Nursing Home Arbitration Agreement Lawsuits: Can You Still Sue?

Nursing Home Arbitration Agreement Lawsuits

Most nursing home admission packets include an arbitration agreement.

Most of them are signed under stress, often by an adult child or a spouse holding a power of attorney, in the middle of a difficult move-in. By the time something goes wrong (a Stage IV pressure ulcer, a fatal fall, a sepsis death), the family is told the case has to go to arbitration, not to court, and that the damages are capped or limited by the agreement.

That is not always true. Many nursing home arbitration agreements are unenforceable for specific, well-established legal reasons.

 

A facility that hands an arbitration packet to a grieving spouse at admission and then waves the same paperwork at the family after a wrongful death is counting on the family not knowing the agreement may not hold up.

Lawsuit Legal's nursing home attorneys evaluate every arbitration agreement before accepting the carrier's "this is arbitration only" framing. Power of attorney defects, lack of capacity, unconscionability, and the wrongful death exception keep many of these cases in court.

 

Call (888) 713-6653 for a free arbitration agreement review, or fill out the form to send the admission paperwork and the facts of your case.

 

Can You Still Sue If You Signed a Nursing Home Arbitration Agreement?

In many cases, yes. An arbitration agreement is one document among many in an admission packet, and its enforceability turns on the law of the state where the facility sits, the federal framework, the authority of whoever signed, and the resident's capacity at the time. None of those questions are answered by reading the agreement itself.

The short answer is: do not assume the agreement controls until a nursing home attorney has reviewed it against the specific facts of your case.

What a Nursing Home Arbitration Clause Actually Is

An arbitration agreement is a contract requiring disputes to be resolved by a private arbitrator instead of a judge and jury in civil court. Pre-dispute clauses (signed at admission, before any injury has occurred) are the form facilities use to keep negligence and wrongful death claims out of public courtrooms. Most are drafted by the facility's defense counsel, designate the facility's preferred arbitration provider (often AAA or JAMS), and shift fees, discovery rules, and damage caps in ways that favor the facility.

The Federal Arbitration Act and What It Means for Your Case

The Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq., establishes a federal policy favoring arbitration. The Supreme Court has applied the FAA broadly to nursing home arbitration agreements in cases like Marmet Health Care Center v. Brown (2012) and Kindred Nursing Centers v. Clark (2017), striking down state rules that singled out arbitration for special disfavor.

The FAA does not, however, make every arbitration agreement enforceable. State-law contract defenses (lack of authority, lack of capacity, unconscionability, fraud) apply to arbitration agreements the same way they apply to any other contract. The FAA preempts state rules that target arbitration specifically; it does not preempt general contract law.

CMS Rules on Nursing Home Arbitration Agreements

The Centers for Medicare and Medicaid Services regulates pre-dispute arbitration in long-term care facilities under 42 CFR § 483.70(n). The current rule (revised in 2019 after a 2016 ban was challenged) permits pre-dispute arbitration agreements but imposes specific requirements:

• The facility cannot require arbitration as a condition of admission or as a condition of continued care
• The agreement must be explained in a form and manner the resident understands
• The resident must acknowledge understanding
• The agreement must not contain language prohibiting communication with federal, state, or local officials
• The resident must have the right to rescind within 30 days of signing
• The agreement must be retained for 5 years and made available for inspection

A facility that violated any of these requirements during the admission process gives the family a federal regulatory defense to enforcement, independent of state-law challenges.

 

 

Common Ways to Challenge a Nursing Home Arbitration Provision

Most successful challenges to nursing home arbitration agreements fall into a handful of recurring categories. Each requires a specific factual showing built from the admission paperwork, the resident's medical records, the power of attorney instrument, and the facility's compliance with CMS rules.

Lack of Power of Attorney Authority:

• Most powers of attorney grant general financial or healthcare authority but do not grant specific authority to bind the principal to arbitration
• Courts in many states require explicit arbitration-binding language in the POA itself
• Kindred Nursing Centers v. Clark requires equal treatment of arbitration, but does not eliminate the underlying authority requirement
• An adult child holding a healthcare POA who signs admission paperwork including arbitration may have exceeded the scope of the POA

Resident Incapacity at Signing:

• A resident with documented dementia, delirium, or cognitive impairment at admission may have lacked the mental capacity required for a binding contract
• The admission medical record (MDS cognitive function score, attending physician notes, hospital discharge summary) establishes capacity at the time
• If the resident lacked capacity and a surrogate without specific arbitration authority signed, the agreement fails on two grounds at once
• This challenge is particularly strong where the resident was transferred from a hospital under sedation, in delirium, or shortly after major surgery

Unconscionability:

• Procedural unconscionability: the agreement was buried in a stack of admission paperwork, presented as routine, or signed under time pressure with no opportunity to consult counsel
• Substantive unconscionability: the agreement imposes one-sided terms (damage caps, fee-shifting, discovery limits, forum selection) that no informed party would accept
• Many states require both procedural and substantive unconscionability; some require only one
• Adhesion-contract doctrine applies to most nursing home arbitration packets, which are non-negotiable and presented on a take-it-or-leave-it basis

The Wrongful Death Exception:

• In many states, a wrongful death claim belongs to the surviving family, not to the deceased resident
• An arbitration agreement signed by the resident or the resident's POA does not bind the family's separate wrongful death claim in those states
• States like Florida, Pennsylvania, Ohio, and Kentucky have well-developed case law holding wrongful death claims survive arbitration agreements
• Other states (California is the leading example) treat wrongful death as derivative of the decedent's claim and may enforce arbitration; the rule varies by jurisdiction
• This is often the strongest path in a fatal-injury case: pursue the wrongful death claim in court even if a survival action remains subject to arbitration

CMS Rule Violations:

• The facility made arbitration a condition of admission (prohibited under 42 CFR § 483.70(n))
• The agreement was not explained in a form and manner the resident understood
• The resident was not provided the 30-day rescission right
• The agreement included language prohibiting communication with regulators or law enforcement
• The facility cannot produce the original signed agreement after the required 5-year retention period

Mutual Assent and Fraud:

• The signer was misled about what the agreement did (told it was "just paperwork" or "required for Medicaid")
• Material terms were not disclosed (damage caps, fee provisions, identity of the arbitrator)
• The signature page was separated from the agreement at signing
• The signature is forged or applied to a document the signer never read

An arbitration challenge is often pursued as a motion to deny arbitration after the facility moves to compel. The motion is litigated like any other contract defense, with discovery, fact testimony from the family, expert opinion on capacity if relevant, and briefing on the controlling state law.