A recent New York Times article shed more light on the unfairness of arbitration. The article entitled, “Pivotal Nursing Home Suit Raises a Simple Question: Who Signed the Contract?” tells the tragic story of Elizabeth Barrow (link to article https://www.nytimes.com/).
Ms. Barrow was a resident of a nursing home in Massachusetts. She had just celebrated her 100th birthday in 2009. A month later staff at the nursing home found her dead in her room with a plastic shopping bag wrapped over her head and around her neck. Ms. Barrow’s roommate, who had a known history of aggression and violence, murdered Ms. Barrow after a minor disagreement. The roommate was later deemed unfit to stand trial and committed to a state mental hospital.
Ms. Barrow’s family brought a lawsuit in Massachusetts civil court to hold the nursing home accountable for her death. Unfortunately one of Ms. Barrow’s family members signed an arbitration contract buried in the admission paperwork at the time Ms. Barrow was admitted to the facility. The arbitration contract stated that any lawsuits for injuries Ms. Barrow suffered at the facility would be submitted to a private arbitrator rather than a jury. An arbitrator is typically a retired judge or attorney who decides cases. These cases do not go to trial in civil courts in front of juries. The Seventh Amendment to the U.S. Constitution guarantees our right to a jury trial in all civil matters. Despite this guarantee, many elder abuse cases are decided in private conference rooms so the public rarely hears about the tragic details. Arbitration contracts buried in nursing home admission paperwork are the reason for this.
The arbitration contract in Ms. Barrow’s case was unfair and one-sided. The arbitration firm designated to handle her claim handled more than 400 other arbitrations for the attorneys representing the nursing home. To no one’s surprise the arbitrator in Ms. Barrow’s case found in favor of the nursing home. No reason for this decision was given. Ms. Barrow’s attorneys appealed this decision, won, and are now set for trial in a Massachusetts state court.
Ms. Barrow’s case illustrates the unfairness of arbitration contracts. Virtually every contract or agreement you sign with a business includes an arbitration provision. Your cell phone contract, credit card agreement, rental agreement, bank loan, and many other contracts obligate you to arbitration should you decide to pursue legal remedies against the business. These arbitration provisions are commonplace now because they are much more advantageous to businesses.
The problem with arbitration contracts is now gaining more attention. Sixteen states and the District of Columbia requested the federal government deny Medicaid and Medicare money to nursing facilities who bury arbitration contracts in admission paperwork. The federal government is currently considering the banning of arbitration provisions in nursing home admission paperwork.
The disadvantages of arbitration contracts are numerous.
First, there is no jury to decide your case. Rather one, or in some cases two or three paid arbitrators decide. Many of these arbitrators have long-standing relationships with the law firms representing the nursing homes. Arbitration is a source of income for the arbitrators and they want to stay in business. They are much more likely to render decisions in favor of the facility because of this. Second, you and your attorneys will be limited in the documents you receive from the nursing home once the arbitration process begins. These documents are requested by your attorneys during discovery and are critically important to successfully pursue your case. Third, the cost of arbitration is significant. I am involved in a case in which the arbitrator charges $650 per hour to review documents and discuss the case with us. The arbitration itself will cost $40,000 for five days. Fourth, the arbitration process can move very quickly leaving you and your attorney very little time to collect necessary evidence. This encourages delay in production of evidence by the nursing home. Fifth, arbitration in many cases does not follow normal rules of civil procedure. We are bound by rules of civil procedure when our cases are in front of a jury. The rules in arbitration are typically chosen by the nursing home since they wrote the contract in the first place. Sixth, compensation for victims in arbitration is typically lower. There is evidence nursing homes encourage arbitration because they know the resulting award by an arbitrator will be lower than a jury verdict. Finally, arbitrations are conducted in private. Civil jury trials are open to the public and members of the public serve on the juries. The public does not hear about tragic cases like Ms. Barrow’s when the cases are in arbitration.
Arbitration provisions are pro-business. When reviewing admission paperwork at nursing homes, beware of these provisions. A nursing home is prohibited from requiring you to sign the arbitration contract as a condition of admission to the facility. This means you are not required to sign it and should not sign it under any circumstances.