Fighting Arbitration Agreements in Nursing Home Cases
Did your loved one unknowingly sign away their right to a trial? Arbitration agreements in nursing home contracts often block families from seeking justice in court. These hidden clauses can make it harder to hold facilities accountable for abuse or neglect. In this week’s episode, nursing home abuse lawyer Rob Schenk welcomes guest Atty. Benjamin Reyes to talk about how to fight arbitration agreements and protect the rights of residents and their families.
Atty. Reyes:
Did they tell you, Hey, you have a right to not sign this thing? The arbitration agreements cannot contain any language that prohibits or discourage the resident or anyone else from communicating with state or federal, local officials. They’re not supposed to tell a resident or their family members, Hey, you have to sign this thing, otherwise you can’t be admitted here, or You can’t stay here.
That’s a no-no. They’re not supposed to do that.
Schenk:
Yeah, there. Welcome back to the Nursing Home Abuse podcast. My name is Rob. I will be your host for this episode this week. We have an excellent topic, something that I can geek out about for a long time, and that is fighting arbitration agreements in nursing home. Cases today, we’re not talking about arbitration in general.
If you wanna know about the arbitration, how arbitration works and why, typically it’s not great for residents. Check the show notes. We have other episodes we’re gonna get on. We’re only talking about legal and policy arguments to fight arbitration and nursing home cases today, but we’re not doing that alone.
We have an excellent attorney. His name is Ben. Reyes, Ben Reyes is gonna be joining us to talk about arbitration agreements today. All right. Before we get into it, we’re gonna do the nursing home regulation question of the week. And I’ve tried to record this about 15 times, so I’m gonna just actually just stick to the script and see if I can put two sentences together.
Schenk:
We’ve got Ben Reyes on the show. Ben is a trial lawyer and a partner at PKSD law, representing victims of serious personal injury and nursing home abuse. Licensed in New Mexico, Wisconsin, Illinois, and Texas. The four timer. He has an extensive experience litigating nursing home arbitration disputes in state and federal courts.
A longtime member of the A J, that’s the American Association of Justice Nursing Home Litigation Group. He is also a graduate of the Jerry Spence Method. He also just recently became the father to a beautiful baby girl who’s five months old. And with that, Ben, welcome to the show.
Atty. Reyes:
Thanks for having me.
I’ve been wanting to have this episode for a long time. I’ve had, I don’t know, a half dozen episodes about arbitration itself and why it is not necessarily a good thing for the consumer or the nursing home resident, but I don’t think I’ve really had an episode that’s hyper-focused on. Policy arguments and legal arguments and how to oppose them how to get people outta these agreements.
For experienced legal representation in nursing home abuse and personal injury cases, visit PKSD Law.
So that’s, I’m super excited about this episode. So we can skip, if anybody doesn’t know what an arbitration agreement is, I’ll link in the show notes and we can point you to the direction of other episodes where we literally talk about arbitration. This, we’re getting in the meat and potatoes now. So Ben, I’m gonna throw it to you.
What are the most effective legal arguments to fight nursing home arbitration agreements?
Schenk:
What is what are some of the things, some of the arguments that you’re making in order to make sure that your clients don’t have to arbitrate their claims against nursing homes?
Atty. Reyes:
Yeah, that’s a good question. So I think the thing that comes up most often for us is the terms of the actual arbitration agreement themselves are usually what we call substantively unconscionable.
That’s a huge issue in that. The people who are drafting these arbitration agreements, they are drafting them to their advantage, to only their advantage of the nursing home. Their corporate folks up high in the chain at maybe a nursing home chain. And they’re trying to make sure that these agreements are as favorable to them as they can possibly be.
And as unfavorable to. Nursing home residents and their families as they can possibly be and as, as much as they can possibly get away with, they will try and do that. That a lot of times in these chain nursing and assisted living facility contracts, that it’s pretty clear that this was somebody out of state who drafted this agreement.
Review the federal regulation that outlines nursing home administrative requirements, specifically 42 CFR § 483.70.
Who was hoping for it to be very broad, was hoping for it to be as enforceable as they possibly can against a family who is looking to, seek justice for their loved one who’s either been severely injured or killed as a result of something that’s happened under the nursing home’s watch.
