Power of Attorney Update – Nursing Home Arbitration Agreements

May 3, 2018

If you have an elderly loved one living in a nursing home, then you know just how tough it can be to deal with the paperwork and bureaucracy of nursing home leadership. During the initial admissions process, you are presented with tons of papers to sign, and you are likely hurried through everything in an effort to quickly get your loved one into a room. Many nursing homes treat the admissions process like a used car deal, rushing to get you in while space remains. Sadly, buried in most nursing home contracts today are arbitration clauses. These provisions in the admissions contract say that if something goes wrong, you are prohibited from bringing a lawsuit. Instead, you are required to take your case to a so-called neutral arbitrator.

In recent years, there has been a lot of back and forth litigation on the issue of the enforceability of nursing home arbitration contracts around the country.  If your loved one has been abused or neglected in a nursing home, you deserve the facts. Here’s what you should know about nursing home arbitration agreements in South Carolina.

Federal Law Controls Arbitration Agreements

Under a federal law called the Federal Arbitration Act (FAA), arbitration agreements in private contracts are presumed to be valid. Historically, states would pass laws to protect their citizens from unfair or unethical attempts by large companies to avoid liability. Essentially, an arbitration agreement removes a victim’s constitutional right to bring a lawsuit for injuries. It takes the decision away from the community, away from the jury, and away from the citizens of the state, and instead, it gives the decision to a private company that is often paid by the nursing home.

South Carolina Attempts to Protect Nursing Home Residents

Under a law known as the Adult Healthcare Consent Act, financial and healthcare decisions can be made by surrogates in many situations.  So, an adult child or a nursing home resident with dementia may have the right to make certain decisions, including the signing of contracts and other healthcare documents. However, a 2014 South Carolina Supreme Court decision held that arbitration agreements are neither financial nor healthcare decisions; therefore, surrogates cannot agree to them or waive the resident’s rights under them.

Supreme Court Upholds Arbitration Agreements in Nursing Home Contracts

In a 7-1 decision, the U.S. Supreme Court decided in May of 2017 that a Kentucky nursing home contract was valid, where it included a provision that prevented injured residents from filing suit. The court focused on the fact that the injured resident’s agents under a power of attorney were given the ability to sign contracts. The Kentucky courts had held that the agreements violate public policy in that state. The U.S. Supreme Court, however, held that the FAA preempted state law and states could not interpret contracts in such a way as to treat arbitration agreements differently than other contracts.

Getting a Properly Drafted South Carolina Power of Attorney

If you have a loved one who may be facing nursing home admission, and you know that you will be needing a power of attorney or other estate planning documents, make sure to speak with an attorney who understands how to properly draft a power of attorney for your unique situation. In some cases, we can use specific exclusions to make it impossible for an agent to waive your rights in a nursing home contract. This allows you to have a power of attorney, while protecting long-term rights.

Throughout the Lowcountry, David Aylor Law Offices is here to help you with your long-term estate planning needs, and if you or a loved one are injured by a careless or greedy nursing home corporation, we can assist you in fighting for the justice you deserve. Call or visit us online to learn more.

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