Diversicare Leasing Corp. v. Hubbard – Nursing Home Arbitration Agreements

The case of Diversicare Leasing Corp. v. Hubbard, recently before the Alabama Supreme Court, was just another example of the fact that virtually every for-profit nursing home these days requires new patients – or their representatives – to sign an arbitration agreement.
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These agreements essentially require patients to give up their access to the civil justice system, should something go wrong (i.e., abuse or neglect is discovered). Instead, they agree to have any “disputes” handled by an arbitrator, where proceedings are confidential and tend to result in findings more favorable to the defense.

Some people don’t even realize when they are forfeiting when they sign, and others may have no business signing in the first place. Personal representatives usually can’t sign away constitutional rights for someone else, and the person being admitted may lack the mental capacity to understand what they are signing. In some cases, courts have found provisions of arbitration agreements to be unconscionable and contrary to public policy, and therefore invalid.

Still, enough of these cases get pushed through that nursing homes continue to push the paperwork on new patients. Forced arbitration clauses allow poorly-run, poorly-staffed facilities to operate and make profits without serious consequences. People who suffer nursing home abuse or nursing home neglect not only lose the opportunity to have their claims weighed in a court of law, they also lose the chance to make sure the public knows what’s happening. When these kinds of actions can be kept in the dark, there is little incentive for these facilities to do better.

As it now stands, about 70 percent of all nursing homes are for-profit entities (a figure that has grown rapidly in recent years) and about 60 percent of all for-profit homes slash the ratio of registered nurses to patients to 1:20.

There are currently calls to the Obama Administration to take action by slashing federal funding from Medicare and Medicaid services for nursing homes that use arbitration clauses in their contracts. Obama has stated he is reviewing those requests.

In the meantime, we will continue to see cases like Hubbard. According to court records, decedent was profoundly mentally and physically disabled from the time he was an infant. He depended on others to feed, clean and dress himself and he was unable to walk or speak or otherwise communicate. He suffered from cerebral palsy and a seizure disorder. Although he spent years alternating between institutions and the care of his mother, he was ultimately placed in a nursing home. His mother, who admitted him, signed an arbitration agreement on his behalf, which was lumped into the rest of the admissions paperwork.

Her son was found unresponsive one day and rushed to the hospital, diagnosed with sepsis. He died a month later. His mother sued for wrongful death.

Defendant nursing home dragged out that arbitration agreement, and moved to compel arbitration. Plaintiff argued in her response that she lacked the legal authority to bind her son to that agreement, as he had passed the age of legal majority.

The nursing home argued decedent had the mental capacity of a toddler, and noted his mother had been the sole custodial parent, made all health-care related decisions for him, maintained a bank account on his behalf and was the payee on all his government-related health care checks. All residential facilities where he had previously stayed looked to her for guidance on his care.

Trial court sided with plaintiff in finding she did not have the proper legal authority to bind her son to the agreement. He was an incapacitated adult, and she hadn’t been given power of attorney – nor had it been appointed by the court – at the time he was admitted.

Nursing home appealed, but the state supreme court affirmed.

Contact our Carolina personal injury lawyers at Lee Law Offices today by calling 800-887-1965.

Additional Resources:
Diversicare Leasing Corp. v. Hubbard, Sept. 30, 2015, Alabama Supreme Court

More Blog Entries:
$25M South Carolina Wrongful Death Lawsuit Filed in Student’s Death, Oct. 12, 2015, Greenville Injury Attorney Blog

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