New Jersey Courts Rule on Required Arbitration Agreements for Patients

November 05, 2010

New Jersey nursing home residents and medical patients may see less access to the courts for negligence claims after two recent court decisions.

A recent appellate court decision ruled that residents can be required to arbitrate their claims against a nursing home despite a state law to the contrary. Another case held that, under certain circumstances, doctor-patient arbitration agreements are enforceable.

Federal Law

As early as 1925, Congress began to favor arbitration as an alternative forum to the courtroom for resolving disputes by passing the Federal Arbitration Act (FAA). The FAA requires states to enforce arbitration agreements with the same level of deference given to other types of contracts. The act also preempts inconsistent state law.

The United States Supreme Court has acknowledged the benefits of arbitration. These can include simpler rules of procedure and evidence, the opportunity for more cooperation between parties, and more flexible scheduling. But arbitration can also have drawbacks, such as when the composition of a panel of arbitrators does not seem fair to both parties.

Nursing Home Cases

Far too many nursing homes fail to provide adequate care to their residents. As a result, residents and their families find themselves having to fight back through litigation against nursing home injuries .

To protect residents' right to bring these cases, the New Jersey legislature passed the Nursing Home Responsibilities and Rights of Residents Act in 2003. The law prohibits nursing home facilities from imposing any agreement that requires residents to waive or limit their right to sue the nursing home. Nursing homes cannot enter contracts under which residents waive their right to sue for negligence and agree instead to arbitrate any future claims.

New Jersey Appellate Courts Resolving Apparent Conflict

A New Jersey appellate court recently ruled that despite the state law prohibiting predispute binding arbitration agreements between nursing homes and their residents, agreements to arbitrate medical negligence disputes will be enforced. In Estate of Ruszala v. Brookdale Living Communities, Inc., the court ordered the parties to arbitrate their dispute pursuant to their agreement. The court reasoned that the Federal Arbitration Act preempts New Jersey's Nursing Home Responsibilities and Rights of Residents Act.

In other words, the federal policy in favor of arbitration trumps the state law designed to protect the rights of the elderly and infirm. But the court found the following provisions of the parties' arbitration agreement unconscionable and therefore unenforceable:
- Limitations imposed on discovery
- Limitation of compensatory damages available to resident
- Prohibition against punitive damages

Because of these restrictions, nursing homes do not have a blank check to force residents into arbitration, even after the Ruszala court ruling.

Patient-Physician Predispute Binding Arbitration Agreements

In a subsequent case, Moore v. Woman to Woman Obstetrics & Gynecology, a New Jersey appellate court ruled that arbitration is also a valid forum for resolution of disputes between doctors and their patients. The court found that some patient-physician agreements to arbitrate are enforceable; enforceability will be determined based on whether certain substantive and procedural requirements have been met.

The Moore court found that an expectant mother could bind her unborn child with an agreement to arbitrate the wrongful life claim. In contrast, the father, who was not present in the doctor's office and did not sign the agreement, was not bound to arbitrate and could therefore instead sue the physician in court.

In health care cases, enforcement of agreements to arbitrate depends on the circumstances surrounding execution of the contract. In particular, the question is whether the patient was given adequate notice of the existence of the agreement and also provided a copy of the agreement after signing.

Current Status of Arbitration Agreements With Patients

The New Jersey Appellate Division has changed the way that claims involving medical negligence can be addressed in the state. Hospitals and nursing homes may increasingly try to rely on predispute binding arbitration agreements. Patients must be careful to protect their rights and not allow all disputes to immediately go into arbitration. Victims of nursing home abuse or neglect, or other medical negligence, should contact a skilled attorney to discuss their situation and the appropriate forum for bringing a claim for damages.

Article provided by Kirsch Gartenberg & Howard
Visit us at www.kghlaw.com