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FAIRNESS IN NURSING HOME 

ARBITRATION ACT OF 2008 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

COMMERCIAL AND ADMINISTRATIVE LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

ON

H.R. 6126 

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 

(II) 

COMMITTEE ON THE JUDICIARY 

JOHN CONYERS, JR., Michigan, Chairman 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

LINDA T. SA ́ NCHEZ, California 

STEVE COHEN, Tennessee 

HANK JOHNSON, Georgia 

BETTY SUTTON, Ohio 

LUIS V. GUTIERREZ, Illinois 

BRAD SHERMAN, California 

TAMMY BALDWIN, Wisconsin 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

ARTUR DAVIS, Alabama 

DEBBIE WASSERMAN SCHULTZ, Florida 

KEITH ELLISON, Minnesota 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

STEVE CHABOT, Ohio 

DANIEL E. LUNGREN, California 

CHRIS CANNON, Utah 

RIC KELLER, Florida 

DARRELL ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TOM FEENEY, Florida 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

PERRY APELBAUM, Staff Director and Chief Counsel 

SEAN MCLAUGHLIN, Minority Chief of Staff and General Counsel 

SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW

LINDA T. SA ́ NCHEZ, California, Chairwoman 

JOHN CONYERS, JR., Michigan 

HANK JOHNSON, Georgia 

ZOE LOFGREN, California 

WILLIAM D. DELAHUNT, Massachusetts 

MELVIN L. WATT, North Carolina 

STEVE COHEN, Tennessee 

CHRIS CANNON, Utah 

JIM JORDAN, Ohio 

RIC KELLER, Florida 

TOM FEENEY, Florida 

TRENT FRANKS, Arizona 

MICHONE JOHNSON, Chief Counsel 

DANIEL FLORES, Minority Counsel 

(III) 

C O N T E N T S 

JUNE 10, 2008 

Page 

THE BILL 

H.R. 6126, the ‘‘Fairness in Nursing Home Arbitration Act of 2008’’ ................. 3 

OPENING STATEMENTS 

The Honorable Linda T. Sa ́nchez, 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 

WITNESSES 

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 

Page

IV 

APPENDIX 

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 

(1) 

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, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:11 p.m., in Room 

2141, Rayburn House Office Building, the Honorable Linda 

Sa ́nchez (Chairwoman of the Subcommittee) presiding. 

Present: Representatives Sa ́nchez, Johnson, Lofgren, Cannon, 

and Feeney. 

Staff present: Norberto Salinas, Majority Counsel; Daniel Flores, 

Minority Counsel; and Adam Russell, Majority Professional Staff 

Member. 

Ms. SA ́ NCHEZ. 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 process. 

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 

2 

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 longterm 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:] 

3 


HR6126-1.eps
4 


HR6126-2.eps
5 


HR6126-3.eps
6 


HR6126-4.eps
7 

Ms. SA ́ NCHEZ. 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. SA ́ NCHEZ. 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. SA ́ NCHEZ. 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 homes. 

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 

8 

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. SA ́ NCHEZ. 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 retirement benefit. 

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 limVerDate Aug 31 2005 11:23 Feb 27, 2009 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6601 H:\WORK\COMM\061008\42828.000 HJUD1 PsN: DOUGA
9 

ited. 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. SA ́ NCHEZ. 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 witnesses. 

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 issues. 

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 broken. 

10 

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 customers. 

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 quality-of-care issues. 

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 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 judicial system. 

We should continue to do everything we can to protect it—not to undermine it. 

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. 

11 

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. SA ́ NCHEZ. The gentleman yields back. Without objection, 

other Members’ opening statements will be included in the record. 

[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 LAW

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 Sa ́nchez introduced the ‘‘Fairness in Nursing Home Arbitration Act of 2008,’’ of which I am proud to be an original cosponsor. 

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 legislation. 

[The prepared statement of Mr. Cohen follows:] 

12 

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 predispute 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 longterm 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. SA ́ NCHEZ. 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 national impact. 

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 Force. 

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 negligence. 

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 Association. 

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 

13 

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, 

WASHINGTON, DC 

Dr. HALL. Chairwoman Sa ́nchez, 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 

14 

made in an absolute crisis situation. Individuals may be pressured 

to accept the first available bed without enough time to adequately 

compare nursing homes. 

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 multipage 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 Sa ́nchez 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 this bill. 

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:] 

15 

PREPARED STATEMENT OF WILLIAM J. HALL


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Ms. SA ́ NCHEZ. Thank you, Dr. Hall. We appreciate your testimony. 

Ms. Stewart, I would invite you to give your testimony at this 

time. 

TESTIMONY OF LINDA STEWART, RN, MBA, HOUSTON, TX 

Ms. STEWART. Chairwoman Sa ́nchez—— 

Ms. SA ́ NCHEZ. Is your microphone on? 

Ms. STEWART. Testing. 

Ms. SA ́ NCHEZ. Perfect. I think you are ready. 

Ms. STEWART. Okay. 

Chairwoman Sa ́nchez, 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 the home. 

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. 

28 

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 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 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 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. 

[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. 

29 

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 home. 

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 valid. 

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 

30 

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 task. 

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. SA ́ NCHEZ. 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 testify. 

At this time I would invite Mr. Gadberry to please give his testimony. 

TESTIMONY OF GAVIN J. GADBERRY, ESQUIRE, UNDERWOOD, 

WILSON, BERRY, STEIN AND JOHNSON, PC, AMARILLO, TX 

Mr. GADBERRY. Thank you, Chairwoman Sa ́nchez. Now can you 

hear me? 

Thank you, Chairwoman Sa ́nchez, 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 

31 

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 arbitration. 

