Ask the Advisor: December 2019

Ask the Advisor: December 2019

My Mom Is Applying For Assisted Living:  Why Must She Agree To Mandatory Arbitration?

Q:  I’m helping my mother shop for an assisted living facility.  She’s considering one within reasonable driving distance, but a clause in the paperwork stipulates that she must agree to mandatory arbitration to settle any disputes.  Can you explain the pros and cons of this?

A:  Clauses requiring mandatory arbitration have become exceedingly common in many types of contracts, but they can have serious implications for unsuspecting consumers.  By signing such agreements, consumers give up their Seventh Amendment right to a trial by jury or their right to bring civil suit in court against the company no matter what the grievance.  This can even include sexual abuse, medication errors, and negligence.

Often, consumers don’t even know they signed such an agreement because the clauses are buried in the fine print.

The House recently passed legislation the FAIR Act (H.R. 1423, S.610) that would prohibit mandatory arbitration agreements in employment, consumer, and other contracts.  Legal advocates who work on behalf of older adults estimate that as many as 90% of large nursing homes in the U.S. use arbitration agreements in their admission contracts.  The federal government has been considering plans to expand the use of mandatory arbitration clauses to be included in contracts for every long - term care facility that accepts federal money as a condition of admission.  Nursing homes receive funding from both Medicaid and Medicare for all residents.

Critics of mandatory arbitration say the agreements stack the deck against long term care residents and consumers.  Unlike civil suits which go to court, arbitration is private, and there’s no judge or jury.  There are no rules of evidence that arbitrators have to follow under the law, and there’s no oversight.  Critics also contend that consumers are less likely to win their cases in private arbitration and, if they do win, they tend to get much less money than they would in court.

Companies requiring mandatory arbitration say it saves money and time for resolving complaints.  But older consumers still may wind up with legal fees, and may wind up having to pay a share of the arbitration fees.

TSCL is interested in hearing your comments on this issue, and whether you have ever been forced to use mandatory arbitration to resolve a disagreement.  If so, did the outcome satisfy you?  Please send us an email.


Sources:  “An 87 Year Old Nun Said She Was Raped In Her Nursing Home.  Here’s Why She Couldn’t Sue,” Haley Sweetland Edwards, Time, November 16, 2017.  “House Passes Ban on Forced Arbitration, Class Action Limits, Jaclyn Diaz, Bloomberg Government, September 20, 2019.