Nursing Home Arbitration Clauses: Be Careful When Signing

Dealbook has an interesting article on nursing home arbitration clauses. The article tells the story of Elizabeth Barrow, who was strangled by her roommate in a Massachusetts nursing home. The nursing home had notice of the roommate’s potential to harm others, yet still placed her with Ms. Barrow.

When Ms. Barrow’s son tried to bring a lawsuit against the nursing home, he learned that he had signed admissions paperwork on his mother’s behalf that contained a clause requiring disputes to be submitted to private arbitration. The case proceeded to private arbitration. That process revealed something that is an ongoing concern in cases involving large companies and the private arbitration process: The arbitration firm had previously handled 400 cases for the nursing home’s law firm, calling into question its ability to be impartial in the matter. In Ms. Barrow’s case, the arbitration firm ruled in the nursing home’s favor without comment.

Arbitration contracts are becoming increasingly common in a wide variety of situations. In the nursing home context, they are regularly signed by emotional or rushed residents or family members who do not have any idea what they are signing. When arbitration is pursued, the cases are handled by arbitration firms that can’t possibly be neutral given that they receive a great percentage of their work from the defendant nursing homes. An examination by the New York Times revealed that arbitration clauses in nursing home contracts are consistently enforced “regardless of whether the people signing them understood what they were forfeiting.”

There are a number of ways to get around a nursing home arbitration agreement. Ms. Barrow’s attorneys argued that, since the contract was signed by her son (who did not have a general power of attorney) it was not binding. In Pennsylvania, the contracts can be invalid if they rely on out of date arbitration procedures, do not apply to certain actions (such as a wrongful death claim by family members), or if the agreement unreasonably favors the nursing home. Before entering a nursing home (or placing a family member in a nursing home) it is important to review all documents carefully and understand that you might be waiving important rights when signing.

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