Nursing Home Contracts Containing Arbitration Clauses Under Attack

Arbitration clauses commanding arbitration in nursing home abuse and neglect cases have been the bane of many lawyers seeking to protect nursing home residents from abuse and injury. Under the Illinois Nursing Home Care Act, arbitration clauses were considered to undermine the purpose of the act by making it mandatory for residents and their families to abide by a confusing nursing home contract on admission to a nursing home.

The Illinois Nursing Home Care Act was intended to protect residents from exploitation by nursing homes and their parent corporations. It would seem to be against Illinois public policy for residents admitted to Illinois nursing homes to be compelled to sign a contract. In some cases, these contracts contained arbitration clauses that would essentially remove a common law lawsuit as an option should the resident be injured by neglect or abuse by a nursing home and its personnel.

The Centers for Medicare and Medicaid Services (CMS) implemented a new rule that prohibited federal funds for nursing homes that enter into binding arbitration agreements with residents. However, in a U.S. District Court in the Northern District of Mississippi, an order was entered that found that the CMS did not have authority to enact the mandate without statutory authority.

The U.S. District Court order was granted in early November 2016. CMS introduced the rule in September 2016 after allegations that nursing homes bury arbitration clauses in the fine print of admission contracts and prevent residents and their families from seeking justice in state courts in the event of abuse or neglect.

The lawsuit brought in the Northern District of Mississippi included the American Healthcare Association, which is a nursing home owners’ organization. The nursing home groups that brought the case argued that the rule of CMS exceeded its statutory authority.

Illinois law and the legislation is emphatic in allowing private remedies for nursing home residents even in the face of the increasing numbers of arbitration clauses found in nursing home contracts. Because most arbitration agreements deny a resident to the right of attorney fees and costs that are allowed under the Illinois Nursing Home Care Act, arbitration clauses weigh heavily in favor of the nursing home and its corporate owners.

In arbitration, a nursing home resident would not be denied the public proceeding that a civil lawsuit would allow.

In Illinois, the compelling of a nursing resident to sign an arbitration clause contract would directly contravene the Illinois Nursing Home Care Act as well as public policy. Nursing home residents are generally admitted to nursing homes at times where they are ill, injured or rehabilitating. They are usually not in condition to understand the intricacies of arbitration clauses.

In Illinois it has been held that arbitration agreements signed by a resident or signed by a family member may not be enforced. In the Illinois Appellate Court case of Curto v. Illini Manors, Inc., 405 Ill. App. 3d 888 (3d Dist. 2010), the court properly denied the nursing home’s motion to dismiss and compel arbitration. In that wrongful death case, the estate was not contractually bound by the arbitration agreement signed by a spouse when the husband was admitted to the nursing home. The spouse’s signature on nursing home documents did not confer express or implied authority on her to sign the arbitration agreement on the husband’s behalf. Absence some evidence that the resident gave the agent spouse authority to sign the arbitration agreement on his behalf, the resident was not bound by its terms.

Accordingly, the Illinois Appellate Court found that a spouse’s signature carries no legally binding weight as to arbitration on her personal claims against the nursing home under either the Wrongful Death Act or the Family Expense Act.

Illinois lawyers and Illinois nursing home residents should be aware of the conflicts in the law regarding arbitration clauses. Nursing homes continue to push for application of arbitration rather than lawsuits in Illinois courts. The arbitration clause clearly advantages nursing homes and their corporate owners. The protection of nursing home residents and their families from neglect and abuse at long-term facilities will be fought in the courtroom rather than in arbitration settings as much as possible.

Kreisman Law Offices has been handling Illinois nursing home abuse and neglect cases for Illinois nursing home residents, their families and loved ones for more than 40 years, in and around Chicago, Cook County and its surrounding areas, including Country Club Hills, Crete, Des Plaines, Dolton, East Hazel Crest, Elgin, Elk Grove Village, Evergreen Park, Forest Park, Franklin Park, Hazel Crest, Lansing, Lynwood, Markham. Northbrook, Northfield, North Riverside, Orland Hills, Rolling Meadows, Willow Springs, Sauk Village, Stickney, Steger, South Holland, Chicago (Roscoe Village, Printer’s Row, Oz Park, Morgan Park, Cragin, DePaul University Area, Gladstone Park, Gold Coast, Greek Town, Horner Park, Humboldt Park, Hyde Park, Jackson Park Highlands), Mount Prospect and Bolingbrook, Ill.

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