A Senior Moment: The Executive Branch Solution to the Problem of Binding Arbitration Agreements in Nursing Home Admission Contracts

Abstract

Many scholars have written forceful condemnations of pre-dispute binding arbitration agreements in consumer contracts in general, and some have focused on nursing home admission contracts specifically. They focus on the failure of the courts to adequately police these agreements for unconscionability, the expansive interpretation of the Federal Arbitration Act (FAA) by the U.S. Supreme Court, and the failure of Congress to amend the FAA. While touching on these issues, this Article charts a different course. In this Article, I move beyond the deserved and already well-articulated castigation of the courts and Congress in favor of an approach that could, if followed, have an almost immediate impact. I argue that the Secretary of the U.S. Department of Health and Human Services should use its extremely broad statutory power under the Medicare and Medicaid Acts to declare these agreements unconscionable and prohibit federal funding of nursing homes that use them. This approach is consistent with the FAA because the FAA does not protect unconscionable agreements to arbitrate.A declaration by the Secretary that these agreements are unconscionable is warranted for many reasons. The gross disparity in bargaining power, the vulnerability of the population, the emotionally charged circumstances that surround being admitted to a nursing home, the significance of the rights being given up, and the type of harm to which nursing home residents are exposed (serious injury or death from negligent care or abuse) all justify a finding of unconscionability. The executive branch is also institutionally better suited than the judiciary to declare these agreements unconscionable. The executive branch has superior resources to investigate these issues and can fashion a remedy -- blanket prohibition of these agreements -- that is superior to case-by-case adjudication by the courts.