The Trump administration is poised to undo rules issued by the Obama administration last year to protect seniors from a common tactic used by businesses to shield themselves from consequences for illegal conduct.
Under these rules, issued last September, Medicare and Medicaid would cut off payments to nursing homes that require new residents to sign forced arbitration agreements, a contract which strips individuals of their ability to sue in a real court and diverts the case to a privatized arbitration system.
But last month, the Trump administration published a proposed rule which will reinstate nursing homes’ ability to receive federal money even if they force seniors into arbitration agreements.
Forced arbitration can prevent even the most egregious cases from ever reaching a judge. According to the New York Times, a 94 year-old nursing home resident “who died from a head wound that had been left to fester, was ordered to go to arbitration.” In another case, the family of a woman who suffered “two spine fractures from serious falls, a large, infected ulcer on her heel that prevented her from walking, incontinence from not being able to get to the bathroom, receding gums from poor hygiene assistance, and a dramatic weigh loss from not being given her dentures,” was also sent to an arbitrator after they sued the woman’s nursing home alleging neglect.
Moreover, as law professor and health policy expert Nicholas Bagley notes, arbitration tends “to favor the repeat players who hire them — companies, not consumers.” Several studies have found that forced arbitration typically produces worse outcomes for consumers and workers. An Economic Policy Institute study of employment cases, for example, found that employees are less likely to prevail before an arbitrator, and that they typically receive less money if they do prevail.
The Obama-era rules were never allowed to take effect. Shortly after the regulations were announced, a George W. Bush-appointed judge in Mississippi issued a decision blocking the rule — although Judge Michael Mills did caveat his order by stating that “this case places this court in the undesirable position of preliminarily enjoining a Rule which it believes to be based upon sound public policy.”
Important parts of Mills’ opinion rely on dubious reasoning. At one point, for example, he cites a doctrine limiting the federal government’s power to use threats of lost funding against state governments in order to impose similar limits on federal efforts to encourage good behavior by private actors.
But let’s be honest. If the Trump administration wasn’t preparing to end the Obama-era rule, conservatives on the Supreme Court most likely would have done so themselves.
Prior to Justice Antonin Scalia’s death, the Supreme Court’s Republican majority took such a sweeping and expansive view of companies’ power to use forced arbitration that it is likely the Obama administration’s rules would have been struck down in a 5–4 decision. Now that Neil Gorsuch occupies Scalia’s seat, Republicans once again have the majority they need to shield arbitration agreements.
In the alternative universe where the winner of the popular vote in the 2016 presidential election was inaugurated last January, Justice Merrick Garland was likely to provide the fifth vote to uphold the Obama-era rule. But we do not live in that universe. And neither do the many elderly nursing home residents who will be worse off thanks to the Trump administration.