Publications: Ask The Legal Expert - June 2006

We've heard of several cases of arbitration agreements in admission packets being "unconscionable." How do we avoid getting that label while still keeping a strong arbitration statement?

There is no clear roadmap to determine whether a particular agreement will be enforceable. Such determinations are not only subject to differing state laws, but also to differing courts' views.

Broadly speaking, though, an arbitration agreement may be found "unconscionable" if it so grossly favors one party having overwhelming bargaining power over the other, as to make it unfair to enforce it in accordance with its literal terms.

In determining unconscionability, courts consider whether the party claiming unconscionability had a meaningful choice in agreeing to its provisions. This inquiry looks to the use of high-pressure or deceptive tactics; the physical form and placement of agreement; the experience and education of the party claiming unconscionability; and the disparity in bargaining power between the parties. Courts also consider the terms of the contract itself to assess whether it is so outrageously unfair as to shock the judicial conscience - for example, terms that unreasonably favor the stronger party.

A provider should assure the terms of the agreement aren't grossly unfair, that the agreement is not "buried" within the residency agreement and that its admission process is informative and non-coercive.

Reproduced with permission from McKnight's Long-Term Care News

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