Hearing Of The Subcommittee On Commercial And Administrative Law Of The House Committee On The Judiciary - Mandatory Binding Arbitration -- Is It Fair And Voluntary?

Statement

Hearing Of The Subcommittee On Commercial And Administrative Law Of The House Committee On The Judiciary - Mandatory Binding Arbitration -- Is It Fair And Voluntary?

Chairman Cohen, Chairman Conyers, and Ranking
Member Franks, thank you so much for allowing me
the opportunity to testify today about this very
important legislation, which also has deeply a
personal meaning to me.
Last Congress, when I chaired this Subcommittee,
we held several hearings to investigate the fairness
and usefulness of arbitration agreements. We
learned, among other things, that arbitration is a very
useful alternative to the court system, especially
when the parties agreeing to arbitrate have about the
same level of knowledge and sophistication
regarding it.

On the other hand, we also found that, in certain
circumstances, arbitration agreements can be forced
on vulnerable parties who have little knowledge
about what they are signing, and frankly little choice
in the matter.
I want to be clear that I strongly support the
principles of arbitration and the arbitration process.
Arbitration can clear court dockets, provide swift
resolution, and reduce legal fees. But, because it can
also limit evidence and damages, and deny the
possibility of a jury trial, it must be willingly entered
into by both parties, not just the party with greater
economic power.
Checking a parent or other relative into a nursing
home or other long-term care facility is a perfect
example of a time when one party really has no real
power or choice in the matter.

For these reasons, I introduced H.R. 1237, the
“Fairness in Nursing Home Arbitration Act,” 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.
By 2040 the demand for long-term care services will
more than double. And the long-term care industry
is increasingly requiring patients or their guardians
to sign binding, pre-dispute arbitration clauses as a
prerequisite to admission.

Unfortunately, the inclusion of such mandatory
clauses adds a confusing—and legally binding—
complication to an event that is already difficult and
even heartbreaking.
For desperate families who are unable to provide
adequate care at home, the need for an immediate
placement for their loved one makes the “take-it-or-
leave-it” choice no choice at all.
Families who are in the midst of the painful decision
to place a parent in a nursing home rarely have the
time or wherewithal to fully and thoughtfully
consider mandatory arbitration clauses.
They are not in a position to adequately determine
what agreeing to such a clause will mean for their
loved one should the unthinkable happen.

Instead of some future dispute, what's real and
immediate is the proper care of a loved one now.
The emotional toll and the sense of vulnerability
when moving a loved one into the care of strangers
at a nursing home is something I am all too familiar
with.
My father, who has been struggling with
Alzheimer's for a number of years, took a turn for
the worse in recent years, to the point where we
could no longer provide safe and adequate care at
home.
One of the last things I wanted to worry about when
searching for that perfect placement was whether he
was forgoing 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, pre-
dispute arbitration clause in its contract.
This bill is for the families across the nation who
face similar decisions at a time when they are least
prepared to make them.
As we learned last year, many average consumers
are totally unfamiliar with the concept of arbitration.
They may not even be aware of the rights they are
signing away. In short, Congress should act to
protect these vulnerable families.

Let me also clarify that not all nursing home
operators use mandatory, binding arbitration
agreements upon admission. Some do try to protect
vulnerable families by, for instance, offering
arbitration on a voluntary basis. Others admit
patients immediately, but give them time to consider
whether arbitration is right for them.
This bill is about fairness. It promotes fairness for
families experiencing the trauma of a parent in
declining health by making unenforceable
mandatory, binding arbitration agreements that
families were essentially forced to sign whether they
wanted to or not.
Fairness demands that parties to a contract should
have a legitimate choice, not a forced one, about
whether or not to arbitrate their disputes.

I am proud to note that several significant groups
who advocate on behalf of seniors and consumers,
including the National Senior Citizens Law Center,
the Alzheimer's Foundation of America, and the
National Association for Consumer Advocates,
support H.R. 1237.
I thank you for the opportunity to testify today and
hope that you will all join me in supporting this
legislation.

Source