Nursing Homes Increasingly Use Arbitration To Avoid Lawsuits and Reduce Costs

According to the Wall Street Journal, nursing home residents and their families increasingly are "giving up their right to sue over disputes about care, including those involving death, as the homes write binding arbitration into their standard contracts.” Under arbitration agreements, nursing home residents and their families agree to settle disputes through a third-party arbiter. An industry study released last year found that the average cost of settling cases has declined for nursing homes. Consumer advocates and plaintiffs' lawyers have criticized the arbitration systems for nursing homes, saying that people too often do not understand whether the arbitration clauses are mandatory or that they are waiving their right to sue. Sens. Mel Martinez (R-Fla.) and Herb Kohl (D-Wis.) on Wednesday introduced legislation that would prohibit nursing homes from requiring patients to sign an arbitration agreement as a term of service. The American Arbitration Association (AAA) and the American Health Lawyers Association (AHLA) generally refuse to handle cases of nursing home arbitration with AAA noting that “in general a nursing home patient may not be able to evaluate an agreement like an arbitration clause.” The nursing home industry says arbitration is relatively inexpensive for plaintiffs and defendants, and allows nursing home staff to focus on patient care, instead of litigation.