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Avoid Nursing Home Arbitration Agreements

By Brendan Faulkner, Esq. and Mike A. D'Amico, Esq

The difficult decision to place a loved one in a nursing home is frequently made under stressful circumstances and is always fraught with emotion. Mandatory arbitration agreements are often overlooked or not given appropriate consideration in the completion of the thicket of admission forms.

These provisions, which substantially deprive a nursing home resident of meaningful recourse in the event rights are violated or injury occurs, are becoming more common. They are also being used increasingly by assisted living facilities as well. Be on the lookout, and do not agree to them.

It is never a good idea to sign a mandatory, binding arbitration agreement as part of the admission process. No one ever thinks the facility they have chosen is going to neglect or injure their friend or relative. But it happens. Mandatory arbitration agreements take away the important right to a trial by jury. Some even require that the resident waive his or her right to file a complaint with the facility against the Department of Public Health.

In most cases, all it takes is a simple refusal to sign the arbitration agreement. (A power of attorney can be drafted to prohibit the agent from agreeing to a mandatory binding arbitration provision.) If the facility says that a mandatory arbitration agreement is a condition of admission, go somewhere else. Moreover, such a requirement may violate federal law and constitute an unfair trade practice.

Through the Medicare and Medicaid programs the federal government finances approximately 40% of the country's nursing home spending. In that context it has been argued that for a facility to require as additional "consideration" a resident to forfeit his or her access to the civil justice system violates 42 U.S.C. 1396r(c)(5)(A)(iii) and 42 C.F.R. 483.12(d) (3). The Centers for Medicare & Medicaid Services (CMS) has stated, '[u]nder both programs' there may be consequences for the facility where facilities attempt to enforce these agreements in a way that violates Federal requirements. CMS has provided guidance indicating that if a facility discharges or otherwise retaliates against residents who decline to sign arbitration agreements, it may result in an enforcement action. See also National Consumer Law Center, When You Can't Go Home Again: Using Consumer Law to Protect Nursing Facility Residents, available at: www.nclc.org/images/pdf/older_consumers/cc_nursing_home.pdf

Nursing home companies put these arbitration agreements in the admission documents for their own benefit. They know that the deck is stacked in their favor in arbitration.

Many of the procedural and substantive protections available in court are not part of the arbitration process. This includes limited access to evidence, and a significant diminishment of the right to appeal an adverse decision. Many arbitration clauses in nursing home agreements also include very low caps on damages.

More importantly, arbitrations are held in private, and often shrouded by confidentiality rules, whereas court proceedings are conducted in an open, public forum and result in the creation of a detailed public record. This, the ability to achieve full compensation for tort victims, and the power to punish reckless tortfeasors are what give the civil justice system the power to change industries.

Additionally, the parties often have to share in the cost of the arbitration which is typically hundreds of dollars per hour and is much more easily borne by a facility (typically owned by a large conglomerate) than residents and their families. (National Arbitration Forum rules do provide for a waiver of all fees under certain circumstances however; a nursing home resident on Medicaid would likely qualify.)

Aon Global Risk Consulting analyzed nearly 1500 claims involving long-term care providers between 2003 and 2011 and found that where arbitration agreements were in place no money was awarded more often than when there was not such an agreement. The study also found that when money was recovered, the amount was lower in arbitration than in court. The study was conducted in conjunction with the American Health Care Association, which represents long-term care facilities.

Finally, a party making a claim against a nursing home will typically be in front of the arbitrator only once whereas nursing homes are frequently selecting arbitrators. This creates an incentive, even if subconscious, for an arbitrator to favor the facility.

The right to a jury trial pre-dates 1215, when The Magna Carta established the principle that no one, including the king or a lawmaker is above the law [1]. The Seventh Amendment to the U.S. Constitution provides for the right of trial by jury in civil cases, and it is firmly enshrined in the Connecticut Constitution. Section 19 of article first of the Connecticut Constitution, as amended by article fourth, provides in part that the "right to trial by jury shall remain inviolate." Even stronger, it establishes a party's right to individually question potential jurors: "In all civil and criminal actions tried by a jury, the parties shall have the right to challenge jurors peremptorily, the number of such challenges to be established by law. The right to question each juror individually by counsel shall be inviolate." This is to ensure a fair and impartial jury, the paramount concern that is the genesis of the jury system.

Blackstone wrote that the right to a jury trial is "the most transcendent privilege which any subject can enjoy, or wish for, that he cannot be affected either in his property, his liberty, or his person, but by the unanimous consent of twelve of his neighbours and equals."

In short, the right to have access to our courts is fundamental to our democracy, protected by the federal and state constitutions, and should not be given up lightly. Why then, when placing a loved one in a nursing home, would anyone willingly agree to a contract provision that strips them of this important (some say sacred) right? There is no reason.

Some will argue that arbitration can, under some circumstances, be a good alternative to litigation. This is typically only true for a facility. Arbitration may be speedier and less expensive overall, but these benefits rarely outweigh the protections an individual loses by opting out of the court system. In the instance in which a patient or the patient's family may want to resolve a dispute with a nursing home through arbitration, that decision can be made after the dispute arises and upon consultation with a lawyer.

When placing a loved one in a nursing home, look out for binding arbitration agreements and avoid them.


[1] Section 39 stated: "No freemen shall be taken or imprisoned or disseised or exiled or in any way destroyed, nor will we go upon him nor send upon him, except by the lawful judgment of his peers or by the law of the land."