Watch out for those Arbitration Agreements!
The Law Offices of J.M. Reinan, P.C. has previously cautioned prospective or current consumers of long-term care, including nursing home residents and assisted living residents, against the dangers of entering into an arbitration agreement. Arbitration agreements are legal in Colorado and are generally favored by the Courts. However, these agreements are almost never favorable for nursing home residents or residents of assisted living facilities, where they are often used, and often at the time of admission when things are feeling rushed and there is a lot of pressure to get in.
Arbitration agreements will often be sold to would-be consumers of long term care services as the less expensive, quicker and more efficient avenue than jury trials or litigation. None of these statements are generally true.
In most arbitration agreements, the consumer of long-term care or nursing home services is required to pay at least half (and sometimes all) of the arbitrator’s fee up front. This means that when you file an arbitration action against a nursing home or assisted living facility, you will be required to pay sometimes between $4,000 and $16,000 up front. Filing a civil lawsuit, on the other hand, costs less than $500.00 dollars. With a civil lawsuit, you do not need to pay for the judge or jury; with arbitration, the arbitrator charges by the hour. The rate for the arbitrator usually runs approximately $400 to $500 per hour. If there are three arbitrators, which is often the case, you will have to pay three times that amount. Thus, the argument that arbitration is less costly is usually a fallacy.
As for efficiency and quickness, in many cases, victims of nursing home abuse or assisted living facility neglect have a statutory right to a 120-day trial setting. This is because there is a statute in Colorado that allows elderly or ill litigants to have a faster litigation process. In other words, for plaintiffs that meet the criteria of that statute, from the time the case is filed until the time of trial can be as short as 4-months. Some arbitrations, however, take between six months and a year or even longer to get set. Thus, the argument that the arbitration is quicker and faster is also a fallacy.
Finally, arbitration will be sold by nursing homes and assisted living facilities as a better alternative to a jury trial. In most cases, there is nothing better about having your case decided by a single arbitrator, who is usually an attorney or retired judge, than a jury made up of your peers. Often times these arbitrators tend to be more conservative than juries, and thus less likely to award a proper amount of damages. In addition, there is the argument that arbitrators know where their bread is buttered, e.g., that the nursing home or assisted living facility that enforced the arbitration agreement will return to the same arbitrator again and again if the arbitrator renders a favorable outcome. There is nothing positive for a nursing home or assisted living claimant in this scenario.
Perhaps the most dangerous thing we have seen recently involves the agreement to limit or “cap” your damages as part of the arbitration. If you have a jury trial, you are entitled in some cases to claim punitive damages, which are damages designed to punish a nursing home or assisted living facility for particularly egregious or intentional behavior. Many arbitration agreements contain language stating that the patient agrees not to seek punitive damages and some agreements that we have seen lately even set the amount of available damages for less than what you would be entitled to at a jury trial. For example, if you sue a Colorado assisted living facility in a jury trial, you are typically entitled to a cap of $468,000 in non-economic damages. Some of these agreements limit your damages to $300,000 or sometimes even $250,000.
It is our suggestion that you think carefully before signing an agreement for yourself or for your loved one. Even if you sign an arbitration agreement as the daughter or son or power of attorney of a parent going into a nursing home, that arbitration agreement may be enforceable against you personally later on.
Buyer beware. If you have any questions about an arbitration agreement, please call us for a free consultation.