And at least where I practice primarily is in New Mexico where we are seeing a lot of. A lot of success in attacking these nursing home agreements. Arbitration agreements is in the substantive unconscionability realm, and what that really means is are the terms of the agreement itself so unfair, so unreasonably and unfairly, one-sided in favor of one party.
Such that a court reviewing the language of the agreement can set this aside and say, no we’re not going to enforce this. This is simply as a policy matter. This is not something that we wanna be doing, and therefore we’re not going to enforce this. The family or the resident can proceed with their claims in state court or federal court and wherever that may be.
We’re seeing a lot of a lot of making, a lot of headway with those these days. There, there are some very good procedural unconscionability arguments that can be made. And even within the last two weeks, I’ve had some luck in New Mexico State Court with getting a judge to to, set aside an arbitration agreement based on the findings or fact that we put before him.
What makes an arbitration agreement substantively unconscionable?
Schenk:
Sure. About the circumstances surrounding the execution of this arbitration agreement by the resident herself. So help out a fellow member of the bar that’s not practicing in a state that’s in the ninth circuit.
We typically are not able to successfully make unconscionability arguments. In the south as a whole, but specifically in Georgia. So what are some of the examples that you see in terms of it being the agreement being substantively unconscionable? What are some examples?
Atty. Reyes:
Yeah, so one of the most common examples that we see and this is both in I practice in primarily in two states New Mexico and Wisconsin.
And we see these in both states. We see a lot of provisions in these arbitration agreements that exempt collections or small claims actions that are brought by residents. In other words, the facility is saying if you resident or your family, if you have a beef and we screwed up and we were negligent and we killed your loved one you have to arbitrate that.
You have, there’s no question you have agreed to arbitrate that you don’t get to be in state court. You don’t get to have a jury of your peers, listen to the evidence and render a decision that has to be arbitrated. But if we, the facility have a collection action against you for unpaid bills, or if we wanna get you removed from the facility for that same reason or for any other reason, we don’t have to arbitrate that.
So it, it essentially creates. An avenue for the nursing facility to be able to bring its most likeliest claims. Precludes the resident from bringing the claims they’re most likely to bring because I would be shocked if you’d ever see a nursing home resident bring a small claims action against a nursing facility.
It’s just, I’ve just never heard of it happening in all my years of practicing. That’s one. And within that ev exempt collection exemptions, I also would include eviction actions. I think I mentioned that. Another big issue that we’re seeing recently is does it waive statutory REM remedies that would otherwise be available to the resident or to their family?
In New Mexico, we see that attorney’s fees are allowable under consumer protection statutes if there’s found to be a violation of the Unfair Practices Act. So if there are limitations in the agreement about, you cannot recover attorney’s fees or you can’t recover those in any kind of arbitration that proceeds, that may be unconscionable.
And we’ve had some luck with attacking even delegation clauses on that on that issue alone. For instance, if you. File a lawsuit and the defendants come in into court and they try and file a motion to compel arbitration and they remove the case to federal court. There, there may not be any ability for a plaintiff or resident family member to be able to seek attorney’s fees for that, for even for the process of having to go to a, an arbitrator to get the ruling that.
The arbitration agreement as a whole is unconscionable. I’ve seen some recent case law in, in our state that suggests that in and of itself, excluding attorney’s fees in that scenario, even when the arbitrator is the one who ultimately has to decide if it’s if it’s an enforceable agreement, even those get set aside.
That can be a potential avenue. Another big one is limitation on damages. We’re seeing a lot of agreements that have. Either an express limitation, they, you cannot recover more than, say, 250,000 or $500,000 or any type of damages. That’s one thing we see. But more frequently what we’re seeing is limitations on punitive damages or an outright exclusion for punitive damages.
Understand the enforceability of arbitration clauses in nursing home contracts in Georgia by reading our blog post, Are Arbitration Agreements in Nursing Home Contracts Enforceable in Georgia?.
