Articles Posted in Arbitration

Often when an individual is injured or mistreated in a nursing home, they have already signed away their rights to bring a lawsuit. Instead, depending on the language of the contract they signed when entering the nursing home, they are required to arbitrate all claims brought against the nursing home. Arbitration is a form of alternative dispute resolution, where an arbitrator—instead of a judge—decides the outcome of the dispute and how much money the nursing home must pay.

A recent federal bill would forbid nursing homes from forcing residents to agree in advance to arbitration in cases where lawsuits are brought against the nursing home for inadequate and a lack of care. The bill would also require a 24-hour nurse to be available at nursing homes, along with requiring an infection prevention and control specialist. Nursing homes receive most of their financing through Medicaid and Medicare, meaning they must follow state and federal regulations—including this bill if it were to be passed by Congress. While it is unclear now whether this bill will be passed, it would provide nursing home residents with a mechanism to bring a lawsuit if they are injured or mistreated while living at a nursing home.

While arbitrating nursing home disputes may not seem terrible for either party, it often limits the settlements plaintiffs will receive, as compared to a jury. An arbitration clause, literally forces the resident to arbitrate instead of suing the home—regardless of the allegations. While arbitrators are often impartial and will ensure the plaintiff’s claims are adequately heard, bills like the one being discussed now give residents the opportunity to bring a lawsuit if they have been neglected or abused. This is better than forcing everyone to bring all claims in front of an arbitrator.

The U.S. House of Representatives recently introduced the Forced Arbitration Injustice Repeal Act, known as the FAIR Act, that would limit private arbitration agreements. The Act as proposed would prohibit companies from requiring workers and consumers to resolve legal disputes through arbitration. Proponents of the Act claim that forcing arbitration tricks consumers into agreeing to arbitration by using fine-print arbitration clauses and deprives them of their right to seek damages in court from a jury. The proposed legislation would include a ban on forced arbitration agreements for residents in Maryland nursing homes by prohibiting pre-dispute arbitration agreements in long-term care facility admission contracts. The Act was previously introduced in 2019 but did not become law.

In October 2016, the Obama administration banned the use of pre-dispute arbitration agreements in long-term care settings. However, a judge struck down the ban and prevented it from being enforced. The Trump administration later issued a new rule, which went into effect in September 2019. That rule reversed the previous ban on pre-dispute arbitration agreements in nursing facilities but required certain conditions to be met. The recently introduced legislation seeks to address the issue once again.

What Is Arbitration?

Nursing home abuse and neglect is, unfortunately, a rampant problem in Maryland and across the nation. While Maryland state law, recognizing this problem, allows individuals whose loved ones are injured by instances of nursing home abuse and neglect to file a civil negligence lawsuit against the negligent staff or home, many Maryland families may be unwittingly signing away this right. This is because nursing homes may often ask residents or their families to sign an arbitration agreement when the resident moves in. But Maryland residents should always read the fine print of these agreements very carefully and, generally, should avoid signing these arbitration agreements.

Arbitration agreements are essentially contracts stating that if any dispute comes up between the individual and the nursing home, it must be settled through arbitration rather than through a civil negligence lawsuit. Basically, nursing home residents who sign these can be barred from pursuing their case in court. And in most cases, arbitration is not an adequate substitute for having a case heard in court. Arbitration processes do not include a jury, may cap damages to way below what is available in court, and may limit a family’s ability to access or provide evidence of the abuse and neglect their loved one faced. Arbitration is also binding, with very little opportunity to appeal.

Importantly, the arbitrator (the decision maker in the process) is usually chosen by the nursing home, giving them an incentive to decide in favor of the nursing home. Nursing homes tend to like arbitration agreements for all of these reasons, as well as the fact that arbitration processes are covered by strict confidentiality rules, meaning that the nursing home’s abuse and neglect will stay hidden from the public. In contrast, filing a lawsuit against a nursing home provides plaintiffs with all the rights given to them by law, which may include the availability of larger monetary damages, a jury trial, access to more evidence regarding the abuse and neglect, and an impartial decision maker.

As arbitration agreements have become routine in many nursing facilities, questions may arise after ownership of the facility has been changed. Like other agreements, Maryland nursing home arbitration agreements can generally be assigned. An assignment of an agreement allows the assignee to “stand in the shoes” of the original party to the contract by granting all the rights the assignor previously had under the agreement.

A recent federal court decision considered whether an arbitration agreement could be enforced against residents after the facility had been transferred to new owners and new agreements had been signed. The case raised issues about when an arbitration agreement is properly assigned and transferred.

In that case, two residents entered a nursing facility in 2019. In April 2019, one resident entered the facility and signed numerous admission documents, including an arbitration agreement, though the agreement was not a condition of admission. The arbitration agreement stated that all claims relating to the resident’s stay were required to be decided through arbitration. In August 2019, the second resident was admitted and signed the same admission documents. In February 2020, the facility was sold and transfer to a new entity. A transfer agreement assigned the new entity as the assignee for certain agreements.

When Joe Biden is sworn into the office of the President of the United States, there are going to be some major changes. Indeed, he and President Trump clashed on many of the most important issues facing the country. However, one very important issue that got relatively little attention was how a Biden administration might impact Maryland nursing home arbitration agreements.

Arbitration is a way for litigants to settle a claim out-of-court. Instead of filing a case in court and letting a judge or jury decide the outcome, in arbitration, a neutral arbitrator hears the evidence and issues a binding decision. While this may seem good in theory, it often works in favor of nursing homes, who get to choose the forum and are intimately familiar with the rules of arbitration. Additionally, there are generally very few ways to appeal an arbitrator’s decision, limiting a resident’s ability to obtain any form of judicial review. For these reasons, and others, many nursing home residents end up at a major disadvantage when they are forced to arbitrate their claims.

