Costly New Anti-Arbitration Rule Aimed at Nursing Homes Is Administration’s Latest Gift to Trial Lawyers
ATRA Urges Media to Focus on Other ‘Midnight’ Regulations Expected to Favor Big Donors to President’s Party as Time Runs out on His Second Term
WASHINGTON, D.C., September 29, 2016 – Noting the extraordinary influence that wealthy plaintiffs’ lawyers have wielded throughout the executive branch during President Obama’s eight years in office, the American Tort Reform Association today called a new rule prohibiting the use of arbitration clauses in contracts between nursing homes and those they serve “the administration’s latest gift to Democrats’ most reliably generous campaign donors.”
“The elimination of arbitration, which provides a relatively quick and inexpensive means to resolve disputes without going to court and further enriching trial lawyers, has long been the Holy Grail of lawsuit industry lobbyists,” began ATRA president Tiger Joyce. “And what those lobbyists were unable to achieve through Congress during the first few years of the Obama administration they’ve sought to squeeze from politically allied regulators since.
“The new rule from the Centers for Medicare & Medicaid Services offers a flimsy rationale for effectively ignoring the will of Congress and the 91-year-old, frequently upheld Federal Arbitration Act,” Joyce continued. “The FAA protects contractual arbitration clauses between consenting parties as wholly lawful and enforceable.
“Nevertheless, this new anti-arbitration rule bans such clauses and unleashes personal injury lawyers on our already struggling nursing home sector, just as the giant baby-boom generation is poised to begin making unprecedented demands on the sector. Why would an administration that says controlling health care costs is among its top priorities open the door for multimillion-dollar lawsuits that will only make nursing home care more expensive and less accessible?
“Even more troubling, the administration is similarly prepared to favor millionaire trial lawyers with other ‘midnight’ regulations in the waning months and weeks of the Obama presidency,” Joyce warned.
“For example, ignoring its own research that essentially found arbitration beneficial to consumers and sellers alike, the Consumer Financial Protection Bureau is soon expected to issue its own anti-arbitration rule, inviting class-action lawyers to rifle the deep pockets of financial service providers at the expense of consumers when litigation costs are again passed on in the form of higher prices.
“Food and Drug Administration regulators are also expected to finalize a rule they initially proposed in 2013 after incredibly meeting only with lawsuit industry lobbyists. The rule will effectively overturn, without the say-so of Congress, a 2010 U.S. Supreme Court decision that protects the makers of inexpensive generic drugs from lawsuits that allege the inadequacy of warning labels.”
Joyce concluded by pointing out that many additional regulations favoring the president’s political allies at everyone else’s expense are likely to be finalized as the current administration begins to head for the exits. He urged journalists to spotlight these midnight regulations and inform voters in the run-up to Election Day.
-ATRA-
The American Tort Reform Association, based in Washington, D.C., is the only national organization dedicated exclusively to tort and liability reform through public education and the enactment of legislation. Its members include nonprofit organizations and small and large companies, as well as trade, business and professional associations from the state and national level. The American Tort Reform Foundation is a sister organization dedicated primarily to research and public education.
