Current Topics in Nursing Home Arbitration Agreements
We previously wrote a blog concerning what has become a common practice of nursing home owners: the inclusion of arbitration provisions in nursing home admission documents. Except in very limited circumstances, Florida courts have routinely found that such arbitration provisions are legally valid. See Manocare Health Service, Inc. v. Stiehl, 22 So. 3d 96, 104, n.7 (Fla. 2d 2009). This current blog on such arbitration agreements is divided into two parts. Part I provides a discussion of the validity of nursing home arbitration agreements signed by individuals acting under a durable power of attorney. Part II discusses the legislative efforts which are being made to make nursing home arbitration agreements illegal.
Part I. The Validity of Nursing Home Arbitration Agreements Signed Under the Authority of a Durable Power of Attorney
Many times nursing home admission documents are signed by a family member acting as the resident’s durable power of attorney and not by the actual resident. The grant of powers under a durable power of attorney is known as an advanced directive. To be valid, a grant of durable power of attorney requires the execution of a formal document which specifies the powers being granted in accordance with the formalities specified by Florida Statute 709.06. A durable power of attorney is one which remains effective should the grantor become incapacitated in the future.
The following issue has arisen in nursing home negligence and abuse cases: whether nursing home admission documents requiring that claims arising under the admissions agreement be arbitrated are valid when the admissions agreement was signed by a person acting under a durable power of attorney. That is, does an individual acting under a durable power of attorney (DPOA) have the authority to consent to arbitrate claims arising from the resident’s nursing home care?
According to Florida courts, the answer depends upon the scope of the authority granted under the durable power of attorney document. In the Estate of Smith v. Southland Suites of Ormond Beach, LLC, et al., So. 3d (Fla. 5th DCA 2010), the decedent’s nursing home admission contract had been signed by her daughter acting under a durable power of attorney. The mother died while a resident at the nursing home, and her estate sued the nursing home for wrongful death. The estate argued that the daughter’s durable power of attorney did not authorize her to consent to arbitrate claims arising from her mother’s nursing home care. Hence, the action for wrongful death could be brought in a court of law.
The Smith Court noted that the DPOA did not specifically state that the daughter was being granted the right to enter into arbitration agreements on behalf of her mother. Nevertheless the Smith Court went on to state that the DPOA at issue did provide the daughter with broad authority to effectuate her mother’s legal rights and that “[t]he language of the DPOA is clearly broad enough to encompass arbitration and to authorize [the mother’s] daughter to enter a binding agreement on her mother’s behalf.” The Smith Court based its opinion on the following provision in the DPOA signed by the daughter:
“generally to do and perform all matters and things, transact all business, execute, and acknowledge all contracts, whether involving real property or not, orders, deeds, writings, assurances, and instruments, which may be requisite or proper to effectuate any matter or thing appertaining to or belonging to me, and generally to act for me in all matters affecting my business or property . . .”
In reaching its conclusion that the DPOA authorized the daughter to enter into a binding arbitration agreement, even though the DPOA did not specifically “allow” such an agreement, the Smith Court cited Florida Statute 709.08(6) which provides that “[u]less otherwise stated in the durable power of attorney, the durable power of attorney applies to any interest in property owned by the principal, including . . . all other contractual or statutory rights or elections.” The Smith Court basically concluded that the DPOA granted the daughter the right to enter into all contracts on behalf of her mother without limitation as to the nature and type of contract and/or the provisions within the contract.
Other Florida appeals courts have reached the same conclusion when the DPOA at issue granted broad powers. See, for example, Jaylene, Inc. v. Steur ex rel. Paradise, 22 So. 3d 711 (Fla. 2d DCA 2009) and Five Points Healthcare, Ltd. v. Mallory, 998 So. 2d 1180 (Fla. 1st DCA 2008). But see our previous blog on arbitration agreements for examples of arbitration agreements which were deemed void by Florida courts.
The premise underlying the Smith Court’s holding is that a nursing home admission agreement, as a contract, constitutes an interest in property. As consideration for the acceptance into the nursing home, the resident or his/her DPOA, whichever the case may be, is agreeing to both: (a) pay for the resident’s care; and (b) also give up the right to pursue legal action in a court of law for injuries sustained as the result of nursing home negligence and abuse at the facility which is being paid to provide proper care. Seems a little one-sided, doesn’t it, especially when one considers why nursing home arbitration agreements are so popular these days: because awards of damages in arbitration proceedings for nursing home negligence will generally be substantially less relative to awards of damages by juries.
Even though Florida courts have routinely upheld nursing home arbitration agreements, we would recommend that the nursing home resident, or his/her legal representative consult a personal injury attorney to assess the validity of the arbitration agreement to determine if there might be any loopholes. For example, in a 2009 Massachusetts wrongful death case, the daughter of a patient who died shortly after her admission to a nursing home for what was supposed to be a limited, recuperative stay, brought an action against both the nursing home and eleven (11) nurses involved in her mother’s care. The nurses demanded arbitration pursuant to a clause in the admissions contract between the nursing home and the plaintiff’s mother. Under contract law principles, the Massachusetts Court of Appeals decided that the nurses could not enforce the clause because they were neither parties to the admissions contract nor intended third party beneficiaries of the admissions contract. Constantino v. Frechette, 897 N.E. 2d 1262 (Appeal Ct. of Mass. 2008). Thus, an injured party may have the opportunity to seek redress via both an arbitration proceeding against the nursing home and via court proceedings against third parties such as individual nurses who were employed by the nursing home.
