Arbitration Agreements in Long-Term Care March 2022

As reported by McKnights Senior Living in February, recent court cases have been decided based on who signs an arbitration agreement.  CMS ruled in 2019 that residents are not required to sign binding arbitration agreements as a condition of admission or to receive care, and this regulation was upheld in October 2021 by the 8th U.S. Circuit Court of Appeals.  Nursing homes are permitted to use these agreements if they are explained to, and acknowledged by the resident or family member that the contents are understood.

Arb Agreement LTC

Case Examples

In addition to the cases cited by McKnights, the following cases provide examples of the enforceability of an arbitration agreement based on the signing party:

The resident signed an arbitration agreement upon entering the nursing home.  The resident died, and the son sued for wrongful death, arguing that his mother would not have understood any legal document due to her mental condition and medications.  An expert witness reviewed the decedents medical records and determined she was not competent to provide informed consent to the arbitration agreement.  Based on this expert opinion, the appellate court affirmed the circuit courts denial to compel arbitration.

  • August 2021: Pennsylvania Superior Court vacated a lower court’s ruling to send a wrongful death claim to arbitration. The resident had signed the arbitration agreement upon admission to the facility; however, the family presented records showing she was not competent.  The family indicated their mother had been declared “mentally disabled with impaired judgement” and “carried a diagnosis of schizoaffective disorder.”  The family further noted she “had only a sixth-grade education and a limited ability to read and write,” therefore, the son typically reviewed documents on her behalf.  The facility relied on the discharge summary from the hospital to prove she was competent.  The judge remanded the wrongful death case to state court for discovery on the issue of the Decedent’s competency to execute the agreement.
  • September 2021: CL SNF, LLC v. Fountain – Supreme Court of Georgia. Upon admission to a nursing home, the patient’s guardian signed the admission agreement and an arbitration agreement.  The guardian later disregarded that agreement and sued the nursing home.  The county court and Court of Appeals allowed the guardian to disavow her authority to the arbitration agreement and the nursing home elevated the review to the state supreme court.  The Georgia Supreme Court found that the guardian had signed all admission documents and the arbitration agreement contemporaneously, therefore, the guardian could not choose to enforce parts of the agreement and disavow those parts that she later found inconvenient (the arbitration agreement.)
  • February 2022: Diversicare of Meridian, LLC v. Shelton – Court of Appeals of Mississippi. An elderly patient who wanted to be admitted to her room as quickly as possible due to difficulty breathing directed her daughter to “sign the documents” needed for admission.  The arbitration agreement was one of the numerous documents presented to the daughter, and she believed all documents were required for admission.  The court found that “a mentally competent individual may orally grant authority to another person to sign documents required for admission to a nursing home” but Diversicare failed to provide sufficient proof that the patient specifically gave her daughter the authority to bind her to arbitrate any future disputes concerning her stay.  The denial of the facility’s motion to compel arbitration was upheld and the case was remanded.
  • March 2022: Tuzzolino v. Windsor Twin Palms Healthcare Center. Court of Appeals of California. The wife signed an arbitration agreement on behalf of her husband when he was admitted to a skilled nursing facility.  She later sued the nursing home for negligence, elder abuse, and wrongful death.  The facility filed to compel arbitration based on the agreement signed by the wife.  The appeals court upheld the trial court’s denial to compel arbitration, citing that husband had executed a Durable Power of Attorney appointing his wife.  This DPOA stated that it did not authorize her to make medical and other healthcare decisions for him.  The trial court concluded that the facility failed to meet the burden of proving the existence of a valid arbitration agreement because the wife lacked authority.  She executed the agreement “while making health care decisions on behalf of the [d]ecedent” in violation of the express terms of the DPOA.

Current Legislation

The Nursing Home Improvement and Accountability Act of 2021 was introduced in the Senate in August 2021 and in the House in September 2021.  As of March 2022, both bills remain in committee.  The AHCA/NCAL issued a statement strongly opposing the severe restrictions on arbitration agreements contained in the bill.  AHCA/NCAL notes that arbitration is quicker and less costly than litigation and provides similar outcomes.  They stated, “An excessive litigation environment, coupled with the existing financial crisis, means thousands of long-term care facilities would be forced to close their doors, in turn, displacing tens of thousands of vulnerable residents and limiting access to critical services for our nation’s seniors.”  Groups such as The National Consumer Voice for Quality Long-Term Care back the prohibition of pre-dispute arbitration agreements, and fully support the “FAIR Act of 2022”, or Forced Arbitration Injustice Repeal Act of 2022.  The U.S. House of Representatives passed this bill on March 17, 2022, which would ban enforcement of pre-dispute arbitration agreements for workers and consumers, which could include long-term care situations.

Supporting the Defense

Excelas’ medical record organization and analysis services identify and highlight admission paperwork and arbitration agreements, along with any additional documentation by staff regarding discussions with the resident, family, and/or guardians.  As noted in these example cases, all circumstances surrounding the execution of the arbitration agreement are relevant.  Excelas also continues to monitor legislation related to arbitration agreements and the potential impact on long-term care.

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