Nursing home arbitration hearings draw courts’ scrutiny
CHARLESTON, W.Va. - A full-on cat-and-mouse game has broken out between the West Virginia Supreme Court, the U.S. Supreme Court and nursing home companies trying to get people to appear before private judges.
The state's high court is obviously dubious of an emerging and parallel system of justice in America: arbitration hearings.
An increasing number of contracts come with arbitration agreements.
People who sign these agreements - often without knowing they are doing so - are giving away their right to jury trials. Instead, they agree to leave things in the hands of private arbitration judges.
Supporters say arbitration is a way to avoid long and costly trials in clogged public courts. Critics argue the private judges are beholden to the companies that give the private judges their business.
The state Supreme Court has sided, rather notably, with the critics.
In summer 2011, the court said personal injury and wrongful death claims on behalf of nursing home residents belong in normal courtrooms - not in front of private judges.
That opinion, written by Justice Menis Ketchum, was clear: "Disputes should be decided by juries of lay citizens rather than paid, professional fact finders who may be more interested in their fees."
The ruling would have exposed nursing homes to greater liabilities.
But it was - in the eyes of the U.S. Supreme Court - absolutely wrong.
The nation's high court said in early 2012 that Ketchum's ruling was "incorrect and inconsistent" with federal law.
So, the state Supreme Court had to back away. Nursing homes could keep sending claims against them to private judges.
But the state Supreme Court last week found a new way to ensure some bereaved family members can sue nursing homes in normal courtrooms with jury trials.
The ruling, a unanimous decision written by Justice Robin Daivs, has the effect of exposing nursing homes to greater liability - something the industry fears in the wake of large verdicts against nursing homes accused of mistreating or neglecting the elderly and gravely ill.
The court's most recent ruling said some people who check their relatives into nursing homes couldn't sign away a resident's right to a jury trial. This means an untold number of arbitration agreements are unenforceable unless the person going into the nursing home signs them.
It is not uncommon for people going into nursing homes to be unable to sign the paperwork, though there is apparently no good information on how many people do not sign their own paperwork in West Virginia.
In 2009, Nancy Belcher checked her mother, Beulah Wyatt, into McDowell Nursing & Rehabilitation Center in Gary, a town in McDowell County.
Belcher was designated as her incapacitated mother's "health care surrogate," a legal title that allowed Belcher to make decisions about her mother's health. Belcher signed a contract that agreed any claims against the nursing home would be settled by a private arbitration judge.
Wyatt allegedly sustained pressure sores, infections, dehydration, malnutrition and other injuries while she was at McDowell, which is owned by American Medical Facilities Management, or AMFM.
After Wyatt died in summer 2010, another daughter sued AMFM.
AMFM said the case did not belong in court because of the arbitration agreement.
Kanawha County Circuit Judge Charlie King said the arbitration agreement was not valid because Belcher had only the power to make medical decisions. King ruled that Belcher could not sign away her mother or the estate's constitutional right to a jury trial.
The West Virginia Supreme Court agreed with King after AMFM appealed his ruling.
The state's high court said state law "succinctly and specifically limited" Belcher's ability to sign contracts on behalf of her mother. She could only make medical decisions. Because of that, any non-medical decision she made for her mother was not legally enforceable, including the arbitration agreement.
The ruling invalidates an unknown number of existing arbitration agreements and provides a legal opening to an unknown number of lawsuits against nursing homes that are signed by relatives of residents rather than residents themselves.
Experts, including the head of the state nursing home industry's trade group, could not predict the ruling's ramifications.
Mark Robinson, an attorney in the case for AMFM, said there would be an effect.
"It will affect a certain percentage - maybe 10 percent, 25 percent, maybe more - it's hard to tell," said Robinson, a lawyer at Flaherty Sensabaugh Bonasso in Charleston.
The ruling itself is rather narrow. It invalidates arbitration agreements signed by people with "medical powers of attorney" or designated as "health care surrogates" to make decisions on behalf of someone else. These people can make only medical decisions.
It does not necessarily apply in cases where a nursing home resident has given someone else "durable power of attorney" - a legal designation that is broader than "medical power of attorney."
Nor does the ruling end the arbitration battles.
Even if a nursing home gets the incoming patient to sign an arbitration agreement, the nursing home could still face a lawsuit in court.
Christopher Regan, an attorney at the Bordas & Bordas law firm in Wheeling, argues relatives can still sue a nursing home even if the resident signed an arbitration agreement. That's because the relatives have a separate claim, Regan said.
"If the person who dies is the one who signed the arbitration agreement, they - by definitions - are not the one who has the claim," he said.
Robinson disagrees with Regan's position but said state courts will have to sort out who is right.
"The issue regarding arbitration agreements is going to be an ongoing issue for some time to come in the nursing home context," he said.