Often Unnoticed In Nursing Home Papers Is
Arbitration Agreement You May Not Want to Sign
Anxious seniors or their caregivers often sign every
document that's put in front of them, perhaps only glancing at the
By Michelle Andrews
Sept. 18, 2012 - When Paul Ormond signed John
Mitchell into a nursing home in Dennis, Mass., in June, he was handed a
few dozen pages of admission papers. Ormond, Mitchell's legal guardian
and an old friend, signed wherever the director of admissions told him
He didn't realize that one of those documents was
an agreement that required Mitchell and his family to take disputes to a
professional arbitrator rather than to court.
Mitchell had been institutionalized since suffering
a stroke in 1999. During a hospital stay early this summer, Mitchell,
then 69, had received a tracheotomy and needed to switch to a nursing
home that could accommodate him.
A few weeks after Mitchell arrived at the new
nursing home, staff members dropped him while using a lift device to
move him from his bed to his chair. An ambulance was called and then
canceled as his vital signs stabilized.
Later that night Ormond, 63, got a call from the
nursing home that Mitchell was unresponsive. Mitchell was rushed to the
hospital, and doctors found that the fall had caused extensive bleeding
on his brain.
He died a few days later.
Mitchell's sons hired a lawyer to look into the
circumstances surrounding their father's death. That was when Ormond
learned that amid all the admissions papers he had signed was an
"I thought it was deceptive, and I was pretty angry
that I'd been tricked into signing something that I didn't know what it
was," says Ormond.
A mandatory arbitration agreement is an often
overlooked document tucked inside the package of admissions documents at
many nursing homes these days. It can have an outsize impact if
something goes wrong. But anxious seniors or their caregivers often sign
every document that's put in front of them, perhaps only glancing at the
Signing an arbitration agreement means that in the
event of a problem that is not amicably resolved -- Mom slips on a wet
floor and breaks her hip, say, or Dad wanders off the premises and gets
hit by a car -- you agree to bring the dispute before a professional
arbitrator rather than file a lawsuit for negligence or wrongful death,
Agreeing to arbitrate is generally not in families'
best interests, say consumer advocates. For one thing, it can be pricey.
In addition to hiring a lawyer, the patient or family generally has to
pay its share of the arbitrator's fee, which may come to hundreds of
dollars an hour, says
Paul Bland, a senior
attorney at Public Justice, a public interest law firm based in
"In court, you don't have to pay the judge," he
says. "Our taxes pay for that."
Court proceedings are also conducted in a public
courtroom and leave a detailed public record that can inform industry
practice and help develop case law, say experts. Not so with arbitration
hearings, which are conducted in private and whose proceedings and
materials are often protected by confidentiality rules.
The amount awarded - if any - may also be less if
an arbitrator hears the case than it would be if a case went to trial,
Aon Global Risk Consulting
analyzed 1,449 closed
claims involving long-term-care providers between 2003 and 2011 and
found that there was no money awarded in 30 percent of claims where a
valid arbitration agreement was in place, compared with 19 percent of
claims in which there was no arbitration agreement or the agreement was
determined to be unenforceable.
Likewise, nearly 12 percent of claims without
arbitration agreements resulted in awards of $250,000 or more, compared
with 8.5 percent of claims with arbitration agreements.
The study was conducted with the American Health
Care Association, which represents 11,000 long-term-care facilities.
According to the
report, "loss rates" --
reflecting the dollar value of liability claims paid -- are increasing 4
"Liability costs for providing care have grown and
escalated" in recent years, says Greg Crist, a spokesman for the
association. Arbitration agreements help keep a lid on those costs, he
That may explain why arbitration agreements have
become much more common in nursing homes, experts say. The agreements
are increasingly used in assisted living facilities as well.
Arbitration can also benefit patients and their
families, Crist says. Claims are typically resolved more quickly than
court cases, he says, so attorney costs are lower and patients can
retain a larger portion of any financial settlement.
The Federal Arbitration Act, enacted in 1925,
allows for two sides in a dispute to agree to binding arbitration to
resolve their differences. If a dispute arises and an arbitration
agreement is in place, the arbitrators are jointly selected by the
patient and the nursing home.
Although consumers usually don't realize it,
there's a simple way to avoid being forced into arbitration, say
experts: Don't sign the arbitration agreement.
What happens if you don't sign? Nothing, Crist
says. "It's not a condition of admission to the facility," he says. The
American Health Care Association doesn't support requiring people to
sign an arbitration agreement as a condition of admission, he says,
although practices may vary at individual nursing homes.
If you do sign and then wish you hadn't,
arbitration agreements typically have a 30-day "opt-out" provision that
allows you to change your mind and retain your rights to sue.
The judge in John Mitchell's wrongful death case
threw out the agreement on the grounds that it was
"unconscionable," a legal
term used to describe contracts that are unfair or unjust.
"The judge agreed it was too much to expect me to
digest all of this information at once, and that the arbitration clause
hadn't been explained thoroughly," says Ormond. A trial date hasn't yet
Arguing that an agreement is unconscionable is one
of the few ways people can extricate themselves from arbitration
agreements once a dispute arises, says David Hoey, a North Reading,
Mass., lawyer representing the Mitchell family. Another possibility is
to prove that the person wasn't competent to sign an agreement or that
the family member who signed wasn't legally qualified to do so.
Better yet, experts agree, is not to sign in the
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