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What is an Arbitration Agreement?

  • June 28, 2018
  • KBA Attorneys
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With alarming frequency, nursing homes are slipping arbitration clauses into the reams of paper seniors must sign when being admitted to a nursing home. 2.5 million Americans are living in nursing homes or senior living centers. Some legal advocates believe that as many as 90% of large nursing homes in the U.S. now include arbitration agreements in their admissions contracts.

In many cases, these agreements allow nursing homes to avoid civil court litigations. Sidestepping civil court proceedings means that there is no judge, no jury, and the proceedings in most cases will remain sealed from the public eye. If a person who is injured by a nursing home’s negligence has their case resolved through arbitration, the press will never hear about it, and a Google search will not reveal the situation.

Arbitration is a tool for business to resolve disputes quickly and efficiently to avoid courts. However, the use of arbitration has expanded over the past 30 years and has been increasingly used to deprive consumers, who have little legal knowledge, of their rights. Today, asking the elderly to sign arbitration agreements have become standard industry practice.

The nursing home industry argues that arbitration is good for business. Industry insiders say that claims subject to arbitration settle for 7% lower total cost to the business and three months sooner than claims with no arbitration. On the other hand, trial lawyers and consumer-rights advocates argue that arbitration agreements deprive consumers of a right to a fair trial and public proceeding.

Why Arbitration Agreements are Bad for Nursing Home Residents

There are several problems with arbitration agreements from my perspective. First, in many instances, nursing home residents do not know what they are signing. Elderly folks with may have varying degrees of dementia are presented with page after page of admission documents to sign before admission. Many of these are benign – the nursing home first may ask the patient to sign a “resident’s rights” document. Then, the nursing home will bury an arbitration agreement in the middle. These agreements are very involved with legalese. The nursing home resident is anxious to be admitted and is not thinking about the wording of every sentence. If the resident has Alzheimer’s or dementia, it is unconscionable to ask such a person to sign a complicated contract. But it happens all the time.

Second, arbitration agreements are known to result in lower awards. Instead of a jury hearing your case, which may be outraged by the allegations of neglect, an arbitrator will hear the case. An arbitrator is usually someone with knowledge of insurance disputes or an attorney. These people have become numb to injury claims are less likely to award a significant amount of money to a claimant. Further, arbitrators are often chosen from a short list of regional professionals. The same arbitrator can decide cases involving the same nursing home over and over again, incentivizing arbitrators to keep repeat clients happy and give more favorable decisions to repeat offenders. Studies show that awards to plaintiffs can be as much as 35 percent lower.

Third, arbitration has different rules. Statements and records that might be considered hearsay in civil court would be admissible under the lax rules of arbitration. Speculation about the cause of a resident’s injuries would be more likely to be heard in arbitration than in a regular court, which typically only allows expert witnesses to opine on causation.

Virginia Law on Nursing Home Arbitration Agreements

Under Virginia Code § 8.01-581.01, “a written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable and irrevocable, except upon such grounds as exist at law or in equity for the revocation of any contract.” Unfortunately, courts have held that Virginia law favors arbitration provisions. Bishop v. Med. Facilities of Am. XLVII (47) Ltd. P’ship, 65 Va. Cir. 187 (2004). However, here are a few ways they can be invalidated:


The nursing home resident did not sign the contract herself, and the family member, or nursing home employee, who did not have a valid authority to do so.


The nursing home resident did sign the contract herself, but was not competent to do so at the time. The contract can be invalidated by showing that the person had dementia or Alzheimer’s at the time the agreement was signed.


A nursing home may waive the right to arbitrate by litigating an issue covered by arbitration. For example, if the nursing home has filed a lien for unpaid medical bills, that may act as a waiver of the entire arbitration agreement.


A nursing home may have fraudulently induced a nursing home resident to sign a contract by misrepresenting the contents of the agreement or making hollow promises concerning the agreement, the nursing home, or nursing home arbitration clause.

Invalidating a nursing home arbitration clause is a tough task. If you are pursuing a nursing home negligence case, it is crucial to hire an attorney who has experience in dealing with arbitration agreements. If you or loved one has a question about a nursing home arbitration clause or nursing home abuse, contact Peter Anderson of Ketterer, Browne & Anderson.