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Arbitration Agreements in Nursing Homes: Don’t Sign Them!

No citizen of California should be required to surrender basic constitutional rights and civil protections to secure a bed in a nursing home or as a condition for adequate care. This is particularly true when the citizens who are being asked to sign arbitration agreements suffer from a variety of physical and mental ailments, and when neither they nor their family members understand what they are signing.

Yet, this is exactly what is happening in California today. In an effort to prevent residents from being able to sue for resident rights violations, abuse or neglect, nursing homes are asking residents or their family members to sign admission agreements that include binding arbitration provisions.

When a resident of a nursing home signs an admission agreement that includes an arbitration provision, the parties are agreeing to give up their constitutional right to have a dispute decided in a court of law in front of a jury. They are agreeing to the use of binding arbitration before the dispute even happens. This means that the decision of the arbitrator is final and there is no appeal. This means that, rather than having the issue decided in public by a jury of their peers in front of a judge, the matter will be decided in private, by a private (and very expensive) arbitrator. Arbitration proceedings are not part of the public record and not subject to judicial review.

The time has come for long-term care consumers to fight back against the use of arbitration agreements. The time has come to Don’t Sign It!

Why is arbitration bad for consumers?

Consumers lose! Arbitrators need cases to make a living. A nursing home resident bringing a neglect case is a one-time customer for the private arbitrators, while corporate defendants and insurance companies will be involved in cases again and again. Some judges take this into account: if they want repeat business, they know if they impose a high compensatory award - let alone punitive damages - the corporate defendant or its insurance company won’t use their services again. Studies bear out arbitrators’ pro-business bias – consumers tend to win less often and are awarded less money in arbitration than in the courts.

Arbitration is expensive! Nursing home residents who are on Medi-Cal or SSI qualify for fee waivers in court, meaning they don’t pay court costs. Plus, the trial judge is a public official paid by the taxpayers. Arbitrators, on the other hand, charge the parties for their services. This “neutral” arbitrator is a private judge whose services can cost anywhere from $400 to $1,000 an hour or more. Arbitration may be cheaper for the nursing home, since the money’s coming out of the pocket of their insurance company, but arbitration is certainly not cheaper for consumers.

Arbitration agreements are rarely “voluntary”. In the nursing home context, residents or their representatives are usually asked to sign an arbitration agreement as one page of a 40+ page admission agreement in a “take it or leave it” setting. Family members often feel compelled to sign such agreements to ensure that the care of their family member is not compromised. If they don’t sign the agreement, they probably won’t be admitted to the facility in the first place. Few of the residents or their representatives understand the consequences of the agreement, nor are they represented by counsel. Yet they are asked to sign a legal document drafted by the facility’s legal counsel relinquishing their right to a trial by jury. What bargaining power does a Medi-Cal resident or an aged or disabled consumer have in this marketplace?

Take the story of Donna C.:

Donna C. was admitted to a nursing home following a minor surgery to fix a broken ankle. Within a few weeks, Donna was barely conscious, over drugged on pain medication and tranquilizers. She developed bedsores and later developed pneumonia from her inability to swallow her food. Donna was eventually re-hospitalized and nearly died. She never recovered her former vigor.
When Donna’s family looked at a possible lawsuit, they learned it was impossible because of an arbitration agreement Donna’s daughter had unwittingly signed. The family did eventually find an attorney and went through the arbitration process. The arbitrator awarded a small amount to Donna that failed to cover her arbitration costs, despite the fact that the nursing home had been understaffed and had failed to act on the family’s expressed concerns about her deterioration.

How Can You Avoid an Arbitration Agreement?

Don’t sign it! Under California law, it is illegal to force prospective nursing home residents to sign an arbitration agreement as a condition of admission, and the arbitration agreement is required to be separate and apart from the admission agreement. The easiest way to preserve your right to use the courts is to refuse to sign an arbitration agreement.

While facilities might (illegally) refuse to accept a resident who won’t sign an arbitration agreement using some pretext or another, they often accept residents who have not yet signed their admission papers. One way to avoid arbitration agreements is to get admitted first and then refuse to sign the arbitration piece. Nursing homes are prohibited from evicting residents unless one of a narrow range of reasons has been satisfied. Failing to sign an arbitration agreement is not one of those reasons – in fact, it is against the law. So once a resident has been admitted, she/he can simply refuse to sign.

What if I Already Signed an Arbitration Agreement?

Nursing home residents or their legal representatives may rescind an arbitration agreement by giving written notice to the facility within 30 days of their signature. (California Code of Civil Procedure §1295) If more than 30 days have passed since you or a loved one signed an arbitration agreement, there is no harm in revoking the clause after the fact. You could send a letter to the facility explaining that you did not understand the implications of signing an arbitration agreement, and therefore you are revoking your consent. Be sure to keep a copy of the letter and obtain proof of delivery.

How to Prevent Being Bound to an Arbitration Agreement

In many cases, nursing home or assisted living residents do not sign their arbitration agreements. A substitute, often a family member or an agent under a power of attorney or health care directive, will sign the admission agreement and the arbitration agreement on behalf of the resident. By not granting your surrogate the power to sign arbitration agreements on your behalf, you can retain your right to consent or refuse arbitration.

The nursing home industry – a multi-billion dollar industry – spends considerable time and money on efforts to deny residents their rights in order to avoid accountability for abuse and neglect of residents. Only by being aware of your rights, by being vigilant, by reading the fine print and by refusing to sign such agreements can residents’ rights prevail.

For more information on CANHR’s Don’t Sign it Campaign, contact the CANHR office or see www.canhr.org

Page Last Modified: July 1, 2013