BEWARE THE ARBITRATION CLAUSE

You heard it from your dad a thousand times. “I never want to go to a nursing home.  When it comes time for me to die, I’m going right here in my own house!”  You’ve done everything you can to respect dad’s wishes.   You even retired early and moved into his house to provide care.  Unfortunately, his needs have now exceeded your abilities and although it pains you greatly, you’re going to move him to a nursing home.  You’ve looked the options and have found a nice place with friendly staff.  Now, you’re at the dining room table with a pile of admission paperwork and you come across something called “Agreement to Arbitrate”.  You have no idea what this is but you’re at the end of your rope and need to move your dad ASAP….so you sign it. Beware the arbitration clause.

 

First of all, what is Arbitration? Arbitration is a process where parties can resolve disputes before a neutral third party (often a lawyer or former judge) without resorting to a formal lawsuit.  The disputing parties each present their case to the arbitrator for a decision.  Parties can agree to use arbitration before any dispute develops or they can agree to try arbitration after a dispute has developed.

 

Over the past decade, nursing homes have increasingly required potential residents or their families to agree to pre-dispute arbitration clauses. Many courts, in all parts of the country, have opined that these agreements prevent the resident or anyone acting on their behalf to sue the nursing home.  Occasionally, courts invalidate the agreements based on “unconscionability,” but far more often than not, they are upheld by deference to the signed contract.  The US Supreme Court has even held that states cannot pass laws restricting use of arbitration agreements.

 

Unfortunately, the law does not always reflect what is “fair.” While arbitration agreements may be legally enforceable they are often entered into during a time of diminished decision making capabilities.  If the potential resident is signing the paperwork themselves, they are always very physically vulnerable and in a difficult time of transition from either their home or the hospital.  If a family member is signing for the potential resident, they are often in a very vulnerable emotional state.  A spouse is facing separation from their life partner and a child is facing the reality that the loss of their parent may be near.

 

You might ask, “What’s the harm? The courts are clogged with cases and why shouldn’t we use some alternative forum to resolve disputes?”  One set of concerns relates to the circumstances of particular cases.  Some cases are complex and require the formalities and structure that the judicial system provides.  Arbitration agreements apply equally to small disputes over billing and large cases involving death or serious injury.  For the more serious cases, the judicial system has a more formalized structure for things like obtaining relevant documentation (commonly called “the discovery process”) as well as a judge and a jury.  A second set of concerns relates more to public policy issues.  State elected officials and regulators are troubled that private arbitration results are hiding patterns of nursing home wrongdoing from the public.  Unlike court cases, there is no way for the public to access private arbitration results.

 

Recently, the Centers for Medicare and Medicaid Services (CMS) addressed this issue with a proposed rule that would allow pre-dispute arbitration agreements so long as nursing homes adhered to certain informational and procedural requirements. Many lawmakers as well as advocates for the elderly and disabled opposed this rule because it didn’t sufficiently address applicants being able to make informed decisions.  It also failed to address the power disparity between the nursing home and the person signing the application during the admission process.  Additionally, many felt that the adoption of a flawed rule would only provide a strengthened legal shield for facilities hoping to avoid the courts.

 

So, what to do? One option that some Elder Law attorneys have offered is to limit the authority given in power of attorney documents.  If an attorney-in-fact is specifically not authorized to sign a nursing home arbitration agreement, the nursing home can’t force them.  This can be a double edged sword, however, as it may result in a denial of the admission application.

 

Although the formal comment period for the proposed regulation has closed, we encourage you to educate yourself on this issue and contact your local elected officials to voice your opinion. The proposed rule is CMS-3260-P and a great deal of information is available on the internet.

 

As always, thanks for reading!

 

Barry M. Meyers

David M. Neubeck 

Elder Law Offices of Barry M. Meyers, P.S.

 

DISCLAIMER: The content of this newsletter is: for information purposes only, subject to change by government agencies, should not be relied upon as current, and, does not constitute legal advice. Reading this newsletter does not establish an attorney-client relationship.