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Mandatory Arbitration May be Coming Out of Nursing Home Contracts

By Deirdre R. Wheatley-Liss, Esq.

Category: Elder Law, Estate Planning, Estate and Inheritance Tax, Business Law and Planning, Tax Law and Planning, Probate and Estate Administration, Financial Planning, Miscellaneous Musings

As I have blogged before in Nursing Home Admission Contracts, Be Aware, Be Very Aware, 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. As J. Michael Young, Esq. points out in his posting Mandatory Arbitration, in his new blog Texas Probate Litigation not only can arbitration be much more expensive than litigation (you are paying the arbitrators as well as your attorney):

Apart from the cost issue, 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.

These clauses are becoming increasingly favored by nursing homes trying to limit liability for substandard care. However,nothing would seem more unequal than an elderly patient "negotiating" with the management of a nursing home. The reason people are admitted to nursing homes is because of failing physical and/or mental
health. Not an ideal circumstance for well informed, arms-length negotiating.

As this article details, Congress has become concerned and a bipartisan bill in the US Senate would curtail the use of such clauses, particularly as a pre-requisite for care.
I imagine this bill has a decent chance of passage, but would likely face a veto from President Bush.

A senisble bill coming out of Congress - who would have thunk it? But note the veto forecast.

Full post as published by New Jersey Estate & Elder Planning Blog on April 18, 2008 (boomark / email).