Arbitration Agreements:
What Do They Mean & Should You Sign One?

The day has sadly come when you have to check an aging, ailing parent into a nursing home. You’re given a large stack of papers to sign.
One is titled “Voluntary Arbitration Agreement.”  Despite the title, you are made to believe that this is anything but “voluntary”
and that you must sign it in order to admit your loved one to the nursing home.

This blog post covers some essential information you should know before signing an arbitration agreement.

What Is Arbitration? 

Arbitration is a method of alternative dispute resolution that exists outside the courtroom.

According to the American Bar Association:

Arbitration is a private process where disputing parties agree that one or several individuals can make a decision about the dispute after receiving evidence and hearing arguments.

Arbitration is different from mediation because the neutral arbitrator has the authority to make a decision about the dispute.

The arbitration process is similar to a trial in that the parties make opening statements and present evidence to the arbitrator. Compared to traditional trials, arbitration can usually be completed more quickly and is less formal. For example, often the parties do not have to follow state or federal rules of evidence and, in some cases, the arbitrator is not required to apply the governing law.

After the hearing, the arbitrator issues an award. Some awards simply announce the decision (a “bare bones” award), and others give reasons (a “reasoned” award).

The arbitration process may be either binding or non-binding. When arbitration is binding, the decision is final, can be enforced by a court, and can only be appealed on very narrow grounds. When arbitration is non-binding, the arbitrator’s award is advisory and can be final only if accepted by the parties.

There are a number of different companies that conduct arbitrations. It can be a very expensive process, costing thousands or even tens of thousands of dollars. Because arbitrators, rather than juries, are deciding the case, companies like those running nursing homes often see it as a favorable venue, as compared to going to trial in a courtroom in front of a jury of our peers.

What are Arbitration Agreements?

Arbitration agreements are essentially contracts where 2 parties agree to resolve disputes through the arbitration process, rather than through the judicial process.  A standard arbitration clause for commercial contracts can look like this:

Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, shall be determined by arbitration in [insert the desired place of arbitration] before an arbitrator.”

The most common place we see arbitration agreements in the personal injury context is in nursing home admission forms.  Because so many injuries occur in nursing homes, most nursing homes will try to protect themselves from the risk of lawsuits by getting family members of patients to sign away their constitutional right to a trial by jury.  Many people do not even know what they are signing when they sign an arbitration agreement.  It’s important to know that you do have certain rights when presented with an arbitration agreement:

1. If you do not have a Power of Attorney for the patient, make clear that you do not have authority to sign such an agreement.
2. Ask whether it is truly voluntary, versus mandatory, for admission. It is not enforceable if it is mandatory for admission.
3. Ask for time to review the agreement with an attorney.
4. Most agreements give you a chance to withdraw your agreement within a certain number of days.

Should You Sign an Arbitration Agreement?

It really depends on the fairness of the arbitration agreement and the context within which you are signing it.

In the context of nursing homes, we do not recommend our clients sign arbitration agreements because there is no fairness in them.  The nursing home will claim that both parties are bound by arbitration so this protects you or your loved one from being sued in a court as well if some type of claim arises.  But compare the type of claim that may arise against you or your loved one, such an unpaid fees, to the types of claims that may arise against the nursing home, such as wrongful death, sexual assault, abuse or neglect.  They don’t compare. The nursing home is getting much more protection from the arbitration agreement than you and your loved one are. The only party that benefits from an arbitration agreement is the nursing home.

Bethany Schneider of Schneider Injury Law recently obtained a win in the Georgia Court of Appeals on the issue of the enforceability of a nursing home arbitration agreement.  The Court found that the person who signed the agreement on behalf of the patient did not have legal authority to do so.  Read more here.

If you or a loved one has suffered an injury or has died in a nursing home due its negligence, contact Bethany Schneider of Schneider Injury Law for a free consultation. Bethany is experienced in navigating arbitration agreements and ensuring that the victim has his or her day in court, rather than being forced into arbitration.