Binding Arbitration for Nursing Home Patients

More and more, companies are putting binding arbitration clauses into their contracts, and nursing homes are no exception. A binding arbitration clause requires that any dispute, including allegations of abuse, be sent to an arbitrator (often employed by a private company or firm) rather than going through the court system. The proceedings are much more relaxed than a formal court process, and the decision of the arbitrator is binding on both parties, often without an appeal or other recourse. As reported by Kiplinger, a 2009 survey by the American Health Care Association, a nursing home trade group, found that close to 70 percent of nursing home residents had signed such an agreement. In an email to Kiplinger, the group’s lawyers cited the high cost of litigation as the motivation. The same study also noted that arbitrators’ awards were on average 35 percent lower than those given in a traditional lawsuit.


Generally, these agreements are enforceable under both federal and New Mexico law. There are exceptions to this rule, however. There are two categories of flaws that may make the agreement unenforceable: the agreement is improper (“unconscionable” is typically the word used by the courts) because of the terms it contains or because of the circumstances surrounding the signing of the contract. Secondly, the courts are looking to see whether there was a large disparity in the bargaining power of the two sides.

The second category was addressed by the New Mexico Court of Appeals. In a 2011 case, the Court discussed the issues that come with signing a nursing home admission agreement. The Court recognized that someone is typically looking to enter a nursing home when facing severe health considerations, and thus fighting about the terms of a contract is not foremost on the minds of the person needing care for his or her close family. The Court also noted that usually the decision to enter a nursing home is made because of an immediate need, so it is difficult to shop around and compare different facilities or companies. In light of these circumstances, the Court found that where there is a disagreement about whether the binding arbitration agreement is conscionable, the nursing home facility must prove that the agreement is valid.

When Others Sign on the Resident’s Behalf

Another issue that can often arise because of the nature of nursing home admissions is whether someone else can sign a binding arbitration agreement on behalf of the resident and whether the agreement can be enforced against the resident. Typically, the answer is yes. For example, the court considered a case where a resident told the admissions staff at her nursing home that her granddaughter would handle all the paperwork. The granddaughter signed the binding arbitration agreement on the resident’s behalf. The Court of Appeals found that she had the authority to do so, given to her by the resident. In another case, the Court found that a husband could bind his wife to such an agreement, even without a specific declaration from the wife that she wished him to have this authority. The Court based its decision on the facts that (1) the wife was not capable of making such decisions at the time, and (2) under New Mexico law, a spouse may act as a surrogate.

In all of these cases, the individual facts are significant, and an arbitration agreement may or may not mean you cannot sue. If you or someone you know has suffered abuse or neglect in a nursing home, you should contact a competent attorney right away.

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Giving the Injured a Voice

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