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Alert | |
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Bloom & Buell's |
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Alert | |
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Bloom & Buell's |
To the Nursing Home Administrator, healthcare provider, private school administrator or other administrator whose organization provides contracted services to individuals:
Does your contract have an arbitration clause? If it does, you can avoid litigating disputes with your service recipients, and resolve the dispute through arbitration. In a case decided in March, the Supreme Judicial Court of Massachusetts upheld an arbitration agreement signed by the son and personal representative of a resident in the course of his admission to a nursing home.
The case involved the son of a man who died in a nursing home. The son tried to set aside the arbitration agreement he had signed—he had full power of attorney and a health care proxy—when he checked his father into the home, arguing that since he was suing a physician who was not a party to the arbitration agreement, it would be doubling his legal burden because he would have to sue the physician in court and also go to arbitration with the nursing home.
At first the son prevailed when a Superior Court judge ruled that in the interest of “judicial economy” he would set the arbitration clause aside so the son might sue both the physician and the nursing home at the same time.
But the SJC ruled that judicial economy had to yield to the sacredness of a contract, the principle of pacta sunt servanda which has been with us since Roman times. As the SJC pointed out, when the son sat down with a nursing home staff member to go over the contract, his father was already in a bed in that home and being cared for. There was no urgency and the son had all the leisure to look the contract over. The arbitration clause was a separate item, consisting of two pages and not part of the general contract. The son would later say in a deposition that he had not read the contracts “word for word,” but the SJC said that didn’t matter. The justices pointed out that he had a college degree, had been a military intelligence officer, and had worked in the insurance industry as a claims official. He also had his wife with him at the session.
But most importantly, the SJC said that nowhere did the nursing home require the son to sign the arbitration agreement. It was not part of the admission agreement. Even if he had not signed the arbitration clause, they still would have admitted his father.
Much of the SJC’s reasoning was devoted to pointing out that encouraging arbitration over litigation is supported not only by most laws, but by Federal rules as well.
Another legal principle that the Court devotes much time and energy to in this decision is whether a contract is unconscionable. To get at the definition in a legal context, the justices reached back to an 1889 case out of England involving Lord Chesterfield where it says that a contract is not enforceable when “the sum total of its provisions drives too hard a bargain for a court of conscience to assist.”
It would seem, then, that if the terms of an arbitration agreement are within the bounds of the understanding of civilized people, and if the signing parties entered into it voluntarily without even the barest hint to compulsion, the parties must stick to its terms.
So, to preserve the possibility of arbitrating, rather than litigating disputes, your arbitration contract must:
1. Not be a condition of admission;
2. Be capable of being rescinded in the first thirty days; and
3. State that it does not prevent one from filing a grievance or complaint with the facility or a state agency.
Otherwise, “See you in Court.”