And at least in New Mexico, that’s a pretty big no-no. Courts don’t look kindly upon that because again, you have a. Generally unsophisticated resident or their family who likely have never been to a nursing home or admitted to a nursing home, gone through the process of getting their loved one admitted, and here you have them signing a piece of paper that says, yeah, not only are you waiving your right to a jury trial, but if we really screw up and we’re reckless.
Or, do something intentional that warrants punitive damages, then you still, you can’t recover those in the arbitration. So that’s one, one way to attack these. In Wisconsin we see a lot of agreements that limit the statute of limitations, date, or shorten the statute of limitations date, which can be particularly, tough for us attorneys coming in after the fact, if a family member hasn’t come in, and spoken to us for a couple months, or sometimes, occasionally we get calls even a year or more after something has happened that can create problems for us. And we’ve had some arguments with statute of limitations shortening I’ve seen.
Schenk:
Go ahead. So thank you for that. And so the, so when you’re. When you’re attacking the arbitration agreement based on unconscionability in New Mexico or Wisconsin that is being heard by the arbitrator or does that, is that kind of an AIO contract formation where the, A judge can hear that. Who, who is deciding whether or not it’s unconscionable?
Atty. Reyes:
Yeah, that’s a good question. So in, in our scenario, what I’m talking about is always the judge. So the ty, the typical way this works is we file suit. The defendants come in within a, the statutory timeframe and they either file an answer or they file a motion to compel arbitration right away.
And then we’re having it out with the judge via motion practice. And a hearing about whether this thing is enforceable in the first place. So these are arguments that can be made to a judge depending on whether the judge is inclined to rule on that based on the delegation clause, which we can talk about later on.
But these are arguments that are being made to a judge. And I think, frankly, you’re better off as an attorney representing victims of nursing home abuse. You’re better off in state court than you are in arbitration. I think we all take that maybe for granted, but that’s who we want to be deciding these issues are.
The state court judges who are. More amenable to the idea. And they know what, they know what’s going on. They know that these poor people are being railroaded by these large nursing home companies that really want to, CYA and so they, the judges are amenable to listening to these arguments in those situations.
So yeah, these are arguments that are being made to a judge initially at the outset of the case before we get into any of the meat of it. So that’s that’s what’s going on.
Explore the current legal landscape and policy debates in our podcast, Federal Rule Against Nursing Home Arbitration on Hold.
How do you challenge delegation clauses in arbitration agreements?
Schenk:
Okay, so tell me then, let’s, that’s a good segue into delegation. What do you mean delegation clauses?
Atty. Reyes:
Yeah, so all nursing home defendants want to put their cases into arbitration.
So that they can delay delay. And as most of the practicing nursing home attorneys who are listening to this know they’ve experienced that firsthand. This, they want to drag it out. They wanna make this take as long as it possibly can. So what are the delegation clause?
It’s a clause that delegates certain issues to an arbitrator. So what you’ll typically see is a provision in the arbitration agreement that says any issues regarding the making the enforcement or defenses to contracting regarding this arbitration agreement should be decided by an arbitrator.
That’s typically the language that we see in these delegation clauses. And so courts generally are, I think you start from the initial premise that courts are to decide. These issues about whether an agreement is enforceable when it’s presented to them in a case like this, unless there is really clear and unmistakable evidence that the parties intended to delegate that threshold issue to an arbitrator.
So fighting those delegation clauses. Is really sometimes it’s the initial battle. It’s the battle before the big battle.
Schenk:
And that’s, and I get is another way of saying that Arbitrability is that, or did I just make that up? That’s it’s No, absolutely. Yeah. Literally who enforces the contract?
Is it the arbitrator or the judge? And I guess, and because I’m not making a lot of these just because of the state that I’m in, not making a lot of unconscionability arguments. All of mine are con, most of mine are contract formation, which Adam Nicio is a court, not an arbitrator. There, it’s is there a contract at all as opposed to what’s the scope of.
The contract that we agree exists. So that’s an interesting thing. Yeah. So you’re fighting sometimes arbitrability. I get it. Okay.
Atty. Reyes:
Yeah. And it’s not just whether it the, not just whether the so I think of traditional arbitrability as well, is this the type of claim that falls within the arbitration agreement scope, and generally any kind of negligence or recklessness claim or injury claim or wrongful death claim.
