Mandatory Arbitration Clauses in Maryland Nursing Home Admissions

1117630_29303137.jpgPeople involved in legal disputes may choose, instead of litigation, to submit their case to a process like mediation, where a neutral person tries to help all sides in a dispute reach a mutually agreeable settlement; or arbitration, where one or more neutral individuals hear arguments from all sides to a dispute and propose a solution. Arbitration can be non-binding, meaning any party can reject the arbitrator’s decision and proceed to litigation; or binding, in which case no party may challenge the arbitrator’s decision in a court of law. These practices can offer an efficient means for settling grievances, but in some cases, people who might prefer litigation find themselves contractually bound to arbitration, often binding. Maryland and federal law generally allow nursing homes to include arbitration provisions in their contracts with residents with some limitations. Anyone signing admission papers for a nursing home, for themselves or someone else, should review them very carefully.

NBC News recently reported on a man who checked his father into a nursing home after his father suffered a stroke. When his father died due to alleged negligence, the man sought advice as to his legal rights. He learned that an arbitration agreement was among the many papers he had signed during his father’s admission, thus barring him from the courthouse.

Arbitration can be an expensive process for individuals, with the arbitrator’s fees often split equally between the parties. Arbitrators are often former attorneys or judges with high hourly rates, unlike judges in the judicial system, whose paycheck comes from taxpayers. The process can lack the transparency of the court system, where most documents are public record. Arbitration is a private transaction, occurring behind closed doors. For reasons that remain a subject of dispute, studies cited by NBC have shown that arbitrations result in fewer monetary awards for patients or their families than litigation.

Because arbitration clauses are usually part of a nursing home’s agreement for services, they are viewed as lawful unless they are clearly unfair. The Center for Medicare and Medicaid Services issued a policy statement in 2003 setting limits on arbitration agreements in nursing homes under its authority. Nursing homes cannot retaliate against a resident for refusing to sign an arbitration agreement, nor can they compel a current resident to sign a new contract with an arbitration clause. Arbitration agreements do not affect issues relating to a patient’s eligibility for Medicare or Medicaid.

The Court of Appeals of Maryland, in Dickerson v. Longoria, 995 A.2d 721 (Ct. App. Md. 2010), addressed the question of whether the estate of a deceased nursing home resident was bound by an arbitration agreement signed on the decedent’s behalf by an agent. The decedent had suffered from dementia and schizophrenia at the time of his admission, but the court focused on the laws of agency. It held that an arbitration agreement is a decision to waive the right of access to the courts, and that this is not a “health care or financial decision” normally included in a power of attorney. The representative therefore did not have the authority to make such a waiver. The court did not address the larger question of whether a nursing home patient, or a representative of one, could be forced into arbitration at all.

The lawyers at Lebowitz and Mzhen help obtain compensation for people in Maryland injured due to nursing home abuse or neglect. To schedule a free and confidential consultation, contact us today online or at (800) 654-1949.

Web Resources:

Binding Arbitration in Nursing Homes (PDF file), Centers for Medicare & Medicaid Services, January 9, 2003

More Blog Posts:

Appeals Court Reinstates Class Action Lawsuit Against Nursing Home Operator Alleging Rights Violations, Maryland Nursing Home Lawyer Blog, August 29, 2012
Legislature Aims to Eliminate Arbitration Clauses in Nursing Homes to Protect Seniors, Maryland Nursing Home Lawyer Blog, October 18, 2010
Abuse of Elders in Nursing Homes Revealed by Civil Justice System, Maryland Nursing Home Lawyer Blog, October 13, 2010
Photo credit: ‘Contract 1’ by gun4hire on stock.xchng.

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