Reading, PAWhen one thinks of nursing home abuse, it would be expected to assume images of mistreatment of the resident through either elder care neglect, or antagonistic and grounds of physical abuse.
But there is another form of alleged abuse that has been lurking amongst nursing homes and elder care facilities for some time. It’s abuse that lurks on paper, but can have far-reaching effects and radically impact a family’s capacity to recover damages from a nursing care provider.
The culprit is the so-called “arbitration agreement,” a common practice of nursing homes in an attempt to escape costly litigation. Families of incoming residents are asked to sign waivers that hold any and all disputes over elder care neglect or a nursing home injury are to be settled by arbitration, and not via the courts. There is also generally a cap on damages available within an arbitration agreement.
Lately, the courts have been having a bit of a field day with this one, ruling that such agreements are unconscionable, in that they tend to be one-sided and violate public policy.
The latest arbitration agreement to be dumped on its backside is a document used by a nursing home in Reading, Pennsylvania. In Hendricks v. Manor Care, Berks County Court of Common Pleas Judge Jeffrey Sprecher found that some of the provisions in the arbitration agreement at issue in the case were “misleading,” while others were “overreaching.”
The case, which came down to the trial judge’s ruling earlier this month, also distills down to the very basis of whether or not the party fully understands what he or she is signing.
In other words, when you waive your right to a jury trial, do you really understand what you’re giving up? And if you don’t fully understand or comprehend what you’re agreeing to, how much weight can be put on the agreement in the first place?
“There is no evidence that this plaintiff realized what she was giving up by waiving a jury trial or even a court proceeding,” Judge Sprecher said, in his opinion released October 3. “This plaintiff is not an attorney or a businessperson experienced in the law. This court cannot conclude that plaintiff understood her rights. Therefore, this court concluded that plaintiff lacked informed consent when she agreed to waive the resolution of all future disputes in a court of law in favor of private arbitration.”
The plaintiff, Esther Hendricks, was attempting to sue the nursing home over injuries suffered by her mother allegedly at the hands of one of the nursing home’s employees. The nursing home tried to invoke the arbitration agreement. However, the judge ruled that the agreement was invalid.
“Arbitration may be fine for monetary issues in business transactions, but injuries caused intentionally or negligently in tort should not be the subject of routine arbitration unless both parties fully and completely negotiated and agreed to the final terms,” Sprecher wrote. “Unlike contracts where the issues are relatively clear and a breach can be easily identified, negligence issues are not so obvious.”
Is an agreement valid if the signatory doesn’t understand it?
Sprecher also noted that Hendricks was asked to sign the arbitration agreement at an emotionally trying time and did not fully understand what she was agreeing to. There was no provision for negotiation in the agreement, which had to be signed as is. Judge Sprecher held that the agreement was “procedurally unconscionable.”
He is not alone in his opinion. Other courts have felt the same way.
In November 2011, a five-member majority of the Florida Supreme Court rejected key aspects of an arbitration agreement signed by the family of a resident with Manor Care Florida Inc.
While there was a dissenting opinion in the case, the majority of Supreme Court Justices noted that “(These) limitation of liability provisions, which place a $250,000 cap on non-economic damages and waive punitive damages, violate the public policy of the State of Florida and are unenforceable.”
The lawsuit, Gessa vs. Manor Care of Florida Inc., involved the same elder care company that was involved in the Pennsylvania case.
Yet another case in New Mexico a few years ago also found for the plaintiff. The son of a resident who died just a few months after admission filed a wrongful death lawsuit on behalf of his deceased parent. The defendant immediately moved to compel arbitration. The trial court in Figueroa v. THI of New Mexico at Casa Arena Blanca LLC, denied the motion on grounds that the agreement was one-sided and unconscionable, citing the Supreme Court’s decision in Cordova v. World Finance Corporation of New Mexico, 2009-NMSC-021, 146 N.M. 256, 208 P.3d 901, which held that arbitration agreements that are unfairly and unreasonably one-sided in the drafter’s favor are unconscionable under state law.
Nursing homes favor arbitration agreements in an effort to hold down the costs of litigation at a time when, according to nursing home advocates, they are struggling with costs in the face of cuts to Medicaid and Medicare payments. However, many a nursing home lawyer has argued that such agreements spirit away the legal rights of residents and their families.
As stated above, in several nursing home injury cases where the validity of arbitration agreements are under the spotlight, the courts appear to be saying that wide-ranging and cookie-cutter arbitration agreements are one-sided and favor the facility.
And perhaps, just plain wrong…
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