An Agreement With Which You May Not Agree

All of us have been in that situation where we are the consumer in a transaction—which frequently means being the person with lesser knowledge of the subject in a given transaction—and are presented with a stack of papers that we are expected to sign (tried to finance a house or car recently?). The expectation to simply sign a series of documents in order to receive the item or service sought happens in a lot of industries—including nursing homes. The stack of papers outlining the admission of a new resident to a nursing home can, at times, rival the size of a resident’s actual medical chart. While all of the documents in an admissions packet are potentially important, I want to focus on one that arises a lot in the litigation Tom and I tend to see—the arbitration agreement.


Under most circumstances if there is a dispute between two parties—whether it be a contract dispute, a negligent act causing an injury (personal injury), etc.—that can’t be worked out informally then a more formal process is invoked, i.e. lawyers and all of that. An arbitration agreement attempts to prospectively dictate how a dispute between two parties will be handled. Typically anarbitration means there will be no jury and no trial, but instead that the dispute will be submitted to an independent third party—an arbitrator—who will hear the arguments of both sides and make a ruling. While the arbitration agreement applies to any number of possible disputes, remember that one of them is that if the corporation ever screws up you don’t have the right to sue them in a court of law and have a jury trial.


Whether arbitration agreements are a good or bad thing depends upon whom you ask. I am personally not in favor of them for a number of reasons that may be the basis for a future post. For now I will say that it is typically the service provider and not the consumer who wants the arbitration and it is the typically the consumer who gives up more by going into arbitration than the service provider. For these reasons, you should really consider whether you want to sign the arbitration agreement as a part of the admission packet. Here are some issues with arbitration agreements you may want to consider when reviewing the arbitration agreement (this list is not intended to be exhaustive):


1) If I refuse to sign this agreement can I or my loved one still be admitted to the facility? Some courts have found it improper to make admission of a nursing home resident dependent upon execution of an arbitration agreement. While some arbitration agreements may be silent on this issue, some will expressly state whether admission is dependent or not. If the agreement does not specify, you should inquire and get the response in writing.


2) Do I have the right to have this agreement reviewed by an attorney? Some agreement will specifically say that you have the right to review the agreement with an attorney before signing. Others will be silent on the issue. If you are in anyway uncomfortable with signing the agreement you should ask to have it reviewed by an attorney. You can be fairly certain that the nursing home had the agreement reviewed by its attorneys before presenting it to you!


3) I didn’t even realize one of the documents I signed was an arbitration agreement. That has happened a lot in the past and there are now some rules in place requiring companies that use arbitration agreements to take certain measures to make sure it is clear to the consumer that he or she is signing an arbitration agreement—as opposed to burying it in small print on page 23 of a 40 page document. If it was not made clear that you were signing an arbitration agreement it is probably not enforceable.


4) I don’t understand who is supposed to arbitrate this or what happens if there is a dispute. A lot of arbitration agreements do a poor job of a setting forth exactly what happens should a dispute arise in which the agreement would be enforced. The agreement should make it clear what rules would apply to arbitration and who would be arbitrating the matter. If it does not, or if you have questions about the rules or the proposed arbitrator you should ask the facility or request to have an attorney review it.


As I said, this is not an exhaustive list of issues that come up in arbitration agreements. I’ve tried to pick out a few things to look for when reviewing such an agreement. Certainly if you have any questions or concerns about it you should ask. If no one is able to answer your question or willing to try and answer your question then perhaps this tells you something about the facility you are considering and the nature of what they are trying to get you to sign. By and large, corporations want arbitration agreements because arbitrations are often considered cheaper for them than civil litigation. It has nothing to do with what is in your best interest. Every situation is different, but before signing one, consider carefully whether it is the right thing for you.


-Ryan