Is going to fall within that. It’s, it is an arbitrable claim under that agreement. This is more, the making the enforceability defenses to contracting that, that if you’re lucky enough to have a judge here. These are the arguments that, that we can then make. Yeah.
And we find that the current case law requires really some kind of attack on the delegation clause. Usually, at least in, in New Mexico. The case law is always changing, but we’re finding that, there has to be an attack. That’s specific to the delegation clause itself, or you can challenge the whole agreement, but it has to, the challenge that you’re making to the agreement also has to apply to the delegation clause.
It, it can get very complex when you’re dealing with the delegation clause and it doesn’t make any sense in some ways because you’re. Sometimes you’re having a court decide that the arbitrator is the one who has to decide whether this thing is enforceable, even though there might be very clear language or evidence in the contract that shows that this thing is unenforceable under existing law, under existing precedent.
Learn how the U.S. Supreme Court has impacted state-level authority over nursing home arbitration rules in our episode, Supreme Court Prevents State Courts from Making Exceptions for Nursing Home Arbitration.
It just seems so such a such a waste of time to me to be having a court say this is, the arbitrator has to decide this, and of course the arbitrator has. Some incentive to decide that the arbitration agreement is enforceable so that the arbitrators can then hear the case, they’re, they are getting paid, they’re getting paid for their time, which is a another issue that, you don’t have in state court.
There’s always the delegation clause issue that, that requires at least some initial research to see, what does it say in your state about does the delegation clause have to be challenged directly? What is the status of the case law on that issue?
Schenk:
Speaking of complexity, there is, now, I say now in the last five years or so, five or six years, I guess now nowadays specifically dealing with the scope of arbitration agreements and how the arbitration agreements are brought to the residents.
How do federal nursing home regulations impact arbitration agreement enforcement?
Schenk:
Under the federal, under federal regs. Tell me about your experience in using the arbitration the federal regulations regarding arbitration in trying to defeat enforcement of arbitration agreements.
Atty. Reyes:
Sure. So there are a couple of regs that are on point that speak to this issue of arbitration agreements because obviously the federal government has realized that this is an issue and CMS, the Centers for Medicaid.
Medicare and Medicaid services understands that’s an issue. So there is there are provisions in the administrative code, the federal code of federal regulations at 42 CFR 4 83 70 that speak to arbitration agreements and how they have to go about. Obtaining a resident’s consent for that. Now, I will say this at the outset, so this, these provisions don’t allow us to go into court and say if they violated this provision, then this thing is per se unenforceable or, a court and not enforce that.
What they do for us, however, are provide us some ammunition. If they look, judge, there are federal regulations that are on point that a nursing home must comply with in order to have. A resident sign, an enforceable arbitration agreement. And for instance, some of the requirements they have in place are a nursing home must not require a resident or her representative to sign an agreement for binding arbitration as a condition of admission.
So they’re not supposed to tell a resident or their family members, Hey, you have to sign this thing, otherwise you can’t be admitted here, or you can’t stay here. That’s a no-no. They’re not supposed to do that. They also must explicitly inform the resident or the representative of their right not to sign the arbitration agreement.
Dive into the issues surrounding nursing home arbitration clauses and how they affect residents’ rights.
Okay, so that’s some something that we dig into with our clients when we have the initial meeting with them about the arbitration agreement is, tell me about the circumstances of it. Did they tell you, Hey, you have a right to, to not sign this thing? Or did they simply, slide it in there in an AE page stack of documents with everything else that say, sign here, and here.
Another requirement is that they have to show that the agreement was explained to the resident or the representative. They also have to acknowledge that the resident understands the agreement for binding arbitration. They have to provide for the selection of a neutral arbitrator agreed upon by both parties and the selection of venue that is convenient to both parties.
They must explicitly grant the resident the right to rescind the agreement within 30 calendar days of signing it. They must also the arbitration agreements cannot contain any language that prohibits or discourage the resident or anyone else from communicating with state or federal, local officials.
