The Circle of Assent: How "Agreement" Can Save Mandatory Arbitration in Long-Term Care Contracts

Article excerpt

I. INTRODUCTION

On September 28, 1997, a resident at the Comanche Trail Nursing Center physically attacked his eighty-one-year-old roommate, Tranquilino Mendoza.1 As a result of the attack, Mr. Mendoza suffered a concussion and brain damage.2 His daughter claimed that her father was never the same after the attack and filed a lawsuit against the long-term care facility alleging negligence.3 In 2006, a jury awarded Mr. Mendoza $160 million.4

Similarly, on April 26, 2003, a resident of the Heritage House Nursing and Rehabilitation Center allegedly attacked Carolyn Mason, another resident at the same facility.5 Mrs. Mason suffered a broken hip.6 Like Mr. Mendoza, she filed a lawsuit against the long-term care facility alleging negligence.7 But instead of proceeding toward trial, Heritage House produced Mrs. Mason's seven-page admission agreement and moved to compel arbitration.8 Apparently unbeknownst to Mrs. Mason, pages five and six of the admission contract required that "any legal dispute which might arise shall be resolved exclusively by binding arbitration."9 Four years after the attack, the Mississippi Court of Appeals upheld the arbitration clause, thereby preventing Mrs. Mason from taking her case to trial.10

As a result, Mrs. Mason will argue her case in front of an arbitration panel rather than a judge and jury. If Mrs. Mason experienced abuse or neglect at Heritage House, a jury never will hear about it - she waived that right, which otherwise is guaranteed by the Constitution.11 Additionally, the public never will learn the outcome of her case12 because arbitration is generally confidential.13 Perhaps of greatest importance, Mrs. Mason lost her most valuable tools for negotiating a settlement. Because Heritage House has no reason to fear the unknown factors that play into a jury verdict, any settlement likely will be limited to compensatory damages.14 Further, damages often are capped contractually in arbitration agreements, and if they are not capped, they are generally very low for the elderly and disabled long-term care population.15 Finally, there is at least the suspicion that industry-wide arbitration tends to favor the repeat players - here the nursing homes- because arbitrators want future case referrals.16

The plight of Mrs. Mason is not uncommon. Mandatory predispute arbitration agreements are the emerging standard in longterm care ("LTC") admission contracts all around the country. The agreements are "mandatory" because arbitration is the only form of dispute resolution available to an aggrieved LTC resident when a claim arises. This form of arbitration agreement is "pre-dispute" because the resident/signer agrees to arbitrate any disputes that may arise between the parties in the future, rather than take those disputes to court. Pre-dispute arbitration agreements differ from postdispute agreements, in which parties agree to arbitrate a specific dispute after it has arisen.17 This Note refers to mandatory predispute arbitration agreements as "mandatory arbitration agreements."

As mandatory arbitration agreements are discovered by consumers and claims arise,18 questions surrounding the legality and propriety of these agreements emerge. Critics of mandatory arbitration agreements in nursing home contracts urge that these provisions are intrinsically unfair.19 Arbitration provisions in nursing home contracts generally deny the elderly and disabled the right to raise any and all claims in court.20 Exacerbating this problem is the fact that admission to a nursing home is usually a remarkably stressful event for residents and their famiUes.21 Critics worry that families admitting a loved one to a nursing home are not capable of making rational and informed legal decisions.22 For example, a typical family may not appreciate the importance of a binding arbitration agreement in an admissions packet that also includes a plethora of technical documents, including Medicare information, patient rights, advance directives, and resident conduct policies. …