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Another State Courts Finds Mandatory Arbitration Provisions Unconscionable

In Ruppelt v. Laurel Healthcare, the Court of Appeals of the State of New Mexico determined that the use of an arbitration agreement that a nursing home required patients to sign as a condition of admission was unconscionable under New Mexico law. The attorneys at our firm have long discussed the need for those affected by these agreements to fight hard in court to protect community rights.

The Case
The lawsuit in this case was filed by Celeste Ruppelt against Laurel Healthcare for the wrongful death of Theodore Lendeen, Ms. Ruppelt’s father. The lawsuit arose from the care provided to Ms. Ruppelt’s father while he was a paient of Laurel Healthcare.

Under the terms of the Arbitration Agreement, signed by Ms. Ruppelt’s father as a condition of accepting him as a patient, both parties gave up the right to have any and all disputes associated with the relationship created by the patient’s admission resolved by lawsuit. Essentially, any disputes needed to resolved through arbitration. However, the Arbitration Agreement contained two very important exceptions, arbitration was not required for either disputes over collections or discharge of residents.

When Ms. Ruppelt filed her lawsuit, Laurel Healthcare filed motions to dismiss and motions to compel arbitration, pursuant to the Arbitration Agreement. Ms. Ruppelt opposed Laurel Healthcare’s motions, alleging that the Arbitration Agreement is unconscionable.

Striking Down the Nursing Home Arbitration
The trial court found that the Arbitration Agreement was unconscionable because it was extremely one-sided in Laurel Healthcare’s favor. In short, the agreement forced a patient to bring their most common claims through the process of arbitration, but it allowed Laurel Healthcare to bring its most common claims, collections and patient discharge, in a court of law. Laurel Healthcare appealed this determination to the Court of Appeals.

On appeal, Laurel Healthcare argued that the Arbitration Agreement was not one-sided, because it allowed either party to bring a lawsuit regarding collections or patient discharge in a court of law. The court noted that while on its face the Arbitration Agreement allowed a patient to bring a lawsuit about collections or patient discharge, it would be very unlikely for a patient to do so while it would be much more common for Laurel Healthcare to bring such a lawsuit. The practical effect of the Arbitration Agreement is to force a patient to bring his or her most likely dispute, negligent care, in arbitration rather than in court. As such, the court found that the Arbitration Agreement was unfair and unreasonably one-sided.

Laurel Healthcare then argued that even though the one portion of the Arbitration Agreement was deemed unconscionable, the unconscionable portions should be stricken and the rest of the Agreement should still be enforceable. The court declined to follow Laurel Healthcare’s reasoning, and struck the Arbitration Agreement in whole, finding it unenforceable.

Hopefully more state and federal courts across the country will follow this model. It is simply inapproproate for facilities to take advantage of families at these times, when there is usually little opportunity to understand the specifics of the legal agreements. Big companies often try to roll over the rights of regular community members. We are proud to fight on their behalf in these cases to ensure full accountability following nursing home mistreatment.

See Our Related Blog Posts:

Court Refuses to Enforce Nursing Home Binding Arbitration Agreement

The Problem with Mandatory Arbitration Clauses in Nursing Home Contracts