.
Mr. Cannon. Thank you.
It just seems to me, Mr. Gadberry and Dr. Hall, that you
are the two groups--and doing it outside of the legislative
context may actually be much more appropriate. Is that
something you have done or would be willing to do, Dr. Hall,
and then Mr. Gadberry?
Mr. Gadberry [continuing]. We work together as much as we
can. And there are times when we have to agree to disagree, but
they are our friends, and we try to work together for the best
interests of the frail and elderly of our Nation.
Dr. Hall. AARP's position is very clear. We are interested
in quality care for our members and for all older adults in the
United States. When that quality of care is compromised, we all
secondarily think that there has to be access to the court
system, period. We are always willing and go out of our way to
talk to every agency and individual who wants to participate in
Ms. Sanchez. The time of the gentleman has expired. I will
recognize myself for 5 minutes, although I don't expect using
the entire 5 minutes.
Just one last question, and this is for Mr. Connor:
Supporters of mandatory binding arbitration agreements contend
that they are a defense against litigation, and therefore they
keep costs down for them, which they ultimately pass down to
consumers, and in this case, residents. How neutral are
mandatory arbitration agreements if such clauses are seen as a
defense to lawsuit?
Mr. Connor. Well, I would have to take issue with the
premise, which is that arbitration is necessarily cheaper than
litigation. The filing fees typically are substantially
greater, and Public Citizen has done a fine job in outlining
The real reason that these are used in lieu of litigation
on the part of the nursing home is not to minimize costs. It is
to minimize exposure for liability. It is to minimize their
accountability. It is to reduce the awards that will be levied
against them by a cross-section of the community who hears the
And as an alternative to that, their preference is to have
a go-to service or provider that they provide repeat business
to, whom they know is likely to make an award for the same
injuries that is dramatically greater than a jury of their
peers would. That is what pre-----
Ms. Sanchez. So it is cheaper for the nursing home that has
not given the standard of care if the award is, in arbitration,
it is a lower amount that is awarded to a family than a
comparable court case. Is that correct?
Mr. Connor. That is exactly right. It is----
Ms. Sanchez. When they say it is cheaper, they mean it is
cheaper for the person that is doing the wrongdoing.
Mr. Connor. That is right, but it is at the cost to the
resident who suffers horribly.
Ms. Sanchez. So you would agree with Dr. Hall's assessment
that there needs to be a way to, perhaps, to increase the
number of facilities and make it cost effective, but not on the
backs of victims, who have suffered at the hands of the people
Mr. Connor. There is nothing wrong with making a profit.
What is wrong is doing it on the back of innocent victims for
whom you are supposed to be caring.
Ms. Sanchez. Thank you.
And I will yield back the balance of my time. I want to
again thank the witnesses for their participation in our
Without objection, Members will have 5 legislative days to
submit any additional written questions, which we are going to
forward to the witnesses and ask that you answer as promptly as
you can so that they can be made a part of the record. And
without objection, the record will remain open for 5
legislative days for the submission of any additional material.
Again, I want to thank all of our panelists for their time
and patience, and this hearing on the Subcommittee on
commercial and administrative law is now adjourned.
[Whereupon, at 3:36 p.m., the Subcommittee was adjourned.]
A P P E N D I X
Material Submitted for the Hearing Record
Prepared Statement of the American Association of Homes and
Services for the Aging (AAHSA)
The American Association of Homes and Services for the Aging
(AAHSA) appreciates this opportunity to submit a statement for the
record on H.R. 6128, which would prohibit nursing homes and assisted
living facilities from asking residents to sign a pre-dispute
arbitration agreement, even if the arbitration agreement is not
required for admission.
AAHSA members help millions of individuals and their families every
day through mission-driven, not-for-profit organizations dedicated to
providing the services that people need, when they need them, in the
place they call home. Our 5,800 member organizations, many of which
have served their communities for generations, offer the continuum of
aging services: adult day services, home health, community services,
senior housing, assisted living residences, continuing care retirement
communities and nursing homes. AAHSA's commitment is to create the
future of aging services through quality people can trust.
Unfortunately, high quality services do not protect even the best
long-term care providers from lawsuits that may have little merit.
Litigation against long-term care providers has become a lucrative sub-
specialty among some in the legal profession. Arbitration provides a
timely and cost-effective alternative for both providers and consumers
to resolve differences in a fair, reasonable and expeditious manner.
AAHSA opposes H.R. 6126 because a prohibition on pre-dispute
arbitration agreements is unnecessary to protect consumers from unfair
coercion. It is not unusual for not-for-profit nursing homes, assisted
living, and continuing care retirement communities to use arbitration
agreements, in accordance with the Federal Arbitration Act and the laws
of the states in which facilities are located. Properly structured,
these agreements can give both providers and consumers an expeditious
alternative to long and costly lawsuits. Federal legislation
invalidating pre-dispute arbitration agreements in long-term care
facilities is unnecessary because the states have already developed
common-sense protections. These protections form the basis of
recommendations AAHSA has made to its own members.
First, we recommend to our members that signing an arbitration
agreement should not be a condition of admission to a nursing home or
other long-term care facility. State courts have often found
arbitration agreements to be unconscionable if admission to a facility
was predicated on signing an agreement. It should be noted, however,
that the Centers for Medicare and Medicaid Services (CMS) do not
prohibit arbitration agreements as a condition of admission for
Medicare patients. CMS leaves it up to the states to determine if they
will accept mandatory arbitration in Medicaid admissions. We believe
most of our members do not require arbitration agreements as a
condition of admission.
In addition, many agreements have a rescission period, another
practice AAHSA recommends to its members. This clause gives consumers a
chance to reconsider and cancel their agreement to arbitrate.
We also recommend to our members, based on case law, that
arbitration agreements should not limit a resident's rights and
remedies under law, other than to specify the forum and procedures for
dispute resolution. Most if not all states that have addressed this
issue have found limitations on rights and remedies to be a trigger for
determining an arbitration agreement was unconscionable. The more
onerous the contract, the less likely it has been to be enforced under
existing law and practice. Consequently, most long-term care providers
do not draw up arbitration agreements that conflict with consumers'
We do not see a need for legislation specifically targeting long
term care. The high rate of litigation over arbitration agreements in
this field means acceptable parameters defining substantive and
procedural requirements for valid arbitration agreements are more
clearly defined in long-term care than in other areas. Residents or
their representatives have had significant success in state courts and
this success is visible in the way providers draft their agreements.
Among AAHSA's membership, most but not all residents sign arbitration
agreements that are offered at the time of admission, and most disputes
are settled regardless of whether there is an arbitration requirement
Quality of care is not determined by the forum chosen for
resolution of whatever disputes may arise between providers and
consumers. On behalf of both our members and the residents they serve,
we urge the Senate not to foreclose recourse to agreements that can
expedite the resolution of disputes for all parties and prevent
unnecessary expense that takes resources away from resident services.
Response to Post-Hearing Questions from William J. Hall, M.D., AARP,
Response to Post-Hearing Questions from Linda Stewart, RN, MBA,
Response to Post-Hearing Questions from Gavin J. Gadberry, Esquire,
Underwood, Wilson, Berry, Stein and Johnson, PC, Amarillo, TX
Response to Post-Hearing Questions from Kenneth L. Connor, Esquire,
Wilkes & McHugh, P.A., Washington, DC