California Nursing Home Arbitration Agreements

Nursing homes have made a furious effort in recent years to end run the tort system with arbitration clauses. The large nursing home chains have been at the forefront of this movement, incorporating draconian provisions that require the resident to waive their constitutional right to a jury trial in exchange for admission, often with provisions that limit damages and discovery about what really happened in the first place. In states that allow for punitive damages in nursing homes, these arbitration agreements seek to deprive victims of the right to claim those damages.

California has stood up to the nursing homes – at least on some level – by enacting legislation, passing legislation to void nursing home agreements that require arbitration brought “against the licensee of a facility who violates any rights of the resident or patient as set forth in the Patients Bill of Rights in Section 72527 of Title 22 of the California Code of Regulations, or any other right provided for by federal or state law or regulation.”

California’s law makes sense. But it just does not go far enough. All nursing home arbitration claims should be voided on their face. Let’s be honest: arbitration agreements in nursing home cases are oppressive. There is an unbelievable amount of inequality in terms of bargaining power. The day you walk into a nursing home is not usually one of the better days of your life. Usually it happens after your inability to care for yourself has reached a critical mass. Now you are expected to have the lucidity to fully appreciate the ramifications of an arbitration agreement? My gosh, that scene should be in a legal dictionary next to the term “unequal bargaining power.”

Making matters worse, arbitration is not always the fairest form of resolving a claim. Why? Arbitrators make unbelievable sums of money. If a good arbitrator works 2000 hours a year at $500 an hour – not an uncommon fee – that is $1,000,000. That is big business. Sure, the arbitrator works for both parties, but how many claims does a nursing home resident have in a lifetime? That is not a source of repeat business. In contrast, a nursing home might have lots of potential cases, particularly if that nursing home is hurting and killing a lot of its residents. Is the arbitrator influenced by this? Maybe.

California has tried to push legislation to deal with this problem of innocent victims of nursing home abuse signing away – often unknowingly – their rights to a jury trial. It has not passed (probably because the nursing home lobby is a beast), but the California legislature needs to live up to its reputation as a advocate for consumers and get a law passed that does not allow nursing homes to take advantage of its residents.

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