Articles Posted in Arbitration

Arbitration agreements are often the source of litigation in Maryland nursing home abuse and neglect lawsuits. Residents and their family members often sign these agreements without giving the terms of the agreement much thought. A state appellate court’s recent decision considered whether an agreement to arbitrate survived even if the remainder of the contract had expired.

According to the court’s opinion, a resident arrived at the defendant nursing home and was immediately given a residency agreement which said the agreement would continue indefinitely. However, the agreement also stated that  either party could terminate the contract immediately upon written notice in the event of the resident’s death or of the resident’s relocation “due to [her] health.” An arbitration clause within the contract stated that all claims arising from the agreement or against the facility would be submitted to arbitration. The facility allegedly failed to administer thyroid medication to the resident for over a year, causing her to suffer health complications. The resident and her daughter (the plaintiffs) filed a lawsuit against the facility based on the facility’s alleged failure to administer the medication. The facility tried to have the case resolved in arbitration, relying on the arbitration clause in the agreement.

The plaintiffs argued that the contract expired in July 2017, when the resident relocated to a new unit and signed a new contract. The court held that even if the rest of the residency agreement terminated, the arbitration agreement did not. The court concluded that the arbitration clause gave the arbitrator the power to decide all disputes concerning the interpretation of the agreement, including when the agreement terminated. The appeals court also held that the plaintiffs failed to make an independent challenge to the arbitration agreement itself. Therefore, the plaintiffs were required to proceed with their claim through arbitration.

On several occasions, we have written about arbitration clauses in Maryland nursing home abuse and neglect cases. An arbitration clause is an agreement, typically within a nursing home resident’s contract or the papers required to sign when moving in, that says any disputes that arise will be handled through arbitration rather than through litigation. Arbitration proceedings are confidential and final, and the agreements mean that residents have signed away their right to sue the nursing home in court if they suffer abuse or neglect at their hands. Arbitration tends to be favored by nursing homes because it costs them less, the outcomes tend to be more favorable to the nursing home, and they can avoid bad publicity.

In a recent opinion, a state appellate court considered the validity of arbitration agreements even when the organization listed in the agreement as the arbitrator was no longer hearing cases. The case sheds light on how arbitration issues might play out in Maryland. According to the court’s written opinion, the plaintiff placed her husband in a nursing home and signed an arbitration agreement that all disputes would be solved by arbitration in accordance with procedures from the National Arbitration Forum. However, the National Arbitration Forum decided in 2009 that it would no longer get involved in consumer disputes. So, when the plaintiff’s husband died, and the plaintiff sued the nursing home for negligence and wrongful death, she argued that the contract language requiring arbitration was impossible to comply with, and thus invalid. The district court agreed with her, holding that the case could proceed through the court system as though no arbitration agreement was ever signed.

However, on appeal from the nursing home, the appellate court found that the agreement was enforceable despite the forum being unavailable to arbitrate the dispute, and that the forum-selection language in the agreement was incidental, not central, to the contract. As such, it found that the nursing home did not mean that only the National Arbitration Forum could arbitrate agreements. The plaintiff thus could not sue the nursing home in court, but rather had to go through arbitration with a different arbitrator.

Every year, more and more Maryland residents are moving into nursing homes. As the population ages and life expectancy rises, nursing homes are supposed to provide a safe environment for those who can no longer care for themselves. Unfortunately, however, instances of nursing home abuse and neglect still occur in Maryland facilities and can result in serious injuries or even death for the residents. Acknowledging the pain and suffering these incidents can cause, Maryland state law allows injured victims or their families to sue a negligent nursing home to recover for their injuries. However, what some residents might not realize is that they may sign away their right to sue when signing the initial agreement forms with the nursing home.

Arbitration agreements are common among nursing home agreements, and oftentimes are signed without the resident even reading or understanding what they say. When signed, arbitration agreements can prevent a resident from suing the nursing home in court. If there is a dispute, the resident is forced to settle it through a confidential arbitration process, with no ability to appeal. Nursing homes prefer arbitration because it is faster, cheaper, and the proceedings are confidential, meaning they are less likely to suffer reputational harm. However, most residents are shocked to find out they signed away their right to a day in court.

