A “Gotcha” in Nursing Home Contracts?


September 12, 2016 / Personal Injury

The use of contracts with binding arbitration clauses has become commonplace for everything from cell phones to matters potentially concerning life and death, such as nursing home contracts. But contracts containing binding arbitration clauses are a minefield for the average person.

When you sign a contract containing a binding arbitration clause, you are waiving your right to bring a suit. You must instead accept the decision of the arbitrator in case of a legal conflict; the arbitrator’s decision is final. That means any decision reached in binding arbitration cannot be overturned or reviewed in court except in extremely limited situations, generally those involving fraud or breach of power.

Binding arbitration clauses are now routinely showing up in nursing home and long-term care facility contracts. Here’s what you need to know.

Contracts Can Be Enforceable Almost Limitlessly

A contract is a contract. As such, if you signed it willingly and you are legally competent to sign it, the contract will likely be upheld. This can be the case even if the facility that demanded the contract cannot locate it. Such was the case with a July, 2016, ruling here in Indiana. The Indiana Court of Appeals ruled that a skilled nursing facility could still compel arbitration, even if they could not produce a copy of the signed arbitration agreement.

Nursing Homes Can Refuse to Admit

Nursing homes and other long-term care or skilled nursing facilities can refuse to admit your loved one if you refuse to accept a binding arbitration agreement clause. Anyone in this position knows this situation places you in the proverbial “rock and a hard place” position. Therefore, what do you do?

Consider asking the facility upfront whether they require you to accept binding arbitration as a condition for admittance. If they do, you might consider finding another facility that doesn’t require the clause before you become too invested in the place. If they do not, you can refuse to sign your acceptance of the clause while still gaining admission. We recommend that you seek legal counsel if you are not sure how to accomplish such a refusal so that it has the force of law.

Exceptions to the Norm of Contract Law

Two cases illustrate potential exceptions.

In South Carolina, a complex case ended up being decided for the plaintiffs who were pursuing a wrongful death case. The Court of Appeals of South Carolina agreed with a lower court that no binding arbitration was to occur, and the wrongful death case could proceed. The following reasons were given by the court:

  • The arbitration agreement was not a requirement for nursing home admission.
  • The son was acting as his mother’s agent, even though he had no authority to do so.
  • The mother’s dementia made it impossible for her to give her consent to his agency.

In Arizona, an early 2016 case also demonstrated that such agreements are not always unbreakable. Again, it was a situation in which a man signed an agreement on his mother’s behalf even though he had no power of attorney. He was forced to sign in order to have his mother admitted despite his lack of authority to do so. Therefore, the contract was void.

The Future: Could It Be Better?

The Centers for Medicare & Medicaid Services (CMS) has proposed a rule that would require, among other things, that facilities explain the arbitration clause(s) to prospective contract-signers, and that such clauses would be banned for Medicare/Medicaid-approved facilities. As of this writing, the rule has not been finalized.

If you have signed a contract with a binding arbitration clause, you might still have recourse. An attorney who specializes in nursing home negligence cases can review your case to make sure that certain safeguards are in place.

When others breach their duty, we keep ours.

Many nursing homes and assisted living facilities in Indiana are part of a larger chain. They have a full-time legal department and resources to routinely dispute abuse and neglect claims. Too often, they are focused on shareholder profits rather than patient safety.

At Stephenson Rife we will work with you to hold the abusers accountable for the pain and suffering they cause. Your elderly loved ones deserve to live in safety and dignity. A lawsuit against an Indiana nursing home won’t undo what has already been done, but it can recover the large sums of money you have paid the negligent facility and any medical expenses caused by the abuse.

If you suspect a nursing home has been neglectful or abusive to your loved one, contact Mike Stephenson at 1-317-825-5200, or use our online contact form to arrange a free consultation.

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