Doing Away With Mandatory Arbitration Provisions in Nursing Home Admissions Agreements

J. Michael Young writes here on his Texas Probate Litigation Blog about the The Fairness in Nursing Home Arbitration Act proposed by Sens. Herb Kohl (D-WI), the chairman of the Special Committee on Aging, and Mel Martinez (R-FL). According to this article, the proposal is really an amendment to The Federal Arbitration Act of 1925


Originally designed as a way to allow businesses to bypass judge and jury trials to settle disputes, the Federal Arbitration Act is now also used by many nursing homes to avert costly trials if charges of neglect, abuse or wrongful death are brought against them.

Picking up on Mr. Young’s post and running with it is Deirdre R. Wheatley-Liss who publishes the You and Yours Blawg. Ms. Wheatley-Liss has previously addressed the issue of the need to be very careful when reviewing nursing home admission agreements in this post and continues her good advice:

[…] a careful review of these contracts is a must. A growing concern is that they are drafted to take advantage of a family in the direst of circumstances by using the terms of the the contract to limit their own liability. This can leave a family with no contractual recourse when their loved one does not receive the care they deserve. One example of this is a damages limitation clause to $10,000 – this is obviously inadequate to address damages from a sub-standard level of care. Another favorite is the mandatory arbitration provisions – which eliminates the family’s right to go to court. Instead, any disputes are decided by a panel of industry experts.

These mandatory arbitration clauses are dangerous things for a number of reasons. First, arbitration can be even more expensive than trial since you’re not only paying your own attoryney’s but, as the Plaintiff, you are also paying the arbitors. Additionally, Mr. Young points out that:

Defendants often prefer mandatory arbitration because the arbitrators are drawn from the industry and perceived to be more conservative than a jury in awarding damages. For that reason, mandatory arbitration clauses are often attacked as unfair, particularly when the parties are in positions of unequal bargaining.

According the above article, while the FNHA act would not bar the use of arbitration agreements under all circumstances. It would prevent nursing homes and assisted living facilities from insisting prospective residents sign them as a pre-requisite for care. Mr. Young speculates :

I imagine this bill has a decent chance of passage, but would likely face a veto from President Bush.

What’s that you say?! A sensible bill may fall under the ill-advised veto-pen of our glorious leader? Shocking.

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