In other words, they cannot say, put anything in the arbitration agreement that prevents the family from reporting a violation of the regulations to state or federal authorities. In, in pretty much every state that we practice in, there’s some kind of overseeing state authority here that.
He’s responsible for regulating nursing facilities and regulating citations and issuing citations and things of that nature. So they cannot prohibit that in an arbitration agreement. So these are regulations that the facility could be cited for violating during a survey, which I think most of your listeners probably understand the survey process.
But it does not create these provisions in the federal code do not create a private right of action if the facility violates this. But they can be very powerful in demonstrating to a court that the circumstances of execution demonstrate that the, that this was procedurally unconscionable.
Schenk:
I wanna make sure that I’ve digested this. So we have a certain amount of requirements. The person has to be explained, it has to be explicit. It can’t be buried under subparagraph 7,041 or whatever et cetera, et cetera. The ramifications. Of not following these regulations as that the nursing home can be cited.
It has nothing to do with the, with whether or not it’s a valid arbitration agreement, but you’re telling the judge, look, judge, just as, just the same as the nursing home has to do a care plan within a certain amount of days or assess the resident within a certain amount of days or it gets cited.
Not saying that’s the standard of care. But it’s just the same, it’s just as important. And that is working in terms of arguments with judges in New Mexico.
Atty. Reyes:
Absolutely. I think it almost to, to put it in Yes. What you just said is absolutely correct. And I think the way to think of it is it almost creates if you look at that provision it almost creates a roadmap for arguing procedural incons, because the, some of the factors that.
If you look at most state law on procedural unconscionability, it almost tracks exactly the elements that courts look at to determine if something’s procedurally unconscionable. And this comes up a lot in the consumer context where people are buying a product or, purchasing a service or something along those lines.
Where a court is looking at it after the fact and saying let this explain what what are the circumstances leading up to the signing of this. You’re correct in your statement. It’s something the facility must do, but it’s not necessarily going to be the kill shot, so to speak, for for the arbitration agreement for us plaintiff lawyers.
Hear more about arbitration clauses in nursing home contracts and what they mean for families in our episode, Nursing Home Arbitration Agreements.
How can violations of CMS arbitration regulations support procedural unconscionability arguments?
Schenk:
I, I think it’s some it’s it, I’m a little slow on the uptick, but I think it’s coming to me. So it’s not necessarily, you’re not arguing a motion like, Hey, they violated these regs and therefore x It’s the violation of those regs is a part of your unconscionability argument. Okay.
I get it now. Correct. That makes sense. Okay. So that requires then that when you go in front of the judge with your response to their motion to compel. You are asking for a limited amount of time to conduct discovery limited to the arbitration, and then you’re deposing whoever the admission person is.
Hey, do you normally do X or what is arbitration or et cetera. Can you walk me generally through your, who are you deposing, what are you wanting to know to, to put into your, your ultimately your response motion.
Atty. Reyes:
Yeah, you’re absolutely right. So we in, in pretty much every single case we have involving an arbitration agreement, we are asking to conduct some initial discovery or asking for a stay of the case in some fashion or another in order to conduct some discovery.
And so what we generally do is we’ll conduct some written discovery, asking for policies and procedures about the process of having the facility get the resident to sign the agreement. Some facilities will have explicit. Language that they give to an admissions person or to a marketing coordinator whoever’s responsible for getting pen to paper from that resident so that they can get heads in the beds.
Whoever that person is, we wanna know how have they been informed about going about this process of getting a signature on an arbitration agreement. So it starts with that, usually some basic written discovery, but then it also involves sitting down and taking depositions of these individuals usually of.
The person, whoever signs on behalf of the facility. So we wanna identify that from the get go, usually in the written discovery or simply from, con conversing with the defense attorney on the case. And then we wanna sit down and take that person’s deposition. And those depositions can be extremely interesting and fun because a lot of times, and I’ve learned this from other folks who are involved with, nursing home litigation from the nursing home litigation group that, you oftentimes find that these folks, they don’t really understand what they’re asking these residents to sign that they’re told, Hey, you gotta get these admissions done get these all done today, get this paperwork signed.
