Protecting Seniors When Arbitration is Mandatory in Long-Term Care Contracts

Examples of the neglect and abuse uncovered in these homes included the stories of Jean Rudolf and Clarence Yesland, who were eighty-seven and eighty-four years old, respectively.⁴ Jean Rudolph died from an infection caused by seven pressure sores, some of which were so deep that they left bone and muscle exposed.⁵ Doctors revealed that the *214 wounds had gone untreated for weeks.⁶ Clarence Yesland suffered from a broken hip but was unable to communicate his pain due to dementia.⁷ Narcotics prescribed by Clarence’s doctor could have dulled his pain; however, Clarence’s caretaker told members of his family that “the drug would hasten his death.”⁸ Clarence’s caretaker used this lie to cover up her theft of Clarence’s pills in order to sell them to a caregiver with a drug problem at a separate adult home.⁹ Without the investigative work of the Seattle Times, the public would not have learned of the stories of Jean or Clarence, or of the hundreds of deaths that resulted from similar instances of abuse across the state.¹⁰

The public’s ignorance of this abuse is, in part, due to the fact that many of the long-term care (LTC) facilities in Washington have mandatory arbitration agreements in their admission contracts.¹¹ Because arbitration is confidential,¹² if the representatives of neglected seniors wanted to hold these facilities accountable, their stories would be hidden from public view in the arbitration process.¹³

In addition to avoiding reputation-damaging litigation, arbitration agreements offer multiple benefits over litigation for the LTC industry. Consider the example of deceased nursing home patient Henry Woodall. *215 In August 2010, the Washington Court of Appeals informed Henry’s heirs that Henry’s survival claims must be arbitrated under his agreement with the Avalon Care Center in Federal Way.¹⁴ As a result, Henry’s heirs must argue his case in front of an arbitration panel, which will likely be selected by the nursing home,¹⁵ rather than before a judge and jury. When Henry signed the arbitration agreement on the date of his admission, he unknowingly waived his constitutional right to a jury.¹⁶ In addition, Henry signed away his right to appeal the outcome of his case, as an arbitrator’s decision is almost always binding.¹⁷ Moreover, arbitration agreements often have damage caps, and even if they are not capped, the average damage award in arbitrated cases is 35% less than in nonarbitrated cases.¹⁸ While proponents of arbitration agreements argue that arbitration leads to cost-savings and a quicker judgment,¹⁹ the nursing home industry usually realizes these benefits, not the residents and their families.²⁰

Many advocates for LTC patients have argued that Congress should prohibit the use of mandatory arbitration agreements in LTC contracts.²¹ While a bill that addresses this issue, the Arbitration Fairness Act of 2009, has been introduced into Congress, it is unclear if and when a vote will be held.²² In order to address immediate concerns, a few states, such as Illinois and New Jersey, have enacted state legislation prohibiting mandatory arbitration agreements in nursing home contracts.²³ But courts *216 recently struck down both statutes due to incompatibility with the Federal Arbitration Act (FAA).²⁴The FAA preempts any state law that disfavors the enforcement of arbitration agreements.²⁵ But state laws that merely govern the procedures of arbitration are outside the FAA’s preemptive scope.²⁶ Thus, while a similar statute has not been enacted in Washington, courts will likely find that the FAA preempts any statute attempting to prohibit rather than regulate arbitration agreements.

This Comment explores the problems associated with the use of mandatory arbitration agreements in LTC contracts and proposes that Washington legislators regulate arbitration procedures in consumer arbitrations in a manner similar to legislation adopted in California. Part II of this Comment provides a brief history of arbitration agreements in the United States. It also discusses the increasing use of mandatory arbitration agreements in the LTC context. Part III examines the current approaches to challenging mandatory arbitration and ultimately concludes that these approaches are inadequate to address the problems presented by mandatory arbitration agreements in LTC contracts. Part IV proposes a new approach to controlling these agreements in LTC contracts in Washington–regulating the procedures of arbitration by requiring arbitration companies to report information about consumer claims they administer.