Many Colorado nursing home companies are now having residents or their family members sign arbitration agreements as part of the admissions process. Arbitration is often portrayed as a more fair, efficient and cost effective alternative to litigation and a jury trial. While arbitration is theoretically an interesting alternative to a jury trial, it is often unfair to the consumer who unwittingly agrees to it.
For one thing, arbitrations generally do not allow full discovery, including depositions and the exchange of important documents. This makes is very hard for the nursing home resident’s attorney to fully develop the case for arbitration, since most of the important documents and information are in the exclusive control of the nursing home company.
The second problem with arbitration is that it is a strictly private proceeding. Part of the reason many people choose to sue a nursing home is to prevent it from hurting others in the future. However, since arbitrations and arbitration awards are generally not public, there is little or no public exposure of the wrongs caused by the nursing home.
Third, arbitrations can limit access to damages, including punitive damages (damages intended to punish and deter bad conduct) and potentially attorney fees.
Finally, some arbitrations can be biased in favor of the nursing home company.
For example, Life Care Centers of America has a standard contract that designates the National Arbitration Forum (“NAF”) as the arbitrator. NAF was the subject of an investigation by the U.S. House of Representatives for fraud, corruption and deceptive business practices in 2009. NAF was also sued by the Attorney General of the State of Minnesota for these same types of things.
Among other things, NAF has been accused of pressuring its arbitrators to find in favor of NAF’s corporate clients and against the consumers involved in the arbitrations. NAF has also been accused of doing such things as firing arbitrators who find in favor of consumers; reversing awards and decisions favoring consumers; and assisting arbitrators in reaching decisions unfavorable to consumers.
In Colorado, nursing home residents are not required to sign an arbitration agreement as a condition of admission. Some nursing homes might suggest as much or might try to aggressively promote arbitration as good or necessary. Our suggestion is to confer with an attorney before signing an arbitration agreement. If you do sign one, you have 90 days to rescind the agreement.
Our client’s wife, a 48-year old woman, was a resident at a Life Care Centers of America facility, Hallmark Nursing Center. Upon admission, a Hallmark representative had her sign a Medical Durable Power of Attorney naming her husband as her agent to make medical decisions in the event of her mental incapacity. After she signed the power of attorney, Hallmark then had her husband sign the rest of her admission documents, including an arbitration agreement. At the time the documents were signed, his wife was not incapacitated and was fully alert, oriented and able to sign her own papers.
Several days later the wife developed a serious infection. Our client claims that Hallmark did not monitor her carefully and did not send her to the hospital soon enough. The wife died suddenly and unexpectedly from the infection. Our client filed suit against Life Care Centers of America as Hallmark’s owner.
Life Care has now demanded that the case be sent to arbitration. The exclusive arbitrator listed in the agreement is NAF.
While we do not know whether Life Care Centers of America had knowledge of NAF’s corrupt practices or whether Life Care Centers of America had some relationship or agreement with NAF similar to those described above, it is certainly troubling that Life Care Centers continued to designate NAF as its exclusive arbitration service more than a year after these serious allegations and findings of corruption were widely published in the media.
We have filed a response to the arbitration demand claiming, among other things, that the arbitration agreement is invalid because the power of attorney was not effective at the time the husband signed it, and the arbitration agreement is unenforceable because it designates NAF, which has been alleged to be a biased and corrupt organization, as the arbitrator. The agreement our client signed promised a fair and just proceeding. Had he known the allegations against NAF, he would not have signed it.
This issue is now before the Denver District Court.