Nursing Home Arbitration

The Wall Street Journal recently published ($) an excellent front-page article describing one of the more egregious incarnations of binding mandatory arbitration – nursing home admission agreements. The money quote:

Nursing homes' average costs to settle cases have begun dropping, according to an industry study, even as claims of poor treatment are on the rise. The industry notes arbitration is slicing the number of patients winning big punitive judgments, the added penalties for severe negligence that can pump up the size of jury awards. Meanwhile consumer advocates, plaintiffs’ lawyers and even some arbitrators are decrying the practice.

The article goes on to describe the case of one Mary Hight, whose nursing home wouldn’t call an ambulance despite her being dehydrated and ill for days. Her daughter, Janice Cowart, resorted to pushing her uphill to a nearby hospital, where she died the next day. Even though the “arbitrator found the home was negligent both in allowing Ms. Hight to become dehydrated and failing to get her to an emergency room,” he only awarded $90,000. After legal fees from the arbitration, “We didn’t get one cent,” said John Estep, Janice Cowart’s brother.

More disturbing than the award, however, was the blatant conflict of interest in Janice Cowart’s case – inherent in far too many arbitration agreements and indicative of arbitration’s problems in general.

Mr. Estep was troubled to learn later that [the arbitrator] Mr. Cothren and an attorney defending the nursing home had given a joint presentation about arbitrations for the state bar association while Mr. Cothren was deciding the case. Mr. Cothren says his award was based on law and evidence, not personal associations: "Mississippi is a small state, and everyone knows everyone," he says.

Arbitration is only as good – or bad – as the arbitration agreement itself. Agreements that allow blatant conflicts of interest are not fair by any stretch of the imagination, but the courts have repeatedly resisted state attempts to tame the wild west of arbitration. That’s why the bipartisan bill [pdf] introduced by Senators Mel Martinez (R-FL) and Herb Kohl (D-WI) is so important. The bill would not outlaw arbitration in nursing home contracts, but simply require that any agreement to arbitrate be made after a dispute arises. Nursing homes will find it much more difficult to push unfair arbitration provisions on residents or their family members when they can’t slip the provisions into tall stacks of paperwork, often presented to injured or ill patients who have come directly from the hospital. Write your senators and tell them to support the Fairness in Nursing Home Arbitration Act!