Nursing Home Arbitration Agreements

It’s no secret that many clients develop mental and physical limitations toward the twilight of their lives, sometimes making a move to a nursing home necessary. Unfortunately, injuries in these facilities because of understaffing and neglect occur alarmingly often. When they do, victims and their families may find that their ability to hold a nursing home accountable has been severely restricted by a document they’ve signed: an arbitration agreement.

Previously, abuse victims in nursing homes had limited recourse or recoverable damages, making it unlikely that they or their families would be able to retain attorneys. Under traditional tort principles, pain and suffering damages don’t survive the death of the victim. This created a perverse situation in which nursing homes were in better positions if residents died from abuse rather than “merely” suffering serious injuries. Even when victims survived injuries, their lack of earning potential and generally short expected life spans, both typically used to measure damages, limited any meaningful consequences for nursing homes. Families of victims who died were similarly limited in their ability to recover wrongful death damages. Under these traditional legal principles, nursing home neglect and abuse were wrongs without remedies.

Arbitration Agreements

Many states have laws in place to protect elderly residents of nursing homes, often including a right to attorneys’ fees for successful plaintiffs and provisions that, contrary to traditional legal principles, allow for the recovery of pain and suffering damages after the death of the victim. To respond to the problem of nursing home residents being injured and abused, the California legislature passed the Elder Abuse and Dependent Adult Civil Protection Act (the California Act). Since its passage, the nursing home industry has engaged in a concerted effort to evade liability for injuries by pushing arbitration agreements on residents and lending the industry’s significant financial leverage towards efforts to enforce these agreements.

Many clients moving into nursing homes may no longer possess the mental wherewithal to understand the nature of any contract, let alone one potentially limiting their rights. Nonetheless, when no family or friends are present to sign for them, or when the nursing home has careless and/or pernicious motives, they’re often made to sign intake documents that include arbitration agreements.

Even when a person with power of attorney or a relative is asked to sign, it’s often implied that signing the agreement is a condition of admittance. As nursing homes are often a last resort for elders and their families, the thought that the home could become unavailable if an arbitration agreement is refused contributes toward obtaining compliance.

The Problem With Arbitration Agreements

While pressure to sign arbitration agreements may be strong, the possible repercussions should be enough to convince potential nursing home residents or their supporters to decline.

There are four primary problems with the agreements:

(1) Arbitrators are private professionals working for profit, not public servants. While the majority of arbitrators are honest individuals and will make all efforts to avoid bias, that’s not always possible. Most nursing home claims are defended by a small number of firms working on behalf of insurance companies, and the attorneys working these cases tend to know the arbitrators. Additionally, the nursing home and the injured party both have a say in selecting the arbitrator. There aren’t many repeat victims of nursing home abuse, but the same nursing homes, with the same attorneys, can often have more than one case per year. An arbitrator who decides against a nursing home or develops a reputation as being tough on abuse isn’t likely to be hired again.

(2) Enhanced damages are generally unavailable. The traditional principles governing damages for wrongful injuries don’t work well in a nursing home context. One of the major reasons the California Act was passed was to make attorneys’ fees available in cases of elder abuse and to allow some pain and suffering damages to survive the victim’s death. This has increased the pool of recoverable damages available, so that compensation to the victim is fair and attorneys are more willing to accept these cases for clients who can’t afford hourly billing.

(3) Arbitration is private. In California, records related to nursing home elder abuse are public, helping make nursing homes accountable for their quality of care. This public benefit becomes meaningless when victims are forced to arbitrate their claims in a non-public forum. Elder abuse settlements may not be confidential under California law,¹ but arbitration tends to keep the information from being effectively reported.

(4) Victims are unlikely to be able to prove their case. The rights to discover information related to claims and defenses in a case are very broad in California. If a nursing home abuse case is being heard in court, the plaintiff can access nursing home records and may take the depositions of any person with relevant knowledge. In arbitration, parties are limited to whatever information the arbitrator decides they may access, which is often inadequate to prove a case.

Federal Arbitration Act

California courts have shown willingness to refuse to enforce nursing home arbitration agreements on the basis of unconscionability for being overly harsh, one-sided or unduly oppressive. Unconscionability is a standard contract defense that seems to apply under these circumstances.

However, California has consistently been rebuked by federal courts for its resistance to enforcing nursing home arbitration agreements on the basis that the Federal Arbitration Act (FAA) completely preempts local or state law on arbitration agreements.² Subsequently, California attempted to make all pre-dispute nursing home arbitration agreements unenforceable, but the FAA preempted this legislation as well.³

Declining Arbitration Agreements

Elderly clients can combat agreements by refusing to sign. This doesn’t allow the nursing home to deny the client admission, because arbitration agreements can’t be a condition of admission. If the client is concerned about being wrongfully denied admission and there’s no alternative facility, an individual who lacks legal authority could sign on behalf of the principal. Spouses and next of kin lack this authority without a power of attorney or similar relationship.⁴ A power of attorney can also be granted to somebody that specifically excludes the right to enter into arbitration agreements.

Clients who take these steps will find themselves in much better positions if disputes should arise with their nursing homes.

 

Endnotes:

1. Code of Civil Procedure Section 2017.310.

2. AT&T Mobility, LLC v. Concepcion, 131 S.Ct. 1740 (2011).

3. Valley View Health Care v. Chapman, 992 F. Supp.2d 1016 (2014).

4. Flores v. Evergreen at SD, LLC, 148 Cal.4^th 581 (2007); Pagarigan v. Libby Care Center, Inc., 99 Cal.App.4^th 298 (2002).