Sometimes, injured residents who hope to sue a nursing home may attempt to invalidate their contract with the nursing home as a whole. Their strategy is that if the contract as a whole is invalid, then the arbitration agreement is as well. However, that strategy does not always work because a court might find that different clauses in the contract are severable, meaning that they are enforceable on their own.

Generally, when two parties sign an arbitration agreement, they must resolve their claims out of court through the arbitration process. Thus, by signing an arbitration agreement, the resident waives the right to sue the facility in court. Of course, the parties must voluntarily consent to arbitration through an agreement or otherwise. This means that in a Maryland nursing home case, the person bringing the claim must have signed, or be bound by, an arbitration agreement with the facility.

One state’s highest court recently ruled that a family member could not file a wrongful death claim against a nursing home where the resident had an enforceable arbitration agreement with the facility. In that case, a resident’s daughter had power of attorney for her mother. The daughter signed an arbitration agreement for her mother when her mother was admitted to the facility in 2013. Her mother developed bed sores and died after undergoing surgery for the sores. The daughter filed a wrongful death suit against the facility, but the facility argued the claim had to be resolved through arbitration.

The issue in the case was whether the arbitration agreement was enforceable against a family member filing a wrongful death claim. The court found that based on the state’s statute, the state’s interpretation of wrongful death claims, and the decisions of other state courts, the arbitration agreement was enforceable. The court ruled that the state’s wrongful death statute did not supersede the arbitration agreements signed by the residents, and that a resident’s agreement to arbitrate extends to their family members in a wrongful death claim.

These days, nursing homes in Maryland routinely incorporate arbitration provisions or agreements into their admission paperwork. People often do not question signing the agreement—until nursing homes try to force them into arbitration later on. Arbitration allows nursing homes to avoid costly litigation in a private decision-making process, generally with no right to appeal. However, an arbitration agreement may not be valid in some cases. A patient may lack the necessary capacity to enter into a contract, the person may have signed under duress, the provision may violate a state, federal, or local law, or the person who signed the agreement may not have had to the legal authority to sign on the resident’s behalf, as in the case below.

Court Invalidates Arbitration Agreement Signed by Resident’s Son

In a recent case before another state’s appeals court, the court invalidated an arbitration agreement that was signed by the resident’s son. In that case, the mother had been a resident of the nursing facility for about a month in 2016. The son signed an admission agreement and an arbitration agreement when his mother was admitted to the nursing facility. The son signed under “Responsible Party.” Under the agreement, Responsible Party was defined as a person with legal authority to sign for the resident, including a legal guardian or an attorney-in-fact.

Abuse and neglect are serious problems in Maryland nursing homes, and incidents can lead to physical and psychological injuries, and even premature death. Maryland law allows victims or their families to file lawsuits against negligent nursing homes when incidents occur, but many residents may be waiving that right without knowing it.

The use of mandatory arbitration agreements in nursing home contracts forces an injured resident to settle disputes with the nursing home through a private and confidential arbitration process, rather than in court. According to a recent news report, last month, two Congressional representatives introduced a bill that would ban nursing homes from requiring or asking residents to enter into mandatory arbitration agreements when moving into a home.

The use of arbitration by nursing homes has been a hotly debated topic. Advocates say that the process is speedier and less costly for abuse and neglect victims, while still allowing them a chance to receive the same financial compensation and other remedies available in court. Critics, on the other hand, claim that mandatory arbitration forces victims to give up their right to a day in court, allows negligent nursing homes to get away with abuse without hurting their reputation, and is unfairly biased against victims, especially since the nursing homes are repeat players who can form relationships with arbitrators.

Although one hopes that Maryland nursing home abuse will never happen, state law understands that, when it inevitably does, the individuals affected have a right to bring a civil suit against the nursing home. However, many nursing homes may ask residents and their families to sign away that right by signing an arbitration agreement. Arbitration agreements, which vary depending on the nursing home, generally bind both the resident and the home to settling any disputes that arise through an arbitrator, rather than in a judicial forum.

With a valid arbitration agreement, when an individual is injured or suffers a premature death as the result of the nursing home’s negligence, the victim or their family must pursue their claim confidentially, through an arbitrator chosen by the facility. Arbitration, although it is quicker and potentially less burdensome than bringing a suit in court, may still be disadvantageous for plaintiffs. For example, nursing homes typically have the power to choose the arbitrator, who acts as the judge, and they may choose one they have worked with before. Additionally, there is no jury, and no appellate process.

