Arbitration Clauses in Nursing Home Contracts: Can You Fight Them in 2025?

The Small Print That Could Change Everything About Your Case

When a family member is being admitted to a nursing home — often under urgent, stressful circumstances — the admissions paperwork is thick and the explanations are rushed. Buried in the stack is frequently an arbitration agreement: a contract requiring the resident and their family to resolve any future disputes — including claims of abuse, neglect, or wrongful death — through private arbitration rather than a jury trial.

These clauses are enormously consequential. Arbitration cases are heard by a private arbitrator (often one with industry ties), not a jury. Discovery is limited. Awards are typically lower than jury verdicts. The process is confidential, preventing victims from knowing that the same facility harmed others before them.

Understanding your rights with respect to nursing home arbitration agreements is critical before a claim arises.

The Regulatory History: CMS Attempted to Ban These Clauses

The Centers for Medicare and Medicaid Services attempted twice to ban pre-dispute arbitration agreements in nursing homes receiving Medicare and Medicaid funding. The 2016 rule was blocked by federal courts at the industry's urging. A 2019 rule under the Trump administration took a different approach: it allowed arbitration agreements but added consumer protection conditions.

Under current CMS regulations (42 C.F.R. § 483.70(n)), nursing homes may use arbitration agreements, but only if:

• The agreement is voluntary and not a condition of admission
• The facility explains the agreement and its consequences in a language the resident understands
• The resident or their representative signs voluntarily
• The agreement prominently discloses that it is not a condition of admission
• The resident has the right to rescind the agreement within 30 days

In practice, many facilities violate these requirements. Staff present the arbitration agreement as routine paperwork without explaining it, sometimes implying it is mandatory. Families under stress sign without reading.

Grounds to Challenge Nursing Home Arbitration Agreements

Courts have invalidated nursing home arbitration agreements on numerous grounds. These arguments are available to families who want to pursue a jury trial instead:

The Agreement Was a Condition of Admission

If facility staff told the family — verbally or by implication — that the resident would not be admitted without signing the arbitration agreement, the contract was made under duress and violates the CMS conditions. Courts have voided agreements on this basis.

Lack of Mental Capacity

If the resident lacked the mental capacity to enter into a contract at the time of signing — due to dementia, stroke, sedation, or other cognitive impairment — the agreement is void. Capacity at the time of signing is evaluated based on medical records, intake assessments, and witness accounts.

The Representative Lacked Authority

Many nursing home arbitration agreements are signed by family members as "responsible parties" or "authorized representatives." If the family member did not hold a valid power of attorney or healthcare proxy at the time of signing, they may not have had legal authority to bind the resident to arbitration.

Unconscionability

Courts may void arbitration agreements that are procedurally or substantively unconscionable. Nursing home contracts are frequently found procedurally unconscionable when presented in a stack of documents without meaningful explanation, with no opportunity to negotiate terms, to a vulnerable person in a high-stress situation. Substantive unconscionability can arise from one-sided terms that heavily favor the facility in arbitrator selection, fee allocation, or discovery limitations.

Federal Arbitration Act Preemption Limits in Elder Abuse Cases

Some state courts have held that state elder abuse statutes create public policy grounds for refusing to enforce arbitration agreements in nursing home cases, since the legislature's intent in creating enhanced elder abuse remedies implies the right to a jury trial.

The FAM Lawsuit (Kindred Nursing Centers v. Clark)

The U.S. Supreme Court decided *Kindred Nursing Centers L.P. v. Clark* in 2017, holding that Kentucky courts could not apply a special rule against arbitration agreements signed by attorneys-in-fact under a power of attorney unless that rule applied to contracts generally. This decision strengthened the enforceability of nursing home arbitration agreements signed by valid POA holders — but it did not eliminate the grounds for challenge described above.

Practical Strategy for Families

If you are facing a nursing home admission:

• **Ask whether the arbitration agreement is required.** Under CMS rules, it must not be. The answer matters and should be witnessed.
• **Request time to review all documents separately.** Refuse to sign in a rush.
• **Retain a copy of everything signed.**
• **Note the 30-day rescission right** and consult an attorney before that window closes.

If your family member has already signed an arbitration agreement and you are now pursuing a claim:

1. Have an elder law or personal injury attorney review the agreement immediately.
2. Challenge the validity of the agreement based on capacity, authority, and the admission circumstances.
3. Investigate whether the facility followed the CMS procedural requirements for enforceable arbitration clauses.
4. Prepare for litigation in both arbitration (if required) and court simultaneously while the enforceability issue is decided.

Many arbitration agreements in elder care cases are successfully challenged. Do not assume the agreement is binding before an attorney reviews it.