During the Obama administration, the Centers for Medicare and Medicaid Services precluded nursing homes from asking residents to sign pre-admission arbitration contracts. The reasoning behind this was that nursing home residents and their families may not be in a position to negotiate the terms of the agreement, and would likely just accept them, even if they are against their interest.

Arbitration is a process in which the parties agree to have a private arbitrator decide the case instead of having the case decided by a court. Although arbitration has some advantages, it can put Maryland nursing home residents at a great disadvantage in many instances. For residents that agree to arbitration as part of their admission paperwork, arbitration agreements can be difficult to get out of—in part because the Maryland Uniform Arbitration Act provides that arbitration agreements are favored.

But there are successful challenges to arbitration. For one, the parties must consent to the arbitration. Consent to arbitration in the nursing home context generally occurs by signing an arbitration agreement as part of an agreement to be admitted to the facility. Because both parties must consent, in some cases, an arbitration agreement is not valid or enforceable because the resident (against whom the agreement is often enforced) did not sign the agreement. For example, a family member may have signed the agreement who did not have the authority to sign on the resident’s behalf.

Agreements may also be unenforceable because they are unconscionable. The language may be unclear or hidden, and unreasonably favorable to one party, leaving the other party with no choice but to accept. Under these circumstances, an agreement may also be unenforceable.

Arbitration agreements are often used as a tool against nursing home residents and their families to block litigation in court. There are several disadvantages to arbitration, but there are advantages as well, and some individuals with Maryland nursing home cases may opt for arbitration. Some of the advantages are that claimants may be able to resolve their cases more quickly and more cost-effectively. In addition, because the rules of evidence do not apply, parties may be able to present additional documents and witnesses. Also, arbitration proceedings are generally private, and the parties can decide can keep the proceedings confidential.

In cases that will be resolved through arbitration, there may be a question about the applicable law. Maryland’s Maryland Uniform Arbitration Act (MUAA), governs arbitration in Maryland. The MUAA generally applies if the arbitration agreement contains an explicit choice of law clause that states that Maryland law will govern dispute resolution. But the Federal Arbitration Act (FAA) governs most arbitration disputes as it applies to transactions involving interstate commerce, which has been interpreted broadly. In general, the FAA preempts state law if it contradicts with the FAA, but there are situations in which state law may apply. Both the FAA and the MUAA favor the enforcement of arbitration agreements generally.

In a recent case, a state appeals court ordered a plaintiff’s claim to be resolved through arbitration on the plaintiff’s motion. In that case, the resident signed an arbitration agreement with a nursing home as part of her admission process. The agreement stated that all legal claims against the nursing home had to be resolved in arbitration. After her death, her estate filed a claim against the facility alleging medical malpractice. Per that state’s law, the claim was filed with the state’s Department of Insurance.

Generally, an arbitration agreement, like any other contract, can be enforced against the parties to the agreement. Yet, Maryland nursing home admission agreements (which may include arbitration agreements) are sometimes signed by someone other than the resident. This raises the question of whether the agreement can be enforced against the resident when someone else signed the agreement. If an arbitration agreement was signed, nursing homes will almost always argue that the case must be resolved through arbitration—but the agreement may not always be enforceable. Both parties to the agreement must voluntarily agree and consent to the arbitration. Under Maryland law, someone who purportedly signs an agreement on a nursing home resident’s behalf must have the legal authority to do so.

In a recent state court appellate opinion, the court held that a nursing home resident’s daughter did not have the authority to sign on her mother’s behalf when she was admitted to the facility. In that case, the mother was 77 years old and suffering from dementia and other medical problems when she was admitted to the facility. The daughter and her husband were appointed temporary conservators of the mother before she was admitted to the facility and they signed the paperwork when she was admitted. Among other admission paperwork, the daughter signed an arbitration agreement, and her husband signed underneath the daughter’s name. The mother did not sign the document. Soon after she was admitted she allegedly suffered injuries including fractures and bruises and she passed away a few months later. The plaintiffs filed suit against a senior living facility for negligence, elder abuse and neglect, and wrongful death.

The facility argued that the case was required to be moved to arbitration based on the arbitration agreement the daughter had signed when the mother was admitted. However, the appeals court found that there was not sufficient evidence to show that when the daughter signed the document, she had the authority to bind the mother to the arbitration agreement. The court found that although the daughter and her husband were temporary conservators, and they did not have the authority to make long-term decisions that gave up substantial rights without her consent or without an adjudication that she lacked capacity. In addition, because there was no evidence presented indicating that they intended to sign the agreement on their own behalf, it could not be enforced against them. Therefore, arbitration could not be compelled.

The decision to place a loved one in a Maryland nursing home is rarely an easy one, and typically occurs when the individual is too elderly or sick to take care of themselves. Often, a family feels as if they have no choice but to place their loved ones in a nursing home to ensure that their loved one is taken care of and looked after. Families are often handed stacks of forms to sign—pages and pages—and will sign them right away, usually without reading them, wanting to ensure their loved one is secure in a safe space. However, a sneaky but potentially important term is often hidden in these forms: an arbitration agreement.

Arbitration agreements can force a resident and their family to resolve any disputes—including abuse and neglect claims—through arbitration, rather than through a lawsuit. By signing these forms, the family essentially waives their right to a jury trial.

These arbitration agreements are especially pernicious during the COVID-19 pandemic, as more and more individuals are being dropped off at nursing homes and rehabilitation centers in need of immediate assistance. Oftentimes, families will sign whatever forms are presented to them in an effort to make sure their loved ones are taken care of immediately. In addition, nursing homes are known hotspots for COVID-19 cases across the country, and COVID-19 related deaths surge within them, raising questions about the homes’ adequacy of care.

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.

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