Posts Tagged ‘arbitrator’

Arbitration Clauses in Nursing Home Contracts


Ever signed a loved one into the nursing home? If so, you will recall the pile of forms you were handed. One probably authorized them to take pictures of your family member and use them in promotional material. Another authorized the facility to bill Medicare directly. Another … well, you get the idea.

Buried in the main form, though, was probably a paragraph about “arbitration.” You probably were asked to separately initial that provision, and you might well have done so. And if you haven’t had this experience yet, you are likely to run into it as a parent, spouse or other family member ages and requires more nursing or medical care.

What is the effect of those arbitration provisions? Generally, they require that any dispute you later have with the facility — like allegations of inadequate care, or injuries caused by an employee’s negligence (or even willful acts) — would have to be submitted to an arbitration process as an alternative to court action. You are basically being asked to sign away your family member’s right to sue, and to collect full damages for any injury inflicted. By signing, you also give up any right to take the matter back through the court system if the arbitration mechanism does not work for you or your loved one.

Can they do that? Courts have been divided over whether mandatory arbitration agreements are even enforceable. There is a strong preference for alternative dispute resolution, and many courts have upheld arbitration agreements on that basis. But a handful — including, now, an Arizona appellate court — have found mandatory arbitration clauses unconscionable and unenforceable.

Jim Cartwright (not his real name) was 88 years old when he entered a Phoenix-area nursing home for recovery after hip surgery. He actually signed himself in, though not until he had been in the facility for three days. One provision of the admission agreement called for mandatory arbitration of any dispute he might have with the facility — though it did not require arbitration if the facility later decided it wanted to sue Jim.

During his short stay, Jim acquired a pressure ulcer on his back — severe enough to expose bone and requiring medical attention and further long-term care. He claimed that this was the result of negligent care provided by the facility, and he sued.

The nursing home pointed to the mandatory arbitration provision and asked for dismissal of the lawsuit. Jim’s only recourse, according to the facility, was to submit his claims to an arbitration panel chosen by the two parties. The arbitration ruling would be final and unappealable. It also would require Jim to pay initial arbitration costs of about $22,800 in order to even get a hearing on the subject.

The trial judge refused to dismiss Jim’s lawsuit, and the nursing home appealed. The Arizona Court of Appeals last week ruled that the facility’s arbitration agreement — signed or not — was unconscionable and could not be enforced. His lawsuit can now go forward.

There are two reasons the trial court and the Court of Appeals invalidated the arbitration provision. One was that it would effectively bar Jim from recovering anything for his injuries, since there is no way he could come up with the $22,800 it would cost to get the arbitration started. The other was because of the way the facility crafted the agreement, requiring Jim’s claims to go to arbitration but preserving access to the court system for themselves in any future dispute. Clark v. Renaissance West, LLC, July 30, 2013.

Does this mean that your arbitration provision will also be struck down if you choose to sue a nursing facility some day? Not necessarily. The complexity of Jim’s case, and the fact that three arbitrators might be required, contributed to the court’s finding. A better option is to simply not sign an arbitration provision in the first place.

How can you avoid signing an arbitration agreement if you admit yourself or a loved one to a facility? Look at the admission agreement. Find the provision about arbitration. Draw lines through it (or a big “X” across it). Do not initial where it says “initial here”. You are not required to sign away your rights in order to enter a nursing facility.

Probate Fee Dispute Leads to Additional Attorney’s Fees

APRIL 12, 2004 VOLUME 11, NUMBER 41

Kathryn Gordon’s will named her sister, Nancy Molet, to handle her estate. Based on that will Ms. Molet was appointed as personal representative. Like most individuals in such circumstances, Ms. Molet hired an attorney to help her get through the probate process.

Eventually Phoenix attorney Harvey Finks billed the estate $25,710 for his representation of Ms. Molet. She, in turn, billed the estate $10,885.50 for her work as personal representative.

The ultimate beneficiaries of Ms. Gordon’s estate were her daughter June Pierce and Ms. Pierce’s five children. The beneficiaries objected to the size of the legal fees and the Ms. Molet’s fee, and they filed a formal objection with the court.

Attorney Finks pointed out to Ms. Molet that he would likely be called as a witness during the trial on his fees, and so she retained another attorney—Phoenix lawyer Paul Blunt—to represent her for the fee dispute.

Eventually Ms. Molet, Mr. Finks and the estate beneficiaries agreed that it made sense to submit the dispute to binding arbitration. In that type of proceeding, both sides would make abbreviated arguments and put on their cases more informally. They both agreed to be bound by the arbitrator’s decision.

The arbitrator approved most—but not all—of the requested fees. He reduced Mr. Finks’ fee by $2,510 to $23,200, and he lowered Ms. Molet’s fee by almost $5,000, to $6150. Then Ms. Molet submitted Mr. Blunt’s fees for payment by the estate, arguing that she had hired him in her capacity as personal representative.

The Phoenix probate judge decided that Ms. Molet would have to pay her own attorney’s fees. Judge Jane Bayham-Lesselyong decided that “it would be inappropriate” for the estate to pay the cost of defending the fees themselves.

The Arizona Court of Appeals disagreed. In the appellate court’s view, the question was really only whether Ms. Molet acted in good faith when she hired counsel to defend her fees. The heirs argued that Mr. Blunt’s representation benefited only Ms. Molet and not the estate. The appellate court agreed that it is relevant to consider whether the estate or the heirs received any benefit from the representation, but decided that the inquiry should be made as a part of the determination of whether Ms. Molet acted in good faith. Estate of Gordon, March 30, 2004.

The reported decision does not indicate how much the estate paid in legal fees and costs to defend Ms. Molet and Mr. Finks. It seems likely, however, that it was more than the reduction in the original fees ordered by the arbitrator.

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