On Thursday, September 22, 2016, the Supreme Court of Florida ruled a nursing home arbitration contract was unenforceable.  In the underlying suit, Juan Mendez Sr. and his son sued Hampton Court Nursing Center in Miami after he developed an eye infection that ultimately required the removal of his eye.  The nursing home argued that Mr. Mendez could not have his day in court but that his claim was governed by the arbitration agreement included in his admission contract.  However, Mr. Mendez’s son, not Mr. Mendez, signed the admission contract with the nursing home and the Florida Supreme Court found no evidence that Mr. Mendez authorized him to do so.  Therefore, the Court held the arbitration agreement unenforceable under the contract law doctrine that a person who did not sign a contract may enforce the contract but they can’t be forced to comply with an agreement they never signed.

The arbitration process removes an individual’s right to have their case heard by a judge and jury, and instead moves disputes to private arbitration firms, typically hired by the company accused of wrongdoing.  Critics of arbitration have argued that arbitration firms usually resolve disputes in a way that benefits the defendant company in order to secure future business.  In the nursing home context where an elderly plaintiff can be even more disadvantaged by an imbalance in resources and lack of available alternatives, such mandatory arbitration agreements can be even more troubling.

This Florida contract law ruling has particular applicability in the nursing home and healthcare context as arbitration agreements with nursing homes have been under recent scrutiny.  The Center for Medicare and Medicaid (CMS), the federal agency that administers the programs, proposed a rule in 2015 that would ban nursing homes from requiring residents to sign binding arbitration agreements.

The proposed rule was met with strong opposition from nursing homes and long-term care industry groups.  After an extensive comment and revision period, the CMS final rule is currently being reviewed by the Office of Management and Budget, but has yet to officially go into effect.  Consumer advocacy groups and attorneys around the country say the current law does not do enough to protect nursing home patients and their families from forced arbitration.  The current version of the proposed rule allows nursing home facilities to include mandatory arbitration clauses as long as the facility makes certain disclosures.  For example, the facility must explain the agreements and the residents — who at the time are being admitted into a nursing home — must acknowledge they understand the often complex arbitration agreements.