Earlier this month, we wrote that President Trump is supporting a bill currently before the U.S. Senate that would restrict the rights of nursing home residents and their loved ones when filing suit against a nursing home. Today, we want to discuss in more detail another change we briefly mentioned in that post — one that could block nursing home abuse lawsuits altogether.
In October 2016, the Obama administration enacted a new federal rule designed to “improve the quality of life, care, and services in [long term care] facilities [and] optimize resident safety.” Among other changes, this new rule prohibited nursing homes from making pre-dispute binding arbitration agreements with residents or requiring such agreements as a condition for admitting the resident.
However, that rule was blocked by a federal court before it went into effect in November. The administration appealed, but directed that the rule not be enforced until the appeal was resolved.
In June 2017, the Trump administration dismissed the appeal and proposed reversing the above prohibitions altogether. This is a dramatic change that will seriously harm Ohio nursing home residents. Let’s discuss the problems with Trump’s proposal in more detail.
What is arbitration?
Before we look at how Trump’s rule would harm Ohio nursing home residents, we should briefly discuss what arbitration is and how it differs from a lawsuit.
Arbitration is a form of alternative dispute resolution. It’s a process for resolving legal disputes outside of court. Arbitration can be thought of as a private, informal version of going to trial. The parties can conduct (limited) discovery and present their arguments and evidence to an ostensibly neutral third party called an arbitrator.
There are two types of arbitration: binding and non-binding. In non-binding arbitration, the parties are free to take their dispute to court regardless of how the arbitrator decides their case. But in binding arbitration, the arbitrator’s decision is generally as final as a court judgment. A court can overturn it in some cases, but usually won’t.
Despite some similarities, there are important differences between arbitration and a court trial. First and foremost, there are no juries in arbitration. Second, arbitrators aren’t always as neutral as arbitration proponents would have you believe. Finally, there are fewer procedural protections available for you in arbitration than in court.
What’s wrong with allowing binding arbitration agreements in nursing homes?
With that understanding in mind, here are three of many reasons why nursing homes should not be allowed to force residents into binding arbitration agreements:
1. Nursing Home Residents Don’t Freely Agree to Arbitrate
The biggest problem with allowing nursing homes to require arbitration agreements is that prospective residents don’t freely accept such agreements. This is so for three reasons:
- Arbitration agreements are just one part of the extensive “routine paperwork” residents and their families receive upon admission. Most people simply sign whatever the nursing home tells them to. Often, they don’t even realize they’re agreeing to arbitration, or that they’re giving up their right to a jury trial.
- Nursing home residents often lack capacity to contract. More than half of nursing home residents suffer from Alzheimer’s disease or dementia, while many others lack the legal capacity to enter a contract for other reasons. Nursing homes try to get around this problem by having a family member sign for the resident, even when that family member lacks the legal authority to do so.
- The need for care forces residents to accept whatever conditions nursing homes impose. Nobody moves into a nursing home because they’re looking for a hip new community to call home. They move there because they have to, because they require the care and attention of the nursing home’s skilled nursing staff. In other words, they have no choice but to sign whatever the nursing homes require them to sign.
2. Challenging an Invalid Arbitration Agreement is Expensive and Time-Consuming
Not every arbitration agreement is valid. For example, if a resident lacked the capacity to contract when he or she signed the agreement — as is often the case in the nursing home context — then the contract is unenforceable. But that doesn’t mean nursing homes won’t still try to enforce it. When they do, challenging the enforcement leads to extensive delays and high costs.
The federal court that put the Obama rule on hold last November relates a poignant example of this in its decision: In a Mississippi state court case called GGNSC v. Johnson, Catherine Johnson filed a wrongful death lawsuit against Golden Living Center, the nursing home where her brother had lived until his death in 2009.
Johnson’s lawsuit was filed in May 2010. In late October 2010, Golden Living Center asked the court to dismiss the case, relying on an arbitration agreement Johnson had signed on behalf of her brother. The court eventually denied the nursing home’s motion, finding that Johnson had not been authorized to sign for her brother. The nursing home appealed.
It wasn’t until March 2013 that the arbitration issue was finally resolved in Johnson’s favor by a decision of the Mississippi Supreme Court. Only at that point could the case progress to considering the merits of Johnson’s claims.
During that delay, both parties continued to rack up litigation expenses and court costs. In fact, according to industry statistics, a nursing home’s legal expenses can balloon from an average of less than $45,000 when an arbitration agreement is not challenged to more than two to three times that amount when it is. Plaintiffs experience a similar jump when forced to challenge arbitration agreements.
3. Arbitration Favors Repeat Players
The worst-kept secret in the arbitration industry is that the process favors “repeat players” — people and organizations who appear in arbitration proceedings frequently. In the context of nursing home disputes, this would mean that arbitration is often tilted in favor of the nursing home and against the resident.
The evidence bears this out. The industry statistics we linked to above show that claims resulted in no payment to the resident in 20.2% of cases not subject to arbitration, but in 27.5% of cases that went to arbitration.
At the other extreme, 1.9% of non-arbitration claims involved payment of more than $1 million. That’s already a tiny fraction of all claims, but it was worse for claims forced into arbitration — only 0.8% involved a greater-than-$1-million payment.
Even more striking are the data concerning claims where an arbitration agreement was challenged by the resident. For claims where the challenge failed and the dispute was resolved by arbitration, the average payment was just under $200,000. When the challenge succeeded and the dispute was resolved in court, the average payment was more than twice that, at nearly $450,000.
How to Protect Yourself and Your Loved Ones Against Binding Arbitration
These are only some of the reasons why Trump’s rule is a bad idea for Ohio nursing home residents. Unfortunately, it’s probably too late to stop the Trump administration from reversing the Obama rule on arbitration agreements.
But there are still steps that you can take to protect yourself and your loved ones against abusive arbitration clauses pushed by nursing homes. Here are some suggestions:
- Read the admission agreement and other documents provided by the nursing home. Be sure you understand what you are agreeing to before you sign anything. If you have questions, ask for a clear explanation. Consult an attorney if you need help.
- Don’t sign an arbitration agreement if it’s not required for admission. While President Trump’s rule would let nursing homes require an arbitration agreement as a condition for admitting a resident, the American Health Care Association, a trade group for nursing homes, recommends that nursing homes not make an arbitration agreement a requirement for admission. If you’re given an arbitration agreement to sign, ask if it is a condition for admission. If not, then there’s no reason to sign it.
- Understand your rights under the arbitration agreement. If you’ve already signed an arbitration agreement, it may nonetheless provide for a temporary rescission period. If so, you can tell the nursing home during that period that you want out of the agreement, and they’ll let you cancel it.
- Hire an experienced Ohio nursing home abuse lawyer. If you or your loved one have been injured by a nursing home’s abuse or negligence, contact the attorneys at Plevin & Gallucci to get the justice you deserve. We offer a free initial consultation and can pursue your claim in court or in arbitration.
- Contact your U.S. senators and representative. In the past decade, several bills have been introduced in Congress to limit the power of nursing homes to compel residents to enter pre-dispute binding arbitration agreements. Let Ohio senators Rob Portman and Sherrod Brown and your representative in Congress know that they should support such bills.