Objecting to Enforcing Arbitration Agreements in Nursing Home Cases
Are arbitration agreements in nursing homes stripping residents of their rights? This controversial issue is at the heart of many legal battles. In this week’s episode, nursing home abuse attorney Rob Schenk welcomes guest Sarah Martin to talk about objecting to enforcing arbitration agreements in nursing home cases.
Schenk: Objecting to enforcing arbitration agreements in nursing homes. Stick around.
Hello out there. Welcome back to the nursing home abuse podcast. My name is Rob. I will be your host for this episode. Where are we talking about arbitration agreements in nursing homes, why they are terrible, why they benefit the nursing home as opposed to the residents, et cetera, et cetera.
But we’re not doing that alone. We have a fantastic guest attorney, Sarah Martin is going to be on the show to walk us through all of those things. And she’s not going to mince words. You’re going to find out what she really thinks about arbitration. All right, let’s get into that meat and potatoes. As they say we’re going to be talking about arbitration and we are not doing that by ourselves. We’re going to have Sarah Martin on the show. Sarah Martin is an associate attorney at the Higgins firm and specializes in nursing home abuse and neglect cases with a law degree from Belmont university, college of law and a background in nonprofit advocacy for victims of domestic violence.
She’s dedicated to advocating for vulnerable individuals. Sarah enjoys traveling, cooking and spending time with her husband and their dogs in East Nashville. And we are so happy to have her on the show. Sarah, welcome.
Martin:
Thanks for having me.
What is arbitration?
Schenk:
I can say that there are some attorneys that if a case comes in the door, if arbitration is even on the plate right back out, and then some attorneys are like, bring it on nine times out of 10. I’m getting out of it. Let’s do this. I’m so happy to have you on because I want to talk about arbitration. I want to talk about your perspectives on it. I want to talk about your experience and some of the things that you’ve experienced in terms of getting out of these contracts.
But before we get into the meat and potatoes of it can you tell me what, from a general standpoint, is arbitration and why are we even talking about trying to get out of it?
Martin:
Okay. It’s too long, don’t read, as the kids say, I think they’re still saying that anyways, about arbitration, it’s a scam.
It is a scam, I will say it until the day I die, it is a scam. It does not belong in consumer disputes in my personal and professional opinion, but, so arbitration is an alternative proceeding to a court of law. It’s when I explain it to people, I tell people if you’re familiar with what mediation is it’s a step further than that and you don’t get to be in court. Everything is confidential. It is all decided by one supposedly unbiased person who is also an attorney and might be a retired judge, but in the real world and in court, you have this public proceeding when you get accountability, it’s public accountability which matters for purposes of deterrence, of course.
But you have a judge deciding what the law is and explaining the law to a jury, which then decides what the facts are, right? And all of that goes away in an arbitration proceeding, and you have, instead, one person deciding the law, applying the law to the facts, and deciding what the facts are, and it’s all behind closed doors.
You also have a limited right, usually virtually no right, to appeal. That, that’s arbitration in a nutshell, and the reason I say arbitration is a scam is that individual consumers in our world, our clients, the plaintiffs to these lawsuits or the decedents on which the lawsuit is based, right?
They are one person. They are never going to be repeat business for this arbitrator. But the arbitrator does get repeat business from these facilities. They’re choosing the same arbitrators over and over again. Our most recent arbitration that I was on we got a motion to exclude our expert based on competency just right at the outset of the case and in the hearing, and the three arbitrator panel that we had decided they would hold that and consider it again once all of the proof had closed.
What that really means is we want to be paid for every hour. We’re going to go ahead and have this hearing. And then at the very end of the case, after all the proof has been submitted. And we had been diligently litigating for two full days. They submitted an order saying that our expert was excluded and therefore there was no finding for the plaintiff, which, again, they could have done two days before, before we paid them all that money.
So the truth of it is we don’t pay judges to hear cases by the hour. We don’t do that. Our tax dollars pay that money. And in arbitration you’re paying potentially up to three individual panels. By the hour to hear your case. And so we try to avoid that at all costs. It doesn’t mean we won’t take the case.
If we have more of a dignity type case with very low damages, we might reconsider that at some point, whether it’s really worth the effort, with the juices worth the squeeze, so to speak. We might make a different decision if the damages are just not high enough to warrant to keep going.
