BACK IN MY DAY, WE HAD RIGHTS: THE MED-ARB SOLUTION TO MANDATORY ARBITRATION CLAUSES IN INDIANA NURSING HOME ADMISSIONS CONTRACTS

MARINA CHERICE ALLEN

J.D., 2020, and Health Law Certificate, 2020, Indiana University Robert H. McKinney School of Law; B.A., Indiana University Bloomington, 2017.

“There are many pleasant fictions of the law in constant operation, but there is not one so pleasant or practically humorous as that which supposes every man to be of equal value in its impartial eye, and the benefits of all laws to be equally attainable by all men, without the smallest reference to the furniture of their pockets.”

— Charles Dickens, The Life and Adventures of Nicholas Nickleby

After 60 years of service to the Catholic Church, Sister Irene Morissette, an 87-year-old nun suffering from dementia, admitted herself into an Alabama-based assisted-living facility to receive help completing her day-to-day tasks and activities. She typically locked her door in the evenings because she did not want anyone entering her living quarters while she slept. Unfortunately, though, this did not stop her assailant from accessing her bedroom, pinning her five-foot-two body against her bed by her shoulders, and raping her. Morisette suffered multiple abrasions during the attack; however, she did not call for help afterward because she feared that her assailant would be the one to respond to her call. After police failed to identify the attacker, Morissette’s sister filed a lawsuit against the nursing home for failing to maintain a safe living environment for its residents.

Despite Morisette having suffered a traumatizing battery, the court quickly stayed her sister’s lawsuit. Unbeknownst to her at the time of her admission, Morissette signed an admissions contract containing a pre-dispute arbitration clause. Specifically, the arbitration clause contractually bound Morissette to settle all disputes relating to her residency through arbitration. By signing the agreement, Morissette waived her Seventh Amendment rights and barred her own access to relief through the courts. Though terribly frustrated, Morissette and her family proceeded into the arbitrative process and asked for $5 million in damages, all of which Morissette planned to donate to the Catholic Church. Nevertheless, the nursing home’s hand-picked arbitrator found that the nursing home was not liable for Morissette’s injuries and did not award Morissette any damages. In fact, Morissette lost money by bringing her case, as the nursing home sent her a $3,000 invoice to cover all of the arbitration costs.

Long-term care facilities play a vital part in caring for society’s aging generation. In 2014 alone, nearly 67,000 long-term care providers served about nine million people nationally. Additionally, Indiana housed 39,000 long-term care patients in 2016, making it home to one of the largest nursing home resident populations in the country. Therefore, as our elderly population dramatically expands in the coming years, it is highly likely that access to long-term care services will grow higher in demand. However, accompanying the long-term care industry’s growing presence is its preference for keeping disputes out of the traditional, adversarial system. Sister Morissette’s story is an unfortunately common depiction of a problem affecting elderly Americans in long-term care facilities across the country, as many nursing homes now use mandatory alternative dispute resolution to resolve conflicts. Some elder law advocates even report that as many as 90 percent of large nursing-home chains in the United States now include some type of arbitration clause in their admission agreements.

Although various state courts have sought to render mandatory arbitration clauses unenforceable on state law grounds, the Supreme Court put an end to such efforts with its decision in Kindred Nursing Centers Ltd. Partnership v. Clark. In Kindred, the Court reviewed Kentucky’s “clear-statement rule,” a statute requiring that patient powers of attorney must explicitly authorize their agents to enter into nursing home arbitration agreements for such agreements to be enforceable. Ultimately, the Court held that the statute violated the Federal Arbitration Act (the “FAA”), a law meant to enforce arbitration agreements between parties at both the state and federal level. Though Kindred was an issue of first impression for the Court, the Supreme Court’s long track record of supporting the FAA’s preemptive powers made the Kindred decision largely predictable. However, the Supreme Court is not the only court to support the enforcement of arbitration; Indiana state courts and the Seventh Circuit regularly do so as well. Even governmental agencies follow the pro-arbitration pattern, as many of their attempts to ban mandatory arbitration are usually withdrawn and replaced before even going into effect.

But despite its overwhelming support in both state and federal judiciaries, long-term care consumers continue to brand the process as inherently unfair. Specifically, critics claim that mandatory arbitration places consumers at a great disadvantage, arguing that arbitration clauses are commonly buried within the fine print of the hefty stack of paperwork a patient completes during the admissions process. Critics also complain that arbitration strips consumers of both their constitutional right to a jury trial and the benefits a court of law provides. Other complaints, such as cost, award amount, biased arbitrators, and lack of ability to challenge the decision, are also inherent in the nursing home arbitration debate. Therefore, if these grievances are so common within the long-term care industry, why have they remained unsolved? Perhaps a realistic solution to these ethical concerns is one that operates outside the traditional canons of contract law. Instead, the answer may lie in redefining the law’s definition of procedural justice to fit what long-term care consumers think it means.

Though mandatory arbitration is lawful in Indiana nursing home admissions contracts, it is far from just. Elderly residents—many of which have cognitive disabilities—are expected to read, comprehend, and assent to partialized agreements under highly emotional and stressful circumstances. Consequently, a legislative change would help ensure that elderly Hoosiers of all awareness levels would be placed on the same footing as the nursing facility early in the dispute resolution process. Therefore, this Note argues that the Indiana General Assembly should amend Title 34, Article 57 of the Indiana Code to include a Long-Term Care Admissions Arbitration chapter that requires Indiana nursing home admission contracts containing arbitration clauses to include language obligating all parties to first participate in mediation before arbitration. Part I explains the historical background of arbitration, its dense support in both the Indiana and federal court systems, and how it operates within the scope of long- term care facility admissions contracts. Part II addresses both the concerns patients commonly raise regarding mandatory arbitration and the ways the courts respond to those concerns. Part III discusses the Mediation-Arbitration model in detail, focusing on its mechanics and benefits; how it fits within the FAA; other industries’ success in using both it and similar models; and how Indiana can merge such a model into the Hoosier state’s long-term care industry [Read entire Article here].