October 29, 2016

If you don’t know what an arbitration clause in a nursing home contract looks like, how do you negotiate about it?

A man’s 100-year-old mother is found dead in her nursing home room. The suspect? Her 97-year-old roommate. The real cause of her death? Was it that the nursing home allowed her roommate to remain long after it was clear that she was a danger?

So, you would expect the son would sue nursing home for that negligence in court. Except, he could not. When his mother entered the nursing home, he had signed the contract that contained a mandatory arbitration clause. The case would be decided by a private arbitrator.

What is more, the arbitration firm had handled more than 400 arbitration hearings for the lawyers who represented the nursing home. Unsurprisingly, they ruled in favor of the nursing home, with a checkbox finding of no negligence.

There were no written findings (probably not required by the contract of arbitration) and unlike a civil trial, there was no public record of anything. Which means when you are considering a nursing home, you would have no way of knowing that such events took place in the facility where your mother or father would reside.

The fiction of contracts

There are two problems with contracts like the one involved in this nursing home. Unless you hire an attorney to review the contract and advise you of any potential problems, like this arbitration clause, the average, intelligent educated person is ill-equipped to interpret the many pages of densely written and technical language of these contracts.

Moreover, even if you detected portions of the contract that you would like to change, it simply would not be permitted. While not presented as such, these contracts are functionally “contracts of adhesion” a legal term for a contract in which one party controls the drafting and the language and the other party is not permitted to request changes or modifications.

They are “take it or leave it.” And if you take it, you are virtually certain to lose many of your rights to hold the drafter accountable for virtually any wrongdoing that they commit.

Arbitration; or how you sign away your rights

Businesses prefer arbitration clauses, as it allows them to control the terms of the arbitration and how any incidents will be treated. They can also keep it quiet with no public record of the settlement. If you are Apple suing Samsung, this makes sense, as billion dollar corporations can hire the largest, most sophisticated law firms and lawyers to protect their rights.

Because of their equal bargaining power, they are able to engage in meaningful negotiations, with each side being forced to compromise and “give” to hammer out a viable agreement.

An ordinary person, with no legal training, concerned with finding a home for their parent is in no position to “bargain” with a corporation regarding the terms of a contract at a nursing home. Yet that is exactly the position of most people when that occurs.

The courts enforce these contracts under the fiction that these are “bargained for” deals, when in fact, they are imposed, leaving the average person with few options and no choice.

Fight fire with fire

Ironically, the man in this case was able to attack the nursing home at its own game by using technical contract interpretation against them.

While his mother had given him a health care proxy, which allowed him to make certain decisions relating to her medical care, she had not given him power of attorney, which meant his signature on the contract could not bind her estate, as he lacked legal authority to sign away those rights.

His case goes to trial March, and he hopes to finally obtain justice for his mother.