Updated July 2025

If your loved one dies as a result of nursing home negligence, can you take the home to court even if someone signed an arbitration clause in admittance paperwork?

The answer is “it depends.”

Why Arbitration Clauses?

An arbitration clause in a nursing home contract means if the person admitted to the nursing home dies or is injured — whether because of an accident, negligence, or gross incompetence — the victim or his or her heirs can’t take the nursing home to court. They must resolve the dispute with an arbitrator — someone who acts like a “private judge.”

Nursing homes increasingly are putting arbitration clauses into the admissions paperwork. The reason is straightforward: they want to keep cases of elder abuse out of court, where there will lead to high legal bills and, with a jury, a chance of a big award. It is also more likely that they will get completely off the hook with an arbitrator than with a jury.

Since court cases are public and arbitrations private, nursing homes also want to avoid having their dirty laundry aired in public.

Court versus Arbitration

A report from AON Risk Solutions provides interesting statistics on why nursing homes like arbitration clauses:

• Average cost per dispute is $180,000 in arbitration versus $194,000 without arbitration.
• Nursing homes get off scot-free more often with arbitration: 27% of the time versus only 20% of the time without arbitration.
• In court, nursing homes are twice as likely to be hit with a big judgement — over $1 million. The rate is 1.9% without arbitration versus only .8% with arbitration.

Is the Arbitration Clause Enforceable?

As general rule, arbitration clauses ARE enforceable. However, there are situations where the validity of arbitration clauses has been successfully challenged.

In a 2012 case in Dennis, Massachusetts, Paul Ormond successfully got an arbitration clause overturned because the judge found it to be “unconscionable,” which is to say unfair.

Ormond had checked his friend, John Mitchell, for whom he was legal guardian, into a nursing home. Staff at the nursing home dropped Mitchell while using a lift device. The nursing home originally called an ambulance, but cancelled it because Mitchell’s vital signs had stabilized. He was found unresponsive later that night and was rushed to a hospital, where doctors found he had extensive bleeding in his brain. He passed away after a few days.

Ormond didn’t even know that an arbitration agreement was part of the pile of documents he’d signed. He felt he’d been deceived. The judge agreed — he said it was too much to expect that Ormond would have been able to digest all of that information, and the arbitration clause had not been explained to him.

In a more recent case, 100-year-old Elizabeth Barrow was murdered by her nursing home roommate. The roommate had a history of dementia and a note in her file said she was “at risk to harm herself or others.” Barrow’s son Scott felt the nursing home was negligent in allowing that woman to live with his mother. When Barrow signed the contract on behalf of his mother, he signed the paperwork — which included an arbitration clause.

Barrow tried arbitration, but lost. He suspected bias as the arbitrator got a lot of business from the nursing home chain. He filed suit, arguing that even though his mother had signed him as a “health care proxy,” that proxy didn’t give him power to bind his mother to arbitration. The judge ruled in his favor, and allowed him to sue the nursing home.

Unfortunately, successful challenges to arbitration clauses have become increasingly rare. Precedent from the Supreme Court and lower federal courts has made it very difficult to prove that an arbitration agreement is so unconscionable that a court is not required to enforce it. State court efforts to nullify arbitration agreements are usually found to be preempted by the Federal Arbitration Act as interpreted by federal courts.

Attempts at Reform

In 2016, the Centers for Medicare & Medicaid Services (CMS) created a rule that prohibited nursing homes from entering into arbitration agreements with patients. A federal court blocked that rule with a nationwide injunction after deciding that CMS had no authority to implement the reform.

In 2017, the incoming administration favored arbitration as a pro-business policy. Accordingly, CMS proposed and later adopted a rule that permitted nursing homes to enter into binding arbitration agreements with their residents.

The new rule nevertheless continued a provision in the earlier rule that prohibited nursing homes from requiring patients to agree to arbitration as a condition of admission to the facility. Under current law, patients can agree to arbitrate disputes with the facility but cannot be forced to do so.

The rule also requires facilities to inform residents or their representatives of the right not to sign an arbitration agreement. Recognizing that nursing home admission is a stressful time to make decisions, the rule also gives residents a 30-day window to rescind their arbitration agreement after signing a contract providing for their admission to the facility.

In response to the 2016 court decision that enjoined the CMS rule prohibiting nursing homes from entering into binding arbitration agreements with patients, legislation has regularly been introduced that would prohibit nursing homes and other long-term care facilities from making arbitration agreements with patients. None of those bills have been enacted.

Avoiding Arbitration Clauses

In many cases, the arbitration clause is not a mandatory part of a nursing home contract. All you have to do is ask the nursing home to take it out, and in many cases they will agree. If they don’t agree, you might want to think twice about whether you want to give away the important right to have your day in court in order to allow someone to live in a particular nursing home.

(This article has been reviewed July 2025 since it was originally published March 2016.)