Nursing Home Arbitration Agreement Deemed Inherently Confusing and Held Unconscionable

A New Mexico Appellate court affirmed a lower court decision determining that an arbitration agreement between a nursing home and its resident was procedurally unconscionable, and therefore not enforceable.

In Adkins v. Laurel Healthcare of Clovis, LLC, No. 26759 (N.M. Ct. App. Dec. 19, 2007), Ruth Painter was admitted to Laurel, a nursing home facility, and died three days later. Adkins, her son, sued Laurel for various claims resulting in personal injury and wrongful death to Painter.

In response, Laurel filed a motion to dismiss and compel arbitration pursuant to the arbitration agreement Painter signed when she entered the nursing home. Adkins argued that the arbitration agreement should not be enforced because it was procedurally and substantively unconscionable.

Following an evidentiary hearing, the lower court determined that the arbitration agreement was unconscionable and denied Laurel’s motion. On appeal, Laurel argued that the lower court’s conclusion was a misapplication of law and reversible error.

The Court noted that the weight given to procedural and substantive considerations varies with the circumstances of each case. The lower court’s findings focused on Painter’s physical and mental conduction when she signed the arbitration agreement, and the circumstances in which it was presented and signed, rather than on the terms of the agreement itself.

At the time of her admission to Laurel, Painter suffered from multiple heart problems, she was taking numerous prescription medications, and required the use of a portable oxygen tank. In the year prior to her death, Painter’s mental condition declined and she exhibited a difficulty remembering things.

The arbitration agreement was three pages in length and found within the thirty-nine-page admission agreement. Further, the lower court determined that, taken as a whole, the admission agreement was inherently confusing, inconsistent, and difficult to comprehend. The agreement contained small print, and there were many discrepancies between what the index to the agreement stated, and what could actually be found on the corresponding page.

With respect to these issues, the lower court concluded that the arbitration agreement was procedurally unconscionable. Further, it was presented in such a fashion to a person in Painter’s condition would have had no meaningful choice, rendering the agreement grossly unfair.

The Court determined that the testimony regarding Painter’s declining medical condition, her heavy medication and serious physical illness, and the confusion she exhibited while signing and dating the arbitration agreement were sufficient to support the lower court’s findings.

The Court concluded that the facts produced at the evidentiary hearing supported the lower court’s determination of unconscionability. Accordingly, the Court affirmed the judgment of the lower court and refused to enforce the arbitration agreement.