But for the most part, it doesn’t stop us from taking a case initially. That’s a long answer to your question.
For more perspectives on why arbitration is considered problematic in consumer disputes, including those involving nursing homes, the Consumer Voice offers an informative resource.
Why is a court of law superior to arbitration in nursing home cases?
Schenk:
No, it’s brilliant. You’ve heard it here first. That’s Sarah’s hot take that it’s a scam. She doesn’t mince words. Okay. So if I hear you correctly, we’re really objecting to the fact that number one, this is not public.
So we could, we can never know, like you, you could theoretically, if you wanted to go to your local courthouse or Lexus or Westlaw, find out all the verdicts against a particular facility because it’s public record, but you could never do that with arbitration. So there’s that privacy issue that prevents you from understanding what’s going on. So from a public policy perspective it doesn’t help the consumer in, in that way. And then an important thing that you touched on was the fact that it’s expensive. Or it can be expensive if parties have to share, especially if it’s a panel, have to share the arbitration’s costs.
And for the folks out there that we might be talking about, like above your pay grade, a judge is free. You pay the filing fee. And in terms of the court costs, judge is free, pay a hundred bucks or 200 bucks or whatever it is, and they, and your taxpayers pay for the judge with the arbitration panel.
If you’ve got one, two or three people, you’re paying somewhere between 200 and a thousand dollars an hour. Like I know that we have some arbitrators here in Atlanta that are almost a thousand dollars an hour and that’s a thousand dollars an hour to do everything. And you’re splitting that cost with the other side.
So that’s another thing. But I think for me. And it’s one of those things you touched on as well, where it’s I want my peers to hear my claims. That’s there, there is something to be said about it. So a lay person’s perspective on my case, as opposed to a former judge or something.
To understand more about the implications of private arbitration versus public trials, a detailed analysis is provided by My Elder regarding recent government rulings.
Martin:
And so you lose that emotional aspect, right? As, as the 12 jurors who are your peers and you. You lose that public accountability and that’s a big deal as far as we’re concerned when you’re litigating these types of cases because. That public accountability is how you get change to happen.
That’s what I believe. And, you lose the heartstrings of those jury members. You don’t see big verdicts. And I just don’t think it’s a good result. Good for him and for our clients.
What are some capacity defenses to arbitration?
Schenk:
So the good news for all those out there who think they might have signed an arbitration agreement on behalf of their loved ones in a nursing home, you have brilliant people like Sarah that could potentially get you out of it.
So let’s talk about that. So what are, and I’ll just throw the floor over to you. What are some of the avenues in which Even though someone has signed that agreement saying, I will arbitrate, how is it possible then that you as the attorney can get them out of that?
Martin:
So there are several avenues. We, we never want to be in the position if we don’t have to be. So if there’s someone listening to this that has signed one in the last 30 days or thinks they just might have because a lot of times they’re buried in various documents for you to find later. You should go and figure out how you need to go about revoking it.
And so the 1st way you can get out of an arbitration agreement is revoking it within that generally 30 day period in the agreement. There’s usually a specific way to go about that. Usually it’s in writing submitted to a specific address. And so that is my 1st recommendation. If you think you have entered an agreement.
Go request a copy of it and then go and revoke your agreement. The other most, most simple, I think the simplest way to get out of the agreement is obviously authority. Most of the time, when you’re admitting a loved 1 into a facility a lot of times. You or 1 of your family members are the ones actually executing that paperwork for that admission, because you’ve got, if you’re admitting someone into a nursing facility, the chances are they are.
Not confident anymore. So when you have an incompetent person, they’re not allowed to sign a contract. They lack the confidence to do it and you have a family member doing it and so then the question becomes, does that family member really have the legal authority to be doing it? And so you have to look at, was there a power of attorney in place?
Was there a conservatorship in place? If there was a power of attorney or conservative conservatorship in place, what does it specifically allow this person to do for this individual? And in Tennessee, it matters whether you have, for instance, legal authority to enter contracts or to litigate claims or make decisions about claims, or whether you have the authority to make health care decisions.
Because we have recent authority in Tennessee from our Supreme Court That says if it’s an optional agreement that isn’t required for purposes of admission a health care power of attorney can’t make that decision. If you have this person who’s been given only health care authority, and that agreement is optional, it’s considered not a health care decision in the state of Tennessee.
