Nursing Home Arbitration Agreements: Consumer Beware

When elders are admitted to a nursing home or assisted living facility, families are typically given a stack of papers, including an admission agreement, and are instructed, "Just sign here." Under stress already, many people sign everything without bothering to read what they are signing. We advise elders and their families to read the admission agreements closely and to consider having an attorney review the documents before anything is signed. Certain clauses in admission agreements are objectionable from the standpoint of residents’ rights. In particular, we recommend that residents consider deleting binding arbitration clauses from admission agreements.

In early 2007, Massachusetts’ highest court enforced a voluntary arbitration agreement between a nursing home resident and a facility in a wrongful death case Miller v. Cotter, 448 Mass. 671 (2007).  The decision means that, if nursing home residents sign an agreement to arbitrate their disputes, even without being fully aware of the consequences, they waive their rights to a jury trial if they are injured by the facility’s negligence. Plaintiffs’ malpractice attorneys strongly object to arbitration clauses because they believe that plaintiffs fare better before a jury than before an arbitrator. As elder law attorneys, we have a unique opportunity to counsel clients who are in the process of nursing home admission. Here are some tips:

1. Just Say No – Facilities may not condition a admission on an agreement to arbitrate. We have yet to hear a convincing argument for residents to agree in advance to waive their right to a jury trial. Alternative dispute resolution is always available to the parties once a dispute has arisen. Review proposed agreements carefully for an arbitration clause, and be sure to make an informed decision about this issue. If you do not want to agree to arbitrate, simply cross out and initial the proposed arbitration clause.

2. Consider Limitation in Power of Attorney – Powers of attorney can include a provision specifically barring the agent from agreeing to mandatory binding arbitration. This has not been litigated, but there are decisions from other jurisdictions holding that an arbitration provision is unenforceable if the party lacked authority to consent to arbitration (e.g., where the arbitration agreement was signed by a health care agent who did not have authority to waive the right to a jury trial).

3. Too Late – If the resident has already signed an agreement requiring arbitration, check to make sure that the party signing the agreement had sufficient authority to bind the resident and that the arbitration clause is not unconscionable. Have an attorney review the applicable arbitration rules to make sure that the process has due process safeguards (e.g., is the arbitrator bound to apply the substantive law of the jurisdiction?) In any case, the arbitration agreement may not require the resident to waive her right to file a complaint against the facility with DPH or seek a hearing on a discharge or transfer notice.

4. If You Can’t Beat ‘em – If the resident has received a demand for arbitration, review the claim and the arbitration rules closely. Arbitration filings are less cumbersome than court pleadings. For example, our office recently represented a client who faced an arbitration claim for non-payment. The rules of the National Arbitration Forum (NAF), which is frequently designated as the arbitrator in nursing home agreements, required a "statement" of each party’s claims and defenses. Rather than drafting formal responsive pleadings, we simply attached a copy of my 93A demand letter to my "Answer" and "Third-party Claim" against the predecessor guardian. We were prepared to arbitrate, but the nursing home caved.

5. Take a Free Ride – Take advantage of the fee waiver provisions that may be available under the arbitration rules. For example, NAF Rule 45 provides for a waiver of all fees in certain cases. A nursing home resident on Medicaid would almost certainly qualify for a fee waiver under this rule.

 

CONCLUSION

During the nursing home admission process, prospective residents and their family members should review admission agreements for arbitration clauses, among other issues. Residents should be advised of their rights with respect to those agreements at the time of admission. Because these clauses involve the waiver of a fundamental constitutional right, and prevent the resident from having malpractice and other claims heard by a jury, residents should consider "just saying no" to arbitration.

If you have already signed an arbitration agreement, an attorney can help you determine whether it is likely to be enforceable (i.e., whether the party signing the agreement had the authority to waive the resident’s right to a jury trial and whether the arbitration clause is conscionable). If you are is required to arbitrate a consumer protection dispute, fear not. Apply for a fee waiver, if possible. Because the process is usually speedier and less expensive than litigation, it might actually serve residents well in resolving non-jury issues such as consumer protection claims.

If you have a problem involving arbitration of nursing home-related disputes, please contact our office at www.margolis.com.    

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