Even if a nursing home arbitration agreement is valid, the nursing home resident or his legal representative still have the right to legal representation during the arbitration proceedings.
Part II. Are Nursing Home Arbitration Agreements About to Become Obsolete?
The rationale behind upholding the validity of nursing home arbitration agreements is puzzling for two reasons. First, "mentally fit" residents or family members who are signing nursing home admission papers as the DPOA for their mentally incapacited loved one are often emotionally distraught and probably have little, if any experience, in reviewing detailed legal documents even under the best of circumstances. Also, most residents and family members are not contemplating legal action at the time of admission to a nursing home facility and believe in good faith that they/their loved ones will receive good care at the facility. Hence, it’s unlikely that the person signing the admission documents, either as the resident himself/herself or as an individual acting under a DPOA, will even understand the implications of the arbitration provisions presented as part of a nursing home admisisons agreement.
Second, mandatory arbitration provisions serve to protect the nursing home from accountability for bad care. Arbitration proceedings are closed to the public. No information about the matter appears on the docket of a clerk of court. Binding arbitration means that the final decision is final. There is no appeal process. The family members have no opportunity to “introduce” their injured or dead loved one to jury members….to emphasize that their loved one suffered due to the negligence and/or abuse of the facility to which the vulnerable loved one had been entrusted. Arbitration may be a reasonable means of alternative dispute resolution for disputes involving say, for example, disputes between business partners, but certainly it has no place for providing redress to the victim and families of nursing home negligence and abuse.
In fact, nursing home arbitration agreements just may become a thing of the past due to the intervention of Congress. As of the date of this blog, both the House of Representatives and the Senate are considering bills (H.R. 1237 and S. 512, both known as the Fairness in Nursing Home Arbitration Act of 2009) providing that a pre-dispute agreement between a long-term care facility and a resident (or anyone acting on the resident’s behalf) shall not be valid or specifically enforceable. Both bills are at the “committee stage.”
Opponents of the two bills will argue that nursing homes are over-burdened; elimination of arbitration agreements will cause them to go out of business; lawyers are responsible for excessive litigation against nursing homes driving up costs; lawyers greedily “encourage” lawsuits against nursing homes, etc. Perhaps these opponents should see for themselves the victims of bed sores that lead to infection and amputation of limbs; renal failure from dehydration; malnutrition; bruises, skin tears, and broken limbs resulting from rough handling, etc. And they should remember that they, too, may someday be a resident of a nursing home.
It is our idealistic belief that the majority of nursing homes do care about their residents. We are the first to say that elderly, disabled people are difficult to take care of, and that every conceivable injury cannot be absolutely prevented by any nursing home facility given the physical and mental state of the occupants. The issue that every nursing home should address, however, is the following: what steps can be taken to minimize the possibility of injuries to our residents? For those readers who are interested, we previously posted numerous blogs which discuss quality control considerations for nursing home facilities.
If an injury occurs, the issue then becomes, how does the nursing home respond to the initial phases of an injury? By ignoring the problem, or initiating timely and appropriate treatment? Bedsores are a classic example of the type of injury where early intervention will generally prevent the bedsore from festering into a life-threatening Stage IV bedsore. Family members, who see such a bedsore on their loved one, are probably going to contact an attorney. Ironically, by providing decent care when evidence of a “budding” bedsore first occurred, a nursing home defendant might well have “saved itself” from a legal proceeding, and the victim of its negligence would not have had to suffer nearly as much because of early, thoughtful intervention.
In closing, we hope that the readers of our blogs related to nursing home negligence and abuse have found them to be informative and written from a the perspective of lawyers who would prefer to see nursing homes simply take proper care of the vulnerable individuals entrusted to their care. A nursing home negligence and abuse lawsuit can only seek financial recourse as a way to “punish” the nursing home for its conduct; it cannot reverse the pain and suffering caused by negligence and abuse. And arbitration agreements clearly interfere with the resident’s ability to seek fair financial compensation. Take, for example, an on-going Minnesota case where the nursing home resident lost 20.6 pounds in 22 days. He was finally admitted to the hospital with severe dehydration, and died a few weeks later. His family’s ability to seek justice for unconscionable care is limited by the one-sided mandatory binding arbitration signed as part of the nursing home admissions agreement. So the owners of the nursing home in this case may pride themselves for coming up with a way to limit damages via arbitration agreements, yet, by providing proper care, they could have avoided paying out any damages whatsoever! And what was that care exactly? A costly, high tech intervention? No. Simply making sure that its staff made sure that the resident was getting fluids and nutrition, and/or alerting the resident's doctor before the situation became medically irreversible.
Stay tuned to our website for updates on the progress of the House and Senate bills (Fairness in Nursing Home Arbitration Act).
Disclaimer. The foregoing information is not legal advice, nor should you consider it as such. Should you be considering legal action, you should consider consulting with an attorney of your choosing.