That is a big thing we have to look at. And in other jurisdictions, it’s different, right? Sometimes. Or at least up until this recent decision, we thought the healthcare power of attorney authorized you to make any decision in the course of admitting someone. That was what we thought. That’s what we believed based on the case law that was in place.
And that’s just recently been turned on its head by our Supreme Court. The first thing to really look at is whether that person really even has authority. And then you get into a lot of fun arguments that vary by jurisdiction. One of which is do you have a purely wrongful death statute and is it a wrongful death case?
If that’s the case, the decedent, the injured person, whether or not they have entered into an agreement, or whether someone entered into that agreement on their behalf, doesn’t really control for purposes of the lawsuit. Because it’s not that person’s lawsuit, it is the beneficiary’s lawsuit. It is the family member who has brought the lawsuit on that person’s behalf.
And they’re authorized to do that under state law. And so it’s a separate action, and they’re not bound by a contract they weren’t a party to. We tried that in Tennessee. We lost that argument all the way to the Supreme court. We have a hybrid weirdo statute in Tennessee that’s different from a purely wrongful death statute or a survival statute where all of the cases originate with that deceased party.
So that’s another fun argument that’s available. And there’s also a fiduciary argument that’s available in some jurisdictions. The facility asked them to sign the arbitration agreement after they had already been admitted. So if it’s not part of that initial admission process, and they’re already a resident of the facility, there is case law in a lot of states that says that facility, those providers, those medical providers, stand in a fiduciary capacity to their patients.
And when they do that, they can’t be having them do things that are not in their best interest, and I think that it is pretty arguable that signing an arbitration agreement only serves the facility. So that’s another argument that’s available. And of course, then we get into whether the agreement is just basically fair or unconscionable, right?
But as most of us learned in law school if that’s the, if that’s the argument that you were left with in a contract dispute, you’re going to probably lose.
Explore additional challenges and legal advice on handling arbitration clauses in our series of blog posts.
- Arbitration Clauses Still a Problem
- Beware Arbitration Clauses
- Are Arbitration Agreements Enforceable in Georgia?
What are some less common defenses to arbitration in nursing home cases?
Schenk:
At least in Tennessee and Georgia, you will be right. Like I know that my contracts professor in Georgia, I went to Georgia state. It was like, if you’re making an unconscionable argument, you’re toast.
But I wanted to jump back to what you said, because I really wanted to make sure that this is highlighted with respect to authority, meaning the person that signed. Their arbitration agreement has the authority and the power to do so for someone else. And you had mentioned things like conservatorship, guardianship, power of attorney, healthcare power of attorney, something that I want people to understand.
If you’re not an attorney listening to this, if you’re a family, if you’re a family member of a loved one, a nursing home, yours, at least in Georgia, probably. And I think Tennessee as well, just because you are a spouse, just because you are a son or a grandson. or daughter, that in and of itself is not enough to allow you to sign an arbitration agreement on behalf of your loved one on barring other outside circumstances, such as if they told you to do it.
But status as a spouse or family member, it typically is not enough.
Martin:
Yeah. And, our clients will get into a deposition if we’re having this arbitration dispute. And The facility council will be like why did you sign it? Then they’re like, what do you mean? Why did I sign it?
Someone handed me some papers and said, I. I had to sign this stuff if I wanted my loved 1 admitted to this facility and that’s very common. But generally speaking, facilities are not making sure. That these folks signing these agreements have the legal right to do it.
Secrecy clauses are another significant aspect of arbitration that can impact the fairness of proceedings. McKnight’s recently covered this topic in depth.
Schenk:
I had a conversation with an attorney here in Atlanta and he was going to try to make the argument because now we, and you had, you had mentioned this a little earlier, but we now have a particular federal regulation with respect to arbitration agreements.
And it’s gotta, it’s gotta go boom. It’s gotta, it’s gotta reflect what the regulations call for. And his idea is that if it doesn’t follow the wording of the regulation, it’s void, which I don’t necessarily agree with in terms of how the regulations are worded because it’s basically just, if you accept federal money.
You gotta do what it says, but it doesn’t say anything with respect to the void ability of the contract. So I’m eager to see that particular argument. If people are making that how well it goes, I don’t know if you’ve ever heard of that, somebody challenging it based on not adhering to the federal regulations and therefore it’s avoidable.
