9 tips for effective arbitration agreements

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Educate employees in the admissions office about the agreement so that they can explain the concept of arbitration and the specific agreement to residents.
Educate employees in the admissions office about the agreement so that they can explain the concept of arbitration and the specific agreement to residents.

Despite the bad reputation that pre-dispute arbitration agreements can have among members of the general public, the agreements offer benefits to senior living residents and their families as well as to operators, said panelists participating in a May 2 educational session on the topic at the Argentum Senior Living Executive Conference in Nashville, TN.

The agreements have been in the spotlight for the past several months after the Centers for Medicare & Medicaid Services banned them in nursing homes in October; senior living providers at the time expressed concern that states would follow the lead of the federal government and ban them in assisted living communities, too. A federal judge granted an injunction in November, however, putting the ban on hold, and the Trump administration appears ready to reverse the ban.

The agreements may be viewed negatively because plaintiffs' attorneys are better than defense attorneys at “messaging,” said the panel's moderator, Christy Crider, long-term care group leader for law firm Baker Donelson. Many plaintiffs' attorneys work on contingency, meaning they get paid if they win and could get paid more if a trial results in a large settlement, noted Bryan Hudson, executive vice president, general counsel and secretary for Atria Senior Living.

Despite their reputation, however, Crider said, the agreements can help ensure privacy and dignity for residents and family members, because reporters and members of the general public won't have access to photos showing the effects of incontinence, wounds and other issues. Also, she said, residents and families may prefer the informality of arbitration hearings, which can be scheduled according to their availability rather than a court judge's schedule. And, Crider added, residents and families may appreciate the fact that arbitration hearings typically lead to closure sooner than trials, which with appeals can last for years. Decisions of arbitrators usually are made more quickly and are final.

“Operationally, our folks, understandably, don't want the arbitration agreement to be a bar to bringing somebody into our community,” said Katie Potter, vice president and general counsel for Five Star Senior Living. “It comes back to why explaining the benefits for both sides, despite the stigma that arbitration is only good for the big, bad companies, why it's good for both sides, is incredibly important in that process.”

She and the other panelists shared these nine points for operators seeking to maximize the effective use of such agreements in senior living:

  1. Hire an attorney to learn things particular to your jurisdiction(s), suggested Brian Danaher, deputy general counsel of Benchmark Senior Living.
  2. A benefit of having an arbitration agreement that is separate from the resident agreement, several of the panelists said, is that it may be more enforceable because it lessens the chance that prospective residents or their representatives can claim that they weren't aware of what they were signing.
  3. Similarly, making signing the agreement voluntary rather than mandatory may mean that the agreement is more enforceable, several speakers said. Mandatory agreements do exist, however. New Perspective Senior Living's arbitration agreement for residents is a required part of the move-in process, said Lore Brownson, senior vice president of resident care programs and chief compliance officer. Potter said that Five Star Senior Living's arbitration agreement is mandatory for independent living residents. Five Star also requires that employees sign an arbitration agreement as a condition of employment, Potter mentioned. (Note that some states forbid mandatory arbitration agreements.)
  4. In some states, it may make sense to mandate signing an agreement, Crider said. In Mississippi, for instance, she said, if the agreement isn't mandatory, then a healthcare power of attorney can't sign it. Crider said she also might recommend mandatory agreements to operators in Kentucky, because many providers in that state are on the verge of bankruptcy due to litigation. (Again, operators should consult attorneys for legal advice specific to their situations.)
  5. Educate employees in the admissions office about the agreement so that they can explain the concept of arbitration and the specific agreement to residents. Periodically check resident files to ensure that admissions employees are discussing the agreement with residents as they move in.
  6. A multistate provider should draft a single agreement that is enforceable in all of the states in which it operates, Potter recommended.
  7. Even if allowed by the state, don't include a cap on damages in an agreement, Crider suggested. “You want your lawyer to be able to stand before a judge, when the family is later objecting to the arbitration agreement, and say, ‘Your honor, all we're doing is changing the venue where this dispute is going to be resolved,” she said.
  8. If the title of the arbitration agreement includes a word such as “optional” or “voluntary” to indicate that signing the agreement is optional or voluntary, then make sure that text in the body of the document states that once the agreement is signed, arbitration is not optional, Crider recommended.
  9. Be sure to have any resident powers of attorney sign the arbitration agreement, too. Crider also recommended that anyone accompanying the resident during the admissions process should be asked to sign the agreement.
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