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 often settled. 

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 not true. 

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 facility. 

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. 

32 

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 increase. 

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 

33 

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. 

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 2007; 

• 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; 

• 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 quality problems.’’ 

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 excellent. 

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 facility care. 

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 

34 

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 longterm 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 

35 

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 care. 

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 care providers. 

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 nonproprietary 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 clauses. 

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 advance.’’ 

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 representative. 

‘‘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 

36 

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 providers. 

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. SA ́ NCHEZ. Thank you for your testimony, Mr. Gadberry. We 

appreciate it. 

And I would now invite Mr. Connor to please give his testimony. 

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 bill. 

If you believe that accountability and responsibility run hand-inhand, 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. 

37 

The sad fact of the matter is that we have a crisis of care in longterm 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 predispute 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 our society. 

I urge you with every fiber of my being to stop this inequitable 

and unjust practice. There is nothing wrong—in fact, I would enVerDate Aug 31 2005 11:23 Feb 27, 2009 Jkt 000000 PO 00000 Frm 00041 Fmt 6633 Sfmt 6601 H:\WORK\COMM\061008\42828.000 HJUD1 PsN: DOUGA
38 

courage, 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 Subcommittee: 

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; holloweyed 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 

39 

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 not exist. 

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 it now. 

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 their wrongdoing. 

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. SA ́ NCHEZ. 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 

40 

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 

whatsoever. 

Ms. SA ́ NCHEZ. 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. SA ́ NCHEZ. 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. SA ́ NCHEZ. They don’t typically discover it 30 days after signing—— 

Mr. CONNOR. They do not. And they do not understand what 

they have signed, and that is by design, in my experience, on the 

41 

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 now. 

Ms. SA ́ NCHEZ. 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 exception. 

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? 

42 

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 nursing home? 

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 predispute 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. 

43 

You suggested something that I am actually quite interested in. 

You said that a quality nursing home doesn’t need mandatory arbitration agreement. 

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. SA ́ NCHEZ. 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 court? 

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 

44 

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 process? 

Ms. STEWART. Yes. It was pretty much understood that the 

chances of winning were slim, so that was sort of one of the reasons also. 

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, 

that—— 

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. 

45 

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 alternatives—— 

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 

have—— 

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. SA ́ NCHEZ. The time of the gentleman has expired. I am sorry. 

Mr. JOHNSON. Thank you, Madam Chair. 

46 

Ms. SA ́ NCHEZ. 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. 

47 

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. SA ́ NCHEZ. 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 yield it—— 

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. SA ́ NCHEZ. 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. SA ́ NCHEZ [continuing]. That that is an unreasonable thing? 

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 sysVerDate Aug 31 2005 11:23 Feb 27, 2009 Jkt 000000 PO 00000 Frm 00051 Fmt 6633 Sfmt 6601 H:\WORK\COMM\061008\42828.000 HJUD1 PsN: DOUGA
48 

tem, 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. SA ́ NCHEZ. 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 committed. 

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. SA ́ NCHEZ. 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. SA ́ NCHEZ. 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 

49 

mortgage loans, though, on banking agreements you have those 

type of pre-dispute arbitration agreements in place. 

Ms. SA ́ NCHEZ. 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 Sa ́nchez, 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 Medicaid. 

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. SA ́ NCHEZ. 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. SA ́ NCHEZ. 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. SA ́ NCHEZ. But they are not bound by the recommended arbitrations clauses. 

Mr. GADBERRY. I can give no assurance that they are going to be 

bound by that—— 

Ms. SA ́ NCHEZ. Thank you. 

Mr. Connor, what is wrong with allowing the resident to choose 

whether or not they want to arbitrate if a dispute arises? 

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 

50 

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. SA ́ NCHEZ. Thank you, Mr. Connor. 

I would recognize Chris Cannon for additional questions. 

Mr. Cannon? 

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. 

51 

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 we do?’’ 

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 occurred. 

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 

52 

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 years ago. 

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. SA ́ NCHEZ. The time of the gentleman has expired—— 

Mr. CANNON. Would the Chair indulge me in one additional 

question? 

Ms. SA ́ NCHEZ. 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 this dialogue. 

Ms. SA ́ NCHEZ. 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? 

53 

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 those costs. 

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 evidence. 

And as an alternative to that, their preference is to have a goto 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. SA ́ NCHEZ. 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. SA ́ NCHEZ. 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. SA ́ NCHEZ. 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 who were—— 

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. SA ́ NCHEZ. Thank you. 

And I will yield back the balance of my time. I want to again 

thank the witnesses for their participation in our hearing today. 

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.] 

(55) 

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’ rights. 

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 paramVerDate Aug 31 2005 11:23 Feb 27, 2009 Jkt 000000 PO 00000 Frm 00059 Fmt 6601 Sfmt 6621 H:\WORK\COMM\061008\42828.000 HJUD1 PsN: DOUGA
56 

eters 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 or not. 

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. 

f 

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RESPONSE TO POST-HEARING QUESTIONS FROM WILLIAM J. HALL, M.D., AARP, 

WASHINGTON, DC 


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RESPONSE TO POST-HEARING QUESTIONS FROM LINDA STEWART, RN, MBA, 

HOUSTON, TX 


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RESPONSE TO POST-HEARING QUESTIONS FROM GAVIN J. GADBERRY, ESQUIRE, 

UNDERWOOD, WILSON, BERRY, STEIN AND JOHNSON, PC, AMARILLO, TX 


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RESPONSE TO POST-HEARING QUESTIONS FROM KENNETH L. CONNOR, ESQUIRE, 

WILKES & MCHUGH, P.A., WASHINGTON, DC 


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