What You Should Know About Nursing Home Arbitration Clauses

As our baby boomer generation ages, our nursing homes become more crowded and unable to keep up with demands. As a result, nursing home abuse and neglect is on the rise, and more families are filing lawsuits on behalf of loved ones who suffered from harm or wrongful death. With these cases, another form of abuse has manifested on paper: the arbitration clause. In an effort to suppress litigation and save money, nursing homes are following a rising trend of including arbitration clauses in their admission contracts. This can be a problem when residents and their families are unaware of the existence of such provisions in the contract and when they do not understand what arbitration requires. Even when residents and their families have an idea of what arbitration entails, it is widely unknown that such arbitration clauses strongly favor the nursing facility.

What is Arbitration?
Arbitration is a form of alternative dispute resolution that provides a way to end a dispute without going through litigation. Arbitration occurs outside of court in front of an arbitrator who is impartial and selected in advance by the parties. The parties, having already agreed to comply with the arbitrator’s award, then participate in a hearing where both sides present their evidence and testimony. The arbitrator’s decision after the hearing is usually final and binding on the parties.

Arbitration is a popular and commonly used method for reaching resolutions, because it is theoretically less painful and quicker than litigation. However, families in the nursing home context must be aware of how arbitration can be used as a tool to serve the nursing home’s interests, and not the families’.

How Arbitration Favors Nursing Homes
Nursing home arbitration contracts generally favor the nursing home, because residents and their families are essentially agreeing not to sue the nursing home regardless of how egregious the injuries are. Such contracts have often been found to include a cap on damages, and many critics argue that residents and their families experience difficulty in reaching a fair resolution because arbitrators receive much of their business from the nursing home industry. Furthermore, arbitration hearings are private and confidential, which keeps the public from knowing if a nursing home is dangerous to its residents. Lastly, as mentioned above, arbitration decisions are final and therefore binding on the parties. They are thus very tough to appeal and unlikely to be reevaluated by the courts even if the parties are unhappy with the result.

Unfortunately for nursing homes, many courts across the nation have caught on to their attempt to suffocate the legal rights of residents and their loved ones, and have begun to deem many arbitration clauses as unenforceable.

Unenforceable Arbitration Clauses
Although the federal and Virginia laws generally favor an agreement to arbitrate disputes, the agreement can nevertheless be rendered unenforceable under state contract law defenses. These defenses include but are not limited to: (1) mistake, (2) fraudulent inducement, (3) lack of specificity, (4) lack of mutuality, (5) unconscionability, (6) estoppel, or (7) lack of capacity to contract. As of late, courts have increasingly found arbitration clauses in nursing home contracts to be unconscionable and refuse to enforce them.

An arbitration clause is found to be unconscionable if it is so one-sided in favor of the party with superior bargaining power (usually the nursing home), that it cannot be deemed as fair. Many residents and families are unaware of what arbitration means and what it involves. Some facilities will hide the clause in the middle of the contract so that it is agreed upon without being carefully considered. Other facilities go as far as to use the arbitration agreement as a condition of allowing a resident to move in, leaving families with little choice but to sign the contract in order to move themselves or a loved one into the home. Under these circumstances, a court may find that the agreement to arbitrate is unconscionable and render it unenforceable.

Contact a Lawyer
Nursing home abuse and neglect lawsuits are a critical tool in compelling nursing homes to provide better care for their residents because of the public nature of litigation. If every nursing home dispute was arbitrated, there would be much less public pressure on nursing homes to improve their policies and conditions for residents. It is therefore important for residents and their families to contact a lawyer when confronted with arbitration in abuse or neglect cases in order to find out whether they are bound by the agreement to arbitrate.

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