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Strausberg v. Laurel Healthcare Providers

New Mexico Supreme Court Fails to Uphold Residents' Rights

    

AARP filed a friend-of-the-court brief on behalf of a nursing facility resident who was suing the facility for inadequate care.

Background

Nina Strausberg was recuperating from back surgery when she entered Arbor Brook Healthcare. During her stay at the facility she developed painful and she says preventable ulcers near her wound that caused the wound to become infected. She alleged that the nursing facility failed to properly treat her infection. She filed a lawsuit against the nursing facility.

In response to the lawsuit, the nursing facility sought to compel arbitration, citing a mandatory arbitration clause Strausberg had signed in her admission papers. Arbitration is an out-of-court dispute resolution process originally designed for business-to-business transactions (where parties have equivalent sophistication, access to resources, and experience) but is increasingly appearing in consumer transactions – including cell phone contracts, nursing facility contracts, and credit card contracts, as well as in employment agreements. It does not provide the same rights and procedural protections afforded people in court, most importantly the right to a jury trial and appeal.

The nursing facility argued that the lawsuit should be dismissed because of the existence of the arbitration agreement and that if she thought there was a defect in the agreement, Strausberg had the burden of proof of showing that unfairness.

A lower court agreed with the nursing facility and dismissed the case. An appeals court overturned that ruling, finding that, unlike commercial transactions, contracts between nursing facilities and residents involve particularly vulnerable people, and the burden of proof should fall on the nursing facility to prove that the agreement is, in fact, fair and should be enforceable. The nursing facility appealed that ruling to the New Mexico Supreme Court, the state’s highest court.

AARP’s friend-of-the-court brief, filed in the N.M. Supreme Court by AARP Foundation Litigation attorneys, points out that nursing facility admissions are made during a time of crisis where the focus is on accessing appropriate and complicated health care services, and where all other considerations are secondary. The brief reviews the unequal bargaining power that exists between a facility and its prospective resident, especially those facilities that are part of a larger and more established chain (as is Arbor Brook). Finally, the brief notes that if the facility can prove the agreement was fair, N.M. law does provide the facility the ability to enforce the arbitration agreement – so it is just to place the burden of proof on the party with greater power.


The N.M. Supreme Court disagreed with Strausberg and AARP. The court reversed finding that the intermediate court acted improperly by shifting the burden of proof to the nursing facility. The N.M. Supreme Court found that the Federal Arbitration Act requires that all contracts be treated the same under N.M. contract law and that the inequities in bargaining power between the resident and the facility could not be relied upon to shift the burden as the lower court had.

What’s at Stake

Nursing facility residents are particularly vulnerable and admissions are made during extremely emotional times. Moreover, because of their acute vulnerability, it is important that residents and their families have access to court in order to remedy dangerous quality of care issues. Mountains of studies, reports, and investigations document that governmental regulatory oversight and enforcement has not been successful in bringing about needed reform to the industry, and individual legal challenges are critical tools in ensuring facilities provide the care required.

Case Status

Strausberg v. Laurel Healthcare Providers was decided by the N.M. Supreme Court.

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