Arbitration Agreements in Residency Contracts Offer Valuable Protections

By special guesspencer_payne_webt blogger, Spencer L. Payne, Esquire

At a recent Senior Housing Symposium, I explained how having a valid arbitration agreement in your residency contract can save owners and managers of senior housing facilities significant amounts of money. Most notably, Aon Risk Solutions determined that as of 2013, the average cost for claims resolved with arbitration agreements in place was 16% lower than for claims without one. With an average claim cost $184,000, a valid arbitration agreement will save you, on average, about $30,000 per claim. I can also tell you from experience that plaintiffs’ attorneys substantially discount their cases at the negotiation table when they know their case will be arbitrated. The primary reason for this is they know their case will be decided by experienced and reasonable healthcare attorneys—not “runaway juries.”

Therefore, your company should strive to create a valid, enforceable arbitration agreement with each resident upon admission. In my experience, there are two components to doing so—proper drafting and proper execution of the agreement.

Over the coming months, I will explain several “best practices” for drafting and executing arbitration agreements. I hope that through these posts you will learn the importance of arbitration agreements and how to best position your company to obtain that 16% savings on your litigation budget.

The law governing the enforceability of arbitration agreements is very nuanced and varies from state to state. Always consult with your attorney before making any changes to your existing arbitration agreement.

Spencer L. Payne is an associate in the Fort Lauderdale office of Quintairos, Prieto, Wood & Boyer, P.A., where he practices commercial litigation with a focus on nursing home and assisted-living facility, medical malpractice, premises liability, and construction defect defense.

Leave a Reply

Your email address will not be published. Required fields are marked *