Get ’em in there. Get ’em in there, heads in the beds. That’s the idea. And we’re talking to these folks and asking them, tell me about what you recall about, meeting my client and going through this process of getting him or her to sign the arbitration agreement. And very often they have no recollection of it.
And if they do, they claim to, usually they’re usually. Not telling the complete truth. I will say because you, what is that they have so many residents and they’re asking all of these residents to sign these arbitration agreements. And you’re talking about a, a hundred or 120 bed facility.
That’s a, that’s thousands and thousands of arbitration agreements that, that these admissions people have gone through. And so they have, they generally have a procedure that they will go through and they will recall some of that. They won’t have a recollection, generally of your client. Just based on the number, the volume that they go through.
But oftentimes you, you realize that, that they are not capable of explaining the ins and outs of the arbitration agreement themself to a resident because they don’t understand them. So that can be very critical in establishing that, for instance, going back to these federal regulations we talked about, that can be critical in establishing that those weren’t followed that it wasn’t explained.
That they didn’t tell the person, Hey, you have the right to have this reviewed by a lawyer before signing it. Hey, you don’t have to sign this as a condition of admission. More often than not, what we hear from our clients is that we’re told, sign here.
And they went through it very quickly as anybody who’s ever, purchased a home or made some kind of a large contractual purchase. They can tell you, it’s, go through the paperwork and get it done. And that’s how this goes down. So yeah we’re almost always deposing the person who’s signed the admission agreement on behalf of the facility so that we can establish a, that they likely have no recollection of this person.
Listen to the very first episode of our podcast discussing nursing home arbitration and new CMS rules to understand the history and future of arbitration regulation in long-term care.
So they, they’re not gonna be able to come into court. Say otherwise say, oh, I remember specifically, I sat down with Mrs. Smith. On March 7th, 2025, and we spoke for an hour, and I explained this to her you, we wanna box that out, but we also wanna establish that they really don’t take the time to explain this, and that the residents don’t understand what they’re signing.
So that’s, that all goes to the procedural unconscionability.
Schenk:
I recently was successful in fighting a motion to compel arbitration, and it was I, it was almost a 100 page admission agreement. Electronically signed, quote unquote, and you, and the, whatever you call the certification that has the time.
Things like that. It tells you how long the document was opened before it was signed, and it was like 60 seconds, but there was like 15 places to initial. So if you did the math, it was like the person was ing something every three seconds or there’s no way that anybody could have comprehended anything in the documents.
So voluminous in that certificate. They gave it to us. That’s it. That’s when they opened it and when they signed it, et cetera, their IP address. You’re right. Heads and beds. That’s a lot of times what it’s all about. Ben, we didn’t, this is, I can geek out on this stuff all day.
We didn’t even get to capacity or authority. We’ll have to have you on it at some other time to talk about those as defenses to to arbitration agreements. But we’ve been going for a while now. But I really, first of all. I appreciate you coming on the show, but also congratulations. I understand that you had a baby girl.
Atty. Reyes:
I did. She’s five months as of three days ago, and she’s, he healthy and happy and it’s been a huge blessing. So thank you so much. Congratulations,
Schenk:
Man. It’s awesome. Is this your first kid?
Atty. Reyes:
It’s our first kid, so we’re learning as we go. And it’s been so fun and scary at times, but I wouldn’t trade it for anything.
Schenk:
Amazing man. Enjoy the sleep of the night. It’s gonna, it’s gonna last for a little while longer, for sure. Yeah. Thank you so much folks. I hope you found that this episode, educational and entertaining. If you have an idea for a topic that you would like for me to cover, please let me know. If you have an idea for a guest that you would like for me to speak to, let me know that as well.
New episodes of the Nursing Home Abuse podcast. For the time being come out every week on Mondays. Make sure that you visit, YouTube or the website, and you can see, I think this might be the 240 something episodes, so we got a bunch of stuff. So if you enjoy this episode and you wanna learn more, go and check out the back catalog.
It’s growing and growing every week, but I guess that’s, is that it? Yeah, I think that’s about it. All right, everybody with that? We’ll see you next time.
Atty. Benjamin Reyes’ Contact Information: