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To illustrate the point of this article, consider the following scenario:

Mother’s condition deteriorates to the point where she needs 24 hour care in a skilled nursing facility. Prior to being admitted to the facility, the director of admissions gave Son, Mother’s Power of Attorney Agent, a stack of admissions papers which included an Admission Agreement and told Son where to sign, as Mother lacked the capacity to execute the documents herself.  An Admission Agreement spells out the contractual relationship between Mother and the nursing facility.  Son failed to realize that buried deep within the Admission Agreement was a mandatory arbitration clause requiring Mother to resolve any dispute with the nursing facility via arbitration rather than through a court proceeding.  The clause probably required Son to initial the provision.  However, given the crisis involving Mother and the large stack of admission paperwork, Son likely initialed without reading this provision.

What is Arbitration?

Arbitration is a method wherein a neutral decision-maker selected by the parties determines the outcome of a dispute instead of a judge or jury. A clause assenting to arbitration effectively requires the resident to waive their right to a trial by jury in exchange for what is supposed to be a speedy and cost-effective settlement.  These mandatory arbitration clauses are becoming more common in nursing facility admission agreements.

Are These Provisions Legal?

Yes. Provisions in Admissions Agreements requiring arbitration to resolve all disputes are legal.  In 2012, the United States Supreme Court held that states could not restrict the enforceability of mandatory arbitration clauses in nursing home contracts.  Therefore, nursing homes have the ability to subject negligence claims to mandatory arbitration.  Given this power, it is extremely important that individuals signing nursing home admission agreements be fully aware of whether a mandatory arbitration clause is included in the admission agreement.

Are There Common Problems with Mandatory Arbitration Provisions That I Should Understand?

Yes. The problem with these mandatory arbitration clauses is that often residents or their loved ones are required to make a critical decision about their future without really knowing the nature or extent of an injury before it happens.   In our scenario, Son was not thinking about litigating a negligence claim against the nursing facility on behalf of Mother when he signed her admission paperwork.

Arbitration also includes additional costs not required in traditional litigation. In addition to hiring an attorney, Mother will also have to pay her share of the arbitrator’s fee, which is charged on an hourly basis.  The arbitrator’s fee may be comparable to or exceed the hourly rate of an attorney.  When litigating in court, one does not pay the judge for their time.

Proceedings before an arbitrator are generally confidential and not subject to public record as are proceedings before a court. Nursing home disputes before an arbitrator avoid public scrutiny and can shield patterns of wrongdoing from prospective residents and their families.

Proponents of arbitration often cite that it is quicker and more convenient than litigation. However, there are fundamental differences between arbitration and regular litigation.  For instance, many of the traditional rules of evidence may not apply.  Other rights, such as the right to depose witnesses or to seek discovery, may be more limited in arbitration.

Will Arbitration Lead to Greater Recovery?

Probably Not. While arbitration could potentially result in a quicker resolution to a matter, data suggests that arbitration could lead to a less generous recovery by the resident.  A 2015 report by Aon Risk Solutions on Long Term Care providers analyzed 2,168 closed claims between 2004 and 2015 and found that there was no money awarded in 27.5% of claims where a valid arbitration agreement was in place, compared with 20.2% of claims in which there was no arbitration agreement in place or the agreement was determined to be unenforceable.  Without arbitration, 1.9% of analyzed claims resolved for more than $1,000,000, while only 0.8% of analyzed claims with arbitration resolved for more than $1,000,000.  One reason for the higher recovery outside of arbitration is that courts are generally more sympathetic to a resident’s claim than an arbitrator.

Are Mandatory Arbitration Clauses Really Mandatory?

No. My advice to Son would be to seek the assistance of an Elder Law attorney prior to signing any documents on behalf of Mother.  However, this advice is not always practical.  Often a bed at a nursing facility will open suddenly and may not remain open long enough for a prospective resident to meet with an attorney.  The important thing for Son to remember is that he is not obligated to sign the arbitration provision in Mother’s Admission Agreement.  An arbitration provision is not required for admission to a facility.  Son can simply skip over this provision or cross it out and it will not affect Mother’s admission.

What If I Have Already Signed an Admission Agreement with an Arbitration Provision?

If you or your loved one have already signed an admission agreement with a nursing facility, you should consult with an Elder Law attorney immediately so that you can be properly advised of any rights that you or your loved one may have or have given up in executing the admission agreement. Depending on the agreement and the language of any mandatory arbitration provision, there may be opportunities to rescind the resident’s consent to the mandatory arbitration provision.

The admission of a loved one to a nursing facility can be fraught with stress. Remember to stay vigilant and carefully review all admissions paperwork prior to signing any documents.

Ryan A. Webber, Attorney