On September 11, 2014, the Supreme Court of Arkansas (“Arkansas Supreme Court”) issued its opinion in a case where an Arkansas nursing home attempted to enforce the arbitration agreement it placed in the admission documents for a nursing home resident.
The nursing home attempted to compel arbitration of the lawsuit filed against it on August 12, 2013, alleging claims for negligence, medical malpractice, breach of the admission agreement, violations of the Arkansas Long-Term Care Residents’ Right Act, breach of the Medicare/Medicaid provider agreement, and for violating the Arkansas Deceptive Trade Practices Act. The trial court denied the nursing home’s attempt to compel arbitration and the nursing home appealed.
Each of the numerous admission agreements executed by the resident or allegedly signed on her behalf with regard to her many nursing home admissions to the same nursing home contained an agreement to arbitrate claims but excluded from the arbitration requirement “a dispute over billing or collecting for services.” The plaintiff had argued that the exclusion reserved to the nursing home the right to sue its residents in court for the most likely claim it would have against them while exclusively binding its residents to arbitrate any claims that residents might have against it. The nursing home argued that there was mutuality of obligation because a resident, particularly one who pays for services privately, could possibly dispute a charge for services and thus might have a claim for billing.
The Arkansas Supreme Court stated that the issue was whether a valid agreement to arbitrate existed (i.e., whether there has been mutual agreement, with notice as to the terms and subsequent assent). In order for an agreement to arbitrate to be enforceable, there must be (1) competent parties, (2) subject matter, (3) legal consideration, (4) mutual agreement, and (5) mutual obligation. With regard to mutuality of obligation, an obligation must rest on each party to do or permit to be done something in consideration of the act or promise of the other; that is, neither party is bound unless both are bound.
The Arkansas Supreme Court stated that there is no mutuality of obligation where one party uses an arbitration agreement to shield itself from litigation, while reserving to itself the ability to pursue relief through the court system. The Arkansas Supreme Court concluded in the case it was deciding that the nursing home reserved the right to litigate billing or collection disputes, which was the only likely claim it would have against a resident, while strictly limiting residents to arbitration (the nursing home’s argument that private pay residents might have a billing dispute with the nursing home “rings hollow,” particularly where the resident’s bills were being paid by Medicare or Medicaid). Therefore, the Arkansas Supreme Court held that the arbitration agreement lacked mutuality and was unenforceable under the circumstances.
Source Regional Care Of Jacksonville, LLC, d/b/a Woodland Hills Healthcare and Rehabilitation of Jacksonville, et al. v. Shirley Henry, as Special Administrator of the Estate of Lucille Betncourt, Deceased, CV-14-37.
If you or a loved one were injured (or worse) as a result of nursing home negligence, nursing home abuse, or nursing home neglect in Arkansas or in another U.S. state, you should promptly consult with an Arkansas nursing home claim attorney or nursing home claim attorney in your state who may investigate your nursing home negligence claim for you and represent you in a claim against a nursing home, if appropriate.
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