Congressional panel to consider arbitration bill

By Chris Rizo | Jun 8, 2008

Rep. Linda S'nchez

WASHINGTON (Legal Newsline)-A congressional panel will consider a proposal Tuesday aimed at eliminating binding arbitration clauses in nursing home contracts.

The legislation, outlined in H.R. 6126, would render invalid pre-dispute arbitration agreements between a long-term care facility and a resident or anyone acting on the resident's behalf.

Considering the measure, dubbed the Fairness in Nursing Home Arbitration Act of 2008, is the House Judiciary's Subcommittee on Commercial and Administrative Law, chaired by Rep. Linda Sanchez, D-Calif., who introduced the measure.

In a May 22 statement, Sanchez said she introduced the AARP-backed bill after hearing some businesses were using pre-dispute mandatory arbitration clauses to the "disadvantage" of consumers.

"Let me be clear: I am supportive of the principles of arbitration, so this legislation will not prohibit arbitration," she said. "Instead, it will simply ensure that residents have the choice whether to arbitrate a dispute after it has arisen."

The proposal would allow nursing home residents and their families to forgo third-party arbitration and file lawsuits.

In a May 1 letter to members of Congress, a coalition of business groups decried Sanchez's bill along with 12 other proposals in Congress to eliminate arbitration clauses.

"Opponents of pre-dispute arbitration have neglected to realize that, if enacted, these provisions will actually limit the realistic opportunity for an average consumer, employee, and investor to obtain a remedy if a dispute arises," the letter distributed by the U.S. Chamber of Commerce reads.

"Evidence shows that arbitration can be very useful in the context of low-value claims. Studies show that plaintiffs' lawyers are reluctant to take cases involving relatively small claims because they seek larger potential attorneys' fees than would likely result from these cases," the letter said.

Legal Newsline is owned by an affiliate of the U.S. Chamber of Commerce.

From Legal Newsline: Reach reporter Chris Rizo by e-mail at chrisrizo@legalnewsline.com.

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