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  >  Elder Law/Long Term Care Planning   >  Binding Arbitration and Admissions Agreements – Part 2

Binding Arbitration and Admissions Agreements – Part 2

In last week’s post I wrote about a New Jersey Appellate Division case that was handed down a couple of weeks ago concerning an arbitration clause in an assisted living facility contract.  I explained that there is a federal law that favors and encourages arbitration but there is also a New Jersey state law that finds arbitration clauses in nursing home and assisted living facility admissions agreements to be void and unenforceable.  

The federal arbitration law preempts – or overrides – state law in cases where the federal law is applicable.  It would seem, in cases involving a prospective resident and a long term care facility, that the federal law would not apply and the state law would take precedence. That is not, however, what the court decided.

Instead, it delved into the circumstances of the signing of the admission agreement.   This part of the decision is instructive.  The decision to place a loved one in a long term care facility is typically followed by much paperwork.  These contracts are necessary so as to give certainty to the rights and obligations of each party.  In every day situations, however, where decisions often must be made quickly, the procedures and formalities of these agreements are sometimes overlooked or not followed exactly as intended.  As a result, problems can arise.

The case in question presented a common set of facts similar to ones we see in our office every day.  The prospective resident was recuperating in a rehab facility while his daughter explored long term care living options.  Once she chose a place she met with the director of the assisted living facility who presented her with the facility’s contract documents including a Responsible Party Agreement, Residence and Service Agreement, and Resident Signature Page.  The Responsible Party Agreement stated the facility’s preference that the resident appoint a power of attorney to serve as responsible party to handle the resident’s assets, sign documents and participate in care decisions.  It also stated that by signing, “the Responsible Party acknowledges that he/she signs in an individual and representative capacity”.  Resident’s daughter and the facility director both signed this agreement.

There was also a separate document, titled “Binding Arbitration Agreement”.  It contained an instruction that the signing party consult with an attorney, family and/or friends before choosing to sign it.  It also contained language in bold type making clear that by signing this document the parties give up any right to have a future claim or dispute decided in a court before either a judge or a jury.  Resident’s daughter and the facility director signed this document.

By signing the Resident Signature Page each signer acknowledged that he/she had received the Residence and Service Agreement and the attachments and understood and voluntarily agreed to each term.  This was the only document signed by the resident himself.  His daughter also signed this document as the Responsible Party.  It provided several boxes from which to identify her role.  These options included “Guardian/Conservator”, “Power of Attorney/Health Care Agent”, “Spouse” and “Other”.  She checked the box for “Other” and wrote “daughter”.  One final box, which was not checked, indicated that the resident and Responsible Party must both sign the arbitration agreement.

These were the relevant facts regarding the contents and signing of the various documents.  Again, they are typical of what we tend to see.  Documents often are not read closely, not signed or dated and/or information not filled in and boxes not checked off.  This leads to questions regarding the validity of the documents and what the parties did or did not agree to.   What legal obligations can they be held to when the formalities of the execution of the written documents are not followed?  I’ll tell you what the court said about that next week.