Arbitration & Mediation

Nebraska Supreme Court Finds Reasonable People Do Not Expect Arbitration Clauses in Nursing Home Contracts

By Christopher B. Hopkins, Esq.

We travel out to Nebraska for a state supreme court decision in a nursing home arbitration case which, like most cases of this type, seems to present (yet another) new twist to an area which should have been fairly well scoured by now. For years, nursing homes and other health care facilities have been making arbitration "optional" so that the admission agreement is not considered an adhesion contract. This case suggests that such an "option" may be outside of the scope of an "agent" or family member who is authorized to sign medical papers -- ironically, if it was mandatory, the court suggests that the agent could have signed it.

Whether you are pro-arbitration or against it, take a look at the conclusions about agency and consider how lawyers -- much less "civilians" -- might predict how a court would interpret the lines of agency in future situations.

In Frank Koricic, Next of Kin of Manda Baker v. Beverly Enterprises - Nebraska, Inc. formerly dba Beverly Hallmark et al., an adult son admitted his competent mother to a nursing home with her advanced knowledge and assent. There was no formal power of attorney or guardianship, simply a long history of the son signing medical paperwork for his mother. In this case, upon placing her in the room, the son left with an employee for the sole purpose of signing the paperwork.

Based upon the foregoing, and after a discussion of "actual agency," the court found the son had actual authority to sign the admission paperwork.

However, because the arbitration provision was optional and not a condition for admission, the court found there was neither actual nor apparent authority for the son to sign that document. The court concluded that, "nothing in the record suggests that a reasonable person should have expected an arbitration agreement to be included with admission documents from a nursing home."

In light of (1) federal and state legislation, (2) a nationwide favoritism towards alternative dispute resolution, and (3) the widespread use of health care forms which address claims, insurance, and other non-health matters, the court's conclusion seems out of touch. When was the last time you went to the doctor or a health care facility and did NOT sign an arbitration agreement? That's not a pro or anti-arbitration statement but (at least anecdotally) fairly commonplace. Here, the facility is at least making it option to avoid the allegation that it was an adhesion contract -- now the court makes a distinction to carve out arbitration from other terms in a standard admission packet.

Plaintiff lawyers seeking to avoid arbitration should use this argument in the face of an optional arbitration agreement.

Defense lawyers seeking to enforce an optional arbitration agreement may want to consider introducing evidence as to the commonality of arbitration agreements (or that the agent signed prior arbitration clauses).

Full post as published by Florida Arbitration Law on October 29, 2009 (boomark / email).