Nursing Homes and Binding Arbitration

The Federal Arbitration Act, enacted on February 12th, 1925 provides for judicial facilitation of private dispute resolution through arbitration. It applies to state and federal courts and was upheld in Southland Corp. v. Keating in 1884.

The Federal Arbitration Act provides for contractually-based compulsory and binding arbitration, resulting in an arbitration award entered by an arbitrator or arbitration panel as opposed to a judgment entered by a court of law. In an arbitration the parties give up the right to an appeal on substantive grounds to a court.

The Federal Arbitration Act requires that where the parties have agreed to arbitrate, they must do so in lieu of going to court.

Nursing homes have been burying a mandatory arbitration clause deep in their admission documents. In the Supreme Court case of Marmet Healthcare Center v. Brown et al in February 2012, the Supreme Court found the practice to be completely legal. Since then, most long term care facilities have been amending their agreements to include that all disputes be settled via binding arbitration. By signing this agreement, patients waive their rights to a jury-based trial. Nursing homes claim that arbitration is the right move from an economic standpoint saying that it is cost-effective and efficient.

The other side of the argument is that it is reprehensible that nursing homes will take advantage of older people who may have a diminished mental capacity and also of family members who are vulnerable and in a stressful situation where they are trying to do the right thing for their loved one. Even with long, sometimes confusing text signed during a time of stress, people may not realize or understand that when signing the admission documents they become contracts and are binding.

Many states have specifically ruled about the legality of these binding arbitration clauses with some states backing the clause and some states refusing to allow the arbitration clause. New York State has not addressed the issue so arbitration clauses will be enforced in New York.

It is vital that before you sign any paperwork for anything as important as moving a loved one into a nursing home, contact an attorney to go through the paperwork with you to make sure you know what you are signing. If you have any questions or need help reading through any contract, contact Elan at 516-822-7866.

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