Martin:
Yeah. It’s the code of federal regulations, title 42. 43 . I think it’s seven.
Schenk:
It’s a seven something. I think.
Martin:
Seven Subsection NI think.
Schenk:
Yes. Okay.
Martin:
Yes. And the way that regulation is worded, and these are in the part of the federal register that deals with facilities that accept Medicare.
And so if they accept Medicare.
Requirements for presenting means you cannot even present the arbitration agreement to a patient or the representative unless you’ve done X, Y, Z. And, 1 of the things that’s in there is. You have to explain it in a language that they understand. It has to have a revocation clause all these sorts of things.
And yes, the idea is if you get caught not doing those things, then you could be fined or what have you under the Medicare regs. And there is actually there is a state surveyor manual that. The state surveyors use, and there is what’s called an F tag, the watermelon book, as we used to call it there is an F tag associated with violation of that regulation, and there is an entire PowerPoint online about what these facilities are really required to do.
A lot of times we will, when we raise this argument, we’ll have the council for the facility say. First of all, the agreement self evidently does these things and then I put the act tag guidance and say, no, that’s not what they’re supposed to do. It’s not about what the agreement says is what the facility is telling the party.
And we do raise that agreement. Typically, it’s not. What the court uses to decide the motion. Typically, we have other arguments as well, and it’s way down the list. And so far, a motion has not been denied. Based solely on the regulation argument in our experience, but it doesn’t mean we aren’t making it.
We’re going to continue making it until we get a decision on it. But in my view, if you are a facility that is. Accepting medicare and the regulation says you can’t do this unless you do these things Then I think it’s an illegal contract because it doesn’t follow the law and so one public policy argument for contract dispute Under state law is if there is something illegal about the contract.
It’s void can’t do it So that’s the argument that we make
Schenk:
I would love it. And I’m not saying that we have the audience that like the Joe Rogan podcast has, but if anybody is out there listening to this, and you have an order on what Sarah and I are talking about, please. Yes, send it to us.
That would be amazing. You had mentioned a little earlier about The high cost of arbitration. What about that? Do you ever use the argument? Hey, there’s a fee splitting provision in this arbitration agreement that in itself is something that’s not right. Do you ever use that argument?
Martin:
We do. And when you have a, an agreement that splits the cost we have actually in our contract, our engagement contract with our clients, A provision that says if the case is ordered to arbitration, we do not front those costs off.
We are then able to go to court and say look, your honor, if this case is ordered to arbitration, our client has submitted this, admissible testimony that says they cannot pay the fees and their lawyer is not going to advance it advance them. And we do make that argument. I will say that a lot of facilities have gotten wise to that and they have started putting in their, I’m losing my husband.
They’re starting to put in their agreements that the facility will pay all of the fees. There are also other a DR alternate dispute resolution providers like Jams that have started to put. The, that the consumer with consumer disputes, the consumer is only responsible for that filing fee or the equivalent of a filing fee.
We’ve seen them wise up to that argument but it’s still an argument that we’re going to make as long as we keep seeing agreements with the fee split.
Schenk:
Sometimes there are very peculiar ways that I, in my experience, I’ve been able to get out of arbitration agreements. And one of them is When it used to be back in the day, and it might still be this way in some instances, but the nursing homes, after they decided, let’s arbitrate everything.
Then they said let’s just create the arbitration company. And one of the companies was the national arbitration forum out of Minnesota. And. We have a case in Georgia that was like, these people are so explicitly, I don’t want to, I don’t want to get, I don’t want to defame anybody. Anyway, the Georgia court of appeals was like, this is ridiculous.
If you have a, if you, if any arbitration that names the national arbitration forum as an arbitrator it’s void. ab initio, like it’s out. So I, there was one time I finally got, this is a long time ago. This is, you’re never, you’re not going to find an arbitration agreement with national arbitration format anymore, but I just remember getting a case and it’d be like, oh my God, it’s national arbitration form.
I know this and got out of the arbitration that way. So there are some obscure ways. Yeah. Obscure ways. So we’ve talked about authority. We’ve talked about fee costs and stuff. Can you actually talk about a little bit? Cause we we went past it pretty quickly, but sometimes the resident does sign the arbitration agreement.
