Missouri Court Tackles Arbitration Clauses in Nursing Home Contracts
Arbitration clauses in nursing home contracts have come under closer scrutiny in recent years. At the state level, several state courts also have faced the issue of the enforceability of arbitration clauses in long-term care facility contracts.

May 27, 2009 /24-7PressRelease/ -- Missouri Court Tackles Arbitration Clauses in Nursing Home Contracts

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Before residents move into a nursing home or other type of long-term care facility, they normally are required to sign a contract. This contract may include an arbitration clause, or the residents may be asked to sign a separate arbitration agreement. These agreements generally state that the residents agree to use binding arbitration rather than the courts to settle any disputes with the nursing home, including any personal injury claims.

Arbitration Agreements

Arbitration is an alternative method for resolving disputes. Rather than going to court and litigating the issue, the parties instead agree to submit their dispute to an independent arbitrator. The arbitrator may be one person or a panel. After each party is given the chance to be heard, the arbitrator will make a decision. This decision is usually binding on the parties.

Generally, arbitration is cheaper and quicker than using the courts. Arbitration clauses are standard in many types of contracts in addition to nursing home contracts, such as employment, commercial and insurance contracts.

However, arbitration also has been the subject of much criticism by those who feel the system cheats people out of important rights, including a jury trial. Others also argue that individuals signing these contracts really have no other option but to agree to arbitration.

Nursing Home Arbitration and Wrongful Death Suits

Arbitration clauses in nursing home contracts have come under closer scrutiny in recent years. At the federal level, there has been a push in Congress to pass the Fairness in Nursing Home Arbitration Act, which would make any pre-dispute arbitration agreement between nursing homes and residents invalid and unenforceable. The Act was introduced in 2008, but never passed into law. It was reintroduced to Congress in February 2009.

At the state level, several state courts also have faced the issue of the enforceability of arbitration clauses in long-term care facility contracts. In Illinois, the appellate court upheld a ruling that the Illinois Nursing Home Care Act prevented nursing home residents from waiving their rights to a jury trial. The nursing home argued that the appellate court's ruling contravenes the Federal Arbitration Act (FAA). The FAA is a 1925 law that requires the state courts to uphold and enforce valid arbitration agreements between parties.

In our own state, the Missouri Supreme Court ruled in Lawrence v Beverly Manor (273 S.W.3d 525) that arbitration agreements in nursing home contracts do not prevent the heirs or successors to the nursing home resident from bringing a wrongful death action in court against the nursing home.

In Lawrence, the daughter of a resident signed the nursing home contract with the arbitration agreement on behalf of her mother. Her mother died in the nursing home shortly after moving in. When the wrongful death action was brought against Beverly Manor, it sought to enforce the arbitration agreement against the daughter and son of the resident. The Missouri court refused to do so, holding that the arbitration agreement was not binding against the family in a wrongful death case.

Normally, an arbitration agreement is enforceable against any heirs, assigns or successors in interest, but only so long as the deceased could have brought the same lawsuit had he or she still been alive. The Missouri Supreme Court ruled that a wrongful death action is a separate cause of action. The court reasoned that the arbitration agreement did not bind the daughter and son in Lawrence because the deceased mother could not have brought a wrongful death lawsuit against the nursing home had she lived.

Thus, under Missouri state law, arbitration agreements signed by nursing home residents -- or by someone acting on their behalf, such as a son or daughter -- are not enforceable against anyone seeking to bring a wrongful death action in state court.

The Effect of Lawrence v Beverly Manor

It is important to note that the Lawrence decision did not invalidate arbitration agreements in nursing home contracts. Arbitration clauses are still enforceable against residents who have signed valid arbitration agreements and want to bring personal injury or other causes of action covered by the agreement against the nursing home.

The Lawrence decision, however, may be used in future cases to attempt to invalidate arbitration agreements in nursing home contracts altogether. Special Judge Glenn A. Norton wrote that he believed any agreements between nursing homes and residents requiring arbitration for personal injury were unconscionable and should be unenforceable.

The Lawrence decision also may be appealed to the US Supreme Court for alleged violations of the FAA. If the highest federal court finds that the FAA requires state courts to enforce these arbitration agreements, then the Missouri court's ruling will be invalidated.

Until these legal issues are resolved, the one thing clear under Lawrence is this: Missouri nursing homes can no longer insulate themselves against wrongful death claims with arbitration agreements. They have no choice but to settle the matter in court.

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