Generally, signed arbitration agreements are valid and enforceable, and a nursing home can compel arbitration if a resident or their family ever file a suit against them in court. However, like all contracts, nursing home residents can challenge a contract that they signed without knowing what they were signing, claiming they never agreed to waive their right to sue. Recently, a state appellate court considered a case where this happened. According to the court’s written opinion, the plaintiff required 24-hour nursing care due to multiple disabilities. When he was admitted to the defendant nursing home, they had him sign 12 documents, including an arbitration agreement, but the facility’s employees never explained the arbitration agreement to him or gave him a copy to review.

Arbitration has been a hot-button issue during the current administration. When President Trump took office back in 2017, there were strict rules set in place by President Obama that prevented nursing homes who used pre-admission arbitration contracts from receiving federal funds. The effect of this rule was to all but eliminate pre-admission arbitration contracts in Maryland nursing homes, as many received these types of funds.

Earlier this year, however, the administration was successful in amending the old rules to allow for nursing homes to include binding arbitration clauses in their pre-admission paperwork. Under the new regulations, nursing homes could use arbitration clauses as long as 1.) it is clear that the resident knew what they were signing, 2.) the document does not discourage residents from reporting non-compliance, and 3.) the arbitrator named in the agreement is neutral and mutually convenient. Nursing homes also had to allow residents a 30-day rescission period in which they could change their minds. While there were some protections for Maryland nursing home residents, most industry experts believe that this was a significant step backward.

According to a recent news report, in September, the U.S. House of Representatives passed the Forced Arbitration Injustice Repeal (FAIR) Act (the “Act”) by a vote of 255 – 186. The premise for the Act, as stated by one congressman, is that arbitration clauses have “seeped into just about every nook and cranny of our lives, including cell phone contracts, medical bills, employee handbooks, credit cards, nursing home contracts – you name it. Supporters of the FAIR Act recognize that the deck is “stacked against American consumers” and has been for far too long. One lawmaker described arbitration as, “just another tool for powerful corporate interests to avoid accountability.” The Act prohibits businesses, including nursing homes, from using binding, pre-dispute arbitration agreements. Under the Act, arbitration is allowed; however, the parties must agree after a dispute arises.

Under the current state of the law, Maryland nursing homes can ask potential residents to sign arbitration agreements. Often, these agreements are included in the pre-admission paperwork that must be completed before a resident is admitted. However, there are many issues that an arise affecting the enforceability of an arbitration agreement.

For example, courts have repeatedly held that an arbitration agreement is not valid if one party tells the other they must sign it. Similarly, for the most part, an arbitration agreement must be signed by the resident, because this is the person whose rights the agreement affects. However, routinely, nursing homes do not comply with the procedural and substantive rules governing arbitration agreements, rendering the agreements unenforceable. In a recent opinion, a state appellate court held that an arbitration agreement was unenforceable based on several criteria.

According to the court’s opinion, the plaintiff’s mother was a resident at the defendant nursing home. During her stay, she developed severe skin ulcers that ultimately required the amputation of her leg. The plaintiff’s mother died just a few days after leaving the home, and the plaintiff filed a wrongful death lawsuit against the facility.

Generally, when a nursing home resident enters a facility, the nursing home administration asks the resident (or the loved one accompanying them) to sign an arbitration agreement. If valid, arbitration agreements require the resident to resolve any cases that arise between the parties through arbitration. However, when a Maryland nursing home resident is the victim of abuse or neglect, there are frequently several parties – often the resident’s children – who may pursue a claim against the facility. This can complicate the effectiveness of arbitration, as shown by a recent state appellate decision.

According to the court’s opinion, a son helped his mother get admitted to a nursing home after a shoulder injury. Upon admission, the woman was confused and could not sign any paperwork due to her injury. Thus, her son signed the pre-admission paperwork, including an arbitration agreement.

While in the facility’s care, the woman passed away due to what appeared to have been nursing home neglect. The woman’s son, as well as her other children, filed a wrongful death case against the nursing home. The nursing home objected to the lawsuit being filed in court, pointing to the arbitration agreement signed by the woman’s son.

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