Okay. Can you talk to capacity arguments of getting out of an arbitration agreement if the loved one if the nursing home resident actually does sign, but shouldn’t. Because
Martin:
we did recently have a situation where the facility
Schenk:
Sorry, there’s a delay. I’m so sorry. I hate it because I feel like I’m talking over you, but I promise I’m not.
It’s one of those things where it’s it’s a delay in the thing. But anyway, no, I was just going to say for the cognitive capacity issues, but go ahead. Sorry. Go ahead.
Martin:
We recently had a situation where we had a facility have the residents execute a power of attorney. Right immediately prior to their admission and then use that attorney in fact to sign the paperwork.
So what we argued was, gee it’s super weird that you’re getting this person to sign this P. O. A. When their BIMS assessment, which is. Brief interview for mental status. The very first one, the very first one upon admission, they were severely cognitively impaired. And you’re telling me that they executed a power of attorney days before Come on.
We have had a situation like that.
Schenk:
I literally just had an order on that. I just got out of arbitration agreement a couple weeks ago and I literally put the BIM score in the motion and was like, how are you going to, on the same day, score this person as severely cognitively impaired, but they signed everything.
It’s ridiculous.
Martin:
Yeah. That’s one way. Of course, and then our, my new escapade is going after the e signatures that aren’t in anyone’s handwriting. So we are lately seeing a lot of admission documents signed with DocuSign or something similar. And instead of them being reflected in the person’s actual handwriting with a digital signature, they’re in this, signature font.
And they are unable to provide any of the audit data for that. And it’s see, at least you’re supposed to maintain some sort of digital verification or have some sort of rigorous process for verifying that is indeed the person who signed. But in that sort of situation, our argument is always that.
Hey, what about the dead man statute? Who are you going to get to testify that they signed it? They’re in there by themselves. With only the facility rep cannot testify to anything they said and then that you might have a facility rep that remembers just distinctly meeting with this particular resident.
And that they signed in their presence, but that is extremely unlikely. Every time I depose a facility rep who did an admission, and I say, do you have any personal recollection of this person? No. Do you have any personal recollection of their admission? No. If you don’t, you can’t authenticate that document.
You can’t tell me. With any certainty that’s their signature so that’s 1 thing that we’ve been looking at. We’re also having facilities lately. Have the facility reps sign on behalf of the resident and put verbal consent next to it. Which I’ve argued is hearsay in front of a lot of attorneys that apparently don’t understand hearsay.
For more in-depth discussions on arbitration and nursing home laws, tune into our podcast episodes that cover a variety of related topics.
Episode 202 on Keeping Residents Safe
Their assertion that someone verbally consented to something is hearsay and you can’t accept that just on its face. I don’t even think I’ve ever,
Schenk:
I don’t think I’ve even heard of that. So wait, hang on a second. They’re writing down this person verbally consented. That’s not a signature.
Okay.
Martin:
No. And we just, we argue that now you’ve become an agent for both the facility and the resident, that’s not okay. You can’t do that.
Schenk:
Oh, I found a piece of paper where it said the administrator said that now I own the nursing home. I wrote it. See it’s written down.
Martin:
That is the argument I made in front of a judge last week. I, I said, your honor if I go to the bank and try to withdraw a million dollars from your checking account, and I just have a piece of paper that has my handwriting that says they verbally consented to it, do you think the bank is going to check that? I don’t think you win your case, Miss Martin.
Schenk:
This has been extremely fun to talk to you about this. I could talk about this stuff all day. But I, yeah, anyway, arbitration is a scam. That’s the headline. Yeah, it’s the scam. That’s the headline of the episode. But Sarah, thank you so much for being on the episode today.
We really appreciate you coming on and sharing your knowledge. Anytime. Folks, I hope you found this episode educational, perhaps entertaining, a lot of colorful language. If you have a suggestion for a guest that you want to see me talk to, or a topic that you want us to address here on the show, please drop me a line.
Let me know what you think. If you’re watching this on the YouTubes, please be sure to like, and subscribe, hit the notification bell leave a comment. Maybe, I don’t know. I don’t think, I don’t even, I don’t think that I’ve gotten a comment. A legitimate comment. Of course, there are the trolls out there.
I haven’t got a legitimate comment in a long time. So if you’re watching this on YouTube, leave a comment new episodes of the nursing abuse podcast every Monday anywhere you get your podcast from, including the YouTubes and with that, folks, we’ll see you next time.
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