New Jersey Legislature Proposes New Law, Regulations for Long-Term Care Facilities, Part One: Resident Admission Agreements and Arbitration Agreements

Newark, N.J. (March 2, 2023) – On February 13, 2023, two New Jersey State senators introduced a bill that, if passed, will affect long-term care facilities throughout the Garden State. The proposed legislation will supplement Titles 26 (the Health Care Facilities Planning Act) and 46 (of which Chapter 2B contains the Revised Durable Power of Attorney Act) of the Revised Statutes. A companion bill was introduced on February 16, 2023, in the General Assembly. Part One of this two-part alert discusses the proposed legislation’s impact on long-term care resident admission agreements and arbitration agreements. Part Two will cover proposed changes to guardianship rules and the Medicaid application process.

New Jersey Department of Health Called Upon to Draft Standard Resident Admission Agreement

Part of the bill requires the New Jersey Department of Health to develop a standard resident admission contract. Long-term care facilities would be required to use the admission contract developed by the department. The department would be required to publish a copy of the standard resident admission agreement on its website in English, Spanish, and Chinese, and any other language the department deems appropriate.

Agreements to Arbitrate Must Be Separate from Standard Resident Admission Agreement

Pursuant to the explicit language of this proposed legislation, “[a] long-term care facility shall not present any arbitration agreement to a prospective resident as part of the standard resident admission agreement.” If a facility presents a prospective resident with an arbitration agreement, it must be separate from the standard resident admission agreement. As a result, the agreement to arbitrate cannot be a standard provision folded into the admission contract.

The bill would disallow a long-term care facility from requiring a resident to sign any other document at the time of, or as a condition of, admission into care.

Additionally, any arbitration agreement would be required to contain advisory language at the top in bold face font, no smaller than 12 point type, that reads “Residents shall not be required to sign this arbitration agreement as a condition of admission to this facility.”

Any prohibition against pre-dispute agreements to arbitrate personal injury or wrongful death claims against nursing homes is a categorical rule prohibiting arbitration of a particular type of claim, which is contrary to the terms of the Federal Arbitration Act. Although the proposed bill appears to single out arbitration as disfavored in this context, the bill, if enacted, would be in line with federal regulations that apply to long-term care facilities that receive Medicare and Medicaid funding.

The Centers for Medicare and Medicaid Services amended their rules in September 2019 as to binding arbitration agreements for long-term care facilities that receive their funding. Pursuant to C.F.R. § 483.70(n), arbitration agreements must not be used as a condition of admission to, or as a requirement for, a resident to continue to receive care at the facility. Under this regulation, the agreement must explicitly grant residents the right to rescind the agreement within 30 calendar days of signing it.

If the proposed legislation is enacted, all private and public long-term care facilities in New Jersey that choose to ask a resident to enter into an agreement for binding arbitration must ensure they comply with the requirements laid out in the state law, plus any corresponding regulations that are promulgated in accordance with the state law, as well as already-existing federal requirements.

Arbitration agreements between consumers and long-term care facilities will be given additional scrutiny under the new proposed legal framework. Long-term care facilities that do not adhere to state and federal guidelines governing arbitration agreements with residents will not be able to enforce these agreements. This may in turn result in further backlogs in New Jersey’s state courts. According to a recent statement issued by New Jersey Supreme Court Chief Justice Stuart Rabner, the sustained number of judicial vacancies over the last three years and the effects of the COVID-19 crisis has led to delays and “substantial increases in backlog.”

For more information on this proposed legislation, contact the authors or editors of this alert. Visit our Long-Term Care Practice page to learn more about our capabilities in this area.

Authors:

Paola A. Silverman, Associate

Timothy Koch, Associate

Editors:

Malinda A. Miller, Partner

Alex W. Raybould, Partner