Tuesday March 19, 2013
The U.S. Supreme Court case of Marmet Health Care Center v.
Brown, decided on Feb 21, 2012, shows the advantage of a properly
written and signed arbitration agreement in order to keep claims
out of court where jurors decide and instead allow an arbitrator to
decide the outcome.
Before Marmet, several states completely prohibited nursing
homes from compelling residents to give up their right to a jury
trial and declared all arbitration agreement in nursing home
admission contracts to be unconscionable.
After Marmet Health Care Center v. Brown, nursing home owners
and operators can have confidence that properly drafted and
executed arbitration agreements will keep inevitable claims away
Litigating claims in court can lead to unexpectedly high awards.
Arbitration of claims is generally seen as offering significantly
less potential for runaway jury awards by eliminating the emotions
that fuel them. More predictable losses should result in lower
overall claim payments, safeguarding funds that are better spent
caring for residents. For these reasons, many long-term-care
facilities have sought to use arbitration agreements when
contracting with their residents upon admission. Plaintiffs often
seek grounds to avoid the enforcement of arbitration agreements, in
order obtain for themselves the potential of a much larger jury
The U.S. Supreme Court noted that in Marmet, arbitration
agreements signed predispute, were enforceable and not void as a
matter of public policy. That Court went on to say "Congress
did intend for the federal arbitration act (FAA) to take precedent
over state law.
Properly drafted and executed arbitration agreements between
facilities and their residents are generally enforceable. The
impact that arbitration has on dispute resolution is so important
that we expect to see it used routinely. Of course, care must be
taken to avoid unenforceability, as is the case with any
The most significant of these are a lack of mental capacity to
consent, fraudulent inducement to sign, duress and
unconscionability. Long term care facilities who choose not to
utilized arbitration agreements will be well-advised to
Arbitration agreements will go a long way toward reducing
inappropriate and huge jury awards, allowing for better provision
of care for nursing home residents.
For information on the provisions needed in arbitration
agreements to increase the likelihood of being enforced or how the
train your facility in getting them signed by the appropriate
person(s), please contact:
Lavonya K. Chapman, Esq., RN.|Director of
Arthur J. Gallagher Risk Management Services, Inc.
2200 Woodcrest Place, Suite 250