Articles Posted in Arbitration

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.

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.

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