What are arbitration clauses

Arbitration clauses are becoming more and more prevalent in nursing home contracts, and have long been prevalent in the ALF setting. At first glance, such a clause may appear harmless to a resident. However, an arbitration clause can have important and far-reaching consequences if a legal issue were to ever arise, as it gives away a resident’s right to a jury trial, and the arbitration process often places limits on the INVESTIGATION of a claim.

The validity of the arbitration agreement or contract is often the central issue in the initial phases of litigation. Did the person who signed the contract, if not the patient, have legal authority to sign for the patient? If not, it may be argued there was no valid binding contract. Also, if a patient does sign the agreement, was he or she competent to sign a document that is legally binding on the resident (and his/her heirs, if death resulted.

The context of most arbitration agreements is that they are signed while the resident and his/her family are in a state of crisis or emergency, unexpectedly needing long-term care. The resulting failure to fully read or comprehend the contract that includes an arbitration agreement before it is signed is thus not surprising. Arbitration agreements are frequently signed by family members who may (or may not) have power of attorney.

While there is a whole body of law related to the enforcement and validity of arbitration agreements, the easiest way to deal with the issue is avoidance.

In Our Opinion

  • When signing an admission contract, you do not have to accept the arbitration clause – you can “X” out that paragraph when you sign the agreement.
  • Rejection of a proposed arbitration agreement should not prevent the admission of you or your loved one to that long-term care facility.

If you have already signed an arbitration clause, you can send the facility a letter telling them that you rescind the previously signed arbitration clause. Again, rescinding the arbitration clause should not affect your loved one’s admission status one iota. If it does, you may want to ask yourself why it matters so much to the nursing home or ALF.