Nursing Home Mandatory Arbitration Provisions

Arbitration agreements are routinely included in nursing home admission documents.  These agreements will bar an injured nursing home patient or the family from filing a personal injury suit in case of nursing home negligence or abuse.  Forced arbitration is rarely to the benefit of the patient.  When faced with one of these agreements, there are several things to consider both before signing the agreement and once a claim for negligence arises.   First, don‘t sign it!

Second, if you do, arbitration agreements are enforceable under both New Mexico and federal law in the absence of unconscionability.  Neither patients, nor anyone on their behalf, should sign an arbitration agreement.  By New Mexico law, agreement to arbitration cannot be a condition of admission into the nursing home facility.  As such, there is no good reason to sign these.  Arbitration is always available later if the parties so choose.

Unfortunately, far too many nursing home patients do sign arbitration agreements.  Once signed, the patient is bound by its terms unless it can be shown that the contract was either substantively unconscionable or procedurally unconscionable.  The two concepts are distinct but closely related.

Substantive unconscionability is present when the terms of the contract are illegal, grossly unfair or contrary to public policy.  The New Mexico courts take this to mean that the contract unreasonably benefits one party or another, and under the circumstances violates public policy.  Though an arbitration agreement will almost always and unreasonably benefit the nursing home, New Mexico has not declared them in violation of public policy.  As such, there must be more to it than that.

Procedural unconscionability relates to the process by which the contract was entered.  The New Mexico courts suggests that a contract is “ procedurally unconscionable where there is such gross inequality in bargaining power between the parties that one party’s choice is effectively non-existent.”  Such inequality in bargaining can lead to unenforceable adhesion contracts where one party who alone has bargaining leverage drafts a contract for blind acceptance with no bargaining input by the other and the weaker party had no other avenues for service.

In fact, it is arguable that all nursing home (or any consumer contract for that matter) mandating arbitration is both substantively and procedurally unconscionable.  New Mexico like most states, honor and enforce them despite this.  However, there is some small consolation.  In New Mexico, when enforceability is questioned, the party seeking to enforce the agreement has the burden of showing that it is not unconscionable.

From there, the outcome will turn on the facts and circumstances of each case relying heavily on the admission process and admission papers and contracts.  Since these provisions are generally enforced, despite the burden placed on the nursing home to prove fairness, it would be far wiser to avoid the provisions from the beginning.