The Maryland Court of Appeals agreed with the brief filed by AARP and several other advocacy groups, ruling that an arbitration clause in a nursing home contract that effectively waived important constitutional rights could not be enforced because it was not signed by the resident.
Carter Bradley was in pain but alert and oriented when admitted to Heritage Care. Carman Dickerson, who had been given legal authority to handle Bradley's financial matters solely related to his veterans' benefits checks, signed his admission forms. Buried in the admission forms was a clause that sent all disputes with the facility to arbitration.
Bradley died after developing bedsores that became infected and spread, often an indication of poor care. Dickerson was appointed as the representative of his estate, and she brought a medical malpractice suit against Heritage Care in his name. The facility invoked the arbitration clause and persuaded a circuit court to dismiss the suit and send it instead to arbitration. Dickerson appealed.
Arbitration is an out-of-court dispute resolution process that was developed for business-to-business transactions where both parties had equivalent access to resources and information and could bargain on a level playing field. But arbitration is being applied more and more to daily situations where one party holds tremendous sway over another — including employment contracts, credit card transactions and nursing facility admission contracts.
The problem with arbitration when used between parties of unequal bargaining power, resources and access to information is that arbitration is held behind closed doors and does not contain procedural protections (such as rights to discovery, rules of evidence and right to jury trial) that courts provide. It can also be far more expensive than court for a plaintiff. In short, when signing an arbitration agreement, a party gives up significant rights that the party may not even understand he or she has.
In Dickerson v. Longoria, the Maryland Court of Appeals considered whether someone without power of attorney has the right to waive these important rights for another. The court examined whether the authority to help someone sign nursing facility admission papers would provide enough authority to bind that person to mandatory arbitration if he has any disputes with the facility in the future.
AARP filed a "friend of the court" brief in the case, arguing that Maryland law prohibits a nursing facility from recognizing the authority of an apparent health care agent if that agent exceeds her authority. Joining AARP on the brief were the National Consumer Voice for Quality Long-Term Care (formerly NCCNHR), Maryland Disability Law Center, Maryland Legal Aid Bureau, Inc., and Voices for Quality of Care.
The brief noted that the nursing facility violated state nursing home law by relying on Dickerson's signature without verifying her authority. The brief also noted that many courts around the country have concluded that mandatory arbitration clauses are so intrusive — and waive such fundamental constitutional rights — that the signatory absolutely must have clear and actual authority to make the contract. In other cases, the brief pointed out, courts have thrown out mandatory arbitration clauses because the emotional and often split-second circumstances of nursing home admission render an agreement to arbitration impossible to execute knowingly and voluntarily.
The court ruled that Dickerson did not have the authority to waive Bradley's rights of access to the courts and right to a trial by jury. The court left open the possibility that a health care directive could delegate authority more expansively and could authorize an arbitration agreement (and the court did not rule on whether such an agreement could waive important constitutional rights — leaving that decision for another dispute, another day).